New York Landlord RXR Realty Taps Investors for a Technology Fund

(Bloomberg) -- New York real estate firm RXR Realty has launched a fund dedicated to property-technology investing as tenants demand more high-tech services from their landlords.

RXR has begun speaking with existing investors about the so-called proptech fund, Chief Executive Officer Scott Rechler said in an interview. The firm is initially targeting a $50 million fund and will allow investors to contribute as much as $100 million in additional capital alongside the fund. Earlier this month, RXR backed MetaProp Ventures II LP, an incubator for emerging companies, and expects to lean on the firm’s expertise to vet its potential deals.

Rechler said the genesis of the proptech fund goes back to RXR having to pass on fundraising rounds by property-focused startups such as Convene, a flexible workspace provider, and VTS, a maker of commercial real estate leasing software. Blackstone Group LP ended up investing $3.3 million in VTS in 2015, while Convene last year landed a $68 million round led by investors including Brookfield Property Partners LP, the Durst Organization and ArrowMark Partners.

“We’ve seen how technology has become more and more ubiquitous in our business and want both the opportunity to invest and to be at the forefront of leveraging these technologies that can help us run our business more effectively,” Rechler said. The fund is targeting a close by the end of the year, he said.

RXR, which manages assets worth almost $18 billion, already has relationships with some of the startups that it has considered investing in. Hello Alfred, the developer of an in-home assistant that in May raised a $40 million round led by DivcoWest and Invesco Ltd., is a tenant at RXR’s 61 Broadway in downtown Manhattan, and has been tested by some residents at its Atlantic Station luxury apartment complex in Stamford, Connecticut. And Convene operates flexible working, meeting, event and conference spaces in some of RXR’s buildings, including 75 Rockefeller Plaza and 237 Park Ave., both in midtown Manhattan, and 32 Old Slip downtown.

RXR is best known for its flagship New York-focused real estate funds. It also has raised debt funds and an emerging-submarket pool focused on New York-area cities such as Yonkers, New Rochelle and Glen Cove.

In March, RXR was selected alongside a partner to expand and redevelop the JetBlue Airways Corp. terminal at New York’s John F. Kennedy International Airport. Rechler himself is on the board of the Metropolitan Transportation Authority; chairman of the Regional Plan Association, a group dedicated to using urban planning to improve the quality of life in the New York, New Jersey and Connecticut region; and former vice chairman of the Port Authority of New York and New Jersey.

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