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The parent company of the Homes.com real estate portal said the “investment phase” is over, and that selling or abandoning the site would be premature.
CoStar continued playing defense against a pair of activist investors who issued scathing public letters calling on the company to drop its incursion into the residential real estate market via the Homes.com portal it purchased five years ago.
New York City-based hedge fund D. E. Shaw & Co. released a public letter on Wednesday to CoStar’s board of directors regarding its “refusal to address the Company’s reckless spending of shareholder capital and significant and longstanding underperformance.” This was the second shareholder in recent weeks to call for the replacement of a majority of members on the CoStar Board of Directors; investor Third Point made similar criticisms late last month.
And, for the second time in as many weeks, CoStar issued a public response defending its stance as a competitor within the residential portal market.
“Abandoning Homes.com, as D.E. Shaw and Third Point suggest, would cause irreparable harm to our entire business and lead to certain and significant value destruction,” CoStar wrote in its Thursday response. “D.E. Shaw and Third Point’s attempt to prescribe a break-up, sale or amputation remedy misdiagnoses an imagined patient and smacks of activism malpractice.”
CoStar is drastically scaling back spending on Homes.com, starting with over $300 million in cuts this year and over $100 million each year until 2030. It has characterized the spending cuts as the end of the “investment phase,” during which the company spent billions on Homes.com.
The company said it had made its changes after engaging with top stockholders who own more than three-quarters of the company’s shares.
“The reality is that CoStar Group’s management team and Board have tried to help D.E. Shaw understand the value creation potential for Homes.com and the fact that the Company is on a responsible plan to realize it,” CoStar wrote. The letter was first reported on by Real Estate News.
Third Point and D.E. Shaw both generally criticized CoStar’s insistence on investing in the “money-losing” Homes.com, on which, by the end of 2026, CoStar will have spent more than $3 billion, all while diverting resources away from its core commercial business.
