SOURCE: Realogy Corporation

Realogy Corporation

November 09, 2010 13:43 ET

Realogy Reports Results for Third Quarter 2010

Real Estate Leader Posts Net Revenue of $1.1 Billion, Operations Continue to Focus on Strategic Growth

PARSIPPANY, NJ--(Marketwire - November 9, 2010) - Realogy Corporation, a global leader in real estate and relocation services, today reported results for the third quarter ended September 30, 2010. Realogy's net revenue for the third quarter of $1.1 billion decreased 10% compared to the same period in 2009. For the quarter, Realogy recorded net loss attributable to the Company of $33 million. Reported EBITDA for the quarter was $177 million. EBITDA before restructuring and other items for the quarter was $173 million, a decline of $25 million year-over-year due primarily to a reduction in home sale transactions.

"Our emphasis on growing our businesses has produced results," said Richard A. Smith, Realogy's chief executive officer. "The Realogy Franchise Group added new franchisees and sales associates with $264 million of gross commission income (GCI) year to date, including Realogy's largest conversion on record with the addition of Mason-McDuffie Real Estate in Northern California to the Better Homes and Garden Real Estate brand in September. NRT acquired approximately $30 million in GCI year to date, including its expansion into Philadelphia with the acquisition of Coldwell Banker Preferred in the beginning of October. In addition, NRT has recruited new sales associates who collectively generated more than $60 million in gross commission income during the last 12 months."

Following the second quarter expiration of the federal tax credit for home purchases, Realogy's core business drivers declined during the third quarter. The number of home sale transactions decreased 19% year-over-year at the Realogy Franchise Group (RFG) and decreased 25% at NRT, the company-owned brokerage unit. Offsetting these declines, the average home sale price increased at both RFG and NRT in the third quarter by 4% and 12% year-over-year, respectively, outperforming the market as reported by the National Association of Realtors (NAR) due to mix of business. Cartus experienced a 30% increase in relocation initiations primarily due to increased volume from corporate clients including incremental business from the Primacy Relocation acquisition. Title Resource Group had a 21% increase in refinance title and closing units that partially offset a 25% decrease in its resale title and closing units and a 2% decline in the average price per closing unit.

"The improvement in home sales aided by the Homebuyer Tax Credit in the second quarter clearly did not survive the program's conclusion," added Smith. "That said, we do believe it contributed to more stabilized pricing."

"The uncertainty created by the disruptions in the foreclosure review process could further complicate an already fragile housing market," said Anthony Hull, Realogy's chief financial officer. "While we have not seen any significant national impact caused by the uncertainty in the REO market, we continue to monitor foreclosure developments and their potential effect on our business."

Despite anticipated weak year-over-year comparisons in the fourth quarter 2010, the sequential seasonally adjusted annualized rate (SAAR) of home sales in the fourth quarter is anticipated to increase between 7% and 8% according to Fannie Mae and NAR.

"For the next 4 quarters, we believe the sequential SAAR data will be the best gauge of the housing market on a comparative basis because the Homebuyer Tax Credits in the fourth quarter of 2009 and the second quarter of 2010 created swings in year-over-year comparisons that are not representative indicators of the direction of the housing market," added Hull. "We are seeing gains in sequential monthly closed sales as reported by NAR, which, if continued for the balance of this year and into 2011, could result in an improved housing market, particularly in the second half of 2011."

Balance Sheet Information and Covenant Compliance as of September 30, 2010

The Company ended the third quarter with $206 million of readily available cash and no outstanding balance on its revolving credit facility as of September 30, 2010. However, there was $120 million outstanding as of November 5, 2010 due primarily to cash interest payments made in mid-October, and which we expect will be substantially repaid by year end. The Company also permanently reduced its synthetic letter of credit from $507 million as of June 30, 2010 to $257 million at September 30, 2010, of which $133 million related to potential remaining legacy liabilities.

A complete balance sheet is included as Table 2 of this press release.

As of September 30, 2010, the Company's senior secured leverage ratio was 4.57 to 1, which is below the 5.0 to 1 maximum ratio required to be in compliance with its Credit Agreement. The senior secured leverage ratio is determined by dividing Realogy's senior secured net debt of $2.87 billion at September 30, 2010 by the Company's Adjusted EBITDA of $628 million for the 12 months ended September 30, 2010. (Please see Tables 6 and 7 for a reconciliation of EBITDA before restructuring and other items, Adjusted EBITDA and net loss attributable to Realogy to EBITDA, and Table 8 for the definition of non-GAAP financial measures.)

