Politics & MoneyReal Estate

JapanÕ SoftBank continues U.S. real estate push by leading $865 million investment in Katerra

Makes sizable investment in construction disruptor

In the last few years, Japanese technology company SoftBank Group has undertaken a significant move into the U.S. real estate and housing market with a series of investments and acquisitions.

That plan took a giant step forward late last year when SoftBank closed on its $3.3 billion acquisition of Fortress Investment Group, the global investment giant that has a massive presence in U.S. real estate.

Fortress is the parent company for New Residential Investment, which buys up mortgage servicing rights by the truckload and will soon be a minority owner of Ocwen Financial. Fortress is also the majority shareholder in Nationstar Mortgage, the nonbank now known as Mr. Cooper

Now, SoftBank is making another move into U.S. real estate by leading a massive capital raise in Katerra, a company that wants to revolutionize the construction industry.

Katerra, a California-based company that was founded in 2015, announced this week that it raised $865 million in its Series D funding round, which was led by SoftBank Vision Fund, SoftBank’s investment arm.

Katerra, which specializes in multifamily, student and senior housing, and hospitality, utilizes technology and begins the construction process in a factory before completing the build on-site.

“The construction industry is ripe for digital disruption,” Michael Marks, chairman and co-founder of Katerra, said. “Katerra leverages its own software platform to remove time and costs from building development and construction.”

Marks said that the new funding will allow the company to invest more in research and development and continue to grow.

Also participating in the $865 million capital raise were Canada Pension Plan Investment Board, a private investment fund managed by Soros Fund Management, Tavistock Group, Navitas Capital, DivcoWest, and others.

“The $12 trillion construction industry is extremely fragmented with tens of thousands of companies using minimal levels of technology. While labor-productivity growth has skyrocketed in the overall global economy, the construction industry has averaged only 1% annual productivity growth over the past two decades,” said Jeffrey Housenbold, managing partner for SoftBank Investment Advisers.

“Katerra is leveraging the latest technologies to radically transform the way people build. Drawing on his experience leading Flextronics, Michael’s unique vision and talented team are taking the great lessons of electronic manufacturing and applying them to an industry that is in dire need of change,” Housenbold continued. “We are excited to support Katerra as they expand across markets and geographies and unleash a new wave of productivity.”

As part of the deal, Housenbold will join Katerra’s board of directors.

In its three years of business, Katerra has more than $1.3 billion in bookings for new construction in multi-family, student and senior housing, and hospitality sectors.

As stated above, the investment in Katerra is hardly SoftBank’s first large investment in the U.S. real estate industry.

In December, SoftBank Vision Fund invested $450 million in Compass, a real estate technology company based in New York City. Compass said that SoftBank’s investment was the “largest real estate technology investment” in the history of the U.S.

And a few years ago, SoftBank led a $1 billion funding round in SoFi, the San Francisco-based lending startup.

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