Interest rate worries dampen homebuilder UCP's market debut
Print
10:25 AM 7/18/2013 - Reuters
July 18 (Reuters) - Shares of Homebuilder UCP Inc got a cold reception in their market debut as investors worried about the impact of rising mortgage rates on the rebounding housing market.
The company's shares, which were priced at the lower end of the expected range of $15-$17, fell 3 percent to $14.55 in morning trading on the New York Stock Exchange.
Mortgage rates have been rising since May and touched their highest in two years in the first week of July, hurting housing demand.
The Commerce Department said on Wednesday housing starts in June dropped 9.9 percent to its lowest level since August last year.
Some of the homebuilder stocks that got listed recently have also pared their initial gains.
Tri Pointe Homes Inc and William Lyon Homes, which debuted in January and May respectively, are now trading below their offer prices. Taylor Morrison Home Corp's gains since its April debut have been contained to 14 percent.
The Dow Jones U.S. Select Home Construction Index has lost about 15 percent since May after rising about 78 percent in 2012.
The lackluster performance of housing stocks may affect other similar offerings in the pipeline.
WCI Communities Inc, which builds homes in coastal Florida, is poised to raise as much as $222.4 million in an IPO next week. Another builder, New Home Company Inc, filed last month to raise up to $172.5 million from its offering.
UCP, acquired by diversified holding company PICO Holdings Inc in 2008, operates in Northern California and Washington.
The company reported revenue of $11.8 million for the three months ended March 31. UCP has a portfolio of 48 communities in 17 cities in Northern California and the Puget Sound area of Washington State.
The builder, which plans to use the proceeds for investment, listed Citigroup, Deutsche Bank and Zelman Partners LLC as lead underwriters.
