Real estate crowdfunding giant Modiv is jumping on the SPAC bandwagon. The real estate platform launched an initial public offering for 10 million units of Modiv Acquisition, or MAC SPAC, which will trade on the New York Stock Exchange under the ticker "MACS.U." The newly formed blank-check company will seek to enter into a merger, capital stock exchange, stock purchase, reorganization, or similar combination with one or more businesses or assets.
Here's a closer look at the latest entrant in the SPAC arena and what it means for real estate investors.
Digging into MAC SPAC
Modiv is one of the leaders in the real estate crowdfunding sector. The company has created one of the largest non-traded real estate investment trusts (REIT) raised via crowdfunding technology. The REIT has more than $400 million of real estate assets under management, consisting of more than 2 million square feet of commercial space.
The company has been reimagining the private real estate industry in recent years. Modiv acquired its external manager and the associated fintech/proptech crowdfunding platform in 2019, making it the first investor-owned crowdfunded REIT. It has since launched a consolidation strategy in the sector, acquiring fintech platforms REITless and BuildingBITs last year to create even better and easier ways for investors to participate in private real estate investments.
The launch of MAC SPAC reflects the REIT's continued commitment to innovation and its investor-first focus. While it has no restrictions on what it could buy and currently has not identified a target, an SEC filing associated with the SPAC launch gives investors a hint at its strategy.
The filing states: "…it is our intention to pursue prospective targets generally referred to as fintech and proptech companies whose core purpose is related to the real estate industry and who use technology-driven platforms and solutions to disrupt or revolutionize the real estate capital markets, transactional marketplaces, and investment management industry. We believe this focus takes best advantage of our sponsor's experience and capabilities."
The company aims to raise at least $100 million via this offering to pursue this strategy.
Entering a crowded field
MAC SPAC is the latest blank-check company raising capital to target acquisitions or investments in the real estate industry and associated fintech/proptech space. Fellow crowdfunding platform YieldStreet revealed earlier this year that it's exploring options, including a sale or forming a SPAC. That company has been working with advisors to potentially go public via a SPAC or create a SPAC to raise capital for other investment opportunities.
Meanwhile, big-name real estate firms like CBRE Group (NYSE: CBRE), Tishman Speyer, Cushman & Wakefield (NYSE: CWK), and Simon Property Group (NYSE: SPG) have all filed to launch SPACs in recent months. Likewise, Zillow's (NASDAQ: ZG) (NASDAQ: Z) co-founder and former CEO, Spencer Rascoff, has launched two SPACs in recent months.
All this means Modiv could have lots of competition for its acquisition targets. That makes MAC SPAC a highly speculative and risky investment until it agrees to a deal. However, Modiv has a veteran real estate team behind it, led by Ray Wirta, former chairman and CEO of CBRE, where he's currently an independent director.
Overall, the Modiv team has overseen more than $25 billion of real estate-related M&A and grown Modiv into an industry leader in the crowdfunding space. That makes MAC SPAC an intriguing entrant in this crowded field.
A SPAC to watch
MAC SPAC is a highly speculative investment, since it's entering a crowded space with no identified target. However, given the success of Modiv's management team, it's a name to watch. If these industry vets chose the right target, the deal could create value for REIT investors and those who take a chance on MAC SPAC.
Disclosure: Matt DiLallo owns a share of Modiv.