The offer price represents a premium of approximately 97% aboveTuesday's closing price of $4.44 per share, CoStar said. Neithercompany returned calls to GlobeSt.com in time for publication.

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It did not take Reis long to reject the same offer again.Shortly before the close of business Wednesday, it issued astatement that its board of directors rejected CoStar's proposal.The Board's view is that the price offered in the CoStar proposalis inadequate, according to the press release, as "the price isbelow the long-term value Reis could realize for its stockholdersby the pursuit of its business as an independent entity and thecontinued disposition of its real estate assets, or by a sale ofthe company."

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"It is extraordinarily disappointing that, after our Boardunequivocally rejected CoStar's $8.75 proposal, CoStar has seen fitto come back with exactly the same proposal in a hostile fashion,"Lynford, says in the prepared statement. "To judge the value of ourcompany by the daily trading prices of its relatively illiquidcommon stock makes no sense. We trust that our clear secondrejection of CoStar's offer will prompt CoStar to withdraw it. OurBoard will, of course, review carefully any serious proposal fromany responsible third party."

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Only Reis and CoStar know how this story will continue tounfold. CoStar could launch a hostile bid, make a higher offer, orit could drop the matter entirely. Reis can continue fend offCoStar, it could bargain for a higher bid price, or it could lookfor another buyer.

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The companies, both providers of market data in the real estateindustry, are competitors and if an acquisition were to happen itwould be a significant consolidation in this niche--as well as anarrowing of focus for Reis, which was formed in May 2007 in amerger between the privately held Reis and Wellsford RealProperties Inc. "We believe a combination with CoStar wouldeliminate very substantial duplicative costs and provide theopportunity to immediately refocus Reis' business entirely on thereal estate information services segment," Florance said in hisletter.

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Competitors in this space include Real Capital Analytics in NewYork City and Property & Portfolio Research in Boston. Bothcompanies declined to comment for this story. Each company,though--including CoStar and Reis--approach the market in adifferent way, says Hessam Nadji managing director of researchservices at Marcus & Millichap. For that reason, customersmight not want to see mergers among these players, he suggests toGlobeSt.com.

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"If you examine both companies strengths and weaknessesobjectively and their operating methods objectively you will see itis actually better that they are different companies," he says.Marcus & Millichap subscribes to all four for that reason,Nadji continues. "They each have their own strengths. We use theirdata to come to our own conclusions and issue our own forecasts forour clients."

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For instance, he says, one of RCA's strength is a focus onanalyzing and identifying trends in property sales. One of PPR's,by contrast, is long-term forecasting using several differentmodels.

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Interestingly, Lynford was asked to differentiate betweenCoStar's and Reis's strength in the earnings call for Q1 2008, by aprivate investor. He gave a very detailed answer, according to atranscript of that call.

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"Costar clearly is the leading provider of information of whatwe might call the space market," he said. "It primarily supportsbrokers and leasing agents to help them serve clients who are outin the marketplace looking to lease facilities. Reis, on the otherhand, primarily serves the investor marketplace--those people whohave capital at risk in either debt or equity investments.

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"So that influences the type of research that we each perform.They're going to be very, very focused on what we might callsuite-level availabilities. There might be space on the third floorof a building with northerly views, seven windowed offices. Ourclient base cares less about that type of information and moreabout information that influences the cash flow potential of theasset. So we're going to focus on things like concessions andabsorption rates and a lot of things that drive a discounted cashflow valuation for our property."

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