Real estate brokerage and franchise company Realogy Corp. on Wednesday reported a first-quarter net loss of $132 million, while net revenues totaled $1.05 billion for the period.
While the company saw a decrease in transaction sides and a slip in average home-sale price, officials said the quarterly net loss was mainly due to an interest expense of $164 million.
"The first quarter of any year is historically our slowest from an earnings perspective almost entirely due to the seasonality of the residential real estate market," Richard A. Smith, Realogy’s president and CEO, said in a statement. "We still have most of our annual EBITDA opportunity in front of us and, of course, that’s where our focus lies."
Earnings before interest, taxes, depreciation and amortization, or EBITDA, was $4 million, slightly above the company’s earlier guidance.
The company in March announced plans to cut costs through office consolidations and other actions in response to the reeling real estate market. After consolidating about 67 company-owned brokerage offices in 2007, Realogy said it was consolidating or reducing the size of an additional 70 company-owned office locations during the first two quarters of 2008.
Year-over-year home-sale transaction sides declined by 25 percent at the Realogy Franchise Group and by 27 percent at NRT, the company’s brokerage unit, during the three months ended March 31, 2008, compared to the same period a year ago.
For the first quarter of 2008, Realogy Franchise Group’s average home-sale price decreased 7 percent and NRT’s average home-sale price declined 1 percent compared to the same period in 2007. Price declines were driven by a number of factors, the company said, including overall market conditions and, as it relates to NRT, a relatively minor shift in the mix of property transactions from the high range to lower- and middle-range homes.
Realogy’s relocation services segment, Cartus, reported a 6 percent increase in relocation initiations in the first quarter, a result of contract expansions and new client signings in late 2007, Realogy said. Cartus’ referral volume declined by 22 percent.
Title Resource Group, Realogy’s title and settlement services unit, reported a 16 percent increase in refinance unit volume in the first quarter. This was offset by a 25 percent decline in purchase title and closing units.
"Despite the current real estate market and general economic downturn, our positive, long-term view remains intact," said Smith. "Housing and housing growth are fundamental to our national economy. Moreover, we believe that Realogy’s size, scale and strong franchise brands, along with increasing efficiencies and new initiatives put in place across all of our businesses, will enable us to capitalize on the recovery, which is inevitable."
The company reported net domestic franchise sales for leading brands — including Century 21, Coldwell Banker, Coldwell Banker Commercial, ERA and Sotheby’s International Realty — totaled $97 million in gross commission income for the first quarter, up 13 percent from the same period a year ago.
Realogy will hold a Webcast to review its first-quarter 2008 results at 11 a.m. (EDT) on Friday, May 16.
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