India’s budget hotel network OYO moves into wedding banquet services

OYO Rooms, the India-based budget hotel network that’s backed by SoftBank’s Vision fund, has prioritized expansion into China this year but that’s not all it’s up to. Back home in India, it just moved into the event hosting space through the acquisition of a wedding banquet company.

Today, OYO said it has acquired Weddingz.in, a three-year-old company that claims to be India’s largest wedding planner with 4,000 venues across 15 cities. The company had raised over $1 million from investors, and it says that it handles 1,500 weddings per quarter.

The deal is undisclosed and it is OYO’s third acquisition to date, all of which have come this year. Previously it snapped up a boutique apartment operator and then IOT startup AblePlus, but this transaction marks its first move outside of its core hotels and homes segment. The company said it is making the move because wedding banquets are “a fragmented, low yield, broken customer service business” that OYO believes matches with its experience of digitizing hotels and real estate.

“At OYO, our experience ranges from end-to-end management of homes, villas, small asset to hotels with 100+ rooms while running successful businesses for our asset partners and all these facets will be of utmost importance while operating in the wedding industry that in the dire need of fundamental changes and improvements,” OYO CSO Maninder Gulati said in a statement.

OYO hinted in its announcement today that it has other real estate projects in mind to expand further beyond hotels. That core focus is its affordable hotel network that it says spans 5,500 exclusive hotels in over 160 cities across India, China, Malaysia and Nepal.

OYO announced its move into China this summer and in two months it claims to have reached 1,000 chains across 28 locations in the country with a focus on serving middle-income customers.

The company has been linked with an investment from internet giant Tencent to push on in China, but so far nothing has been confirmed. OYO does count NASDAQ-listed China Lodging, which was formerly known as Huazhu Hotels and is valued at $6.8 billion, as a strategic partner on the ground there though. China Lodging invested $10 million last year as a follow-on to OYO’s $250 million Series D, which was led by SoftBank’s Vision Fund.

Zillow gets into the mortgage business, acquires Mortgage Lenders of America

Zillow, the publicly traded real estate portal and lead generation service, has acquired Mortgage Lenders of America. This is Zillow’s first move into originating mortgages. Until now, the company’s focus in this space was on providing home buyers with quotes from a variety of third-party lenders.

The financial details of the transaction were not disclosed.

Mortgage Lenders of America (MLoA) is a privately held online lender based in Kansas. It will continue to operate as usual and will continue to appear in Zillow’s existing mortgage marketplace, which isn’t going away either. “Owning a mortgage lender will allow Zillow Group to develop new tools and partnership opportunities, including for real estate brokers with existing in-house mortgage operations or mortgage affiliates,” the company says in today’s announcement.

Other lenders in Zillow’s marketplace may not feel the same way. MLoA originated 4,400 mortgage loans from its ads on Zillow in 2017. The company argues that this leaves “plenty of opportunity for independent lenders to continue to advertise and build their businesses on the Zillow Group platform.”

In many ways, this move makes perfect sense, given the trajectory Zillow has been on in recent years. The company recently started buying and selling homes through its Zillow Offers program in a few select cities, so this closes the loop for buyers who are using this program.

“Getting a mortgage can be the toughest, most painstaking and time-consuming part of the home buying process,” said Greg Schwartz, president of media and marketplaces at Zillow Group, in a canned statement. “Now that we are buying and selling homes through Zillow Offers, we believe that having our own mortgage origination service as an option for consumers will allow us to streamline the process for people who buy a Zillow-owned home. Over time, we expect the work we do in conjunction with this new line of business will help us expand our offerings to our partners – including real estate brokers with existing in-house mortgage operations and third-party lenders who co-market with Premier Agents.”

MLoA was founded in 2000 and currently has about 300 employees. It will remain in its Kansas headquarters and its CEO Philip Kneibert will continue to lead the company as general manager after the deal closes, which will likely happen in the fourth quarter of 2018.

