Toll Brothers Has a Secret

Toll Brothers(TOL) CEO Robert Toll said on the company's recent earnings call that sales of the company's Brooklyn condos have been going "pretty strong," but he made no mention of the pricing problems at the developments.

In recent weeks, the homebuilder slashed prices by nearly 20% to sell a block of condo units that have less-than-desirable views in the first tower of Northside Piers, TheStreet.com has learned. What's more, the company appears to be having trouble selling the remaining 11 units that also suffer from poor views at North 8, a nearby project that has had these units on the market since October 2006.

Toll is building both developments along the waterfront in Brooklyn's Williamsburg section, which is a five-minute train ride across the East River to Manhattan. The area will eventually be home to numerous condo developments and parks as part of a rezoning plan approved by the city two years ago.

Over the past decade, Williamsburg has transformed itself from a cheap living destination for artists to a gentrified, pricey extension of Manhattan. While Toll's luxury condos would seem to be a surefire hit in the ever-expanding area, the company may have trouble finding premium pricing for the developments.

Lior Barak, who handles new Brooklyn condo sales for real estate firm Prudential Douglas Elliman, says that there is a lot of demand for housing in Williamsburg, but the Toll projects will be somewhat separated from the neighborhood itself.