The real estate holding is downsizing its office space, creating a more integrated transaction experience and reducing debt.
For the second straight year, Realogy posted record sales as the hot real estate market propelled the company into a huge year with the country’s largest real estate holding company generating more than $ 500 billion in closed-ended sales.
However, the COVID-19 pandemic and the resulting economic tailwind have not only increased sales growth and cash flow for the company. It influenced Realogy in a number of other ways as well.
Here are three additional takeaways from Realogy’s fourth quarter and year-end results.
Realogy is downsizing its office supplies
Like many companies, Realogy was forced to move to remote access in the early days of COVID-19 and spent the year as a hybrid remote office, CEO Ryan Schneider announced in the company’s call for profits.
Schneider said the transition was “seamless” and prompted the company to redefine and downsize its massive corporate headquarters in Madison, New Jersey, a suburban community 25 miles west of New York City.
“We’re transforming Realogy headquarters from 270,000 square feet of office space to 60,000 square feet of brand and technology showcase with a focus on collaboration,” said Schneider. “Our employees have been resilient as they introduced new ways of working and our results speak for themselves during this transition.”
A number of other real estate companies have taken similar approaches to reduce costs and open up operations to more talent across the country. Zillow has announced that its employees will be able to work remotely in the future, and eXp World Holdings has a fully virtual office.
Realogy made progress on a more integrated deal in 2020
Schneider shares a vision of a more integrated real estate transaction – where the entire ecosystem of consumer needs is served by one company – with many other industry leaders.
He believes that most of this process is completing services. With the rise of the Realogy Title Group and the company’s Guaranteed Rate Joint Mortgage Venture, Realogy made more strides toward that goal in 2020 than ever before, with both segments generating more revenue than any other year in the company’s history.
“We have the title and mortgage parts and some of the digital products we’ve invested in, as well as our leading broker,” said Schneider. “In 2020 we started putting this together.”
Realogy’s title business continues to grow geographically – Utah and Idaho will be added in 2020 – and there is more room for strategic growth, Schneider said.
There is also more room for geographic growth for the mortgage business, but Schneider really plans to grow by depth. Currently the company has approximately one loan officer for every 50 agents, but Schneider has one loan officer for every 20 agents.
“Our agents have real power to help loan officers get the business going,” Schneider said.
Strategically, the company will spend much of 2021 integrating the companies and technologies it needs. “Create a better experience, capture more of those transactions, and drive more integrated economics, ”said Schneider.
The leverage ratio is the best since 2012
From 2021, Realogy will be “faster, leaner and more innovative” according to Schneider. Improving these three facets of the business has been an important effort since Schneider took over the business.
One of the greatest results of Schneider’s efforts was a massive deleveraging of the company’s debt. In 2020, Realogy eliminated approximately $ 500 million in debt. The company thus achieved the lowest debt ratio since going public – in part to reduce debt – in 2012.
While the hot housing market and strong market share growth put the company in a strong financial position to reduce debt, the company’s strategic cost-cutting plans, many of which were realized despite the COVID in 2020, have been an integral part of that effort. 19 pandemic.
“We’re continuing to aggressively drive costs down, achieving $ 83 million permanent cost savings and over $ 150 million temporary cost savings,” said Charlotte Simonelli, executive vice president, chief financial officer and treasurer of Realogy. said in a statement. “We expect to see additional permanent savings of $ 80 million in 2021.
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