AIF Altus Group Limited

Altus Group Limited (TSX: AIF) (the “Company” or “Altus”), a leading provider of software, data solutions and independent advisory services to the global commercial real estate (“CRE”) industry, announced today that it has signed a definitive agreement to acquire Scryer, Inc. (dba Reonomy) (“Reonomy”), a fast growing, AI-powered data platform for the CRE industry, for US$201.5 million (approximately C$249.5 million), (on a cash-free/debt-free basis) subject to adjustments. The transaction is expected to close on November 12, 2021.

Mike Gordon, Chief Executive Officer of Altus Group said:

“The combination of Reonomy’s AI-powered data platform with Altus’ suite of software, data and analytics capabilities creates a very compelling client offering that will enable our clients to better manage performance and risk within their CRE portfolios with data-driven insights, predictive analytics and alert capabilities. It significantly accelerates our transformative innovation in AI predictive data analytics by better positioning us technologically, with data science and analytics expertise, and with a robust dataset to add analytics into workflows that not only look back at what happened and why, but look forward to machine learning informing us on what might happen next.” 

Acquisition Highlights

• Accelerates, Altus’ innovation and data strategy to solve key CRE challenges with real-time data-driven insights, predictive analytics and alert capabilities.  
• Expands Altus’ CRE data and analytics capabilities with complementary and synergistic offerings which can be scaled globally while having the potential to substantially increase the Company’s total addressable market.  
• Enhances Altus’ growth profile with strengthened cross-sell opportunities and prospects to serve new and expanded customer use cases.  
• Strengthens data science and analytics expertise with Reonomy’s highly talented team that has a strong cultural fit with Altus, providing Altus and Reonomy employees with expanded opportunities for career development and growth.

• Immediately improves the Company’s recurring revenue profile with fast-growing subscription revenues.  (Reonomy’s annual recurring revenue forecast for 2021 is expected to be US$21 million by year end.)

• Presents attractive revenue, cost and cost avoidance synergies related to the Company’s ongoing data strategy initiatives and significantly accelerates time to market on numerous product roadmap initiatives underway.

Founded in 2013, Reonomy is a leading U.S. CRE data and analytics provider leveraging artificial intelligence and machine learning technologies to empower real estate industry professionals with data-driven insights and solutions to gain comprehensive market knowledge, discover opportunities, and automate workflows.

Reonomy's AI-powered data platform connects disparate property information by leveraging vast data sources, including multiple public and proprietary data feeds, together with AI machine learning to aggregate market intelligence on commercial properties across the U.S., including assessor, census, transaction, geospatial, ownership and occupant data. Using AI machine learning and proprietary entity resolution capabilities, Reonomy then links all the data sources for every commercial asset with a single unique identifier (Reonomy ID). The resulting dataset is an industry-leading collection of insights across more than 52 million tax parcels and over 38 million commercial properties, accounting for nearly all of the commercial inventory in the U.S. Reonomy’s team of approximately 115 professionals will be integrated with the Company’s Altus Analytics business.

Richard Sarkis, Executive Chairman and Co-Founder of Reonomy said:

“I co-founded Reonomy with a very direct mission to solve a pressing pain-point in the CRE industry - to connect data and bring greater transparency to the CRE market at a time when credible information on this significant asset class was still scarce. Altus Group shares in our mission and has played a pivotal role in advancing the transformation of the CRE industry. We are very excited about the opportunities that joining Altus Group will bring and how it paves the way for continued innovation. Leveraging Altus’ unique position in the CRE value chain with our data and analytics capabilities is exceptionally powerful and I’m confident that together we will create considerable value for our industry and combined stakeholders.”

Jorge Blanco, Chief Product Officer of Altus Group, added:

“Together, we will be able to provide leading-edge insights and analytics in a new and innovative manner. The Reonomy team has done an exceptional job leveraging AI machine learning to solve key data management challenges in the CRE industry and unveil hidden data relationships. Integrating Reonomy’s data and technical capabilities with our recently acquired StratoDem Analytics platform for predictive analytics will enable us to deliver analytics at scale, and when integrated together with our foundational ARGUS software solutions, will be transformative for the CRE industry. Our clients will be able to gain deep insights on their CRE assets in a way that’s never been done before.”

