RISMEDIA, November 11, 2010—Realogy Corporation, a global leader in real estate and relocation services, reported results for the third quarter ended September 30, 2010. According to the company, Realogy’s net revenue for the third quarter of $1.1 billion decreased 10% compared to the same period in 2009. For the quarter, Realogy recorded net loss attributable to the Company of $33 million. Reported EBITDA for the quarter was $177 million. EBITDA before restructuring and other items for the quarter was $173 million, a decline of $25 million year-over-year due primarily to a reduction in home sale transactions.
“Our emphasis on growing our businesses has produced results,” said Richard A. Smith, Realogy’s chief executive officer. “The Realogy Franchise Group added new franchisees and sales associates with $264 million of gross commission income (GCI) year-to-date, including Realogy’s largest conversion on record with the addition of Mason-McDuffie Real Estate in Northern California to the Better Homes and Garden Real Estate brand in September. NRT acquired approximately $30 million in GCI year-to-date, including its expansion into Philadelphia with the acquisition of Coldwell Banker Preferred in the beginning of October. In addition, NRT has recruited new sales associates who collectively generated more than $60 million in gross commission income during the last 12 months.”
According to the company, following the second quarter expiration of the federal tax credit for home purchases, Realogy’s core business drivers declined during the third quarter. The number of home sale transactions decreased 19% year-over-year at the Realogy Franchise Group (RFG) and decreased 25% at NRT, the company-owned brokerage unit. Offsetting these declines, the average home sale price increased at both RFG and NRT in the third quarter by 4% and 12% year-over-year, respectively, outperforming the market as reported by the National Association of Realtors (NAR) due to mix of business. Cartus experienced a 30% increase in relocation initiations primarily due to increased volume from corporate clients including incremental business from the Primacy Relocation acquisition. Title Resource Group had a 21% increase in refinance title and closing units that partially offset a 25% decrease in its resale title and closing units and a 2% decline in the average price per closing unit.
“The improvement in home sales aided by the Home Buyer Tax Credit in the second quarter clearly did not survive the program’s conclusion,” added Smith. “That said, we do believe it contributed to more stabilized pricing.”
“The uncertainty created by the disruptions in the foreclosure review process could further complicate an already fragile housing market,” said Anthony Hull, Realogy’s chief financial officer. “While we have not seen any significant national impact caused by the uncertainty in the REO market, we continue to monitor foreclosure developments and their potential effect on our business.”
Despite anticipated weak year-over-year comparisons in the fourth quarter 2010, the sequential seasonally adjusted annualized rate (SAAR) of home sales in the fourth quarter is anticipated to increase between 7-8% according to Fannie Mae and NAR.
“For the next 4 quarters, we believe the sequential SAAR data will be the best gauge of the housing market on a comparative basis because the Home Buyer Tax Credits in the fourth quarter of 2009 and the second quarter of 2010 created swings in year-over-year comparisons that are not representative indicators of the direction of the housing market,” added Hull. “We are seeing gains in sequential monthly closed sales as reported by NAR, which, if continued for the balance of this year and into 2011, could result in an improved housing market, particularly in the second half of 2011.”
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