Divesting Homes.com Would Cause ‘irreparable Harm’: Costar

The pressure of even more activist investors does not appear to be enough to cause CoStar Group to change its stance on Homes.com. 

The Andy Florance-led firm responded to a letter sent by activist investors at D.E. Shaw & Co., LP. in a press release on Thursday, in which the company reiterated its commitment to seeing things through with Homes.com. CoStar argued that “eliminating a business that is embedded across the CoStar Group, driving network benefits and additional products in our other businesses, with the majority of required investments complete, is wholly impractical and shortsighted.”

In an open letter published on Wednesday, investors at D.E. Shaw echoed demands made by Third Point Investments last week, calling for CoStar to divest or shutter Homes.com, bring in new independent directors to its board and for greater oversight on executive compensation. 

According to CoStar, “abandoning” Homes.com, which it sees as a “critical partner” for Apartments.com, would cause “irreparable harm” to its business and lead to “certain and significant value destruction.”

“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,” the press release states.

Additionally, CoStar wrote that it feels that D.E. Shaw’s call to change even more members of the firm’s board of directors is based on “arguments that demonstrate a fundamental misunderstanding” of CoStar’s business and they further a “false narrative” that CoStar has not engaged with the activist investors or considered their previous feedback. 

Actions by CoStar

According to the release, some of the actions CoStar took in response to D.E. Shaw’s feedback include the appointments of John Berisford, Rachel Glaser and Christine McCarthy to the firm’s board of directors, replacing Michael Klein, Christopher Nassetta and Laura Kaplan, who all retired from the board; the appointment of Louise Sams as the independent board chair; and forming the Capital Allocation Committee.

The company also said that its decisions to reduce net investment in Homes.com by $300 million in 2026 and at least $100 million annually thereafter; accelerate the completion of its $500 million share repurchase program in 2025 and launching a new $1.5 billion repurchase program in July of 2026, were also made in response to feedback.

CoStar also noted that it made the decision to implement a “redesigned executive compensation program” for 2026 that includes “more rigorous and quantitative goals, enhanced transparency and a simplified structure,” after meeting with the top 50 stockholders, who represent 77% of shares outstanding.

CoStar claims that D.E. Shaw and Third Point have not “heard the answers they want” regarding Homes.com and as a result have “latched on to a manufactured tale of governance shortcomings starring a CEO who would be unrecognizable to most of CoStar Group’s long-term stakeholders.”

A ‘tired and easily refutable narrative’

According to CoStar, its board and management team have worked with D.E. Shaw to help the investors “understand the value creation potential for Homes.com and the fact that the Company is on a responsible plan to realize it.”

“Despite 14 meetings over the past nine months – including two meetings with independent directors without participation by CoStar Group’s CEO – D.E. Shaw trotted out a tired and easily refutable narrative of Board insulation littered with petty mischaracterizations,” the press release states. “Elsewhere, D.E. Shaw predicates its arguments on assertions that Homes.com will not reach goals the Company has laid out without offering any compelling evidence to support its assertions.”

Over the past month, since the announcement of its new strategic plan outlining Homes.com’s path to profitability by 2030, CoStar said it has met in person with more than 300 stockholders, “the vast majority of whom express enthusiasm for” CoStar’s plan. The company has stated that the “heavy investment phase” of Homes.com is complete and that the firm is on the way to monetizing the investment. 

“Scaling Homes.com has already generated positive network effects for CoStar Group, including increased traffic and leads at Apartments.com and the ongoing integration of new technology across the Company, particularly in AI,” CoStar stated in the release. “Our 2026 and long-term guidance reflect our confidence in our ability to repeat our prior successes and to unlock the significant potential of our digital ecosystem for stockholders. Our guidance reflects the benefit of initiatives across our core platform that would not be possible without Homes.com.”