Re/Max Gains After $220 Million IPO Priced Above Target
Re/Max Holdings Inc. (RMAX), a franchiser of real estate brokerages, jumped on its first day of trading after raising $220 million in an initial public offering.
The Denver-based company sold 10 million shares for $22 each, Re/Max said in a statement yesterday, after offering them for $19 to $21. The stock gained 23 percent to $27 in New York trading today.
Re/Max is among property companies raising funds as the U.S. housing market rebounds. Home prices and sales are climbing following the worst crash since the Great Depression. Shares of Realogy Holdings Corp. (RLGY), owner of the Century 21 and Coldwell Banker brokerage brands, and property-listings sites Zillow Inc. and Trulia Inc. have surged since their IPOs.
“Wall Street is looking for ways to monetize the housing recovery for their investors,” Susan Wachter, a professor of real estate and finance and co-director of the Institute for Urban Research at the Wharton School at the University of Pennsylvania, said in a telephone interview before Re/Max’s pricing. “This is perhaps the moment on the apex where the recovery is at its fastest, so it’s a great time to go public.”
RIHI, a corporation majority-owned by Re/Max founders David Liniger and Gail Liniger, will own 61 percent of Re/Max shares, according to a Sept. 30 regulatory filing. Weston Presidio, a private-equity firm that previously backed Re/Max, planned to sell its stake in the IPO, according to the filing.
Re/Max intends to use some of the money from the IPO to reacquire regional real estate franchises in the Southwest and Mid-Atlantic region of the U.S., the prospectus shows. Re/Max had net income of $33.3 million last year, compared with income of $24.2 million in 2011 and a loss of $2.75 million in 2010.
“The company is very cash-rich so it is our intention to use the money for further acquisitions and to accelerate the growth and our market share throughout the U.S. and Canada,” Re/Max Chairman David Liniger said in a telephone interview today. “We have to be franchising in the real estate sector and with the improving market, virtually worldwide, the timing was absolutely perfect.”
Sales of previously owned U.S. homes rose 1.7 percent in August to the highest level in more than six years, the National Association of Realtors said on Sept. 19. Home prices in 20 U.S. cities rose 12.4 percent in the 12 months through July, the most in more than seven years, the S&P/Case-Shiller index showed on Sept. 24.
Investors are benefiting from the recovery. Shares of Zillow, operator of the largest real estate information website, more than quadrupled through yesterday since the company’s 2011 IPO. Trulia Inc., the San Francisco-based residential-property listings website, almost tripled since it went public in September 2012. HD Supply Holdings Inc. (HDS), a construction-supply company, has risen 23 percent since its June debut.
Morgan Stanley, Bank of America Corp. and JPMorgan Chase & Co. managed Re/Max’s share sale, according to the filing. Re/Max has more than 90,000 real estate agents worldwide, and its 6,300 offices are owned by agents or franchises.
To contact the editor responsible for this story: Kara Wetzel at email@example.com