By Kris Hudson
California developer Five Point Holdings Inc. filed a draft
registration statement with regulators outlining an initial public
offering, providing a test of investors' appetite for
housing-related offerings after a yearlong lull.
New-home sales in the first five months of this year were up 23%
from the same period a year ago amid job growth. The Dow Jones U.S.
Home Construction Index of the stocks of six large builders is up
10.2% so far this year, reaching a five-year high in April.
But the last wave of home-builder IPOs, which came in 2013 and
the first half of 2014, have brought mixed results, with five of
the eight builders trading at or below their IPO prices. No other
builders have gone public since June 2014.
Five Point, partly owned by home-building giant Lennar Corp.,
operates California projects cumulatively spanning tens of
thousands of home sites and billions of dollars in development
costs.
An IPO likely would help Five Point finance the huge costs of
developing those projects, including additional infrastructure and
marketing efforts. Its release on Tuesday and Lennar's associated
filings with the Securities and Exchange Commission didn't disclose
details about its financial performance.
Lennar formed Five Point in 2009 to oversee massive
redevelopment projects it had taken on in California. Those include
multiyear projects to redevelop into housing and commercial uses
the former naval shipyard at Hunters Point in San Francisco and the
former El Toro military base in Irvine, Calif. Five Point is
developing six projects in California spanning 50,000 potential
home sites and 20 million square feet of commercial space.
Five Point's consolidation will shuffle its ownership. A few
investors in some of its projects, including Barry Sternlicht's
Starwood Capital Group and Michael Dell's MSD Capital, intend to
sell some of their stakes as part of the eventual IPO. Lennar,
meanwhile, will retain an estimated one-third ownership stake as
Five Point's largest investor.
In San Francisco, Five Point, Lennar and affiliates are moving
ahead on development of the former naval bases at the Hunters Point
Shipyard and Treasure Island, having drawn new financing for them
after $1.7 billion in funding from China Development Bank fell
through in 2013. The state-run Chinese bank withdrew partly because
of its leadership transition at the time and partly due to
challenges with American tax requirements, people familiar with the
matter said. Lennar and Five Point since have landed financing from
other lenders and from investors in the EB-5 visa program.
Also on Tuesday, Florida home builder WCI Communities Inc.,
which went public in 2013, registered Tuesday to sell 3.25 million
shares held by two of its largest investors.
WCI, based in Bonita Springs, Fla., is one of the four newly
public builders currently exceeding their IPO prices. As of midday
Tuesday, WCI's stock traded at nearly 55% above its July 2013 IPO
price of $15.
WCI registered Tuesday to sell shares held by private-equity
investors Monarch Alternative Capital LP and Stonehill Capital
Management LLC. If all of the shares are sold, including the
overallotment, it would reduce the pair's stake in WCI to a
combined 24.8% from 39.2%.
Write to Kris Hudson at kris.hudson@wsj.com
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