Ladies and gentlemen, thank you for standing by, and welcome to the CoStar Acquisition of 10x Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's webcast is being recorded. Thank you. I'd now like to hand the conference over to your speakers for today.
Sarah Spray, Investor Relations for CoStar will begin. Please go ahead, Ms. Spray.
Thank you. Good morning, and thank you all for joining us to discuss the acquisition of 10x. Before I turn the call over to Andy Florance, CoStar's CEO and Founder and Scott Wheeler, our CFO, I would like to review our Safe Harbor statement. Certain portions of the discussion today may contain forward looking statements. Forward looking statements involve many risks, uncertainties, assumptions, estimates and other factors that can cause actual results to differ materially from such statements.
Important factors that can cause actual results to differ include, but are not limited to, those stated in CoStar's group press release issued yesterday evening and in our filings with the SEC, including our most recent annual report on Form 10 ks and quarterly report on Form 10 Q under the heading Risk Factors. The press release is available on our website located at costargroup.com under Press Room. And all forward looking statements are based on information available to CoStar on the date of this call. CoStar assumes no obligation to update these statements, whether as
a result of new information, further events
or otherwise. As a reminder, today's conference call is being webcast and the link is also available on our website under Investor Relations. Please refer to today's press release on how to access the replay of this call. And now, I'd like to hand over to Andy.
Good morning, and welcome, and thank you all for joining us today to discuss CoStar's acquisition of 10x. Especially welcome to those of you joining us from the West Coast at 5 am. We appreciate your diligence, at getting up so early and joining us, particularly you, Scott. We want to make some brief remarks on the transaction. Importantly, we're going to open the call up for questions, which is probably the most important part of the call.
So as you saw in the press release that we put out last night, we're very excited to announce the acquisition of 10x for $190,000,000 in cash. 10X was launched in 2,007 to meet the demand actually 2,009 to meet the demand for digital platform to liquidate the very large volume of the stressed commercial real estate assets that were coming on the market during the Great Recession. 10x has successfully executed $24,000,000,000 of sales and 10x believes that represents 90% of all digital commercial real estate transactions that have been done. So that's obviously a significant number and has proven the concept beyond a shadow. The 10x platform has transacted $7,000,000,000 in retail properties, dollars 6,000,000,000 in office properties, dollars 4,000,000,000 in multifamily properties and $3,000,000,000 of hotel properties.
It's executed billions of other sorts of commercial properties, industrial, land and etcetera. The Tenex transaction platform is provided only to brokerage firms. It's a broker tool and all 25 of the top 25 U. S. Commercial brokerage firms have used the platform to execute trades on behalf of their clients.
10x and CoStar share many, many common brokerage clients such as Cushman and Wakefield, CBRE, JLL, Marcus, Millichap and many, many others. Banks, government service GSEs, CMBS, special servicers such as Wells Fargo, LNR, SunTrust, Fannie Mae, BlackRock, Blackstone, CW Capital, Torchlight, C3, which is Greystone, Capital One, PNC, Starwood, Bank of America, MetLife and a long list and many others have relied on the 10x auction platform to effectively liquidate billions in CRE assets. So 10x is a known commodity amongst the biggest institutional players in the commercial real estate space. Increasingly, even though it was started as a distressed asset product, increasingly brokerage firms have begun to adopt a 10x platform for faster execution of income producing or performing commercial real estate property sales. In 2019, approximately 75% of the 10X transactions were performing commercial real estate sales and only 25 were distressed.
Partially that's a function of the fact that there simply wasn't much distressed activity in 2019. In April however, sadly that ratio is flipped to 75% distressed and only 25% performing. While distressed sales are very likely to be our key focus over the next few years, longer term, we see 10x returning to primarily a performing asset sales tool for both auctions and negotiated bid sales of properties. 10x accelerates the property sales process by qualifying and independently underwriting the assets, identifying likely buyers from a database of about 400,000 buyers from 73 countries. They qualify the bidders and the funds are sufficient to be able to bid.
