Real estate data and IT vendor CoStar Group Inc. said Monday it would acquire Apartments.com from newspaper-owned Classified Ventures LLC in a deal valued at $585 million in cash.
Apartments.com was launched in 1998 as a digital version of classified ads, and the unit has grown to generate 2013 Ebitda of $28 million on sales of $86 million. The unit, which operates nationally as apartments.com, apartmenthomeliving.com and rentalhomesplus.com, last year generated 114 million visits.
Washington-based CoStar, which via its LoopNet operation is a vendor of commercial real estate information, analytics and marketplaces, said that the purchase would complement its commercial operations and help it expand into new areas.
"In much the same way LoopNet revolutionized how owners and brokers market the commercial real estate sectors of office, industrial and retail, [Apartments.com] has transformed the way owners and property managers market their commercial real estate's apartment buildings," company CEO Andrew C. Florance said in a statement.
CoStar said it has received a financing commitment letter from JPMorgan Chase & Co., Bank of America Merrill Lynch, SunTrust Bank and Wells Fargo Bank NA for a fully committed term loan of $400 million and a $225 million revolving credit facility. The fundings, which each will carry a term of five years at an initial interest rate of Libor plus 2%, will be used along with cash on hand to fund the purchase, refinance existing debt and to manage ongoing working capital needs.
Classified Ventures was formed by media companies Tribune Co., A.H. Belo Corp., Gannett Co., McClatchy Co. and Washington Post Co. to help the newspaper owners compete on the Internet. Tribune, owner of about 28% of the venture, said it would receive about $160 million in proceeds from the deal, while Gannett said its 26.9% interest would receive about $155 million.
The media companies said they would use proceeds for general corporate purposes and to pay down debt.
Moelis & Co. LLC was the exclusive sell-side adviser with a team consisting of Navid Mahmoodzadegan, John Momtazee and Carlos Jimenez.