Toll Brothers Shifts Focus, Exits Multifamily Development

TL;DR

**Toll Brothers is shedding its multifamily ventures to double down on luxury homebuilding, a bullish move for focused growth.**

AI Summary

Toll Brothers, Inc. (TOL) reported delivering 11,292 homes from 556 communities in fiscal 2025, contributing to a total of 52,203 homes delivered over the past five years. The company's backlog stood at $5.49 billion, representing 4,647 homes, with 98% expected to be delivered in fiscal 2026. A significant strategic shift was announced on September 18, 2025, with the intention to exit the multifamily development business, beginning with the sale of interests in approximately half of its portfolio and its operating platform to Kennedy Wilson for approximately $380 million. This transaction, largely completed in December 2025, will see Kennedy Wilson assume management responsibilities for retained for-rent properties, which Toll Brothers expects to sell over time. The company continues to expand its product lines and geographic footprint, with 54% of fiscal 2025 deliveries being quick move-in (spec) homes, up from 49% in fiscal 2024, and operates in 24 states and the District of Columbia.

Why It Matters

Toll Brothers' strategic pivot away from multifamily development, marked by the $380 million sale to Kennedy Wilson, signals a sharpened focus on its core luxury homebuilding business. This move could streamline operations and capital allocation, potentially improving investor returns by concentrating on higher-margin, less capital-intensive segments. For employees in the Apartment Living division, this means a transition to Kennedy Wilson, while homebuilding staff remain with TOL. Customers will see Toll Brothers double down on its luxury single-family and attached home offerings, potentially leading to more innovative designs and efficient delivery in a competitive housing market where rivals like Lennar and D.R. Horton continue to expand. The broader market will observe how this specialization impacts Toll Brothers' growth trajectory and profitability compared to diversified builders.

Risk Assessment

Risk Level: medium — The company's risk level is medium due to its exposure to the cyclical housing market and interest rate fluctuations, as evidenced by 69% of fiscal 2025 home buyers relying on financing. While the exit from multifamily development reduces some capital intensity, the reliance on 'spec' homes, which constituted 54% of fiscal 2025 deliveries, introduces inventory risk if market demand softens. Additionally, the company's backlog of $5.49 billion, while substantial, is subject to cancellation risks inherent in the homebuilding industry.

Analyst Insight

Investors should monitor Toll Brothers' execution of its multifamily exit and its impact on capital efficiency and profitability. Evaluate the company's ability to maintain strong demand for its luxury and affordable luxury homes, especially given the increased reliance on spec homes, and assess how interest rate trends affect buyer affordability and backlog conversion.

Key Numbers

• $5.49 billion — Backlog value (Represents 4,647 homes under contract at October 31, 2025)
• 11,292 homes — Homes delivered in fiscal 2025 (Delivered from 556 communities in fiscal 2025)
• $380 million — Sale price to Kennedy Wilson (For interests in approximately half of multifamily portfolio and operating platform)
• 54% — Percentage of spec homes delivered in fiscal 2025 (Increased from 49% in fiscal 2024, indicating a shift in sales strategy)
• 4,647 homes — Number of homes in backlog (98% expected to be delivered in fiscal 2026)
• 76,100 — Home sites owned or controlled (Across 1,137 communities at October 31, 2025)
• 24.5% — Overall option value as percent of base sales price (In fiscal 2025, reflecting customization revenue)
• 69% — Percentage of sales price borrowed by home buyers (In fiscal 2025, indicating reliance on mortgage financing)
• 3,043 — Spec homes in communities (At October 31, 2025, with 1,783 under construction and 1,260 completed)
• 95,003,000 — Shares of Common Stock outstanding (As of December 17, 2025)

Key Players & Entities

• Toll Brothers, Inc. (company) — Registrant and luxury homebuilder
• Kennedy Wilson (company) — Purchaser of Toll Brothers' multifamily interests
• New York Stock Exchange (regulator) — Exchange where TOL Common Stock is registered
• Delaware (regulator) — State of incorporation for Toll Brothers, Inc.
• October 31, 2025 (date) — Fiscal year end
• September 18, 2025 (date) — Announcement date for multifamily exit
• December 2025 (date) — Completion of significant portion of Kennedy Wilson sale
• 24 states and the District of Columbia (location) — Toll Brothers' operating footprint
• Toll Brothers City Living (company) — Brand for high-density urban luxury condominiums
• Toll Brothers Apartment Living (company) — Brand for urban and suburban for-rent apartment communities

