CoStar Group, Inc.
), a leading provider of commercial real estate information,
analytics and marketing services, announced a definitive
agreement to acquire Apartments.com, a division of Classified
Ventures, LLC, for $585 million in cash.
Gannett Co., Inc. and Tribune Co., major stakeholders in
Classified Ventures, expect to receive a gross distribution north
of $155 million each from the sale. The transaction received
unanimous approval from the board of directors of both CoStar and
Classified Ventures, and is expected to conclude in the second
quarter of 2014, subject to regulatory approvals.
Apartments.com provides a national online resource that matches
apartment seekers with varied choices. It has emerged as a
leading advertising destination for professional management
companies and building owners. The sale includes websites of
Apartments.com, RentalHomesPlus.com and ApartmentHomeLiving.com,
which generated 114 million visits on an aggregate with an
average of 7 million unique monthly visitors in 2013.
Apartments.com has revolutionized the marketing avenues of
commercial real estate's apartment buildings, affording
efficient, targeted advertising solutions that attract
Along with the cash on hand, CoStar will take on considerable
debt to fund the deal - consisting of a $400 million fully
committed term loan and $225 million revolving credit facility
from a consortium of leading banks. These include JPMorgan Chase
Bank NA, the investment banking division of
JPMorgan Chase & Co.
), Bank of America Merrill Lynch, the investment banking divison
Bank of America Corp.
), and Wells Fargo Bank National Association, a segment of
Wells Fargo & Co.
). These loans will also refinance the company's existing debt
and meet its ongoing working capital requirements.
The transaction will reportedly create an online behemoth in
commercial real estate, by integrating CoStar's leading
information solutions with the comprehensive operations of
Apartments.com, creating leading information, marketing and
analytics company in commercial real estate.
CoStar expects annual synergies of approximately $20 million,
resulting from cross-selling and cost efficiencies over the
couple of years following the close of the transaction.
Apartments.com will attract valuable, focused consumer traffic
with the aid of CoStar's comprehensive database covering rents,
availabilities, key contacts, comparable sales, photographs,
building characteristics and other facts on hundreds of thousands
of apartment buildings in the U.S.
The existing clientele of Apartments.com will also benefit
from CoStar's diverse information and analytics solutions. In
addition, the experienced, robust sales force of Apartments.com
lends a deep advertising knowledge base to this Zacks Rank #3
(Hold) stock to further accelerate revenue growth in other
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CoStar is expecting to cross-pollinate its multifamily property
database with more than 100 million visitors that showed interest
in Apartments.com and its two sister sites,
ApartmentHomeLiving.com and RentalHomesPlus.com, last year. The
deal follows CoStar's 2012 acquisition of LoopNet, valued at $860
million, the commercial real estate industry's most
Founded in 1987, CoStar now has more than 8 million unique
monthly visitors online and more than 2,000 staff in the United
States, United Kingdom and France. This horizontal integration
has established CoStar as a repository of commercial real estate
CoStar's existing marketplaces are pre-eminent in their
respective verticals. Its commercial property sites, namely,
LoopNet, CityFeet and Showcase attract over 5 million monthly
unique visitors. Its rural land and farm properties' sites
include LandsofAmerica and LandAndFarm, which attract 1.7 million
unique monthly visitors; and BizBuySell and BizQuest that claim
over 1 million unique monthly visitors in total. Adding
Apartment.com to its portfolio will designate CoStar as a
comprehensive commercial real estate solutions company.