REAL ESTATE TECHNOLOGY PERSPECTIVES THAT COUNT

RET Ventures today announced that it has appointed multifamily technology industry veteran Monte Jones as Platform Partner. Concurrently, RET announced that it has added three members to its investment team, Melissa Fagan, Jaymie Fung Bingham and Julia Lambert.

Jones comes to RET Ventures with nearly two decades of experience in the multifamily industry. For four years, he served as President of On-Site.com, an end-to-end marketing and leasing platform for the apartment industry. In these roles, he was responsible for leading all customer-facing departments as well as business development, acquisitions and strategic planning within the company. Under his leadership, the company’s sales team was successful in growing revenue by more than 200%, leading to its ultimate $250-million exit to RealPage in 2017. After the sale, Jones developed and led several specialized sales and go-to-market teams, integrated newly acquired companies into the RealPage system and left RealPage as its Chief Experience Officer.  

In his new role at RET Ventures, Jones will engage across a range of functions, including coaching portfolio companies, drawing on his deep industry expertise as an operator; helping build and implement RET’s own internal technology stack; and lastly, building out the firm’s “Affiliates” initiative.

The Affiliates program will be a collection of forward-thinking multifamily and SFR owners and operators who are interested in gaining access to the technology companies RET backs. Many of the leading multifamily REITs and private operators have already gained close relationships to these technologies by investing in RET’s funds. However, for companies that are not RET Strategic Investors, the Affiliates program offers an inside track of access to leading technology companies in the RET portfolio.

Currently, RET’s Strategic Investors represent approximately 2.5 million multifamily and SFR units across the U.S. and Canada — a figure that makes the prospect of an RET investment particularly alluring to startups looking to grow their user base. Through the Affiliates program, RET is looking to help drive innovative technology across a broader potential user base.

“As an industry-backed technology investor, RET is uniquely positioned to provide our portfolio companies with access to a broad swath of institutional owners and operators, and adding Monte to the team will enable us to further broaden our reach,” said RET Ventures Partner John Helm. “We also place great importance on helping portfolio companies scale quickly toward profitability, something that has become an even greater priority amid the current economic uncertainty. Monte’s unique skillset and ability to mentor early-stage companies and CEOs will be instrumental as we expand our portfolio and, with our Strategic Investors’ help, lead the industry towards a more technology-driven future.”

Added Jones: “Given recent macroeconomic headwinds, real estate owner-operators are increasingly looking for innovative solutions to help streamline their operations. RET has built a tremendous reputation by backing technologies that have immediate applications for owners across the entire real estate ecosystem. In its first five years, RET has already delivered tremendous value to a wide range of stakeholders, and I look forward to working with John Helm, Christopher Yip and the rest of the team as we pursue the fund’s goal of elevating technology in the rental housing sector.”

In addition to Jones, RET also announced three additional new hires over the last six months:

• Melissa Fagan has joined RET as a Vice President. Fagan previously served as an investment associate for KSL Capital Partners, and a private equity associate at Goldman Sachs. She received her bachelor’s degree in engineering from Princeton University.
• Jaymie Fung Bingham has joined the RET team as an Associate. Prior to joining RET, Fung Bingham served as a private equity and venture capital associate at Ensign Peak Advisors. She received her bachelor’s and master’s degrees in accounting from Brigham Young University.
• Julia Lambert has joined the RET team as an Associate. Lambert previously served as an investment associate at The Carlyle Group and Hanover Real Estate Investors (now Pacific Urban Investors). She received her bachelor’s degree in civil engineering from Stanford University.

With these four hires, RET continues its rapid growth over the past year. In April of 2022, the firm — along with Strategic Investors Essex Property Trust and UDR — launched RET Ventures ESG Fund, L.P. (“the Housing Impact Fund”), an investment vehicle to back the growth and implementation of ESG-focused technologies for the real estate sector. In June, RET announced the addition of former UDR President Jerry Davis and venture capital veteran Jacob Zornes to its growing team.