FAQ

Risk Factors

• Interest Rate Sensitivity [high — market]: The Company's profitability is sensitive to changes in interest rates, which affect mortgage affordability for buyers and the cost of financing for the Company. Higher interest rates can reduce demand for new homes and increase borrowing costs, potentially impacting sales and margins.
• Housing Market Fluctuations [high — market]: The Company's performance is tied to the cyclical nature of the housing market. Economic downturns, reduced consumer confidence, or oversupply in certain markets can lead to decreased demand, lower home prices, and reduced profitability. The Company delivered 11,292 homes in fiscal 2025, a key indicator of market activity.
• Supply Chain Disruptions and Material Costs [medium — operational]: The Company relies on a consistent supply of labor and materials. Disruptions in the supply chain or significant increases in the cost of lumber, steel, and other building materials can delay construction, increase costs, and negatively impact gross margins.
• Land Acquisition and Development Risks [medium — operational]: The Company's ability to secure desirable land parcels and obtain necessary approvals for development is critical. Delays in zoning, permitting, or entitlement processes, as well as competition for land, can impact the Company's growth and profitability. The Company controls approximately 76,100 home sites across 1,137 communities.
• Reliance on Mortgage Financing [medium — financial]: Approximately 69% of home buyers relied on mortgage financing in fiscal 2025. Changes in mortgage availability, lending standards, or interest rates can significantly impact buyer demand and the Company's sales volume.
• Environmental and Land Use Regulations [low — regulatory]: The Company is subject to various federal, state, and local environmental and land use regulations. Changes in these regulations or the inability to obtain necessary permits can lead to project delays, increased costs, or even project cancellations.
• Exit from Multifamily Business [medium — strategic]: The Company's strategic decision to exit the multifamily development business, including the sale of interests for approximately $380 million, introduces execution risk. The successful divestiture and management of retained assets are crucial for realizing expected financial benefits.

Industry Context

The luxury homebuilding market is characterized by its sensitivity to economic conditions, interest rates, and consumer confidence. Toll Brothers operates in a competitive landscape with other national and regional builders, differentiating itself through its focus on upscale buyers and master-planned communities. The industry is seeing a trend towards quicker sales cycles, as evidenced by Toll Brothers' increased spec home deliveries.

Regulatory Implications

Toll Brothers faces a complex regulatory environment, including federal, state, and local laws governing land use, environmental protection, and building codes. Compliance with these regulations is critical to avoid project delays, fines, and reputational damage. The ongoing shift in strategic focus may also involve navigating regulatory aspects of divestitures.

What Investors Should Do

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Key Dates

• 2025-09-18: Announcement of intention to exit multifamily development business — Signals a strategic shift to focus on core luxury homebuilding, potentially improving capital allocation and reducing complexity. The sale of interests for approximately $380 million is a key part of this transition.
• 2025-12: Completion of sale of interests in multifamily portfolio to Kennedy Wilson — Marks a significant step in exiting the multifamily segment, with Kennedy Wilson assuming management of retained for-rent properties, impacting the Company's asset base and future revenue streams.
• 2025-10-31: Fiscal Year End — Reporting period for key financial and operational metrics, including 11,292 homes delivered, a backlog of $5.49 billion (4,647 homes), and 76,100 home sites owned or controlled.

Glossary

Quick Move-In (Spec) Homes

Homes that are built by Toll Brothers without a specific buyer under contract, intended for faster sale and delivery. (The increase in spec home deliveries to 54% in fiscal 2025 from 49% in fiscal 2024 indicates a strategic shift towards quicker sales cycles and potentially higher inventory risk.)

Backlog

Represents homes that are under contract with buyers but have not yet been delivered. (A backlog of $5.49 billion (4,647 homes) at fiscal year-end 2025, with 98% expected in fiscal 2026, provides visibility into future revenue and operational planning.)

Home Sites

Parcels of land owned or controlled by the Company that are designated for home construction. (The Company owned or controlled approximately 76,100 home sites across 1,137 communities at October 31, 2025, indicating significant future development potential.)

Multifamily Development Business

The segment of Toll Brothers' business focused on developing and operating rental apartment and student housing communities. (The Company's strategic decision to exit this business, including a sale for approximately $380 million, will reshape its operational focus and asset portfolio.)

Option Value

Represents the value of customization and upgrades chosen by buyers on top of the base sales price of a home. (An option value of 24.5% of the base sales price in fiscal 2025 highlights the luxury segment's focus on customization and potential for higher-margin revenue.)

Year-Over-Year Comparison

While specific comparative figures are not detailed in the provided text, the filing indicates a strategic shift with the exit from the multifamily business and an increase in spec home deliveries to 54% in fiscal 2025 from 49% in fiscal 2024. This suggests a focus on accelerating sales and potentially higher inventory levels compared to the prior year. The backlog remains substantial at $5.49 billion, with 98% expected in fiscal 2026, indicating continued revenue visibility.

