Presented by: Lloyd Lynford CEO Reis, Inc. Presented at: B. Riley & Co. 15 th Annual Investor Conference Santa Monica, CA May 20, 2014

Transcription

1 Presented by: Lloyd Lynford CEO Reis, Inc. Presented at: B. Riley & Co. 15 th Annual Investor Conference Santa Monica, CA May 20, 2014

2 DRAFT Disclaimer This presentation may include forward-looking statements which involve a number of risks and uncertainties and are based on currently available information and current management outlook or expectations. Actual results may differ materially from those in the forward-looking statements. In addition, we do not plan to update any forward-looking statements to reflect subsequent events or circumstances or if our expectations change. For more information relating to the risks and uncertainties involved in our forward-looking statements and Reis generally, please see the Risk Factors and Forward-Looking Statements sections of our recent filings with the SEC, including our 2013 Annual Report on Form 10-K filed on March 6, 2014 and the March 31, 2014 Quarterly Report on Form 10-Q filed on May 1,

3 DRAFT Executive Summary Reis is a leading provider of U.S. commercial real estate ( CRE ) market and transaction-support information. Unique Proprietary Databases Diversified Customer Base Significant Growth Opportunities Attractive Subscription Business Model Attractive Financial Profile Compelling Industry Dynamics Strong Platform to Execute Growth Strategy 3

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6 DRAFT Executive Summary Subscription-based business model with high revenue visibility, significant cash generation and substantial growth potential. Delivers proprietary CRE market information and analytics. Unrivaled depth of proprietary data on over 6,800 market areas and segments. 34 year history of data collection and aggregation; difficult to replicate. Blue-chip client base across wide spectrum of CRE and financial sectors. Outstanding platform to capture logically adjacent opportunities (space leasing and marketplace sectors). 6

7 Products DESCRIPTION Primary delivery platform Data on rents, vacancy rates, absorption, lease terms, property sales and new construction activity Market-based trends, comparable properties, valuation and credit analysis Repurposes Reis SE market data to prosumers and smaller businesses Provides subset of information available to Reis SE subscribers Developed in conjunction with Opera Solutions Property and loan-level analyses of cash flows, collateral values and default risk Property valuation, credit analysis, recurring stress testing and benchmarking CUSTOMERS Property owners, developers, managers, banks and nonbank lenders, equity investors and service providers Smaller enterprises and individuals, professional investors, brokers, appraisers and other service providers Available to new and existing customers as an add-on to Reis SE Banks and lending institutions seeking CRE risk Management tools CMBS and equity investors PRICING / CONTRACT Annual and multi-year subscriptions ($1,000 $1 million+) with an average range of $35,000 $40,000 Prices of individual reports typically range up to $999 Monthly subscriptions generally ranging up to $150 Annual subscriptions are also available Varies by client and usage Annual and multi-year subscriptions Low tens of thousands of dollars into the hundreds of thousand of dollars per year 7

8 Key Databases Property Data Physical Attributes Geocoding Performance Data Up to 34-year Time Series New Construction Planned Proposed Under Construction Sales Comps 277 Markets 10-year history Cap Rate Trends $250K+ Transactions Trends 275 Markets 6,800 Submarkets/Segments Up to 34-year Time Series Forecasts 5-year Forecasts 82 Markets and Thousands of Submarkets Property Type Markets Apartment 275 Office 190 Retail 190 Warehouse/Distribution 47 Flex/R&D 47 Self Storage 50 Seniors Housing 57 Totals 856 8

9 Curated Databases Curated databases for CRE professionals Reis s databases are carefully constructed and maintained. Competitive inventories are coded and sub-property types are defined. Historical property-level performance data is archived at the record level. Consistent samples ensure disciplined market trends. Not repositories of land use records of low value to CRE professionals. Only precisely designed and populated databases will succeed in the emerging analytics marketplace... 9

10 Data Collection Thousands of sources are accessed on an ongoing basis. Primary Research Methodologies Proprietary lists of brokers, managers and owners Individual telephonic surveys (1M+ calls placed annually) List processing of brokerage feeds Websites and internet searches Extensive database of market sources must be maintained Other Research Sources Utilized Planning and Zoning Boards Public Records (Deed recorders and Tax assessors) Building Directories Business and Trade Press Visiting selected markets 10

