Realogy Corporation keeps it real, or more precisely, real estate. One of the biggest names you've never heard of in property brokerage, the company operates through its more familiar subsidiaries Century 21, Coldwell Banker, Sotheby's International Realty, NRT, and ERA. It also licenses the Better Homes and Gardens brand from Meredith Corporation. There are about 14,000 company-owned and franchised Realogy offices around the world. In addition to residential brokerage and corporate relocation services, it offers title settlement and research through Title Resource Group. Affiliates of Apollo Global Management own Realogy. In 2012 parent company Domus Holdings filed to take itself public.
Domus filed its intial public offering with the hopes of raising up to $1 billion. The company will use proceeds from the offering to repay debt. The timing of the offering coincides with an expected recovery in the housing sector, which some believe will begin adding to economic growth this year. After the offering, Apollo Management will continue to hold a controlling stake in the company.
The US housing market has been in a prolonged downturn, which initially began in the second half of 2005. The number of homes sold and home prices have dropped significantly since then. As a result, Reology's revenues declined. The company struggled with mounting debt levels and continuing poor sales into 2009. That year Apollo increased its investment in the company and cut its own costs to maintain operating efficiency.
Realogy's earnings recovered slightly in 2010, but sales were flat the following year. Revenues increased slightly (only by $3 million) in 2011. The increase was due mostly to higher sales in the relocation and title and settlement services segment. However, home sale transaction volume continued to decrease and total expenses increased (up 11%), leading to a $441 million net loss for Realogy in 2011.
Realogy completed a series of refinancing transactions in early 2011 and 2012. The deals were designed to improve the company's capital structure and help improve its financial flexibility.
The company is banking on long-term demand for housing to spur growth. Several trends including home affordability, low interest rates, an improving US economy, and population growth indicate that the housing market will return to full health soon.
Internationally, Realogy has made some inroads into expansion in the Asia/Pacific region. It owns a stake in Century 21 China Real Estate, an independent firm that franchises the Century 21 name. In 2010 the first Sotheby's office in Hong Kong opened its doors; the firm acquired licensing rights to operate in Australia the following year.
Realogy was formed in 2006 after it was spun off from Avis Group (then called Cendant). Apollo's 2007 leveraged buyout of Realogy was reportedly valued at $9 billion. – less