CoStar acquires troubled rental listings firm for $588M

CoStar Group has acquired troubled apartment listing firm RentPath for $588 million.

The real estate data giant’s all-cash deal will take RentPath out of Chapter 11 bankruptcy, the companies announced Tuesday evening. The purchase is subject to bankruptcy court and regulator approval. Discussions around the deal were first reported by the Wall Street Journal.

The acquisition adds to CoStar’s apartment-listings businesses, which it has built alongside a sprawling commercial real estate information service. RentPath is the parent company of residential rental websites including ApartmentGuide.com, Rentals.com and Rent.com.

RentPath filed for Chapter 11 bankruptcy this week.

“RentPath was burdened with a heavy debt load that prevented the company from making the necessary investments in building brand recognition and generating traffic from Google,” said Andrew Florance, CoStar’s CEO. “As the cost of Google traffic soared, RentPath was unable to keep pace.”

CoStar, which is due to release its fourth quarter earnings Feb. 25, was on target to generate almost $1.4 billion in revenue last year, up from $1.2 billion the year before. According to CoStar, RentPath’s 2019 unaudited financials reflect revenue of approximately $227 million and adjusted EBITDA of approximately $47 million.