A tiny-home startup in Lancaster County is poised for the big time.
- A publicly traded shell company has agreed to buy Tiny Estates LLC and two related companies, Endeavor Tiny Homes LLC and Tiny Communities Fund LLC.
- The companies are led by CEO Abby Shank, a former KPMG auditor-turned-entrepreneur who started a tiny-home community outside Elizabethtown in 2018.
- Shank, who went on to build a larger business around the initial community, declined to comment. She referred questions to the buyer — Chase Packaging Corp., which has an administrative office in Rumson, New Jersey.
- “The more we dug in, the more we were impressed with her, what they were doing and where the industry is going,” said Mark Nielson, a San Diego-based management consultant who sits on Chase’s board of directors.
Where’s it going: Nielson sees opportunity to grow the tiny-home business as an affordable alternative to high-priced traditional homes.
- “This closes the gap for certain people,” Nielson said, particularly younger and older households of just one or two people.
- Indeed, the move to smaller homes is a fledging trend dubbed “the great compression” in a recent New York Times article.
- Nielson sees parallels to the manufactured housing industry, a sector with which he and some of his colleagues have experience.
- “This is like manufactured housing 3.0,” said Nielson. “The quality is really good.”
- Tiny homes also are emerging as a solution to homelessness among veterans, Nielson added.
How did this happen: Nielson said he met Shank when he reached out to the Tiny Home Industry Association, a trade association for the industry. Shank is a board member.
- The two began discussing a potential deal about six months ago, Nielson said.
- Tiny Estates oversees the development in Elizabethtown.
- Tiny Communities manages tiny-home developments in Florida, while Endeavor is a licensed dealer for manufacturer Atomic Homes, an offshoot of Lititz-based staging company Atomic Design.
- Altogether, the three businesses employ about 10 people, said Nielson.
- He expects the companies to grow, in part, by offering management services to tiny-home communities around the U.S.
- They will not be manufacturing homes.
- “The companies provide a well-rounded offering for renters, homeowners, investors and developers, as well as a platform for geographic expansion into additional markets,” Chase said in a press release.
The buyer: Chase was a specialty packaging company that ceased operations in the late 1990s and has been looking for a new business ever since. Nielson, a former public-company CFO, joined the board in 2019.
- The company had a potential deal in 2020 with an undisclosed third party but the deal fell through.
- Chase’s stock trades over the counter and had been valued at about 4 cents per share for most of this year.
- Shares jumped to about 18 cents last week on news of the potential merger with Tiny Estates.
What’s next: The merger is expected to close in the second quarter of this year and result in the Lancaster firms going public.
- At that point, Chase would change its name and ticker symbol to reflect its new business.
- Terms of the pending transaction were not disclosed, though Chase described it as involving the use of its stock.
- Chase plans to raise additional capital in a private placement to support expansion of the tiny-home business. Nielson declined to disclose the amount.
- The headquarters would remain in Lancaster County and Shank would be CEO, he added.
What’s tiny: Generally speaking, homes of less than 400 square feet, according to the industry trade association
- Prices range from $30,000 to $60,000, according to online lender Rocket Mortgage, though amenities could drive the cost up to $150,000.
- In the final three months of 2023, the median price for a home sold in the U.S. was $417,000, according to the St. Louis Fed.
