Real estate brokerage and franchise giant Realogy Corp., has priced its initial public offering of stock in the company today at $27 per share, clearing the way for public trading of company common stock on the New York Stock Exchange Thursday morning under the ticker "RLGY."

Realogy filed paperwork with securities regulators on Sept. 27 saying it expected to price the offering at $23 to $27 per share, and raise up to $1.24 billion before expenses. The offering priced at $27, Realogy announced today.

At $27 per share, the IPO of 40 million shares will raise $1.08 billion before expenses. Underwriters have the option to purchase up to 6 million additional shares at the offering price, minus discounts and commissions, which would increase the total raised to $1.24 billion before expenses.

Realogy has said it will use proceeds of the offering primarily to repay more than $7 billion in outstanding debt, much of which was incurred when the company was taken private by hedge fund Apollo Management in 2006.

All told, the IPO will wipe out nearly $3 billion in debt, as holders of nearly $2 billion convertible notes trade them in for stock in the company. 

As the largest real estate company in the U.S., Realogy’s IPO could also be a bellwether for confidence in the U.S. housing market.

Real estate portals Zillow and Trulia raised more than $240 million last month in sales of stock to investors. Trulia raised $89.3 million after expenses in an IPO that closed Sept. 25. Zillow raised $156.7 million in a secondary offering that closed Sept. 24.

Today, Zillow CEO Spencer Rascoff wrote "Rooting for our friends at Realogy #IPOs" on Twitter.

"It’s a hallmark transaction in real estate," said Steve Ozonian, chief real estate officer of Carrington Holding Company, which owns brokerage Atlanta and Pacific Real Estate LLC.

For one, Ozonian said, the IPO will show how much confidence investors have in the nascent housing recovery. Ozonian said he’s also watching to see if Realogy’s conglomeration model of real estate will survive going forward, or whether investors see real estate tech upstarts like Zillow and Trulia as the wave of the future.

Realogy’s NRT LLC subsidiary is the nation’s largest broker, but Realogy’s most profitable business is providing franchise services like marketing, technology and training to independently owned brokerages. Realogy’s franchise companies include Century 21 Real Estate, Coldwell Banker Real Estate, ERA Real Estate, Sotheby’s International Realty, Coldwell Banker Commercial, and Better Homes and Gardens Real Estate.

Realogy says brokerages affiliated with or owned by the company handled 26 percent of U.S. real estate transactions in 2011.

"This (IPO) is the pure way to benefit from the housing recovery," said Realogy Chairman, CEO and President Richard Smith during the company’s IPO road show. "We offer the broadest exposure to the U.S. markets."

Realogy is also a leading player in relocation services, and operates mortgage and title and settlement services businesses. Realogy says its relocation company, Cartus, is the nation’s largest. It operates a title and settlement service company, Title Resource Group, and mortgage provider PHH Home Loans, a joint venture with PHH Corp.

NRT is the largest brokerage in the U.S. completing 255,410 transaction sides (representing the buyer or seller, or both, in a closed deal) in 2011 on homes valued at $108 billion. Its nearest competitor, HomeServices of America, closed 113,556 transaction sides in 2011 on homes valued at $31 billion.

Currently, Realogy is owned by Apollo (via its affiliates and subsidiaries), which has had a long history with the company. In 1997, Apollo formed NRT with a precursor of former Realogy parent company Cendant Corp. In 2002, Cendant bought out Apollo to become sole owner of NRT.

After Cendant spun off Realogy as its own company in 2006, Realogy spent several months as a public company traded on the NYSE under the ticker "H." In spring of 2007, Apollo purchased Realogy in a heavily leveraged deal, taking it private again.

If Realogy’s underwriters exercise an option to purchase all 6 million additional shares available to them, Apollo will own 48 percent of Realogy’s common stock. If Apollo no longer owns a majority interest in Realogy, it will no longer be considered a "controlled company" exempt from certain corporate governance requirements, the company revealed in updating its S-1 registration statement on Oct. 5.

Realogy will then be required to appoint a majority of independent directors to its board, and also ensure that the company has a compensation committee and a corporate governance committee each composed entirely of independent directors, within a permitted "phase-in" period.

But as the largest shareholder, Realogy said, Apollo "will continue to be able to significantly influence or effectively control our decisions," and have the ability "to prevent any transaction that requires the approval of our board of directors or our stockholders, including the approval of significant corporate transactions such as restructurings, mergers and the sale of substantially all of our assets."

Realogy was on shaky ground in 2009. Some speculated that it would not survive the year after posting a $1.9 billion loss in 2008.

But Apollo re-invested in Realogy so it wouldn’t default on its debt, reducing expenses and restructuring its debt so that the company had more time to stabilize after the housing crisis. Thanks to this "financial wizardry" by Apollo, Realogy is stable enough to pull off an IPO, law professor Steven Davidoff said, writing for the New York Times’ Dealboook. Davidoff says if Realogy emerges from the IPO on solid footing, it would be a "Hollywood-like comeback."

Some industry watchers are wary of Realogy’s debt. Realogy posted a $441 million net loss on $4.1 billion in revenue in 2011, after paying $666 million of interest expenses and recording $186 million in charges for depreciation and amortization. Adjusted earnings before interest, taxes, deductions and amortization (EBITDA) totaled $443 million.

"That’s typical Apollo, they squeeze a company, take out as much as they can to pay dividends and then they basically present the carcass for an IPO," said Francis Gaskins, founder and editor of IPO Desktop, in a video interview with The Street. He doesn’t recommend the stock.

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