CoStar plots international push with Emporis buy

Purchase price not disclosed; Q3 profits slid to $58M from $79M last year

CoStar CEO Andy Florance (iStock; Getty)
CoStar CEO Andy Florance (iStock; Getty)

Commercial real estate data giant CoStar Group has acquired real estate data company Emporis, a move that will boost its European presence.

Germany-based Emporis has data on 700,000 buildings records across 100 countries, CoStar said Tuesday.

CoStar did not disclose the purchase price, which founder and CEO Andy Florance described as “de minimis” on the company’s earnings call. He said the deal would allow CoStar to “jump start” its international data collection efforts.

“We believe the market opportunity for us internationally is more than twice the market opportunity in North America,” he said. In London and New York, he noted, as much as 70 percent of capital put into investment-grade properties is flowing across international borders.

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In May, it bought Ten-X for $190 million, giving it a presence in the distressed real estate space. Other recent deals include buying hotel data provider STR for $450 million and paying $588 million for apartment-listing firm RentPath.

These acquisitions have raised concerns that CoStar is building a powerful monopoly. When asked about this in May, Florance told The Real Deal that, “We are never going to pursue a path where we try to get smaller and smaller and smaller and become less effective and provide less solutions.”

Over the past six months, CoStar has increased its war chest, and now has $4 billion in cash and debt. “We are a disciplined acquirer,” Florance said Tuesday. “We have a track record of buying slow-growing companies and accelerating their growth rates.”

On Tuesday, CoStar said its third-quarter profits slid to $58 million, compared to $79 million in the same period last year. It reported profits of $60 million in the second quarter.
The company generated $426 million in third-quarter revenue, up 21 percent year-over-year. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $134 million, up 3 percent year-over-year.

Florance described CoStar’s data as both “mission critical” for customers and countercyclical. He said CoStar had $53 million in new sales bookings during the third quarter. LoopNet sales were up 130 percent, the firm said, while sales rose 59 percent year-over-year.

CoStar will double down on its investment in LoopNet over the next 12 to 18 months and hire up to 200 salespeople specifically dedicated to the brand, according to Florance. It will also build out a designated management team.