CoStar Group (NASDAQ: CSGP) today announced it has signed an agreement to acquire Apartments.com from Classified Ventures for $585 million in cash. Apartments.com is a premier online apartment rentals resource for renters, property managers and owners.
In 2013, Apartments had revenue of approximately $86 million and an adjusted EBITDA of $28 million, (EBITDA margin of 33%). CoStar Group expects annual synergies of approximately $20 million from cross-selling and cost efficiencies over the 24 months following the close of the transaction. The Company achieved strong synergies from its LoopNet acquisition.
Apartments provides a national, online resource that matches apartment seekers with great apartments. In addition to Apartments, the business operates ApartmentHomeLiving.com and RentalHomesPlus.com. In 2013, the three sites generated 114 million visits and an average of 7 million unique monthly visitors.
“In much the same way LoopNet revolutionized how owners and brokers market the commercial real estate sectors of office, industrial and retail, Apartments has transformed the way owners and property managers market their commercial real estate’s apartment buildings, moving them from the classified ads section of Classified Ventures owners’ newspapers to more effective online advertising,” stated CoStar Group Founder and Chief Executive Officer Andrew C. Florance. Apartments customers receive cost effective, targeted marketing solutions that effectively drive measurable exposure, high-quality traffic and leads to their businesses.
“Apartments is one of the most widely recognized online apartment rental brands in the United States and is a leading advertising destination for professional management companies and building owners,” Florance said. According to a recent study conducted by the firm, 95% of U.S. apartment owners are familiar with the Apartments brand.
Florance stated, “Over the past two decades, CoStar Group has built what we believe is the most comprehensive information source covering U.S. apartment buildings. CoStar Group collects details such as availabilities, rents, key contacts, comparable sales, photographs, building characteristics and other details on hundreds of thousands of apartment buildings. We believe that we have collected information on five times as many buildings as any other commercial real estate information provider.”
According to Florance, CoStar’s comprehensive database will add richer content to Apartments, thereby building a better consumer experience and driving more consumer traffic and ultimately more leads for customers. In addition, Florance believes owners and property managers using Apartments will find CoStar’s multifamily information and analytics solutions valuable for their own understanding of critical market dynamics. “We also believe CoStar’s huge database of apartment owners and managers can be a valuable source of new leads for the Apartments sales force,” he added.
Apartments has 140 sales professionals, including 75 advertising field representatives located across the United States. “The Apartments sales force gives us a robust advertising field sales force that we believe when combined with our existing sales team, will be invaluable in selling advertising solutions for both Apartments and LoopNet thereby further accelerating LoopNet’s revenue growth.”
CoStar Group’s existing marketplaces are leaders in their respective verticals. LoopNet, CityFeet and Showcase attract over 5 million monthly unique visitors and are the number 1, 2 and 3 most trafficked sites for commercial real estate in the United States. LandsofAmerica and LandAndFarm provide a marketplace for rural land and farm properties and are the number 1 and 3 sites by revenue, respectively, drawing 1.7 million unique monthly visitors in aggregate. BizBuySell and BizQuest are the leading marketplaces for small businesses for sale, and in the aggregate have over 1 million unique monthly visitors and are the number 1 and 2 business for sale sites by traffic.
“We intend to draw on our deep experience with all of these marketplaces and leverage our management, technology, sales, and marketing expertise to make this acquisition a success,” Florance stated. “We are confident that CoStar Group’s proven real estate technology capabilities will help Apartments build the industry’s most compelling apartment rental destination on the web. Conversely, we also expect that CoStar’s multifamily information and analytics solutions will strengthen as we gain valuable demand side data from Apartments.”
“I am looking forward to working with the great team at Apartments and welcome them to the CoStar family,” said Florance. “We are all dedicated to building and growing commercial real estate’s premier online Apartment platform and strengthening CoStar’s leadership position in the $2 trillion U.S. multifamily asset class.”
The transaction is expected to close in the second quarter of 2014.