REMAX now a part of trades on the NYSE
Re/Max Rises in Debut, While Empire State Trust Is Subdued
via DealB%k @ The New York Times : http://dealbook.nytimes.com
The big real estate brokerage Re/Max Holdings was greeted warmly on Wednesday in its trading debut, while a real estate investment trust that owns the Empire State Building had a more cautious reception. The deals are the latest on Wall Street to entice investors looking to bet on a recovery in the property market.
In addition, investors lined up on Wednesday for shares of Burlington Stores, which operates the Burlington Coat Factory retail chain, selling discount apparel and home furnishings. The stock opened at $23.05 a share, after pricing at $17 in its initial public offering on Tuesday evening. Shares ended the day up 47.12 percent, to $25.01.
Re/Max, tapping the public market after 40 years as a private company, began trading at $26.25 a share on Wednesday, nearly 20 percent above the initial public offering price. The company had priced its shares at $22 on Tuesday evening, above an expected range, to raise $220 million. They also soared to close at $27, up 22.7 percent.
The Empire State Realty Trust had a more subdued start, as its shares opened at $13.05, virtually flat compared with the initial public offering price of $13. The I.P.O. on Tuesday evening had reflected a cautious outlook when the shares priced at the low end of the expected range. Its stock ended the day up just 10 cents, to $13.10.
With the real estate market emerging from a punishing slump, investors are wagering that companies focused on the sector are poised to benefit. Re/Max, which receives fees and dues from its network of brokerage franchises, has expanded as the housing recovery has gathered steam. Its network includes 91,809 agents as of June 30.
“It’s nice to see an uptick in sales and interest” in the housing market, Margaret Kelly, the chief executive of Re/Max, said in an interview. “We really looked at it and said now would be a great time” to go public.
In its offering prospectus, Re/Max reported $78.3 million in revenue for the six months that ended June 30, compared with $70.2 million in the period a year earlier. It earned $15 million of income in the first half of this year, compared with $13.8 million in the period a year earlier.
The company is following a big rival, Realogy Holdings, into the public market. The stock of that company, which runs Century 21 and Coldwell Banker, has risen 60 percent since its I.P.O. in October 2012.
Other companies focused on real estate have been similarly buoyant. Zillow, a real estate Web site that went public in 2011, has surged this year and it recently agreed to buy StreetEasy.com in an effort to strengthen its position in the New York City market.
But investing in the Empire State Realty Trust is an entirely different type of real estate play, offering exposure to a specific set of properties. The deal also comes with a complicated back story and a few outstanding challenges, including continued litigation.
The main winners in that I.P.O. are the real estate barons Peter L. Malkin and his son, Anthony E. Malkin, with a stake that was valued at about $460 million. The trust is trading under the symbol ESRT on the New York Stock Exchange.
Re/Max, for its part, used two classes of stock, selling Class A shares in its I.P.O. But the Class B shares, conferring control of Re/Max, will be held by a company called RIHI, which is majority owned by the co-founders of Re/Max, Dave and Gail Liniger.
The investment firm Weston Presidio, which had a 15 percent stake in Re/Max, planned to sell its Class A shares in the I.P.O. Re/Max trades under the symbol RMAX on the New York Stock Exchange.
The private equity backer of Burlington Stores, Bain Capital, which bought the company in 2006, did not plan to sell any stock in the I.P.O. Burlington is trading under the symbol “BURL” on the N.Y.S.E.
Morgan Stanley, Bank of America Merrill Lynch and JPMorgan Chase were the lead underwriters of the Re/Max I.P.O., while Bank of America Merrill Lynch andGoldman Sachs handled the Empire State Realty Trust deal.
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