World’s Largest Real Estate Group Shows Positive Signs of a Recovery

Realogy Corporation, the world’s largest real estate franchise group, last week reported their results through March 31^st. The one-liner is that the Q1/10 revenue of $819 million is up 18% over the same period last year.

The growth is principally attributed to the move-up, higher priced markets and a comparatively weak first quarter in 2009. According to Realogy president and CEO Richard A. Smith, the company also saw gains in the average home sale price during the last year.

Smith said that increased momentum in terms of home sale contracts opened during the months of March and April, due to the homebuyer tax credit, will have a positive impact on sales numbers in Q2/10. The balance of the year however, still looks uncertain at this stage due to traditional macro factors such as weak job growth and consumer confidence.

The Numbers

EBITDA for the period was $11 million, an improvement of $73 million year-over-year, while Realogy still recorded a net loss attributable to the Company of $197 million.

As of March 31, 2010, the Company’s senior secured leverage ratio was 4.51 to 1, which is below the 5.0 to 1 maximum ratio required to be in compliance with their Credit Agreement. Realogy’s current senior secured net debt is $2.92 billion; they have no balance on their revolving credit facility and had $175 million of readily available cash.

The company saw a changing composition of home sale price points. For example subsidiary NRT, a subsidiary of Realogy Corporation, the nation’s largest residential real estate brokerage firm, saw average home prices climb from $356,000 for the same period last year to $418,000 in 2010. In the first quarter of 2010, home sales at price points over $750,000 represented 43% of NRT’s sales volume (up from 35% in Q1/09) while REO transactions at NRT dropped to 11% (from 19% in Q1/09).

Inside the Company

• Cendant spilt into four separate entities Q4/05 creating Realogy.  On August 1, 2006 Realogy became a self-operating company trading on the NYSE.

• By end of 2006 Realogy accepted an $8.5 billion buyout from Apollo Management and Realogy was delisted on April 10, 2007.
• Today Realogy owns and operates the following well known residential real estate brokerage brands: Better Homes and Gardens Real Estate, Century 21, Coldwell Banker, The Corcoran Group, ERA Real Estate and Sotheby’s International Realty.
• Realogy claims to collectively have 264,000 sales associates operating from approximately 14,900 offices (95% franchises) in 93 countries around the world.

• Realogy also owns NRT, is the largest residential real estate brokerage company in the nation. They company owns and operates numerous subsidiaries in some 35 of the nation’s largest metropolitan markets. Collectively the company owned stores have approximately 760 offices, 5,300 employees and 46,000 sales associates.

Whichever way you slice it, this is an impressive company, and with many excellent real estate brands in their stable, especially Coldwell Banker, Realogy remains the company to beat.

About the Author
Nineteen-time author Stefan Swanepoel publishes the annual Swanepoel TRENDS Report and the annual Swanepoel SOCIAL MEDIA Report. His Reports are widely regarded as the leading research on the most important business and technology trends impacting the real estate industry. For more information visit www.RETrends.com