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Altus Group's Jim Hannon has a big interest in Proptech startups – Commercial Observer

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In April, Jim Hannon became CEO. Altus Group After nearly two years as president of subsidiary Altus Analytics, he is continuing the company’s long-standing policy of aggressively buying proptech startups to feed itself. Valuations, Tax Appeals, Project Management, Due Diligence A platform for real estate investors and owners.

Altus Group, a publicly traded Toronto-based company founded in 2005, was an early advocate of providing real estate technical data in what the company calls “intelligence as a service.”

Commercial Observer spoke to Hannon from his home in Naples, Fla., in late July about Altus’ role in the real estate investment and ownership world and his take on proptech in the short and long term.

Interviews have been edited for length and clarity.

Commercial Observer: $2 billion market cap, Altus Group is a giant in the proptech sector and offers many services. As CEO, what is Altus’ elevator pitch?

Jim Hannon: In a nutshell, we are #1 in providing valuations through technology advisory services for commercial real estate. We are a number 1 or 2 player in our core markets, with success in facilitating tax appeals, lowering taxes and getting better returns on your assets.

We help developers decide when, where and if to invest. We also help manage large scale investment and development projects if you choose to invest. valuations, tax appeals, project management and due diligence. Our clients are investors, asset managers, developers, lenders and, in the case of tax businesses, property owners.

Is Altus too big or too small for what you’re trying to achieve as a technology source for your client?

That’s an interesting observation. I started my career at his IBM so this is not a big deal for me. In fact, it’s a very tight-knit community within Altus. It came together through acquisitions over the years. But compared to the size of the companies I’ve worked for, from my chair it feels like a focused company.

How many employees and revenue does Altus have?

The number of employees is 2,600. We’re in a blackout period at the moment, so I can’t say specifically, but I can say that last year he made $625 million in Canada (today he’s $485 million).

As you said, Altus has grown quite a bit through acquisitions. How do you look these days? Are opportunities to acquire proptech startups that fit your platform increasing, or are opportunities for innovative startups slowing down?

There is always an opportunity to acquire a gadget tech startup. We closely monitor our markets and capital structure to ensure that we are investing in the right areas.

Last year we made three significant acquisitions.we bought a company in paris finance activeWe focus on the valuation business with a focus on equity investments in commercial real estate. Finance Active has put us on the debt management side of these investments, significantly expanding the scale of our international footprint.

In March of last year, we acquired a company called Stratodemgives us an analytical engine and thousands of macroeconomic data points that can be fed into advanced analytics. And in November he bought a company in New York City. rheonomyThis yielded a wealth of data on approximately 53 million commercial real estate assets in the United States. We also have the underlying technology to link asset attributes to performance drivers.

This year we acquired a tax technology company. Rethinking Solutionsalso provided us with automated workflows and tax predictive analytics capabilities.

What makes these proptech companies attractive to Altus?

On the tax side, you need technology that improves workflow or improves the predictability of successful tax appeal outcomes. In the Canadian market, we are the #1 commercial real estate tax appraisal advisor. So basically it helps make the process of appealing tax assessments easier. In the UK we are number one.

It’s difficult to get an exact market size in the US, but our estimate is that we’re number two, but still have a single-digit market share. It’s a highly fragmented market in the US, so any acquisition that helps us automate processes or predict which assets are most likely to succeed is an interesting technology for us. or, if they choose, want a lighter advisory touch, or want to leverage the expertise of our team.

Analytically, our core franchise has been commercial real estate valuation, or mark-to-market. From a technical standpoint of Argus Enterprise, flagship product or advisory services, we are the leader by far. You can look and say, “What drives the performance of different types of assets?”

How do you see the industry as technology changes so much?

The industry is at an inflection point. I feel that financial services are very similar to what he did over a decade ago. There you have the amazing technology and the expert services that go with that technology and ask, “What happened to the market? How can I better understand what’s going on around me?” The step is “why did it happen”. Recent acquisitions in particular can use analytical techniques to draw out correlations. Then, and most importantly, ask yourself, ‘What happens next? Where should I invest? Why should I invest? Should we?” That’s what we were doing with our acquisition last year.

What is the most exciting thing about being CEO?

An opportunity to stand in front of the entire industry. When it comes to the investment side of commercial real estate, we are very early on the adoption curve for advanced analytics. There are great companies out there, with their own data strategies, and some of them are much bigger than us.

But this is our job. Investment firms should have a data strategy and we are here to enable those data strategies. By combining assets like Stratodem and Reonomy to create advanced offers and combining them with data split between Argus and our advisory business, as well as our tax franchise, we are able to leverage our data sets and potential. No other company in the world does. Change this industry like we do. And the opportunity to take over was just too much fun.

On the demand side, how do clients view proptech adoption?

they are hungry for it When applied to today’s economic conditions, seeing rising interest rates and headwinds will change the way we think about investment themes and how owners can maximize returns on their assets. They are, naturally, focused on the tenant experience. I think the business side has as much potential as our side, the investment and performance management side. Opportunities abound for improving in-building services and incorporating all kinds of technology into the current economic cycle.

It’s even more important to think about productivity, efficiency and differentiation. The various proptech companies out there are all tackling it some angle. We believe owners understand that their investment in technology will enable future growth and the best possible outcome with their tenants. We are in about 100 markets overall in his six major countries of Canada, US, UK, Germany, France and Australia, and these six countries alone have about a $5 billion opportunity. I believe there is. Add the rest of the world, and in our model, we’d say the world as a whole is a $10 billion market.

What kind of data is the client asking Argus for?

The first set of conversations I had with industry C-level people was surprisingly about core data management. “How do you reconcile data from investments in three different countries to get a portfolio view?” If this is the current situation, even the most advanced are still trying to figure out how to corral data and look at it on a national or global basis.

Now let’s consider different attributes of performance. This is a core industry-wide issue, and the technology we’re building organically through the acquisitions we made last year directly addresses it.

Are there any specific real estate sectors you focus on for your clients, such as construction, office or residential?

There is some line blurring that occurs. We stick to our core strategy which is commercial real estate. But as investors shift to renting single-family homes as a commercial asset class, our view of what is commercial is changing. From an investor’s perspective, the traditional definition does not always apply. It’s not our core strength, but we’re building analytics capabilities.

With the Stratodem acquisition, we actually took a huge amount of data on macro-housing information and incorporated it into our model. Informs the performance of commercial real estate assets. Across the commercial real estate class, we build data and analytics around it all. We have our own tax practices. We aim to target and segment into growth areas such as data centers and green energy.

How do you see the adoption and use of technology in real estate for the rest of the year or in the near future? How will that affect Altus’ strategy?

We have to be careful not to answer specific questions about the rest of the year that may come across as guidance in some way. we are in a great place. In a rising or falling market, investors want to buy or sell. We have been through a variety of economic cycles over the last 15 years and are very resilient. Because buyers and sellers are looking for the next information to decide what to do next.

We have provided professional services, information and analytical capabilities, but the adoption of that technology is accelerating. This puts us in an excellent position as a trusted partner to many of the world’s largest investors.

Contact Philip Russo at: prusso@commercialobserver.com.