Homebuilder and land developer Union Community Partners has filed for an initial public offering under the NYSE ticker “UCP.”
UCP was founded in 2004, then decided to sell out to holding company PICO (NASDAQ:PICO) four years later. During this time, the company got aggressive with its purchases, seeing the housing downturn as a great opportunity to pick up bargains.
UCP now controls more than 4,916 single-family residential lots in San Francisco, Puget Sound and the Central Valley of California, which purchases totaling nearly $200 million. The most attractive properties are in the San Francisco area, which has strong job growth and limited supply of housing — there are about 5.4 jobs for every residential permit issued, which compares to the U.S. average of 1.2.
UCP also has the advantage of a deep experience when dealing with the complexities of the San Francisco market. This means having to navigate the mind-numbing complex regulations, politics and permitting.
Of course, UCP isn’t relying on just one market — the company’s holdings in Puget Sound are also attractive. Job growth has been fairly robust, with clusters of businesses in aerospace, software and clean tech. The access to a mega-port is helpful, as is a jobs-to-permit ratio of about 2.8.
UCP’s footprint in the Central Valley should have potential, too. In the past year, the area has seen an uptick in economic activity, and its heavy reliance on agriculture should at least provide stability.
All in all, UCP’s portfolio has resulted in a nice growth ramp, with revenues soaring from $2.4 million to $58.1 million from 2010 to 2012. During this time, the company swung from a net loss of $6.6 million to a profit of $3 million.
In light of the general rebound in residential real estate, Wall Street has wasted little time with pulling off IPOs in the sector. And these housing-related deals have been strong, too. For example, Boise Cascade (NYSE:BCC) is up 47% since its IPO, Trulia (NYSE:TRLA) has returned 74% and Realogy (NYSE:RLGY) has gained 66%.
In fact, when UCP filed for its IPO, the shares of its parent, PICO, shot up 7%.
No doubt, Wall Street is expecting a hot deal.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities, and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.