NJ state of mind: Toll Brothers revenues fueled by sales across the Hudson

Homebuilder reported $1.5B in revenue, up 18%, during third quarter
By E.B. Solomont | August 22, 2017 02:55PM

Rendering of 10 Provost Street, David von Spreckelsen and Doug Yearley

Toll Brothers can thank the bridge-and-tunnel crowd for its recent gains in the New York metro area.

The national homebuilder said sales activity at two large New Jersey projects drove third-quarter revenue at its City Living division, which pulled in $98.7 million, up from $52.5 million during the third quarter last year. The uptick reflects 78 closings (up from 14), the bulk of which were at 1400 Hudson Street in Hoboken. Toll also accepted 49 contracts at its 10 Provost Street condominium in Jersey City, which launched six weeks ago. Also in the third quarter, it sold 17 units at 121 East 22nd Street, a 140-unit condo near tower Madison Square Park in Manhattan.

CEO Doug Yearley attributed strong sales in New Jersey to lower prices at those projects. “We have to work harder to sell units at higher price points, although we’re not competing in the super-tall or super-expensive condo product,” he said during an earnings call Tuesday.

Not surprisingly, Toll’s City Living division saw its average contract price drop to $858,000 during the third quarter, down from $2.1 million a year prior. Yearley attributed that drop to deals at 10 Provost, where the average price is $850,000. “That’s a big building,” he said. “But we also have inventory in New York City that’s much more expensive that we anticipate selling next year.”

Over the past few months, Toll has aggressively offered incentives to drive deals at its condos in New York.  But it hasn’t bought land around New York City in nearly three years, instead focusing on growing opportunities on the West Coast.

Overall, Toll reported $1.5 billion in revenue during the third quarter, up 18 percent year over year. Net income rose 41 percent to $148.6 million, and signed contracts rose 25 percent to $1.81 billion, filings show.