SANTA ANA, Calif. — An Orange County-based residential home builder will soon trade in Nasdaq after merging with a New York-based blank check company in a $510 million deal.
LF Capital Acquisition Corp. has acquired Landsea Homes, based in Newport Beach, in a reverse merger transaction that would allow Landsea to become publicly traded, pending regulatory approvals.
What You Need To Know
- Landsea Homes will merge with LF Capital Acquisition in a $510 million deal
- The merger will allow Landsea Homes to trade in the stock market
- Despite the coronavirus pandemic, the real estate market is experiencing an upward trajectory
- Landsea Homes is experiencing record growth
A reverse merger is when a private company merges with a public company, usually a shell company, to allow that private company to go public without going through the formal and lengthy Initial Public Offering or IPO process.
Under the terms of the deal, the combined company will be named Landsea Homes Corp., and its common stock will trade in Nasdaq under the new ticker symbols, “LSEA,” “LSEAW,” and “LSEAU,” the companies announced in a news release.
“We are bringing to the public market a growth oriented well capitalized homebuilder focused on high performance homes in the desirable core markets of California and Arizona,” LF Capital Acquisition CEO and President Scott Reed said in a conference call on Monday.
Founded in 2013, Landsea Homes is a subsidiary of China-based Landsea Group, a real estate development company. Landsea Group will own 67 percent of Landsea Homes once the merger closes.
Landsea Homes specializes in designing and building master-planned residential communities mostly in Arizona and California.
In the past 12 months ending in June, Landsea Homes has delivered 932 homes and generated $641 million in revenue, a 50 percent increase from the previous year, Landsea Homes CEO John Ho said during the conference call.
The company currently has 35 communities with about 5,400 homes and lots with an average sale price of $440,000. Landsea currently has homes in master-planned communities in Los Angeles, Orange County, and the Inland Empire. Prices for the company’s Ironridge community in Lake Forest range from $500,000 to $1.4 million.
In Chatsworth, the Crestley starts at $1 million.
The deal comes as residential home buying locally and nationwide continues its upward trend despite the global coronavirus pandemic. In a conference call with investors, Ho said historically-low interest rates and the shift to a work from home or hybrid work environment had fueled buyers' demand for spacious single-family homes.
Millennials who once favored living in dense urban core downtown areas are now looking for single-family homes in suburban areas, Ho said.
“We are seeing more homebuyers across all generations of the labor force entering the market, driven by COVID related factors including mortgage rates and prices or simply disliking their current home layout or needing a larger home,” Ho said.
Millennials, who make up 35 percent of the workforce, and first time homebuyers will continue to drive the real estate market in the future.