CoStar Management to Hold Conference Call at
8:00 AM May 14 to Discuss
CoStar Group, Inc. (NASDAQ: CSGP) the leading provider of
commercial real estate information, analytics and online
marketplaces, announced today that it plans to acquire Ten-X for
$190 million in cash.
Ten-X was launched in 2009 with the goal of providing a digital
transaction platform for effectively liquidating the large volume
of distressed commercial real estate assets that came on the market
during the Great Recession. Ten-X has since become a leading,
best-in-class platform for digital commercial real estate
transactions with close to $24 billion dollars of sales
successfully executed on the platform. The Ten-X platform has
transacted approximately $7 billion in retail properties, $6
billion in office properties, $4 billion in multifamily properties,
$3 billion in hotel properties, and billions in value in other
commercial property types. While Ten-X initially focused on
distressed assets, non-distressed sellers and brokerage firms have
increasingly come to rely on Ten-X to facilitate faster execution
to transact properties.
The Ten-X transaction platform has become the trusted online
platform for brokers across the country to execute transactions for
their clients, including all of the top 25 US commercial real
estate brokerage firms. Leading lenders, special servicers and
institutional sellers have relied on Ten-X’s transaction platform
to sell billions in assets. Fannie Mae, Bank of America, JP Morgan
Chase, Blackstone, Starwood, BlackRock, Capital One, MetLife, LNR,
UBS, PNC, and SunTrust are just some of the major institutions that
have trusted the Ten-X platform to transact billions in online
commercial property transactions.
Ten-X accelerates the property sales process by qualifying and
independently evaluating the assets, identifying likely buyers from
a database of 400,000 buyers from 73 countries, qualifying the
bidders and funds, providing a powerful and flexible digital
auction process, and managing online escrow. The online model
accelerates the marketing period of the sales process, cutting deal
times by up to 50% while providing reliable execution, value
maximization and certainty of close.
CoStar Group operates the most heavily trafficked online
marketplace for commercial properties and land for lease and sale
in North America and Europe with 10 million monthly visitors in
April 2020 to its websites including LoopNet.com and CoStar.com.
After completion of the transaction, CoStar Group intends to
integrate the Ten-X digital transaction platform directly into both
LoopNet and CoStar thereby exposing the properties that brokers are
selling on the Ten-X platform to millions of potential buyers from
around the world.
“Together, Ten-X and CoStar plan to create a new end-to-end
commercial real estate platform, combining LoopNet and CoStar’s
unmatched online audience of buyers with Ten-X’s clear leadership
in online auctions for both performing and distressed assets”, said
CoStar Group Chief Executive Officer Andrew Florance. “Combining
our complementary capabilities is expected to create significant
benefits for brokers and the institutions they represent by
exposing their properties for sale to the biggest pool of potential
bidders on the most trusted digital transaction platform and
delivering fast and reliable trade execution. In the aftermath of
the economic disruption which is being caused by the global
pandemic, we believe that the volume of distressed properties
coming to market will surge and that this combined platform will
support the market’s recovery.”
“Today, only 1% of all commercial real estate sales transactions
take place online,” noted Steve Jacobs, CEO of Ten-X. “Just like
CoStar Group, we are focused on driving volume and efficiency and
have devoted ourselves to addressing the massive, untapped demand
for digital commercial real estate solutions. We see significant
demand for a one-stop shop platform that provides solutions across
the entire transaction continuum and we are delighted to combine
our complementary capabilities and strengths with CoStar to meet
that demand.”
Ten-X Commercial’s 2019 unaudited financial statements reflect
revenue of approximately $57 million. “The Ten-X team has worked
hard over the past year to position the business for growth and
profitability,” said Scott Wheeler, Chief Financial Officer of
CoStar Group. Revenue for the first quarter of 2020 was
approximately $13 million, representing revenue growth of 35%
compared to the first quarter of 2019, and operating profit of
approximately zero. “Although we expect a certain amount of revenue
disruption from the global pandemic, I am optimistic that
transaction volumes could increase materially later in the year as
was the case following the last recession,” continued Wheeler. The
transaction is expected to close in the third quarter of 2020,
subject to customary closing conditions and regulatory review.
Assuming the transaction closes in the third quarter of 2020, Ten-X
is not expected to have a material impact to CoStar Group Adjusted
EBITDA for the year.
Ten-X was acquired by investment funds affiliated with Thomas H.
Lee Partners, L.P. and certain co-investors in September 2017, as
part of a broader acquisition of a holding company that owned
Ten-X, Auction.com and a business formerly known as Ten-X Homes.
Following such acquisition, Ten-X was separated from the other
businesses, and this acquisition does not include such other
businesses. Investment funds affiliated with Thomas H. Lee
Partners, L.P. and certain co-investors continue to own
Auction.com.
The preceding forward-looking statements reflect CoStar Group's
expectations as of May 13, 2020. We are not able to forecast with
certainty whether or when certain events, such as the exact timing
of closing of 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 ET on May
14, 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 866-627-4249 (from the United States and
Canada) or 825-312-2385 (from all other countries) and conference
ID 7545087. 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, Westside Rentals,
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 approximately 55 million
unique monthly visitors in aggregate in the first quarter of 2020.
Headquartered in Washington, DC, CoStar maintains offices
throughout the U.S. and in Europe, Canada and Asia with a staff of
over 4,200 worldwide, including the industry’s largest professional
research organization. For more information, visit
www.costargroup.com.
This news release and the Company’s earnings conference call
contain “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's plans,
objectives, expectations, beliefs 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 and are subject to many risks and uncertainties. Actual
results may differ materially from the results anticipated in the
forward-looking statements and the assumptions and estimates used
as a basis for the forward-looking statements. The following
factors, among others, could cause or contribute to such
differences: the possibility that the acquisition of Ten-X does not
close when expected or at all; the possibility that the parties are
unable to obtain regulatory approval, or the risk that any actions
required to be taken in order to receive regulatory approval may
impact the expected benefits of the transaction; the risk that the
businesses of Ten-X and CoStar may not be combined successfully or
in a timely and cost-efficient manner, including integration of the
Ten-X platform into LoopNet and CoStar and creation of a new
end-to-end commercial real estate platform; the possibility that
the volume of distressed properties coming to market will not be as
expected; the risk that business disruption relating to the Ten-X
acquisition may be greater than expected; the risk that demand for
a one-stop shop platform is not as expected; the risk that
synergies as a result of the acquisition of Ten-X 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 and Ten-X (or their customers); the
risk that the combination and integration of Ten-X will disrupt
CoStar’s or Ten-X’s operations or result in the loss of customers
or key employees; the risk that the impact from the acquisition to
CoStar Group’s Adjusted EBITDA for the year differs from current
expectations; uncertainty surrounding the impact of the COVID-19
outbreak, including volatility in the international and U.S.
economy, worker absenteeism, quarantines or other travel or
health-related restrictions; the length and severity of the
COVID-19 outbreak; the pace of recovery following the COVID-19
outbreak; and government and private actions taken to control the
spread of COVID-19. More information about potential factors that
could cause results to differ materially from those anticipated in
the forward-looking statements include, but are not limited to,
those stated in CoStar’s filings from time to time with the
Securities and Exchange Commission, including in CoStar’s Annual
Report on Form 10-K for the year ended December 31, 2019, and
CoStar’s Quarterly Report on Form 10-Q for the quarter ended March
31, 2020, 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200513005870/en/
Investors
Scott Wheeler Chief Financial Officer (202) 336-6920,
swheeler@costar.com
Sarah Spray Investor Relations (202) 346 6394,
sspray@costar.com
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