Commercial property software company Re-Leased grew more than 75 percent in 2020 and estimates revenue will exceed $10 million for the financial year ending March 2021.
This is after weathering a 50 percent drop in sales and a six-month hiring freeze due to the coronavirus pandemic.
The company’s software automates much of the traditionally manual, laborious tasks of property management, and can be used by managers, landlords, and tenants sick of spreadsheets.
In an industry resistant to change, founder and chief executive Tom Wallace (pictured) told BusinessDesk Re-Leased profited when global lockdowns forced property managers worldwide to consider the benefits of the cloud and remote access to data.
“We’ve been speaking for years about why it’s important to be on modern technology," something the whole world has recognised all of a sudden.
He blamed the commercial real estate industry’s aversion to change on the success of its large players and their hesitance to modernise their processes.
“Mostly for the laggards it’s just about fear, security, fear of risk. They’re managing hundreds of millions generally, sometimes billions of dollars or pounds worth of property, and there’s massive risk around that. Not just of losing money, that’s always there for them, and they don’t like doing that, but there’s a lot of compliance risk as well.”
Customers can integrate Re-Leased’s software with their Xero or QuickBooks accounts, and the company is working to bring similar integrations with Microsoft and SAP software this year.
Founded in Napier in 2013, Re-Leased has been steadily bringing customers on board with a focus on New Zealand, Australia, Canada, the US, and the UK.
Then covid came along and delivered a whole lot more inbound inquiry. Its software currently manages around 150,000 properties, and over 75 percent of the firm’s revenue is made offshore, according to Wallace.
“Once people started working from home, realised it’s the new normal, they realised they needed modern technology,” he said.
“We have had customers calling us desperate to come on board because they cannot run unless they’re in the office and the government has banned them from being in the office in the UK, so they’re really screwed. That has been really good for us.”
Re-Leased’s mobile apps for iOS and Android automate reminders for managers, landlords, and tenants, traditional processes that at high volume are difficult to keep on top of.
“The first thing was moving to the cloud, automate everything. That was the big first journey, it took five or six years because there was so much software to build,” Wallace explained.
“The next step was moving everything mobile, allowing them to do everything from their phones.”
The company also has a product called CREDIA where it merges its customer data with market data and sells these insights to its customer base to let them see how they’re performing against the market.
Wallace is confident such data analytics are just the tip of the iceberg.
“We’re starting now to look at if we can predict out of a portfolio which tenants are most likely to default on rent and leave their lease, so we can go to one of our landlords and say, you’re really exposed to these types of retailers, or your portfolio is weighted in this way, which means you’re carrying this risk.”
This year the company plans to hire 30 developers to work out of its Hawke’s Bay location. Wallace said Re-Leased wants to lead the charge and cement the area as a Kiwi technology hotspot.
“The only limitation is going to be getting the talent to Hawke’s Bay. We want to figure out how we can work with the council, what they can do for us, to try and make that happen because it’s obviously going to be really good for the region,” he said, confident that qualified locals who moved to Auckland or Wellington due to lack of jobs at home will be able to return.
“We’re creating a real campaign about raising the profile of ourselves and Hawke’s Bay as a region for technology, because it certainly hasn’t been that way in the past. We can offer a lot compared to Auckland with the lifestyle and the company.
“They can get out of the traffic and move back,” he added. Re-Leased currently has 100 employees spread across NZ, Australia, the US, and the UK.
He said much of the company’s expansion is financed from cash flow.
Self-funded until 2018, Re-Leased then brought in a small group of private investors rather than go down the venture capital route popular with Kiwi tech start-ups.
“We speak to a lot of American VCs, Australian VCs, UK, but we’ve just turned that away, as we didn’t think we needed that funding. We’re running a slightly leaner model, we think there’s a lot of waste that comes in when you raise that money and it doesn’t necessarily get you to make the right decisions in terms of longevity and quality for the company,” said Wallace.
“We focus on the long term, so we see a lot of that VC money as pumping artificial growth.”
Back to the future
Wallace said a key next step is to bring the company into the payment processing chain. It’ll soon launch Re-Leased Pay in partnership with Silicon Valley payments giant Stripe.
“Over $7 billion of rent flows through Re-Leased every year but right now that’s just invoices and we’re not part of that transaction flow,” Wallace said.
Re-Leased Pay will let Re-Leased’s customers pay directly on its software, with the company hosting and processing transactions for the first time. Wallace said this will improve the user experience.
He has an amusing anecdote that shows just how important automation could be to the property management market and certain customers.
“We’ve seen people that don’t even know they’ve got property. Big companies in the UK, when they’ve owned the property for 300 years, it’s been in the family. We’ve had examples in the UK where we show customers how to on-board a new property into the system and they say they won’t know how to do that because they haven’t bought a property in 300 years.”
It’ll take another century or so before NZ’s property managers get this tardy but Re-Leased believes it is grasping an opportunity to modernise a hesitant market.