Brookfield Asset Management (BAM.US) is reportedly nearing a $950 million acquisition of Divvy Homes.
1min read Brookfield Asset Management (BAM.US) is reportedly close to a deal to buy 3,800 single-family homes from startup Divvy Homes for approximately $950 million. About 65% of the homes are located in markets such as Atlanta, Dallas, and Tampa, according to sources. After the acquisition, Brookfield's Maymont Homes will manage approximately 20,000 properties. The deal is not finalized and could fall through, according to sources.
Divvy Homes is a U.S. "rent-to-own" mortgage platform founded in 2017. The company works with individuals who want to become homeowners but cannot secure financing, allowing renters to select the house they wish to own one day, pay a small down payment, and move in, then make monthly payments. All of this is designed to allow buyers to obtain the equity in their home within a few years. Ideally, in about three years, renters would have raised their credit scores, acquired equity in their home, and be eligible for financing.
Earlier, high prices and low interest rates made Divvy Homes' business model appealing to potential buyers. Venture capital firms also found the idea appealing. In 2021, Divvy Homes raised a $2 billion valuation in a new round of financing led by Tiger Global Management and Caffeinated Capital.
However, high interest rates have presented challenges to Divvy Homes' business model, making it more difficult for the company's customers to fulfill their contracts and increasing the company's own funding costs. In August 2023, Divvy Homes announced in a blog post that it would pause acquisitions and plan to restart them "once interest rates drop significantly." Shortly after, the company laid off some employees.
