Brad Bellflower’s Company Acquires ForRent.com for More Than a Song

CoStar Group announced today that it is acquiring ForRent.com, adding it to a portfolio that already included Apartments.com, which it purchased in 2014 and Apartment Finder, which it purchased in 2015. The price tag on this purchase is $385 million, with $350 million in cash and the remainder in stock.

From the Wall Street Journal article about the sale:

Landlords have listed apartments online for more than a decade, partly on sites developed by newspaper owners worried about their loss of traditional print ads. In 1998, a venture of the Times Mirror Co. , Tribune Co. and Washington Post Co. purchased the company that went on to build Apartments.com.

In recent years, large investors such as CoStar and Zillow began to make big bets on the business. Currently there are 46 million rental households, up from 35 million in 2004, according to CoStar.

Competitors also include RentPath Inc., which is owned by private equity giants TPG and Providence Equity Partners. Major players like Facebook Inc., Google Inc. and Craigslist also get an enormous amount of traffic from people looking for rental apartments.

The rental segment is now Zillow’s fastest-growing marketplace, according to remarks made by Chief Executive Spencer Rascoff during the company’s second quarter earnings call. He said the business grew 64% year over year in the second quarter.

 

CoStar Purchasing Apartment Finder

Hot on the heels of its acquisition of Apartments.com, CoStar Group has announced it is also purchasing Apartment Finder. From the press announcement:

CoStar Group, Inc. (Nasdaq:CSGP), the leading provider of commercial real estate information, analytics and online marketplaces, today announced that it plans to acquire Apartment Finder pursuant to a definitive agreement and plan of merger with Network Communications, Inc. for $170.0 million in cash which is subject to customary post-closing purchase price adjustments. This amounts to approximately seven times Apartment Finder’s EBITDA for the fiscal year ended March 2015. The Company expects the acquisition to close within 90 days, subject to customary closing conditions, and expects the acquisition to be accretive in 2016 and to achieve run-rate synergies of $20 million within 18 months after the acquisition closes…

“Over the past year we have transformed Apartments.com into one of the fastest growing industry websites, and we are excited to do the same for Apartment Finder,” stated CoStar Group Founder and Chief Executive Officer Andrew C. Florance…

Apartment Finder will remain a distinct, complementary brand to Apartments.com with a unique user interface, but will also be powered by CoStar’s information.  By offering two online marketing solutions, the Company believes property managers and owners will get more exposure for their listings and more effective and precise targeting of leads. CoStar expects by the end of the year it will have integrated the back ends of Apartments.com and Apartment Finder thereby leveraging the same research, systems, support, and sales platform to power both Apartments.com and ApartmentFinder.com. CoStar anticipates that this will create tremendous cost synergies and greater operating efficiencies.

Apartment Finder has approximately 400 employees, including approximately 120 field sales representatives located across the United States. CoStar plans to combine the sales forces and eventually all sales representatives will cross-sell multiple marketing and information solutions. CoStar believes this will further increase sales force production.

Florance continued, “I am looking forward to working with the great team at Apartment Finder and welcoming them to the CoStar family. 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.”