PRESS RELEASE DETAIL


Apr 29, 2015

CoStar Group to Acquire Apartment Finder to Expand Its Network of Industry Leading Apartment Marketing Websites

WASHINGTON, April 29, 2015 -- CoStar Group, Inc. (Nasdaq:CSGP), the leading provider of commercial real estate information, analytics and online marketplaces, today announced that it plans to acquire Apartment Finder pursuant to a definitive agreement and plan of merger with Network Communications, Inc. for $170.0 million in cash which is subject to customary post-closing purchase price adjustments. This amounts to approximately seven times Apartment Finder's EBITDA for the fiscal year ended March 2015. The Company expects the acquisition to close within 90 days, subject to customary closing conditions, and expects the acquisition to be accretive in 2016 and to achieve run-rate synergies of $20 million within 18 months after the acquisition closes.

WASHINGTON, April 29, 2015 -- CoStar Group, Inc. (Nasdaq:CSGP), the leading provider of commercial real estate information, analytics and online marketplaces, today announced that it plans to acquire Apartment Finder pursuant to a definitive agreement and plan of merger with Network Communications, Inc. for $170.0 million in cash which is subject to customary post-closing purchase price adjustments. This amounts to approximately seven times Apartment Finder's EBITDA for the fiscal year ended March 2015. The Company expects the acquisition to close within 90 days, subject to customary closing conditions, and expects the acquisition to be accretive in 2016 and to achieve run-rate synergies of $20 million within 18 months after the acquisition closes.

Apartment Finder's service offerings include digital advertising on ApartmentFinder.com with approximately 13,400 properties advertised on its website today. The Company believes Apartment Finder is currently in the top five of the multi-family property rental listings marketplaces based on revenue. Apartment Finder's fiscal year end is March 2015. For the fiscal year ended March 2015, revenue for Apartment Finder was approximately $79 million and estimated EBITDA was approximately $23 million, resulting in an EBITDA margin of 29%. Apartment Finder's core marketplace revenue was approximately $68 million - $70 million for fiscal year ended March 2015.

"Over the past year we have transformed Apartments.com into one of the fastest growing industry websites, and we are excited to do the same for Apartment Finder," stated CoStar Group Founder and Chief Executive Officer Andrew C. Florance.

Since its acquisition of Apartments.com in April 2014, CoStar Group has completely rebuilt and launched a new consumer centric Apartments.com website that includes over 550,000 current availabilities. Apartments.com had 18,200 listings at the time it was acquired in April 2014. CoStar Group is actively driving traffic with what is believed to be the top search engine marketing campaign in the industry as well as a national marketing campaign featuring acclaimed actor Jeff Goldblum which launched on March 1, 2015. As a result, for the month ended March 31, 2015 Apartments.com moved to number one in traffic versus other apartment rental sites according to leading authoritative sources that monitor internet traffic: comScore, Compete.com, Experian Hitwise and Alexa. Traffic to Apartments.com more than doubled in March 2015 compared to March 2014 with 15 million visits and 7 million unique visitors. Leads to property managers and owners are up nearly 67% year-over-year. All of these proactive steps have contributed to the best Apartments.com sales month ever with an 827% increase in net bookings for Apartments.com in the first quarter of 2015 compared to the first quarter of 2014.

Apartment Finder will remain a distinct, complementary brand to Apartments.com with a unique user interface, but will also be powered by CoStar's information.  By offering two online marketing solutions, the Company believes property managers and owners will get more exposure for their listings and more effective and precise targeting of leads. CoStar expects by the end of the year it will have integrated the back ends of Apartments.com and Apartment Finder thereby leveraging the same research, systems, support, and sales platform to power both Apartments.com and ApartmentFinder.com. CoStar anticipates that this will create tremendous cost synergies and greater operating efficiencies.

Apartment Finder has approximately 400 employees, including approximately 120 field sales representatives located across the United States. CoStar plans to combine the sales forces and eventually all sales representatives will cross-sell multiple marketing and information solutions. CoStar believes this will further increase sales force production.

Florance continued, "I am looking forward to working with the great team at Apartment Finder and welcoming them to the CoStar family. We are all dedicated to building and growing commercial real estate's premier online apartment platform and strengthening CoStar's leadership position in the $2 trillion U.S. multifamily asset class."

 
Conference Call

Management will conduct a conference call at 11:00 AM EDT on Thursday, April 30, 2015 to discuss this acquisition, earnings results for the first quarter of 2015 and the potential impact of the acquisition on the Company's outlook. The audio portion of the conference call will be broadcast live over the Internet at http://www.CoStargroup.com/investors.aspx. To join the conference call by telephone, please dial (877) 777-1968 (from the United States and Canada) or (612) 332-7516 (from all other countries) and refer to conference code 357606. An audio recording of the conference call will be available for replay approximately one hour after the call's completion and will remain available for a period of time following the call. To access the recorded conference call, please dial (800) 475-6701 (from the U.S. and Canada) or (320) 365-3844 (from all other countries) using access code 357606. The webcast replay will also be available in the Investors section of CoStar Group's website for a period of time following the call.

 
About CoStar Group, Inc.

CoStar Group (Nasdaq:CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. Through LoopNet, the Company operates the most heavily trafficked commercial real estate marketplace online with more than 9.6 million registered members. Apartments.com is a premier online apartment resource for renters that matches apartment seekers with great apartment homes and provides property managers and owners a proven platform for marketing their properties. CoStar Group operates websites with over 22 million unique monthly visitors in aggregate during March 2015. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S., Canada and Europe with a staff of approximately 3,000 worldwide, including the industry's largest professional research organization. For more information, visit www.costargroup.com.




This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about CoStar Group's financial expectations, the Company's plans, objectives, expectations and intentions and other statements including words such as "hope," "anticipate," "may," "believe," "expect," "intend," "will," "should," "plan," "estimate," "predict," "continue" and "potential" or the negative of these terms or other comparable terminology. Such statements are based upon the current beliefs and expectations of management of CoStar Group and are subject to significant risks and uncertainties. Actual results may differ materially from the results anticipated in the forward-looking statements. The following factors, among others, could cause or contribute to such differences: the possibility that the acquisition of Apartment Finder does not close when expected or at all; the risk that the businesses of Apartment Finder, Apartments.com, and CoStar may not be combined successfully or in a timely and cost-efficient manner; the risk that business disruption relating to the Apartment Finder acquisition may be greater than expected; the risk that synergies from the acquisition of Apartment Finder, including as a result of cross-selling and cost efficiencies, may not be as expected, may not be fully realized, may take longer to realize than expected or may not drive revenue and earnings growth as expected; the risk that the acquisition and combination of services does not produce the expected results for CoStar or its customers and advertisers, including increased exposure for listings; the possibility that the backend support is not fully integrated when and as expected, or at all; the possibility that the expected operating efficiencies are not fully realized when expected or at all; the risk that the sales forces may not be combined as or when planned and, therefore, that the Company does not realize increased sales force production when or as expected; the risk that expected investments in Apartment Finder, or the timing of any such investments, may change; and the risk that the combination and integration of Apartment Finder will disrupt CoStar Group's operations or result in the loss of customers or key employees. Additional factors that could cause results to differ materially from those anticipated in the forward-looking statements can be found in CoStar Group's Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC, including in the "Risk Factors" section of that filing, and the Company's other filings with the SEC available at the SEC's website (www.sec.gov). CoStar Group assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.'