Housing Back in IPO Fold
Pending Home-Builder Offerings Would be First Since 2004
As the market for initial public offerings comes back to life after a holiday lull, deals from home builders are likely to be among the first out of the gate, with issuers trying to capitalize on an improving U.S. housing market.
Taylor Morrison Home Corp. and TRI Pointe Homes Inc., which filed plans for IPOs with the Securities and Exchange Commission last month, would be the first home-builder IPOs since late 2004, the housing boom's salad days, according to Dealogic. The IPOs could come as soon as this month.
Helping coax such issuers, bankers say, has been the strong performance of housing stocks amid signs of improving home prices, sales and construction.
Shares of PulteGroup Inc. PHM +2.64% have nearly tripled over the past year, making it the best-performing stock on the Standard & Poor's 500-stock index over that time. Lennar Corp. LEN +0.80% has roughly doubled, and D.R. Horton Inc. DHI +1.67% has climbed nearly 60%.
"We're coming out of the doldrums and depths of the real-estate crisis, and there's a long runway ahead in the housing-related sectors," said Frank Maturo, vice chairman for equity capital markets at Bank of America BAC +1.24% Merrill Lynch.
Other bankers said the relative dearth of available shares has left investors clamoring for new issues and more ways to gain exposure to the housing market. PulteGroup, Lennar and D.R. Horton represent $21 billion, or 0.1%, of the S&P 500's $13 trillion market capitalization, according to S&P Dow Jones Indices.
Taylor Morrison, of Scottsdale, Ariz., builds single-family homes and planned communities. The company in December filed for an IPO valued at up to $250 million, and is free to market its offering to investors at any point. It hasn't established the number of shares it will issue, the price or the date they will begin trading.
TRI Pointe, of Irvine, Calif., builds single-family homes in communities across the Golden State and in Colorado. TRI can't pitch its $172 million potential offering to investors until after Friday, the end of the 21-day public-viewing period of documents before it can launch meetings with prospective investors.
Also in the pipeline is Boise Cascade LLC. The plywood maker filed for an IPO of up to $200 million in November.
Enthusiasm for housing-related IPOs has spread beyond builders. Realogy Holdings Corp., RLGY -0.26% owner of real-estate-agent brands such as Century 21, has surged since its October offering. Shares ended Friday 55% above their IPO price. Since its IPO Dec. 14, Silver Bay Realty Trust Corp., SBY +2.62% which acquires and leases single-family homes, has climbed 6.1%, almost double the 3.3% rise for the S&P 500 over that time.
"What we're seeing now is these companies emerging with strengthened financial statements, needing to access capital for a variety of reasons in order to grow," said Jackie Kelley, head of Ernst & Young's IPO markets team in the Americas.
The trend also has been evident in follow-on offerings, or share sales by public companies made after their market debuts. Builders like Meritage Homes Corp., MTH +0.86% Beazer Homes USA Inc. BZH +2.99% and Standard Pacific Corp. SPF +1.32% came to the market in 2012 with follow-on sales valued at nearly $449 million, the most active year since at least 2008, according to Dealogic.
Write to Chris Dieterich at Chris.dieterich@dowjones.com