Rentlogic lands millions to grade NYC real estate for renters and landlords

A company called Rentlogic has raised $2.4 million to take the guesswork out of determining whether that cheap, beautiful New York apartment is actually a deathtrap wrapped in a brownstone’s clothing.

Renting in New York is murder already, but using Rentlogic, apartment hunters can figure out if their new housing situation could actually kill them (or put them at significant risk of bodily or property harm… or even minor inconveniences).

Investors in the company’s seed round include the Urban-X accelerator (which is a partnership between Urban.US and Mini); Urban.Us, an investor in urban technologies; the millennial-entrepreneur-focused investment firm, Kairos; and Seagram beverage company scion Edgar Bronfman, Jr.

Rentlogic already provides a grade for every building in New York — more than 1 million properties — but has added an inspection feature that it charges landlords for so that they can display a rating outside of their building. It’s like the city’s scoring grades for restaurants in neighborhoods.

“We grade every single property in New York,” says Yale Fox, the company’s founder and chief executive. “We have inspected 103 properties. Everybody is really happy with it and everybody is going to re-sign and we’re going to start scaling this out to every property in New York.”

Rentlogic scores buildings on a combination of around 150 different variables, including the ability to provide continuous heat and hot water, and whether or not a building has evidence of bed bugs or rodents.

The looks of the building doesn’t matter, Fox says. It’s more about the conditions of the building.

“It’s the same way a building would get LEED-certified,” says Fox. “It’s a good way for one landlord to differentiate their property as higher quality than a competitor’s in the same neighborhood.”

Launched initially in 2013, Rentlogic was born out of Fox’s own tragic experience as a new renter in New York. The Canadian transplant (and the son of a family of real estate professionals and small scale landlords) had come to the city for a new job and was looking at an apartment in the West Village.

After shelling out a $12,000 deposit for first month’s rent, last month’s rent and a security deposit, Fox settled into his abode in the tree-lined luxury of one of Manhattan’s most sought-after neighborhoods. The love affair with the building didn’t last long.

Unexpectedly, Fox started to become sick. Several visits to the doctor couldn’t identify a cause for his illness, until, finally, his physician suggested a mold-related illness.

“I asked the landlord to fix it and I wound up having to take the landlord to court,” says Fox.

By the time the court date arrived, Fox had paid to fix the mold problem himself and had little in the way of solid evidence to show a judge. So he built an app that would track the public complaints filed against the landlord and the public assessments that had been done on the building.

“I went to court and I showed the judge this model that I had put together and he said, ‘Welcome to New York and I’m sorry this happened to you… and you should definitely build an app, because New York City needs this.’”

Rentlogic founder Yale Fox

Fox, already enrolled in the TED Fellows program, built the app, initially called “RentCheck” and began marketing it to landlords and renters. “It was just a hobby because I was so angry about how things had happened to me,” says Fox. “We didn’t want to charge renters fees to the site. We thought having equal access to information could prevent this from happening in the future.”

Things continued as a nonprofit for a while until last year Fox hit on a business model. He designed a ratings card for the building based on the data his company had collected and showed it to his current landlord. “She said, ‘How much would you charge for it?’” Fox recalled.

Thus RentCheck became Rentlogic and a business was born. Fox charges landlords for assessments and to display a ratings placard that indicates the building’s grade.

Renters are willing to pay up to an additional $45 per month, according to a white paper, to sign a lease in a building that’s been independently certified. “People are willing to pay a little bit more just to not deal with the constant headaches that happen in certain kinds of buildings,” he said.

Fox appears to have launched Rentlogic at the right time. The market for housing in New York has softened as luxury apartments flood the market and demand softens, meaning that rents are coming down across the board.

But beyond being more competitive there’s a defensive aspect to getting rated in a market filled with demanding, complaint-prone consumers that have no qualms savaging any business, from landlords to local restaurants (although oftentimes the landlords and restaurants deserve it).

“A lot of times landlords are purchasing this because there’s no way to prove they’re not a one-star landlord,” Fox says. “This is accessible for big landlords and small landlords. In a zero-transparency and low-accountability marketplace, there’s no incentive for bad actors to improve their behavior, but with Rentlogic there is.”