And they're providing a powerful and flexible digital auction engine and managing the online escrow and the closing process. The online model accelerates and compresses the marketing period of the sales process, cutting the times by up to 50% while providing the reliable execution institutions need. And they're maximizing the value and the certainty of the close. One important component of 10x's offering is leveraging their database of potential buyers to bring the right bidders to the auction. With CoStar's very significant global research reach and the data assets we have, we intend to dramatically improve, expand the scale and depth of 10x's buyer database.
In addition, we are in a unique position to be able to observe user search behavior around the world on both Lutman and CoStar, so we can observe buyer interest that can be helpful in determining who we should focus on to bring to the auctions. CoStar Group believes there's going to be a surge over the next 5 years of distressed commercial properties and mortgages that may exceed the volume of distressed properties liquidate in the Great Recession. That's probably not terribly farfetched and most people would think that's likely the case. We observed $176,000,000,000 of distressed sales across the 8 years of the Great Recession. Distressed sales are tightly correlated to the unemployment and the vacancy rate lagged by 1 year.
The R squared on that relationship is 0.8 4, so it's tightly correlated. Using Oxford Economics current baseline forecast, we would predict $146,000,000 of distressed sales in 2021 2022. However, the Oxford baseline forecast keeps getting overrun by facts on the ground faster than the new forecast come out. And as you move forward a little bit under Oxford's economics moderate side scenario, we would predict $565,000,000,000 of distressed assets coming to market in the next few years or 2 20% more than we saw in the Great Recession. Just trying to understand the TAM of that on a 5% auction fee that would generate $28,000,000,000 of potential revenue to someone servicing that distressed debt component.
An essential component for an auction is a robust pool of bidders. One of the best places to find potential bidders is on CoStar's marketplaces. CoStar Group operates the most heavily traffic online marketplace for commercial properties for sale in North America and Europe with 10,000,000 monthly visits in April to its websites including LoopNet and CoStar. It's about 6,000,000 unique visitors. After the completion of the transaction, CoStar Group will integrate or intend to integrate the 10x transaction platform directly to both LoopNet and CoStar, therefore giving the properties that the brokers are selling on the 10x platform exposure to millions of additional potential buyers from around the world, a very robust audience.
Having an ample inventory of properties for sale is a valuable offering to attract potential bidders to the platform as well. So you need to have a lot of bidders to get a lot of properties to the platform and you need a lot of properties in the platform to bring a lot of bidders to the platform. CoStar is currently offering about 305,000 commercial properties for sale in our marketplaces across Europe and North America. CoStar will market the 10x platform to these 100 of thousands of sellers that we have regular contact with. Capital investing in commercial properties freely flows across international borders.
A very significant share of buyers for institutional assets come from outside the country that the asset is located in. It's not atypical to see 50% or more of institutional sales in a given market come from outside of that particular country's borders in any given year. CoStar has offices around the world and we have clients in well over 70 countries. We're currently working on unifying our systems across the world to one system accessible in dozens of languages. When completed, a potential buyer in Munich will be able to bid on a property in Los Angeles using German language access to access the auction, while a bidder from Italy will be able to bid on the same property in Italian.
We believe this international platform will bring even more bidders to the 10x platform and as it does that it will bring even more inventory to the platform. 10x is headquartered in Irvine, California and it's got $57,000,000 of revenue in 2019 and currently has approximately 113 employees. The company will continue to be led by the variable Steve Jacobs, who has 25 years of experience in commercial real estate, including transactions development, equity investment, asset management and CMBSs. Prior to joining 10X, Steve served as Managing Director at CW Capital, where he built, operate and managed the company's disposition team. We look forward to welcoming Steve and importantly his entire team to CoStar Group and working with them to build an exciting and valuable integrated global digital transaction platform.
