Elliman’s revenue rose 18%, after sales frenzy to avoid New York’s new transfer tax

Profits rose to $15.1M from $5.9M a year ago

National /
Aug.August 07, 2019 10:31 AM
Douglas Elliman chairman Howard Lorber (Credit: Getty Images and iStock)

Douglas Elliman chairman Howard Lorber (Credit: Getty Images and iStock)

Douglas Elliman’s revenue soared 18 percent during the second quarter as New York City buyers rushed to close deals before a new transfer tax went into effect July 1, parent company Vector Group said Wednesday.

The New York-based brokerage raked in $243 million during the quarter, compared to revenue of $205.6 million a year ago. Despite pressure on brokerage margins throughout the industry, Elliman reported net income of $15.1 million, up from $5.9 million, thanks to the flurry of sales in late June.

“A lot of people rushed to get deals done to avoid the increase,” Chairman Howard Lorber said during an earnings call Wednesday. Although the tax tacks an additional 1 percent to 4 percent on residential purchases, Lorber said the real estate industry “did a lot of lobbying” to avoid a more onerous, recurring mansion tax.

In addition to the transfer tax boost, Lorber said the market’s well-documented decline “has surely slowed down.”

Like other residential firms, Elliman has not been immune to competitive pressure, particularly from Compass, the SoftBank-backed firm valued at $6.4 billion after its latest funding round.

“There’s no question the margins are down, without question because of increased broker payouts,” said Lorber, who cited the impact on competitor Realogy’s stock price, which was trading around $5 per share on Wednesday morning, down from a 52-week high of $23.27 per share.

Lorber said he thinks Elliman has done “better than most” in moderating payouts to agents. “It’s still a very competitive marketplace for brokers right now, especially here in New York City.” During the second quarter, Vector made “moderate” cuts to some Douglas Elliman subsidiaries, said CFO J. Bryant Kirkland III.

Overall, Vector reported total revenue of $538.4 million for the second quarter, up from $481.5 million. Net income was $39.3 million compared to last year’s $17.8 million. Total real estate revenue, including earnings from New Valley, Vector’s investment arm, rose 17.9 percent to $243.9 million during the quarter. Net income was $15.3 million, up from $2.9 million a year ago.

Though he remains “bullish” on New York, Lorber said New Valley is not investing in new condo projects in the city because high land costs make it nearly impossible to pencil out a profit.

“If you can’t sell for $3,000 a foot, you probably can’t make money,” he said. “So it’s not a market where there’s a lot of new projects in New York City.”
New Valley is still looking in South Florida. In California, it owns 50 percent of the Edition Hotel in West Hollywood, which has 190 hotel rooms and 20 condos (about 15 of which have been sold).


Related Articles

arrow_forward_ios
Clockwise from left: Ori Allon, Robert Citrone, Robert Reffkin and Masayoshi Son (Getty/Illustration by Kevin Rebong for The Real Deal)
Here’s who made bank in Compass’ IPO
Here’s who made bank in Compass’ IPO
(Compass/Instagram)
Compass makes public market debut at $7B valuation
Compass makes public market debut at $7B valuation
Redfin CEO Glenn Kelman, Compass CEO Robert Reffkin and eXp CEO Jason Gesing. (Getty, Redfin, eXp)
Compass, eXp rise in Real Trends’ annual brokerage rankings
Compass, eXp rise in Real Trends’ annual brokerage rankings
Compass CEO Robert Reffkin (Getty, iStock)
Compass seeks $10B tech valuation
Compass seeks $10B tech valuation
Howard Lorber and Steve Witkoff (Getty, iStock)
Lorber, Witkoff launch $250M SPAC
Lorber, Witkoff launch $250M SPAC
eXp Realty founder Glenn Sanford. (eXp)
eXp rides housing boom with $31M in profits
eXp rides housing boom with $31M in profits
Compass CEO Robert Reffkin (Instagram, Compass, iStock/Photo illustration by Kevin Rebong for The Real Deal)
Inside Compass’ S-1: How it measures the upside of its tech
Inside Compass’ S-1: How it measures the upside of its tech
Douglas Elliman chairman Howard Lorber (Getty)
Douglas Elliman reports $14M profit, 50% revenue jump in quarter
Douglas Elliman reports $14M profit, 50% revenue jump in quarter
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...