Real estate franchise powerhouse Realogy Corp. said first quarter revenue was up 18 percent from a year ago, to $819 million, helping the company trim losses by 24 percent, to $197 million.
The company’s brokerages and franchises not only handled more "transaction sides" — representing a buyer or seller in a sale — but home prices in those transactions were up from a year ago, boosting commission revenue.
Transactions were up 11 percent at Realogy’s company-owned brokerages, to 52,532, and average home prices increased 17 percent, to $418,000. The company-owned brokerages, which are owned by NRT LLC and affiliated with Realogy franchise brands including Coldwell Banker, ERA and Sotheby’s International Realty, are focused on high-end markets.
Homes priced at $750,000 or above represented 43 percent of sales for NRT brokerages, up from 35 percent a year ago. The share of bank-owned property (REO) sales dropped from 19 percent a year ago to 11 percent.
At brokerages that are affiliated with a Realogy brand but not owned by the company, transaction sides were up 8 percent from a year ago, to 193,340, and the average home price increased 3 percent, to $188,478. In addition to Coldwell Banker, ERA and Sotheby’s, brokerages in the Realogy Franchise Group are affiliated with brands including Better Homes and Gardens Real Estate, CENTURY 21, and ONCOR International.
In a statement, Realogy president and CEO Richard A. Smith said that the boost provided by the homebuyer tax credit should stretch into the second quarter, but the outlook for the second half of the year is less certain.
"The third and fourth quarters for housing remain somewhat uncertain as they will be driven by traditional macro factors such as job growth, consumer confidence, and from a micro-economic perspective, the dynamics of local markets," Smith said.
Although Realogy has been able to reduce losses from $1.9 billion in 2008 to $262 million last year (see story), the first $197 million first quarter loss suggests the debt-burdened company has a ways to go before it returns to profitablity.
Realogy was acquired by an affiliate of private equity firm Apollo Management LP in April 2007, a highly leveraged deal that left the company deep in debt. A debt restructuring completed in September gave the company additional breathing room from creditors (see story).
Realogy said it had $2.92 billion in senior secured debt at the end of March, up slightly from $2.89 billion at the end of the year. But with an increase in earnings before interest, taxes, depreciation and amortization (EBITDA), the company’s 4.51-to-1 senior secured debt ratio was down from 4.66-to-1 at the end of 2009 and well within the 5-to-1 maximum stipulated in agreements with creditors.
What’s your opinion? Leave your comments below or send a letter to the editor.