ReAlpha Tech Corp., the Dublin property-tech startup, soon will own no properties.
The company has quietly sold off short-term rentals it purchased while training its machine-learning software that identifies prospects for investments, including a handful since going public in October. The last home, in the suburbs near Dallas-Fort Worth Airport, is listed for $325,000, reduced from $350,000 when it was listed in October, according to Realtor.com.
ReAlpha (Nasdaq: AIRE) likely will start buying properties again in the second quarter or later, according to a regulatory filing at year's end. The company plans to use machine learning to recommend neighborhoods and properties for evaluation to buy.
"The recent disposal of properties is occurring as part of a temporary adjustment, as we are currently in the process of re-evaluating our operations in Texas and Florida," said the prospectus filed with the U.S. Securities and Exchange Commission.
Skipping an IPO, the company went public in late October through a direct listing on Nasdaq. While that move brought no proceeds to the company, in late November it raised $8 million in a private placement through Maxim Group LLC, the New York City investment bank that advised it in going public, according to regulatory filings and a release.
The Dec. 29 prospectus was to register shares for future draw-downs of a $100 million investment by GEM Global Yield LLC SCS, a subsidiary of the firm Global Emerging Markets, based in New York City, Paris and the Bahamas. Going public was a condition of the agreement reached in December 2022, under which GEM would buy shares over a period of three years.
GEM also receives warrants for additional purchases. A warrant allows the holder to buy shares at a later date; these expire in five years. Right now, that means the stock would have to trade higher than $407 for GEM to be able to sell those shares at a profit. The stock has been trading around $1.50 this week, according to Nasdaq.
ReAlpha has declined to comment outside of its public filings and news releases.
The company is bringing more of its tech in-house: In December, the company entered agreements to acquire Naamche Inc., a 25-person data analytics and AI software development firm based in Nepal, and United Software Group, a Dublin IT consulting and custom software firm with 2,000 full-time and contract employees, according to a release. The purchase price is $40 million, according to the prospectus.
And it's completing the integration with the tech platform for fractional investments by Rhove, the Columbus startup it acquired for $13 million last spring.
In November, the company launched software using AI to generate short-term rental listing descriptions.
"We are looking to continue to develop and scale ReAlpha to provide innovative AI solutions to further enhance stockholder value," CEO Giri Devanur said in a December news release.
Also as part of its shifting tech strategy, last spring the company sold MyAlphie, a digital marketplace connecting property managers and contractors, for $5.5 million to a subsidiary of Crawford Hoying, the Dublin developer that was an early investor in ReAlpha, according to SEC filings. Brent Crawford, principal of Crawford Hoying, resigned from the startup's board in April, and he is among shareholders who listed shares for resale as the company went public.
That divestiture resulted in a $590,000 profit for the six months ending Oct. 31, mitigating a $4.8 million operating loss, according to the prospectus. Revenue of $101,000 for the period was just over half the $199,000 for the same period a year ago, because of the drop in both rental income from selling its properties and in software services sold to outside real estate companies.
The company also has changed its fiscal year to end on Dec. 31 instead of April 30. Its next annual report will be a transitional one covering May through December of 2023.
ReAlpha, one of Columbus Inno's Startups to Watch for 2023, was the first company in the first two years of the feature to go public. The 2024 class came out last week.
