One of the highlights of the 2013 IPO market so far has been the flood of real estate related offerings.
We have seen a number of real estate investment trusts and homebuilders roll out initial offerings, and more are on the calendar.
They are seeing demand for investment products to fuel investors' desire for yield and ways to bet on a continued housing market recovery. More real estate related offerings are being added to the calendar on a regular basis and most have held up fairly well in the aftermarket.
Good news for investors looking on the IPO market: In the next week we have two real-estate related initial offerings that are worth consideration.
Here's a look.
Two New Real-Estate Picks in the 2013 IPO Market
On Thursday WCI Communities will make its debut.
The company builds what they call lifestyle communities in some of Florida's fastest growing coastal areas. WCI also owns a real estate brokerage division that complements its homebuilding and should also benefit from a sustained recovery in the housing market.
It also operates several facilities such as country clubs, marinas and golf courses in connection with its planned developments.
WCI has been in business for 60 years (including its predecessor companies) and has developed a reputation for quality projects. Management believes they have a strong portfolio of land inventories with approximately 8,300 home sites.
The company believes that increasing population and a stronger-than-average job market is going to spur a recovery in the hard hit Florida real estate markets. The prospectus points out that Florida population continued to grow throughout the recession and growth should accelerate over the next five years.
Permit issuance has begun to rise again and builders look to meet the increasing demand for new homes in the state. In addition to stronger new home sales the brokerage division is the third largest in the state with 39 offices and about 1300 real estate agents and should benefit from stronger market conditions.
Business has been picking up in 2013 for WCI, as indicated in its prospectus filed with the SEC:
"Revenues from homes delivered for the three months ended June 30, 2013, were approximately $53.8 million, an increase of $33.9 million, or 170.4%, from $19.9 million for the three months ended June 30, 2012. For the six months ended June 30, 2013, revenues from homes delivered were approximately $84.0 million, an increase of $58.2 million, or 225.6%, from $25.8 million for the six months ended June 30, 2012. Our average selling price per home delivered for the three months ended June 30, 2013, was approximately $441,000, an increase of $43,000, or 10.8%, from $398,000 for the three months ended June 30, 2012."
The offering will be priced on Thursday with 8.4 million shares offered between $21 and $23 a share. Citigroup, Credit Suisse and JPMorgan are the co-managers of the offering and the shares will trade with the symbol WCIC.
One week later on Aug. 1, we will see the IPO of the latest REIT formed to buy single family homes as rental properties...
American Homes for Rent was formed in 2011 to take advantage of the dislocation of home prices. The founder and Chairman is D. Wayne Hughes one of the co-founders and CEO of Public Storage, one of the largest publicly traded REITs.
The company began operations in 2012 and has accumulated a portfolio of 17,949 rental homes and has more than 1,000 in escrow. The portfolio includes more than $3 billion of property locates in 21 different Metropolitan Statistical Areas across the United States. As of the end of June over 9,800 of the properties were available for lease with a 97% occupancy rate.
Management believes that after the real estate collapse we are in the early stages of a long-term real estate recovery. Many markets are starting to show lower vacancy rates and a firming of rental rates. They believe they will be able to secure an early mover advantage and become one of the dominant home rental concerns in the United States. Home rental has traditionally been a fragmented business with individual owners acting as landlords and that efficiencies and cost savings can be realized by a large national firm.
They will be offering 44 million shares between $16 and $18 a share and the offering is managed by Goldman Sachs, BofA Merrill Lynch, JPMorgan and Wells Fargo Securities. Shares will trade with the symbol AMH when the deal closes next Thursday.
Interested in the hottest offerings on the IPO market in 2013? Here's your "don't-miss" list.
Credit: Money Morning - Only the News You Can Profit From http://feeds.moneymorning.com/~r/moneymorning/jOLe/~3/t3obeKl2Aq4/
