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

We’ve seen hundreds of SPACs go public over the past year, and we’re seeing a growing number of these blank check companies targeting real estate companies. Not only that, but we are now seeing REITs starting to launch their own SPACs. How long will it last? In this fool live Video clip, recorded February 16, Matt Frankel, real estate analyst for Millionacres, CFP, and editor Deidre Woollard discuss the PSPC boom and what they are seeing.

Deidre Woollard: One last trend that I want to touch on as well is SPAC fever because it’s so crazy. I tweeted earlier, can’t follow. There was another one announced on Friday, but I know in retail, Simon Real Estate Group (NYSE: SPG) has a SPAC. A lot of energy is devoted to real estate technology, but also to certain retail businesses.

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

Oldest boy : At one point. I think we haven’t got there yet.

Frankel: There is only a limited number of private companies to go public which would be in the domain of some of these SAVS. We haven’t reached it yet. But there are days when more than 10 new SAVS are made public. It’s like the IPO activity levels of 1999, only in the PSPC market. But that said, it’s just starting to flow. Probably the type of PSPC that has gained the most notoriety has been the electric vehicle industry. There were electric vehicles. There has been a lot of this in the gaming industry, DraftKings was a large and successful SPAC. The space market was one of the first. Galactic Virgo was made public by a PSPC.

Oldest boy : In real estate, we had Open door.

Frankel: That is true. It was more recent. We’re just starting to see it spreading into the real estate space. We just had Latch announce that it will be released to the public by PSPC. Tishman Speyer, the company that sponsored SPAC, has just announced the # 2 acquisition of Tishman Speyer. They don’t settle for Latch; they want something else to complement it. We are definitely seeing a SPAC trend. One of our retail REITs we’ll be talking about recently announced their own SPACs. I don’t think it has started to be negotiated yet, but it is announced and it is planned. They will not be the last. I was reading the other day that many private REITs are starting to consider going public through SAVS. It’s not just REITs that create PSPCs that are going to go public, some REITs themselves may choose to start going public through PSPC, which is a really interesting concept because it’s more easy than a traditional IPO in many ways.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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