Proptech SPAC The Latest Play To Advance Investment In Booming SFR Market

A proptech platform that helps investors acquire and manage single-family rentals is going public through a merger with a special-purpose acquisition company.

Appreciate, which manages around 15,000 homes for about 12,000 clients in 40 markets, will join with PropTech Investment Corp. in a merger that will carry an estimated post-transaction enterprise value of $416M, according to a news release. 

Tom Hennessy, chairman and CEO of PropTech Investment, said in a statement that single-family rental technology is one of his company’s high-conviction investment areas. Merging with Appreciate will allow the company to accelerate its growth plans, he said.

“We recognize there’s a lot of uncertainty and volatility in the market today,” Hennessy said in an interview with Bloomberg. “Our attitude is, 'Let’s get the company public in the right way, give it the tools to grow, and allow it to become a large company in the long term.’”

Founded in 2007, Appreciate, which operates under the name Renters Warehouse, has evolved over the years to serve institutional investment groups with large portfolios of single-family rentals, according to Bloomberg. Demand for its services grew during the pandemic, and the merger should help Appreciate expand into more markets where it can serve both retail and institutional investors, CEO Chris Laurence said in a statement.

“Single-family rental represents an attractive investment opportunity and investment hedge, but the complexity of buying and owning a rental property has until now been a hurdle for many investors,” he said. “Our goal is to democratize SFR ownership by making the end-to-end process more seamless and closer to the experience of managing other types of investments.”

The SFR market has exploded in recent years as investors look to capitalize on the growing need for rentals in markets with constrained supply. Demand for the product is behind huge jumps in cost — according to CoreLogic’s Single-Family Rent Index, rent growth for SFRs was up by 12% in December, the fastest annual increase in more than 16 years.

The Appreciate-PropTech Investment merger is set to finalize in the second half of this year, per the release.