Together, 10x and CoStar will form the leading end to end commercial real estate platform, combining LoopNet's and CoStar's unmatched online audience of buyers with 10X's clear leadership in online auctions for performing and distressed assets. Leveraging our combined platforms will create significant benefits for brokers and the institutions they represent by exposing their properties for sale to the biggest pool of potential bidders on a trusted digital transaction platform delivering fast and reliable trade execution. In the aftermath of economic disruption, let's take it back to disruption, not destruction, that's too dire. We believe the volume of the stress properties will clearly be coming to market at a greater pace and the combined platform will support the market's recovery. If you look for one of the influences on what brought us this transaction here today, CoStar Group has operated through multiple economic downturns and has some experience with the patterns of these sorts of cycles.
And one of the things that sticks out in my mind was back in 2009, CoStar Group had an opportunity when no one else wanted to buy office buildings to purchase the Mortgage Banking Association's headquarters, when the Mortgage Banking Association couldn't pay their mortgage. So we bought it in an essence of default sale, a short sale. And the building had they put about $95,000,000 in it to build it. We bought it for $41,000,000 a year later. And that was a great purchase.
We needed it for our headquarters facility. A year later, we sold that property for $101,000,000 or a $60,000,000 gain, which shows you the power of distressed sale investing and the attraction to people who have money sitting on the sidelines for that kind of asset. But when we sold it, we had a great broker representing us and but no one's perfect and we agreed to sell it to GLL, a German investor, for the $101,000,000 And we spoke to him on the phone and say, you're a successful bidder, we'll close the deal with you. 2 hours later, we got a phone call from the broker and said there was a problem that there had been another offer had come in for $103,000,000 before the bid deadline, but it come in on a fax machine, fallen off the fax and slid under the table. So $2,000,000 has slid under the table.
And it was we weren't too upset. It's like we just made $60,000,000 The broker said, what do you want to do? He said, look, we spoke to JLL. We made $60,000,000 We're going to honor our commitment to close the deal with them. But I never forgot that moment.
I never forgot that moment. Dollars 2,000,000 slid under the table. And I thought why in the world isn't there a digital platform where all the bids came in, people could see them, they were transparent and 1,000,000 of dollars didn't slide under the table. So today we've taken an important step to preventing faxes from sliding under the table. And I think that will be useful to the industry going forward.
So with that, I'll turn the call over to Scott Wheeler.
Great. Thank you, Andy. You're welcome. Thanks for that story. I appreciate that.
A little bit of history lesson for those of us.
Did I wake you up, Scott?
I'm just taking the call from my bed this morning.
Don't do that.
No, not good for your longevity. Anyway, as Andy mentioned, we're excited to add 10x alongside LoopNet and CoStar into our operating platforms. As Andy mentioned, 10X began back in 2009 as part of auction.com to sell distressed commercial properties following the last Great Recession. Now during the years following, the recession transaction volumes, of course, increased substantially for the distressed assets. And by 2015, revenue of the company had grown to approximately $100,000,000 per year, which is an increase at a compound annual growth rate of 40% over that period.
Over the past few years, as volumes of distressed commercial property sales diminished, 10x built a growing revenue stream of market rate property sales, building relationships with brokers and property owners to leverage the effectiveness of the auction platform. In 2019, as Andy mentioned, the market rate channel represented 75% of 10x transactions running through the platform. 10x generated approximately $57,000,000 in revenue and operated in 2019 at a loss. During the past year, however, the company completed a significant technology project to upgrade their auction platform. They subsequently reduced the staffing and spending levels after the successful completion of the project and now they produce breakeven results on approximately $13,000,000 of revenue in the Q1 of 2020.
As you look historically, typically the Q1 of any year was the weakest year of revenue sales through the auction platform. 10x currently has 113 employees and we're thrilled to welcome them to CoStar. The current 10X business model is based on revenue earned from each property sold on the platform. As the current significant economic uncertainties are the result of the COVID-nineteen pandemic, we don't believe we can predict the commercial property sale transaction volumes with any reasonable degree of accuracy, although as Andy mentioned, we certainly think they're going to be going up pretty soon. So we're not able to provide 2020 financial guidance estimates for 10x at this time.
