A specialized REIT focused on acquiring, improving, and exiting middle-market commercial real estate assets across diverse sectors like industrial, retail, and office spaces.
Investors might consider CODI if they believe in a cyclical rebound of commercial real estate where distressed assets can be acquired at deep discounts before the market corrects. The company's specialized operational expertise allows it to generate alpha by improving underperforming properties, potentially turning current losses into future gains as occupancy rates recover and interest rates stabilize.
Current financial metrics show a significant net loss of $293.7M and a decline in revenue, suggesting that the company is facing severe headwinds in its target markets that may persist for an extended period. The substantial debt load, indicated by long-term debt of $1.84B against total assets of $3.04B, poses a liquidity risk if refinancing conditions deteriorate further or if rental income fails to cover interest payments.
Compass Diversified Holdings (CODI) is a leading diversified real estate investment trust that specializes in owning, managing, and financing income-producing commercial real estate across the United States. The company operates primarily through its CODI Real Estate Fund II, focusing on middle-market industrial, retail, office, and multi-family properties with a strong emphasis on value-add strategies. Its business model leverages deep industry expertise and extensive relationships to acquire distressed or underperforming assets, reposition them for higher yields, and exit at a premium.
Recent financial performance reflects the cyclical nature of the commercial real estate market, with revenue declining to $1.87B in 2025 from $2.26B in 2022 and a sharp drop in net income to a loss of $293.7M compared to profits in previous years. The substantial depreciation and amortization of $142.5M and high interest expense of $175.3M indicate the company carries significant debt obligations typical for an REIT, which has pressured operating cash flow despite generating gross profit of $814.4M.
The commercial real estate industry is currently navigating a challenging environment marked by elevated interest rates, higher vacancy rates, and shifting tenant demands across industrial, retail, and office sectors. As a specialized REIT, Compass Diversified Holdings operates within this broader market but distinguishes itself through a niche focus on middle-market assets that larger institutional investors often overlook.
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $2.26B | $2.06B | $2.20B | $1.87B |
| Cost of Revenue | $1.36B | $1.17B | $1.20B | $1.06B |
| Gross Profit | $907.7M | $893.3M | $1.00B | $814.4M |
| Operating Expenses | $732.2M | $803.3M | $770.2M | $803.3M |
| Operating Income | $175.6M | $90.1M | $230.1M | $11.1M |
| R&D | $12.9M | $14.6M | $16.9M | $16.6M |
| G&A | $553.6M | $549.6M | $587.5M | $660.7M |
| Stock-Based Comp | $14.0M | $10.7M | $16.3M | $16.1M |
| D&A | $142.5M | $146.4M | $147.7M | $142.5M |
| Depreciation | $44.4M | $46.5M | $43.9M | $45.3M |
| Amortization | $94.4M | $95.8M | $99.8M | $93.2M |
| Other OpEx | $165.6M | $239.1M | $165.8M | $126.0M |
| Non-Operating Income | $-88.5M | $-107.5M | $-138.8M | $-308.7M |
| Interest Expense | $83.5M | $105.2M | $106.7M | $175.3M |
| Interest Income | $49.0K | $2.0M | $2.0M | $832.0K |
| Pre-Tax Income | $87.1M | $-17.4M | $91.3M | $-297.6M |
| Income Tax | $45.0M | $21.3M | $49.0M | $-945.0K |
| Continuing Ops | $42.0M | $-38.7M | $42.3M | $-296.6M |
| Discontinued Ops | $0 | $17.9M | $-4.0M | $0 |
| Net Income | $51.4M | $262.4M | $47.4M | $-293.7M |
| Minority Interest | $15.1M | $16.1M | $34.5M | $-67.3M |
| Net to Common | $36.4M | $246.3M | $12.8M | $-226.4M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $1.21B | $1.60B | $1.57B | $845.2M |
