Renters Warehouse Parent Company Going Public Via SPAC
By most accounts, Wall Street investors have largely sweated out the SPAC fever of 2021. After a euphoric run last year, many businesses that went public through so-called “blank-check” companies, or SPACs, have seen their shares tank in value in 2022, according to research by investment bank Renaissance Capital. Plus, regulators are approaching SPACs with increasing scrutiny: In late March, the U.S. Securities and Exchange Commission proposed new rules designed to increase transparency around SPACs, aka special purpose acquisition companies.
But none of that is stopping Minnetonka-based Appreciate, parent company of real estate website Renters Warehouse, from entering the public market through a SPAC. On Tuesday, the company announced that it’s merging with a SPAC known as PropTech Investment Corp. II. The move would make Appreciate a publicly traded company on Nasdaq. The companies said the deal is slated to close in the second half of this year. When the deal is completed, PropTech will be renamed Appreciate.
SPACs are shell companies with no assets. They raise money from investors, go public, and then acquire another private firm. It’s essentially a way to fast-track the process of going public, which is often a laborious process that requires a lot of back-and-forth with the SEC.
PropTech II’s shares began trading on Nasdaq in December of 2020.
For its part, Renters Warehouse caters to owners and renters of single-family homes, often referred to as SFR in the real estate industry. The company’s website provides a platform for landlords to buy a rental property or for renters to find a place to live.
Despite uncertainties ripping through the global economy, Appreciate’s management and board of directors determined that “going public via a SPAC was the most efficient and strategic method for the company to enter the public markets,” a company spokesman said in an email.
PropTech II is technically headquartered in Wyoming, but Appreciate will continue its operations in Minnetonka, and likely grow its presence there, the spokesman said. “A big use of proceeds from this transaction is going toward customer acquisition through marketing, which will grow our customer base and result in the need for us to grow our team,” he said. “Our Minnetonka location houses both local team members and our centralized services like customer support and call center which will be expanded to meet our growth.”
In a news release, Appreciate CEO Chris Laurence said the company’s goal is to “democratize SFR ownership by making the end-to-end process more seamless and closer to the experience of managing other types of investments.” Going public, he said, will enable the company to “scale our business with both retail and institutional investors and capitalize on the strong economic and demographic tailwinds in SFR.”
“Single family rental represents an attractive investment opportunity and investment hedge, but the complexity of buying and owning a rental property has until now been a hurdle for many investors,” Laurence said.
On its website, Renters Warehouse said that it currently manages over $4 billion in real estate assets, including more than 15,000 homes.
Appreciate won’t be the first Minnesota company to go public through a SPAC merger. In 2019, New Brighton-based APi Group went public through a SPAC based in the British Virgin Islands.