(Bloomberg)—Lessen, a technology provider that helps US landlords hire building contractors, is buying competitor SMS Assist for $950 million in a deal aimed at expanding the company’s reach into new corners of real estate.
Lessen raised $500 million in equity and debt to help finance the deal, valuing the firm at more than $2 billion. Monroe Capital and Invitation Homes Inc. were among investors participating in the funding, Lessen Chief Executive Officer Jay McKee said in an interview. Lessen was valued at more than $1 billion when it raised money in 2021.
The deal comes during a challenging time for real estate technology companies, as well as the single-family rental industry to which Lessen traces its roots. Silicon Valley darlings including Opendoor Technologies Inc. and Compass Inc. have seen their share prices plummet amid a housing slowdown that has limited demand for their services. Rental-house investors, meanwhile, have curtailed purchases while they wait out volatile debt markets and a softening leasing market.
The transaction made sense despite those headwinds because it accelerates Lessen’s efforts to add clients in sectors other than residential real estate, said McKee, who co-founded Colony American Homes in 2012, guiding real estate mogul Tom Barrack’s entry into single-family rentals.
The combined company will serve roughly 250,000 residential and commercial properties and facilitate about 2.5 million maintenance orders per year, according to a statement Thursday.
The deal also expands the services Lessen provides to residential landlords. While the company has focused on helping property owners find contractors to perform large-scale renovations, as well as refreshing properties between tenants, SMS Assist has expertise in making minor repairs during the life of a lease.
“Every resident has three to five service calls a year for things that break in the home,” said McKee, who will remain CEO. “That’s a perpetual revenue stream that’s recession-proof. You have to fix the toilet.”
To contact the author of this story: Patrick Clark in New York at [email protected].
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