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Property developer Five Point spikes as much as 10% on its first day of trading

  • Five Point raises $294 million in its IPO of 21 million shares at $14 each.
  • The pricing was well below the expected range.
  • Lennar invests $100 million in the company for about a 40 percent stake.

Shares of Five Point, a California real-estate developer backed by the nation's second-biggest homebuilder, soared on their debut on the New York Stock Exchange on Wednesday.

Five Point raised $294 million in its initial public offering of 21 million shares priced at $14 each. The share pricing Tuesday night was well below the expected range.

By Wednesday afternoon, share prices closed more than 7 percent higher than the IPO price, but had been up about 10 percent late in the morning.

Lennar agreed to invest $100 million in the company for about a 40 percent stake.

Five Point develops commercial and residential land sites in coastal California, which has been a strong housing market.

The Asian community in Irvine, California, is driving investment, Five Point CEO Emile Haddad told CNBC's "Squawk on the Street."

"Household formation [is] happening out of that community," he said. "When the son or the daughter wants to buy a home, the parents are helping them so they can have the grandchildren stay around."

Appearing alongside Haddad, Lennar CEO Stuart Miller said, "It's not about where you start. It's about how you proceed and how you grow along the way."

"We're not locked into yesterday's obsolescence, we're building tomorrow's opportunities. And so as a master plan community strategy, we really have a unique position," Miller said.

"California continues to grow," he said. "It continues to be a dominant driver of the economy in the United States ... [and] is going to remain strong."

"This is a pure play California strategy," Miller said.

— Reuters contributed to this report.