Latch is trying to unlock its potential in the public markets.
On Monday, its first day of trading, the smart lock maker’s common stock rose 4.06 percent to $ 11.27.
Latch is the latest real estate company to try their hand at raising money through a special purpose acquisition company. A SPAC provides an alternative to a traditional initial public offering and can be a windfall for business insiders.
Several real estate technology companies have joined the SPAC craze. And despite regulator concerns, investors continue to invest money in the space.
Latch, which is listed on the Nasdaq Stock Exchange, went public by merging with TS Innovation Acquisitions Corp, a SPAC released by developer Tishman Speyer. Latch said it raised $ 453 million in cash from the public offering. It plans to release additional financial information on June 9.
The company plans to use the money to add locations and services, according to a press release.
Latch, founded in 2014 by its CEO, Luke Schoenfelder, initially focused on apartment buildings. It allows tenants to access their homes through a smartphone app instead of a physical key. It announced last week that tenants can access their Latch credentials through the Apple Wallet.
The company is now looking to break into the commercial office market replacing some functions traditionally handled by the reception. It recently launched a pilot program in New York City at the Empire State Building, Brookfield Place, and Rockefeller Center to test a new service to reduce wait times in lobbies.
Schoenfelder recently told The Real Deal that his company had experienced its “strongest growth during the pandemic.”
Latch in 2019 raised $ 126 million through a Series B funding round, which included investors such as Brookfield Ventures and Tishman. At the time, the company was valued at $ 454 million. The company says that one in 10 new apartment buildings in the US has Latch products.
Latch joins the long list of real estate firms to raise money through a SPAC. RXR Realty and Tal Kerret of Silverstein Properties have also launched SPAC.
Unlike a traditional initial public offering, a SPAC offering does not have to disclose to investors the specific investments you plan to make. The lack of disclosure combined with disappointing returns for investors has led the Securities and Exchange Commission to warn investors about the need to invest money in these offerings.
SPAC’s 330 IPOs in the United States have reaped $ 104 billion, according to SPAC Research.
Latch’s public offering also shows interest in real estate or proptech technology. Investors are betting heavily on the sector, which seeks to modernize parts of the real estate industry that have historically been averse to technology, such as title insurance, mortgage closings and construction.
Established real estate firms like Lennar are investing in the sector to improve their own operations. Lennar, the nation’s largest home builder, has invested more than a combined $ 300 million in 20 startups.