The true property holding firm is downsizing its workplace footprint, making a extra built-in transaction expertise and lowering debt.
For the second consecutive quarter, Realogy posted record revenue numbers as the new housing market propelled the corporate to an enormous yr, throughout which the nation’s largest actual property holding firm tallied greater than $500 billion in closed gross sales quantity.
However the COVID-19 pandemic and ensuing financial tailwinds didn’t simply drive top-line income development and money circulate for the enterprise. It additionally impacted Realogy in a variety of different methods.
Listed below are three extra learnings from Realogy’s fourth quarter and year-end outcomes.
Realogy is downsizing its workplace footprint
Like many corporations, Realogy was forced to go remote within the early days of COVID-19 and has spent the yr working as a hybrid distant workplace, CEO Ryan Schneider revealed on the corporate’s earnings name.
Schneider stated the transition has been “seamless,” and it has led the corporate to re-imagine and downsize the large company workplace headquarters that sits in Madison, New Jersey, a suburban group that sits 25 miles west of New York Metropolis.
“We’re remodeling Realogy’s headquarters from 270,000 sq. ft of workplace use to 60,000 sq. ft of brand name and expertise showcases with an emphasis on collaboration,” Schneider stated. “Our workers have been resilient as they’ve embraced new methods of working and our outcomes throughout this transition converse for themselves.”
Numerous different actual property corporations have taken related approaches in an effort to cut back prices and open operations to extra expertise throughout the nation. Zillow has said its employees will be allowed to work remotely sooner or later and eXp World Holdings operates with a completely digital workplace.
Realogy made progress on a extra built-in transaction in 2020
Schneider shares a imaginative and prescient of a extra built-in actual property transaction — one the place the complete ecosystem of a shopper’s wants is served by one firm — with many different leaders within the trade.
He believes most of that course of exists in closing providers, and with the rise of Realogy Title Group and the corporate’s joint mortgage enterprise with Guaranteed Rate, Realogy made extra progress towards that objective than ever earlier than in 2020, with each segments driving extra income than another yr in firm historical past.
“We have now the items of it with title and mortgage and among the digital merchandise we’ve invested in, plus our main brokerage,” Schneider stated. “In 2020, we began to place that collectively.”
Realogy’s title enterprise continues to broaden geographically — including Utah and Idaho in 2020 — and there’s extra room for strategic development, Schneider stated.
For the mortgage enterprise, there’s additionally extra room for geographic development, however Schneider is absolutely envisioning rising by depth. Proper now the corporate has about one mortgage officer for each 50 brokers, however Schneider envisions one mortgage officer for each 20 brokers.
“There’s actual energy in what our brokers can do to assist mortgage officers drive enterprise,” Schneider stated.
Strategically, the corporate will spend a lot of 2021 integrating the companies and expertise it has to “create a greater expertise, seize extra of those transactions and drive extra built-in economics,” Schneider stated.
Debt leverage ratio is the most effective its been since 2012
Getting into 2021, Realogy is “quicker, leaner and extra progressive,” in keeping with Schneider. Enhancing these three aspects of the enterprise has been a key effort since Schneider took the reins as CEO.
One of many largest outcomes of Schneider’s efforts has been a massive reduction in the company’s debt. In 2020, Realogy eradicated roughly $500 million in debt, giving the corporate its lowest leverage ratio because it went public — partially to cut back debt — in 2012.
Whereas the new housing market and robust market share development put the corporate in a robust place financially to cut back debt, a key a part of these efforts has been the corporate’s strategic plans to cut back prices, lots of which had been realized in 2020, regardless of the COVID-19 pandemic.
“We proceed to aggressively decrease prices, delivering $83million in everlasting price financial savings and over $150 million in short-term price financial savings,” Charlotte Simonelli, Realogy’s govt vp, chief monetary officer, and treasurer. stated in an announcement. “We count on to ship an extra $80 million in everlasting financial savings in 2021.