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's sales teams are located in 30 field sales offices throughout the US and in offices located in London, England; Manchester, England; Glasgow, Scotland and Paris, France. Sales in the US accounted for about 95% of total revenues in fiscal 2012.
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 and Marketing
The company draws its customers from commercial real estate and related business community. Commercial real estate brokers have traditionally formed the largest portion of CoStar clients. The company also provides services to owners, landlords, financial institutions, retailers, vendors, appraisers, investment banks, governmental agencies, and other parties involved in commercial real estate.
CoStar sells its products and services through a direct sales force located in field sales offices. Its E-commerce advertising expenses were approximately $3 million in fiscal 2012.
CoStar's revenue has spiked nearly 40% in fiscal 2012 compared to the previous year. The company brought in almost $350 million in revenue during fiscal 2012 after reporting about $251.7 million in fiscal 2011 and $226.3 million back in fiscal 2010.
The increase in revenues during fiscal 2012 was primarily attributable to additional revenue from the acquisition of LoopNet, the penetration of the subscription-based information services, and successful cross-selling of the company’s services to its customers in existing markets, combined with continued high renewal rates.
Net income decreased in fiscal 2012 mainly due to the increase in income tax expense and the impact of costs related to the LoopNet acquisition that are not deductible for tax purposes.
Mergers and Acquisitions
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.