Douglas Elliman announced the closing of a $50 million growth investment from Kennedy Lewis Investment Management, a leading credit-focused alternative asset management firm. This investment enhances Douglas Elliman’s balance sheet to drive its strategic growth and expansion.
Douglas Elliman has issued $50 million senior secured convertible notes due July 2, 2029, to funds advised by Kennedy Lewis. The convertible notes feature interest at a rate of 7% per annum payable in cash, or, at Douglas Elliman’s election, 8% 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. And 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 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. And 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.
In connection with the investment, David K. Chene from Kennedy Lewis and Patrick J. Bartels Jr., an independent director from Redan Advisors, will join Douglas Elliman’s Board of Directors, succeeding Ronald J. Kramer and Lynn Mestel, effective immediately after the transactions close.
KEY QUOTES:
“Kennedy Lewis’ investment in Douglas Elliman is a testament to our agents, business model, and strategic plan. 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.”
“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.”
- Howard M. Lorber, Chairman and Chief Executive Officer, Douglas Elliman
“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.”
- David K. Chene and Darren L. Richman, Co-Founders and Co-Managing Partners of Kennedy Lewis
