We expect to receive net proceeds from this offering of approximately $156.3
million, after deducting the underwriting discount and estimated offering
expenses payable by us.
We intend to use the net proceeds from this offering primarily for the
acquisition of land, and for development, home construction and other related
purposes.
Pending these uses, we intend to invest the net proceeds from this offering
in a variety of capital preservation investments, including short-term,
interest-bearing investment grade securities, money market accounts,
certificates of deposit and direct or guaranteed obligations of the U.S.
government.
We will not receive any of the net proceeds from the sale of shares of our
common stock in this offering by the selling stockholder, including the net
proceeds received if the underwriters exercise their option to purchase
additional shares.
Competition in the homebuilding industry is intense, and there are relatively
low barriers to entry into our business. Homebuilders compete for, among other
things, home buying customers, desirable land parcels, financing, raw
materials and skilled labor. Increased competition could hurt our business, as
it could prevent us from acquiring attractive land parcels on which to build
homes or make such acquisitions more expensive, hinder our market share
expansion, and lead to pricing pressures on our homes that may adversely
impact our margins and revenues. If we are unable to successfully compete, our
business, prospects, liquidity, financial condition and results of operations
could be materially and adversely affected. Our competitors may independently
develop land and construct housing units that are superior or substantially
similar to our products. Furthermore, a number of our primary competitors are
significantly larger, have a longer operating history and may have greater
resources or lower cost of capital than ours; accordingly, they may be able
to compete more effectively in one or more of the markets in which we operate.
Many of these competitors also have longstanding relationships with
subcontractors and suppliers in the markets in which we operate. We also
compete for sales with individual resales of existing homes and with available
rental housing.
homebuilding industry, by our current management team with over a century of
collective industry experience. As a “next generation” regional homebuilder,
we are focused on taking advantage of opportunities in selected markets in
California and are prudently evaluating opportunities in other Southwestern
states with improving local market conditions. Unburdened by underperforming
assets or legacy issues, our growth strategy generally seeks to capitalize on
high demand in selected “core” markets with favorable population and
employment growth as a result of proximity to job centers or primary
transportation corridors. As of September 30, 2012, our operations consisted
of 13 communities, eight of which are actively selling, containing 695 lots
under various stages of development in Southern and Northern California.
Our company was founded by the members of our management team, who have worked
together for over 20 years. They have firmly established our company’s core
values of quality, integrity and excellence, which are the driving forces
behind our innovative designs and strong customer commitment. Given our
relative size and regional focus, our management team employs a disciplined,
hands-on approach, leveraging strong local market relationships and
established reputation to source acquisitions, achieve land entitlements
(which provide basic development rights to the owner) and deliver quality
homes on budget and on schedule.
Prior to this offering, we have operated our business through TRI Pointe
Homes, LLC, which, in connection with this offering, was converted into a
Delaware corporation and renamed TRI Pointe Homes, Inc. The members of TRI
Pointe Homes, LLC, which members include a fund affiliated with Starwood
Capital Group, the members of our management team and a third-party investor,
will receive an aggregate of 21,597,907 shares of our common stock in
connection with our conversion into a corporation.
Since our formation, we have sold over 350 homes (including fee building
projects), a number of which are located in prestigious master planned
communities in California, and we have forged relationships with several
leading national land developers. Our construction expertise across an
extensive product offering allows us flexibility to pursue a wide array of
land acquisition opportunities and appeal to a broad range of potential
homebuyers, including entry-level, move-up and higher income customers. As a
result, we build across a variety of price points, ranging from approximately
$300,000 to $1,500,000, and home sizes, ranging from approximately 1,250 to
4,300 square feet. Cutting edge product development as well as exemplary
customer service are key components of the lifestyle connection we seek to
establish with each individual homebuyer. Additionally, we believe our
diversified product strategy enables us to adapt quickly to changing market
conditions and to optimize returns while strategically reducing portfolio
risk.
In September 2010, we received an equity commitment of $150 million from a
fund affiliated with Starwood Capital Group, a private equity firm founded and
controlled by Barry Sternlicht, the chairman of our board. Starwood Capital
Group is a key strategic partner, providing access to acquisition
opportunities within our markets as well as a wide range of knowledge in all
aspects of real estate finance and operations. As of September 30, 2012, the
Starwood Fund had contributed the entire $150 million of its commitment to us,
and it has no further obligation to contribute capital to us. The Starwood
Fund’s investment has enabled us to acquire or control, through options or
non-binding letters of intent, 1,436 lots in 20 current and future
communities. Prior to the Starwood Fund’s investment, most of our operations
consisted of “fee building projects” in which we built, marketed and sold
homes for independent third-party property owners with whom we have revenue
sharing agreements on projects typically marketed under the TRI Pointe Homes
brand name.
Our home sales revenue has grown rapidly from $4.1 million in 2010 to
$26.5 million in the twelve months ended September 30, 2012 and our business
mix has shifted away from fee building. We have experienced losses since we
were founded in 2009, including losses of $3.9 million and $4.6 million for
the nine months ended September 30, 2012 and the year ended December 31, 2011,
respectively. As of September 30, 2012, we owned 552 lots and controlled 841
lots (689 lots that are under land option contracts or purchase contracts, 91
lots that are under non-binding letters of intent and 61 additional lots that
are under an option contract executed in October 2012), representing
approximately two to three years of supply to support our current growth plan.
We seek to invest only in land inventory that we can efficiently develop
over a 24 to 36 month horizon in order to maximize our returns on capital and
minimize our exposure to market risk. We continually evaluate new communities
and have an attractive pipeline of land acquisition opportunities.
-------
Our principal executive offices are located at 19520 Jamboree Road, Suite 200,
Irvine, California 92612. Our main telephone number is (949) 478-8600. Our
internet website is www.tripointehomes.com.