(Bloomberg) — Sam Zell’s Equity Residential and the luxury homebuilder Toll Brothers Inc. have formed a partnership to develop apartments, looking to deploy $1.9 billion to take advantage of the surging demand for rentals.
The two companies will invest about $750 million in equity, plus additional debt, over the next three years to develop projects in Boston, Seattle, Atlanta Austin, Denver, Dallas-Fort Worth and the San Diego area, according to a statement on Tuesday.
Read more: Housing Hunt Turns to Desperation With Record Rise in U.S. Rents
Rents in the U.S. are surging as would-be homebuyers get shut out of the housing market. Home prices have been driven higher in the pandemic by low mortgage rates and a shortage of homes to buy. That’s pushed more Americans into rentals.
The firms said the projects will be financed with about 60% leverage, and that the $1.9 billion is an “initial minimum co-investment.” Chicago-based Equity Residential will contribute 75% of the equity for each project, according to the statement.
Toll Brothers is scheduled to report earnings after the close on Tuesday.
(Adds details from statement.)
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