After selling off the relocation services arm of Cartus, Realogy is open to selling off or divesting from more non-core businesses, CEO Ryan Schneider revealed at the Stephens Nashville Investment Conference on Thursday.
Ryan Schneider | Photo credit: Realogy
“Both [Realogy chief financial officer Charlotte Simonelli] and I are very open to doing something differently or divesting if something is not core to the business and you saw that literally in the last quarter with what we did on the relocation business,” Schneider said. “We really liked the price and we’re really happy with what we’re going to be able to do.”
“There’s other stuff that I’m absolutely willing to divest from,” Schneider added. “I’m not going to name any of them here.”
Realogy, the nation’s largest real estate holding corporation, announced on Nov. 7 it was selling off Cartus’ relocation services branch in a transaction valued at $400 million to SIRVA Worldwide, a global relocation firm. The move was made to allow Realogy to pay down corporate debt and use the balance to reinvest in the business.
“If nothing else, my hope is that you saw with what we did in the third quarter, we’re very open to that if there’s a better use of capital and we can do deals that are above our multiple and really help on the debt reduction side for example, then we’ll do them if they’re outside of our core business,” Schneider said.
There’s a few conditions for any deal. The first is that it’s got to be the right price, Schneider said. That’s something he relies on Simonelli for, joking that he’s going to bring her to negotiate next time he wants to buy a car. The market also has to be there for what Realogy is aiming to sell and it has to be the right time.
“We’re always going to have a couple of fishing poles in the water on things that may not be as core for our business,” Schneider said. “Some will be big enough that you might hear about them if we did them, a few may be smaller things that are just in our company that are just distractions. It’s kind of got to come together in the right way and we really can’t announce or plan those things in advance.”
While Schneider admitted he is willing to divest or sell off more aspects of the business, he also confessed during the same discussion, that he’s surprised Realogy hasn’t acquired a technology company or two, in his nearly two years at the helm.
He said he expected at this point there would have been something really cool the company could buy and quickly scale up to its massive agent base. It’s the one area where Schneider eventually could see Realogy making a deal.
“The technology offerings in this industry just really haven’t been that impressive bluntly and I just haven’t seen that opportunity,” Schneider said.
One area where Schneider isn’t looking to spend capital is the acquisition of brokerages, which is a far departure from the days of Realogy’s past. Its most recent acquisition was Climb Real Estate in 2016.
It’s also a departure from how some of Realogy’s own-side brokerage NRT’s top competitors, specifically Compass and HomeServices of America, are growing. Schneider said he wants the company to focus on organic growth.
“If you look at the history of buying brokerages both at our company and other companies in the last four or so years, you see a lot of companies that generated additional revenue but didn’t actually help the bottom line,” Schneider said. “I pretty quickly realized I don’t want to be in that business. Unless something fundamentally changed in the market, we’re probably going to stay out of the buying brokerage business now.”
