Real Estate

Realogy Continues To Tap Into The Market To Reduce Debt

The holding company has been using the economic conditions created by COVID to shed its label as an over-leveraged company.

Since the pandemic hit the United States early last year, Realogy has tapped into more than $1 billion in market capital through multiple note offerings. The economic conditions created by COVID-19 have given the company a chance to shed significant amounts of debt and in turn, the perception of being over-leveraged that’s dogged the nation’s largest residential real estate holding company since its Apollo days.

The company announced Tuesday morning an additional $200 million add-on to an already upsized $600 million senior note offering that took place in early January. The offering is subject to the same terms as the $600 million in 5.750 percent senior notes due 2029 and will also go towards paying down debt.

“The Company currently intends to use the net proceeds from this offering to repay a portion of the outstanding borrowings under its term loan B credit facility,” the company said in a statement. “The application of the net proceeds from the offering is subject to change, and the Company may elect to apply all or a portion of such proceeds to repay other indebtedness.”

In June 2020, Realogy offered $400 million in second lien notes and upsized that capital raise to $550 million after a significant amount of interest.

The strategic moves are aimed at giving Realogy a “longer runway to put our earnings to work in investing in our business and reducing more of our debt,” a company spokesperson told Inman.

Realogy has taken a proactive approach to reduce costs and shed non-essential portions of its business and, even with the pandemic, those efforts are starting to make an appearance on the company’s balance sheet.

In conversation with Inman in late December, Realogy CEO Ryan Schneider revealed that the company paid its revolving credit line down a zero balance for the first time since 2016, preceding Schneider’s tenure.

Preliminary, unaudited, earnings results also show that while the company expects to have increased topline revenue by roughly 5 percent in 2020, its operating earnings before interest, taxes, depreciation and amortization (EBITDA) is expected to be up approximately 22 percent.

The huge increase in operating EBITDA shows Realogy’s “commitment to operate more efficiently, simplify our business, and manage costs, even as we continue to strategically invest to support our affiliated agents and franchise owners,” a Realogy spokesperson said.

The company also revealed in the filing with the U.S. Securities and Exchange Commission that it expects to post between $6.1 billion and $6.2 billion in revenue for the full year 2020, and a net loss in the range of $361 million to $368 million.

The net loss includes accounting impairments generated in part by the pandemic.

Realogy is expected to release its full-year 2020 and fourth quarter on February 23.

Email Patrick Kearns

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