Realogy’s revenue hits $6.2B after housing rebound
Net loss was $360M thanks to Covid-related impairment
UPDATED: Feb. 23, 5:45 p.m.: Boosted by a surging U.S. housing market, Realogy’s revenue grew 6 percent to $6.2 billion in 2020, the real estate giant said Tuesday.
But its net loss ballooned to $360 million from $188 million in 2019, due to Covid-related impairment charges.
Mirroring national home sales trends, Realogy said most of its gains came during the fourth quarter of the year, when a spike in sales drove revenue up 36 percent to $1.89 billion. Overall, Realogy reported $572 billion in transaction volume in 2020, up 13 percent year over year. Transactions in the fourth quarter rose 45 percent from the year prior.
“The housing market is clearly doing great,” CEO Ryan Schneider said during an earnings call, in which he said remote work and low interest rates were driving momentum. “Consumers are rotating from urban to suburban geographies. They are accelerating the existing trend to attractive tax and weather locations.”
Schneider said Realogy would reduce its own office footprint from 270,000 square feet to 60,000 square feet. The brokerage conglomerate — the parent of Corcoran Group, Coldwell Banker and Sotheby’s International Realty — is headquartered in Madison, New Jersey.
Despite the housing rebound, Realogy reported a non-cash impairment charge of $682 million due to the pandemic, which caused the markets to freeze this past spring.
Excluding the impairment charge, the company’s adjusted net income was $231 million compared to $73 million in 2019.
In general, U.S. home sales continued to rise in January. The pace of sales was up 24 percent year over year and 0.7 percent from December, according to the National Association of Realtors. NAR economists said the pace would be even higher if not for a shortage of inventory.
Realogy said its sales volume reflects the national trend. January closed sales are up 32 percent year over year, and contracts are up 45 percent year over year. In New York City, where sales have been slower, sales volume grew in January, Schneider said.
With some $3 billion in corporate debt, Realogy enacted a cost-cutting plan in 2019. It reduced its net debt by $500 million in 2020, and currently has $520 million of cash on its balance sheet. Realogy has 320,000 total agents, including 190,700 at franchise affiliates. Its company-owned brokerages have 53,000 agents, up 2 percent year over year.
In a statement, CFO Charlotte Simonelli said Realogy showed top-line revenue growth while focusing on cost efficiency in 2020.
“We seized market opportunities to improve our capital structure,” she said, “including significantly reducing net debt and net leverage, which further strengthened Realogy’s financial profile.”