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Realogy Reports Results for Full Year 2008

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RISMEDIA, February 27, 2009- Realogy Corporation, a global provider of real estate and relocation services, reported results for the year ended December 31, 2008. Realogy generated $109 million of cash flow from operations in fiscal 2008 and, as of December 31, 2008, had $402 million of readily available cash. The Company had full year 2008 net revenue of $4,725 million, a net loss of $1,912 million and earnings before interest, taxes, depreciation and amortization (EBITDA) of negative $1,449 million. EBITDA adjusted for special items in 2008 was $411 million and Adjusted EBITDA pursuant to our credit agreement was $657 million.

Realogy’s results were impacted by an impairment charge of $1,789 million. This non-cash charge to goodwill, intangible assets and investments on our balance sheet has no impact on the Company’s day-to-day operations, cash position, liquidity or debt agreements.

Full Year 2008

Net Loss ($1,912)

EBITDA ($1,449)

Special Items:

Impairment of goodwill, intangible assets and investments in unconsolidated entities: 1,789
PHH Home Loans impairment recorded in equity in (earnings) losses: 31
Legacy (benefits)/costs (20)
Restructuring costs 58
Merger costs 2
Total special items 1,860
EBITDA adjusted for special items $411
Adjusted EBITDA $657

“There are several non-operational items in Realogy’s full-year reported EBITDA, including non-cash impairment charges, merger and legacy costs, as well as restructuring charges that were incurred to improve profitability,” said Anthony E. Hull, Realogy’s Chief Financial Officer. “If you exclude these mostly non-cash items, you gain a more accurate indication of the performance and health of our businesses. For fiscal 2008, Realogy generated over $100 million of cash from operations in what was an extremely challenging real estate market. Furthermore, with the movement of interest rates, our cash interest is expected to be reduced by over $100 million in 2009 compared to 2008.”

For the year ended 2008, Realogy’s year-over-year home sale transaction sides declined by 18% at the Realogy Franchise Group (RFG) and were down by 16% at NRT, the Company’s owned brokerage unit. RFG’s average home sales price decreased 7% and NRT’s average home sale price declined 10% compared to the full year 2007. These price declines were driven by various factors, including high inventory levels, the increased prominence of short sale and foreclosure activity and, particularly as it relates to NRT, a meaningful shift in the mix of business from higher price ranges to lower- and middle-range homes. At Cartus, client initiations were up 3% due to organic global growth and new client signings.

“We continue to focus on investing in growth in these challenging times, and in 2008 successfully signed new franchisees who generated $420 million of gross commission income during the previous 12 months, which includes our newest brand, Better Homes and Gardens Real Estate,” stated Chief Executive Officer Richard A. Smith. “As the largest provider of real estate and relocation services, participating in one out of every four existing home real estate transactions, based on volume, Realogy continues to affirm its leadership position in the industry. We have used our prominence in the industry to impress upon Congress, Department of the Treasury and the White House the economic policies we believe will stimulate housing and thus our economy.”

“We join Richard and his team in recognizing the challenging task before management in navigating through this extremely difficult time in housing and our nation’s economy,” said Marc Becker, Partner, Apollo Management L.P. “We are impressed with their efforts to remain in the forefront of the industry while optimizing their business model. The premise of our original investment in Realogy has not changed and we look forward to supporting the company through what will likely be another difficult year in housing.”

Covenant Compliance:
As of December 31, 2008, the Company’s senior secured leverage ratio was 4.95 to 1. This is 0.4x 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 $3.25 billion at December 31, 2008 and dividing it by the Company’s Adjusted EBITDA of $657 million for the 12 months ended December 31, 2008. Apollo has advised the Company that, based upon management’s current financial outlook, it will provide financial assistance to Realogy, to the extent necessary, in meeting its senior secured leverage ratio and cash flow needs through December 31, 2009. Based upon its current financial forecast and, to the extent necessary, Apollo’s financial assistance, the Company believes that it will continue to be in compliance with the senior secured leverage ratio during the next 12 months.

Balance Sheet Information as of December 31, 2008:
• Cash and cash equivalents of approximately $437 million
• Outstanding revolving credit facility balance of approximately $515 million
• Securitization obligations of approximately $703 million compared with $1,014 million at December 31, 2007
• Relocation receivables due from our corporate clients and relocation properties held for sale of approximately $787 million compared with $1,213 million at December 31, 2007.

As of December 31, 2008, Realogy had a net revolver debt balance of $113 million with $515 million revolver drawn less $402 million of readily available cash, which is included in cash and cash equivalents of $437 million.

Realogy’s revolver matures in April 2013 and permits the Company access to up to $750 million of total borrowing.

For more information, visit www.realogy.com.

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