As the corporate infighting continues between CoStar Group and billionaire investor Daniel Loeb’s hedge fund Third Point, with Third Point on Jan. 27 announcing it would seek to replace a majority of CoStar’s eight-person board, CoStar responded with a lengthy statement released on Jan. 28 highlighting new planned initiatives.
“The CoStar Group Board of Directors and management team are taking decisive action to prioritize profitable growth and increase long-term value for all stockholders,” read the statement. “Over the last nine months, the CoStar Group Board and management team have conducted extensive engagement with holders of a vast majority of the Company’s outstanding shares, including Third Point. The feedback from these engagements has informed the meaningful steps we have taken to extend our track record of stockholder value creation.”
In the statement, CoStar delineated these steps:
- Adding three new independent directors to the Board—including two designated by Third Point and (investor firm) D.E. Shaw. As a result, 50% of the CoStar Group directors have been appointed in the last three years.
- Announcing a new independent Board Chair alongside the retirement of our prior independent Chair and two other independent directors.
- Forming a Capital Allocation Committee to support the Board’s and management’s comprehensive review of the Company’s capital structure, capital allocation priorities, and financial targets, including for significant investments in the Company’s major brands such as CoStar, Apartments.com, LoopNet, and Homes.com.
- Moderating investment in Homes.com as we scale revenue upon the completion of the investment phase and successful launch of Homes.com. We are reducing net investment by $300 million in 2026 and $100+ million annually thereafter to achieve breakeven profitability for the platform exiting 2029.
In a statement earlier this month, CoStar Founder and CEO Andy Florance promised that Homes.com is still “an important part of our ecosystem” even as his company started scaling back expectations, and Louise Sams, chair of CoStar’s board said in a statement, “The Board unanimously believes that CoStar Group is executing the right strategy to drive sustainable, profitable growth and is focused on holding management accountable to deliver on the Company’s objectives for the benefit of our stockholders.”
Other initiatives outlined in the Jan. 28 statement included accelerating the completion of the company’s $500 million share repurchase program, deploying AI technology initiatives across the entire CoStar Group, investing to enhance and expand the company’s commercial product offerings, and approving a redesigned executive compensation program for 2026.
“Third Point appears intent on spinning a yarn of Board complacency and ‘quixotic’ investment,” the statement continued. “Their story is completely detached from reality. Following a review process that Third Point and D.E. Shaw suggested with participation from their Board nominees, the Board unanimously recommended a plan involving accelerated profitability for Homes.com, additional investments in our core platforms, incremental capital return, stockholder-aligned executive compensation, and greater investor transparency. Unhappy with the conclusions of the independent Board they helped pick, Third Point, like a child with a board game, wants to throw the pieces off the board.”
The CoStar statement directly addressed Third Point’s call for the company to exit the residential space and dissolve Homes.com.
“Third Point’s demand that we abandon Homes.com reflects their complete misunderstanding of our business, industry, and the strong progress we are making,” said the statement. “Third Point would have you believe that Homes.com could be jettisoned or shut down with no negative impact on our business or competitive positioning. The reality is that the single-family residential market is the largest segment of the real estate industry. Homes.com complements and meaningfully expands our residential portfolio alongside Apartments.com, Domain, OnTheMarket, and Land.com, significantly increasing our global addressable market to more than $100 billion. Without Homes.com, we would lose a critical partner for Apartments.com, a key component of our digital ecosystem.
“The Homes.com platform is demonstrating strong momentum, with subscribers increasing 337%, since Q1 2024. With the investment phase now complete, we expect to rapidly scale the platform while lowering its capital intensity.”
CoStar noted that over the last 15 years it has acquired more than 40 businesses for approximately $7.3 billion.
