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A Strong IPO for TRI Pointe Homes

Homebuidler up-sizes the deal to $17 per share


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.

Article printed from InvestorPlace Media,

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