Realogy Corporation, a global leader in residential real estate services, reported results yesterday for the second quarter ended June 30, 2012. Realogy’s net revenue for the second quarter was $1.3 billion, an increase of 11 percent compared to 2011. Realogy’s EBITDA for the quarter was $203 million, a year-over-year increase of $16 million, or 9 percent.
These improvements were due largely to an increase in sales volume (transaction sides times average sale price) at both the franchised and company-owned real estate services segments. For the quarter, Realogy recorded a net loss attributable to the Company of $25 million, which was after $176 million of interest expense and $44 million of depreciation and amortization.
For the six months ended June 30, 2012, net revenue totaled $2.2 billion, an increase of 9 percent compared to the first half of 2011. Realogy’s EBITDA for the first six months of 2012 was $233 million, an increase of 32 percent compared to the first six months of 2011. Realogy’s Adjusted EBITDA for the first six months of 2012 was $274 million, an increase of 14 percent compared to 2011, with a net loss attributable to the Company of $217 million.
“We believe that the U.S. residential real estate market is continuing to experience the beginnings of the recovery that we reported in the first quarter of 2012,” says Richard A. Smith, Realogy’s chairman, chief executive officer and president. “We expected to see the continued improvement in both home sale units and average sales price, with price increases in most major markets being heavily influenced by reduced inventory. Those expectations were realized in our second quarter results, which support our forecasted early-stage recovery.”
Looking at Realogy’s core business drivers in the second quarter, Realogy Franchise Group (RFG) had a year-over-year 9 percent increase in homesale transaction sides, while NRT, the company-owned brokerage unit, had a 13 percent year-over-year increase. In comparison, the National Association of Realtors (NAR) reported that existing home sales increased by 9 percent compared to second quarter 2011. RFG’s average home sale price increased 6 percent in the second quarter, which was consistent with NAR’s 6 percent reported increase in national average sales price. NRT’s average home sale price was flat compared to second quarter 2011, due to its mix of business that shifted to more lower-priced homes. In our relocation business, Cartus experienced a 5 percent year-over-year increase in initiations and a 9 percent increase in broker referrals. As for our title and settlement services segment, Title Resource Group experienced a 14 percent increase in purchase title and closing units and a 64 percent increase in refinance title and closing units. Those combined unit gains more than offset a 5 percent decrease in the average fee per closing unit due to the increase in refinance volume.
“Our closed homesale transaction sides continued to increase at an accelerated pace in the second quarter,” says Anthony E. Hull, Realogy’s CFO and treasurer. “We believe that the combined Realogy average sale price increase was driven by lower levels of home inventory in many markets, greater overall demand, and fewer distressed sales than we saw last year. Looking ahead, we anticipate our third quarter 2012 home sales to increase at a high single-digit pace ahead of last year on a combined Realogy basis, and average home sale price to increase in the mid-single digits as indicated by our preliminary July results.”
For more information, visit http://www.realogy.com/.
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