Fifth Wall, Tastemaker Form SPACs To Fund CRE Deals
Fifth Wall, a Los Angeles-based proptech investor, is forming a special purpose acquisition company, or blank check company, to expand its presence in that sector, Bloomberg reports. The size of the SPAC hasn't been made public yet, but SPACs, an investment vehicle whose use dramatically accelerated in 2020, often have hundreds of millions of dollars at their disposal.
Fifth Wall has been a major player in the proptech space. The firm raised $503M in 2019 for its second real estate technology-focused fund, with investors that included CBRE Group, Cushman & Wakefield, D.R. Horton, Lennar Corp., PulteGroup and Toll Brothers. That fund wasn't structured as a SPAC.
The goal of Fifth Wall's new SPAC will be to find proptech companies that it believes offer strong growth potential. By law, a blank check company can't specify ahead of time any individual company it is thinking of acquiring. Rather, it takes its millions and goes on a highly sophisticated fishing expedition.
The investment vehicle has been phenomenally popular in the last year or so. In 2020, 248 SPACs were formed with $83B to invest, according to SPAC Insider. In 2019, there were only 59 SPACs with $13.6B to invest. Already in 2021, 28 SPACs have been formed with $6.8B to invest.
Another recent blank check company formed to fund commercial real estate is Tastemaker Acquisition Corp., a SPAC created late last year that is aiming to raise about $240M to invest in hospitality and restaurants.
In December, Cantor Fitzgerald started raising $400M for another SPAC, CF Acquisition Corp., which will possibly acquire a real estate brokerage. Previously Cantor Fitzgerald rolled out CF Finance Acquisition Corp. II, a SPAC that later reached a merger agreement with Silicon Valley-based View, a company that creates smart windows. The deal will take SoftBank-backed View public at an expected valuation of $1.6B.
In November, Jaws Acquisition Corp., a blank check company backed by real estate investment mogul Barry Sternlicht, struck a deal to acquire Cano Health; it values Miami-based Cano at $4.4B. That same month, CBRE created a $400M SPAC to invest in companies that "accelerate [the] digitalization of, and data proliferation within, the real estate industry," according to its filing with the Securities and Exchange Commission.