Fortune 500 homebuilder Toll Brothers is giving up on apartments.

Real estate investment firm Kennedy Wilson agreed to pay $347M to acquire Toll Brothers Apartment Living, bringing all of the company’s employees under its banner, along with its $5B in assets under management.

Toll Brothers will hand over management but continue to own 20 apartment buildings as part of the deal.

“It is Toll Brothers’ intention to dispose of these remaining assets over time and exit the multifamily development business,” the company said in a statement.

The transaction, expected to close in October, would involve Kennedy Wilson acquiring Toll Brothers' general interests in 18 apartment and student housing properties valued at $2.2B and a pipeline of 29 projects in various stages of development that, if completed, would total roughly $3.6B in invested capital, according to a release.

The 20 properties that Kennedy Wilson will manage while Toll Brothers looks for a buyer have an estimated value of about $3B.

“This transaction will unlock significant capital for our stockholders, while allowing us to focus on our core homebuilding business and continue our transformation to a more asset-light homebuilder,” Toll Brothers CEO Douglas Yearley Jr. said in a statement. “We are pleased that our Toll Brothers Apartment Living employees have found a new home at Kennedy Wilson.”

Toll Brothers declined Bisnow’s request for further comment on its exit from the multifamily business.

The deal also establishes a new business relationship between the two companies that aims to boost each other’s prospect pipeline. Under the arrangement, Kennedy Wilson will refer for-sale opportunities to Toll Brothers, and the homebuilder will reciprocate by sending multifamily deals in Kennedy Wilson’s direction.

Kennedy Wilson is planning to “make an initial investment of approximately $90 million in the acquired interests,” while the “balance of the purchase price will be funded from existing Kennedy Wilson partners.”

The deal would substantially increase Kennedy Wilson’s assets under management, which the company says currently total $30B. It would give it a combined portfolio of more than 80,000 rental units that it either owns, finances or manages. Kennedy Wilson said it also plans to further grow the apartment development platform.

The acquisition comes as smaller multifamily operators are being consumed by larger investors that are looking to capitalize on credit dislocation.

Brookfield Asset Management is reportedly circling a $10B deal for a portfolio of 300 manufactured-home developments from Singapore’s sovereign wealth fund.

Pennsylvania-based Morgan Properties, an investment firm that owns or manages more than 100,000 units in 22 states, reached a $354M deal in August to take Dream Residential REIT and its 15-property portfolio private.

And last year, Blackstone bought AIR Communities for $10B, signaling a renewed interest in multifamily assets after a sluggish period in 2022 and 2023.