In Stunner, Compass Acquiring @properties Christie’s International Real Estate

In an unexpected residential real estate company consolidation announced December 2, Compass Inc., the leading brokerage by sales volume, according to RISMedia’s 2024 Power Broker Report, will be acquiring @properties Christie’s International Real Estate for $444 million in a move that Compass says will accelerate domestic and international growth opportunities. 

“This partnership will allow us to empower strong independent brokerages and broker/owner entrepreneurs around the world who are affiliates under Christie’s International Real Estate,” said Robert Reffkin, Compass founder and CEO in a statement.

@properies Christie’s International Real Estate is the eighth-largest brokerage by transaction volume. In a conference call after the announcement, Reffkin emphasized the international presence of @properties Christie’s, as well as its significant marketshare in key domestic metros like Atlanta, Georgia, and Chicago, Illinois.

In response to an investor question, Reffkin also put the earth-shattering deal in the context of his company’s ambitious goals for seizing most listing marketshare, and his opposition to the National Association of REALTORS®’ (NAR) restrictions and MLS rules.

“We want to build a company that better serves homeowners and builds a platform for homeowners that gives them the same advantages as the big real estate developers as well as the real estate homebuilders (who) are able to freely market their homes in any way they want,” he said. “They are not restricted by National Association of REALTOR® mandatory submission rules like Clear Cooperation.” 

Reffkin previously articulated a “30-30” strategy, with Compass seeking to have 30% marketshare in its 30 top markets. Part of that is the use of brokerage-exclusive listing platforms that are not on the MLS—so-called “Compass Private Exclusives” and “Compass Coming Soon.”

Emailed inquiries to Compass regarding how the acquisition fit into this strategy, and whether agents and brokers affiliated with @properties Christies would have access to these platforms (or similar platforms) were not immediately returned.

“What (developers and builders) are able to do, they are able to protect their listings from days on market and price drop history, from valuation estimates that are lower than the price of the home that they’re actually listing at they want to be able to watermark their photos…they want to ensure that the buyer inquiries go to the agent that they hired,” Reffkin said. “So bringing two great companies together gives us a clear path to being able to give these kinds of benefits to individual homeowners that the big money real estate developers and homeowners have been taking advantage of forever.”

The details

Via a filing with the Securities and Exchange Commission, Compass said it will purchase the company for $150 million in cash at closing, along with about 44 million shares of Compass’ Class A stock, which will be issued “as soon as reasonably practicable after the one year anniversary of the Closing,” according to the filing.

There will be no changes in leadership at @properties, according to Reffkin.

“Operationally, we intend to keep Compass and the @properties entities as separate brands for the foreseeable future as we want to limit any distractions for agents in the markets that they operate in,” said Compass CFO Kalani Reelitz in the after-hours call. “(@properties) co-CEOs Thad Wong and Mike Golden will continue to run the day-to-day operations, and we have full faith in their capabilities given their tremendous track record.”

Continuing on the after-hours call, Reffkin detailed four major points.

“First, we are kick-starting a new dimension to our business through an entry into the high-margin independent affiliate business under the Christie’s brand,” he said. “This expands Compass’ business from one that not only serves agents, but independent broker owners as well. Second, we are entering the international market in a capital-light manner as we look to expand through an affiliate network that does not have nearly the same capital intensity as opening up a brokerage office. 

“Third, we are adding the eighth-largest brokerage in the U.S. by closed sales volume to our platform, which should bolster our local scale and inventory advantage in several key markets across the U.S. And fourth, we are accelerating our integrated services strategy by adding title and mortgage businesses with above industry average attach rates in adjusted EBITDA margins that are accretive to our current title margins.”

Reffkin went on to say that an added benefit of entering the affiliate business is that Compass gets to immediately expand its reach into luxury international markets such as Paris, London, Singapore and Dubai, to name a few.

Compass plans to continue to grow the independent affiliate network through the Christie’s brand both domestically and internationally. Christie’s has global reach with a network of 100-plus independently owned domestic and international affiliates across 50 countries and territories. @properties is the eighth-largest residential brokerage in the U.S. by sales volume, with operations in greater Chicago, Indiana, Michigan, Wisconsin and Metro Atlanta (through the Ansley Real Estate Brand). @properties’ Northern California operation, under the Christie’s International Real Estate Sereno brand, will become an independent brokerage while maintaining its network affiliation. 

“Compass shares our commitment to enhance the real estate industry through technology, marketing and exceptional service, and to embrace the local, independent broker through the Christie’s International Real Estate and @properties brands,” said Wong. Golden added that “this is a very complementary union that respects our unique brands and empowers agents to provide an even better experience for the clients they serve.” 

The news came as a surprise to many in the industry. Compass explained in a filing with the U.S. Securities and Exchange Commission on December 2 that it entered into a merger agreement with @properties and Christie’s on November 25, and that its board of directors had unanimously approved the merger.

In the after-hours call, Reffkin said the partnership is expected to be transformational, adding high-margin businesses, expanding the total addressable market and accelerating Compass’ strategy. The acquisition of Christie’s will expand Compass’ reach into luxury international markets and add the eighth-largest brokerage in the U.S. by closed sales volume. The transaction is expected to generate adjusted EBITDA margins of approximately 9% – 10% in the first year, even in a slow market. 

Reelitz added that the Christie’s brand will attract top independent broker owners and offer a proprietary tech platform. The owned brokerage business will complement Compass’ current footprint, particularly in high-end markets like Chicago and Atlanta. The acquisition also enhances Compass’ integrated services strategy, adding title and mortgage businesses with above-industry-average attach rates. The transaction is expected to be accretive on an adjusted EBITDA per share basis within the first year of closing, with a total consideration of $444 million, funded through a mix of cash and equity.