Brookfield Asset Management (BAM, Financial) is reportedly close to finalizing a deal to acquire startup Divvy Homes for approximately $950 million. The acquisition includes around 3,800 single-family homes, with about 65% located in key markets such as Atlanta, Dallas, and Tampa. Upon completion, Brookfield's subsidiary, Maymont Homes, will manage nearly 20,000 properties. However, the deal is not yet finalized and could still fall through.
Founded in 2017, Divvy Homes operates a "rent-to-own" model, assisting potential homeowners who face financing challenges. The company allows renters to select homes they wish to own, make a small down payment, move in, and make monthly payments to build equity over time. Ideally, within about three years, renters improve their credit scores, build equity, and qualify for financing.
Divvy Homes' model gained traction amid high home prices and low interest rates, attracting venture capital interest. In 2021, the company achieved a $2 billion valuation in a funding round led by Tiger Global Management and Caffeinated Capital. However, rising interest rates have challenged this model, making it harder for customers to fulfill contracts and increasing Divvy's own funding costs. In August 2023, Divvy announced a pause in acquisitions, planning to resume once interest rates significantly decrease, followed by a round of layoffs.
