Real Estate, Tech Investment Manager Fifth Wall Cuts Staff

One of the biggest names in proptech investment is dealing with a major shakeup.

Fifth Wall reduced headcount and pressed pause on active fundraising, Axios Pro reported. Chief executive officer Brendan Wallace confirmed the business decisions to the outlet.

It wasn’t immediately clear how many employees were affected, though people familiar with the firm told the outlet the climate team was hit particularly hard.

The company cited a familiar foe of the real estate industry for the cuts, pointing to high interest rates. The firm also pointed to climate policies under President Donald Trump’s administration. The federal government’s shift away from climate change science has affected proptech fundraising by scaring off investment and stoking uncertainty around regulations and building materials.

A representative for the company did not immediately respond to a request for comment from The Real Deal.

Wallace disputed several points raised by Axios, including the cancellation of a $500 million to $1 billion proptech fund that the CEO said never existed.

The firm’s REACT fund, geared towards the since-consolidated real estate and climate tech business, remains open to investment, even without an active fundraising effort. The company raised $124 million for the fund last year, a quarter of its goal, according to an SEC filing last month.

In the past, Fifth Wall’s funds brought in plenty of cash. It has closed an $866 million proptech fund, a $500 million climate fund — its first in the sector — and a $159 million fund pointed at Europe. Real estate firms once made up 65 percent of Fifth Wall’s limited partners as it enjoyed low interest rates and government support for climate initiatives.

But rising interest rates and reportedly questionable decisions that rankled LPs caused difficulties for the firm.

Fifth Wall has $600 million in dry powder at its disposal today. Wallace intends to get active fundraising going again next year.

“The real estate market has continued to struggle, and so what I don’t think we’ll raise is $1 billion,” Wallace said. “I think we’ll raise a much smaller fund.”

— Holden Walter-Warner