Opendoor Seeks $2 Billion Credit Facility to Boost Homebuying
(Bloomberg) -- Opendoor Technologies Inc., which buys homes from consumers and lists them for resale, is in talks with lenders for a new revolving credit facility of roughly $2 billion, according to people familiar with the effort.
The company, which is rapidly accelerating the number of homes it purchases, plans to use the proceeds to help increase acquisitions, said one of the people, who asked not to be named because the matter is private.
A representative for Opendoor declined to comment.
Opendoor, led by Chief Executive Officer Eric Wu, pioneered a data-driven spin on home-flipping known as iBuying. After the company buys a home, it makes light repairs and seeks to resell it, profiting by charging sellers a 5% fee for the convenience of an easy sale.
The company acquired 8,500 homes in the second quarter, more than double the number it bought in the first three months of the year, according to an statement Wednesday. It also had roughly 8,100 additional houses under contract at the end of June.
Opendoor uses debt to fund acquisitions, and had just under $4 billion in borrowing capacity under existing revolving credit facilities as of the end of June. The company had drawn $1.8 billion on those facilities, according to a filing.
Zillow Group Inc., Opendoor’s main competitor, has also moved to increase its firepower for home purchases. The company borrowed $450 million through a first-of-its-kind bond offering earlier this month.
Opendoor went public last year through a merger with a blank-check company led by Chamath Palihapitiya. The company’s shares surged as much as 21% Thursday after it reported second quarter earnings that beat analyst estimates for revenue and profit. Shares had been down 36% on the year through Wednesday.
Due to the rapid increase in purchases, Opendoor anticipates hitting a revenue target in the second half of 2021 two years ahead of a schedule the company set when it went public last year, Wu said in a letter to shareholders.
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