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William Lyon Homes Puts IPO Target at $200 Million

William Lyon Homes is betting that its strong market position in Orange County and other desirable West Coast housing markets, along with significant land holdings in those areas, will make the company’s stock an attractive option for investors upon its return to the New York Stock Exchange.

The Newport Beach-based homebuilder, which has been privately held since 2006, last week filed paperwork to raise $200 million in an initial public offering.

IPOs

A time frame for the IPO becoming effective has not been disclosed. The company plans to list its shares on the NYSE under the ticker WLH.

William Lyon Homes is the latest local homebuilder looking to tap the IPO market. Irvine-based TRI Pointe Homes Inc. raised $232.7 million in a late-January offering, the first IPO for a U.S. homebuilder in nearly nine years.

Scottsdale, Ariz.-based Taylor Morrison Home Corp., whose Southern California operations are based in Irvine, raised nearly $630 million in an IPO last week.

Other privately held builders based in OC, including Aliso Viejo-based The New Home Co. and Newport Beach-based City Ventures LLC, also have been rumored as potential IPO candidates.

William Lyon Homes thinks it has a leg up on much of the competition due to its strong presence in a number of key homebuilding markets on the West Coast, including Orange County.

“We believe that homebuilding is a very local business and that we benefit not only from being in attractive markets, but also from having significant scale in such markets,” the company said in its preliminary registration with the Securities and Exchange Commission.

William Lyon Homes said it currently ranks as the third-largest builder in both OC and Los Angeles County, and it is the fifth-largest builder by sales in Southern California.

Sales, Projects

Data from the Costa Mesa office of Hanley Wood LLC show the builder selling 115 homes in OC last year, trailing only Newport Beach-based Irvine Pacific and Walnut-based Shea Homes.

The company currently expects to have four projects open in OC this year, including two in Irvine and another two in Rancho Mission Viejo.

The Irvine projects, including Willow Bend, a 58-unit infill development in University Park that opened for sale earlier this month, count prices starting at about $890,000, according to regulatory filings.

The yet-to-open Rancho Mission Viejo projects, totaling close to 200 homes, count starting prices closer to $300,000.

Land

The company said it has “a significant land supply,” with more than 11,800 lots owned or controlled as of the end of December.

That land has a book value of more than $400 million and represents a 13-year supply of lots based on the company’s 2012 home closings, according to regulatory filings.

William Lyon Homes said it signed purchase and sale agreements for another 1,585 lots in the first three months of this year, with an aggregate purchase price of about $68.7 million. The locations of those expected land buys were not disclosed.

A number of other specifics of William Lyon Homes’ IPO, including the number of shares expected to be listed, and an estimated price, were not disclosed in last week’s red herring prospectus filed with the SEC.

Proceeds

Proceeds from the IPO would be partly used for growth capital, including land acquisition, and for general corporate purposes, according to the SEC filing.

An unspecified portion of the offering’s proceeds would also go to the company’s main shareholders, who helped recapitalize the builder after it filed for bankruptcy in late 2011.

New York-based Luxor Capital Group LP and Paulson & Co., as well as Colony Capital LLC in L.A., took large stakes in the builder following the recapitalization, which was completed last year.

The IPO plans had been expected, albeit not necessarily so soon.

The recapitalization plan required William Lyon Homes to make an effort to complete an IPO on a national exchange by 2016; some of its shares currently trade on the lightly traded OTC Bulletin Board.

The company’s IPO plans come about a month after the builder saw a change in its executive lineup.

The company’s founder and namesake, Gen. William Lyon, turned over the chief executive role at the company to his son, Bill H. Lyon.

Bill H. Lyon, 39, was previously the president and chief operating officer of the builder.

Gen. Lyon, 90, has taken on the role of executive chairman.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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