The latest SPAC deal to know about: Smart home system company SmartRent to go public

SmartRent is an enterprise-level smart home system company that sells hardware and software solutions to residential property owners, managers, and homebuilders. On Thursday, SmartRent announced a deal to go public as part of a SPAC deal with Fifth Wall Acquisition Corp I - Class A (NASDAQ: FWAA)

About SmartRent

SmartRent was founded in 2017 and is classified as a property technology (proptech) company. Under the leadership of Founder and CEO Lucas Haldeman, SmartRent offers an Internet of Things (IoT) operating system that: 1) decreases the complexities of property owners, 2) lowers their operating costs, and 3) increases their revenue.

SmartRent recognized a void in the real estate market as no one offered an integrated software management platform to deliver a smart home experience for the real estate industry. As a first mover, SmartRent’s products are featured in more residential units than all of its competitors combined. 

The SPAC deal

SmartRent said Thursday it is going public as part of a $2.2 billion SPAC merger with Fifth Wall Acquisition Corp. 1.

FWAA is a SPAC sponsored by the largest proptech venture capital firm in the world, Fifth Wall. As part of the SPAC agreement, the founder shares of FWWA’s sponsor are locked up for a period of up to three years. In addition, no SPAC warrants were issued so shareholders will benefit from less dilution and an easier-to-understand capital structure.

“It was clear to Fifth Wall that SmartRent has emerged as the category leader in smart home tech, with customers that include 15 of the 20 largest residential owners in the U.S., with a larger install base than all of its competitors combined,” Fifth Wall Acquisition Corp. I CEO Brendan Wallace said in the press release.

The combined entity will hold around $513 million in cash at closing, including $345 million of cash held in FWAA from the Feb. 5 initial public offering. The transaction is also supported by a $155 million PIPE at $10 per share from notable real estate entities, SmartRent customers, and leading institutional financial investors. Some of the names include Barry Sternlicht’s Starwood Capital, Koch Real Estate Investments, Baron Capital Group, among others.

SmartRent’s outlook

SmartRent expects the SPAC deal to become EBITDA positive by 2022, the company said. Currently, 80% of its unit projections for 2021 and 2022 are coming from already committed units. 

SmartRent’s recurring revenue model is backed by a zero percent customer churn since its inception. The company’s existing customers represent a $1.5 billion annual revenue opportunity.

Fifth Wall will support SmartRent’s growth strategy by deepening its relationship and applications with existing customers. It will also help the company expand internationally and aid in its ongoing M&A strategy.

"We started this business as frustrated real estate operators looking for a comprehensive smart home solution,” Haldeman said in the press release. “We understood the deficiencies of the enterprise smart home industry and knew that if we could build a fully integrated platform that met the needs of operators and their communities, we would have an impact not just on their business, but on society at large. Today we offer the most robust and deeply integrated platform on the market, validated by its rapid adoption and 100 percent customer retention."