Strengthens balance sheet and fuels long-term
strategic growth and expansion plans
Announces preliminary second quarter gross
transaction value in the range of $10.25 billion to $11.25 billion
and strong cash position
Douglas Elliman Inc. (NYSE:DOUG) today announced the closing of
a $50 million growth investment from Kennedy Lewis Investment
Management LLC (“Kennedy Lewis”), a leading credit-focused
alternative asset management firm. The investment strengthens
Douglas Elliman’s balance sheet to fuel its strategic growth and
expansion.
Douglas Elliman issued $50 million senior secured convertible
notes due July 2, 2029 to funds advised by Kennedy Lewis. The
convertible notes bear interest at a rate of 7.0% per annum payable
in cash, or, at Douglas Elliman’s election, 8.0% per annum paid in
kind, due semi-annually. The convertible notes are convertible into
common stock at an initial conversion rate equal to $1.50, subject
to certain customary anti-dilution adjustments. As part of the
agreement, Kennedy Lewis will have the right (subject to certain
conditions), for so long as such funds hold at least one-third of
their initial investment, to nominate one director to Douglas
Elliman’s board.
Kennedy Lewis has a long history of investing in the residential
real estate sector and an impressive track record of providing
customized financing solutions tailored to its partner companies’
unique strategic goals. As part of this partnership, Douglas
Elliman expects Kennedy Lewis to tap into its deep expertise in the
industry, including extensive knowledge and experience in land and
home builder finance investments.
“Kennedy Lewis’ investment in Douglas Elliman is a testament to
our agents, business model and strategic plan,” said Howard M.
Lorber, Chairman and Chief Executive Officer, Douglas Elliman.
“With deep experience in residential real estate, we are pleased
Kennedy Lewis has chosen to support Douglas Elliman’s strategic
initiatives and look forward to tapping into the firm’s network and
knowledge base as we work together to drive long-term stockholder
value. We are also encouraged by stronger performance in the second
quarter of 2024 compared to the prior quarter.”
David K. Chene and Darren L. Richman, Co-Founders and
Co-Managing Partners of Kennedy Lewis, said, “We are excited to
partner with Douglas Elliman, a firm with one of the strongest
brands and most reputable agents in residential real estate and a
compelling growth opportunity, and work with the management team to
fully capitalize on that opportunity. Douglas Elliman operates in
an industry we understand well, having studied and invested in
residential real estate and homebuilders through multiple cycles.
We see attractive long-term market dynamics in the growing, luxury
markets Douglas Elliman focuses on, and believe the firm is well
positioned to utilize additional financial and strategic resources
to build on its leading position in the space.”
Preliminary Second Quarter Financial Results
The Company also announced that preliminary unaudited gross
transaction value for the second quarter is expected to be in the
range of $10.25 billion to $11.25 billion, compared to $7.1 billion
in the first quarter of 2024. Douglas Elliman maintains a strong
balance sheet with cash and cash equivalents of approximately $92.0
million at June 30, 2024, up from $91.5 million at March 31, 2024,
and after the $7.75 million settlement payment in the second
quarter to resolve certain brokerage commission litigation.
These estimated financial results are preliminary and are
subject to the completion of Douglas Elliman’s quarter-end closing
procedures and further financial review by Douglas Elliman’s
independent registered public accounting firm. Actual results may
differ from these estimates as a result of the completion of our
quarter-end closing procedures, review adjustments and other
developments that may arise between now and the time the Company’s
financial results for the second quarter are finalized.
Board Appointments
In connection with the investment, David K. Chene from Kennedy
Lewis and Patrick J. Bartels Jr., an independent director from
Redan Advisors LLC, will join Douglas Elliman’s Board of Directors,
succeeding Ronald J. Kramer and Lynn Mestel, effective immediately
after closing of the transactions.
Mr. Lorber continued, “Ron and Lynn have been valuable members
of the Douglas Elliman board, and we thank them for their numerous
contributions to the success of our company.”
About Douglas Elliman Inc.
Douglas Elliman Inc. (NYSE: DOUG, “Douglas Elliman”) owns
Douglas Elliman Realty, LLC, which is one of the largest
residential brokerage companies in the United States with
operations in New York City, Long Island, Westchester, Connecticut,
New Jersey, the Hamptons, Massachusetts, Florida, California,
Texas, Colorado, Nevada, Connecticut, Maryland, Virginia, and
Washington, D.C. In addition, Douglas Elliman sources, uses and
invests in early-stage, disruptive property technology (“PropTech”)
solutions and companies and provides other real estate services,
including development marketing, property management and settlement
and escrow services in select markets. Additional information
concerning Douglas Elliman is available on its website,
investors.elliman.com.
Investors and others should note that we may post information
about Douglas Elliman on our website at investors.elliman.com or,
if applicable, on our accounts on Facebook, Instagram, LinkedIn,
TikTok, X, YouTube or other social media platforms. It is possible
that the postings or releases could include information deemed to
be material information. Therefore, we encourage investors, the
media and others interested in Douglas Elliman to review the
information we post on our website at investors.elliman.com and on
our social media accounts.
About Kennedy Lewis
Kennedy Lewis is an alternative credit manager founded in 2017
by David K. Chene and Darren L. Richman with over $16 billion under
management across private funds, a business development company,
and collateralized loan obligations. The firm seeks to deliver
attractive risk adjusted returns for clients by investing across
the credit markets through its opportunistic credit, homebuilder
finance, core lending and broadly syndicated loan strategies.
Forward-Looking and Cautionary Statements
This press release includes forward-looking statements within
the meaning of the federal securities law. All statements other
than statements of historical or current facts made in this
document are forward-looking. These statements include, but are not
limited to, statements regarding the issuance and sale of the
convertible notes to Kennedy Lewis and the impact of the investment
on our operations. We identify forward-looking statements in this
document by using words or phrases such as “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “may be,” “continue” “could,”
“potential,” “objective,” “plan,” “seek,” “predict,” “project” and
“will be” and similar words or phrases or their negatives.
Forward-looking statements reflect our current expectations and are
inherently uncertain. Actual results could differ materially for a
variety of reasons.
Risks and uncertainties that could cause our actual results to
differ significantly from our current expectations are described in
our Annual Report on Form 10-K for the year ended December 31, 2023
and our Quarterly Report on Form 10-K for the quarter ended March
31, 2024. We undertake no responsibility to publicly update or
revise any forward-looking statement, except as required by
applicable law.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities. The offer and sale
of the convertible notes, and the issuance of common stock upon
conversion of the convertible notes, are being made in a
transaction not involving a public offering and have not been
registered under the Securities Act of 1933, as amended, or
applicable state securities laws. Accordingly, the convertible
notes or the common stock issuable upon conversion of the
convertible notes may not be reoffered or resold in the United
States except pursuant to an effective registration statement or an
exemption from the registration requirements of the Securities Act
and applicable state securities laws.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240701439769/en/
For Douglas Elliman Inc. Stephen Larkin, Douglas Elliman Inc.
917-902-2503 Columbia Clancy/Catherine Livingston, FGS Global
212-687-8080 J. Bryant Kirkland III, Douglas Elliman Inc.
305-579-8000
For Kennedy Lewis Investment Management Joshua Clarkson/Mike
Geller, Prosek Partners pro-klim@prosek.com 212-279-3115
Douglas Elliman (NYSE:DOUG)
Historical Stock Chart
From Oct 2024 to Nov 2024
Douglas Elliman (NYSE:DOUG)
Historical Stock Chart
From Nov 2023 to Nov 2024