TEK2day PropTech Outlook & Landscape<span class="badge-status" style="background:red">Premium</span> 

TEK2day PropTech Outlook & LandscapePremium 

The TEK2day PropTech Outlook provides our perspective on where we believe the PropTech industry is headed over the next few years. Major themes include: I.) further industry consolidation and II.) AI-driven revenue opportunities and operating efficiency gains.

The TEK2day PropTech Landscape (link at the bottom of this article) includes company names, descriptions, CEOs, 2019 revenue estimates, financial sponsors and more. We cover 81 companies – including industry leaders such as CoStar Group (tkr: CSGP), MRI Software (private), Real Page (tkr: RP) and Yardi (private) – featured in an interactive format.

Further PropTech Consolidation on the Horizon

Similar to other Enterprise Software sectors, PropTech is a scale game. The M&A activity over the past number of years reflects this. We expect M&A to remain a major theme within the PropTech sector as strategic acquirers (traditional and non-traditional), and private equity firms hunt for acquisitions.

For strategic acquirers, the name of the game is scale. PropTech leaders such as CoStar wish to provide their various customer segments with one-stop shopping. Whether it be comprehensive CRE property data, benchmarking & analytics (see CoStar’s $450M STR acquisition), multi-family listings and more, CoStar has something for you. CoStar realized the benefits of scale early in its history as it worked to build comprehensive CRE property data coverage across the U.S. and U.K.

Richardson, TX-based RealPage – a leading Property Management software provider – is another strategic acquirer that has used acquisitions to build out its platform. RealPage recently announced its $580M acquisition of Buildium – a property management software provider focused on the SMB market. (For more on CoStar, RealPage and other PropTech companies, see our May 2019 “Real Estate Tech” article).

Non-traditional strategic acquirers such as Fortive (tkr: FTV) have moved into the PropTech industry. Fortive acquired Accruent in July 2018 for $2B. Accruent competes in the facilities management/ asset management segment of the larger Property Management space against companies such as RealPage, Entrata, MRI Software and Boston-based Building Engines (Building Engines recently acquired Synlio, a software company that manages the CRE RFP process). We expect to see more non-traditional acquirers compete for CRE software / “PropTech” assets given the predictability of CRE software revenue and cash flow streams as well as the relative “stickiness” of CRE software from a customer retention standpoint.

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