Five months after announcing the sale of a controlling stake in its title insurance underwriting business, Realogy has officially sealed the deal.
The New Jersey-based holding company announced the close of the $210 million deal on Tuesday, which enables Realogy to maintain a 30 percent equity interest in the newly formed limited partnership joint venture that indirectly owns TRG. The new owners, Centerbridge Partners, will have a 70 percent stake and have started the process of creating a new board of directors headed by former Assurant CEO Alan Colberg.
“We’re encouraged by the strong team and platform Scott has built,” Centerbridge Managing Director Kevin Mahony told Fintech and Finance News on Tuesday. “We look forward to accelerating the growth at TRG as an independent entity. The board of TRG will continue to prioritize investments in technology and new services, all with the goal of delivering value to all stakeholders, including agents and employees.”
Realogy will continue to own and operate Realogy Title Group, which provides title, settlement and escrow services in 44 markets under 45 different brand names. In the fourth quarter of 2021, RTG generated $40.1 million in purchase title and closing units (+2 percent YoY) and $10.9 million in refinance title and closing units (+44 percent YoY). For the full year, RTG topped $219.7 million in revenue for purchase and refinancing units.
“As we continue to reimagine and deliver a more integrated real estate transaction, today’s closing enables Realogy to be even more focused on our core business, including critical consumer-facing transaction services in franchise, brokerage, title settlement and escrow, and mortgage,” Realogy CEO and President Ryan Schneider said in a prepared statement.
In October, Realogy said the $210 million generated from the sale will be used to pay down debt and fuel the company’s pursuit of creating a seamless end-to-end transaction experience for buyers and sellers.
“While we really like our Title Insurance Underwriter, this agreement enables us to be even more laser-focused on Realogy’s core businesses, including critical consumer-facing transaction services in franchise, brokerage, title settlement and escrow, and mortgage,” Schneider said in a previous article. “[The deal] unlocks capital, enabling Realogy to further invest in the integration of core real estate transaction services.”
The CEO acknowledged real estate companies, including Realogy, can’t reach or maintain profitability on mortgage and title alone but noted it’s a crucial building block to the company’s long-term viability.
“I think [title and mortgage] is an area of big growth, revenue and profit, and we’re literally demonstrating it with our title capture rates and mortgage capture rates,” he told Inman in December. “I think the customer is going to demand a more integrated experience that’s easier and simpler, period.”
He added, “You can look at what the margins look like if you only have title and mortgage, versus if you’re able to make at least some money from other things. So I’m all in on it. But I’m mostly all in it for the customer experience.”
Now that the deal is finished, Realogy Holdings Corp and Centerbridge will focus on accelerating TRG’s success, which FFN said includes a compound annual growth rate of 15 percent in title premiums and 19 percent in statutory net income.
“Title Resources Group has grown through our dedication to providing knowledgeable and responsive underwriting solutions to support our network of title insurance agents across America, while maintaining quality through integrity and financial stability. We’re thrilled to form this partnership, a testament to the top-quality people and operations at our firm, and accelerate our profitable growth trajectory,” TRG President and CEO Scott McCall told FFN. “With the support of our partners at Centerbridge, we’re excited about the opportunity to broaden our reach and deepen our capabilities, through investment in our people and technology.”