Luxury homebuilder Toll Brothers (TOL) performed better than many of its competitors during the home construction downturn due to its strong liquidity position, willingness to acquire lots and management's stake in the long-term health of the company, Fitch Ratings said.

The ratings giant affirmed Toll Brothers at its lowest investment grade of 'BBB-' when announcing its issuer default rating Monday. That's one step above junk, but still investment grade in the wake of what has been a tumultuous five year-period for homebuilders.

The company's overall ratings outlook is stable, Fitch said.  

Insider ownership of the builder amounts to 14% of the company, putting management's interests directly in line with the long-term success of the firm, Fitch added.

While risks remain with the housing market still subject to uncertainty and volatility, the year 2012 brought good news with Toll Brothers seeing contract growth of 43% in the nine-month period ending July 31.

Fitch also expects single-family housing starts to grow 12% for all of 2012 and new home sales to increase 10.5%.

In July, Toll Brothers had about $601.4 million in cash and cash equivalents, as well as $275.9 million in marketable securities.

By the end of July, Toll Brothers controlled a little more than 39,000 lots.

The company's latest third-quarter earnings report shows the builder recording a $61.6 million, or 36 cents a share, profit for the period ending July 31. That is up from a profit of $42.1 million, or 25 cents a share, in the year-ago period. 

kpanchuk@housingwire.com