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Mobile Infrastructure Corporation (NYSE:BEEP), one of the largest institutional-quality, mobility-focused parking asset owners in the U.S., and Fifth Wall Acquisition Corp. III, a special purpose acquisition company ("SPAC") sponsored by an affiliate of Fifth Wall, the largest venture capital firm focused on technology for the built world, announced the completion of its business combination. The transaction valued the equity of Mobile at $15.00 per share versus its published 2022 Net Asset Value ("NAV") of $14.76 per share.
Mobile Infrastructure Corporation's common stock commenced trading on the New York Stock Exchange American under the ticker "BEEP" on August 28, 2023.
Manuel Chavez, CEO and Chairman of Mobile Infrastructure stated, "Public listing is an important milestone in our growth trajectory. The merger structure and domain expertise of Fifth Wall creates alignment with shareholders and clear avenues for open-ended growth."
Transaction Highlights
Concurrent with Mobile Infrastructure's public listing, a PIPE investment provided an additional $46 million of capital that will be used for deleveraging certain debt facilities and general corporate purposes.
No Street Capital and its affiliates invested an additional $40 million through the PIPE. Jeff Osher, Founder of No Street Capital and Mobile Infrastructure board member, stated, "When we made our initial investment in Mobile Infrastructure two years ago, we saw a unique opportunity to partner with an experienced, trustworthy management team to strategically build one of the largest portfolios of parking assets in the country. As Mobile Infrastructure's largest shareholder, I believe the combination of steady asset acquisition, portfolio optimization through active management, and healthy operating leverage, is a strategy that will create significant shareholder value in 2024 and beyond."
Other notable features of the merger structure were outlined in SEC filings, making this a unique transaction among SPAC targets. SPACs often have promote and warrant features that benefit the SPAC sponsors but create significant dilution to target shareholders. FWAC's structure had no warrants, the majority of the SPAC's promote shares have been cancelled, and it elected to align its remaining promote shares with management incentive programs, which trigger at prices significantly higher than the transaction closing price. Finally, to further align management with shareholders, the CEO and President have elected to receive the majority of their 2022 and 2023 compensation in equity.
Brad Greiwe, Co-Founder and Managing Partner at Fifth Wall, commented, "We are excited to have completed the merger with Mobile Infrastructure in a transaction that very clearly aligns the interests of all stakeholders. With multiple compelling dynamics in the parking industry, we firmly believe that Mobile Infrastructure has the right team, model and technology to leverage its experience and platform to create shareholder value."
Focus on Growth and Acquisitions
To maximize the company's growth opportunities, Mobile Infrastructure has converted to an Up-C structure, which is unique in its ability to offer favorable tax treatment to parking asset sellers. An Up-C structure is comparable to an UPREIT structure often utilized by real estate investment trusts, allowing sellers to realize tax deferrals, while converting partnership units into common stock at a timing that is suitable for the seller.
On the growth prospects for Mobile Infrastructure, Mr. Chavez noted, "We intend to be highly acquisitive with a robust acquisition pipeline already in place, enabling our growth and the uplisting of the company as we execute on our acquisition plan. Considering an addressable market of 1 billion parking stalls across the United States, we believe Mobile Infrastructure has an open-ended acquisition market as the only pure play public acquirer of parking infrastructure assets."
Realizing Operational Enhancements
In early 2022, the company moved its headquarters from Las Vegas, Nevada to Cincinnati, Ohio. As of 2021, Cincinnati was the fifth largest economy in the Midwest and a one-day drive to approximately 50% of the US population. At that time, Mobile Infrastructure published a letter to shareholders outlining several key objectives, including increasing revenues, expanding market presence, and enhancing the balance sheet.
Stephanie Hogue, President and CFO of Mobile, remarked, "With over 60% of our property level net operating income in the Midwest, Cincinnati was the perfect location to rebuild Mobile Infrastructure's operational and personnel infrastructure from the ground up. Unlike the industry's traditional passive net lease strategy, we are on the ground talking to operators to reposition assets when needed, target strategic acquisitions, and recycle capital when an asset is inconsistent with our growth strategy. Our propriety platform provides a unique competitive advantage by allowing us to dynamically monitor and budget asset level performance. Our team uses our real-time data signals to optimize pricing, utilization, and ultimately, revenue per available stall across each of our assets."
Key financial highlights for the company in the first half of 2023:
Mr. Chavez stated, "Parking tends to see a multiyear lag on operational improvements, as disparate revenue channels, operators, and technologies create a time delay in realizing operational improvements. As such, our primary focus since 2021 has been the development of an industry-leading platform, capable of enhancing revenue per available stall across a scaled portfolio. I have never seen a more innovative time in the industry and we could not be more positive about the future of parking assets going forward."
Posted In: BEEP
