Following a challenging period for businesses in the real estate sector, Divvy Homes announced on Wednesday that it will be acquired by a division of Brookfield Properties for approximately $1 billion.
This development may not signify the distressed sale previously reported, although it is below the $2.3 billion valuation Divvy received in 2021. The acquisition is projected to conclude by mid-February.
Divvy operated a rent-to-own model that supported renters aspiring to become homeowners by purchasing their desired property and leasing it back to them for three years, allowing them to accumulate “the savings necessary for ownership,” as per the company’s statement.
The company faced challenges when mortgage interest rates spiked in 2022, leading to three documented rounds of layoffs over the course of the year.
Established in 2016, the once-promising startup successfully raised over $700 million in debt and equity from notable investors including Tiger Global Management, GGV Capital, and Andreessen Horowitz (a16z), among others. The latest known funding round for Divvy occurred in August 2021 — a $200 million Series D financing led by Tiger Global Management and Caffeinated Capital, which valued the company at $2 billion. This Series D round was revealed just six months following a $110 million Series C round.
Maymont Homes, the Brookfield division acquiring Divvy, operates in over 40 markets throughout the United States. In an official statement, Divvy indicated that it has “created 2,000 homeowners to date.”
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