Portland vacation rental company Vacasa began trading on the Nasdaq Stock Market on Tuesday, a day after completing its merger with a publicly traded investment fund.
Vacasa is the latest in a string of Oregon companies – and one in Vancouver – to hit the public markets this year, breaking a long drought that extended back to 2004.
Tuesday’s deal netted Vacasa $340 million in gross proceeds, considerably below the $485 million the Portland company had forecast when it announced plans to go public in July. And its debut was rocky, with the stock dropping more than 10% Tuesday, to $9.84.
Vacasa went public by merging with a publicly traded investment fund, known as a special purpose acquisition company, or a SPAC. It can be a quicker, more efficient way for companies to obtain a stock listing than the conventional initial public offering.
Vacasa now has a market value around $4 billion, making it Oregon’s sixth-most-valuable business. It’s trading under the ticker symbol VCSA.
Founded: In 2009, by Portland business analyst Eric Breon. He started the company because he was disappointed with the property management firm running a cabin his wife’s family owned on the Washington coast. Breon stepped down last year as Vacasa’s CEO but remains one of the company’s major shareholders.
Business: Vacation rental listings and property management. Vacasa lists owners’ vacation homes online and provides cleaning and maintenance services in exchange for a share of the rental fee. The company monitors pricing for its properties and dynamically adjusts online rental prices during periods of high demand – boosting the income of property owners and raising the cost of renting a vacation home.
Headquarters: Portland’s Pearl District.
Employees: 8,000, mostly managing and maintaining rental properties. It had about 400 in its Portland headquarters before the pandemic.
Revenue: Forecast at more than $870 million in 2021, up 78%.
Losses: $36.4 million in the first nine months of the year, compared to $47.0 million, compared in the same period of 2020.
Ownership: Split between Breon and several large investment firms.
On Tuesday morning, Chief Financial Officer Jamie Cohen said proceeds from a SPAC offering can vary considerably but were still within the range of what Vacasa anticipated. And she said that despite the initial decline in its stock price, the deal still meets the company’s financial goals.
“It will allow us to meet the business plans that we’ve laid out, and we think we’re in a really great position,” Cohen said by phone, from Nasdaq’s offices in New York. “We’re getting visibility for Vacasa. We’re getting capital, which is the most important thing for us.”
Vacasa lists, maintains and cleans vacation rental homes in 400 destinations from Nehalem to Nantucket. A property’s owner typically receives about half of what renters pay after Vacasa’s commission and local property taxes.
The Portland company initially feared the pandemic would devastate its business, and the company laid off staff early in 2020. But the opposite happened, with people flocking to rental homes when other forms of travel and entertainment were unavailable or undesirable.
Cohen said Tuesday that the pandemic prompted many people to try vacation rentals for the first time and she said Vacasa expects they will stick with it – providing a durable bump for the business.
“We think this is an enduring trend,” she said.
Vacasa expects more than $870 million in revenue this year, an extraordinary leap from the $300 million in sales recorded for 2019.
While Vacasa lost $36 million in the first nine months of this year, losses are common at rapidly growing businesses as they spend heavily to finance their expansions. Vacasa said it’s building a business with robust fundamentals.
Portland business analyst Eric Breon, now 43, started the company in 2009. He said he couldn’t find a good fit to manage a rental home his wife’s family owned on the Washington coast, so Breon started his own business.
What set Vacasa apart was its ambition. The vacation rental management business was highly fragmented, with homes in destination communities typically managed by small businesses that operated in just a few places.
Vacasa thrived by buying those up and implementing an automated system for listing and pricing rentals, and for managing cleaning and maintenance. It now manages 35,000 homes.
That gives it the pricing power that comes with listing large numbers of vacation properties and the efficiencies that come with automation and scale.
Breon stepped down as CEO last year and moved from Portland to White Salmon, Washington, in the Columbia River Gorge. But he is still on Vacasa’s board and is the company’s largest shareholder. Breon’s stake is worth roughly $600 million, according to regulatory filings.
Vacasa is the latest in a string of companies in Oregon and southwest Washington that have moved to the public markets this year. Before 2021, no Oregon company had held a substantive IPO since 2004.
This year alone, though, Oregon companies Dutch Bros, ESS Tech and Expensify, the Vancouver pharmaceutical startup Absci, and now Vacasa have all begun trading on stock exchanges. Portland-based KinderCare, currently owned by private equity firms, had hoped to return to the public markets, too, but ran into regulatory problems “outside of our control” and has postponed its public offering indefinitely.
The rush of public listings reflects a surging economy in the pandemic’s wake, reduced barriers to going public, and Oregon’s payoff from the years of robust business growth that proceeded the pandemic.
But Oregon’s business landscape has changed considerably since the state’s last spate of IPOs, in the 1990s, when the state’s public companies occupied large offices or corporate campuses. Today’s corporate workforce is highly distributed across cities and across nations.
Vacasa, for example, has about 6,500 employees, but only 400 of them worked at its corporate headquarters in the Pearl District before the pandemic. The company’s top two executives, CEO Matt Roberts and CFO Jamie Cohen, both live in California.
So while the recent spate of IPOs has been lucrative for investors and executives, they won’t bring Oregon a tax windfall or create economic pillars for the state. They nonetheless herald the emergence of a new class of Oregon business and suggest the prospect of future growth.