Divvy Homes Finds a New Home with Brookfield Properties
In a notable turn of events, Divvy Homes, a company that has navigated the challenging real estate market landscape, has announced its acquisition by a division of Brookfield Properties for approximately $1 billion. This acquisition, set to conclude by mid-February, is not the “fire sale” some reports anticipated. Nevertheless, it’s a step down from Divvy’s $2.3 billion valuation in 2021.
Understanding Divvy’s Unique Model
Divvy Homes offers a distinctive rent-to-own model aimed at aiding renters in their journey to homeownership. The process involves Divvy purchasing the desired home and leasing it back to the renter for three years. During this period, renters can save enough to eventually own the property themselves.
“We have successfully turned 2,000 renters into homeowners,” Divvy proudly stated in its announcement.
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Challenges Along the Way
The company faced significant challenges when mortgage interest rates began to climb in 2022. This economic shift led to three rounds of layoffs within a year, indicating the hurdles Divvy had to overcome.
A Journey Marked by Prominent Investors
Founded in 2016, Divvy Homes quickly became a buzzworthy startup, securing over $700 million in debt and equity from reputable investors such as Tiger Global Management, GGV Capital, and Andreessen Horowitz (a16z).
The company’s most recent funding round was a $200 million Series D led by Tiger Global Management and Caffeinated Capital at a $2 billion valuation in August 2021. Notably, this funding came just six months after their $110 million Series C round.
Brookfield Properties’ Strategic Acquisition
Maymont Homes, the Brookfield unit acquiring Divvy, operates across more than 40 markets in the United States. This acquisition reflects Brookfield’s strategic expansion plans within the real estate sector.
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