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Costar Has Been Hunting Again

CoStar tries to buy data-rich CoreLogic in bid to dominate real estate information.

CoStar Group, in their continuing efforts to control all your real estate info, has entered the fray bidding to acquire the stalwart real estate data firm, CoreLogic. Costar recently acquired online property auction company, Ten-X.

Costar’s topline revenues have increased year-over-year because of acquisitions, but their earnings are lower than they have been in over a year (per yesterday’s earnings release). Never mind, investors continue to bid up the stock which gives CoStar currency for more acquisitions. Costar, taking advantage of their inflated stock price, held a secondary stock offering in May. Also, taking advantage of near-zero interest rates thanks to the Federal Reserve, Costar took on an additional One-Billion Dollars in debt to round out a war chest of over $3 Billion in cash. In the words of CoStar’s founder and CEO, Andrew Florance, in yesterday’s earnings call, “We prefer to acquire larger companies to obtain scale results for relatively the same effort… Since acquiring small or large companies seem to take about the same amount of effort to do right, it makes sense to acquire larger ones.”

Kudos to CoStar and Andrew Florance for all this, but it’s indicative of the unfortunate fallout of the pandemic where the biggest firms have been provided with easy access to cheap capital and are getting bigger, while the others fall by the wayside. We seem to be trending towards a world controlled by oligopolies.

Nevertheless, opportunities abound for the lone wolf and smaller firms. David was not the underdog against Goliath. He was always going to win. Read why in Chapter 20 of Confessions of a Corporate Real Estate Hitman.

-- Steve Miller

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