Toll Brothers joins with Shea

The two builders plan to develop a huge community in Lake Forest, California.

By Jun 22, 2012 9:38AM

By Zacks Equity Research


Toll Brothers, Inc. (TOL) entered into a partnership with Shea Baker Ranch LLC, a member of the Shea family of companies, to develop Baker Ranch, a master-planned community in Lake Forest, California.


Designed to cater to a variety of buyer profiles and price points, Baker Ranch will have three segments offering single-family attached, detached and multi-family homes. Baker Ranch will have about 1,780 single-family homes and 414 rental apartments. The construction is expected to start from fall of 2012. The company expects to offer homes for sales by spring of 2014.


The homeowners in Baker Ranch will have 40 acres of open space, an 8.4 acre central park, seven neighborhood parks with three having private recreation clubs, walkways and bicycle paths. Baker Ranch is close to popular locations like Foothill Transportation Corridor, Irvine, Laguna Beach and Newport Beach.


The ranch is also near to Irvine Spectrum, which consists of more than 130 retail stores, reputed restaurants and other entertainments.  


Lake Forest has several industrial, commercial and business offices. It is close to Los Angeles, San Diego and the Inland Empire. Baker Ranch is in the Saddleback Valley Unified School District, containing some highly reputable schools.


Toll Brothers, Inc. is one of the leading homebuilders in the United States. The company is focusing on raising the quality and the luxury quotient of the products and hopes to benefit from the rise in quality.


The company expects to deliver 2700 to 3200 homes in fiscal 2012, out of which it has already delivered 1235 homes in the first six months of fiscal 2012. The average price is expected to be within the range of $560,000 to $580,000 per home for the remaining quarters of fiscal 2012.


The partnership with Shea Baker Ranch LLC will help Toll Brothers develop one of the most premier locations in the U.S. We are optimistic about the company's performance and believe that it can use the opportunities as the housing market recovers further. The company's focus on raising the quality and the luxury quotient of the products (thus raising the average price of the homes) and reducing cost seems to be paying off.


Toll Brothers presently retains a Zacks #1 Rank, which translates into a short term "strong buy" rating. One of its peers, Lennar Corporation (LEN) carries the Zacks #3 Rank in the near term ("hold" rating).


Headquartered in Horsham, Pennsylvania, Toll Brothers, Inc. offers luxury residential communities; single family attached and detached homes and urban communities. The company caters to 20 states in the United States.


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