Reonomy’s trailing twelve-month to September 30, 2021 revenues were US$18.3 million and Reonomy had an Adjusted EBITDA loss of US$16.9 million reflecting its investment focus on user growth, platform development and revenue acceleration. Substantially all of Reonomy’s revenues are recurring, consistent with Altus Group’s Over Time revenue definition. Management anticipates that with the anticipated synergies, the impact of Reonomy on Altus’ Adjusted EBITDA for 2022 will be nominal. The acquisition is expected to be accretive to Altus’ Adjusted EBITDA in 2023. In addition, as required by IFRS, Altus Group expects to have an accounting adjustment on Reonomy’s deferred revenues. Notwithstanding Reonomy’s impact to the Altus Analytics’ Adjusted EBITDA in 2022, Management continues to expect a year-over-year improvement in Altus Analytics Adjusted EBITDA margins for full year 2022.

On closing, Altus will pay US$198.5 million (approximately C$245.8 million) in cash, funded by cash on hand and borrowings under the Company’s credit facilities.  In addition, Altus will issue common shares from treasury to Reonomy employees valued at US$3.0 million (approximately C$3.7 million). These common shares will be subject to restrictions and will vest in equal installments on the first and second anniversaries of the issuance date.  With this transaction, the Company’s funded debt to Adjusted EBITDA leverage ratio is expected to increase to approximately 3.0x.  Given the expected synergies and existing strong cash flows, Altus expects to de-lever to a funded debt to EBITDA leverage ratio in the low 2.0x range by the end of 2022.

Conference Call Details

The Company will hold a conference call today, November 11, 2021, at 5:00 pm ET to discuss its third quarter 2021 results and the details of this transaction. A replay of the webcast will be made available on Altus Group’s Investor Relations section of its website.

Date:	Thursday, November 11, 2021
Time:	5:00 p.m. (ET)
Webcast:	altusgroup.com (under Investor Relations)
Live Call:	1-800-319-4610 (toll-free North America) or 416-915-3239 (Toronto area)
Replay:	available via webcast at www.altusgroup.com/company/investor-relations

About Altus Group Limited

Altus Group Limited is a leading provider of software, data solutions and independent advisory services to the global commercial real estate industry. Our businesses, Altus Analytics and Altus Commercial Real Estate Consulting, reflect decades of experience, a range of expertise, and technology-enabled capabilities. Our solutions empower clients to analyze, gain insight and recognize value on their real estate investments. Headquartered in Canada, we have approximately 2,600 employees around the world, with operations in North America, Europe and Asia Pacific. Our clients include many of the world’s largest commercial real estate industry participants. Altus Group pays a quarterly dividend of $0.15 per share and our shares are traded on the Toronto Stock Exchange under the symbol AIF. For more information on Altus Group, please visit: www.altusgroup.com.

Forward-Looking Information

Certain information in this press release may constitute “forward-looking information” within the meaning of applicable securities legislation. All information contained in this press release, other than statements of current and historical fact, is forward-looking information. Forward-looking information includes, but is not limited to, the discussion of our business and our objectives, goals, strategies, priorities, intentions, plans, beliefs, expectations and estimates, and our expectations of the business, our operations, financial performance and condition. Generally, forward-looking information can be identified by use of words such as “believe”, “expect”, “anticipate”, “estimate”, “intend”, “may”, “will”, “would”, “could”, “should”, “continue”, “plan”, “goal”, “objective”, “remain” and other similar expressions and the negative of such expressions, although not all forward-looking information contain these identifying words. All of the forward-looking information in this press release is qualified by this cautionary statement.

Forward-looking information is not, and cannot be, a guarantee of future results or events. Forward-looking information is based on, among other things, opinions, assumptions, estimates and analyses that, while considered reasonable by us at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies and other factors that may cause actual results, performance or achievements, industry results or events to be materially different from those expressed or implied by the forward-looking information. The material factors or assumptions that we identified and applied in drawing conclusions or making forecasts or projections set out in the forward-looking information include, but are not limited to: our ability to meet its “Revenue” and “Adjusted EBITDA” targets, including assumptions on Altus Analytics Bookings growth, subscription and maintenance renewal rates, client retention rates, growth in our Data Solutions and Appraisal Management businesses, assumptions on the Argus Software revenue model, license sales, cloud conversion (including timing and rate), the 2021 post-acquisition financial results of Scryer, Inc. being in line with historical results, expected revenue, cost, and cost avoidance synergies will be realized, assumptions on other Altus Analytics contributors, expenses, operating leverage, and foreign exchange; having available cash on hand to repay debt on our expected timelines; engagement and product pipeline opportunities in Altus Analytics will result in associated definitive agreements; settlement volumes in the Property Tax business will occur on a timely basis and that assessment authorities will process appeals in a manner consistent with expectations; the successful execution of our business strategies; consistent and stable economic conditions or conditions in the financial markets; consistent and stable legislation in the various countries in which we operate; no disruptive changes in the technology environment; the opportunity to acquire accretive businesses and the absence of negative financial and other impacts resulting from strategic investments or acquisitions on short term results; the successful integration of acquired businesses; and the continued availability of qualified professionals. Projections may also be impacted by macroeconomic factors, in addition to other factors not controllable by the Company. We have also made certain macroeconomic and general industry assumptions in the preparation of such forward-looking information. We believe that the expectations reflected in forward-looking information are based upon reasonable assumptions; however, we can give no assurance that actual results will be consistent with the forward-looking information. Not all factors which affect the forward-looking information are known, and actual results may vary from the projected results in a material respect, and may be above or below the forward-looking information presented in a material respect.

