Bloomberg News

Toll Brothers Buys Seattle Homebuilder CamWest Development

November 22, 2011

(Updates with comment from analysts in fourth paragraph, data on Seattle market in sixth.)

Nov. 21 (Bloomberg) -- Toll Brothers Inc., the largest U.S. luxury-home builder, will enter the Seattle market through its acquisition of CamWest Development LLC.

Toll, based in Horsham, Pennsylvania, paid cash for “substantially all” of the assets and operations of Seattle- based CamWest, one of the largest closely held homebuilders in the Pacific Northwest, Toll said today in a statement. Terms weren’t disclosed.

The deal gives Toll about 15 communities in King and Snohomish counties. CamWest, founded in 1989, has built more than 2,800 single-family houses, condominiums and townhomes in the Seattle metropolitan area. Its properties sell for about $350,000 to more than $1 million, according to the statement.

“We believe this is a good strategic move” for Toll, Stephen East and Paul Przybylski, analysts with New York-based Ticonderoga Securities LLC, wrote in a note to clients today. “We much prefer the company’s deployment of capital in this manner rather than continuing to build upon its already lengthy land positions in many of its core markets.”

Toll Chief Executive Officer Douglas C. Yearley Jr. said the acquisition allows the company to enter a market with a “robust employment base and a concentration of affluence.”

Seattle Market

The area’s unemployment rate was 8.4 percent in October, according to the Washington State Employment Security Department, compared with the 9 percent national average. Contracts to buy single-family homes and condominiums in the city increased every month from May to October, according to the Northwest Multiple Listing Service, an association owned by member real estate agents.

“Toll Brothers has been looking to make an entry into the Puget Sound market for several years,” said Matthew Gardner, managing principal of Gardner Economics LLC, a land-use consulting company based in Seattle. “They haven’t before because our market has got huge barriers to entry.”

The region, which is bounded by Lake Washington to the east and Puget Sound on the west, has a “finite land supply, unlike, say, Phoenix, where you can build as far as the eye can see,” Gardner said.

The transaction includes CamWest’s existing backlog and 1,500 lots owned or controlled by the company. CamWest expects to deliver about 180 homes and generate $90 million in revenue this year. Toll said the transaction probably will add to earnings in fiscal 2012.

Toll Brothers operates in 20 states, including Arizona, California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Pennsylvania, Texas and Virginia.

--Editors: Christine Maurus, Daniel Taub

To contact the reporter on this story: Prashant Gopal in New York at pgopal2@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net


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