Key Financial Figures

• $5.49 billion — to our home buyers. We had a backlog of $5.49 billion (4,647 homes) at October 31, 2025; we e
• $380 m — n for a purchase price of approximately $380 million, as adjusted to reflect investmen
• $500,000 — es Delivered in Fiscal 2025 Less than $500,000 12% $500,000 to $750,000 25% $750,000
• $750,000 — 5 Less than $500,000 12% $500,000 to $750,000 25% $750,000 to $1,000,000 31% $1,000
• $1,000,000 — $500,000 to $750,000 25% $750,000 to $1,000,000 31% $1,000,000 to 2,000,000 27% More
• $2,000,000 — $1,000,000 to 2,000,000 27% More than $2,000,000 5% Of the homes delivered in fiscal 2
• $7.54 billion — nd future communities was approximately $7.54 billion (including $111.3 million of land to be
• $111.3 million — approximately $7.54 billion (including $111.3 million of land to be acquired from joint ventu
• $744.5 million — urchase contracts, we paid or deposited $744.5 million. If we acquire all of these land parcel
• $6.80 billion — e will be required to pay an additional $6.80 billion. The purchases of these land parcels ar

Filing Documents

• tol-20251031.htm (10-K) — 3037KB
• tol-2025x1031x10xex41.htm (EX-4.1) — 51KB
• tol-20251031x10kxex21.htm (EX-21) — 236KB
• tol-20251031x10kxex22.htm (EX-22) — 76KB
• tol-20251031x10kxex23.htm (EX-23) — 5KB
• tol-20251031x10kxex3101.htm (EX-31.01) — 8KB
• tol-20251031x10kxex3102.htm (EX-31.02) — 8KB
• tol-20251031x10kxex3201.htm (EX-32.01) — 4KB
• tol-20251031x10kxex3202.htm (EX-32.02) — 4KB
• tol-20251031_g1.jpg (GRAPHIC) — 93KB
• 0000794170-25-000112.txt ( ) — 17151KB
• tol-20251031.xsd (EX-101.SCH) — 111KB
• tol-20251031_cal.xml (EX-101.CAL) — 118KB
• tol-20251031_def.xml (EX-101.DEF) — 608KB
• tol-20251031_lab.xml (EX-101.LAB) — 1093KB
• tol-20251031_pre.xml (EX-101.PRE) — 900KB
• tol-20251031_htm.xml (XML) — 3213KB

BUSINESS

ITEM 1. BUSINESS 1

RISK FACTORS

ITEM 1A. RISK FACTORS 11

UNRESOLVED STAFF COMMENTS

ITEM 1B. UNRESOLVED STAFF COMMENTS 20

CYBERSECURITY

ITEM 1C. CYBERSECURITY 20

PROPERTIES

ITEM 2. PROPERTIES 21

LEGAL PROCEEDINGS

ITEM 3. LEGAL PROCEEDINGS 21

MINE SAFETY DISCLOSURES

ITEM 4. MINE SAFETY DISCLOSURES 21 PART II

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 22

[RESERVED]

ITEM 6. [RESERVED] 23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 24

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 43

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 43

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 43

CONTROLS AND PROCEDURES

ITEM 9A. CONTROLS AND PROCEDURES 44

OTHER INFORMATION

ITEM 9B. OTHER INFORMATION 44

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 44 PART III

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 45

EXECUTIVE COMPENSATION

ITEM 11. EXECUTIVE COMPENSATION 45

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 46

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS; DIRECTOR INDEPENDENCE

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS; DIRECTOR INDEPENDENCE 46

PRINCIPAL ACCOUNTANT FEES AND SERVICES

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 46 PART IV

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 47

FORM 10-K SUMMARY

ITEM 16. FORM 10-K SUMMARY 54

SIGNATURES

SIGNATURES 55 PART I

BUSINESS

ITEM 1. BUSINESS Toll Brothers, Inc., a corporation incorporated in Delaware in May 1986, began doing business through predecessor entities in 1967. When this report uses the words "we," "us," "our," and the "Company," it refers to Toll Brothers, Inc. and its subsidiaries, unless the context otherwise requires. References herein to fiscal year refer to our fiscal years ended or ending October 31. General We design, build, market, sell, and arrange financing for an array of luxury residential single-family detached home, attached home, master-planned, and urban low-, mid-, and high-rise communities. In recent years, we have pursued a strategy of broadening our product lines, price points and geographic footprint, as well as increasing the number of quick move-in (or "spec") homes that we sell relative to our traditional build-to-order homes. We cater to luxury first-time, move-up, empty-nester (move-down), active-adult and second-home buyers in the United States. We also design, build, market, and sell high-density, high-rise urban luxury condominiums with third-party joint venture partners through Toll Brothers City Living ("City Living"). At October 31, 2025, we were operating in 24 states and in the District of Columbia. In the five years ended October 31, 2025, we delivered 52,203 homes from 1,061 communities, including 11,292 homes from 556 communities in fiscal 2025. At October 31, 2025, we had 1,137 communities in various stages of planning, development or operations containing approximately 76,100 home sites that we owned or controlled through options. At fiscal year-end, we were selling from 446 of these communities. Backlog consists of homes under contract but not yet delivered to our home buyers. We had a backlog of $5.49 billion (4,647 homes) at October 31, 2025; we expect to deliver approximately 98% of these homes in fiscal 2026. We operate our own architectural, engineering, mortgage, title, land development, insurance, smart home technology and