The COVID-19 pandemic has cast additional uncertainty on each of these factors and assumptions. There can be no assurance that they will continue to be valid. Given the rapid pace of change with respect to the COVID-19 pandemic, it is difficult to make further assumptions about these matters. The duration, extent and severity of the impact the COVID-19 pandemic, including measures to prevent its spread, will have on our business is uncertain and difficult to predict at this time. As of the date of this press release many of our offices and clients remain subject to limitations and restrictions set to reduce the spread of COVID-19, and a significant portion of our employees continue to work remotely.

Inherent in the forward-looking information are known and unknown risks, uncertainties and other factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any results, performance or achievements expressed or implied by such forward-looking information. Those risks, uncertainties and other factors that could cause actual results to differ materially from the forward-looking information include, but are not limited to: the general state of the economy; the COVID‐19 pandemic; currency; our financial performance; our financial targets; the commercial real estate market; industry competition; our acquisitions; our cloud subscriptions transition; software renewals; professional talent; third party information; enterprise transactions; new product introductions; technological change; intellectual property; technology strategy; information technology governance and security; our product pipeline; property tax appeals; legislative and regulatory changes; fixed-price and contingency engagements; appraisal and appraisal management mandates; the Canadian multi-residential market; customer concentration and the loss of material clients; interest rates; credit; income tax matters; health and safety hazards; our contractual obligations; legal proceedings; our insurance limits; our ability to meet the solvency requirements necessary to make dividend payments; leverage and financial covenants; our share price; our capital investments; and the issuance of additional common shares, as well as those described in our annual publicly filed documents, including the Annual Information Form for the year ended December 31, 2020 (which are available on SEDAR at www.sedar.com). In addition, in respect of the June 13, 2021 cybersecurity incident, while we have implemented our cybersecurity and business continuity protocols and adopted additional measures to enhance the security of our IT systems to help detect and prevent future attempts or incidents of malicious activity, we are subject to a number of risks and uncertainties in connection with the incident. Such risks and uncertainties include, but are not limited to: the outcome of the ongoing investigation into the incident; costs related to the investigation and any potential liabilities, regulatory investigation or lawsuit resulting from the incident; costs related to and the effectiveness of our mitigation and remediation efforts; our ability to recover proceeds under our insurance policies; and the potential loss of customer and other stakeholder confidence in our ability to protect their information, and the potential adverse financial impact such loss of confidence may have on our business.

Given these risks, uncertainties and other factors, investors should not place undue reliance on forward-looking information as a prediction of actual results. The forward-looking information reflects management’s current expectations and beliefs regarding future events and operating performance and is based on information currently available to management. Although we have attempted to identify important factors that could cause actual results to differ materially from the forward-looking information contained herein, there are other factors that could cause results not to be as anticipated, estimated or intended. The forward-looking information contained herein is current as of the date of this press release and, except as required under applicable law, we do not undertake to update or revise it to reflect new events or circumstances. Additionally, we undertake no obligation to comment on analyses, expectations or statements made by third parties in respect of Altus Group, our financial or operating results, or our securities.

Certain information in this press release may be considered as “financial outlook” within the meaning of applicable securities legislation. The purpose of this financial outlook is to provide readers with disclosure regarding Altus Group’s reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.

FOR FURTHER INFORMATION PLEASE CONTACT:

Camilla Bartosiewicz Vice President, Investor Relations, Altus Group 416.641.9773 Camilla.Bartosiewicz@altusgroup.com

Ernest ClarkChief Marketing Officer, Altus Group+44 (0) 20 7636 7347Ernest.Clark@altusgroup.com

FOR MEDIA INQUIRIES PLEASE CONTACT:

Altus Group                                                         Elizabeth Lambe                                                 Senior Manager Global Communications                         416.641.9787                                                         Elizabeth.Lambe@altusgroup.com