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Renters Warehouse parent Appreciate announces SPAC plans

Today, Appreciate, the parent holding company of single-family rental (SFR) marketplace Renters Warehouse, announced plans to go public via SPAC merger, according to a press release.

The definitive agreement states that Appreciate, formally known as RW National Holdings, LLC., will merge with special purpose acquisition company “PropTech Investment Corporation II.”

The company estimates post-transaction enterprise value of $416 million, consisting of $575 million estimated equity value, $159 million in cash and no debt.

It says that upon closing the transaction, the combined company will be renamed Appreciate and will remain on the NASDAQ under new ticket symbol “SFR.”

Through the Renters Warehouse platform, Appreciate offers a full-service end-to-end tech platform for investing in and owning SFR properties. The marketplace serves over 40 markets, and manages over 12,000 investors across 15,000 homes, 

The company plans to use the proceeds from the blank-check transaction to ramp up marketing spending and expand geographically, with Appreciate expecting to generate $113 million in revenue next year and $23 million in EBITDA. The company estimates post-transaction enterprise value of $416 million with an additional $159 million in cash to fund forward growth. 

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“As a leader in the SFR industry for more than a decade, we have continually expanded the scope of our service offering. With the capital from our business combination with PTIC, we will be able to scale the breadth of our technology solutions, increase our share in existing markets and rapidly penetrate new geographies,” stated President of Appreciate, Kevin Ortner, in the release.

Appreciate also noted that cash proceeds include $230 million in cash in trust from PropTech II and a committed equity facility of $100 million from Cantor Fitzgerald & Co.‘s affiliate CF Principal Investments.

This move is interesting, when you look at the recent difficulties of SPAC-merger companies. The De-SPAC Index, which tracks 25 companies that have gone public through a merger via SPAC, is down 50% this year, according to Bloomberg

Founded in 2007, Appreciate is obviously a bit older than some recent SPAC listings, and is served by a fragmented single-family rental market that has seen huge demand throughout the pandemic.

Operating company Renters Warehouse also enjoyed new demand for its property acquisition and management services due to the lockdown, saying that investors were hungry for commercial real estate that wasn’t impacted by COVID lockdowns. 

Appreciate estimates that the total U.S. addressable market is over $145 billion, with powerful demographic and secular tailwinds, in its Form 8-K filed with the U.S. Securities and Exchange Commission (SEC).

It remains to be seen if Appreciate can weather the current stormy markets and raise meaningful funding as it hits the open market.

One thing is certain: the single-family rental market is crowded, and, these days, separating yourself takes money. 

In other recent proptech news, Stoa USA raised a $50 million equity fundraise for its single-family investment platform FlipOS. Splitero CEO Michael Gifford also discussed alternative home equity and educating homeowners.

P.S. Are you a multifamily investor or property manager? Interested in how proptech is changing the property management industry? Join us for our FinLedger Mini-Con: Property Management, this Thursday, May 19 at 1 p.m. CT. The event will cover the property management segment, and include a fireside chat with Alfred CEO Marcela Sapone and a panel of industry experts. 

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