Domus Holdings Corp., the parent of Realogy Corporation, has announced that it has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission (“SEC”) relating to a proposed primary initial public offering of shares of its Class A common stock.
The number of shares to be offered and the price range for the proposed $1 billion offering have not yet been determined. The company intends to use the net proceeds from the offering to repay outstanding indebtedness.
In its filing, the company stated that the real estate market is at the beginning of a recovery and the company is well-positioned to benefit as the market returns over the long term.
“We believe that our business is well positioned to benefit from a sustained recovery in the residential real estate market as a result of our scale, market leadership, breadth of complementary service offerings and operations, and the substantial brand equity of our portfolio of brokerage brands,” said the company in its filing. “Furthermore, since the downturn in the residential real estate market began, we have implemented a number of actions which we believe have fundamentally improved our operations and enhanced our ability to generate significant growth in our Adjusted EBITDA and free cash flow upon a sustained recovery in the residential real estate market.”
The company filing stated that the organization has reduced its operating cost base by approximately $500 million since 2005 by streamlining business units, consolidating offices and increasing the use of online listings distribution, while improving the infrastructure necessary to preserve its service and enhancing its ability to capitalize on a recovery.
“We have continued to invest in our businesses to further strengthen our long-term growth prospects in a recovering housing market, including growing our franchise network through adding brokers to our existing franchise brands, adding a new franchise brokerage brand, Better Homes and Gardens® Real Estate, recruiting sales associates and completing several strategic acquisitions,” said the company in its filing.
“We believe that we are experiencing the beginning of a recovery in the residential real estate market. In the first five months of 2012, on a company-wide basis, our volume of completed home sales (i.e., average home sale price times number of home sale transactions) increased 12% compared to the first five months of 2011. According to NAR, in April 2012, existing home sale transaction volume (i.e., median home sale price times number of home sale transactions) increased approximately 17% as compared to April 2011. Furthermore, the most recent NAR forecast estimates that the volume of existing home sales will increase 12% for the full year 2012 compared to 2011 and increase a further 10% in 2013 compared to 2012.”
If the offering is consummated, all of Realogy’s Convertible Notes in the aggregate principal amount of approximately $2.1 billion would be converted into Class A common stock or redeemed at 90% of the principal amount thereof on or about the closing of the offering, and holders of approximately $2 billion aggregate principal amount of such Convertible Notes have indicated that they intend to so convert.
If the offering is consummated with net proceeds of $1 billion and at least $2 billion aggregate principal amount of the Convertible Notes are converted into Class A common stock, the company expects its overall indebtedness would be reduced by approximately $3 billion. Domus Holdings Corp. does not conduct any operations other than with respect to its ownership of Realogy.
A registration statement relating to these securities has been filed with the SEC, but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. For more information, click here.
Copyright© 2015 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.
Content on this website is copyrighted and may not be redistributed without express written permission from RISMedia. Access to RISMedia archives and thousands of articles like this, as well as consumer real estate videos, are available through RISMedia's REsource Licensed Content Solutions. Offering the industry’s most comprehensive and affordable content packages. Click here to learn more! http://resource.rismedia.com