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Real Estate SPAC IPOs: How Long Will the Boom Last?

By Matthew Frankel, CFP® - Feb 26, 2021 at 6:33AM

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The SPAC boom is showing no signs of slowing down, and real estate is one of the popular SPAC target sectors.

We've seen hundreds of SPACs go public over the past year, and we're seeing an increasing number of these blank check companies target real estate businesses. Not only that, but we're now seeing real estate investment trusts starting to launch SPACs of their own. How much longer will it last? In this Fool Live video clip, recorded on Feb. 16, Millionacres real estate analyst Matt Frankel, CFP, and editor Deidre Woollard discuss the SPAC boom and what they're watching.

Deidre Woollard: One last trend I want to touch on, too, was SPAC fever because it's just so crazy. I tweeted earlier, I cannot keep up. There was another one announced Friday, but I know that in retail, Simon Property Group (SPG 0.08%) has a SPAC. There's a lot of energy going toward real estate technology, but also toward some of the retail as well.

Matt Frankel: At some point, the market is going to run out of appetite for these SPACs. At some point, it has to happen.

Woollard: At some point. I don't think we've reached it yet.

Frankel: There are only so many private companies to take public that would be in the realm of some of these SPACs. We haven't reached it yet. But there are days when there are over 10 new SPACs that go public. This is like 1999 levels of IPO activity, just in the SPAC market. But having said that, it's just starting to trickle down. The type of SPAC that's gotten the most notoriety probably has been the electric vehicle industry. There's been the electric vehicles. There's been a lot of that in the gaming industry, DraftKings was a big, successful SPAC. The space market was one of the early ones. Virgin Galactic went public by a SPAC.

Woollard: In real estate we had Opendoor.

Frankel: That's true. That was a more recent one. We're just starting to see it trickle down to the real estate space. We just had Latch announce it's going public by SPAC. Tishman Speyer, the company that was that SPAC sponsor, just announced Tishman Speyer Acquisition No. 2. They're not satisfied with just Latch; they want something else to complement it. We're definitely seeing a SPAC trend. One of our retail REITs that we're going to talk about recently announced a SPAC of its own. I don't think it's started trading yet, but it's been announced and it's been planned. They are not going to be the last. I was reading the other day, a lot of privately held REITs are starting to explore going public through SPACs. It's not just REITs creating SPACs that are going to take companies public, but some REITs themselves may choose to start going public through SPACs, which is a really interesting concept because it is easier than a traditional IPO in a lot of ways.

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