MADISON, NJ-Next month will mark the one-year anniversary that Realogy Holdings Corp. completed a $1.2-billion public offering. The real estate brokerage conglomerate has turned around its fortunes that during the recession looked bleak.
Apollo Management's more than $6-billion deal to take Realogy private in April 2007 turned sour after the nation's housing market went bust. The owner of noted real estate brokerage franchises such as Century 21, Coldwell Banker and Corcoran Group, saw its debt rating fall into junk status and reports at the time speculated that the firm would go bankrupt.
However, Realogy reworked its debt and therefore nearly cut in half its $675 million in annual interest expenses, according to the Wall Street Journal. The company also saved an additional $500 million a year by closing approximately 400 of its more than 1,100 company-owned real-estate offices and reducing its workforce by 5,000 jobs. Eventually, Apollo negotiated a debt exchange that gave it bonds that would convert to Realogy stock if the company ever went public.
Realogy went public on the New York Stock Exchange on Oct. 10, 2012. The stock rose in value by approximately 25% on the first day of trading. Taking advantage of the improved Realogy bottom line and a recovering housing market, Apollo sold the last of its shares in July 2013 at a profit of approximately $1.3 billion for its partners and investors.
Apollo's "really used every financial-engineering tool they had,'' said Lenny Ajzenman, a Moody's Investors Service analyst. "They had a view that the real-estate market would turn…and it worked out very well for them." See story in the Wall Street Journal.
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