However, we do expect the transaction will increase CoStar's reported revenue in the second half of twenty twenty and it will not have a material impact on CoStar's non GAAP earnings per share during the second half of twenty twenty. After the acquisition closes and the market environment returns to some level of stability, we plan to complete a more detailed forecast of 10x impact to CoStar's consolidated estimates. We'll share that with you on our regularly quarterly earnings call. While we're not in a position to provide specific short term guidance, we believe there is significant growth opportunity for the 10x platform when combined with LoopNet and CoStar. As Andy discussed, we believe the timing of this deal is perfect given the wave of distressed assets we expect to come to market over the next several years.
In addition, by combining 10x's leading online transaction platform with LoopNet's marketplace, CoStar's data and analytics and a huge global audience of buyers and sellers, we believe the longer term potential market opportunity to be in the 100 of 1,000,000 of revenue dollars a year with the TAM, as Andy mentioned, in the $20,000,000,000 to $30,000,000,000 range. The total purchase price of $190,000,000 will be paid from our available cash balance. If both the proposed 10x and the RentPath acquisitions closed during the Q3 of 2020, we would expect to have approximately $1,100,000,000 in cash and cash equivalents prior to any incremental cash flow from operations. Of course, both of the proposed deals are subject to customary closing conditions, including antitrust approval. With that, that's about all we got on the financial side.
We will now open up the call to questions.
Certainly. Mario Cartagena with Jefferies. Your line is open.
Hi, thanks for the time. Just could you give us a sense for what growth looks like in a non crisis environment? Just thinking about just the percentage of the, I guess, transaction that you receive in the fee, is it more of a flat fee, or is there potential to turn this into more of a subscription type business? Because I'm just assuming as you guys grow and you build scale there, because it is transaction based, it could build some lumpiness into your growth. Just trying to see, I guess, what your expectations are going forward?
Currently, the buyer of the property pays a fee on the platform. It varies roughly 5% or so. The brokerage clients often will negotiate some rebate element back to the seller to effectively reduce the net commission that the broker is charging the seller. We are going to continue to offer that industry standard option, but we're also going to offer a second option of a sort of fixed underwriting and marketing fee alternatively. That will create some additional smoothness in the income stream because we won't be as reliant on a successful execution of the auction.
Now, right now, brokerage firms are have become a pretty robust faculty reseller channel for CoStar Real Estate Manager. And we're looking to also evolve that or migrate that into the brokerage firms being a reseller channel for LoopNet higher end marketing for commercial properties. And we see 10x as yet another tool we can provide the brokerage firms and they can effectively resell that transaction service, or the software fees associated with that transaction service. And then we can generate rebates to them or incentives to use the platform. And we believe that will create some level of smoothness that may not be in the platform today.
And but really this is something that with volume and with scale, you get a little bit smoother on this. I'm not terribly worried about any lumpiness in revenue. I think that's probably a lesser worry for us because nothing is changing in CoStar's overall platform and that the overall platform continues to grow and then this will just be something on top of it. So I'll take the revenue that comes. And by the way, the broker that I referred to with the fax sliding under the table just texted me.
Apparently, he's on the call. Great broker, very happy with the transaction. I view it as much my fault that as the software provider to brokerage firms, we hadn't provided a good digital transaction platform. So we're solving that problem, but very happy with that transaction. I won't use the brokers name.
Ryan Tomasello with ABW. Your line is open.
Good morning, everyone. Thanks for taking the questions. Andy, beyond the clear benefit that the business will have from distressed asset sales in coming years, can you give us a bit more color on the strategy you'll utilize with integrating 10x into LoopNet, into CoStar Suite to really accelerate the adoption specific revenue stream has grown in recent years? I realize, specific revenue stream has grown in recent years? I realize that the mix has certainly shifted at least prior to 1Q to performing.
But does that actually represent growth in that revenue stream versus just a mix shift? Thank you.
Yes. So I'd say that if you look at 10x when they started they were about distressed and their original leadership their DNA was 110% distressed. That's all they focused on. And that branding, sort of kept them there and their fee structure and the software initially was really just focused on distressed. So, if you look over the last several years, they've had pretty good growth in their performing sales participation.
