Taylor Morrison Home Files for $250 Million U.S. IPO
Taylor Morrison Home Corp., a builder of houses in the U.S. and Canada, is seeking to raise $250 million in a U.S. initial public offering, according to a regulatory filing.
The Scottsdale, Arizona-based company didn’t say how many shares it will offer or at what price. The figure is a placeholder used to calculate registration fees, and may change.
Taylor Morrison is seeking to benefit from a recovery in home sales and prices, which have climbed this year following the worst housing crash since the Great Depression. The company is the sixth-biggest homebuilder in North America based on 2011 revenue, according to today’s filing.
“It’s a great sign institutional investors believe homebuilding is back,” Steve Friedman, a partner in the real estate practice at Ernst & Young LLP, said in a telephone interview from Washington. “It’s huge.”
Proceeds from the IPO will be used for working capital, according to Taylor Morrison’s filing. Credit Suisse Group AG and Citigroup Inc. are leading the offering.
Taylor Morrison was sold for $955 million in March 2011 by its British parent, Taylor Wimpey Plc (TW/), to a group of investors backed by David Bonderman’s TPG Capital; Oaktree Capital Management LP, a Los Angeles-based investor focused on alternative markets; and JH Investments Inc., a fund based in Vancouver.
Taylor Morrison builds homes in Arizona, California, Colorado, Texas, Florida and Ontario, Canada. It had net income of $81.8 million on revenue of $879 million this year through September, according to the filing. During the period, it sold 1,880 homes in the U.S. and 706 in Canada, with an average sale price of $347,000.
“We believe it’s a very good time in homebuilding,” Taylor Morrison CEO Sheryl Palmer said in a telephone interview today. “We feel consumer sentiment and the industry are in the early stages, but in a good time.”
She declined to comment on details of the company’s IPO plans, citing advice from Taylor Morrison’s attorney.
U.S. construction spending in October climbed 1.4 percent from the previous month to $872.1 billion, and spending on new- home construction rose 3 percent to $294.2 billion, its highest level since November 2008, the Commerce Department reported earlier this week. U.S. home prices jumped 6.3 percent in October from a year earlier, the biggest increase since June 2006, data provider CoreLogic Inc. (CLGX) said yesterday.
Toll Brothers Inc. (TOL), the largest U.S. luxury-home builder, yesterday reported net income of $411.4 million for the three months ended Oct. 31, up from $15 million a year earlier. The results included a one-time tax benefit of $350.7 million. Net orders for new homes jumped 70 percent, and were up 34 percent from a year earlier in the first five weeks of this quarter, the Horsham, Pennsylvania-based company said.
“The market is still in the early stages of recovery,” Toll CEO Douglas Yearley Jr. said on a conference call yesterday. “We are very encouraged that, as traffic picks up, there’s a great opportunity to increase absorption to have some real pricing power.”
There are few closely held homebuilders that may consider going public because so many went out of business during the housing slump, Friedman said. Orleans Homebuilders Inc., a Bensalem, Pennsylvania-based company that left bankruptcy in February 2011, and North Salt Lake, Utah-based Woodside Homes, which exited Chapter 11 protection in 2010, are other potential candidates to go public, he said.
Woodside Chief Executive Officer Joel Shine said he has no immediate plans to take his company public.
“Right now, we’re in blocking and tackling mode,” he said two days ago in an interview at Bloomberg’s Los Angeles offices.
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