Now, though, it appears as though the two companies' view of Reis's value has widened so far that the gap cannot be bridged. The financial system's meltdown and rapidly declining residential real estate markets are the primary reasons CoStar gave during its recent Q3 earnings call as to why it is formally withdrawing its offer.
"Given the dramatic changes in the economic environment and our growing uncertainties about the value of REIS' business, CoStar Group believes its previous offer is no longer financially viable and has formally withdrawn that offer," CoStar Group CEO Andrew Florance, says in a prepared statement. Neither Reis nor CoStar returned calls to GlobeSt.com in time for publication.
CoStar, not surprisingly, appears to be struggling with the same forces that it believes has battered Reis' value. During the same call Florance assured stakeholders the company was on solid financial footing--but nonetheless saw a higher number of contract cancellations for the quarter among lenders and institutional investors. All together the firm lost slightly more than $1 million in contract value during the quarter, he told listeners.
Firms that have or are likely to reduce or cancel their CoStar agreements include Lehman Brothers, Bear Stearns, Countrywide, Merrill Lynch, LaSalle Bank, Genwest Financial, Equity Office, Washington Mutual, AIG, Wachovia, Cohen Financial, Vertical Capital, and GreenPoint Mortgage, he said.
"Fortunately, we have more than 16,000 other subscribing firms that are still strong clients, 92% of which are not lenders and 90% of whom are not institutional investors." Also, many healthy firms in the financial services sector are signing new contracts for CoStar's information services, he added.
"Some of the firms in the financial sector that signed new CoStar subscription agreements during the quarter include Massachusetts Mutual Life Insurance Co., Bank of America, RVI, American Insurance Company, Intercontinental Real Estate Corp., Urdang Capital Management, Forest Realty Funding, Long Acre Fund Management, Trenwith Group, and most interestingly, the US Federal Reserve." Reis will be releasing its Q3 financial results on Nov. 10.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