The company is already making institutional moves. Fox has inked a deal with Blackstone about providing ratings for their $5.5 billion Stuyvesant Town acquisition on the Lower East Side, according to Fox. In addition, the company has partnered with a number of real estate brokers and roommate-hunting services like Nooklyn and Roomi to use its ratings.

While Rentlogic is scrupulous about using data to train its algorithm, it’s also transparent about how the algorithm works, according to Fox.

“Algorithms control so much what’s going on in the world and people just don’t understand them,” he says. So in the interest of full transparency, the company is putting together a building simulator where users can add problems and see how it affects a building’s rating on the Rentlogic site. The company also has an algorithmic review committee that reviews the results coming from the building assessments.

And while Rentlogic is starting in New York, the company has plans to use its machine learning system to hoover up publicly available data and provide grades for real estate across the United States.

Ultimately, Fox just wants to help improve the tenant-landlord relationship, he says. “I was in a terrible situation with a landlord who went to jail… I launched this site so no one would have to go through what I went through.”

Brookfield buys Forest City in second blockbuster real estate deal this year

Brookfield Asset Management Inc. agreed to acquire Forest City Realty Trust Inc. just four months after the real estate investment trust said it planned to remain a standalone company.

The Toronto-based alternative asset manager said in a statement Tuesday it will acquire Forest City for US$25.35 a share in cash, a 10 per cent premium over where shares closed Monday and about 26 per cent above where they were trading the day before Bloomberg reported that the pair had restarted talks. The deal is valued at US$11.4 billion including debt, according to the statement.

“Forest City has created a high-quality portfolio of operating and development assets over its 100-year history,” said Brian Kingston, chief executive officer of Brookfield Property Group. “We look forward to creating further value in these great assets on behalf of our limited partners.”

Forest City shares rose as much as 8.7 per cent after Bloomberg reported the companies were nearing a deal. The shares were up 8.6 per cent to US$25 at 10:23 a.m. in New York.

“I think it’s a positive for Brookfield as they’re buying Forest City at an attractive price,” said Sheila McGrath, an analyst at Evercore ISI who covers Forest City and Brookfield Property Partners LP. Forest City’s development assets may provide an “embedded upside” for Brookfield, she said.

The acquisition comes just four months after Cleveland-based Forest City said it had completed a strategic review and decided shareholders would be better off if it remained a standalone company.

Starboard’s Support

The company announced then that nine directors would resign. Representatives from activist investors Starboard Value and Scopia Capital Management were among those named to the board. Starboard and Scopia, which collectively hold about 14 per cent of Forest City’s shares, said Tuesday they agreed to support the transaction.

Forest City said it wouldn’t pay a dividend while the transaction was pending and also wouldn’t hold its second quarter conference call. It said it expected the transaction to close in the fourth quarter, subject to standard conditions.

In March, Forest City said that 18 interested buyers had entered into confidentiality agreements. One large financial investor, which people familiar with the process identified as Brookfield, made a non-binding proposal of US$26 a share for the company. The board ultimately decided not to pursue that transaction, which was revised to US$25 a share as of March 13, with conditions attached.

Firm’s Progress

Forest City said at the time it would have supported a US$25.50 all-cash deal with dividends paid through closing, and no conditions related to third-party consents or the completion of an internal reorganization.

David LaRue, Forest City’s chief executive officer, said the firm had made significant progress in its transformation over the past several years and was pleased Brookfield recognized the value of its portfolio and its growth opportunities.

“We believe that this transaction will deliver an immediate cash premium to stockholders for their investment and represents the best path forward for our company and our stockholders,” he said.

Forest City, founded by the Ratner family in 1920, focuses on commercial and residential projects, including mixed-use developments, according to its website. The company built the Frank Gehry-designed residential tower on Spruce Street in lower Manhattan and owns substantial life sciences office space in Cambridge, Massachusetts.

Buying Forest City is the second sizable real estate transaction by Brookfield and its affiliates this year. In March, its real estate arm agreed to take U.S. mall owner GGP Inc. private in a deal valued at about US$15 billion.

