Divvy Homes Finds New Owner in Brookfield Amid Market Shifts

Divvy Homes, a pioneer in the rent-to-own real estate market, is set to be acquired by Maymont Homes, a division of Brookfield Properties, for approximately $1 billion. Established in 2016, Divvy revolutionized homeownership with a unique model that allowed renters to purchase their homes while renting them back for up to three years. Despite significant growth, the company faced challenges as rising mortgage interest rates impacted its business model, leading to three rounds of layoffs within a year. The acquisition deal is anticipated to close by mid-February.

Divvy Homes had become a beacon for aspiring homeowners by helping them build savings to eventually own their homes. The company's innovative approach attracted substantial investments, notably a $200 million Series D funding round led by Tiger Global Management and Caffeinated Capital in August 2021. This round valued Divvy at $2 billion, following a successful Series C funding six months earlier, which raised $110 million.

However, the rapid increase in mortgage interest rates in 2022 posed significant hurdles for Divvy. As a result, the company had to restructure through layoffs and reassess its market strategy. Despite these challenges, Divvy's impact remains significant, having facilitated homeownership for over 2,000 individuals since its inception.

The impending acquisition by Maymont Homes signifies a strategic move for both companies. Maymont, operating in over 40 U.S. markets, stands to benefit from Divvy's innovative model and its established market presence. Despite the acquisition price being lower than Divvy's peak valuation of $2.3 billion in 2021, this transaction is not characterized as a fire sale. Instead, it represents a strategic alignment of resources and expertise.

Divvy's journey from a startup to a major player in the real estate sector highlights both the opportunities and challenges within the market. Having raised over $700 million from investors including Tiger Global Management, GGV Capital, and Andreessen Horowitz, Divvy's trajectory has been marked by significant financial backing and market influence.