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Real estate tech is bouncing back from its pandemic slump

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The pandemic has had a stormy impact on the real estate industry.

On the one hand, offices were empty, hotel occupancy collapsed and construction was halted for months. At the same time, the demand for living space increased as people looked for more space to work and study.

As a result, global VC deal flow decreased by almost 80% in 2020 compared to 2019. Meanwhile, venture investments in residential real estate technology fell less than 10% over that time, according to PitchBook data.

As pandemic-related standstills are coming to an end, both segments see renewed interest from venture capitalists. About six months out of the year, VC deal activity in residential real estate technology has already hit an annual record of $ 6.2 billion as of June 18, according to PitchBook data. And with $ 2.6 billion in funding, the commercial segment is well on its way to becoming the second most important year for venture activity in 2021.

Unlike previous years when the busiest companies in the industry served commercial customers, much of the venture dollars goes to startups focused on disrupting the scorching housing market.

“There are so many interesting trends in the living area that you can hardly pay attention to them,” says Frank Rotman, co-founder and partner of QED Investors.

A severe housing shortage in the US and a large millennial population reaching the maximum age for home buying combined with antiquated buying and selling methods are creating momentum for real estate-oriented startups.

“You only need to hit a single-digit percentage of these markets to build a really big business,” said Lisa Wu, partner at Norwest Venture Partners. Her company just ran a $ 136 million Series B for Homeward and a $ 150 million Series C for Flyhomes, both of which offer platforms to help buyers buy homes with cash offers.

Venture capitalists are also targeting companies digitizing home sales outside of the United States.

Real estate technology in emerging markets is seeing some of the biggest valuation gains, Rotman said. QED invested in Loft and Quinto Andar, two Brazil-based marketplace and property search platform providers, each of which recently raised multi-billion dollar mega-rounds.

The segment now also produces a number of public exits.

Real estate agent Compass went public earlier this year with a valuation of $ 7 billion. Offerpad agreed to merge into a SPAC that valued the digital brokerage at approximately $ 3 billion. In another reverse merger with Blankoscheck, Better, a mortgage lender, will go public for $ 7.7 billion.

Many investors believe they can predict the future of the residential real estate markets and that the demand for home ownership will continue to outpace supply in the years to come. But the post-pandemic commercial real estate landscape is full of unknowns. Rotman said the opportunity for investors is to identify “the right future” for these subsegments. “You have to understand these markets extremely well,” he said. “Office buildings in Manhattan are very different from shopping malls in the suburbs.”

But some trends are emerging in the commercial market.

The explosion in online shopping is a boon to logistics and warehousing technology.

“We hypothesize that retail and logistics are essentially merging as an asset class,” said Zach Aarons, co-founder and general partner of MetaProp, a venture firm focused on early-stage real estate tech startups that are currently a third with a $ 100 million fund.

Flexe, which provides a marketplace for large retailers to purchase on-demand warehouse space, raised a Series C worth $ 80 million last winter. Some investors are betting that the post-pandemic world will need flexible office space. WeWork, whose attempted IPO in 2019 is known to have failed, agreed earlier this year to go public through a SPAC merger valued at $ 9 billion including debt.

While the residential segment is overtaking the commercial segment at this point, Aarons is certain that it will have more opportunities for technical disruption in the future. “Commercial transactions are much more complex, but they too will be digitized at some point,” he said.

Featured image via erhui1979 / Getty Images

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Doma, the Company Architecting the Future of Real Estate Transactions, Completes Business Combination with Capitol Investment Corp. V

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SAN FRANCISCO – (BUSINESS WIRE) – Doma Holdings, Inc. (formerly known as States Title Holding, Inc.) (“Doma”), a leading force in disruptive change in the real estate industry, and Capitol Investment Corp. V (NYSE: CAP) (“Capitol”), a publicly traded special purpose vehicle, today completed its previously announced business combination. Doma leverages machine intelligence and its proprietary technology solutions to create an easier, more efficient and more affordable real estate deal experience for current and potential homeowners, lenders, title agents and real estate professionals. The combined company’s common stock and warrants are expected to trade on July 29, 2021 on the New York Stock Exchange under the symbol DOMA and DOMA.WS, respectively.

