(Bloomberg) -- Brookfield Asset Management Ltd. is nearing a deal to buy 3,800 single-family rentals for about US$950 million through an acquisition of startup Divvy Homes, according to a person familiar with the matter.
About 65% of the homes are in markets such as Atlanta, Dallas and Tampa, according to the person, who asked not to be identified discussing a private matter. After the acquisition, Brookfield’s Maymont Homes will oversee about 20,000 properties.
The deal hasn’t been finalized and could still fall through, the person said. Representatives for Brookfield and Divvy declined to comment. Fast Company reported earlier the companies were nearing an agreement without indicating a value.
Divvy was co-founded by Chief Executive Officer Adena Hefets in 2017 with a rent-to-own model. The company acquired homes on behalf of its customers, who then rented the properties with a contractual option to buy the house in the future.
At the time, high home prices and low interest rates made the concept appealing to would-be buyers. Venture capital firms also liked the idea. In 2021, Divvy raised new funding at a $2 billion valuation in a round led by Tiger Global Management and Caffeinated Capital.
Higher interest rates have challenged the model, making it harder for Divvy’s clients to exercise their contracts and raising the company’s own cost of capital. In August 2023, Divvy said in a blog post it was pausing acquisitions with a plan to restart “once rates sufficiently decline.” The company conducted a round of layoffs shortly after.
Divvy’s purchase options are expected to be honored, the person said.
Brookfield’s global real estate portfolio includes apartments, warehouses, offices and other property types. In 2020, the firm acquired a controlling stake in single-family landlord Conrex and raised $300 million for a vehicle to acquire houses, Bloomberg News reported at the time.
Brookfield has been bolstering its residential business. Last year, a Brookfield Asset Management fund snapped up an $893 million portfolio of student-housing properties at schools including Texas A&M University.
