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.