SPACInsider contributor Matt Cianci this week compiled his three favorite potential SPAC targets in the real estate technology space. We look at why they are compelling and why each could be a fit for a blank-check merger.

A consistent theme in the great SPAC surge that began late last summer has been of teams using combinations to add propellant to targets actively disrupting industries lagging behind the digitization curve.

While much of the attention has gone toward consumer-facing sectors that have already seen their fair share of disruptors, many of the largest industries globally are B2B affairs that have stubbornly resisted tech-led innovation for decades. Among these Jurassic giants is the real estate sector, which continues to be full of paper-heavy processes with numerous middlemen and little broad-scale transparency.

Five SPACs (CPTK, PTIC, LCAP, TSIB, and FWAA) are actively searching for targets in real estate or proptech, and two more (BOAS and PSAG) have filed to IPO with these areas as their designated focus. This may look like a drop in the bucket of 330 SPACs searching and 110 filed to list, but SPACs aren’t beholden to their initial focus and every winning deal inspires repeat attempts – particularly when they come from trend-setting teams.

In the proptech space, these have come in the form of home marketplace OpenDoor, (NASDAQ:OPEN) which is now trading comfortably above $35 having completed its deal with Social Capital II in December, and Monday’s announced combination between Gores VI (NASDAQ:GHVI) and Matterport, which has shot the latest Gores vehicle up to a Thursday close at $17.33.

Matterport uses 3D cameras to create digitized models of spaces and accurately measure their square footage. It estimates its total addressable market (TAM) at $230 trillion. This may be somewhat tongue-in-cheek as it counts every one of the estimated 4 billion buildings on Earth as covered by its umbrella. But the figure nonetheless illustrates just how much real estate there is out there not being serviced by existing technologies.

CREXi

Apartment-hunters are accustomed to turning to a series of sites like StreetEasy or Zillow (NASDAQ:Z) to begin their searches, but no single site for commercial real estate covers a similar breadth of the available listings.

For commercial properties, the long-time leader is LoopNet, but it is limited by its business model that charges sellers fees to list properties rather than actively seeking to incorporate as much real estate stock as possible.

With players in this space already accustomed to doing business directly through brokers and personal networks, this means LoopNet has developed a reputation as the place where brokers dump the less attractive listings that they’re struggling to sell.

CREXi has worked to shake this up with a marketplace that takes on more responsibility for transactions. It keeps the bidding process on its platform, holding buyer funds in escrow and it ensures a change of ownership within 30 days. It also hosts live auction suites, helps brokers with marketing plans for properties and provides market intelligence to both sides of a deal.

By January 2020, CREXi had grown its user base to 6 million with 300,000 properties listed on its platform worth over $1 trillion. That month, it closed a $30 million Series B led by Mitsubishi Estate Company – the Japanese conglomerate’s commercial real estate division.

While CREXi’s total outside funding of about $55 million may appear small, marketplaces with this much room to grow have tended to move to public markets fast. Zillow itself raised juts $96 million through three raises in less than two years ahead of its 2011 IPO. StreetEasy, meanwhile, raised just $2.9 million before being gobbled up by Zillow.

Jet Closing

Swimming in similar waters is Jet Closing, which provides digital title and escrow tools via an app, similar to OpenDoor. Unlike OpenDoor, which is seeks to virtually eliminate brokers from transactions, Jet Closing’s services are targeted at the realtors themselves to help them nail down deals faster through the traditional channels.

Its services are currently centered on seven states: Arizona, Colorado, Florida, Nevada, Pennsylvania, Texas, and Washington. Within this territory, Jet Closing’s app can run the numbers to get quotes on fees, premiums and taxes for any street address whether for a cash purchase or a refinancing intended to put cash in or out within seconds.

For deals executed on its platform, it charges buyers and sellers $500 each and handles notary services and wire transfers. This includes processing the realtor’s commission in under a minute and sellers’ proceeds in an hour.

Jet Closing has kept its own numbers close to the vest, but noted last summer that the pandemic had accelerated the adoption of its digital services, with order activity up 124% on its platform from April to July.

Its particular focus insulates it from wider housing market volatility as well. Whether housing booms or busts, Jet Closing is likely to see plenty of business in the refinance market as title is required for those transactions. Mortgage rates remain low with 30-year fixed averaging around at 2.8%, so the refinance market is likely to remain robust for the foreseeable future.

Like CREXi, it hasn’t collected a war chest of venture funding, having raised just $35 million in four outside rounds. But, institutional investor T. Rowe Price led both its Series A and Series B and has been active in PIPEs once SPACs come calling.

Proptech-focused SPACs are generally not too large to make a midcap deal work as well. The five explicitly searching in this space raised between $230 million and $345 million at IPO, while the two on file are currently seeking to raise $175 million and $250 million in their IPOs.

Cortex Intel

Many sustainability-focused SPAC deals have focused on building better, more efficient vehicles and infrastructure to replace their polluting forebears. But, swapping out the old for the new is far easier with cars than buildings.

CF Finance II (NASDAQ:CFII) took its crack at it nonetheless by announcing its $1.6 billion combination with smart window-maker View in December. View’s connected windows automatically tint to improve energy efficiency and individual comfort. However, the price tag on all this smart glass is such that it is best priced into new construction rather than renovations.

Cortex Intel might be the solution that could touch upon Matterport’s $230 trillion TAM of existing buildings that are mostly not optimized for sustainability and efficiency. Its software platform unites sensor and meter readings throughout a building and layers in other disconnected data forms like billing, weather, work orders and maintenance schedules.

Using machine-learning tools, Cortex’s platform crunches this data into real-time operating insights that allow for predictive maintenance and gradual optimization towards energy efficiency. It gives asset managers quarterly reports on utility savings gained through interventions on the app and portfolio-level views of energy spend.

In addition to incremental savings, this has real value as all institutions face increasing pressure to demonstrate progress in sustainability in hard numbers.

Cortex has several high profile clients already plugged into the platform, including the Empire State Realty Trust (NYSE:ESRT), which announced it had used the app to save $800,000 annually at its iconic namesake building.

Cortex got that gig through its relationship with Jones Lang LaSalle, (NYSE:JLL) which sources property services for real estate clients in 80 countries. So, while Cortex has not gone public with client or revenue figures that would help flesh out a sense of its current scale, it is connected with several large books of business.