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Toll Brothers Obtains $187 Million in Financing for San Diego Apartment Project

Plans for the Lindley tower in downtown San Diego include extended-stay units geared to remote workers. (Joseph Wong Design Associates, Toll Brothers)

By Lou Hirsh CoStar News August 23, 2022 | 5:06 P.M.

A joint venture that includes Toll Brothers obtained $187 million in construction financing for its first San Diego apartment project, as one of the nation’s largest homebuilders looks to grow its multifamily footprint in California and other states.

Fort Washington, Pennsylvania-based Toll Brothers has begun construction on a 422-unit tower called the Lindley in downtown San Diego, which it is developing with PGIM Real Estate, a global investment management firm based in Newark, New Jersey, and affiliated with Prudential Financial.

The developers obtained a construction loan package from BNY Mellon and Wells Fargo, including equity and debt financing arranged in-house by the developers, according to a statement from Toll Brothers. The 37-story project at 499 W. Ash St. in downtown’s Columbia neighborhood near Little Italy is slated for completion in 2024.

Plans for the Lindley include electric vehicle charging stations, smart thermostats, a concierge and 22,000 square feet of interior and exterior amenity space including a pool, spa, dog walk and rooftop lounge.

“In addition to its high-end features and amenities, the property will benefit from strong market fundamentals in San Diego overall, which has experienced employment growth largely driven by the technology sector and migration from other major cities,” Cathy Marcus, global chief operating officer and head of U.S. equity for PGIM Real Estate, said in the statement.

The full cost of the project has previously been estimated by developers at $285 million. At a groundbreaking ceremony in June, held during the National Apartment Association convention in San Diego, Toll Brothers officials said the project would include 59 extended-stay hotel rooms geared to remote workers needing Wi-Fi and other tech access, in addition to 363 traditional apartments.

This is the fifth urban high-rise rental project that Toll Brothers is developing with PGIM. The partners have two projects in the Boston region and one each in Atlanta and Washington, D.C., according to Fred Cooper, senior vice president of finance at Toll Brothers.

Officials said Toll Brothers’ apartment division also has a 218-unit project under construction in Santa Ana, California, scheduled for completion in 2024, as it looks to expand in other regions of the Golden State. The developer last year sold a 262-unit apartment complex shortly after its completion in Orange, California.

CoStar Market Analytics data as of Aug. 23 shows downtown San Diego has been among the region’s most active areas for apartment development and leasing during the past decade, with the vacancy rate currently at 5.4% and rents rising 7.5% during the past year. Downtown has more than 2,600 apartments under construction, the most of any San Diego neighborhood, and saw apartment property sales reach $814 million during the past 12 months, up 34.1% from the prior year.

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