Brookfield Property leads investment in project management platform
OCTOBER 11, 2017 / 12:01 PM NEW YORK (Reuters) – Brookfield Property Partners LP (BPY.N), one of the largest commercial real estate companies, said on Wednesday it has invested in Honest Buildings, a project management start-up that compiles data for property owners to make construction projects more efficient.
Brookfield led a group that raised $13 million for Honest Buildings in the hopes its platform can establish an industry-leading standard for large property owners that need greater clarity into construction projects.
The stake, whose amount and size of ownership was not disclosed, is Brookfield’s second foray into non-property holdings and raises investment in Honest Buildings to just over $30 million, the company said.
Other property owners, investors and venture capitalists in the Series B fundraising round included New York’s Rudin Management Co, C-III Capital Partners, Navitas Capital, Greensoil Building Innovation Fund and Grosvenor Estate.
Honest Buildings operates a centralized database that helps property owners find cost savings from greater clarity of information that often is still compiled on paper spreadsheets.
The latest investment should elevate Honest Buildings’s profile.
“Our operations team were the end-users of this and really raved about the product,” said Ben Brown, part of Brookfield’s investment team.
“We really buy into the software and the efficiency and the cost savings it provides,” he said, adding Brookfield’s global footprint could help Honest Buildings move overseas.
The centralized database has increased net operating income for companies by speeding up projects and driving down construction costs, according to Riggs Kubiak, founder and chief executive officer of Honest Buildings. A survey last year of 60 clients showed companies saved about $100 million, Kubiak said.
Much of commercial construction has evolved at a glacial pace and is among the least digitized sectors in the world, consultants McKinsey & Co said in a February report that underscored the industry’s low productivity and chronic cost overruns and downtime.
The size of the market Honest Buildings serves is hard to gauge, but McKinsey has said $10 trillion is spent worldwide on construction-related goods and services every year.
The first move abroad will be Canada and then other countries alongside Brookfield, Kubiak said.
Brookfield is considering options for its office properties in the U.S. Northeast, including the potential sale of a stake that could value the portfolio at as much as $10 billion, people familiar with the matter told Reuters last week.
Reporting by Herbert Lash; Editing by Daniel Bases and Lisa Shumaker