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Realogy reports $50 million loss
Negatively affected by $45 million of non-cash equity losses and impairment charges from its 49 percent investment in PHH Home Loans LLC, Realogy Corporation recently reported third quarter 2008 losses of $50 million. The company had third quarter 2008 net revenue of $1.3 billion, earnings before interest, income taxes, depreciation and amortization (EBITDA) of $129 million, and a net loss of $50 million. Realogy’s EBITDA was also affected by $15 million of restructuring charges. The net loss is after $152 million of interest expense and $54 million of depreciation and amortization expense.
“The current economic conditions of this country are weighing heavily on consumer confidence and thus on the housing industry,” says Richard A. Smith, Realogy’s president and CEO. “We’re not immune from the macroeconomic shocks to the credit and financial markets. In spite of these extraordinarily difficult circumstances, we have remained focused on reducing our operating costs and investing in the growth of our business.”
In the third quarter, Realogy’s real estate business drivers experienced declines that were in line with the National Association of Realtors® and Fannie Mae. During this period, Realogy’s year-over-year home sale transaction sides declined by 15 percent at the Realogy Franchise Group (RFG) and were down by 10 percent at NRT, the Company’s owned brokerage unit. Likewise for the third quarter, RFG’s average home sales price decreased 7 percent and NRT’s average home sale price declined 12 percent compared to the same period in 2007. Price declines were driven by high inventory levels, the increased prominence of short sale and foreclosure activity and, particularly as it relates to NRT, a relative shift in the mix of business from higher price ranges to lower-and mid-range homes.
As of September 30, 2008, the Company’s senior secured leverage ratio was 4.8 to 1. This is 0.6x below the maximum 5.35 to 1 ratio required for Realogy to be in compliance under its Credit Agreement. The senior secured leverage ratio is determined by taking Realogy’s senior secured net debt of $3.2 billion at September 30, 2008 and dividing it by the Company’s Adjusted EBITDA of $661 million for the 12 months ended September 30, 2008.
We have this self-egrandizing habit, here in Manhattan and the Fabulous Hamptons of referring to real estate “agents” as “Brokers”. I guess it makes us feel better about what we do, but technically, the principals of the real estate agencies are the brokers and all others are associate brokers or sales agents.
That being said, whether your a broker or an agent, you gotta pay yer taxes folks! md
Patrick Brennan, a senior associate broker at the Corcoran Group, was initially charged with two misdemeanor counts for failing to pay taxes in 2004 and 2005, the DA’s office said. Considered a minor offense, the charge was reduced to what’s called an adjournment in contemplation of dismissal.
If Brennan files an accurate tax return for two years, pays taxes owed plus penalties and interest, and stays out of legal trouble for six months, the case will be dismissed, the DA’s office said. Otherwise, the DA will prosecute the case.
Two other Corcoran brokers similarly saw their charges reduced: Corcoran vice president and associate broker, Gabriel Bedoya, who also has a real estate investment firm, was initially hit with two misdemeanors for allegedly living tax-free in 2004 and 2006; Dennis Hughes, a senior vice president and associate broker at Corcoran, was originally charged with a misdemeanor for allegedly failing to pay taxes in 2006.
Miriam Sirota, a senior vice president and associate broker at Corcoran, will be arraigned on tax evasion charges on June 3. The DA’s office said it would not discuss details of that case until then.
The brokers are part of a group of 31 real estate professionals in the state who the DA’s office said failed to report more than $13 million in income and evaded more than $650,000 in state income taxes.
As independent contractors, real estate brokers are responsible for filing their own personal income taxes. Brokers who do not file returns for three consecutive tax years face felony charges, while those who fail to file in a single tax year or non-consecutive years face misdemeanor charges. The first three misdemeanor charges equal one felony count.
As reported by The Real Deal in March, convictions of felony charges could to lead as much as four years in a state prison, while misdemeanor charges could lead to prison sentences of up to a year.
Two brokers alleged to have been delinquent in tax payments work for Brown Harris Stevens.
High-profile luxury broker Kathy Sloane, a senior vice president and managing director at Brown Harris Stevens, is suspected of tax evasion but has not yet been arraigned on charges.
Scott Moore, a Brown Harris Stevens senior vice president, was arraigned on five felony counts in court last Tuesday. He allegedly evaded paying taxes between 2000 and 2006.
Another defendant, Sotheby’s International Realty’s Camille McKinley, an associate broker, was charged with five felonies for delinquency between 2000 through 2006, the DA’s office said. She is slated to return to court next Monday.
Joseph Carris, an associate broker at Warburg Realty Partnership, was charged on April 15 with two felonies for tax evasion between 2002 and 2005. He pled guilty to a misdemeanor, paid fines and filed his real tax returns.
Sarah Brady, an office manager at Coldwell Banker De Simone Realty in Staten Island, also made the list of defendants. She has not yet been charged.
Brooklyn-based broker Solomon Knopf was charged with a felony for failure to file tax returns between 2004 and 2006. His case is still pending, the DA’s office said.
The lone commercial broker on the list, Richard Brickell, a vice president at Joseph P. Day Realty Corporation, was charged with two misdemeanor charges for evasion in 2005 and 2006. The charges were reduced last month.