The proceeds from the transaction will be used by Doma to drive growth, both through market expansion and new product development aimed at expanding the strategic advantage customers receive from Doma’s machine intelligence platform. Capitol shareholders approved the transaction at a special meeting instead of the 2021 annual general meeting on July 27, 2021. CEO Max Simkoff and the rest of the Doma management team will continue to lead the combined company.

“For us, this transaction is about accelerating our ability to penetrate and revolutionize first the antiquated $ 23 billion title, escrow and closure market, and finally the broader $ 318 billion home ownership services market.” said Simkoff. “Ultimately, our vision is to have many of the most important experiences when buying a home, instantly and digitally. Today’s milestone is evidence of Doma’s impressive growth to date and the strength of our business. We look forward to this next phase as a stock corporation. ”

Citigroup Global Markets Inc. acted as financial advisor and Davis Polk & Wardwell LLP acted as legal advisor to Doma. JP Morgan Securities LLC acted as financial advisor and Latham & Watkins LLP acted as legal advisor to Capitol. Deutsche Bank Securities Inc. also acted as capital markets advisor to Capitol. Citigroup Global Markets Inc. and JP Morgan Securities LLC acted as PIPE placement agents with JMP Securities LLC, Oppenheimer & Co. Inc. and DA Davidson & Co. acted as co-placement agents.

About Doma

Doma (formerly States Title Holding, Inc.) is shaping the future of real estate transactions. The company uses machine intelligence and its patented technology solutions to transform residential real estate and make closures instant and affordable. Doma and its family of brands – States Title, North American Title Company (NATC), and North American Title Insurance Company (NATIC) – provide solutions for current and potential homeowners, lenders, title agents and real estate professionals that greatly simplify and efficiently close deals, reduce costs and increase customer satisfaction. Doma customers include some of the largest bank and non-bank lenders in the United States. To learn more, visit www.doma.com.

Legend for forward-looking statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the US Private Securities Litigation Reform Act of 1995. “plan”, “project”, “predict”, “intend”, “will”, “expect.” “,“ Anticipate, ”“ believe, ”“ seek, ”“ seek, ”or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. The absence of these words does not mean that a statement is not forward-looking. Such statements are based on beliefs and assumptions about the information currently available to Doma’s management.

These forward-looking statements include, among other things, statements regarding estimates and projections of financial and performance metrics, projections of market opportunities, total addressable market (“TAM”), market share and competition, and potential benefits of the transactions described herein. These statements are based on various assumptions, whether or not mentioned in this press release, and current expectations of Doma management and are not predictions of actual performance. These forward-looking statements are presented for illustrative purposes only and are not intended as a guarantee, assurance, prediction or final determination of fact or probability and should not be relied upon as such by any investor. Actual events and circumstances are difficult or impossible to predict, differ from assumptions, and are beyond Doma’s control.

These forward-looking statements are subject to a number of risks and uncertainties, including changes in business, market, financial, political and legal conditions; Failure to achieve the expected benefits of the business combination; Risks related to the uncertainty in the forecast financial information relating to Doma; future global, regional or local economic, political, market-related and social conditions, including due to the COVID-19 pandemic; the development, impact and enforcement of laws and regulations, including those related to the title insurance industry; Doma’s ability to manage its future growth or to develop or acquire improvements to its platform; the impact of competition on Doma’s future business; the outcome of potential legal disputes, governmental and regulatory proceedings, investigations and investigations; and the other factors described in the “Risk Factors” section of Doma’s filings with the SEC from time to time.

Should any of these risks materialize, or should Doma’s assumptions prove incorrect, actual results could differ materially from those implied in these forward-looking statements. There may be additional risks that Doma is not currently aware of or that Doma currently considers to be immaterial and which could also mean that the actual results differ from those contained in the forward-looking statements. Additionally, forward-looking statements reflect Doma’s expectations, plans or projections of future events and beliefs as of the date of this press release. Doma assumes that subsequent events and developments will lead to a change in Doma’s assessments. Although Doma may update these forward-looking statements at some point in the future, Doma expressly disclaims any obligation to do so, unless required by law. These forward-looking statements should not be taken as a representation of Doma’s opinion at any time after the date of this press release. Accordingly, you should not place undue reliance on any forward-looking statements.

