Dexus-backed PropTech Fund Delivers Bumper Return

Author: Nick Lenaghan, Australian Financial Review, 26 November, 2020

A Dexus-backed proptech fund has delivered a 72 per cent internal rate of return after investing in a series of innovative technologies, including a process that stores carbon dioxide in concrete used for construction.

The country’s largest office landlord has invested alongside global real estate firm CBRE and Frankfurt-listed real estate investment manager Patrizia AG into the RealTech Ventures fund, run by realtech investment firm Taronga Group.

The fund hopes to hit its targeted raising of $75 million to $100 million before Christmas. By then, a host of deep-pocketed global players – ranging from global insurers, to a Japanese conglomerate and a Singaporean government-linked entity – may well have joined Dexus and its co-investors.

Taronga co-founder Jonathan Hannam said a recent audit of the fund showed it had delivered a 72 per cent IRR in its capital deployed in the year to June 30.

“It is showing us the direction. We had five companies which had revaluations during this period,” he said.

“That is where another investor has come in after us at a higher value.

“We want to change the way the real estate sector functions but we are seeking a financial return both at the asset level but also for our fund investors. It has to deliver on both.”

The fund has invested in about 12 tech innovations. Among them is US-based construction tech start-up OpenSpace, which uses an imaging and AI-driven platform to provide 360-degree visibility for construction sites.

The technology is already in use on Australian construction sites. Site managers recording imagery with a small camera attached to their hard hats as they walk around.

OpenSpace’s algorithms then map the imagery and project plans, and stitch them together, creating a representation similar to those wrought by Google Street View.

Another innovation in construction that has created much excitement is CarbonCure, a technology that injects recycled carbon dioxide into fresh concrete to reduce its carbon footprint. The Taronga-run, Dexus-backed fund was the only Asia-Pacific investor to join Microsoft and Amazon in a funding round for the Canadian-based company.

That technology could arrive in the local market as soon as early next year.

Dexus chief Darren Steinberg said the real estate sector had lagged to some extent in developing and investing in innovative technology.

“The world is moving very quickly. If the industry and the sector doesn’t get behind some of this technology, it’s going to be a laggard in its performance,” he said.