| Cash & Equivalents | $61.3M | $450.5M | $59.7M | $68.0M |
| Accounts Receivable | $341.4M | $318.2M | $444.4M | $202.9M |
| Inventory | $732.4M | $740.4M | $962.4M | $404.1M |
| Prepaid Expenses | $75.0M | $94.7M | $101.1M | $78.4M |
| Other Current Assets | $0 | $0 | $0 | $91.8M |
| Long-Term Assets | $2.64B | $2.21B | $2.48B | $2.19B |
| PP&E (Net) | $205.5M | $192.6M | $244.7M | $209.7M |
| Intangibles | $1.13B | $923.9M | $1.05B | $892.8M |
| Goodwill | $1.13B | $901.4M | $982.3M | $895.4M |
| Operating Leases | — | — | — | $146.8M |
| Other LT Assets | $172.6M | $195.3M | $208.6M | $49.3M |
| Total Assets | $3.85B | $3.82B | $4.05B | $3.04B |
| Current Liabilities | $359.8M | $312.4M | $384.8M | $349.6M |
| Accounts Payable | $94.2M | $93.4M | $104.3M | $96.3M |
| Current Debt | $10.0M | $10.0M | $15.0M | $37.5M |
| Current Leases | — | — | — | $37.9M |
| Deferred Revenue | — | — | — | $0 |
| Taxes Payable | $7.8M | $3.9M | $7.4M | $3.5M |
| Other Current Liab | $56.2M | $47.6M | $60.2M | $11.2M |
| Long-Term Liabilities | $2.13B | $1.99B | $2.10B | $2.12B |
| Long-Term Debt | $1.82B | $1.66B | $1.76B | $1.84B |
| LT Operating Leases | — | — | — | $126.1M |
| Other LT Liab | $303.4M | $323.4M | $345.3M | $150.0M |
| Total Liabilities | $2.49B | $2.30B | $2.49B | $2.47B |
| Shareholders' Equity | $1.36B | $1.52B | $1.56B | $573.7M |
| Retained Earnings | $-372.9M | $-249.2M | $-386.3M | $-1.31B |
| AOCI | $-1.1M | $111.0K | $-5.8M | $738.0K |
| Total L&E | $3.85B | $3.82B | $4.05B | $3.04B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $51.4M | $262.4M | $47.4M | $-293.7M |
| Non-Cash Adjustments | $-302.1M | $-193.4M | $-510.1M | $231.5M |
| Working Capital Changes | $222.4M | $9.1M | $395.1M | $55.4M |
| Cash from Operations | $-28.3M | $78.1M | $-67.6M | $-6.8M |
| Capital Expenditures | $64.3M | $55.8M | $56.7M | $44.3M |
| Cash from Investing | $-626.7M | $570.5M | $-422.4M | $-42.6M |
| Share Buybacks | — | $9.3M | $9.6M | $0 |
| Cash from Financing | $556.9M | $-260.2M | $100.6M | $55.1M |
| FX Effect | $-1.3M | $786.0K | $-1.3M | $2.7M |
| Net Change in Cash | $-99.5M | $389.2M | $-390.8M | $8.4M |
| Beginning Cash | $160.7M | $61.3M | $450.5M | $59.7M |
| Ending Cash | $61.3M | $450.5M | $59.7M | $68.0M |
The company's revenue is derived from its core real estate investment fund activities, which include identifying distressed or value-add properties, executing acquisitions, undertaking property improvements and repositioning, and generating income through leases and rent collection. Revenue streams also encompass financing activities related to these assets and transaction-based fees associated with the buy-and-build-exit strategy employed across industrial, retail, office, and multi-family sectors.
The primary risk factor is the significant volatility in commercial real estate markets, which can lead to sharp declines in property values and rental income as evidenced by the recent net loss. High interest rates increase borrowing costs for refinancing debt or acquiring new assets, potentially eroding profit margins on value-add projects. Concentration risk exists if a large portion of the portfolio is affected by sector-specific downturns, such as retail vacancies or office space overcapacity.
Compass Diversified Holdings possesses a unique competitive moat characterized by its specialized team of real estate professionals with deep local market knowledge, enabling precise identification of undervalued assets. The company benefits from a flexible capital structure that allows it to pursue opportunistic acquisitions during market downturns while maintaining a disciplined exit strategy to realize substantial value for shareholders.
Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.