London-based Daily Mail and General Trust plc (DMGT), owner of U.S. CRE data provider Xceligent, reported this morning a quarterly loss of US$150 million primarily due to its decision to write-off the full value of its investment in Xceligent.
In announcing the company’s third quarter results, Tim Collier, DMGT’s global chief financial officer and executive director, said that continued losses at Xceligent and SiteCompli, two of five components of DMGT’s U.S. property information business, had hurt the division’s overall profitability.
“The disappointment in U.S. property has been two of our early-stage businesses, Xceligent and SiteCompli, where growth was not as strong as we had expected,” Collier said. Xceligent is a “loss making business” as it has attempted to expand its data coverage across the U.S., he added.
“We have literally been collecting data one city at a time – an incredibly labor-intensive process,” Collier said. “Simply put, our strategy was to generate revenue in each local market with a view to generating significant revenue once Xceligent had sufficient national coverage.”
Xceligent’s big push this year was into New York City, where “quite candidly the revenues were disappointing,” Collier said. “And that suggests a longer and more challenging path to profitability.”
“Given the timeline and the degree of uncertainty about Xceligent’s ability to become cash generative in the future, I felt it was appropriate to fully impair the business,” Collier said.
DMGT recorded an impairment charge of US$56.54 million on the writedown.
Collier said Xceligent’s new management team will conduct a strategic review of the business looking at all options that “will address and contain the current challenges.”
Similarly, DMGT’s SiteCompli’s planned expansion into the national retail market has proven more challenging than the company previously anticipated and DMGT took an impairment charge of US$32.1 million on that business as well.
SiteCompli is a New York-based tech company that provides software to track property compliance codes and regulations.
DMGT is in the process of selling a third component of its U.S. property information business called EDR, a real estate environmental information business.
DMGT said it plans to shift its future focus to its other two U.S. property businesses, Trepp, which provides CRE securitization and banking data and analysis, and BuildFax, which offers property condition data for the insurance industry, analyst and inspectors.
Xceligent is a direct competitor of CoStar Group (the publisher of CoStar News.) The two firms have been engaged in a protracted legal dispute.