William Lyon Rises After Share Sale Exceeds Price TargetJohn Gittelsohn
William Lyon Homes rose 2 percent in New York after selling shares to the public at $25 apiece, exceeding its price target as the homebuilder raised $217.5 million.
The stock, which had traded over the counter, closed at $25.50 on the New York Stock Exchange, a day after the Newport Beach, California-based company and an existing investor sold 8.7 million shares. The price topped the $22 to $24 a share the builder initially expected to receive.
“They’re trading up on a day the rest of homebuilders are down,” Megan McGrath, an analyst with MKM Partners LLC in Stamford, Connecticut, said in a telephone interview. “Their story hits on data points investors have liked,” she said, citing its focus in areas where there’s a boom, including California, Arizona and Nevada, and its land holdings.
The 11-member Standard & Poor’s Supercomposite Homebuilding Index was down 1.9 percent after the Commerce Department reported housing starts unexpectedly fell to a five-month low.
Along with the share sale, existing William Lyon investors including hedge-fund firm John Paulson & Co. got a 1 for 8.25 reverse split, reducing the number of shares they held. Compared with yesterday’s split-adjusted price of $29.70, the shares were down 14 percent today, according to data compiled by Bloomberg.
The company, which emerged from bankruptcy last year, joins at least two U.S. homebuilders that conducted public offerings this year as investors seek to capitalize on the housing-market recovery. New-home demand has risen as buyers, seeking to take advantage of low mortgage rates, find a tight supply of existing properties for sale.
William Lyon’s backers include Paulson & Co., the firm run by John Paulson, who earned $15 billion in 2007 betting against subprime mortgages; Luxor Capital Group LP, a New York-based investment manager; and Thomas Barrack Jr.’s Colony Capital LLC, which lent $206 million to William Lyon before its bankruptcy. Luxor offered about 2.2 million shares in the sale, aiming to trim its stake to 30 percent from 47 percent. Paulson’s stake was set to decrease to 11 percent from 14 percent, and Colony’s stake to 3.9 percent from 5 percent.
William Lyon had a net loss of $11.6 million on revenue of $372.8 million from Feb. 25, 2012, when it emerged from bankruptcy, to Dec. 31, according to a regulatory filing. The company sold 883 homes for an average price of $277,000 at communities in California, Arizona, Nevada and Colorado.
The stock sale was led by Credit Suisse Group AG and Citigroup Inc. The shares are listed on the New York Stock Exchange under the symbol WLH.
Tri Pointe Homes Inc., an Irvine, California-based builder backed by Barry Sternlicht and co-founded by former William Lyon executives Doug Bauer, Thomas Mitchell and Michael Grubbs, raised $267.6 million in a January IPO, including the overallotment option.
Taylor Morrison Home Corp., based in Scottsdale, Arizona, and backed by Howard Marks’ Oaktree Capital Group LLC and David Bonderman’s TPG Capital, raised $722.9 million in an April IPO, including the overallotment option.