If you think TRI Pointe Homes Inc.’s revenue growth over the past 24 months is eye-opening, just wait until next year.
The Irvine-based homebuilder, which didn’t exist five years ago, ranks No. 1 on the Business Journal’s latest list of the fastest-growing midsize public companies in Orange County.
Its revenue jumped 1,621% in the 12 months ended June 30 to $339.1 million from an estimated $19.7 million for the 12-month period ended June 2012.
$2.8B Buy
The growth doesn’t even reflect the gains TRI Pointe is making as the result of its biggest deal yet, the blockbuster buy of the homebuilding division of timber conglomerate Weyerhaeuser Co. in Federal Way, Wash.
That $2.8 billion cash-and-stock acquisition was announced last November but did not close until July, too late to include Weyerhaeuser-related home sales on this week’s list.
Weyerhaeuser’s homebuilding operations—located in Arizona, California, Texas, Washington, Nevada, and Washington, D.C.—sold more than 3,000 homes last year for more than $1 billion in revenue.
The closed deal with Weyerhaeuser made TRI Pointe, which reported 396 home deliveries last year, the 16th largest U.S. builder in terms of home sales last year, according to data by trade publication Builder Magazine.
TRI Pointe is aiming to soon be among the top 10 in sales, thanks in large part to a generally improving market for home sales in Southern California, where it has its largest number of home lots, as well as a stronger emphasis on growth of its five new Weyerhaeuser homebuilding units.
The largest of the units that TRI Pointe bought is El Segundo-based Pardee Homes, long one of Southern California’s most active builders.
The Weyerhaeuser purchase capped off a stunning five-year ascent for TRI Pointe, which was formed in 2009 during the recession and housing downturn by Chief Executive Doug Bauer, President Tom Mitchell, and Chief Financial Officer Mike Grubbs, former executives of Newport Beach-based William Lyon Homes.
TRI Pointe got its start working as a fee builder for Newport Beach-based Irvine Company on the land owner’s first batch of post-recession home development on the Irvine Ranch. It soon moved into more traditional homebuilding arrangements in California and later in Colorado.
Its next big break was getting the financial backing of Barry Sternlicht’s Starwood Capital Group, which helped jumpstart TRI Pointe’s operations with a $150 million investment in 2010.
Sternlicht remains its chairman and biggest individual shareholder, but the private equity investor’s involvement in the company didn’t have an immediate impact because the company still had to brave a couple of more shaky years for the homebuilding industry.
2011 “was a scary time,” as was the first half of 2012, Bauer told the Business Journal earlier this year. But by the end of 2012, the company had plans in place to raise money in the capital markets.
TRI Pointe’s timing for the fundraising tuned out to be fortuitous.
The company raised $233 million in an initial public offering in January 2013 as the first U.S. homebuilder to go public via an IPO in nearly eight years. The IPO was the largest in Orange County in several years.
A few other national builders, including William Lyon Homes, went public after TRI Pointe, but by mid-2013, Wall Street’s appetite for builder IPOs waned, a breather that lasted through the end of the year.
TRI Pointe acted during that breather to sign its deal with the larger homebuilding operations of Weyerhaeuser, boosting the company’s market capitalization from a premerger value of about $600 million to about $2.2 billion.
Weyerhaeuser shareholders now own about 80% of the combined company, which is still getting its hands around a deal that increased TRI Pointe’s headcount from about 150 to nearly 900.
In September, the company announced it was cutting about 30 Pardee employees as part of a post-merger restructuring. Other personnel changes include last month’s promotion of Tom Grable, another former William Lyon executive and a TRI Pointe employee since 2010, to division president for TRI Pointe’s Southern California operations.
With Grable’s promotion, the company said Mitchell is now focusing his time running TRI Pointe Homes and Pardee Homes in California, Colorado and Nevada, while Bauer will manage the remaining companies TRI Pointe bought from Weyerhaeuser.