The commercial division of Irvine-based Ten-X Inc., an online real estate transaction marketplace formerly known as Auction.com, is being sold to CoStar Group Inc. for $190 million.
The all-cash deal, expected to close later this year, adds Ten-X’s commercial analytics and online marketplace divisions to the Washington, D.C.-based commercial real estate research firm, which counted 10 million monthly visitors in April to two of its websites, LoopNet.com and CoStar.com.
The remaining Ten-X divisions, which includes its residential online marketplace, will continue to be operated by Boston private equity firm Thomas H. Lee Partners LP, which acquired all of Ten-X in 2017 in a deal that valued the entire company at around $1.6 billion.
CoStar plans to utilize “Ten-X’s clear leadership in online auctions for both performing and distressed assets,” the company’s chief executive, Andrew Florance, said in a statement.
“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,” Florance said.
One-Stop Shop
Ten-X, which runs an online real estate transaction marketplace that brokers commercial and residential real estate sales, including hotels and distressed homes, was founded in 2007 by Jeffrey Frieden, Robert Friedman and Monte Koch.
The platform took off amid the glut of distressed homes offered for sale in the wake of the Great Recession. Significant investors in the company over the years have included Google.
The company’s commercial operations launched about a decade ago out of a startup venture between Ten-X and Miami-based LNR Property Corp. LNR’s parent company Greenwich, Conn.-based Starwood Capital Group, held a stake in Ten-X and also has used the platform to conduct transactions, according to a statement by CoStar.
It lists Fannie Mae, Bank of America, Blackstone and SunTrust among other users.
“Today, only 1% of all commercial real estate sales transactions take place online,” noted Steve Jacobs, chief executive of Ten-X Commercial.
“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 and we are delighted to combine our complementary capabilities and strengths with CoStar to meet that demand.”
Third Quarter Close
Ten-X has conducted about $24 billion of commercial real estate sales, primarily for retail and office sales. The company had $57 million in 2019 revenue and assisted 400,000 buyers from 73 countries.
It had $13 million in first quarter revenue, up 35% compared to the first quarter of 2019, the company said.
It expects to see a near-term drop in business as a result of the coronavirus pandemic, according to CoStar Chief Financial Officer Scott Wheeler.
“Although we expect a certain amount of revenue disruption, I am optimistic that transaction volumes could increase materially later in the year as was the case following the last recession,” Wheeler said.
The deal is expected to close in the third quarter of 2020.
