The Fifth Wall reduced staff and shut down active fundraising, Axios Pro reported. Chief executive officer Brendan Wallace confirmed the business decisions to the outlet.
It was not immediately clear how many employees were affected, although people familiar with the company told the outlet that its climate team was hit particularly hard.
The company cited a known enemy of the real estate industry for the cuts, pointing to high interest rates. The company also pointed it out climate policy under the administration of President Donald Trump. The federal government’s shift away from climate change science has affected proptech fundraising by deterring investment and fueling uncertainty around regulations and construction materials.
A company representative did not immediately respond to a request for comment from The real deal.
Wallace disputed several points raised by Axios, including the cancellation of a $500 million to $1 billion proptech fund that its CEO said never existed.
The company’s REACT fund, focused on its since-consolidated real estate and climate technology businesses, remains open for investment even without active fundraising. The company raised $124 million for the fund last year, a quarter of its target, according to an SEC filing last month.
In the past, Fifth Wall funds raised a lot of money. It has closed an $866 million proptech fund, a $500 million climate fund – the first in the sector – and a $159 million fund focused on Europe. Real estate firms once made up 65 percent of Fifth Wall’s limited partners, as it enjoyed low interest rates and government support for climate initiatives.
But rising interest rates and reportedly questionable decisions that rattled LPs caused problems for the company.
Today, Fifth Wall has $600 million in dry powder. Wallace plans to actively fundraise again next year.
“The real estate market continues to struggle, so I don’t think we’re going to raise $1 billion,” Wallace said. “I think we will raise a much smaller fund.”
— Holden Walter Warner
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