Earlier this month, Brokers+Engineers launched an online brokerage and trading platform for the net lease real estate sector, which in the U.S. encompasses an estimated 1.3 million properties with a total market value of $6.5 trillion. NREI talked with CEO and co-founder Camille Renshaw to learn more about the firm’s technology solutions and the potential to raise the bar for net lease brokerage firms.
This Q&A has been edited for style and clarity.
NREI: There has been an explosion of fintech solutions across commercial real estate. What’s the back story behind Brokers+Engineers?
Camille Renshaw: I actually coded my way through college on a Neural Networks project. Then in my 20s I had my first start-up, which I sold to a financial firm. I took those proceeds and invested in commercial real estate, and that’s how I ended up in commercial real estate. For many years, I have felt that I had these very disparate interests in terms of tech and commercial real estate.
I ended up founding the Stan Johnson Company’s New York City office and having the largest team in terms of people and revenues there, and that team went with me to Ten-X, which is really where I felt these disparate interests come together. My number two there, Scott Scurich, headed up the net lease division, and we really created that (net lease) group while we were there. That same team has come together to start our third venture with Brokers+Engineers.
NREI: Are there other online sales platforms that roll NNN properties into other general real estate sales platforms?
Camille Renshaw: As net lease brokers, there is not a lot of tech in our world, be it sector-specific platforms, dashboards, algorithms, anything. A couple of the ideas that we had that we are now seeking patents on are:
One, the pricing regression algorithm that helps price net lease assets. Be it a McDonald’s or a Wendy’s or an Amazon distribution center, there is just one tenant and a long-term lease that determines pricing even more than the underlying real estate. The underlying real estate is incredibly important, but the leading factors are credit and term, and there has not been an algorithm that can do predictive pricing, such as on a five-year IRR and bring it back to an estimated net present value (NPV). So we have created that, and that is not going to be client-facing, it is really to empower the broker with their client.
Second, is an artificial intelligence (AI)-assisted 1031 exchange process. When we were at the Stan Johnson Company, our team had a very large exchange to work through when a family wanted to close on 20 different assets. They had 30 family members with equal voting rights and everyone had a lot of opinions. So we had to come up with this manual process that took five or six people to run to enable that exchange to be a success. We have run that manually a bunch of times now with 100 percent success. We have gone forward with what we learned and put AI behind that process, so that we can help 1031 exchangers have a higher probability of getting the best assets that they can at that moment, and closing them on time and within the required criteria.
Behind that is really a third thing, what we believe is the largest data set for net lease in the industry. So that is really the backbone of it. I think you are going to see Brokers+Engineers have other products and services, because it is about brokers trying to best serve net lease clients – buyers, sellers and exchangers.
NREI: So it is a trading platform, but there also are some tools that go along with that?
Camille Renshaw: That’s right. We named it Brokers+Engineers, because we want everyone in the industry to know that it is people first. A mistake that a lot of tech companies made when they came into the commercial real estate space initially was that they thought they could push the people, the brokers, out of the picture and make it more of a Yahoo! model or a click-through model and everything be a fee-for-click. That was a complete abysmal failure and doesn’t work in the commercial real estate sector. Instead, Brokers+Engineers provides senior relationships and senior advisory backed by great tech products. This gives our clients new tools with new insights into the net lease market, while still working with trusted relationships.
NREI: Who is your target audience or end user?
Camille Renshaw: We are a net lease brokerage firm. At the end of the day, it is about selling and buying net lease through a brokerage firm. We want to give our brokers tools that help them scale. Senior brokers often have five, 10 or more folks behind them. We want to be able to reduce the personnel and also reduce some of the errors that come when you have a big group trying to provide information on a big transaction when our technology can make a broker much more efficient. You still need that senior broker there. So we are out to give the broker everything he or she needs.
NREI: What do you think is the growth potential for the platform?
Camille Renshaw: Most people don’t realize that the net lease industry in the United States is $6.5 trillion in size. The market is massive, and the potential for the company is huge.
NREI: Do you think your technology has broader implications for the industry? Could this help to pull the industry forward?
Camille Renshaw: I hope so. Our mission statement is to help virtually anyone intelligently trade net lease. We want our tools to be good enough, and our brokers to be strong enough, so that we can help virtually anyone who needs to trade net lease do so with great intelligence. If we achieve that mission, we believe that we will provide increased liquidity in the market, which is great for everybody.
Source: NREI Online