Realogy Corp. reported a $1.9 billion loss for 2008 Wednesday, but the debt-burdened company’s executives said they can count on financial assistance from private equity firm Apollo Management LP to stay in compliance with creditors and maintain cash flow through the end of the year.

Nearly all of the loss reported by Realogy — $1.79 billion — were noncash charges to goodwill, intangible assets and investments on the company’s balance sheet.

Most of the write-downs were related to the difference in the price paid by Apollo to acquire Realogy in 2007 and the current value of the company’s assets, said Chief Executive Officer Richard A. Smith.

The write-downs have more to do with the state of the economy than the health of the company, Smith said, and have no impact on the company’s day-to-day operations, liquidity or debt agreements.

Realogy generated more than $100 million of cash from operations on revenue of $4.7 billion in "an extremely challenging real estate market," said Chief Financial Officer Tony Hull.

Smith began a conference call with investors by addressing what he called "the elephant in the room" — speculation that Realogy will file for Chapter 11 bankruptcy protection.

Smith lashed out against what he characterized as an "uninformed press" and "wishful thinking" of competitors.

A blog published by U.S. News and World Report on Feb. 6 named Realogy one of "15 Companies That Might Not Survive 2009," citing Realogy’s difficulties in refinancing its massive debt.

Company spokesman Mark Panus responded to the report, saying Realogy had cut $350 million in overhead, and had the continued support and commitment of Apollo Management.

In a press release Tuesday, Realogy said that at 4.95-to-1, its debt ratio on $3.25 billion in senior secured debt remains within the maximum 5.35-to-1 ratio stipulated in its credit agreement. Realogy said Apollo has promised financial assistance if necessary to maintain the debt ratio and cash flow through Dec. 31.

In its annual report to investors, Realogy revealed it has a total of $6.76 billion in debts, and released numbers showing the impact the housing downturn has had on sales and commissions.

Within its franchise group, Realogy saw "transaction sides" — home sales in which it represented either the buyer or seller — decline by 18 percent, to 995,662. The average sale price fell 7 percent to $214,271. The franchise group includes the Better Homes and Gardens Real Estate, CENTURY 21, Coldwell Banker, The Corcoran Group, ERA, and Sotheby’s International Realty brands.

At NRT, the company-owned brokerage unit, transaction sides fell 16 percent, to 275,090, and average home-sale price was down 10 percent from 2007, to $479,301.

The price declines were driven by high inventory levels, increased short sale and foreclosure activity, and a "meaningful shift" in the mix of business from higher price ranges to lower- and middle-range homes, particularly at NRT, the company said.

The average broker commission rate within Realogy Franchise Group in 2008 was 2.52 percent, up slightly from 2.49 percent in 2007 and 2.47 percent in 2006. Commissions at NRT averaged 2.48 percent, up from 2.47 percent in 2007 but down from 2.62 percent in 2002.

Commission rates had been declining several basis points per year before 2006, the company said, but that effect was "more than offset by increases in home-sale prices."

From 2006-08, the average broker commission rate Realogy franchisees charge customers has remained stable, Realogy said, but the company expects "the modestly declining trend in average brokerage commission rates will continue" over the long term.

Realogy does not give guidance on future earnings, but company officials said they are in general agreement with projections by Fannie Mae that sales of existing homes will fall 4 percent in 2009, and that median home prices will see a 9 percent decline.

The annual report also revealed that Smith and other top executives took big pay cuts in 2008. Smith, whose salary, bonus, stock awards and options totaled $11.3 million in 2007, received $2.8 million in total compensation in 2008.

Realogy Franchise Group CEO Alex Perriello saw his compensation slashed from $3.34 million in 2007 to $1.03 million in 2008, while NRT CEO Bruce Zipf took a 70 percent pay cut in 2008, to $1.13 million, the report said.


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