Mr. Jim Hannon reports

ALTUS GROUP ENTERS INTO AGREEMENT TO PURCHASE SITUSAMC'S COMMERCIAL REAL ESTATE VALUATION SERVICES BUSINESS

Altus Group Ltd. today signed a definitive agreement to acquire the commercial real estate valuation and advisory services business of Situs Group LLC (a SitusAMC company) (REVS) for $225.0-million (U.S.) (approximately $310.1-million) in cash, or net approximately $190.0-million (U.S.) (approximately $261.9-million) after consideration of an estimated acquisition-related benefit of the tax step-up, implying a 13.4 times 2023 normalized EBITDA (earnings before interest, taxes, depreciation and amortization) multiple.

"Current market complexity and increasing financial reporting demands drive the need for high-quality and timely valuations and data-driven insights for CRE investors and operators," said Jim Hannon, chief executive officer of Altus Group. "We are excited to have the highly regarded REVS team join the top talent at Altus Group. Collectively we will expand the scope of valuation offers, including advanced analytics, that we deliver to clients."

Acquisition highlights

The proposed acquisition is expected to provide Altus Group with the following strategic advantages:

• Enhances valuation offering: Enhances client value with complementary solutions that are embedded in key client work flows and opens up new growth avenues for advanced analytics applications.
• Expands talent to efficiently serve clients: Adds bench strength with highly credentialed and licensed valuation professionals, technologists, and a scalable service delivery function with synergistic workflow technology.
• Strengthens financial profile: Supports recurring revenue growth, immediately accretive to analytics earnings, and creates operating efficiencies.
• Enhances strategic long-term growth opportunities: Adds strong technology assets with expansive valuation data sets that are core to Altus Group's strategy to scale advanced analytics.

REVS offers independent valuation management solutions to some of the largest CRE institutional investors in the United States, including pension funds, insurance companies, investment managers, banks and other CRE (commercial real estate) asset owners and investors. The transaction will include REVS's key commercial solutions for valuation management (including its valuation management system and the daily valuation system technology platforms), as well as related appraisal and consulting services such as portfolio monitoring and reporting, portfolio valuations, pension fund monitoring and reporting, and other similar services.

The REVS team includes highly credentialed and licensed valuation professionals who leverage real-time data, proprietary research and innovative technology to help clients monitor and report the value of their commercial real estate portfolios directly contributing to their investment decision process and financial reporting requirements. Approximately 350 people are expected to join Altus Group as part of the acquisition.

"The combination of our market expertise and expansive valuation data sets will create best-in-class valuation intelligence," added Rick Kalvoda, president of analytics for the Americas region at Altus Group. "It will elevate the insights and transparency we bring to clients to help them drive asset performance and manage risk."

"Joining Altus Group will create significant value for our clients, our team and the industry," added Brian Velky, head of REVS. "Coming together will enhance our independent end-to-end valuation capabilities to ensure we're best positioned to meet our clients' evolving needs."

Financial information

The transaction is expected to strengthen the company's recurring revenue base, be immediately accretive to Altus Group's adjusted EBITDA and adjusted EBITDA margin for its analytics reportable segment and create operating efficiencies. REVS has been consistently growing its top line in the double digits and expects to generate approximately $46.2-million (U.S.) (approximately $63.6-million) in revenue and approximately $14.2-million (U.S.) (approximately $19.5-million) in normalized EBITDA for fiscal 2023.

On closing, Altus Group will pay $225.0-million (U.S.) (approximately $310.1-million) in cash, financed by cash on hand and borrowings under the company's credit facilities. In connection with the acquisition of REVS, the company obtained a commitment from lenders to increase its borrowing capacity under its existing bank credit facilities from up to an aggregate of $550-million to up to an aggregate of $725-million. The increase to the company's borrowing capacity is subject to completion of the acquisition of REVS, satisfaction of typical conditions precedent and definitive documentation.

Assuming that this transaction, as well as the previously announced acquisition of Forbury Property Valuation Solutions Ltd., both close, the company's financed debt to Adjusted EBITDA leverage ratio is expected to still be below its 4.5 times maximum capacity liait under its credit facilities. Given the expected synergies and existing strong cash flows, Altus Group expects to steadily delever to its target 2.0 times to 2.5 times financed debt to adjusted EBITDA leverage ratio range by the end of 2025.

The acquisition of REVS is expected to close prior to the end of the first half of 2024, subject to customary closing conditions, including receipt of regulatory approvals. Altus Group plans to discuss the transaction during its Q3 2023 financial results conference call scheduled at 5 p.m. ET today.

Cravath, Swaine & Moore LLP is serving as legal counsel to Altus Group. Kramer Levin Naftalis & Frankel LLP and Kirkland & Ellis LLP are serving as legal counsel and Evercore is serving as financial adviser to Situs Group LLC.

About Altus Group Ltd.

Altus Group is a leading provider of asset and fund intelligence for commercial real estate. It delivers intelligence as a service to its global client base through a connected platform of industry-leading technology, advanced analytics and advisory services. Trusted by the largest CRE leaders, its capabilities help commercial real estate investors, developers, proprietors, lenders and advisers manage risks and improve performance returns throughout the asset and fund life cycle. Altus Group is a global company headquartered in Toronto with approximately 2,900 employees across North America, Europe, the Middle East and Africa, and Asia Pacific.

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