American Unicorn launch in London

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The penthouse at 4-5 Queen Street in Mayfair, Pacaso’s first listing in London as the startup expands in Europe

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Karl Tomusk

Pacaso, a Silicon Valley startup that sells shares in luxury second homes, has expanded into the UK market – with more sites to follow.

The brainchild of Zillow co-founders Spencer Rascoff and Austin Allison, Pacaso sells shares in vacation homes ranging from one-eighth to one-half their value. How often a co-owner can use the building depends on the size of their operation.

Since launching in the United States in 2020, the company has purchased second homes in 35 locations around the world, making its European debut in November 2021 in Marbella, Spain.

Pacaso’s first London home is at 4-5 Queen Street in Mayfair, where an one-eighth share costs £1,084,000 and monthly outgoings total around £675.

The startup is tapping into both the growth of fractional real estate ownership, in which many people own pieces of a single building (e.g. IPSX), and flexible residential ownership and rental products (e.g. JLL Short Stays or Blueground).

“You are buying real estate. You get the value of that appreciation and the liquidity that we get in the Pacaso market,” said Razor Suleman, global president of the startup. PlaceTech at MIPIM, ahead of the UK launch.

Don’t say the ‘T’ word

Pacaso tries to distance itself from timeshare – so much so that it has a blog on its site explaining why what it offers is not timeshare.

The biggest difference between the two is that Pacaso offers equity in a building, rather than just the right to use a space. Pacaso buys a house, puts it in a limited company and then sells shares in this company. As the value of the building increases or decreases, the value of the stock also increases.

Working on a first-come, first-served basis, Pacaso allows owners to reserve dates at their second home based on how much they own: someone with a half share has access to the building six months year, while someone with an eighth can book 44 days.

According to Suleman, Pacaso homes are occupied 87% of the year, in part because of its international user base: “The Spanish school calendar is different from the UK school calendar and the German school calendar.” People want to use their second home at different times depending on their situation.

By maintaining a consistently high occupancy rate, Suleman said Pacaso tries to positively impact local economies year-round. “As we take ownership of this first sales period, we are going to be part of this community forever,” he said.

Shareholders are locked into their investment for 12 months, but there is no limit to how long they can keep it.

No SPAC in sight

Pacaso’s fame reached unicorn status – hitting a $1 billion valuation – faster than any other US company, doing so in less than six months.

To date, the company has raised $170 million in equity and is already considering options in other European countries, including France, Italy and Portugal.

In the UK, Pacaso purchased three properties. Following its launch in London this week, it plans to open a second location in the Cotswolds in April, where shares start at £260,000.

As for the future of the company itself, while it will eventually aim to go public, there are no immediate plans to do so.

Asked if he would consider listing through a SPAC like several other real estate startups have done in the past year, Suleman said, “I can assure you that Pacaso would not take this opportunity.

“I think when you’re looking at building an infinite long-term business, we’re going to go through the right channels to raise capital.”

But after a whirlwind 18 months of fundraising, getting more capital isn’t an immediate priority, Suleman said: “We’re very well capitalized on the equity side – but we’re always open to interesting conversations. “

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