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Based in Scottsdale, AZ, Colony American Homes (CAHS) scheduled a $245 million IPO with a market capitalization of $3 billion at a price range mid-point of $12.25 for Wednesday, June 5, 2013.

Three other IPOs are scheduled for this week. The full IPO calendar is here.

  • S-11A filed May 31, 2013
  • Manager, Joint Managers: Credit Suisse, JPMorgan, BofA Merrill
  • Co Managers: FBR, Zelman

SUMMARY

CAHS is a single family REIT. Both single family REITs that have IPO'd fairly recently are down from their IPO price.

Notice in the valuations below that CAHS wants to IPO at a price-to-book value of 1.3, while the other recent IPOs are selling at a 1.1 price-to-book value ratio.

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

annualized March qtr

Cap (mm)

Sales

Erngs

BkVlue

TanBV

in IPO

Colony American Homes (CAHS)

$3,050

74.0

-254.2

1.3

1.3

8%

Compare

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

yr ended Dec 2012

Cap (mm)

Sales

Erngs

BkVlue

TangibleBV

American Residential Properties (ARPI)

$697

199.2

-99.6

1.1

1.1

Silver Bay Realty Trust (SBY)

$701

193.6

-127.0

1.1

1.1

Glossary

CONCLUSION

Avoid the CAHS IPO. To put the above conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced earlier:

BUSINESS

CAHS is a single family REIT.

The portfolio consisted of 8,236 homes as of March 31, 2013, which CAHS believes is one of the largest portfolios of single-family homes in the United States.

As of March 31, 2013, CAHS's portfolio consisted of 7,059 wholly owned homes and 1,177 homes owned in a joint venture, which are concentrated in attractive sub-markets within Arizona, California, Colorado, Delaware, Florida, Georgia, Nevada and Texas, offering us significant operating efficiencies and economies of scale.

CAHS is externally managed by the Manager, a subsidiary of Colony, a leading real estate private equity firm that has established 44 investment vehicles and raised over $20 billion of equity capital since its founding in 1991.

COMPETITON

American Residential Properties (ARPI) IPO'sdat $21 May 8, 2013, and recently traded at $19.71, down 6.1%.

Silver Bay Realty Trust (SBY) IPO'd at $18.50 December 13, 2013, and recently traded at $17.83, down 3.4%.

USE OF PROCEEDS

CAHS expects to net $224 million from its IPO.

CAHS will contribute the net proceeds of this offering to the operating partnership, which will use substantially all the net proceeds from this offering to acquire and renovate single-family homes for rental to tenants.

CAHS will use up to $9.0 million out of the net proceeds of this offering to redeem the Class A Special Units, which amount is equal to the estimated $16.5 million in unpaid distributions that will have accrued with respect to such Class A Special Units through the expected date of such redemption, offset by payments otherwise expected to be due from the Manager to the operating partnership through such date.

Disclaimer: This CAHS IPO report is based on a reading and analysis of CAHS's S-1A filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: IPO Preview: Colony American Homes