Elliman loses $18M in Q4

Perhaps no other residential brokerage’s financials better illustrate the market’s fall from 2021 to the end of 2022 than those reported in Douglas Elliman’s fourth-quarter earnings.

Elliman’s net loss jumped to $18.4 million in the fourth quarter from $4 million in the previous period and down from a profit of $20.2 million in the fourth quarter of 2021. Its annual net loss was $5.6 million, a sharp turn from a net income of $98.8 million in 2021.

Chairman and CEO Howard Lorber pointed to “significant headwinds” that cut into real estate’s “generational peak in 2021.” 

The company posted a consolidated operating loss of $21.9 million last quarter and its real estate brokerage segment posted an operating loss of $15.6 million, both of which were down  year over year from a net operating income of $19.2 million.

Last quarter’s adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — was a loss of $17.1 million for Elliman and a loss of $12.6 million for its brokerage segment, down from income of $21.3 million year over year.

Elliman will look to reduce office space, which Lorber said could begin to reduce rent expenses in 2023 “and more meaningfully in the second half of 2024.” 

Headcount so far this year is down as a result of “normal attrition,” and the company may not backfill employee positions in the coming year.

The brokerage’s gross transaction volume last quarter was $7.5 billion, a decrease from $12.6 billion in the fourth quarter of 2021. The brokerage’s annual gross transaction volume was $42.9 billion, down from $51.2 billion in 2021. 

Elliman’s annual adjusted EBITDA was $15 million, compared to $110.7 million in 2021. The brokerage segment’s EBITDA in 2022 was $34.5 million. 

The company finished the year with $163.9 million cash on hand. 

Lorber said Elliman grew its broker headcount by 400 last year and had a retention rate of 87 percent. The brokerage expanded into several new markets, including Las Vegas, Washington D.C. and Dallas last year. It also launched a payday loan business last year. 

The company’s new development business grew by $3.5 billion in gross transaction value last year, according to Lorber, across the Florida, New York, California, Massachusetts and Texas markets.

New development is “the only place where there is new inventory,” Lorber said, adding the sector presents more flexibility for buyers contending with elevated mortgage rates. 

“When you start selling a new development project, it’s generally around three years until the project is finished and closings are happening,” Lorber said. “That gives people that period of time to hope that interest rates, mortgage rates, will be lower during that three-year period.”