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Tishman Speyer SPAC to take Latch public with $1.5B valuation

Tishman Speyer’s special purpose acquisitions company, TS Innovation Acquisitions Corp. is merging with Latch, a digital entry and building management software company, to take the tech firm public in a deal that values it at $1.56 billion.

‍Founded in 2014, Latch is an enterprise SaaS provider to buildings and residents. The company has been working with many of the country’s largest real estate owners as partners and investors including Tishman Speyer, since its launch.

Today, the Latch system is used in over 300,000 apartments across more than 35 states, and one in ten new apartments were built with Latch already installed in 2019.

Co-founder and CEO Luke Schoenfelder will continue to operate and manage Latch following the transaction. Rob Speyer, president and CEO of Tishman Speyer and CEO and Chairman of TSIA, will join the company’s Board of Directors upon completion of the transaction.

LUKE SCHOENFELDER

“Latch has successfully created an entire ecosystem around our full building operating system, devices, and partners that enhances the building experience for both owners and residents,” said Schoenfelder.

“This transaction provides the capital for Latch to accelerate our product and market expansion and drive bookings growth. Furthermore, Latch will be able to harness Tishman Speyer’s global real estate platform to more rapidly create new products, leveraging their vertically integrated real estate business and on-the-ground teams across the globe. We are fortunate to benefit from Rob’s vision and leadership and look forward to partnering with the entire Tishman Speyer team as we create value for our shareholders, customers, and residents by scaling our business in this next phase while we continue to enhance the way people interact with their spaces.”

“As a long-time real estate and capital markets investor, Tishman Speyer has helped accelerate many of the prop tech innovations reshaping our cities,” said Speyer.

 “We launched our SPAC knowing that our expertise and portfolio could power the next generation of innovators on the public stage. Our mission has been to partner with a growing company; one with a great team, a strong and differentiated business model and the ability to scale quickly through our platform. As both a customer and early investor in Latch, I know Luke and his talented team check all of these boxes. We look forward to serving as an incubator, operational partner and launch customer as Latch develops and expands its exceptional product lines.”

LatchOS is the first multifamily operating system that brings together all the elements that make up the modern building for building managers, residents, and service providers.

Its core capabilities are designed to unify operations for everyone, and building owners have the flexibility to select the specific capabilities they need to meet their needs.

It provides Smart Access, Delivery and Guest Management, Smart Home and Sensors, Cellular Connectivity and resident experience and community management capabilities.

The company already has deep relationships with many of the country’s largest residential real estate owners, including seven of the ten largest NMHC developers, alongside other large NMHC developers like Alliance, Avalon Bay, Greystar, and NRP Group, plus AMLI Residential, Prometheus, RXR Realty, Toll Brothers, and more.

The Company generated $167 million in revenue in 2020, which represents 49 percent growth from 2019.

The market for an apartment building operating system is massive, with an estimated 47 million rental homes in the United States representing an approximately $54 billion total annual market.

 Latch currently services less than one percent of this market and is positioned to drive continued growth.

 Partnering with TSIA will bring together Latch’s leading software and products with the global real estate platform of Tishman Speyer, the parent of TSIA’s sponsor. With an international portfolio encompassing nearly 80 million square feet of first-class real estate across many asset classes, including residential, commercial office, mixed use and life sciences, among others, Tishman Speyer will deliver synergies to Latch to further its growth and product expansion.

Upon completion of the transaction, Latch expects to have up to $510 million in cash, net of fees and expenses to fund growth initiatives, including growing the number of units on its platform, expanding to additional asset classes and spreading to new geographies.

This includes net proceeds from TSIA’s cash held in trust of $300 million from its initial public offering in November 2020 and approximately $60 million of cash on Latch’s balance sheet. The transaction is further supported by a $190 million PIPE at $10.00 per share from key investors, including funds and accounts managed by BlackRock, D1 Capital Partners, Durable Capital Partners LP, Fidelity Management & Research Company LLC, Chamath Palihapitiya, The Spruce House Partnership, Wellington Management, ArrowMark Partners, Avenir and Lux Capital.

Latch’s existing equity holders have agreed to convert 100 percent of their ownership stakes into the new company, and are expected to own 64 percent of the pro forma company at close.

The transaction, which has been approved by TSIA’s board of directors, is expected to close in the second quarter of 2021, and is subject to approval by TSIA’s shareholders and other customary closing conditions, including any applicable regulatory approvals.

Goldman Sachs is acting as exclusive financial advisor to Latch and acted as joint placement agent on the PIPE. Latham & Watkins LLP is acting as legal advisor to Latch. Allen & Company LLC and BofA Securities are acting as joint financial advisors to TSIA and also acted as joint lead placement agents on the PIPE. Sullivan & Cromwell is acting as legal advisor to TSIA.

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