Realogy Sells Most Of Its Stake In Title Resources Guarantee
Realogy Holdings Corp. is selling a controlling stake in its title insurance underwriting business to a private investment firm for $210 million, which it will use to invest in its other businesses and to pay off debt.
Realogy will retain a 30 percent interest in Title Resources Guaranty Co. through a joint venture with Centerbridge Partners, which will have a 70 percent stake.
The deal, which values Title Resources Guaranty at $300 million, “unlocks capital, enabling Realogy to further invest in integration of core real estate transaction services across franchise, brokerage, title settlement and escrow, and mortgage,” Realogy said.
Realogy will continue to maintain its existing ownership of Realogy Title Group, which last year provided title, settlement, and escrow services for 214,000 transactions in 43 states under 45 different brand names.
“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,” Realogy CEO Ryan Schneider said in a statement.
In reporting the strongest first quarter earnings ever in April, Realogy executives said their mortgage and title businesses were playing a growing role in the company’s profitability, and that they planned to invest in unique products including Listing Concierge, RealVitalize, the iProspect developer’s portal, and RealSure iBuying platform.
In addition to investing in the company’s future, Realogy has been steadily paying down billions in debt acquired when an affiliate of private equity firm Apollo Management LP took the company private in a 2007 leveraged buyout, and in the ensuing 2007-2009 housing crash and recession.
Realogy reported a $1.9 billion loss in 2008 and was $6.76 billion in debt at the end of the year. By the time Realogy went public again in 2012, it was still more than $7 billion in the red, but was able to pay down $2.8 billion in debt in the IPO.
This year, the company has been taking advantage of its stronger financial position and low interest rates to issue bonds that it’s using to pay down higher-interest loans.
Last month Realogy announced that it had used cash on hand to pay off $435 million in term loans that were due in 2023 and 2025. The repayment reduced the company’s annual interest expenses by $10 million, and left the company with about $3.045 billion in gross debt.