For Compass backers, ROI remains far off

Miami /
Jul.July 22, 2016 11:15 AM

From the New York website: For investors in Compass, there are no shortcuts to a payday.

The brokerage is looking to raise about $50 million at a $1.3 billion valuation, which would make it the most valuable residential brokerage in the country by a distance — at least on paper. But according to the firm’s CEO Robert Reffkin, profitability isn’t a pressing goal, and investors shouldn’t expect to reap rewards anytime soon.

“They’re making an investment alongside the management team,” Reffkin said. “The luxury of our capital base is that we can think long-term.”

Compass strutted into New York’s residential market in 2013, vowing to transform the art of selling real estate. By deploying a $135 million venture capital-funded war chest, it expanded aggressively, bagging several firms and top agents along the way. It is now in eight regions, and in New York City, its largest market, it closed over $650 million worth of sell-side deals during a 12-month period ending Feb. 29. At some point down the road, Reffkin said, it could very well go public.

But what would investors in a Compass IPO be buying into? Critics from within the industry say it’s just a brokerage masquerading as a technology company, while admirers see it as the brokerage of the future. That’s still up for debate, but here’s what we know for sure: The firm is burning through money fast, and its numbers aren’t quite what they seem. Read TRD‘s special report on Compass


Related Articles

arrow_forward_ios
Ruthie and Ethan Assouline lead Compass’ Assouline Team. (The Assouline Team, iStock)
Compass’ Assouline Team expands to Miami Beach
Compass’ Assouline Team expands to Miami Beach
Carl Gambino
Celebrity agent Carl Gambino expands to Miami
Celebrity agent Carl Gambino expands to Miami
From left: Developer Jesus Quintero, Chad Carroll, and the Quint Collection
Chad Carroll takes over sales of waterfront Hollywood townhomes
Chad Carroll takes over sales of waterfront Hollywood townhomes
Chad Carroll
Top-selling Douglas Elliman agent Chad Carroll joins Compass along with his team
Top-selling Douglas Elliman agent Chad Carroll joins Compass along with his team
Ivan Chorney and Michael Martirena
Movers & Shakers: Top One Sotheby’s team joins Compass, shakeup at CBRE & more
Movers & Shakers: Top One Sotheby’s team joins Compass, shakeup at CBRE & more
Ben Moss
Ben Moss to head Compass’ National Sports & Entertainment Division
Ben Moss to head Compass’ National Sports & Entertainment Division
Beth Butler of Compass, 101 Renaissance Centre (Credit: Google Maps)
Compass plans to open new office in downtown Boca Raton
Compass plans to open new office in downtown Boca Raton
Jay Parker, Mike Pappas and Beth Butler
SoFla brokerage execs optimistic, say deals are still closing
SoFla brokerage execs optimistic, say deals are still closing
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...