CoStar Group acquires RentPath from Chapter 11 bankruptcy

April 2020 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

April 2020 Issue

Following digital media company RentPath’s recent Chapter 11 bankruptcy protection filing, commercial real estate information, analytics and online marketplaces provider CoStar Group has agreed to acquire the business for $588m in cash.

RentPath’s 2019 unaudited financials reflect revenue of approximately $227m and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of approximately $47m. Total revenue declined approximately 9 percent from 2018, while adjusted EBITDA declined approximately 24 percent over the same period.

RentPath’s operations are expected to continue in the ordinary course subject to bankruptcy court oversight and pending closing.

“RentPath has a 30-year track record of outstanding service to the multifamily industry, developing thousands of meaningful customer relationships,” said Andrew C. Florance, founder and chief executive of CoStar. “Obviously, it is very challenging for newspapers, magazines, and print directories to reinvent themselves as profitable digital businesses. 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.”

Headquartered in Washington, DC, CoStar maintains offices throughout the US and in Europe and Canada with a staff of over 4300 worldwide, including the industry’s largest professional research organisation.

As a leading provider of commercial real estate information, analytics and online marketplaces, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information.

“As the cost of Google traffic soared, RentPath was unable to keep pace,” continued Mr Florance. “Following restructuring in bankruptcy, we expect the combined companies to benefit from synergies and plans to invest in building RentPath’s online brands and traffic to provide improved quantity and quality of lead flow to advertising clients. Our Apartments.com network of sites generated 842 million visits last year, and we intend to use this valuable audience to generate leads for RentPath clients as well.”

Headquartered in Atlanta, Georgia and with approximately 770 employees, RentPath’s primary service is digital marketing for rental properties through a network of internet listing websites – including Rent.com, ApartmentGuide.com, Rentals.com and Lovely.com – which generated over 21 million monthly visits and almost 9 million monthly unique visitors in 2019.

“We are very excited to be joining CoStar as part of the Apartments.com network,” said Marc Lefar, chief executive of RentPath. “Our customers have an ever-increasing number of choices when considering where to spend their marketing dollars. With CoStar’s commitment to invest in the RentPath family of sites, we will be in a position to offer our customers the best options to reach potential renters.”

The closing of the transaction is subject to various conditions, including approval by the bankruptcy court and regulatory approval.

“Following successful conclusion of the Chapter 11 bankruptcy process and regulatory review, we expect the acquisition to add scale to our Apartments.com business and be highly accretive to CoStar earnings once fully integrated,” added Scott Wheeler, chief financial officer (CFO) at CoStar.

Mr Florance concluded: “We believe that RentPath’s talented and experienced employees will become valuable contributors not only to our Apartments.com network of sites but across all of our marketplaces.”

Fraser Tennant