So while the distress came down, their performing was coming up. The mass overall was a decline, but the real story was that the performing was coming up. CoStar Group does not CoStar Group and LoopNet does not have its roots in distressed property sales and our brand doesn't represent that. So we believe that when we put these very good software tools into the CoStar and LoopNet engine, it will be easier for us to get adoption on these tools around performing assets just as we have a more broader brand identity there. Also, we're already with our platform like Propex where when you are selling a major property, a £100,000,000 property in the United Kingdom, often brokers will use our PropX platform to submit the introduction to institutions like legal and general, other major institutional investors.
And the institution takes an introduction on our platform and saying, okay, yes, a legal general saying, yes, I'm interested in buying this property and then using a set of proven tools to participate in a bidding process or a negotiated purchase of a property. So for us to grow this in the performing side, I think is one of the I think is one of the unique values we can bring to this merger, because the existing products we've got in place and existing audiences we've got in place. The integration is pretty straightforward. They've been rewriting the 10x platform from a monolithic software platform that is really derived off the auction.com system into a system that could be called with APIs. We're going to be putting those APIs in CoStar LoopNet.
Frank Sommer hate it when I say something like just put it into CoStar LoopNet, but it might be a little harder than that. But and then what will happen is like when you watch, I've had the chance to observe some auctions on 10x and I'll look at the exposure statistics and a property that is going to auction might have 1800 views in the marketing period. And that's a decent amount, but a diamond ad on LoopNet will typically pick up something like 2000000 to 30000 views a week and across a couple of months can pick up 2,000,000 views. So being able to move that auction to a platform where millions will view it, view that property for sale And we will present it so that it is, the very kinetic nature of a bid process and upcoming bids is very visible on the platform. It will start to look more like a trading platform.
We think will create a lot of energy and excitement around the options. Certainly, it will entertain us.
Mayank Tandon with Needham. Your line is open.
Thank you. Good morning. Maybe for Scott or Andy, what is the level of investment you believe is required to integrate LoopNet and CoStar Suite into the platform? And then what does the steady state margin look like for this business? Is it more similar with LoopNet and Multifamily?
Or is there a different margin profile to this type of business? Thank you. Sure. Thanks, Mike. Thanks for the question.
When you look at the required integration, fortunately, as you've seen us do in the past, we have strong broad technology teams that focus on the CoStar LoopNet platforms, and we now bring a strong technology team over from the 10x business. So just as we're doing with other acquisitions and as we're doing now with STR, we have the people on staff that will start to prioritize their work, we'll start to move them into getting the 10x platform on. There'll be some incremental resourcing involved, but there's not a big wholesale investment needed. Again, given that they just re platformed the company and have really just a little bit of that left to go over the next few months. We think there's some technology we can put in, but it's not going to move the needle at all from a real cost perspective.
The real benefit we get, as Andy mentioned, is this integration with LoopNet and the amazing amount of traffic and buyers and the marketplace it brings to the platform. And currently, the 10x advertises with LoopNet and one of their largest cost platforms is around marketing. As you can imagine, they need to get visibility on those properties. And without a marketplace that costs a lot of money to do. So there's definitely some integration synergies there when you look at the cost side, but this isn't a cost synergy deal.
And then when you start to look at if you combine our marketing reach and what they used to be spending and you start looking at where margins can go on the business, really as the volume picks up, there's not a big incremental cost pool on top of what their existing cost structure is. So when you look back in their history and you look at some of their, the faster growing quarters or periods and you see easily reaching 20 plus percent margins, you start to put more volume and the marketing synergies on top. Now you can easily see this business getting 30%, 40% margins, incremental additions into our platform over time. Although the plan is not like many with our other acquisitions, you don't track the specific profits and margins off of this revenue stream, but we think it's very scalable off of fixed base and a technology platform, and that's the beauty of the combination. Hope that helps give you some idea of that this looks like a pretty good profit move as well over time.
