The latest economic and policy trends facing mortgage servicers

Join this webinar for an in-depth roundtable discussion on economic and policy trends impacting servicers as well as a look ahead at strategies servicers should employ in the next year.

Fannie Mae official questions purpose of AMCs

A Fannie Mae official Monday questioned the role of appraisal management companies, or “AMCs,” in evaluating houses.

Atlantic Bay Mortgage’s Chrissy Zotzmann Brown on secrets to success

Today, HousingWire Daily is joined by Atlantic Bay Mortgage Group’s Chrissy Zotzmann Brown for the Women of Influence podcast miniseries.

Why today’s housing market makes speed and agility crucial for lenders

In light of the state of the housing market, HousingWire sat down with Nomis Solutions CEO Frank Rohde to discuss why agility, speed and a better customer experience are more important than ever.

Real Estate

Compass aims for $10B+ market valuation

Company to offer stock at $23-26 per share

Residential brokerage Compass took another step toward becoming a publicly traded company Tuesday, declaring it intends to sell common stock at a share price of between $23 and $26.

The New York City-headquartered company will offer 36 million Class A common stock shares to the public, according to the registration statement filed with the Securities and Exchange Commission, plus another 5.4 million shares to the investment banks underwriting the initial public offering.

If Compass succeeds in selling shares at $24.50, that calculates to $951 million raised, once share discounts to underwriting banks are factored in. The underwriters include Goldman Sachs Co. – Compass CEO Robert Reffkin’s former employer – as well as Morgan Stanley and Barclays Capital.

It is not clear when exactly Compass plans to go public.

A successful sale of stock at $24.50 would give the brokerage a “fully diluted market value of $12.5 billion,” according to Renaissance Capital, a company that researches IPOs. Reuters and other outlets Tuesday morning pegged Compass’s hoped-for market value at $10 billion.

How to Diversify Your Brokerage to Weather Economic Hardship

Diversification is one approach brokerages can adopt to help ensure stability in unavoidable times of uncertainty, work to protect their revenue and – ultimately – financially weatherproof their business.

Presented by: Motto Mortgage

Valuations are calculated by taking the total company shares, (as opposed to just shares publicly traded) which is about 400 million shares, and multiplying that by the $24.50 stock price offering.

It would appear that Compass is positioning itself as a technology company and not merely a brokerage. The share price, and related valuation, are ambitious compared to Compass’s peers. Compass lost $270 million in 2020, and it generated $664 million in revenue after the agent’s average 83% cut from each sales commission is subtracted.

Realogy has more than double Compass’s market share (and endured its own $356 million loss in 2020) but traded at $15.09 at close of business Monday. The New York-based Realogy traded at a $1.77 billion market cap.

Meanwhile, Bellingham, Washington-based eXp World Holdings, which reported $31 million in 2020 profit but has a smaller market share than Compass, traded at $47.46 at the end of Monday. The company has a $6.85 billion market value.

Founded by Reffkin and software entrepreneur Ori Allon in 2013, Compass grew across the U.S., using $5.4 billion in venture capital to recruit top agents and acquire established brokerages, such as Pacific Union and Stribling & Associates.

The company’s biggest VC financier, SVF Excalibur, a Canary Islands-based subsidiary of Tokyo-headquartered SoftBank, is earmarked for over 66 million shares of convertible preferred stock, which has a total purchase price of $450 million, per the SEC statement.

SVF Excalibur is slated to hold 33.2% of all company stock after the IPO offering, according to the filing, while Allon – who is no longer in a leadership position at the company – is set to have 5%.

The largest stockholder is Reffkin, whose “class A common stock” represents 46% of the company’s voting power and “may increase over time as Mr. Reffkin vests and settles in certain equity awards,” according to the statement.

Leave a comment

Latest Articles

Can real estate brokerages survive without mortgage?

Real estate brokerages can survive, but only if they seriously invest in mortgage. So said members of a panel Tuesday on the evolution of the real estate brokerage during HousingWire Annual in Frisco, Texas. HW+ Premium Content

Sep 28, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please