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What Would Equitable Real Estate Finance Look Like? – Non Profit News

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“The Art of RE Membership, How To Be Human,” Lola Audu

“Real estate is a big issue in America,” noted Avery Ebron, who runs The Guild’s Atlanta business. Ebron made these remarks last month at a press conference to mark the release of the Inclusive Capital Collective’s (ICC) first “black paper” entitled Building Community Wealth: Shifting Power and Capital in Real Estate Finance. Ebron co-authored this paper with The Guild CEO Nikishka Iyengar and Chicago Trend CEO Lyneir Richardson. The report provides an important framework not only to identify how structural racism is penalizing real estate development by and for BIPOC communities, but also to identify specific changes that could significantly reduce these barriers.

ICC defines itself as “a growing network of community fund managers and entrepreneurship support organizations that have designed and developed a common technical and financial infrastructure for the aggregation and delivery of financial capital and other resources to entrepreneurs and colored communities in the United States.” The group was formed at a meeting in Denver in the fall of 2019 and is incubated by the 2015 Zebras Unite Cooperative, which aims to promote access to capital for socially minded companies, especially women-owned and black-owned companies.

Often the discussion about real estate focuses on home ownership and the gap between black and white ownership rates. Here, however, the focus is less on residential properties and more on the actual real estate development business. As Amanda Abrams wrote in the New York Times earlier this year, “Commercial real estate remains an area where the vast majority of developers are white.” Abrams found that a 2013 industry survey found that only 4.4 percent of the commercial real estate professionals were blacks. A recent 2020 survey by the Urban Land Institute found that only five percent of its members were black, while 82 percent were white.

In their paper, the authors state that “current community development practices and institutions tend to focus on outcomes (especially affordable housing) rather than outcomes that drive structural change.” In their report, Iyengar and her co-authors claim that a commercial Real estate industry, in which blacks and other colored real estate entrepreneurs played a bigger role, would not only be more diverse and inclusive, but would also focus on the goal of collective wealth creation. According to the authors, a “community-centered” real estate market would:

  • Prioritize affordable operating space for local BIPOC businesses
  • Be more democratic and involve community organizers, small business owners and local residents in the development process
  • Focus on providing space for important common goods like groceries and common areas
  • Leverage infill development to support affordable rents and home ownership that stabilize existing BIPOC neighborhoods
  • Create opportunities for blacks, indigenous peoples and other colored residents to have a stake in commercial real estate
  • Better connect residents and businesses to public resources such as technical assistance, basic financial literacy programs and business grants

Real estate redesign for equity

An important contribution of the report is that it provides a thoughtful list of both the barriers to equitable real estate development and potential solutions. As Joe Neri, CEO of IFF, a leading Chicago-based community development financial institution (CDFI), explained, one of the many effects structural racism has on real estate is that BIPOC neighborhoods are valued lower than white neighborhoods, what it is makes it more difficult to fund projects (as the credits are drawn up to a percentage of the appraised value), which means that a developer has to raise more money.

As Neri put it, “Old government-sanctioned banking regulations have depreciated property for decades, and now current banking regulations prevent investment in areas where appraisals are low.” Building on Neri, the ICC report calls for one “Income-based lending” (ie, lending based on a percentage of the income the project is expected to generate), which is forward-looking, not ratings that bake in past discrimination.

The authors describe specific loan products that could lower financing costs for BIPOC real estate developers. These include “patient justice,” which the authors of the report describe as a long time horizon (e.g. 10 years), low interest rates (zero to five percent), and provisions to protect development projects from early costs (e.g. payments for the first 12 to 24 years of age) Months of the loan). Foundations, according to the authors, are the most likely providers of such funding, and that funding could be five percent of the project’s value. Another 20 percent of the financing structure could be “friendly debt”, such as low-interest loans from CDFIs. The remaining 75 percent could be standard bank loans. In other words, while the need for philanthropic assistance is clear, the report also shows how limited philanthropic dollars can enable more common commercial funding.

The authors also describe additional steps in overcoming barriers – for example, easier access to credit lines, reducing zone restrictions, loan guarantees (possibly from CDFIs or foundations) to reduce interest costs, and partnering with public land banks to help BIPOC real estate developers get low-cost land.

