CoStar discussing $500M takeover of apartment finder RentPath

RentPath, owned by TPG Capital, is currently in financial trouble

From left: RentPath CEO Marc Lefar and CoStar CEO Andy Florance (Credit: CoStar via YouTube)
From left: RentPath CEO Marc Lefar and CoStar CEO Andy Florance (Credit: CoStar via YouTube)

CoStar Group is in talks to acquire a troubled apartment listing firm for close to $500 million.

The discussions to acquire RentPath — the parent company of residential rental websites including ApartmentGuide.com, Rentals.com and Rent.com — remain in flux, and a deal is yet to close, according to the Wall Street Journal.

The deal would further signal CoStar’s desire to gobble up apartment-listings businesses to complement its sprawling commercial real estate information service.

CoStar has had a steady run of acquisitions in the sector that started in 2014 when it acquired Apartments.com for $585 million, a bet that has paid off well and continues to boost its revenue. In October, it paid $450 million cash to acquire STR, a Tennessee-based data firm that provides supply and demand insights on the hospitality industry.

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The acquisition of RentPath could also raise eyebrows about CoStar’s grip on the real estate data market. In October, Moody’s Investors Service downgraded RentPath’s credit rating, citing “competitive pressure by a substantially larger and better capitalized competitor.” At the time, CoStar’s Aparments.com had twice as many web visitors than RentPath’s sites.

TPG Capital reportedly acquired RentPath in 2011 from KKR for $525 million, and Providence Equity later acquired a 50 percent stake in the firm. As RentPath has faced financial trouble alongside increased competition, its owners tapped financial advisors to restructure $650 million of debt, the Journal reported.

CoStar, which is due to release its 2019 earnings this month, last year was on target to generate almost $1.4 billion in revenue, up from $1.2 billion the year before. [WSJ]David Jeans