Since its launch in 2017, RET Ventures has backed more than 30 real estate technology companies, including category leaders in smart home technology, leasing tech, construction tech and sustainability technology.

About RET Ventures

A leading real estate technology venture capital firm, RET Ventures elevates real estate innovation by investing in cutting-edge technologies out of its core venture funds and a Housing Impact Fund. RET works in partnership with its base of more than 40 Strategic Investors who own and manage over $600 billion of real estate assets, with a particular focus on multifamily and single-family rental real estate. In these asset classes, the group includes some of the largest REITs and private real estate owners, operators and developers, who together control approximately 2.5 million rental units.

Through its deep expertise and network, RET has created a unique real estate innovation ecosystem that delivers significant value to the companies it backs, providing them with access to thought leaders, development partners and ongoing strategic guidance. For more information, please visit www.ret.vc.

RET Ventures Partner John Helm and Travtus Founder and CEO Tripty Arya recently joined EG Properties editor and podcast host Samantha McClary on the EG Properties Podcast's “Tech Talk” series, which focuses on real estate technology and how it is enabling the transformation of CRE.

On the podcast, Tripty shared her perspective on why RET’s collaborative approach and robust strategic investor base make it the ideal partner for technology companies who are rolling out solutions for the real estate industry at large. With an investor base that represents around 15-18% of the institutional U.S. multifamily market, RET’s network of portfolio companies has direct access to information about the largest challenges facing owners and operators.

The discussion also featured John’s perspective on how Travtus differentiates itself from most AI-based technologies on the market. Whereas the majority of AI products for real estate focus primarily on streamlining the leasing process, John talked about how Travtus provides a truly holistic solution for property management, improving a broad variety of day-to-day management processes for multifamily owners looking to scale operations in today’s challenging labor market.

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The Proliferation of Electric Vehicles

Over the past year, global electric vehicle (EV) sales have climbed dramatically, to reach a total of over four million vehicles sold in the first half of 2022. As of Q2 2022, EV sales accounted for nearly 6% of total automotive sales< a figure that is only expected to increase as innovation continues and more cost-efficient options hit the market. Amidst this growth in EV adoption, a variety of stakeholders — from EV drivers and manufacturers to commercial and multifamily property owners and operators — must consider the requirements and challenges associated with EV charging options. Multifamily property managers, in particular, have many unanswered questions concerning the deployment of EV charging solutions.

Because most passenger cars are parked 8-12 hours a night, at-home charging provided by property managers has the potential to be the most convenient and affordable experience for residents — one that could also create a new revenue stream for owners and operators. In light of this, many of our strategic investors and industry peers have been eager to explore the various options within the EV charging landscape, and in December 2021, we formed a working group dedicated to finding a long-term solution.

Developing an EV Charging Strategy

identifying what would constitute the ideal EV charging approach to address apartment operators’ and residents’ needs. Reducing total lifetime costs for both residents and owners in addition to improving the charging experience were among the group’s key priorities and considerations.

Ultimately, the group determined that dedicated overnight charging for each EV-driving resident — with supplemental shared fast charging for the property — was the ideal strategy for the multifamily industry. The rationale for this solution is intuitive, and can best be explained by following the trajectory of an amenity that many renters place a high level of importance on: laundry.

Washers and dryers were once a shared amenity (think of the local laundromat), but eventually they were moved to on-site laundry rooms and individual units. Tenants did not desire (or need) the “fastest” most high-end washer or dryer, they wanted low-cost convenience; EV charging is similar. Fast chargers (known as “Level 2” or “Level 3” chargers) exist in public spaces across every metropolitan region, most often servicing areas where drivers park between 15 minutes and a few hours. For parking that exceeds 2-3 hours, such as at apartment complexes, it is significantly more convenient for residents to have dedicated chargers (typically “Level 1” or “Level 1B” devices) that will be accessible whenever they want.

