Inside Compass’ first filing after @properties deal

Compass’ industry-shaking deal for @properties and Christie’s International Real Estate is coming into focus.

In a filing with the Securities and Exchange Commission, the residential giant revealed the most detailed financial information about the Chicago-based brokerage it acquired in December.

Compass paid $155 million in cash and $250 million in stock for a total preliminary purchase valued at $405 million, which is still subject to change based on Compass’ share price next year, according to the filing, in a deal that closed on January 13, 2025.

The cash paid out closely aligns with the $155 million of shareholder equity in @properties at the end of September, while the stock payout essentially functions as the deal premium, according to Francine McKenna, a former lecturer of accounting at Wharton.

The filing also provides financial statements for @properties for the first nine months of 2024 and the entirety of 2023.

Thad Wong and Mike Golden’s firm, which acquired Christie’s International Real Estate in 2021, has been profitable for much of its existence as an independent company — up through its last reported financial quarter.

The company generated $20.7 million in net income through the first nine months of 2024; Compass generated a $114 million loss during that same period. In 2023, @properties generated $8.2 million in net income, compared to Compass’ loss of $321 million.

@properties generated $487 million in revenue over the first nine months of 2024, 88 percent of which came from its owned-brokerage commissions income. In 2023, it generated $570 million in revenue with roughly the same percentage coming from its owned-brokerage business.

Roughly 20 percent of its revenue came from Christie’s International Real Estate Sereno, which @properties acquired in 2022 for $20.8 million and sold back to its founders prior to the deal with Compass.

For @properties, splits were on the high side — 83.8 percent in 2024 and 84.2 percent in 2023.

The deal was, predictably, a hit to the cash balance Compass had slowly been accruing.

According to the pro forma statement as of Sept. 2024, the combined entities would have had a cash balance of $110 million at the end of September, compared to Compass’ cash balance of $211 million.

The deal did not close until this year, when @properties had a cash balance of $4.4 million.

@properties also had roughly $125 million in long-term debt on its books with a balloon payment for the remaining balance, which it settled prior to the deal.

Compass’ remaining cash balance could come into play for another deal rumored to be around the corner. The Wall Street Journal reported earlier this month the brokerage is in “advanced talks” for HomeServices of America, the real estate arm of Berkshire Hathaway.

The company still maintains a $350 million revolving credit facility that can provide cash for a potential deal. It drew down $50 million from the facility to partially fund the @properties acquisition.

HomeServices executives denied the reported acquisition talks. Compass has so far not commented publicly on any potential deal for HomeServices.