Classified Ventures LLC has put its Apartments.com business on the block, and one banker in the online real estate space believes Zillow Inc. and Trulia Inc. could be prospective buyers.
Chicago-based Classified Ventures, which is a joint venture of media giants A.H. Belo Corp., Gannett Co., Tribune Co., The McClatchy Co. and The Washington Post Co., said Tuesday that it had retained Moelis & Co. LLC to explore options for its online renting division, which includes the Apartments.com, RentalHomesPlus.com and Apartment
Navid Mahmoodzadegan, John Momtazee and Carlos Jimenez, all based in Los Angeles, are working with Classified Ventures on the strategic review, The Deal Pipeline has learned.
Officials with Classified Ventures and Apartments.com declined to comment, but Classified Ventures said in a Tuesday announcement that its Cars.com business wouldn't be affected by the review.
Zillow and Trulia have both proven to be acquisitive this year already, according to Steven C. Fletcher, managing director with international investment banking firm GCA Savvian Advisors LLC, which advised Market Leader Inc. on its $355 million stock-and-cash sale to Trulia on May 8.
"Zillow and Trulia have been blessed with lofty stock prices and that's a huge advantage to them," Fletcher said. "They should continue to take advantage of those stock prices and be consolidators in that industry."
Shares of Trulia, which trade on the New York Stock Exchange as TRLA, have surged about 157% this year so far, including a 4.8% rise to $43.90 Wednesday following the announcement. Zillow, which is listed on the Nasdaq under the symbol Z, has rallied about 255% year to date, including a 1.4% climb to $100.50 Wednesday.
The stock performance of the two major real estate sites has gotten the attention of everyone else in the space, including Classified Ventures, Fletcher explained.
"That has all the other players looking around saying, 'Maybe I can sell it for an interesting revenue multiple, rather than a less interesting cash flow multiple,' " Fletcher said.
Other real estate players, such as the provider of online commercial real estate LoopNet Inc., as well as Internet companies such as Yahoo Inc. and AOL Inc., that might see the value in entering the real estate vertical, could also be potential candidates looking to snap up Apartments.com.
If Classified Ventures ultimately dumps the online apartment marketplace it acquired for undisclosed terms more than 15 years ago, its sole business will be its Cars.com division, given that it has already disposed of its other real estate assets.
Classified Ventures unloaded HomeGain Inc. to online advertising marketplace Reply.com Inc. on Feb. 4 for undisclosed terms and spun off digital real estate search site HomeFinder.com in 2009.
Consolidation and activity within the online real estate marketplace has been picking up lately.
Though improvement in the housing market is serving as a nice tailwind for real estate-related companies, Fletcher said deal flow is being driven primarily by the broader transition of companies and customers to the online marketplace.
"In the same way you saw classified ads move to eBay and Craigslist, and job postings move to Career Builder and Monster.com, you're seeing the same thing happen in real estate," Fletcher said.
Less than three weeks ago, on Aug. 19, Seattle-based Zillow snapped up StreetEasy for $50 million in cash, expanding its footprint in the New York market. Before that, it paid $16 million for map-based real estate and rental site HotPads Inc. and $16.1 million for marketing software business Mortech Inc., on Nov. 27 and Nov. 6, respectively.
Real estate data company CoreLogic Inc. said on July 1 it would acquire Marshall & Swift/Boeckh LLC (MSB), DataQuick Information Systems and DataQuick Lender Solutions from private equity-backed Decision Insight Information Group for $661 million.
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