In the report’s conclusion, the authors note that “there is an abundance of black developers creating equitable and contextualized real estate solutions for their communities – transforming the way real estate development is done and transforming them into a vector for creating Transforming Prosperity for All Americans ”. In the appendices to the report, the authors document this through case studies of BIPOC-owned real estate companies in four cities – Philadelphia, Chicago, Atlanta and Fort Myers in Florida.

When the report was released, Kevin Williams, a member of the Black Squirrel Collective in Philadelphia, spoke about the urgency of the work. “You see a lot of study and research into the plight of minorities in America,” noted Williams. “But you don’t see any follow-up. Someone writes a newspaper and says black people are poor. Yeah we know that. But has anyone followed up to see what was being done to address this issue? … We have to keep being vocal … and we have to keep pushing the point that justice has to happen. “

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Starwood Capital Group Affiliate Files Preliminary Proxy Statement in Opposition to Monmouth Real Estate Investment Corp.’s Proposed Sale to Equity Commonwealth

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MIAMI–(BUSINESS WIRE) – Starwood Capital Group (“Starwood Capital”), a leading global private investment firm focused on real estate and energy investments, today announced that its subsidiary Starwood Real Estate Income Trust, Inc. (“Starwood”) has granted preliminary powers of attorney has filed a statement from the Securities and Exchange Commission, in which the shareholders of Monmouth Real Estate Investment Corp. (NYSE: MNR) (“Monmouth”) will be asked to vote against the proposed sale of Monmouth to Equity Commonwealth (“EQC”) at the upcoming Monmouth Special Meeting, scheduled for August 17, 2021 (the “Special Meeting “). The preliminary proxy statement is available here: https://www.sec.gov/Archives/edgar/data/67625/000119312521225930/d180189dprec14a.htm.

On July 15, 2021, Starwood submitted a fully funded, fully funded acquisition proposal to acquire Monmouth for a net cash of $ 18.88 per share. Starwood’s proposal offers a 5.6% premium and approximately $ 100 million additional value compared to the implied value of $ 17.88 per share of the EQC transaction based on the closing price of the common stock of EQC of $ 26.69 on July 27, 2021. Monmouth’s Board of Directors has rejected this superior cash-only proposal and continues to recommend its shareholders to accept a financially worse deal.

At the special meeting, Monmouth calls on its shareholders to approve the EQC transaction with a two-thirds majority of the outstanding Monmouth shares. Only shareholders holding Monmouth shares as of close of business on August 2, 2021, the date set by the Monmouth Board, will be entitled to vote at the special meeting.

The preliminary proxy statement outlines the background to Starwood’s engagement with Monmouth and the reasons Starwood believes its July 15 offer is superior to EQC’s proposed transaction for a variety of reasons, including:

  • Starwood’s proposal clearly offers Monmouth shareholders more value and security than the EQC transaction.

  • Starwood’s proposal is fully funded and has no funding reservations. All funding commitments necessary to fund the transaction have been executed and made available to the Monmouth Board.

  • Starwood’s price is fixed and shareholders can be assured of the value they will receive.

  • Unlike the EQC transaction, which requires approval from Monmouth shareholders as well as EQC shareholders’ approval, Starwood’s proposal does not require a vote from Starwood shareholders to advance the merger agreement and complete the transaction.

  • Starwood’s proposal does not require any further due diligence or Starwood approval.

  • Starwood’s proposal is fully and immediately actionable as Starwood has already submitted a merger agreement to Monmouth that Starwood can sign immediately.

“We strongly believe that EQC’s share offering is not in the best interests of all Monmouth shareholders,” said Ethan Bing, managing director of Starwood Capital. “Starwood Capital has proposed a cash alternative that would provide Monmouth shareholders with significant added value and the assurance that value will be realized when compared to EQC’s offering. We are ready to sign a definitive merger agreement. ”

Bing added, “The Monmouth Board of Directors continues to recommend an substandard transaction that will prevent shareholders from realizing significant value. We believe that Monmouth shareholders should protect their own interests by voting against the EQC transaction and urge their board of directors to accept Starwood Capital’s considerate proposal and allow shareholders to vote on that proposal. ”

Starwood remains fully committed to its proposal and stands ready to execute its fully funded, full offering with the aim of working with Monmouth to reach an agreement.