Bill Warmington with Wells Fargo. Your line is open.
Good morning, everyone, and congratulations on the deal.
Good morning, William.
Hi,
Bill. So, 2 part question. So the 2019, what was the dollar value of properties transacted on the 10x platform? What was that as a percentage of total distressed assets that were being sold? And then what was that as a percentage of the total market in real estate assets transacted?
I'm trying to get a sense for the share. And then you threw out a $146,000,000,000 forecast and it wasn't clear is that for 2020, 2021 multiple years, just trying to get a sense for that. And then the other part of the question is asking about the numbers. You gave the Q1 13,000,000 dollars that that was up about 35% year over year and was breakeven and I understand there's some seasonality there. So if you roll that 35% growth rate out with the $57,000,000 base that they did in 2019, that would get you to 77,000,000 dollars It seems like a classic fixed cost business.
So at 13,000,000 you're at breakeven, so that would mean 77, so $13,000,000 times 4, dollars 52,000,000 So $77,000,000 less the $52,000,000 in what looks like the fixed cost breakeven base, we get you about $25,000,000 in EBITDA, all things considered. I just want to check that math.
Yes. So let me just so if you carry the 4 and you bring down the 2, the secret of life is 42. So the I can answer, counsel has objected on the basis that you just asked 21 questions, But let's start with a couple of things there. The number we used and I don't want to be the bearer of bad news here, but I think what we're talking about is pretty obvious. Any of us can if you're a grown up, you can look at the unemployment rate.
You can understand that some number of restaurants, retailers newly launched multifamily properties purchased on a 3 cap will go into distress. And so we've looked at it a number of different ways. It's common sense and there are different ways to model it. I gave you a number of $146,000,000 of distressed sales in 2021 2022. That's just a model and it will be wrong because it's a model.
And that assumes a V shape recovery in the economy, which may be optimistic and most people feel it's optimistic. And so then if I used a moderate scenario that would predict $565,000,000,000 and that would likely be over about a 5 or 6 year period. And I did not even present to you the severe downside, which is based on unemployment of more than $14,000,000 Oh, wait a minute, we've got more than that. And that one would be $700,000,000 and that would be over 7 or 8 years. Now looking in the prior year, their share of online their share of transactions was well less than 1% and distressed debt last year, I'm sorry, distressed property sales last year was de minimis.
And so the share of that, I don't know what it would have been, but I believe it would be definitely sub 10%, more likely sub 1%. So, we'll research some of those numbers and try to get back to some of the other detail. But the bottom line is just think about the fact that these platforms are relatively new. They're very proven and successful, but they're 1% of the market or less. And the size of the potential issue that will need to be liquidated is could be over $500,000,000,000 So it's very substantive.
Peter Christiansen with Citi. Your line is open.
Good morning. Thanks for taking the call. Interesting deal. Andy, I guess the distressed market falls toe and toe with foreclosures. Is there any opportunity to integrate some of the functionality with this with banks or with financial businesses?
And if you think about the technology roadmap longer term, are there enhancements that you're thinking off the bat here, I don't know, document workflow or something of that nature? I think there's even notions of blockchain getting into CRE distress sales. Just thoughts there, that would be helpful. Thank you.
Sure. So remember that CoStar Group has a good working relationship with the majority of the major banks in the United States. We provide a service through CoStar Risk Analytics, where we on a very confidential basis load up all their mortgage portfolios and then we run economic scenarios and models against their mortgage portfolios and we help some of the biggest banks in the United States understand what the probability of default is in their mortgages, what their risk and concentrations are, what their maturity GAAP losses are likely to be, what their liquidated losses are likely to be. So we are very closely in touch with and very well aware of what's going on in the nation's banking system around commercial real estate and distress. So this is a pretty small step away from that relationship with the banks into this product area.
We are working on a number of things that are certain technology enhancements around all this. For instance, just simply, we provide deal rooms in brokerage applications in our private sale network. We're going to enhance and provide those deal rooms into our Propex CoStar platform into and take the 10x deal room and incorporate that. That's an element of documents. As you know with our Apartments dotcom area, we're providing electronic and online leases.
