To pay off debt, Realogy to sell relocation biz for $400M
Corcoran and Sotheby's parent lost $70M during Q3
As it looks to pay down debt, Realogy — the country’s largest brokerage conglomerate — is selling its relocation business in a deal valued at $400 million.
Saddled with $3.5 billion in total debt, Realogy said Thursday that it will sell Cartus’ relocation business to SIRVA, a relocation company that owns Allied Van Lines. The deal does not include recent affiliations meant to drive business, such as partnerships with Amazon and AARP.
“This transaction is about simplifying and amplifying — simplifying Realogy’s business, and amplifying Realogy’s value,” the company said in a statement. The deal is expected to close during the first half of 2020.
Terms of the SIRVA deal will give relocation clients access to Realogy’s agents. Realogy said it will continue to grow its affinity partnerships.
“We like this transaction a lot,” CEO Ryan Schneider said on an earnings call Thursday. “We are divesting a non-core, very complex business. At the same time, we’ve signed a five-year broker services agreement with SIVRA.”
During the third quarter, Realogy generated $1.6 billion in revenue, down 2.8 percent year-over-year. The company said it lost $69 million during the quarter, compared with last year’s net income of $104 million, which it attributed to an impairment (or write-down in value) of its NRT business.
Realogy, which has been cutting costs, said it reduced its net debt by $163 million during the third quarter. It’s looking to save up to $100 million in 2020.
Ahead of its earnings report, Realogy’s stock closed at $9.59 per share on Wednesday. That’s up dramatically from $4.94 per share in early September. But it’s still a steep drop from the $18.49 it was trading at a year ago.
It’s been a year of change at Realogy. In addition to cost-cutting, the conglomerate has been right-sizing commission payouts. Amid heavy competition it launched a referral program with Amazon and waded into the iBuying business. Earlier this month it said it was creating a benefits program for AARP members that allows them to earn cash back if they work with a Realogy agent.
This summer Realogy filed a wide-ranging lawsuit against Compass accusing it of “predatory” poaching and unfair business practices. The SoftBank-backed firm later accused Realogy of trying to sell itself to Compass — an allegation Realogy flatly denied.
Realogy said Thursday its agent count was up 1 percent in the third quarter and roughly 3 percent for the year.