One of the leading U.S. providers of commercial real estate information and websites, including apartments.com — CoStar Group — has announced its intention to acquire digital advertising service ForRent, for $350 million in cash and $35 million in CoStar Group stock.
ForRent is a division of Dominion Enterprises and offers a digital advertising service through a network of four multifamily websites — which includes ForRent.com, AFTER55.com, CorporateHousing.com and ForRentUniversity.com.
Commenting on the deal, CoStar’s CEO Andrew C. Florance said:
“We are delighted to welcome the ForRent team and their family of sites to the Apartments.com network. We believe this is a beneficial combination for all of our constituents. Prospective renters will have access to the most complete and accurate inventory of apartment availabilities with more than one million rentals spanning apartments, homes, and condominiums.”
ForRent’s revenue for 2017 is expected to be approximately $100 million and EBITDA is estimated at approximately $15 million, for an EBITDA margin of 15%, based on financial results from the first half of 2017. CoStar expects to achieve synergies of approximately $25 million within 24 months after the acquisition closes, resulting in an adjusted purchase price multiple of ten times EBITDA after synergies.
CoStar’s press release states that ForRent.com will remain a distinct, complementary brand to Apartments.com. By offering multiple distinct website marketing solutions it states that property managers and owners will have more exposure for their listings and expects to fully integrate the underlying technology that supports its entire multifamily suite of services by mid-2018, thereby efficiently leveraging a common research and listing platform.
Following integration, advertisers will be able to manage all of their listings across the combined networks through a single website. CoStar expects this will result in significant operating efficiencies for the Company, its advertisers, and renters.
The transaction is expected to close in the fourth quarter of 2017 subject to customary closing conditions.