Shares of TRI Pointe Homes climbed in the home builder's first day of trading. The stock was up $2.15, or 12.7 percent, to $19.15 in Thursday afternoon trading.
The strong debut is a sign that the gradual housing market recovery is gaining traction. Home sales and prices have routinely been setting multiyear highs as they come back from the real estate collapse.
TRI Pointe Homes Inc. raised approximately $232.9 million from its initial public offering of about 13.7 million shares. The offering priced at $17 per share, above the expected range of $14 to $16 per share.
The company said that it is selling 10 million shares, while a fund affiliated with Starwood Capital Group is selling about 3.7 million shares. The fund is giving the underwriters a 30-day option to buy up to 2.1 million more shares.
TRI Pointe, based in Irvine, Calif., expects net proceeds of about $156.3 million, after deducting an underwriting discount and some expenses. It plans to use net proceeds to buy land and for development, home construction and other related purposes. TRI Pointe won't receive any proceeds from shares sold by the fund affiliated with Starwood Capital Group.
TRI Pointe has 14 communities in California and one in Colorado. The company was formed by former executives of homebuilder William Lyon Homes.
In becoming a public company, TRI Pointe has the option of raising capital through the stock market, rather than relying solely on private investors or financing from lenders.
That's important because builders need capital to buy land and build homes. Even with the improvement in home sales and housing prices over the past year, many small, privately held homebuilders complain that lenders remain hesitant to provide loans for land acquisition.
In a regulatory filing TRI Pointe reported $22.3 million in home sales for the nine months ended Sept. 30. That compares with $9.3 million in home sales a year earlier. The company's projects are primarily in California.
The company reported a loss of $3.9 million for the nine months. It lost $3.1 million a year earlier.
TRI Pointe's stock is trading on the New York Stock Exchange under the "TPH" ticker symbol.