11 Premier Brand Name Reis is a trusted source for many of the nation s most well respected news organizations. 11

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13 Client Composition 56% Debt Banks Non-Bank Lenders Investment Banks and Conduits Insurance Companies Government As of March 31, 2014: 1,007 Reis SE subscribers Overall TTM renewal rate = 91% 84% Capital Providers 16% Service Providers 28% Equity Developers Real Estate Investment Trusts Investment Managers Opportunity Funds Pension Funds Private Investors Service Providers Appraisers Brokers Accountants Consultants Academia Government Note: Percentages in chart based on an analysis of Reis customer list at December 31,

14 Reis SE Product Overview Product Overview Reis Subscriber Edition (Reis SE) is our primary webbased delivery platform for market and property level reports. Reis SE currently has 1,007 enterprise subscribers. The average annual subscription fee is between $35,000 and $40,000. Annual and multi-year subscriptions range from $1K to $1M+ depending on anticipated usage and what the subscriber is entitled to. The product can be entitled at the user or account level to support customized access by selected markets, property and report types and analytical modules. 14

15 Reis SE Report Types Report Types Market and Submarket Reports: Provide trends and forecasts on critical performance criteria such as rent, vacancy, inventory, class cuts and eco/demo variables at the metro and submarket levels. Rent Comparables: Property-level performance data such as rents and vacancies, as well as comp group summary statistics and geocode mapping. Sales Transactions: Timely tracking of sales transactions (including Hotels) along with buyer, seller, price and pro forma cap rates in over 277 metropolitan areas. New Construction: Tracking of all planned, proposed, and under construction projects as well as lease up velocity for newly completed construction. Executive Briefing Reports: Instantly translate key conclusions from Reis data and charts into a straightforward narrative that takes the form of an analyst s report. 15

16 Reis SE Key Features Key Features Single Property Valuation: Automated Valuation model (AVM) utilizes three valuation methods discounted cash flow, direct capitalization and sales price per square foot. Transaction Analytics: CRE capital market trends, including market level trend information on buyers, sellers, transaction prices and cap rates. Property Sales Real Estate News and Commentary: Executive Briefings, the Reis Observer and news stories selected by Reis analysts. Alerts: Customizable alerts that let users receive proactive updates on changing market conditions, transactions of interest and new construction projects. 16

17 ReisReports Product Overview Product Overview ReisReports is designed to meet the needs of smaller enterprises, professional investors, brokers and appraisers. Prospects: Prosumers, small businesses (<$5M) and individual appraisers and brokers. Business Model: Access to high quality market research and property comparables at a low cost. Anti-Cannibalization: Key differences in report types, features, and limits on the number of reports ensures upsell opportunities for Reis SE. Monthly Subscriptions: generally ranging up to $150; annual subscriptions are also available. 17

18 ReisReports Key Features Key Features Push Content: Automatically tracks the markets/property types a user is interested in and s them when new content is available. Personalized Reports: Users can add their corporate logo, picture and name to reports. Video Content: Designed to minimize research time, educate and attract prospects. Credit Card Product: No sales force needed except for upsell opportunities. 18

19 Mobiuss Product Overview Product Overview Launched in 2013 and developed in conjunction with Opera Solutions experts in Big Data. Loan-level portfolio analysis and surveillance tool that enables clients to quickly and thoroughly assess portfolio risks. Property valuation, credit analysis, stress testing and benchmarking. Targeted to both debt and equity capital providers and banking institutions with significant CRE loan exposure. Pricing varies by client and portfolio size; ranges from low tens of thousand of dollars into the hundreds of thousands of dollars per year. 19

20 Mobiuss Key Features Data Management Upload and manage loans and portfolios Ensure quality with standard templates and auto-validation Signals combined with advanced visualization, contextualizing insights and facilitating action Portfolio Analysis Analyze credit metrics and cash flows over time Compare results for each forecasted scenario Surveillance Stress Testing Quickly understand property, loan and portfolio characteristics, trends and forecasts Instantly identify drivers and concentrations of risks Quantify impact of market, economic and loan performance stress scenarios Apply pre-loaded regulatory stress tests Reporting Create reports for risk, board and regulatory reviews Customize extracts of market, loan and portfolio data Collaboration Share portfolios, scenarios and reports Standardize analyses, reports and scenarios 20

