CoStar’s next target, ex-Zillow execs eye mortgage market

National /
Nov.November 02, 2020 08:00 AM

$4B burning a hole in CoStar’s pocket

The giant has just purchased Germany-based Emporis, which has data on 700,000 buildings, to “jump start” its international business. The deal caps a string of buys for CoStar, including Ten-X ($190M), hotel data provider STR ($450M) and RentPath ($588M).

CEO Andy Florance said CoStar’s international market opportunity is “more than twice” that of North America — and that’s pretty big. CoStar’s third-quarter revenue jumped 21 percent year over year to $426 million. Its quarterly profit was $58 million, a drop from last year’s $79 million and $60 million in Q2. Meanwhile, the company has a $4 billion warchest.

One potential target could be CoreLogic. The data and analytics firm received multiple takeover bids at more than $80 per share. According to Bloomberg, CoreLogic is in talks with CoStar and a consortium including Warburg Pincus and GTCR.

In September, CoreLogic rejected an unsolicited offer for $66 per share from shareholders Senator Investment Group and Cannae Holdings. “No decision has been made to enter into a transaction at this time,” the company said Wednesday. Shares rose 13.2 percent to $77, following the news.

“When we took @Zillow $Z public in 2011 it was … a facepalm moment. We priced at $20, but the stock hit $60 moments after it started trading. Our employees and VCs were penalized by the broken IPO system.”

— Spencer Rascoff, ex-CEO of Zillow 

Masa should probably stop texting

After WeWork’s bungled IPO, SoftBank agreed to pay shareholders $3 billion. But new court documents show CEO Masayoshi Son told executives to “use whatever excuse” to delay the tender offer. In a text message exchange, Marcelo Claure told Son he would, citing antitrust approval. “I am turning good at excuses like someone I know very well :),” Claure wrote.

Ultimately, SoftBank scrapped the offer to repurchase stock from shareholders, including founder Adam Neumann, who is suing SoftBank. A SoftBank spokesperson said “cherry-picking” quotes didn’t change the fact that SoftBank had “no obligation” to complete the tender offer.

But there’s more. WeWork CEO Sandeep Mathrani said this week that the company would likely revisit plans for an IPO as soon as next year once it turns profitable, Bloomberg reported. “Nazar na lag jaye,” he told Indian reporters, using a Hindi expression to avoid casting an evil eye on WeWork’s turnaround.

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Show them the money

Camber Creek, a backer of VTS and WhyHotel, raised $155 million for its third and largest fund, which included backing from Texas Employees Retirement System. Since 2011, the firm had raised a total of $37 million and invested in 25 startups. Its latest raise is four times the size of its first two funds combined.

“We were dramatically underinvesting,” Jake Fingert, a general partner, said. He said the later-stage market’s gotten bigger and more competitive. “As early investors, we have the opportunity to continue to support those companies; we want to make sure we had the right amount of capital.”



Amazon’s record-breaking Q3 revenue, with $6.3B in profits

Tishman gets SPAC’ed

Billionaire Bill Ackman. Investor Chamath Palihapitiya. Former House Speaker Paul Ryan. And now, Tishman Speyer.

The landlord jumped on board the SPAC craze, forming a blank-check company that’s looking to raise $300 million for a proptech deal. With 78 million square feet under management, Tishman is hoping its industry experience will give it an edge in an increasingly crowded space. Since 2017, Tishman’s “selectively invested” in 11 startups.

Trouble in iBuying?

Despite betting big on iBuying, Zillow has cut 80 jobs from its home buying and selling business. The real estate giant does not disclose how many of its 5,300 employees work for Zillow Offers. But a spokesperson told GeekWire the cuts would allow Zillow to invest in iBuying by “realigning our resources and staffing levels.”

Zillow lost more than $300 million on iBuying last year, and it loses about $6,500 per home. It recently said it would hire in-house brokers to represent it on home purchases, allowing it to reduce brokerage fees and take a step toward breaking even.

40M ways to make mortgages less “lousy”

You’ve heard of a $1 million seed round, even a $5 million one. But $40 million? That’s how much two former Zillow execs just raised for a new mortgage startup called Tomo.

Founded by Carey Armstrong and Greg Schwartz, Tomo bills itself as a fintech startup that aims to streamline homebuying for buyers and agents. “Buying a home is a lousy experience,” Schwartz said. “Despite years of tech companies focusing on real estate, the overall process has not changed.”

Tomo’s initial funding was led by Ribbit Capital, Zigg Capital and NFX, a firm co-founded by Trulia co-founder Pete Flint. Spencer Rascoff, co-founder and former CEO of Zillow, is also an investor, along with SVB Capital, Ted Ackerley, Alex Sacerdote, Kurt Mobley and Eli Weinberg.

Small bytes

✄ Knotel laid off 20 staffers, bringing its headcount to 250. But CEO Amol Sarva is hoping for profits early next year.

?Jack Chandler, BlackRock’s former real estate head, is joining CrowdStreet’s investment committee.

? Airbnb said it will go public on Nasdaq.

? Caliber Home Loans and AmeriHome are delaying their IPOs due to market volatility.

? NYC employers, including Deloitte and NBC, are using a “Health Pass” app from CLEAR to screen workers for Covid. Upon entry, workers snap a selfie and get a temperature check.

? L.A.-based Stay Open, which turns unused commercial spaces into pod hotels and co-living units, raised $2 million in seed funding. Its first project is a Budget Rent a Car into a 240-room hotel.

? Finnish iBuyer raised €100 million, or $116M, in a debt and equity round led by NREP.

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