CoStar to Buy Real Estate Data Provider for $800M All-cash Deal

CoStar is adding to its data trove with a nearly billion-dollar deal.

The commercial real estate behemoth has agreed to buy real estate data and analytics firm Zonda for $800 million, the company announced in a press release. The all-cash deal is expected to close in the second half of the year.

Zonda serves more than 3,000 customers, including large residential builders like Lennar and Toll Brothers, as well as developers, suppliers and lenders. The firm’s core offering is a proprietary, lot-level database that has information on development activity, home sales and builder operations.

In addition to its data offerings, Zonda also operates two online new home marketplaces, NewHomeSource and Livabl, in which homebuilders send listings directly to the marketplaces.

“Zonda has built an extraordinary business with deep relationships across the homebuilding industry and one of the most valuable proprietary datasets in new home real estate,” CEO Andy Florance said in a statement, noting that the deal will allow CoStar to further tap into the homebuilder market while also strengthening its “core information offerings.”

The majority of Zonda’s revenue comes from subscriptions, and the business has a 104 percent net retention rate, according to a release. Zonda also has a visualization product that CoStar said will pair with its own spatial technology firm, Matterport, which it acquired last year.

The move appears to boost CoStar on both its commercial and residential business lines, the latter of which has come under fire for its poor returns in recent months.

Last year, investment firm Third Point launched an activist campaign urging CoStar to pare back its investment in Homes.com after years of losses on the business line, its residential marketplace that competes with sites like Zillow and Realtor.com.

In April, Third Point announced it was ending its activist campaign and liquidating its position in CoStar. “We no longer believe that our original thesis holds true today and have disposed of our position in its entirety,” Third Point CEO Daniel Loeb wrote in an investor letter.

CoStar reported $3 million in net income in the first quarter, an improvement from a $15 million loss in the first quarter of last year, and an adjusted EBITDA of $132 million, up 100 percent from the same time last year and above the high-end of its guidance for the quarter.