Zillow Group (ZG) - Get Zillow Group, Inc. Class A Report has reportedly reached an agreement to sell roughly 2,000 homes to an investment firm as the digital real-estate company shuts down its home-flipping business.
Shares of the Seattle, Wash. company were up slightly to $66.54 at last check.
Zillow Group did not immediately respond to a request for comment.
Pretium Partners, a New York City-based investment firm, has agreed to buy Zillow homes across 20 U.S. markets and plans to rent them out, the Wall Street Journal reported, citing people familiar with the matter.
Last week, Zillow said it would wind down its home-flipping business, Zillow Offers, and reduce its workforce by 25%. It also said it would take up to $569 million in write-downs on home inventory in the third and fourth quarters.
Zillow said it intends to sell roughly 9,800 homes it owns, plus another 8,200 it had been in the process of buying. The company expects to lose between 5% and 7% on the sales and will receive market price for the homes.
Pretium owns more than 70,000 rental houses in the U.S., making it the second-largest single-family landlord behind Invitation Homes.
“Pretium has long been committed to providing quality housing options for residents,” the company said in a statement to Bloomberg. “At a time when move-in-ready homes are in short supply, we continue to invest in communities and improve access to housing throughout the U.S.”
Last week, Citi analyst Nicholas Jones downgraded Zillow to neutral from buy with a price target of $86, down from $185.
Following the "surprising" exit of the home buying business, Zillow will likely "be in the penalty box" as investors digest the news and being sizing its new growth opportunity, Jones said. The analyst's new valuation removes the homes segment.