CRE Marketplace Metechi Raises $5M As Family Offices Swoop On Distressed Real Estate

The following is a contributed article from a content partner of Benzinga

In the real estate business, these are the best of times and the worst of times. On the one hand, the events of 2020 have buffeted the entire industry, with commercial real estate (CRE) particularly badly affected. The vacant office blocks and half-finished construction projects have provided an opportunity, however, for savvy investors to swoop in and pick up cheap NPLs. Capitalizing on this trend is AI startup Metechi, which has completed a $5M raise to refine its platform for brokering commercial real estate deals.

Going Direct to Offload Non-Performing Loans

Repackaging bad debt and selling it on is a task normally left to the big banks such as JPMorgan Chase & Co. JPM. While extremely practiced at finding buyers of NPLs and underperforming assets, investment banks aren’t cheap, charging around 4-5% on a typical RE deal, which squeezes the margins of buyer and seller. In a bid to undercut the financial stalwarts, and service the growing demand for CRE deals, Metechi has created a marketplace for refinancing debt.

Although not limited to real estate, the majority of the deals currently live on Metechi’s platform are for CRE. More than $1 billion worth of deals are active on the company’s Commercial Lenders Marketplace, comprising a range of CRE, C&I, and distressed debt. Buyers include family offices that oversee the finances of HNW individuals. According to financial data provider Preqin, interest in buying up CRE has risen sharply among family offices, which manage almost $6 trillion in assets.

Angel Investors Take a Shine to Metechi

Metechi’s vision of a direct marketplace for CRE deals that slashes the fees levied by big banks has found favor with VCs and angel investors. Brack Capital Group co-founder Shimon Weintraub and the former CEOs of Bank Hapoalim, Zion Kenan and Ari Pinto, were among those who participated in the $5M round.

Describing how the AI component of Metechi’s tech stack comes into play, the company’s COO Keren Goshen explains that it automates deal management and bidding, allowing deals to be tabled faster, and for sellers to receive capital from a pool of pre-vetted buyers.

“With our proprietary technology, we empower brokers to sell more NPLs with much less effort,” said Goshen. “This is why we can reduce our buyers’ fees from an industry-rate of 5% to only 2% while remaining free for brokers and sellers.”

The Demise of CRE Has Been Exaggerated

Some commentators believed that the pandemic-driven events of 2020 would spell the beginning of the end for commercial real estate, as businesses downsized and enacted remote working. While the sector has been buffeted, talk of its demise may have been premature. In New York, America’s CRE heartland, high rises are still springing up in Brooklyn and Manhattan, where work continues apace.
Office occupancy is lower than normal in New York, but this isn’t reflected in the pricing; JPMorgan’s office in Midtown recently went for $350 million – that’s $942 per square foot. Metechi’s marketplace currently features an array of properties in New York, including a $35 million portfolio of NPLs and a residential block in Brooklyn. With more than 1,000 US banks, institutional investors, and brokers able to access its platform, Metechi has the foundations in place to give CRE a long overdue shakeup.