Compared with the alternative — outfitting a property with shared devices — this dedicated charging approach has numerous advantages: Unlike shared products that typically burden users with limited charger availability, peak charging rates, and idle fees for prolonged use, dedicated charging options provide increased accessibility, while also allowing users to dictate when charging activity occurs to leverage discounted rates during off-peak hours.

Understanding the advantages surrounding a strategy focused on dedicated chargers, we were able to focus further evaluation on Level 1 and Level 1B devices, whose installation costs are much lower than L2 chargers. Though these technologies won’t charge residents’ EVs quite as quickly — most dedicated devices deliver between 3-15 miles of charge per hour — they allow residents to keep their car plugged in all night long, providing sufficient charge for virtually every driver. (A small number of shared L2 chargers can also be used to support the rare instances in which residents need a more powerful charger.

With the strategy settled, the working group launched an RFP to identify the best charging solution. After assessing more than 20 platforms, the cohort collectively decided on driving RET’s latest investment

A Solution That Checks Every Box

Founded in 2018, Plugzio was created with the vision to “make charging simple” for property owners and operators. Its functionality allows owners and operators to centrally manage all of their chargers with custom charging plans and access rights for residents and non-residents.

The platform is configured to streamline EV charging regardless of property type or charger type — while Plugzio offers an ideal solution for dedicated overnight charging at multifamily properties, it also supports shared fast charging at commercial and retail deployments. Also significant for our many strategic investors, lifetime costs for Plugzio’s L1/1B chargers are 50-80% lower than other EV charging options; a Plugzio device costs less than $350 and can be installed/maintained by onsite staff without the need for a certified technician. This limits upfront and ongoing costs and increases flexibility — if EVs grow in market share faster than expected, property owners will be able to scale up the number of chargers at each property more quickly.

In just four years, Plugzio has established itself as one of the leading EV solutions for the multifamily space in the few years since its launch, with more than 1,000 units deployed throughout North America. We’re eager to begin this partnership with such a trusted and respected player in the EV charging market, and we look forward to working in tandem with them to promote and simplify the adoption of EV charging across multifamily properties nationwide.

Solving the Labor Shortage in Multifamily

Prior to the Great Resignation, the multifamily industry was relatively slow to adopt AI-driven property management solutions. While there was no doubt that automated technologies could benefit owners and operators, organizations were hesitant to begin utilizing technologies that might be seen as dilutive to overall resident experience.

However, in the wake of the pandemic, the multifamily industry began facing new challenges, including a labor shortage for many on-site teams. The unreliable hiring market reframed the conversation around automation in multifamily, highlighting its ability to not only assume some of the more tedious tasks associated with property management, but to create efficiencies that allow existing teams to perform their jobs more effectively. In this new environment, multifamily owners are using automation to pick up the slack for positions they simply cannot fill, enabling them to do more with less by streamlining property management workflows and increasing resident satisfaction.

Automation for Daily Operations

Although we have been monitoring the space for several years, we had never made an investment in an AI-based tool, but as automation has become a larger priority for multifamily owners and operators, we are excited to announce our Seed investment in Travtus.

Travtus’ flagship machine learning platform — “Adam” — is purpose built to automate operations in multifamily communities. Acting as a digital employee, Adam first reviews resident email correspondence and service requests to gather intelligence on the property; it then cross-references that information with renewal data and other key property metrics to gain a 360-degree understanding of the property and how residents are interacting with it. Once the analysis is done, Adam then begins working as a virtual customer service representative, using its knowledge of the specific property to respond to resident communications across email and chat to address concerns and resolve issues as they arise.

Adam also integrates with existing productivity tools, seamlessly automating task management, CRM, and communication workflows for property teams. All in all, it allows rental operators to simplify and scale their operations through automated, effective resident engagement.

For owners and operators facing a labor crunch, Adam has become an essential tool that lacks any clear competitor. While other AI-based technologies exist in the real estate space, they all focus primarily on automating the leasing function; Adam’s main applications improve a wide range of day-to-day property management processes from maintenance requests to dealing with WiFi issues and rent payments, setting it apart in terms of overall functionality.