About Starwood Capital Group

Starwood Capital Group is a private investment company with a core focus on global real estate, energy infrastructure, and oil and gas. The company and its affiliates have 16 offices in seven countries around the world and currently employ approximately 4,000 people. Since its inception in 1991, Starwood Capital Group has raised over $ 60 billion in capital and currently manages approximately $ 90 billion in assets. Through a number of Comingled Opportunity Funds and Starwood Real Estate Income Trust, Inc. (SRIT), a privately held REIT, the company has invested in virtually every property category worldwide, opportunistically changing asset classes, regions and positions in the capital stack as it moves perceives the risk-return dynamics. Starwood Capital also manages Starwood Property Trust (NYSE: STWD), the largest commercial mortgage real estate investment trust in the United States, which has successfully deployed over $ 69 billion in capital since its inception and a portfolio of over 18 billion Managed US dollars in debt and equity investments. For the past 29 years, Starwood Capital Group and its affiliates have successfully implemented an investment strategy that involves building businesses in both the private and public markets. Please visit starwoodcapital.com for more information.

IMPORTANT INFORMATION

On July 27, 2021, Starwood Real Estate Income Trust, Inc. along with the other participants referred to herein (the “Participants”) filed a preliminary power of attorney and the accompanying BLUE authorization card form with the Securities and Exchange Commission (the “SEC”, and attendees intend to file a final proxy statement and accompanying BLUE proxy card form with the SEC in connection with obtaining proxies from Monmouth shareholders for the Monmouth Special Meeting on August 17, 2021.

ALL MONMOUTH SHAREHOLDERS ARE RECOMMENDED READ THE FINAL STATEMENT AND OTHER AUTHORIZATION DOCUMENTS, WHEN IT IS AVAILABLE, AS THEY CONTAIN IMPORTANT INFORMATION, INCLUDING THE ENTIRE PARTY. SUCH PROXY MATERIALS ARE OR WILL BE AVAILABLE FREE OF CHARGE ON THE SEC WEBSITE AT HTTP://WWW.SEC.GOV OR BY CONTACTING INNISFREE M&A INCORPORATED BY TELEPHONE (87257-750) INNISFREE M&A INCORPORATED, THE PARTICIPANTS PROXY AGENT. IN ADDITION, THE PARTICIPANTS TO THIS PROXY REQUEST WILL PROVIDE COPIES OF THE PROXY DECLARATION FREE OF CHARGE ON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS ‘PROXY LAWYER.

PARTICIPANT INFORMATION

The proxy attendees are Starwood Real Estate Income Trust, Inc., Christopher Graham, and Ethan Bing. Information about the participants and a description of their direct or indirect holdings of securities are included in the preliminary proxy statement that participants filed with the SEC on July 27, 2021. This document is available free of charge on the SEC website.

ADDITIONAL INFORMATION

None of the notices contained herein or in the preliminary proxy statement relating to Starwood’s July 15 offer constitute an offer to buy or a solicitation of an offer to sell any securities. Starwood’s July 15 proposal is a proposal made by Starwood to the Monmouth Board of Directors for a business combination with Monmouth. In order to promote such a proposed transaction, and subject to future developments, Starwood (and, if a negotiated transaction is agreed, Monmouth) may file one or more registration letters, power of attorney, purchase or exchange offers, prospectuses or other documents with the SEC. The preliminary power of attorney is not a substitute for a power of attorney, registration, offer or exchange offer, prospectus, or any other document that Starwood or Monmouth may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY OWNERS OF STARWOOD AND MONMOUTH ARE URGENTLY READ CAREFULLY AND IN ITS ENTIRETY IF YOU HAVE SUCH AUTHORIZATION, REGISTRATION, INFORMATION, OFFERS, PROMOTIONS, PROMOTIONS, PROMOTIONS, TRANSFERS. All final proxies or prospectuses (if available) will be sent to Starwood and Monmouth shareholders, respectively. Investors and securityholders can obtain free copies of these documents (if available) and other documents Starwood has filed with the SEC through the SEC-operated website www.sec.gov and Starwood’s website at www.starwoodnav. riding.

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