Douglas Elliman posts big third quarter, closed $5.2B in deals

Earnings report of parent company Vector shows property market is still picking up pace

From left: Howard Lorber and Dottie Herman of Douglas Elliman and Realogy's Richard Smith
From left: Howard Lorber and Dottie Herman of Douglas Elliman and Realogy's Richard Smith

As the largest brokerage in New York City, Douglas Elliman is seen as something of a bellwether for the real estate industry. And judging by the company’s third quarter performance, the market in New York is on a serious roll.

Douglas Elliman closed deals worth $5.2 billion during the quarter, up from $4.5 billion a year earlier, the firm reported October 30. That pushed Elliman’s revenue for the quarter up to $153.2 million, compared with $133.4 million last year.

Douglas Elliman — led by Chairman Howard Lorber —  is benefiting from “the continuing recovery in the real estate market,” analysts from Oppenheimer & Co. wrote in a note to investors about Vector Group, the public company that is the majority owner of Douglas Elliman.

Indeed, the firm’s revenues have been on the upswing for several years.

Douglas Elliman reported $436 million in revenue last year, up from $378 million in 2012 and $346 million in 2011. Likewise, sales continue to rise, topping $9.6 billion. The firm recorded $8.4 billion in sales in 2012 and $7.7 billion in 2011.

Meanwhile, Vector had net income of $14.9 million during the third quarter, compared to a loss of $36.9 million last year. Net income for Douglas Elliman for the last 12 months was $42.3 million.

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Douglas Elliman is also an investor in 12 developments in New York and Florida, and the company made $5 million from those investments during the third quarter, according to its quarterly report. “There continues to be strong demand for residential real estate,” Lorber said during an October 30 earnings call.

Earlier this spring, Oppenheimer analysts said that Vector Group as a whole has “hidden assets that are not obvious” — namely real estate.

“It has non-consolidated stakes in real estate projects and owns other real estate projects that do not yet generate income,” analysts wrote in a June 30 note. “These assets could be worth $471M alone”

Meanwhile, Realogy Holdings – the conglomerate whose brands include the Corcoran Group, Citi Habitats, Sotheby’s International and ZipRealty – reported relatively flat third-quarter revenue of $1.5 billion on November 5. Net income for the quarter was $100 million.

“During the first nine months of 2014, the residential real estate industry has continued its recovery, albeit at a slower pace from the significant growth experienced in 2012 and 2013,” Realogy stated in its quarterly report.

In part, the company was impacted by lack of activity among first-time buyers. “This is one of those unusual housing recoveries for the first time buyer is sitting on the sidelines,” CEO Richard Smith said during an earnings call.

He noted that the high-end market “continues to be very strong” and said, “We don’t see anything changing there.”