CoStar to Acquire LoopNet in $860M Deal

CoStar announced yesterday that it has entered into an agreement to acquire LoopNet in a transaction valued at approximately $860 million. The boards of directors of both companies have unanimously approved the deal which is expected to close by the end of 2011. CoStar has received a commitment letter from J.P. Morgan for a fully committed term loan of $415 million and a $50 million revolving credit facility. J.P. Morgan acted as CoStar’s financial advisor, and Simpson Thacher & Bartlett LLP acted as legal counsel to CoStar. Evercore Partners, L.L.C. acted as LoopNet’s financial advisor, and Davis Polk & Wardwell LLP acted as legal counsel to LoopNet.

"We are combining two very innovative companies that have transformed the commercial real estate industry," Andrew C. Florance, CoStar Group's Founder and CEO, said in a conference call announcing the agreement. "CoStar revolutionized how the industry researches commercial real estate and LoopNet revolutionized the way the industry markets commercial real estate. We believe that the combination of our two outstanding and complementary companies will lead to even more innovation and greater efficiencies by creating the premier Internet solution for the commercial real estate industry. We expect the benefits to our customers and ultimately our shareholders to be very significant."

"CoStar and LoopNet have been at the cutting edge of innovation in their respective businesses, and we believe the two companies will be even stronger together," said Richard Boyle, Chairman and CEO of LoopNet. "This transaction combines the capabilities and best practices of two successful and very complementary companies. We are excited about the possibilities that can be created together."

For more news and information visit Blumberg Capital Partners.

CoStar Sells DC HQ, Makes $60M Profit

1331 L Street in the heart of Washington's Business District traded hands this week as CoStar agreed to sell the 169,430-square-foot building to GLL L-Street 1331, a subsidiary of GLL Real Estate Partners. The sale of the headquarter building of CoStar is scheduled for close later this month for $101 million - a $60 million profit for the company according to the Washington Post. CoStar bought the Class A building last year from the Mortgage Bankers Association for $41.3 million with the help of a $6.1 million, 10-year tax abatement from the city that was contingent on the publicly traded company hiring 100 District residents.

"We nailed the bottom and are getting out while we go into the recovery," said CoStar's chief executive, Andrew Florance. The seller was represented by executive managing directors, Paul Collins and William Collins, senior managing director, John Flood and senior vice presidents, James Cassidy and Judson Ryan of Cassidy Turley Commercial Real Estate Services.

For more news and information visit Blumberg Capital Partners.

Office Market Recovery Advancing Says CoStar Report

CoStar Group's 2010 Third Quarter Office Review and Outlook was released this week, confirming that the office market recovery is underway. CoStar's research shows that the recovery is still in its early stages and may not be abundantly evident in all US markets, but confirms that the 3rd quarter results in the office market posted positive net absorption for the second consecutive quarter.

"Leasing activity in the quarter was healthy and robust,"said Andrew Florance, CEO of CoStar Group in the company's webinar presentation. "We're now seeing the strongest leasing activity numbers we have seen since the peak of the market [in 2005 and 2006]." Hilights from some major markets follow:

New York: "What I am seeing in the office leasing market is smaller tenants getting lower renewal rents (dollars per square foot), taking less square feet be it renewed or tenants consolidating, and landlords doing more tenant improvements," said Adelaide Polsinelli, associate vice president investments for Marcus & Millichap. "Larger tenants are doing the same as smaller tenants except they are taking advantage of the lower rents and taking on more space in buildings where they want to stay for a longer time."

Boston: "The lifeblood of the Boston market is its knowledge-based sectors, and those innovative companies which by definition start small, then grow," said Mary Sullivan Kelly, senior vice president and chief research officer for Colliers Meredith & Grew. "I can tell you that anecdotally, we are seeing growth from a number of firms -- particularly small and mid-sized tech and life science firms, some increasing their space requirements marginally, some by 50% or more, and this is an encouraging sign."

Atlanta: "Today, while money may be cheap, credit (along with collateral) is nearly nonexistent. This leaves the tenant to face either paying for tenant improvements themselves or adjusting their business practices to fit an existing layout,"said Rob Hill, commercial brokerage sales and leasing with Hill Corporate Partners. "Paying for tenant improvements, from a practical standpoint, requires a longer term to justify (and depreciate) the expense. Unfortunately, in today's world, five years can easily see a company's whole business strategy change."

For more news and information visit Blumberg Capital Partners.