CARROLLTON, TX - , a leading provider of on demand software and software-enabled services to the rental housing industry, today announced it entered into a definitive agreement to acquire Multifamily Technology Solutions, Inc. ("MTS") which offers an Internet listing service for rental properties marketed under the trade name MyNewPlace® and a suite of syndication and organic lead generation tools marketed under the trade name Rent Engine®. The Company will acquire MTS for approximately $74.4 million, net of cash expected to be acquired. The purchase price will consist of approximately $63.6 million in cash and approximately $10.8 million paid with shares of RealPage common stock. The Company expects to close the transaction after closing conditions are met, which should be on or prior to Aug. 24, 2011.
The Company believes that the acquisition of SeniorLiving.Net, and now MyNewPlace®, vastly expands its lead origination and syndication capabilities increasing the total addressable market for all RealPage software-as-a-service (SaaS) products and services to at least $9.0 billion. MyNewPlace® has approximately 7,500 property listings with 1.8 million rental units. Approximately 500,000 of these units do not presently use any RealPage products and services. These unique units will increase the total number of units using one or more RealPage products and services to 6.9 million units.
MyNewPlace® is one of the largest and most efficient generators of traffic in the multifamily industry which is monetized through its MyNewPlace® Internet listing service. MyNewPlace® also offers a suite of tools under its Rent Engine® solution, which create and manage advertising campaigns for Internet classified directories. Most importantly, MyNewPlace® will add significant consumer Internet marketing expertise intended to enable owners to optimize their software-as-a-service marketing tools.
Steve Winn, chairman and CEO of RealPage, said, "Internet marketing in the rental housing industry is highly inefficient because property owners lack transparency into the real costs associated with generating a lease from each Internet lead source. Based on our analysis of best practices across thousands of rental properties, we have concluded that the most cost effective channels of lead generation are: organic lead generation from an owner's property website; lead generation from Internet classified directories such as Craigslist; and pay-for-performance Internet listing services. Leases generated from subscription Internet listing services as well as non-Internet advertising can be 2 to 3 times more expensive. As transparency improves, we expect the industry will shift away from expensive channels in favor of organic and pay-for-performance channels. MyNewPlace® positions RealPage to capture a disproportionate share of this shift."
Sina Shekou, president of LeaseStar™, added, "MyNewPlace® is an integral part of our LeaseStar Marketplace™ which we expect to differentiate in five important ways. First, we will offer a lead generation platform that can create more leads than all other sources combined. Second, we will incorporate our centralized leasing center enabling consumers to talk or chat with a live leasing associate. Third, we will incorporate the best property content which will include 2D, 3D and richly animated floor plans, site maps and brilliant pictures. Fourth, we expect to incorporate a booking engine that allows consumers to find an available unit, get a price quote, apply for residency and actually lease a rental unit online. Finally, we will differentiate our marketplace by providing management systems that track and manage leads by channel. Ultimately, we expect our offering to include tools that increase lead conversion rates, accurately analyze the true cost of generating leases from each lead source and enable the efficient allocation of advertising dollars to generate more leases at a lower overall cost."
MyNewPlace® generated $16.1 million of revenue for the trailing 12 months ended June 30, 2011 with an EBITDA loss of $2.3 million. The Company believes that MyNewPlace® will contribute to its long term target operating model. However, investments needed to integrate and enhance MyNewPlace® and the LeaseStar Marketplace™ are expected to temporarily lower adjusted EBITDA margin by approximately 200 basis points through the end of 2012. As a result of the acquisition, the Company is updating its outlook for the third quarter ended Sept. 30, 2011 and for the full year ended Dec. 31, 2011.