Realogy Corp., the real estate broker whose parent company filed to raise as much as $1 billion in an initial public offering, reported a wider second-quarter loss as interest and other expenses wiped out a revenue increase.
The net loss was $25 million, compared with $22 million a year earlier, the Parsippany, New Jersey-based company said in a statement today. The results included $176 million of interest expenses, up from $161 million. Revenue increased 11 percent to $1.31 billion.
Realogy is well-positioned to take advantage of the recovery in residential property, parent company Domus Holdings Corp., co-owned by Apollo Global Management LLC (APO) and Paulson & Co., said in a June regulatory filing. Realogy, which runs the Century 21, Coldwell Banker and Sotheby’s International brands, is going public as home prices find a bottom after the worst housing slump since the 1930s.
The Realogy Franchise Group’s number of transaction customers increased 9 percent in the second quarter from a year earlier, while the NRT brokerage unit’s jumped 13 percent. Realogy Franchise Group’s average home sale price increased 6 percent, the company said.
“We believe that the U.S. residential real estate market is continuing to experience the beginning of the recovery,” Realogy Chief Executive Officer Richard Smith said in the statement. “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.”
Home prices in 20 U.S. cities decreased 0.7 percent in the 12 months through May, the smallest decline since September 2010, the S&P/Case-Shiller index showed on July 31.
Realogy’s earnings before interest, taxes, depreciation and amortization rose 8.6 percent to $203 million. Income from commissions increased to $983 million from $873 million. Franchise fees climbed to $76 million from $70 million.
This quarter, home sales are likely to increase “at a high single-digit pace,” and the average home sale price will climb in the “mid-single digits as indicated by our preliminary July results,” Chief Financial Officer Anthony Hull said in today’s statement.
Apollo, the New York-based private-equity firm run by Leon Black, will hold a majority of the voting common stock following the offering. Apollo paid $6.6 billion for Realogy in the biggest leveraged buyout of a real estate services firm on record, in a deal announced in December 2006, five months after home prices peaked.
Realogy had about 13,500 franchised and company-owned real estate brokerage offices with 238,500 sales representatives as of June 30. It also owns a relocation-services company and provides title and settlement services.
To contact the editor responsible for this story: Kara Wetzel at email@example.com