Compass agreed to buy Christie’s International Real Estate and other businesses in a transaction valued at US$444 million.
Compass will pay for the deal with US$150 million in cash and US$294 million in Compass stock, according to a statement on Monday (Dec 2). The acquisition, which includes brokerage owner @properties, will help Compass build out an international presence.
The transaction also helps Compass expand its business to franchises, a move that chief executive officer Robert Reffkin has said the company was exploring. The Christie’s International Real Estate brand will be the face of those operations and already has more than 30 domestic affiliates and 70 international ones, including locations in Dubai and Hong Kong.
Reffkin and Ori Allon founded Compass in 2012 and took the brokerage public nine years later. The Christie’s deal helps forge a new expansion path for Reffkin’s firm at a time when the housing market remains sluggish because of high rates and prices.
“We are entering the international market in a capital-light manner that doesn’t have the same capital intensity of opening our own brokerage office,” Reffkin said during an investor call on Monday.
Compass has been building out its presence in the US this year through other deals. In May, the brokerage announced the acquisition of Parks Real Estate, a major firm in Tennessee. Compass also bought New Orleans-based firm Latter & Blum this year.
As part of the transaction, the company will also gain title and mortgage businesses, Proper Title and Proper Rate. The deal is expected to close in the first quarter.
The brokerage industry in the US has come under pressure in recent years. High rates have made housing less affordable, weighing on sales. And the National Association of Realtors came under fire for the industry’s compensation structure, with the key industry group agreeing to a settlement that included changes to how agents would communicate about their fees.
“Brokerages got punched in the face by the NAR lawsuit and a slow market,” said Mike DelPrete, who teaches courses on real estate technology at the University of Colorado Boulder. “Now they have to be looking in the mirror. Are we going to stick this out for the next two or three years, or are we going to sell?” BLOOMBERG
