Fifth Wall raises $503 mln from property owners seeking tech edge

Mitsubishi Estate

17/07/2019 12:30

By Herbert Lash
    NEW YORK, July 17 (Reuters) - Fifth Wall, a venture capital
firm focused on real estate technology, raised $503 million from
a group of 50 large U.S., European and Asian property owners who
will provide a market for the start-ups and their products it
invests in.
    Venice, California-based Fifth Wall said on Wednesday its
real estate venture capital fund is the largest "proptech"
investment pool raised to date and its investor base is the
largest consortium of property owners ever assembled.
    Property owners have been slow to adopt technologies that 
use predictive analytics and sensors, for example, to slash
energy consumption or increase efficiency. Fifth Wall, founded
in 2017, is seeking to fill a void as functions such as data
collection are increasingly being computerized. 
    Fifth Wall invests in companies that will benefit its group
of property owners, which include Gecina SA  GFCP.PA  in France,
Spain's Merlin Properties  MRL.MC  and British Land Co Plc
 BLND.L  in Europe, and Mitsubishi Estate  8802.T  in Japan,
said Brendan Wallace, a managing partner at the VC fund.
    Fifth Wall targeted the largest homebuilders, brokerages,
office and retail building owners in Europe, Asia and the United
States, he said.
    The consortium's size increases access, insight,
collaboration and the sharing of ideas among the investors and
portfolio companies, Wallace said, calling it a network effect. 
    Fifth Wall noticed the nine investors in its first proptech
fund sought not only a financial return but also synergies and
cost savings with the technologies they adopted, he said.
    In the aftermath of the global financial crisis real estate
owners have recognized their business no longer is buying and
selling assets, but being a better operator, Wallace said.
    Stuart Miller, executive chairman at Lennar Corp  LEN.N ,
told analysts in June that the use of Fifth Wall portfolio
companies Opendoor, a direct home buyer, title insurer States
Title, and digital mortgage platform Blend has cut expenses and
increased operating margins. 
    "What we've been seeing is 10 basis points here, 20 basis
points there over the last quarter, year," Miller said,
according to transcripts of the call. "Technology has made us
better at what we're doing."
    The money Fifth Wall raised more than doubled the size of
its first fund, which closed in May 2017 at $212 million. With a
third, retail-oriented fund, Fifth Wall now oversees more than
$1 billion, the company said.
    Fifth Wall said it has delivered more than $340 million in
revenue to companies with its portfolio, an increase from over
$100 million in May 2018. 

 (Reporting by Herbert Lash; Editing by Richard Chang)
 ((herb.lash@thomsonreuters.com; +1-646-223-6019; Reuters
Messaging: herb.lash.reuters.com@reuters.net))