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RXR announced it will be the next real estate firm to enter the special purpose acquisition company (SPAC) arena. The "blank check" company will be called RXR Acquisition, and RXR plans to list on the Nasdaq under the symbol RXRAU and raise $250 million for it.
What is proptech?
Proptech is the use of technology to drive efficiencies in real estate, ultimately leading to improved asset returns, reduced friction, and greater transparency.
Proptech companies that have recently gone public through a SPAC or plan to do so soon include:
- Opendoor (NASDAQ: OPEN), an iBuying industry leader
- Latch (NASDAQ: LTCH), a smart building and access provider
- Porch (NASDAQ: PRCH), a marketplace to connect service providers and homeowners
- Matterport, a company that makes real estate virtual, has not yet gone public but intends to do so in 2021 through a SPAC.
A SPAC is a public "blank check" writing company whose management team is tasked with identifying a private company to successfully take public through a merger. In this regard, an investment in a SPAC is a bet on the management team.
SPACs are usually designed with a 12- to 24-month "shot clock" in which to identify an acquisition target and agree to merger terms. If the management team cannot find a company and execute a deal, capital is returned to the SPAC's investors, and the company is dissolved.
In case you're not familiar with RXR
RXR Realty is a real estate owner, manager, and developer based in New York. In 2018, the firm created its own $50 million proptech fund to make direct investments into start-ups across the real estate technology value chain. RXR is also a Limited Partner in one of MetaProp Ventures II's funds.
According to Crunchbase, RXR has invested in six proptech start-ups:
- Metropolis, an AI and computer vision start-up built to modernize parking and empower the future of mobility
- The Guild, a tech-enabled hospitality start-up
- Eden Workplace, an office management platform
- Kitchen United, which offers a turnkey solution to help restaurant brands expand profitably
- Lyric, a lifestyle hospitality company for the "modern business traveler"
- Convene, a company that designs and services premium places to work, meet, and host events
RXR's intention with the SPAC is, according to a press release, to "target businesses operating at the intersection of real estate and technology ('proptech'), including immediately adjacent ecosystems to real estate such as logistics, modern mobility, financial services, and technologies that address problems or inefficiencies associated with urbanization."
The Millionacres bottom line
At this point, it seems like every big real estate player is in on the SPAC craze. Are there enough quality proptech companies out there ready to go public, though?
With all of the SPACs out there, your best bet might just be to see which company RXR decides to take public (if they find a company) and then assess the investment opportunity at that time. As we mentioned, at this point an investor is making a bet on the management team’s ability to source a quality company to take public. It might be wise to sit back and wait.
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