Upstart real estate brokerage Properly Inc. has hired an investment bank to consider options including a sale, just a few years after rapidly expanding in Ontario.
Properly is the second real estate entrant that has been forced to change course after the country’s housing market slowed when the Bank of Canada aggressively hiked interest rates. FairSquare Group Realty, also known as Purplebricks, was shuttered earlier this year.
The company’s cofounder Anshul Ruparell confirmed to The Globe and Mail that his brokerage hired investment bank Raymond James to help with the process.
“We received inbound acquisition interest, and have hired Raymond James to help us evaluate,” Mr. Ruparell said in an e-mail.
He declined to respond to questions on who had expressed interest, what price he would be willing to accept, why he wanted to sell and whether he would remain in the real estate sector if he sold his company.
It is unknown how much the brokerage is worth. Properly had positioned itself as a tech company with online analytics to help determine valuation, as well as a real estate firm with innovative products that were not offered by the traditional players like Royal LePage and Re/Max.
Its main feature, called sales assurance, offered home sellers a guaranteed sale and price. Properly provided sellers with a firm purchase agreement to buy their property at a set price if they were unable to sell it on the open market.
But earlier this year Properly paused sales assurance citing “unprecedented volatility in the Canadian housing market.”
It once had ambitious plans to triple its staff and expand across Ontario and other major Canadian cities. Properly now has 79 employees, which is about half the staff it had in mid-2021, according to LinkedIn. Late last year, the company axed 71 jobs, citing the rapid slowdown in the housing market. At the time, Mr. Ruparell apologized to his staff and said conditions had “deteriorated much faster” than anticipated and that he could not predict when the market would recover.
His company is among the many in the tech space that have suffered from cooling demand from customers who sought out their services during the pandemic lockdowns and low interest rate era. Over the past year and a half, tech companies have cut more than 360,000 jobs in a bid to slash costs as borrowing became more expensive, cooling investor interest in early-stage tech companies. Valuations of public and private technology companies have crashed and venture capital investment has dropped sharply, echoing past downturns.
In February, financial services firm Desjardins Group shut down its real estate brokerage FairSquare Group Realty, blaming the housing slowdown. It had bought FairSquare in the first year of the pandemic but failed to gain any traction outside of Quebec.
Real estate activity quickly picked up after the Bank of Canada said in January that it would take a break from raising interest rates. But with the latest increase in June,, it is unclear whether the four-month rebound in home sales and prices will continue. Now, the bank is warning that the housing recovery along with a tight job market and robust demand for goods and services are signs of persistent inflation.
Mr. Ruparell started Properly in 2018 in Calgary, where he grew up. He expanded to Ottawa and Toronto in 2020 as the real estate market boomed with interest rates near zero.
Properly had attracted high profile financiers and well known investors such as Bain Capital LP’s venture financing arm, as well as a $100-million credit facility from Silicon Valley Bank to help fund any purchases that were needed through its sales assurance.
Silicon Valley Bank has since failed after a run on deposits. Its Canadian loan business is now being auctioned off and it’s not certain what if any appetite a new owner would have for financing Properly’s business model.