A Dublin startup using AI to guide real estate investments could build a half-billion-dollar portfolio of Airbnb rentals under a joint venture with a Singapore-based investment firm.
ReAlpha Asset Management Inc. will own 51% of the properties, and Saiml Pte. Ltd. the other 49%, according to regulatory filings.
Saiml, an asset management firm for family offices and wealthy individusals, is in the professional network of Giri Devanur, founder and CEO of parent ReAlpha Tech Corp., and initiated talks when it was looking enter the U.S. real estate market.
"This business model is resonating beyond the U.S. – which is a great sign for us," said Mike Logozzo, the startup's CFO and COO.
The JV is under separate financing from the initial business model in which ReAlpha sells stakes as low as $1,000 in a "mini-IPO" so everyday investors can break into real estate – but it benefits those investors as well, Logozzo said in an interview.
"They're investing in the company," he said. "(The JV) enables us to grow faster."
The Saiml deal is split in two phases, with the optional second depending on the success of the first:
- Phase 1: ReAlpha puts up $20.8 million and Saiml $20 million for down payments, and ReAlpha secures a $160 million loan toward investing in $200.8 million worth of "rental-ready" properties.
- Phase 2: ReAlpha invests $31.2 million and Saiml $30 million, leveraged with debt financing for a total portfolio worth $306.2 million. The first phase would have to meet certain metrics to trigger this tranche.
“In meeting reAlpha and learning about its platform, creative approach to marketing and mission to democratize real estate investments in a better, cheaper and financially inclusive manner, we became convinced the company’s value proposition is a game changer,” Bala Swaminathan, Saiml founder and CEO, said in a news release. “We strongly believe that reAlpha has the opportunity to become a global leader in the vacation rental space."
ReAlpha will look for properties that need minimal or no renovation to turn into short-term rentals, starting in California, Arizona, Florida and Tennessee. The joint venture's directors would need to approve expanding into more states.
The deal follows a $200 million credit line the company secured last month from New York City-based Churchill Real Estate, which will enable ReAlpha to buy up to 500 properties.
Downpayments for those properties would come from the company's $75 million "mini-IPO." Using Regulation A of the 2012 Jobs Act, ReAlpha Asset Management is selling $10 shares with a minimum investment of $1,000. That public offering closes in one week.
The offering is "going well," Logozzo said, but the company can't disclose specifics until it closes.
ReAlpha had previously raised $6 million in 2021, led by Dublin developer Crawford Hoying, to develop its software. It borrowed from banks to buy its first 16 properties in Dallas and Miami.
It also has a management agreement with publicly traded vacation rental company Vacasa Inc. (Nasdaq: VCSA). The Portland, Oregon, company has right of first refusal to manage ReAlpha properties when it buys in markets where Vacasa operates.
ReAlpha is monitoring the economy to find the best balance between rising interest rates and falling home prices, he said. It has not bought new properties recently.
"We believe Q1 is the right time to begin our acquisitions," he said.
