Toll Brothers' land-buying spree continues, this time with the builder boosting its presence in the Dallas market.
Toll closed on 92 acres, including 171 home lots, in Colleyville, Texas, an affluent north Dallas suburb, April 19. The purchase was one of the company's largest since it moved into the market in 1995.
Toll has not released the cost of the land, which includes 77 fully developed lots and 94 partially improved lots. Toll division president Rob Paul said the price was much reduced from what was being asked a year and a half ago, when the subdivision was first ready for home construction. Toll bought the land from RP25 Development, managed by former Major League Baseball player Rafael Palmeiro, Paul said.
Within a month, Toll plans to be selling houses out of the community called The Reserve at Colleyville.
Paul said the buy won't be the company's last in the market in the near term. "There are some other things in the pipeline. Hopefully in the next couple or few months we can announce them," he said.
In the last year, Toll Brothers has bought and opened three other new communities in the area as well. The new purchase gives the Horsham, Pa.-based builder 10 communities in the greater Dallas-Fort Worth area.
"The Dallas market is showing signs of a faster recovery compared to other parts of the country," Paul said. "We have very good economic drivers, job stability, home price stability, and it's very affordable."
According to CEO Bob Toll, lot prices have begun to come down to levels where the company can make at least the mid-20% internal rate of return it is targeting for new land buys. Because Toll builds primarily for the high end of the production home market, suitable land tends to be scarcer, said Paul.
"There is becoming a shortage of finished lots in the A and B+ locations where we build," he said. "It's got to be a fairly affluent suburb, with a highly rated school district and close to job centers."
Texas has been a good place for Toll Brothers to be of late, with two of the state's markets on its 10 top markets list. In the company's most recent conference call, Toll said Houston, which the company only recently entered in June 2009, had become the company's fourth best market and Austin was not far behind at No. 9.
But Texas is far from the only place Toll has been picking up land at what it considers to be bargain rates. In early March, it spent $23.5 million to buy 323 single-family lots and a Tom Fazio-designed golf course in Hasentree, the highest-end new-home community in Wake County, N.C., near Raleigh.
During a February conference call, Toll said the company is looking for bargains, wherever they may be.
"We are very opportunistic, and the deals are coming in nationwide," Toll said. "We are not buying because we are out of lots. We are not buying in one region or another because strategically we feel like that region needs more lots. ... Solely, we are determining our buys on the basis of opportunity."
On March 17, the company said it has bought or put under control roughly 3,000 home sites via mortgage note purchases and direct acquisitions in the prior four months.
Learn more about markets featured in this article: Dallas, TX.