It seems like commercial real estate companies all over the industry are creating special purpose acquisition companies (SPACs) these days and Silverstein Properties is one of the latest to do so, The Real Deal reports. Silverstein Properties President Tal Kerret is moving forward with SilverSPAC, Inc., which plans to raise $250 million for a blank check firm that wants to take a property technology (proptech) firm public, according a recent regulatory filing. SilverSPAC will also look at financial technology (fintech) startup companies and enterprise tech companies that currently have real estate apps.
Silverstein Properties has been investing in proptech since 2015 through its accelerator and venture capital firm, Silvertech Ventures, according to The Real Deal. Karret and VC investor Charles Federman co-founded Silvertech Ventures. The company has worked with 29 startup companies and financially backed 17 businesses through an affiliated venture fund. These companies include real estate investment platform Fundrise and The Guarantors, an insurance startup that serves as a co-signer for apartment rentals. SilverSPAC plans to leverage its relationships with Silvertech and Silverstein Properties to generate business deals.
“The adoption of technology and innovation in real estate and financial services has recently reached an inflection point,” the filing said. “In this environment, the power of data and the ability to manipulate and analyze it for rapid insights has become a necessity to industry participants.”
Why SPACs are on the rise
It might seem surprising that SPACs have gained so much popularity within the last year and that commercial real estate companies are lining up to join the fray. Investors put $83 billion in to blank check companies in 2020 and another $7.2 billion in the first 11 days of this year alone, The Real Deal reports. Investors find SPACs attractive because there isn’t much downside. When a company goes public, sponsors often have two years to secure a merger or investors are refunded their money. If a merger is announced, investors have the option to sell their shares or tender the stocks for what they paid plus interest.
“It’s like a cash return on the downside,” Patrick Galley, CEO of investment firm RiverNorth Capital Management told The Real Deal. “On the upside, it’s an equity option to whatever company they do a reverse merger into.”
The COVID-19 pandemic has pushed a number of commercial real estate companies into the SPAC game. They want to secure proptech deals because digital tools are becoming more necessary as tenants begin to come back to buildings following the pandemic. Almost 150 blank check companies have gone public as of mid-February, raising $44.7 billion, according to SPACInsider. That’s more than half of the number of firms that went public total in 2020.
RXR Realty, Tishman Speyer, CBRE and Crown Acquisitions are among the real estate companies who have formed SPACs. Meanwhile, Fifth Wall Venture’s newly formed SPAC closed a $345 initial public offering.
Joe Dyton can be reached at email@example.com.