Luxury Real Estate Brokerage Rocked By Scandal Gets Surprise Takeover Offer Worth Twice Its Market Value

Embattled real estate brokerage Douglas Elliman Inc. DOUG saw its stock price briefly soar to almost twice its market value on May 27 following news of a takeover offer from rival Anywhere Real Estate HOUS, according to Bloomberg.

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Elliman Likely To Reject Takeover Offer

The merger proposal would value the company at over $4 a share. However, Bloomberg reported that Elliman was unlikely to accept the offer, noting that the offer included selling the company’s property management business as part of the deal. The proposed purchase would give Anywhere a sizable foothold in some of Douglas Elliman’s key markets, including New York and Miami.

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A Drop In Valuation

Despite brand recognition and being involved in some of the biggest deals of the last few years, including hedge titan Ken Griffin‘s $238 million record-breaking penthouse purchase at 220 Central Park South, Douglas Elliman has seen its valuation tumble to $190 million from a peak of over $900 million in December 2021, when it was spun off into standalone company by the Vector Group VGR, Bloomberg reported.

Fallout From Star Brokers’ and Executives’ Sex Scandals

The biggest issue Douglas Elliman has faced in recent years is the fallout from lawsuits against former high-profile agents Tal and Oren Alexander. Although the brothers left the firm in 2022 to form their brokerage, Official, multiple allegations of rape and sexual assault saw them charged with sex trafficking by federal prosecutors. Their alleged crimes date back to their tenure at Douglas Elliman.

According to a federal indictment handed down on Dec. 11, the brothers had conspired in their alleged sex trafficking since 2009. There were other scandals at the brokerage as well. Former CEO Howard Lorber retired last year after disclosing in an internal inquiry that he was intimate with two brokers, Bloomberg reported.

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Q1 Comeback

Michael S. Liebowitz, Douglas Elliman’s current CEO, has focused on implementing austerity measures, according to Bloomberg, and growing the firm’s development marketing business. It has borne fruit, with the company reporting $253 million in revenue in the first quarter, a 26.5% year-over-year increase.

“By focusing on high-impact areas like Development Marketing, we’re driving growth and reinforcing our position as the leader in the luxury market – delivering our highest first-quarter revenue since 2022 with significant reductions in operating losses,” Liebowitz said in a statement. ‘We are optimistic about our trajectory, and we are committed to staying nimble in our core business. With our strong balance sheet as well as continued investment in the agent experience and new technologies, I am confident that we will continue to build long-term growth and enhance stockholder value.”

Embracing AI

The company recently launched its new digital platform, elliman.com, which includes Elliman Inspirations, an AI-powered home discovery tool that personalizes property searches and facilitates collaboration between agents and clients.

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