Advertiser Disclosure

advertising disclaimer
Skip to main content
stop hand

FTC Seeks To Block CoStar's Latest Purchase


Dec 01, 2020 by Deidre Woollard
FREE - Guide To Real Estate Investing

Take the first step towards building real wealth by signing up for our comprehensive guide to real estate investing.

*By submitting your email you consent to us keeping you informed about updates to our website and about other products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.

CoStar Group (NASDAQ: CGSP) has consistently grown through acquisitions. In recent months, it's announced the purchases of Emporis and Homesnap, but its plans to purchase RentPath Holdings, the owner of Rent.com and ApartmentGuide.com, may have hit a snag.

The Federal Trade Commission (FTC) is planning a federal lawsuit to prevent CoStar from spending $587.5 million to acquire RentPath Holdings. CoStar owns Apartments.com and several other rental property websites, In the FTC complaint, Daniel Francis, Deputy Director of the FTC's Bureau of Competition, says that if the two companies become one, it may "eliminate price and quality competition that benefits both renters and property managers."

Both CoStar and RentalPath make much of their income through advertising to large apartment complexes. Most rental complexes advertise on a wide variety of sites, but millions of consumers use apartment-specific websites to research these communities. According to the complaint, a whopping 70% of apartment complexes in the United States with 200 or more units advertise on sites owned by CoStar and RentPath. The two companies compete heavily for business from apartment communities.

The making of a rentals giant

The company now known as RentPath has had an interesting evolution. In the 1990s, when it was known as PriMedia, it bought and sold a variety of niche magazines and built a publishing empire. In 2000, it embraced the internet, buying About.com for $690 million as it continued to buy and sell more magazines. In 2012, it bought rent.com from eBay (NASDAQ: EBAY) to add to its portfolio that already included ApartmentGuide.com and Rentals.com. eBay had originally bought rent.com for $415 million in 2004.

RentPath filed for Chapter 11 bankruptcy in February 2020 and announced its sale to CoStar at the same time. At the time of the filing, it said it received 21 million monthly visits to its sites each month. CoStar's network of rental sites had approximately 842 million visits in 2019.

What's next?

The administrative trial for the FTC case will begin in June 2021. One question that isn't clear is whether this lawsuit will have any impact on CoStar's other deals in progress. Many industry watchers have said CoStar's acquisition of HomeSnap shows they're going after Zillow's (NASDAQ: Z) (NASDAQ: ZG) territory of home listing data. However, Zillow has also made forays into the rentals business, expanding its rental manager services and creating Zillow Rent Connect, a program for larger multifamily building operators.

CoStar has also been one of the suitors for real estate data provider CoreLogic (NYSE: CLGX). While a $66 per share bid to acquire the company has been rejected, CoStar's reported offer of around $80 a share may meet with more favor. CoreLogic recently voted on three new nominees to its board of directors and said a decision on a potential sale could happen in 2021.

All of this is taking place as CoStar still pursues its core business of providing commercial real estate data through its premium CoStar service and running commercial real estate listings on LoopNet, as well as a variety of other data-related operations in the U.S. and internationally.

In the third quarter of 2020, CoStar delivered total revenue of $426 million, up 21% from the previous year and including an all-time sales high for LoopNet. It has forecast revenue growth of approximately 18% for the year. The stock has risen in recent months, up over 80% from its 52-week low.

The Millionacres bottom line

If the market reacts unfavorably to the FTC news, this may present a bit of a buying opportunity. While the news of the lawsuit isn't good news and could eventually scuttle the sale entirely, there's every indication that CoStar will continue its march toward data supremacy throughout multiple arms of the real estate world.

Unfair Advantages: How Real Estate Became a Billionaire Factory

You probably know that real estate has long been the playground for the rich and well connected, and that according to recently published data it’s also been the best performing investment in modern history. And with a set of unfair advantages that are completely unheard of with other investments, it’s no surprise why.

But those barriers have come crashing down - and now it’s possible to build REAL wealth through real estate at a fraction of what it used to cost, meaning the unfair advantages are now available to individuals like you.

To get started, we’ve assembled a comprehensive guide that outlines everything you need to know about investing in real estate - and have made it available for FREE today. Simply click here to learn more and access your complimentary copy.