Private equity bigwig makes CRE play

Private-equity firm Insight Venture Partners has made its latest bet in the commercial real estate technology space, acquiring a New York-based software company focused on building operations. Through Property Brands, a holding company in which Insight is the lead investor, it bought SiteCompli, The Real Deal has learned.

The acquisition closed earlier this year, sources confirmed. On Thursday, Jason Griffith and Ross Goldenberg, who founded SiteCompli in 2008 and led it during its time as an independent company and later as a subsidiary of Daily Mail General Trust, said they would stay on as co-CEOs of the company. They declined to comment on the financial terms of the deal, but said in a statement that they were “excited” for the alliance with Insight and for SiteCompli’s “continued growth, innovation and expansion in New York and across the country.”

Representatives for Insight and Property Brands didn’t respond to requests for comment Thursday.

The Knoxville, Tennessee-based Property Brands is led by Lisa Stinnett, and sources said it deliberately keeps a low profile – its own website is rudimentary for a company focused on software-as-a-service (SaaS) firms. Insight has backed companies such as pet meal-prep company the Farmer’s Dog and vacation-rental search platform HomeToGo. It raised a $6.3 billion fund last year, with the firm’s general partners serving as its largest investors – a rare move in an industry where partners usually have little skin in the game.

Representatives for DMGT, which controls the U.K. tabloid powerhouse Daily Mail and has been steadily divesting its real-estate technology holdings, didn’t respond to requests for comment. DMGT bought a majority stake in SiteCompli in June 2014 for an undisclosed price, and tried to scale the firm by helping it acquire its main competitor, Empower, the following year. However, in late 2017, in the midst of a major legal battle between commercial real estate data giant CoStar Group and DMGT subsidiary Xceligent, DMGT wrote down the value of both Xceligent and SiteCompli, citing the latter’s failure to expand into the retail sector.

SiteCompli’s “planned expansion into the national retail market has proved more challenging than previously expected,” DMGT said at the time, writing down the value of the company by £24 million (about $31 million.)

The following year, DMGT reduced its stake in the firm to 49 percent, with Goldenberg and Griffith taking back majority control. Sources said that SiteCompli has struggled to expand across the U.S., but Griffith challenged this, saying it was “very pleased with the reception” nationally.

The firm is headquartered at 53 West 23rd Street in the Flatiron District and has about 70 employees, Griffith said. It aims, he added, to “change the way buildings operate every day,” harnessing data on tenant interactions, maintenance, compliance and building performance. Clients include SL Green Realty, Tishman Speyer, Related Companies and Olshan Properties.

For a firm the size of Insight, the game plan might be to build out a portfolio company to a scale that makes it desirable either to take public or to sell for a big markup, said Morris DeFeo, the co-chair of Herrick Feinstein’s corporate department.

“If you have a company that is a good base to build on,” he added, speaking generally and not about Property Brands, “you can use it as a platform to do other acquisitions and achieve some scale. The combined value will be greater than the sum of its parts.”