Travtus’ Incredible Potential

Our investment in Travtus comes amid a market shift towards embracing automation not only as a solution to a recent labor shortage, but also as an intelligent analytics tool that helps existing on-site management teams better understand resident sentiment. As demand for automated management technology increases, Travtus has emerged as a premier solution that is effective at solving resident pain points and can be deployed at the enterprise scale.

Several of our strategic investors have already added Adam to their property teams, and their feedback has been extremely positive. With the size of the opportunity and product-market fit, we are confident that Travtus has the potential to become a leading solution across the multifamily industry in the years to come. We look forward to supporting CEO Tripty Arya as she expands the Travtus team, enhances machine learning capabilities, and provides enduring value for multifamily owners and operators across the country.

An Industry-Wide Focus on ESG

In recent years, leading companies across the commercial real estate industry have increased their ESG efforts to improve the sustainable operation of buildings amidst a worsening climate crisis and a related rise in climate risks. Specifically within the multifamily sector, the demand for innovative, sustainable new technologies has been strong, and this demand was part of the impetus for the launch RET Ventures’ own ‘Housing Impact Fund’ — an ESG-centric vehicle investing exclusively in solutions that address environmental and social performance pain points for multifamily assets.

Real estate stakeholders have been pushing for more sustainable buildings for a range of reasons, including climate responsibility and reduced operating costs. But emerging federal and regional legislation — such as the Inflation Reduction Act and New York City’s local Law 97 — have quickly created another major incentive. Through these and other laws, the government is introducing new capital, major tax incentives, and stricter reporting guidelines to the commercial real estate sector and raising the potential ROI on sustainable investments for multifamily assets. Coupling this regulatory landscape with strong demand from investors and tenants alike, a strategy for stronger ESG performance and greener building operations will be necessary for any asset hoping to hold long-term value in the market.

AI-Powered Technology for Real-Time Optimization

As the demand, risks and opportunities surrounding sustainable operations in the multifamily sector have been heightened, apartment owners and operators are facing growing pressure to not only collect building data for benchmarking and reporting purposes, but to also implement impactful solutions that leverage relevant data to actively improve sustainable operations. According to NYSERDA, HVAC equipment in particular accounts for about 40 percent of a building’s total energy usage — with this in mind, action to drive emissions reduction and energy efficiency, especially through HVAC optimization, is of significant importance for the industry.

There are many HVAC management systems currently on the market, but nearly all are designed to help owners and operators by monitoring building systems and identifying inefficiencies. The final and most critical step — actually remedying the inefficiency — is left to the property team. In some cases, building professionals are up to the task; but in others, essential fixes aren’t made, and the issues identified can languish for months on end. This gap in the market is just part of what drove RET’s latest investment in Parity.

Parity's technology platform is designed to transform the operations and energy management of mid-rise and high-rise apartment buildings with a capital-light, non-intrusive model. The platform utilizes an AI-powered system to optimize operations, taking complete control of a building's HVAC systems through the existing BMS or by deploying off-the-shelf sensors and controls. This enables real-time performance optimization, minimization of energy waste, the elimination of the human error that can often lead to energy inefficiency in buildings, and a decrease in capital investment costs for operators.

With its revolutionary technology, the company regularly reduces HVAC energy use by 15 to 25 percent — leading to cost savings of 30 to 50 percent for HVAC operations — this could mean up to $60,000 in savings annually for a typical 250-unit high-rise, though some buildings have yielded savings equivalent to $130,000 for a property of this size.