Lazard Ltd. and Goldman Sachs Group Inc. provided financial advice to Forest City while Sullivan & Cromwell acted as its legal adviser. Wachtell, Lipton, Rosen and & Katz provided legal counsel to Forest City’s board.

Bank of America Corp., Barclays Plc, Bank of Montreal, Citigroup Inc., Deutsche Bank AG, Royal Bank of Canada and Toronto-Dominion Bank provided the financing for the transaction to Brookfield. The banks, along with Moelis & Co., also provided financial advice. Three law firms provided legal advice: Skadden, Arps, Slate, Meagher & Flom; Weil, Gotshal & Manges; and Torys.

Bloomberg.com

Skyline AI raises $18M Series A for its machine learning-based real estate investment tech

Skyline AI founders Iri Amirav, Or Hiltch, Guy Zipori and Amir Leitersdorf

A mere four months after coming out of stealth mode with $3 million in seed funding, real estate investment startup Skyline AI announced that it has raised an $18 million Series A. The round was led by Sequoia Capital, a returning investor, and TLV Partners, with participation from JLL Spark, a division of real estate investment management firm JLL. The strategic funding will allow Skyline AI to add more asset classes to its platform, which uses data science and machine learning algorithms to help institutional investors make better decisions about properties.

Skyline AI says its technology is trained on what it claims is the most comprehensive data set in the industry, drawing from more than 100 sources, with market information covering the last 50 years. Its technology is meant to provide faster and more accurate analysis than traditional methods, so investors can react more quickly to changes in the real estate market.

Co-founder and CEO Guy Zipori told TechCrunch in an email that the startup decided to raise its Series A so soon after coming out of sleath because of positive response from investors, adding that the round was oversubscribed. “The timing of the round also worked out perfectly with our current deal flow and expansion plans. The round was significant, putting us in a great position to move forward,” he said.

Skyline AI has had a busy few months since emerging from stealth. In June, it teamed up with an unnamed partner in the U.S. to acquire two residential complexes in Philadelphia for $26 million. Zipori said they decided to make an unsolicited offer after Skyline AI’s platforms determined the properties were being mismanaged. Then in July, Skyline AI announced a partnership with Greystone, a real estate lending, investment and advisory firm, to collaborate on improving the dealmaking and loan underwriting processes.

JLL and other strategic investors in Skyline AI’s Series A will allow the startup to add analysis and underwriting for new asset classes, including industrial, retail and office properties, to its platform. “This in turn will enable us to deepen and strengthen cooperation with the leading commercial real estate investment firms across the U.S.,” said Zipori. Some of the capital will also be spent on growing its research and development, data science and AI teams in Tel Aviv, and its recently opened sales and real estate office in New York.

In a press statement, Sequoia Capital partner Haim Sadger said “Over the last few years, we’ve seen AI disrupt a number of traditional industries and the real estate market should be no different. The power of Skyline AI technology to understand vast amounts of data that affect real estate transactions, will unlock billions of dollars in untapped value.”

WeWork is just one facet of SoftBank’s bet on real estate

This week WeWork announced that its Chinese subsidiary — WeWork China — raised an additional $500 million in capital in a deal led by SoftBank, Temasek Holdings and others. The deal reportedly values the Chinese branch of the shared workspace and real estate management company at $5 billion, up from $1 billion (post-money) in the round WeWork China announced almost a year ago in July 2017.

SoftBank rarely doubles down on a particular company. At time of writing, SoftBank itself has made 175 investments in 144 different companies, according to Crunchbase data. Of those, just 23 companies raised more than one round from SoftBank. And in conjunction with its China branch, with four cumulative transactions on record, WeWork is tied for first place in a ranking of companies most-engaged with SoftBank’s investment arm.

That being said, SoftBank’s investment strategy appears to be one of taking stakes in leading companies from a given sector. And although it’s sometimes difficult to tell just how large some of those stakes are as a percent of equity in the company, SoftBank finds itself involved in many companies’ biggest rounds to date.