We want to provide electronic and online leases for smaller end deals in commercial office, industrial retail. Obviously, providing document management and signature around transactions would be something we do. And then if you sort of open off, if you take off the restraints and you sort of go loosely into the broader future, You obviously this applies not just to the properties, but to the mortgages themselves. So very often you can sell a distressed mortgage or an operating mortgage online as well. And it presents the opportunity to eventually sell potentially limited partnership units or partial interest in properties in a digital platform as well.
So really it's unlimited as to the scale and scope. And I'm a big believer that in these crises, people things change permanently and people step out of business as usual and they in responding to a crisis, they accept new ways of doing things that are more efficient or more effective or they're forced into using things that are more efficient and more effective. So I believe there's a good chance here that when all is said and done, this might this crisis might move a lot more of the commercial real estate transaction process online to digital. It's certainly doing. I mean, if you look at if you look at just leasing office space right now, people are not touring buildings physically.
They have to just view them virtually online and they can go to LoopNet now and they can use Zoom like functionality and LoopNet to see their brokers face on the video and the other colleagues face on the video while they're actually looking at properties on LoopNet. People are using that now. I think that's sort of an example of the kind of change that's permanent and I think that could happen here with digital transactions online. And again, I just want to reiterate the answer to Bill's question is 42.
Stephen Sheldon with William Blair. Your line is open.
Hey, thanks. Good morning. You gave some good detail on views for auction on 10x for those marketed on LoopNet. Anything you can share on the number of bidders or outcomes for those auction processes that have marketed on LoopNet relative to those that have not, if you have any visibility into that? Sure.
I've gotten 2 different numbers on it. So and the disparity between the numbers are pretty broad. I think as you know, this deal is distinct and that this is our first ever quarantine deal. The deal was originated, conceived and closed in quarantine and will be integrated in quarantine. So this is a first.
This one gets a very special deal toy. I don't know how you do it. The deal toy will have a face mask. So in that context, I had received a number in a market report last year that 40% of the successful bidders on the 10x platform were found from a LoopNet lead. So that LoopNet was a major source.
I saw another number that said it was about somewhere close around 10%. So that but needless to say, it's one of the biggest sources and that's where the auctions are buried deeply inside of LoopNet at the lower levels that no one's seeing them. So when you actually promote these transactions at the top of screen, top of funnel for anyone searching for sale in either the CoStar platform from Europe or Canada or the United States or LoopNet platform or Real in the United Kingdom or Beldex or Propex, I believe you'll I believe I would not be surprised if you didn't see 85%, 90% of successful bidders coming from the CoStar Group platforms. And I would say, again, I don't have a hard number, but my gut would be that it's about 50 plus percent of the deals closed. And it's the critical element is that it's all about how many bidders you've got at the auction.
When you have 1 or 2 bidders, you often the auction or the transaction struggles to close because you don't reach the reserve. They're fishing at the bottom and they know they can fish at the bottom. If you get 4 or 5 bidders, your close rates go through the roof. So it's an exponential relationship between the number of bidders that show up and the success in the auction. So in order to drive growth at 10x exponentially, you need to bring dramatically more bidders to the platform and CoStar Group is well positioned to do that.
Brett Huff with Stephens. Your line is open. Morning, Andy, Scott and Sarah. Glad you're all well and congrats on what looks like a great deal.
Thank you very much.
Thanks, Brad.
One question I got and I hopped on a couple of minutes late, so I apologize if you went through this in the opening remarks, Andy. But it seems to me that the crux of the deal is, as you mentioned, you can bring lots more unique visitors to 10x. Could you tell us kind of what the monthly net uniques were at 10x versus the I think you've quoted $10,000,000 for you guys in the press release. I mean isn't that just kind of a status that we need to focus on?
