Here comes another real estate industry SPAC. This time, it's Howard Lorber, president and CEO of Vector Group. He and partner Steve Witkoff are looking to raise $250 million from investors to take a proptech start-up public.
Lorber and Witkoff’s track record
Lorber is the executive chairman of Douglas Elliman, one of the oldest and largest real estate brokerages in the country, with approximately $28.8 billion in annual sales volume and more than 7,000 affiliated real estate agents. Lorber has been chairman of Douglas Elliman since 2003. Lorber is also the president and chief executive officer of Vector Group, which is the majority owner of Douglas Elliman.
Witkoff is chairman and CEO of Witkoff, a firm he founded in 1997. Witkoff has since led the financing, repositioning, and construction of over 70 properties in the U.S. and abroad. Before founding Witkoff, he co-founded Stellar Management, a firm that acquired and repositioned a portfolio of residential buildings in New York City.
SPACs are designed to raise money that will be used to take a chosen private company public through a merger, which is why people often refer to them as "blank check" companies. When you invest in a SPAC, you’re really investing in the management team's ability to find a suitable company to take public in the near future.
Monroe Capital is sponsoring this SPAC. Sponsors front the funding costs needed to fund regulatory and underwriting costs (usually in the 3% of raised capital range). In exchange, the sponsors generally receive a large volume of cheap warrants, which means they cash in if a SPAC successfully acquires a target company.
Other notable real estate players using SPACs include RXR Realty, Cushman & Wakefield (NYSE: CWK), CBRE Group (NYSE: CBRE), Tishman Speyer, and Fifth Wall. Some recent proptech companies that have either been acquired through a SPAC or have announced that they will be acquired include View, a smart glass company; Hippo, a homeowners insurance company; and Matterport, a company that helps take the built world virtual.
Vector Group’s proptech fund
This SPAC news comes on the heels of Lorber and Vector Group’s announcement of a proptech fund, New Valley Ventures.
Richard J. Lampen, executive vice president and chief operating officer of Vector Group, explained, "We are incredibly excited to introduce New Valley Ventures to the proptech industry...We look forward to putting our capital and deep industry knowledge to work to bring exciting and innovative tech-driven solutions to our colleagues at Douglas Elliman as well as the greater real estate community."
One would think that Lober’s SPAC may be targeting a company within the brokerage vertical of proptech.
The Millionacres bottom line
As discussed, an investment in a SPAC is a bet on the management team. While the real estate industry is getting crowded as far as SPACs go, this wouldn’t be a bad team to invest in. That being said, it might not hurt to see what company they target and wait to decide until then.