WASHINGTON--(BUSINESS WIRE)--CoStar Group, Inc. (NASDAQ: CSGP) the leading provider of commercial real estate information, analytics and online marketplaces, announced today that it has signed an agreement to acquire RentPath’s business for $588 million in cash, in connection with RentPath’s recently announced Chapter 11 bankruptcy process.
RentPath’s primary service is digital marketing for rental properties through a network of Internet listing websites, including Rent.com, ApartmentGuide.com, Rentals.com and Lovely.com. The RentPath network of websites generated over 21 million monthly visits and almost 9 million monthly unique visitors in 2019, according to comScore, and had approximately 28,000 properties advertised on its network as of December, 2019. RentPath is headquartered in Atlanta, Georgia and has approximately 770 employees.
“RentPath has a 30-year track record of outstanding service to the multifamily industry, developing thousands of meaningful customer relationships,” said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group. “Obviously, it is very challenging for newspapers, magazines, and print directories to reinvent themselves as profitable digital businesses. RentPath was burdened with a heavy debt load that prevented the company from making the necessary investments in building brand recognition and generating traffic from Google. As the cost of Google traffic soared, RentPath was unable to keep pace. Following restructuring in bankruptcy, CoStar Group expects the combined companies to benefit from synergies and plans to invest in building RentPath’s online brands and traffic to provide improved quantity and quality of lead flow to advertising clients. The Apartments.com network of sites generated 842 million visits last year, and we intend to use this valuable audience to generate leads for RentPath clients as well.”
“We believe there is untapped potential to serve the millions of landlords traditionally overlooked by online apartment marketplaces, which tend to focus on large apartment communities with over 100 units. We believe that investing in an excellent URL like Rent.com is the perfect vehicle for reaching that underserved audience.”
“CoStar Group operates a number of large and growing online marketplaces,” continued Florance. “We believe that RentPath’s talented and experienced employees will become valuable contributors not only to our Apartments.com network of sites but across all of our marketplaces.”
RentPath’s 2019 unaudited financials reflect revenue of approximately $227 million and adjusted EBITDA of approximately $47 million. Total revenue declined approximately 9% from 2018, while adjusted EBITDA declined approximately 24% in the same period. “Following successful conclusion of the bankruptcy process and regulatory review, we expect the acquisition to add scale to our Apartments.com business and be highly accretive to CoStar earnings once fully integrated,” said CoStar Group Chief Financial Officer Scott Wheeler.
“We are very excited to be joining CoStar as part of the Apartments.com network,” said Marc Lefar, Chief Executive Officer of RentPath. “Our customers have an ever increasing number of choices when considering where to spend their marketing dollars. With CoStar’s commitment to invest in the RentPath family of sites, we will be in a position to offer our customers the best options to reach potential renters.”
The Company plans to provide revenue and earnings guidance for 2020 in its quarterly financial results release for the fourth quarter expected to be issued on February 25, 2020. Revenue and earnings guidance related to the transaction is not expected to be available until later in the year.
The closing of the transaction is subject to various conditions, including approval by the bankruptcy court and regulatory approval. Subject to bankruptcy court oversight and pending closing, we expect that RentPath’s operations will continue in the ordinary course.
The preceding forward-looking statements reflect CoStar Group's expectations as of February 11, 2020. We are not able to forecast with certainty whether or when certain events, such as acquisition-related costs, the exact timing of closing of the acquisition, or the exact amounts or timing of any investments related to the acquisition will occur. Given the risk factors, uncertainties and assumptions discussed above, actual results may differ materially. Other than in publicly available statements, the Company does not intend to update its forward-looking statements until its next quarterly results announcement.
Conference Call
Management will conduct a conference call at 8:00am EST on February 12, 2020 to discuss the acquisition. The audio portion of the conference call will be broadcast live over the Internet at www.costargroup.com/investors/events. To join the conference call by telephone, please dial 844-721-7241 (from the United States and Canada) or 409-207-6955 (from all other countries) and conference code 9109916 if needed. An audio recording of the conference call will be available for replay approximately one hour after the call's completion and will remain available for a period of time following the call. To access the recorded conference call, please dial 866-207-1041 (from the U.S. and Canada) or 402-970-0847 (from all other countries) using access code 8752015. The webcast replay will also be available in the Investors section of CoStar Group's website for a period of time following the call.
About CoStar Group, Inc.
CoStar Group, Inc. (NASDAQ: CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. STR provides premium data benchmarking, analytics and marketplace insights for the global hospitality sector. LoopNet is the most heavily trafficked commercial real estate marketplace online with over 6 million monthly unique visitors. Realla is the UK’s most comprehensive commercial property digital marketplace. Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, WestsideRentals.com, AFTER55.com, CorporateHousing.com, ForRentUniversity.com and Apartamentos.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. CoStar Group’s websites attracted an average of over 51 million unique monthly visitors in aggregate in the third quarter of 2019. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Canada with a staff of over 4,300 worldwide, including the industry’s largest professional research organization. For more information, visit CoStarGroup.com.
This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about CoStar Group's financial expectations, the Company's plans, objectives, expectations and intentions and other statements including words such as “hope,” "anticipate," "may," "believe," "expect," "intend," "will," "should," "plan," "estimate," "predict," "continue" and "potential" or the negative of these terms or other comparable terminology. Such statements are based upon the current beliefs and expectations of management of CoStar Group and are subject to significant risks and uncertainties. Actual results may differ materially from the results anticipated in the forward-looking statements. The following factors, among others, could cause or contribute to such differences: the possibility that the acquisition of RentPath does not close when expected or at all; the possibility that the parties are unable to obtain bankruptcy court or regulatory approval; the risk that the businesses of RentPath and Apartments.com may not be combined successfully or in a timely and cost-efficient manner; the risk that the combination does not produce the expected benefits for RentPath and CoStar or their customers and consumers as stated in this release; the risk that business disruption relating to the RentPath acquisition may be greater than expected; the risk that the bankruptcy process may cause greater business disruption for RentPath than currently expected and may cause RentPath to change the way it operates its business and that it may be unable to operate in the ordinary course pending closing; the risk that synergies from the acquisition of RentPath may not be as expected, may not be fully realized, or may take longer to realize than expected; the risk that the acquisition does not produce the expected results for CoStar, Apartments.com and RentPath or their advertisers and consumers, including increased scale of our Apartments.com business, the acquisition being highly accretive once integrated, and as otherwise stated in this release; the risk that expected investments in RentPath, or the timing of any such investments, may change or may not produce the expected results as stated in this release; the risk that revenue results will differ from expectations; and the risk that the combination and integration of RentPath will disrupt CoStar Group's, Apartments.com’s or RentPath’s operations or result in the loss of customers or key employees. Additional factors that could cause results to differ materially from those anticipated in the forward-looking statements can be found in CoStar’s Annual Report on Form 10-K for the year ended December 31, 2018, and CoStar’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, each of which is filed with the SEC, including in the “Risk Factors” section of those filings, as well as CoStar’s other filings with the SEC available at the SEC’s website (www.sec.gov). All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
