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IBuying Real Estate Company Offerpad Purchased In SPAC Led By Former Zillow CEO

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IBuying Real Estate Company Offerpad Purchased In SPAC Led By Former Zillow CEO

A new public entrant in the online buying and selling of homes has emerged with a SPAC deal announced Thursday. 

The SPAC Deal: Offerpad, a technology-enabled real estate solutions platform, is going public with Supernova Partners Acquisition Co Inc (NYSE: SPNV).

Spencer Rascoff, co-founder and former CEO of Zillow (NASDAQ: Z), is the leader of Supernova Acquisition.

The SPAC Deal values Offerpad at a post-transaction equity value of $3 billion. PIPE investors in the SPAC deal included BlackRock, Zimmer Partners and national homebuilder Taylor Morrison Home Group (NYSE: TMHC).

Current Supernova Acquisition shareholders will own 11.9% of Offerpad if the merger is approved.

See also: How to Invest in SPACs 

About Offerpad: The company’s mission is to provide the best way to buy and sell a home. Offerpad has one-stop solutions for buyers and sellers, such as a free, 24-hour cash offer online service that can be completed in less than three minutes. Customers can also list a home with Offerpad with a back-up cash offer.

Since it was founded in 2015, Offerpad has sold over 15,000 homes and completed renovations on more than 14,000 homes. In 2020, Offerpad acquired 3,519 homes and sold 4,281 homes. The estimates for 2021 are to acquire 6,455 homes and sell 5,612 homes.

Growth Ahead: Offerpad is currently in over 900 cities and towns in 16 markets and is looking to expand into additional territories going forward. The company also wants to add services like home improvement advances, extended-stay options and title and mortgage.

Offerpad has an $850 million total addressable market according to its investor presentation. The real estate market has a low penetration from online sales in a highly fragmented $1.7 trillion market.

Related Link: 10 SPACs Owned By Cathie Wood, Ark Funds 

Competition: Offerpad competes with Zillow and Opendoor Technologies Inc (NASDAQ: OPEN), which also went public via a SPAC.

Offerpad has done more with less equity raised, according to the presentation. Offerpad has sold over 15,000 homes with raising only $0.2 billion. Zillow has sold around 10,000 homes with $1.9 billion raised in equity. Opendoor has sold around 40,000 homes and raised $2.3 billion.

The expansion into additional territories with the funding from the SPAC deal could help Offerpad catch up to its rivals. Offerpad estimates it will grow to 19 states during 2021. Currently, Opendoor is in 21 states and Zillow in 25. 

Financials: Offerpad is estimating fiscal 2021 revenue to hit $1.4 billion. Revenue is expected to grow at a compounded annual growth rate of 55% from fiscal 2020 to fiscal 2023. Each additional state added to the Offerpad network is estimated to add $0.5 billion in revenue on average.

Revenue is estimated at $3.9 billion for fiscal 2023. A future opportunity of $23 billion in revenue is listed in the presentation.

SPNV Price Action: Shares of Supernova Acquisition are down 1% to $10.54 on Thursday.

Related Link: Learn more about SPACs on "SPACs Attack" hosted by Mitch Hoch and Chris Katje on YouTube.

(Photo by Todd Kent on Unsplash)

 

 

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