http://www.recrs.com/AccuRecruiter//prospect/careerintro.aspx?rcid=exitre&jid=13678&p=1239755“

1.) A reflection of investor confidence is that Realogy’s notes (fixed rate senior, senior toggle, and senior subordinated) are valued at a fraction of their carrying amount (28%, 18%, and 17% respectively per the latest 10-Q, pg. 12).

2.) The first quarter 2009 commission volume (for Realogy’s franchise companies & owned brokerages combined) was down some 30% vs. Q1 2008 (pg. 40).

3.) On 3/31/09 Realogy had negative net worth of $997mx (vs. a neg. $740mx on 12/31/08.) When I was in business school (back in the dark ages when a company’s Balance Sheet received no less attention than its Income Statement) we called this “insolvency”. I’m not sure what descriptive term is used in today’s more sophisticated world… perhaps it’s called “forward thinking”.

4.) At the end of Q1 2009, Realogy reported a Current Ratio of 54%: Current Assets of $1.338 billion and Current Liabilities of $2.484 billion.

5.) Mr. Panus points out that Realogy has reduced overhead and is focusing on its cost structure. This is fine as far as it goes, but it may be noted that Realogy reports a first quarter Total Expenses reduction of 24.5%, vs. 2008, but a Net Revenues reduction of 33.7% vs. Q1 2008.

5.) Mr. Panus’s statement that none of their corporate debt “is due until at least 2013” is correct regarding the debt’s Principal. However the fact remains that their debt service payments must be made each and every quarter.

6.) Now in one sense, none of the above weaknesses would critical, IF Realogy’s near term cash flow situation was favorable. However it’s difficult to find satisfactory signs on this. Their available cash balance appears to have only been possible because of their $600mx revolving credit facility, which source has now been maxed out. And while Apollo announced in March that they would if necessary step in with an additional $150mx, this amount only represents a single quarter of debt service ($144mx in Q1).

7.) Given the last two years’ trends in Realogy’s financials, unless: a.) a substantial & adequate debt restructuring is accomplished, or b.) Apollo is willing to kick in truly adequate additional capital, or c.) a major shift occurs immediately in the company’s underlying business, then it’s probable that Realogy will experience “an event of default” sooner rather than later. The company clearly acknowledges this risk in its 10-Q (remarks on pp. 1 & 2.)

8.) This does not mean that Realogy’s real estate brands or all their related brokerage companies would disappear – they would not. But it’d be a major hiccup, and would likely draw more attention to the question of how much support the brokerages receive from corporate on their core business.

CNBC Slideshow – Companies at Greatest Risk of Default

Not everyoe is a disgruntled former employee.

The facts are that over 75% of the Accounts Receivables are over 90 days old. how much is that….a Billion Dollars. In accounting, that is considered Collection or Uncollectable. The facts are that the Franchisees are not paying the Franchise Fees. Realogy is simply rewriting these debts into new debt instruments and contracts and placing them as Assets on the Balance Sheet. These instruments are as reliable as the mortgages in the Derivatives Contract on Wall Street that have lost all value in the last two years.

Remember, Market Share continues to slide for Realogy Brands and at Century 21 rates below 5% and in a market where you would expect a Strong Brand to recapture lost share, Century 21 continues to slide. Coldwell Banker is the Company Brand for Realogy and has closed over 1,100 offices and represents almost 80% of the Brand Sales. Coldwell Banker Franchisees are too small a Market but these are teh Strongest Franchisees in the Realogy System. The Better Homes and Garden Brand in languishing amoung leadership that has been in the Real Estate Industry too long that it is entrenched in the Old Ways of doing business and cannot develop any inovation or change to spark sales, interest, a Mantra or call to action.

The NRT Brand is the only Money winner for Realogy but is a loss leader for the Franchsiee. In the past that was fine but in todays environement, no one needs, wants or has a loss leader. There is simply no revenue for the Broker here and NRT Agents, while experienced are very Lazy Prospectors and simply sit and wait for a referral.

best,

Chris O.
Referral Key
“Your Trusted Referral Network”