In a move clearly designed to take advantage of what most expect to be exponential growth in the distressed assets market, commercial real estate data company CoStar Group plans to acquire Ten-X for $190 million in cash.
“Together, Ten-X and CoStar plan to create a new end-to-end commercial real estate platform, combining LoopNet and CoStar’s unmatched online audience of buyers with Ten-X’s clear leadership in online auctions for both performing and distressed assets,” said CoStar Group Chief Executive Officer Andrew Florance. “In the aftermath of the economic disruption which is being caused by the global pandemic, we believe that the volume of distressed properties coming to market will surge and that this combined platform will support the market’s recovery.”
Ten-X was founded in 2009 to provide a digital transaction platform for liquidating the large volume of distressed commercial real estate assets that came on the market during the Great Recession. The platform has since executed close to $24 billion of sales, comprised of approximately $7 billion in retail properties, $6 billion in office properties, $4 billion in multifamily properties, $3 billion in hotel properties and billions in value in other commercial property types. The platform also has expanded beyond distressed assets and has worked with clients including Fannie Mae, Bank of America, JP Morgan Chase, Blackstone, Starwood, BlackRock, Capital One, MetLife, LNR, UBS, PNC and SunTrust.
Ten-X qualifies and independently evaluates assets, identifying likely buyers from a database of 400,000 buyers from 73 countries, qualifying the bidders and funds, providing a digital auction process and managing online escrow. The online model accelerates the marketing period of the sales process, cutting deal times by up to 50% while providing reliable execution, value maximization and certainty of close.
CoStar Group’s online marketplace for commercial properties and land for lease and sale in North America and Europe (which includes websites loopnet.com and costar.com) saw 10 million monthly visitors in April 2020. After completion of the transaction, CoStar Group intends to integrate the Ten-X digital transaction platform directly into both LoopNet and CoStar.
“Today, only 1% of all commercial real estate sales transactions take place online,” noted Steve Jacobs, CEO of Ten-X. “Just like CoStar Group, we are focused on driving volume and efficiency and have devoted ourselves to addressing the massive, untapped demand for digital commercial real estate solutions. We see significant demand for a one-stop shop platform that provides solutions across the entire transaction continuum.”
The transaction is expected to close in the third quarter of 2020, subject to customary closing conditions and regulatory review.