The initial offering of 6.9 million shares of common stock, priced at $19 per share, represented about 16 percent of its total shares outstanding. The equity immediately raised totaled $130 billion, which WCI promptly used to pay off debt. This brought the company's net debt-to-total capitalization down from 62 percent to 48 percent, a level consistent with other public builders.
WCI, which operates only in Florida, and trades under the name WCI, had made no secret of its intent to go public. It was only a question of when. "We actually started filing last year, on Sept. 6, but held off after the events of the following days," says CEO Al Hoffman. "Because there's been a resurgence in popularity among builder stock, we decided now was the right time."
Hoffman doesn't plan to expand beyond Florida to maintain the kind of growth that public investors look for.
"Our long-range plan doesn't require us to move out of Florida, and I don't believe that a builder has to cater to the first-time buyer. The real growth is right here in Florida, where the population is growing rapidly. Our market is coming to us," says Hoffman.
"That's not to say we would never export our business model," he continues. "Any Sun Belt state offering attractive housing opportunities for retirement home buyers and empty-nesters would be a logical place for us, if accretive to our plan."
The Bonita Springs-based company aims to continue distinguishing itself from traditional home builders by targeting affluent buyers, offering luxury towers and single-family homes in highly amenitized communities. Prices range from $200,000 to $10 million.
Last year, WCI brought in $1.1 billion in revenue, with net earnings of $102 million. It builds in 35 communities located in Florida's coastal markets.
Shrinking Pie: Ongoing mergers, punctuated by a few de-listings, are paring down the list of public builders. Since 2000, Schuler, Del Webb, and Crossmann have been acquired; Rottlund went private; and The Fortress Group has struggled to maintain its listing on the NASDAQ exchange.
|Standard Pacific Corp.||1969|
|The Ryland Group||1978|
|K. Hovnanian Enterprises||1983|
|Capital Pacific Holdings||1987|
|Del Webb Corp.||1989|
|William Lyon Homes||1991|
|The Ryland Group||1992|
|The Rottlund Co.||1992|
|M/I Schottenstein Homes||1993|
|Beazer Homes USA||1994|
|The Fortress Group||1996|
Source: Company Reports