CoStar has all the dirt on the commercial real estate industry. A provider of commercial real estate information, CoStar has a proprietary database of some 4 million properties in the US, the UK, and France. The database contains information on more than 10 billion square feet of sale and lease listings. It also has more than 12 million digital images of buildings, floor plans, and maps. Its hundreds of data fields include location, ownership, and tenant names. CoStar additionally offers marketing and analytic services. Clients include government agencies, real estate brokerages, real estate investment trusts (REITs), and property owners and managers. Most of CoStar's sales come from subscription fees.
The company employs a team of more than 1,000 research professionals and contractors who collect and analyze commercial real estate information. Its subscription-based services consist primarily of CoStar Property Professional (comprehensive inventory), CoStar Tenant (tenant information), CoStar COMPS Professional (comparable sales information), FOCUS (data on UK market), and Propex (UK market info for professional investors). It does business in England through CoStar UK. Sales of these subscriptions account for more than 94% of total revenues.
In 2012 the company significantly expanded its holdings with the $860 million purchase of LoopNet, a complementary provider of online commercial real estate information. The deal doubled the size of CoStar's paid subscriber base to some 160,000. The previous year, CoStar enhanced its real estate brokerage offerings when it obtained Virtual Premise, a provider of real estate management software and lease abstraction services. Each month Virtual Premise manages over $1 billion in rent payments for its customers.
In 2011 the company's revenues increased to nearly $252 million from about $226 million the prior year, driven by increased subscriptions and high renewals, thanks to a recovering commercial real estate market. The company also posted an increase in net income that year, from $13.3 million in 2010 to $14.7 million in 2011; the bump came after two years of declining profits. A key factor for CoStar's positive net income was the tax benefits it received from moving its headquarters to Washington, DC.
CoStar no doubt used its own services to scout out the best location for its headquarters move in 2010, when it relocated from Bethesda, Maryland. It acquired a 10-story office building in downtown Washington, DC, and made the move to help it collaborate with federal government clients, a fast-growing customer segment. However, in 2011 CoStar sold the building to raise cash. It made the sale for $101 million (one year after acquiring it for $41 million), and continues to occupy it under a long-term lease. CoStar made the sale using its own research capabilities to purchase the asset at the bottom of the market and more than double its initial investment.
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