Take WeWork for example. If you take all of the equity funding rounds raised by its main corporate entity and regional offshoots like WeWork China and WeWork India, you’ll find that SoftBank was either the sole investor, the round leader or a syndicate participant in the rounds that delivered the lion’s share of capital to the company.

If the market opportunity is big, SoftBank will typically make investments in regionally dominant companies operating in that sector. After all, if worldwide dominance is difficult to obtain for any one company, SoftBank is so big that it can take positions in the regional leaders, creating an index of companies that collectively hold a majority of market share in an emerging industry.

It’s a bold strategy that involves taking some big risks and writing big checks. As a result, SoftBank is typically the largest single investor — in terms of dollars committed — in the fastest-growing companies in an industry.

Real estate is just one theme

WeWork is just one facet of SoftBank’s real estate investment efforts. The table below shows a selection of SoftBank’s investments in the real estate and construction sector. It’s ranked by the amount of money invested in rounds involving SoftBank (either as the sole investor or as part of a broader syndicate). We also show what percent of total known equity funding SoftBank-involved rounds account for.

SoftBank’s strategy of writing big checks to successful startups in large and growing market segments extends past real estate, of course. It touches many other industries, including e-commerce and logistics, insurance and healthcare, and, perhaps most contentiously, ride-hailing and on-demand transportation.

SoftBank also has a strong portfolio of artificial intelligence companies to flex at some point down the road. It has invested in the likes of Nvidia, Improbable, Brain Corporation, Pentuum and others. Furthermore, its stakes in Mapbox and Cruise Automation are advantageous to SB Drive, its own autonomous vehicles effort.

SoftBank is one of the cases of everything old being new again. In the late 1990s, SoftBank and its founder Masayoshi Son were some of the biggest investors in tech. Then, like today, Son aimed to forge a kind of virtual Silicon Valley in SoftBank’s portfolio, a platform for symbiotic, cooperative relationships and business partnerships to emerge. There’s definitely the possibility for this sort of bonhomie to emerge today, given the thematic nature of the firm’s investment strategy. But at the same time, Son is famous for losing a lot of money when the first tech bubble collapsed. It remains to be seen whether the firm will make it out on top the second time around.

Canada’s housing sector faces high degree of instability for eighth straight quarter, CMHC warns

TORONTO — The Canada Mortgage and Housing Corporation says the country’s housing sector is facing a high degree of vulnerability to market instability for the eighth straight quarter.

The Crown corporation attributes the vulnerability to overvaluation and price acceleration in Toronto, Vancouver, Victoria, and Hamilton.

It rated Edmonton, Calgary, Saskatoon, Regina as having moderate levels of vulnerability and Winnipeg, Montreal and Halifax among those with low risks.

CMHC says it is seeing signs of moderate overheating in Vancouver although price growth has been slowing over the last two quarters and detached properties in some areas are seeing declining prices.

In Toronto, CMHC says sales continued to trend lower in the first quarter of 2018, well below the threshold for overheating.

CMHC’s quarterly report uses overheating, acceleration of home prices, overvaluations and overbuilding to assess the country’s real estate markets.

Welcome to suburbia: the millennials done with city life – and city prices

Despite their urban image, millennials are looking to suburbs and the country for a quieter, and cheaper, lifestyle

A green sign with a horse-drawn carriage marks the turn in the road: Townes at Covington, it reads, a nod to the management company running properties in this quiet cul-de-sac 30 minutes outside Washington DC.

Of course, there aren’t any horse-drawn carriages here. There aren’t even really any pedestrians. I drive up to a cheerful cream-colored house with blue shutters. I park.

We’re inheriting this highly toxic system that only favors rich people. Cities are becoming unaffordable

Related: Millennials are struggling. Is it the fault of the baby boomers?

The oldest millennials are starting to think about what their next stage of life looks like

Related: ‘We’re being pushed out’: the displacement of black Oakland

My wife now that she has a taste, she’s hungry for the country life and wants to move even further out

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