Ensuring Improved Performance — A Cost-Saving Guarantee

Relying on the effectiveness of its technology and the fact that it has full control of building operations, Parity is one of the rare building efficiency technologies that is able to guarantee cost savings to users. If a building’s projected cost savings are not achieved, Parity sends a check to the property owners to cover the difference. However, users shouldn’t be waiting around expecting a check from Parity to hit their inbox; while performance is guaranteed, buildings across Parity’s portfolio are already outperforming expectations and achieving average savings of 118% respective to projected savings. This means that the software leads to both a significant reduction in energy waste and a meaningful return on investment for the customer.

As Parity’s solution brings multifamily owners and operators a clear financial incentive to improve operational efficiency, we’re eager to begin this partnership with the company, promoting the adoption of sustainable technologies to better both real estate assets and the environment in the short- and long-term.

The Rise of Healthy Buildings

The coronavirus pandemic brought an increased awareness of how the places we live, work, and socialize can impact our health and well-being, and it is no surprise that this societal shift has impacted the commercial property sector. While indoor air quality was an immediate concern, several years after the start of the pandemic real estate owners are now putting increased, broader focus on integrating the human experience and buildings based on the growing demand from consumers for buildings that prioritize health outcomes.

And while it’s easy to pay lip service to concepts like “sustainable buildings,” many property owners and managers know that discerning tenants want more — and even that they’re willing to pay for it. In fact, according to the Center for Active Design, commercial properties with healthy building certifications garnered rental premiums of four to seven percent per square foot over non-certified peers, demonstrating a clear financial value for owners. Because of this, owners are looking to receive healthy building certifications for their properties for both the financial upside and as indicators of their commitment to maintaining ESG principles that create long-lasting positive impacts for their tenants and the broader commercial real estate space.

A Science-Backed Solution

With the recent launch of our Housing Impact Fund, RET is dedicated to pursuing technologies that enhance building health and sustainability, and it was this priority that led to our most recent investment in Fitwel.

As an evidence-based building certification developed with the CDC, the Fitwel Platform leverages the most relevant data to give owners science-backed insights into the health of their building or portfolio. Fitwel grades a project's holistic health based on seven “Health Impact Categories,” which are weighted and scaled depending on the type of building. On the comprehensive platform, customers can register, benchmark, and submit either a single project or an entire real estate portfolio for Fitwel Certification. From there, Fitwel’s portal offers customers an interactive, digital interface where they have direct access to details on a project’s health impact – increasing transparency and giving owners actionable insights on how to improve overall building performance.

For example, the Fitwel Platform helps owner-operators identify which among a range of potential amenities (green space, onsite childcare, etc.) will have a greater positive impact on resident wellness, and then helps them implement the more beneficial choice.

Operated by Active Design Advisors, Inc. (Adai), an affiliate of the Center for Active Design (CfAD) created solely to help grow and promote the implementation of Fitwel, the platform has a world-class team of professionals driving it forward. Fitwel’s proven ability to improve the resident and tenant experience while positively benefiting operators’ bottom lines across the global real estate sector makes it an extremely valuable tool for the CRE industry.

Fitwel’s Incredible Potential

While RET typically invests in technologies that specifically service the multi- and single-family rental space, we see incredible market opportunity in the prospect of a data-centric certification platform that has the potential to bridge the gap between building design and operational performance across real estate verticals. Equally important, we have tremendous confidence in Adai’s leadership team, which is led by industry veteran Joanna Frank.

The company has already gained significant traction. In 2021 alone, there was a 325% year-over-year increase in the total number of Fitwel certifications and a 288% increase in certified square feet, and the company expects further growth in the years to come.

The Future of Building Certification

Our investment in Fitwel comes at a time when the “S” of ESG — the social aspect — is a rising priority for consumers who view health as not just a building amenity but perhaps the most important one. With proven benefits for our LPs – and many of them already signed up for certification – Fitwel is a natural addition to our portfolio of companies targeting health and sustainability in the CRE industry.

As demand for healthy buildings continues to grow, we are confident that Fitwel will be a major solution across the industry for years to come, and we look forward to supporting the team at Adai as they grow and enhance the Fitwel Platform’s certification and reporting capabilities.