21 Growth Opportunities Content Expansion Seniors Housing May 2014 Release Next Asset Class: Student Housing Potential additions: Data Centers Medical office Hotel Land International markets Analytical Tools Mobiuss CRE CRE-backed Securities: REITs CMBS Reis-timates summary values for millions of CRE properties Distribution Channels ReisReports Data redistribution Custom data/feeds Acquisitions Regional data vendors (roll-up strategy) Software providers: Property Mgmt. Cash flow Budgeting Valuation Appraisers 21

22 Financial Performance 22

23 Historical Reis Services Performance Fiscal Years 2006 to 2013 (in millions) $40 $35 $30 $25 $20 $15 $10 $5 $ % 44.6% 44.9% 39.3% 39.9% 40.9% % % % 80% 70% 60% 50% 40% 30% 20% 10% 0% EBITDA Revenue Margin Note: Results relate to the Reis Services segment. Please see Reis s SEC filings for information relating to Reis s consolidated results. 23

24 Financial Performance Metrics Reis Services Segment First Quarter For the Years Ended December 31, ($ in thousands) (Unaudited) As reported: Increase Increase Revenue $ 9,946 $ 8,234 $ 1, % $ 34,721 $ 31,229 $ 3, % EBITDA $ 4,066 $ 3,277 $ % $ 14,307 $ 12,762 $ 1, % EBITDA Margin 40.9% 39.8% 41.2% 40.9% Note: EBITDA is a non-gaap measure that senior management of Reis uses to measure operational and management performance, and may be appropriate for investors to use as a supplement to reported GAAP basis financial information for the Reis Services segment. Please see our March 31, 2014 Quarterly Report on Form 10-Q, filed with the SEC on May 1, 2014 and our December 31, 2013 Annual Report on Form 10-K, filed with the SEC on March 6, 2014, for cautionary language about the use of EBITDA and reconciliations of income from continuing operations to EBITDA. Please also see that filing for information relating to Reis s consolidated results and reconciliations to Adjusted EBITDA on a consolidated basis. March 31, 2014 TTM: Revenue = $ 36,433 EBITDA = $ 15,096 Margin = 41.4 % Annualized First Qtr 2014: Revenue = $ 39,784 EBITDA = $ 16,264 Margin = 40.9% 24

25 Balance Sheets (In thousands) Condensed Balance Sheet Data March 31, 2014 December 31, 2013 Assets Cash $15,788 $10,560 Accounts Receivable, Net 5,124 11,387 Prepaid and Other Current and Non- Current Assets 1,630 1,619 Goodwill and Intangible Assets Deferred Tax Assets, Current and Non-Current 70,437 23,419 70,512 23,789 Total Assets $116,398 $117,867 Liabilities and Stockholders Equity Debt (A) $ $ Deferred Revenue (B) 19,251 20,284 Other Liabilities 3,159 4,712 Total Liabilities 22,410 24,996 Stockholders Equity 93,988 92,871 Total Liabilities and Stockholder s Equity Common Shares Outstanding $116,398 11,102 $117,867 10,916 (A) The Company has $10 million credit revolving facility, expiring on October 16, 2015 with an interest at a rate of LIBOR % per annum. (B) Aggregate Revenue Under Contract (which is deferred revenue, plus future revenue under non-cancellable contracts for which we do not have the contractual right to bill) aggregated $40,089 and $40,330 at March 31, 2014 and December 31, 2013, respectively. At March 31, 2014, $27,009 relates to amounts under contract that will turn into revenue in the forward twelve month period through March 31,

26 DRAFT Investor Highlights Executive Summary Unique Proprietary Databases: Continuing development of three curated databases with a 34 year history of data. Growth Opportunities: Expanding to new addressable markets through ReisReports, Mobiuss and agreements with leading financial information vendors. Excellent Revenue Visibility: Recurring revenue, digital delivery, subscription model (not ad-based). Strong Business Fundamentals: Our high renewal rates, enviable EBITDA margins and cost structure fuel significant cash flow creation. Significant Management Focus: Management and board members own approximately 25% of the company. Opportunities: Attractive acquisition target for large information and media companies. 26

27 Reis, Inc. 530 Fifth Avenue, 5th Floor New York, NY (212) Lloyd Lynford, CEO Mark P. Cantaluppi, CFO