The Real Deal Miami

Is Realogy overleveraged?

October 15, 2012 04:30PM

From left: Richard Smith of Realogy, Pamela Liebman of the Corcoran Group and Gary Malin of Citi Habitats

Shares jumped 22 percent in Realogy’s much anticipated IPO last week, but they “look overpriced,” according to a Barrons report cited by Reuters. Realogy — the largest residential brokerage franchisor in the world and Corcoran Group, Century 21 and Citi Habitats parent — priced its initial public offering at $27 per share Wednesday, to raise $1.08 billion through 40 million shares.

But $27 per share seemed overleveraged to Barrons, because “the company is valued at $4.4 billion and carries $4.5 billion in debt.”

“Put a still-generous multiple of 11 on next year’s projected cash flow and Realogy’s stock is valued at around $27,” said Barrons. “That’s 20 percent below current levels.”

The Parsippany, N.J.-based firm, which is headed by chairman and CEO Richard Smith, is be listed under the ticker symbol RLGY. [Reuters]Christopher Cameron