Shea Homes L.P.

Overview Key strengths Key risks Established track record as a master planned community (MPC) builder. Increasing mortgage interest rates have led to softening home demand amid affordability concerns. Record low leverage of 1.6x debt to EBITDA at year-end 2022. Exposed to a highly competitive, cyclical industry affected by changes in general and local economic and real estate conditions. Deep knowledge and long-term land holder in the California, Arizona, and Colorado markets. Concentrated geographic end markets and smaller scale compared with higher rated peers with more diverse holdings. Shea Homes L.P. reduced 2022 year-end leverage with historically low debt to EBITDA of 1.6x, record unit deliveries of 2,825 and record debt to capital of 33%. The boom in U.S. housing during

...We expect EBITDA to decline significantly in 2023, primarily because of slower housing demand. Shea Homes L.P. reduced 2022 year-end leverage with historically low debt to EBITDA of 1.6x, record unit deliveries of 2,825 and record debt to capital of 33%. The boom in U.S. housing during the pandemic propelled Shea to report strong EBITDA growth, with good discretionary cash flow to fund future land acquisition and land development. Given the uncertainty of the severity and duration of the slowing economy, we expect 2023 EBITDA to decline at least 60%, resulting in debt to EBITDA increasing close to 4x by the end of 2023. Furthermore, we...

Full Report