A group of landlords including Starwood Capital Group, Greystar, Cortland and real estate investment trusts such as Invitation Homes Inc. and Mid-America Apartment Communities Inc. have backed RET Ventures to make early-stage bets on property-technology startups.
The Park City, Utah-based firm has raised a new $165 million fund and — unlike many venture groups — has no pension funds or endowments among its investors. Instead, backers are dozens of property owners, operators and developers that collectively have more than 2.4 million rental units and over 135,000 single-family rentals. Its family office backers are heavily involved in real estate, including billionaire Penny Pritzker’s PSP Partners.
“It’s a self-fulfilling process as competitors recognize banding together is the best way to access new technology while providing scale and traction to these startups,” said John Helm, RET Ventures founder and partner.
The firm owns a stake in SmartRent, which makes a home operating system for residential properties and has agreed to go public via a SPAC merger. Because of that position, its first fund is slated to deliver a multiple on invested capital of at least 5, according to people with knowledge of the matter.
RET’s newest fund has backed companies including construction-design firm Falkbuilt and PassiveLogic, a maker of building-control systems. Helm said the fund is about 25% drawn and he expects it to be deployed in three to four years.
The fragmented rental industry, populated by over 45 million U.S. households, is hungry to adopt new technology that helps them react to changing tenant habits spurred by the pandemic, RET partner Christopher Yip said.
UDR Inc., a Colorado-based REIT with a market value of about $15 billion, tapped RET to filter through investment opportunities, Chief Executive Officer Tom Toomey said in a phone interview. Scott Wesson, UDR’s chief digital officer, said the firm can charge $20 to $25 more in monthly rent for the roughly 44,000 of its units which have SmartRent offerings such as motion detection, keyless entry and remote temperature control.
Essex Property Trust Inc. CEO Michael Schall said the REIT works with RET companies including Funnel, which makes apartment-leasing software; SightPlan, a provider of maintenance and resident-service software; and GiGstreem, which specializes in high-speed internet.