Tishman Speyer CEO on SPAC merger with Latch: ‘This is exactly the kind of transaction we had in mind’

Smart-lock maker Latch said this week it will merge with a blank check company formed by commercial property giant Tishman Speyer. Latch Co-Founder & CEO Luke Schoenfelder and Tishman Speyer CEO & President Rob Speyer joins Yahoo Finance Live to weigh in.

Video Transcript

BRIAN SOZZI: Smart-lock maker Latch said this week it will merge with a blank check company formed by commercial property giant Tishman Speyer. Values Latch at $1.56 billion. Prior to this deal, Latch had raised about $152 million and has seen solid growth in booked revenue during the pandemic.

Let's bring in Latch CEO Luke Schoenfelder and Tishman Speyer President and CEO Rob Speyer for more on this pretty big transaction. Good morning to you both. Rob, let me start with you. Why did it make sense to go the route-- the SPAC route?

ROB SPEYER: Well, SPACs, for us, were the next step in the evolution of our proptech business. We've been embracing technology into our real estate for years. We've been an early stage investor in many proptech companies, including Latch. And this is all about serving our customers better.

And to be able to link arms with an entrepreneur as talented as Luke and a company with as much promise and potential as Latch, this is exactly the kind of transaction we had in mind when we thought about doing a SPAC.

BRIAN SOZZI: So Luke, as I mentioned, you have seen strength in booked revenue, really throughout the pandemic, maybe a little counterintuitive intuitive to what many people out there would expect. Why do you think that's the case?

LUKE SCHOENFELDER: Yeah, I mean, it's pretty simple. We've always focused on making buildings better places to live, work, and visit. And during the pandemic, each stakeholder at a building has had new challenges. And it turns out our products were well considered and were able to meet those new challenges.

So letting in UPS deliveries without a building-- you know, staff needing to be there, the Latch delivery assistant, which can let in any delivery through our intercom product, the contactless controls that we give to residents so they can open doors, control elevators without having to touch anything. All of these things were exciting before. And the tailwinds of the COVID-19 pandemic have really provided a boost to the business.

There's also an interesting sort of counterintuitive element within real estate, which is that oftentimes during recessions, real estate owners actually invest more in their existing assets. And while we're not necessarily in a recession now, we've still seen continued investment in existing assets to make them better places to live.

JULIE HYMAN: Hey, Luke, obviously, this deal hasn't closed yet. But on announcement of the deal, shares in this SPAC vehicle went up by 45%. And obviously, we have seen a lot of this happening in the market. Does that make you nervous at all, Luke?

I mean, in other words, you know, that's a lot of pressure in terms of expectations perhaps being priced in here because of all of the enthusiasm, shall we say, that we have seen for a lot of these SPACs. How are you thinking and feeling about that?

LUKE SCHOENFELDER: Yeah, we have a long vision, and we're really focused on the long vision. And if you look at who supported the transaction in our pipe, I mean, it's the world's best technology investors. D1, Durable, Fidelity, BlackRock, Chamath, we're very, very excited about the shareholder base that we have and our ability to execute on this long-term mission to bring our software to every building.

JULIE HYMAN: And Rob, if I could bring you back into this as well, while we got you, I got to ask you generally about commercial real estate and what you're seeing, particularly in the New York market. Because, you know, it's a tough time, right? A lot of people are not in the office. I imagine that some people are giving up their leases. What's the picture look like right now? And how has it changed in the last few months?

ROB SPEYER: Well, first of all, we're getting rent collection from 95% of our customers. So the situation at the moment is stable. The question is, how is New York going to use this as an opportunity to continue on the incredible growth trajectory the last 25 years? I grew up in the New York in the '70s and '80s, so I've seen tough times before. And I've seen our city come together to get through them.

And I have no doubt if we bring the public and the private sector together to really work towards common interests, that our city's best days are ahead. You can count on that.

JULIE HYMAN: Just one quick follow up on that, you say 95% of your tenants are paying rent, which is great. Has the number of tenants fallen? Has the amount of space rented fallen?

ROB SPEYER: Well, clearly, leasing activity in 2020 was slow. People had other considerations on their mind in their businesses than real estate. But on the other side of the pandemic, I'm very confident that human nature will take hold and the community that you find at work, in the workplace, not on Zoom, will come back into play.

Just like it would be great to be doing this interview in person. Luke and I were just discussing the week of this transaction over several weeks, we never saw each other in person. And we said, you know what? It would be great to take a walk together. Let's get it done. And I think that's kind of-- that's indicative of how we're all going to feel on the other side of this pandemic. We're going to want to come back together in person, not just on Zoom.

BRIAN SOZZI: Luke, I have 30 seconds left. What's your next big product?

LUKE SCHOENFELDER: Yeah, so what we're most excited about is the strategic partnership with Tishman Speyer and our ability to solve problems for new customers in Europe and new products for the commercial office space. We were just speaking about that. We have the biggest return to office moment probably in world history. And there's an incredible opportunity because of the strategic relationship that Rob and I have to create something really exciting.

BRIAN SOZZI: All right, fair enough. Well, good luck on the public company journey. Look forward to following it. Latch CEO Luke Schoenfelder and Tishman Speyer President and CEO Rob Speyer, we'll talk to you soon.