Yes, that's correct. And so CoStar Group suite of commercial estate sites, roughly 10,000,000 visitors in the month of April from all over the world, 10,000,000. 10x would likely be 10,000 or infinitesimal. So 10x is not a marketplace and it doesn't have 100 of 1000 of listings like our sites do. At any given time, it's more of a you have to be drawn to that site from something else.
It has to be a marketing piece that went out to you. It has to be an ad you saw. So it doesn't have any traffic, it's not a marketplace. And the connection of the marketplace to the transaction platform is really is exactly what we're talking about. It's about bringing millions and millions of potential bidders and exposing these properties so that the seller of the property, the institution selling the property knows that the transaction platform technology is secure, the process is professional and clean and that the property has been exposed to a massive audience of potential bidders and they know that the full value has been achieved.
Sterling Auty with JPMorgan. Your line is open.
Good morning, guys. This is Jackson Ader on for Sterling.
Sorry for the delay.
Good morning, Jackson. So just a quick follow-up question, and maybe we missed it. What was the revenue growth in from 2018 to 2019 for 10x?
Yes. The revenue was declining in 2018 to 2019. And this was you may have heard us mention that the distressed property sales went down since about 2016, 2017 as those were moving out of the system post recession that was coming down and then the market rate sales were going up during that time. And so the down of the distressed was more than the up of the market rate, and that's why you saw declining revenue rate in 2019. And then in the Q1, those lines crossed over, you saw an increase in year over year revenue in the Q1 as the market rate took over and the other revenues were much, much smaller.
So that was a I mentioned the good positive restructure and turnaround the company had engineered. And now we're going to look to see how the distressed properties we expect will rebound significantly. There's certainly a disruption that's happened to all of our businesses, including the 10x business that happens in the March, April timeframe where property sales overall will just freeze up for some time. But that's not the point here. It's not about us looking at what the quarter is or the next two quarters are.
It's about the massive opportunity that comes with the sales that we know will be through the latter part of the year into next year, the global platform, the bringing on of those market rate sales in the future. Those things are all what's going to drive massive increases, we think, in this opportunity. And so you saw that crossover happen over the last couple of years. And I think we see a good strong position both in distressed and in the expertise and experience to do market rate sales in the platform, which is why this looks like such a nice deal for us.
Joe Goodwin with JMP Securities. Your line is open. Hi, good morning and congrats.
Just a
quick question from me. When a transaction occurs on 10x, what happens to a broker's fee? Is it eroded at all or is there any dynamic there? No. The brokers retains the same fee they had before, but with our customers who are buying at scale, so like Cushman and Wakefield, we will rebate some of the buyer fee back to Cushman and Wakefield's client or to the seller.
So effectively, the brokers getting the same commission, but the buyer is I mean, I'm sorry, the brokers get the same commission, but the seller is effectively net net paying a lower commission. So the seller really likes that phenomenon. And again for us, as I look at it, at volume and using a digital platform, I don't believe we need a 5 percent fee to be very profitable across a lot of these deals, especially if you can break out the underwriting cost separately and people cover that separately, then we can bring the performance fee down and reduce the cost of the broker services effectively to the seller, while keeping the broker whole in their commission, which is what we've done for 30 some years.
There are no further questions at this time. I would now like to turn the call back over to our presenters for closing remarks.
Well, I think in sum, I think the takeaway from today's call is CoStar Group can do deals in quarantine. We get antsy when we're locked up and we like to go do stuff. And then secondly, I think it's kind of clear that if you're trying to find counter cyclical, 10x would be counter cyclical, which is added to apartments.com, which by all parents indications is very countercyclical. I believe Lutinib will prove out to be very countercyclical and CoStar is very resilient in any one of these cycles as well as real estate manager is very resilient because compliance based and risk analytics, which helps banks deal with distressed debt, is also something that hangs in there. So, we are glad to join you all this morning and pleased to get a chance to share this deal with you and look forward to talking to you all in the days, weeks and months to follow.
Thank you very much for joining us.
This concludes the CoStar acquisition of 10xCall. We thank you for your participation. You may now disconnect.