Homebuilder TRI Pointe Homes (NYSE:TPH) launched its IPO today with no small amount of success. The deal got done at $17 per share — higher than the initial price range of $14-$16 — and shares have gained about 16% to above $19.50 so far in Thursday trading.
Lead underwriters included Citigroup (NYSE:C), Deutsche Bank (NYSE:DB) and FBR.
TRI Pointe got its start back in April 2009 during the depths of the real estate depression. The founders realized there was a big opportunity to create a next-generation platform with a focus on growth markets and low-cost approaches, and the strategy paid off.
The broader real estate market is playing ball, too — it has rebounded nicely during the past year, and the momentum is expected to continue. The National Association of Home Builders forecasts a 22% increase in new single-family homes this year.
The overall resurgence in real estate has sent homebuilder stocks soaring. Operators like KB Home (NYSE:KBH), Lennar (NYSE:LEN) and Hovnanian (NYSE:HOV) have all more than doubled in the past year.
TRI Pointe has been capitalizing on the boom, too. During the past two years, revenues have exploded from $4.1 million to $26.5 million (as of the year ended Sept. 30, 2012), though the company currently isn’t profitable, with losses coming to $4.6 million during the first nine months of 2012.
Another plus for TPH: Real estate legend Barry Sternlicht is the chairman of Tri Pointe’s board. (In late 2010, his fund, Starwood Capital Group, invested $150 million in the company.)
All in all, there’s plenty to like here.
As a note, Tri Pointe likely will not be the only homebuilder to ride the real estate market’s wave to the public markets. Arizona-based Taylor Morrison Home also has filed for an offering, and you can expect that deal to be pretty hot, too.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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