By Oshrat Carmiel
Aug. 11 (Bloomberg) — Realogy Corp., the real estate broker acquired by Apollo Management LP for $6.8 billion in 2007, said its second-quarter loss narrowed after the company cut expenses to offset a decline in revenue.
The net loss decreased to $15 million from $27 million a year earlier, Parsippany, New Jersey-based Realogy said today in a statement. Revenue dropped 27 percent to $1.02 billion.
The residential real estate slump is cutting revenue for brokers including Realogy, owner of Coldwell Banker and Century 21. Prices are being brought down in part by discounts on foreclosures. U.S. foreclosure filings hit a record in the first half, a sign that job losses and falling property prices deepened the housing recession, according to data provider RealtyTrac Inc. of Irvine, California.
“While the rate of decline in home sales is slowing and there are emerging positive signals, given the macroeconomic headwinds it is premature to conclude that the housing market has started its rebound,” Chief Executive Officer Richard A. Smith said in the statement.
Revenue from commissions fell 28 percent to $746 million, and the average price of brokered home sales fell 15 percent to $188,489, the Realogy said. Franchise fees dropped to $72 million from $91 million a year earlier. Expenses declined to $1.04 billion from $1.44 billion.
Commissions
The average commission for company owned brokerage services rose to 2.52 percent in the three months ended June 30 from 2.48 percent a year earlier. Gross commission income per transaction fell to $10,292 from $12,981.
Realogy’s $1.7 billion of 10.5 percent notes due in 2014 fell 1 cent to 60 cents on the dollar at 2:19 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields 25.7 percent, Trace data show.
The company said its leverage ratio was 5.1 to 1 as of June 30 and that it had a net debt revolver balance of $254 million.
Apollo acquired Realogy as the housing market was peaking in the U.S. Apollo financed the purchase with $2 billion of equity, $4.4 billion of debt in the form of bank loans and bonds, plus about $300 million in cash, according to Moody’s Investors Service.
Realogy had 14,400 franchised and company-owned real estate brokerage offices as of June 30 with 270,000 sales representatives. It also owns a relocation services company and provides title and settlement services.
