Already in 2021, the trend of special purpose acquisition companies (SPACs) has continued so swiftly that it may dwarf the activity that took place in 2020. These "blank check" companies are used to raise money for a variety of companies across many different sectors, including real estate.
Already this year, we've seen Simon Property Group (NYSE: SPG) create a SPAC, and a proptech start-up, Latch, was acquired by Tishman Speyer's SPAC. The newest SPAC with an eye on real estate is BOA Acquisition, which announced its intentions last week with the filing of an S-1. BOA seeks to raise up to $175 million in its initial public offering.
The reason this SPAC may have real estate on its radar is that the chairman of the company is Scott Seligman, chairman of The Seligman Group, a company that specializes in acquisition and management of commercial and residential properties across the United States. The Seligman Group portfolio includes a variety of real estate types, including malls, industrial buildings, offices, and hotels.
The details on BOA
BOA Acquisition is offering shares of Class A stock for $10 per share along with one-half of one redeemable warrant. Each whole warrant entitles the owner to a share of the Class A common stock at $11.50 per share. The whole warrants can be used 12 months after the closing of the offering and expire within five years. The company is applying to trade on the New York Stock Exchange under the ticker symbol BOAS.
The S-1 filing for BOA emphasizes the management team's real estate acumen, including the fact that Brian D. Friedman, the company's chief executive officer and chief investment officer, is managing partner of Foxhall Partners, a commercial real estate firm with a focus on hospitality, retail, lifestyle rental apartments, and mixed-use developments in U.S. metropolitan markets.
Nominees for members of the board of directors include Srikanth Batchu, who was previously an early employee and executive at Opendoor (NASDAQ: OPEN), a company that also went public via SPAC. Sam Beznos, partner and the CEO of the Beztak Companies, a private developer of commercial real estate, will also serve as a strategic advisor.
Looking for clues
So much depends on what company the SPAC has on its radar. BOA has made it very clear it's focused on real estate technology, saying in the S-1 it seeks to "partner with a business that offers innovative software, hardware, operations, or services that improve the real estate development and management business -- bringing the real estate industry into the modern era."
Of course, that doesn't narrow down the candidate list very much, considering there are a wide variety of proptech companies that could be suitable to go public. The S-1 cited data we recently mentioned from the Center for Real Estate Technology & Innovation that showed investment in proptech in 2020 was down by almost 25%, proving the point that many promising companies may not have gotten the funding they needed to scale last year. Another clue from the S-1 is that the SPAC is seeking a business with "an aggregate enterprise value greater than $500 million" and a competitive moat.
Is it investible?
Investing in SPACs comes down to trusting the leadership and vision of the company. With a variety of real estate SPACs announced in recent weeks, some of them with an equally appealing management story, it's hard to know what to choose. Fifth Wall's SPAC increased its SPAC offering from $250 million to $350 million, another sign real estate SPAC fever is high.
With so much competition out there, the challenge for SPACs may lie in finding a target company before others do. It's a safe bet that this one will be within real estate, likely within the commercial space, but anything else is truly a guess at this point.