Investor Webcast

Realogy will hold a Webcast to review its third quarter 2010 results at 4:00 p.m. (EST) today. The call will be hosted by CEO Richard A. Smith and CFO Anthony Hull. The conference call will be made available live via webcast on the Investor Information section of the Realogy website. A replay of the webcast will be available at www.realogy.com from Nov. 9 through Nov. 23.

About Realogy Corporation

Realogy Corporation, a global provider of real estate and relocation services, has a diversified business model that includes real estate franchising, brokerage, relocation and title services. Realogy's world-renowned brands and business units include Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Coldwell Banker Commercial®, The Corcoran Group®, ERA®, Sotheby's International Realty®, NRT LLC, Cartus and Title Resource Group. Collectively, Realogy's franchise systems have approximately 14,700 offices and 267,000 sales associates doing business in 100 countries and territories around the world. Headquartered in Parsippany, N.J., Realogy (www.realogy.com) is owned by affiliates of Apollo Management, L.P., a leading private equity and capital markets investor. To receive future Realogy news releases, you can sign up for an e-mail subscription or secure a link for your RSS reader at www.realogy.com/media.

Forward-Looking Statements

Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Realogy Corporation to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates" and "plans" and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements.

Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to: our substantial amount of outstanding debt; our ability to comply with the affirmative and negative covenants contained in our debt agreements; adverse developments or the absence of sustained improvement in general business, economic and political conditions; adverse developments or the absence of improvement in the residential real estate markets including but not limited to the lack of sustained improvement in the number of home sales and/or further declines in home prices, low levels of consumer confidence, the impact of slow economic growth or future recessions and related high levels of unemployment in the U.S. and abroad, the termination of the federal homebuyer tax credit program, continuing high levels of foreclosures or further disruptions in the foreclosure review process, our geographic and high-end market concentration in particular to our company-owned brokerage operations and reduced availability of mortgage financing or financing availability at rates not sufficiently attractive to homebuyers; the final resolution or outcomes with respect to Cendant's remaining contingent liabilities; any outbreak or escalation of hostilities on a national, regional or international basis or adverse effects of natural disasters or environmental catastrophes; our failure to enter into or renew franchise agreements, maintain our brands or the inability of franchisees to survive the current real estate cycle; our inability to realize benefits from future acquisitions; our inability to sustain improvements in our operating efficiency; and our inability to access capital, including debt refinancing, and/or securitization markets.

Consideration should be given to the areas of risk described above, as well as those risks set forth under the headings "Forward-Looking Statements" and "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2009, under the heading "Forward-Looking Statements" in our Form 10-Q for the quarter ended September 30, 2010, and in our other periodic reports filed from time to time, in connection with considering any forward-looking statements that may be made by us and our businesses generally. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.

This release includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, important information regarding such measures is contained in the Tables attached to this release.

Table 1


                                  REALOGY CORPORATION
                    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                    (In millions)



                                    Three Months Ended  Nine Months Ended
                                       September 30,     September 30,
                                    ------------------  ------------------
                                      2010      2009      2010      2009
                                    --------  --------  --------  --------

Revenues
  Gross commission income           $    751  $    878  $  2,280  $  2,096
  Service revenue                        197       174       518       469
  Franchise fees                          67        79       203       201
  Other                                   37        38       123       118
                                    --------  --------  --------  --------

Net revenues                           1,052     1,169     3,124     2,884
                                    --------  --------  --------  --------


Expenses
  Commission and other agent-related
   costs                                 490       567     1,479     1,336
  Operating                              315       309       925       950
  Marketing                               42        38       138       124
  General and administrative              45        63       180       179
  Former parent legacy costs
   (benefit), net                         (6)        5      (315)      (37)
  Restructuring costs                      2        15        12        59
  Depreciation and amortization           49        48       148       147
  Interest expense/(income), net         151       139       458       430
  Gain on extinguishment of debt           -       (75)        -       (75)
  Other (income)/expense, net              -        (1)       (6)      (11)
                                    --------  --------  --------  --------

Total expenses                         1,088     1,108     3,019     3,102
                                    --------  --------  --------  --------

Income (loss) before income taxes,
 equity in earnings and
 noncontrolling interests                (36)       61       105      (218)
Income tax expense                        10         8       134        15
Equity in earnings of unconsolidated
 entities                                (13)       (6)      (22)      (18)
                                    --------  --------  --------  --------
Net income (loss)                        (33)       59        (7)     (215)
  Less: Net income attributable to
   noncontrolling interests                -        (1)       (1)       (1)
                                    --------  --------  --------  --------
Net income (loss) attributable to
 Realogy                            $    (33) $     58  $     (8) $   (216)
                                    ========  ========  ========  ========




Table 2

                               REALOGY CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                (In millions)

                                              September 30,   December 31,
                                                  2010            2009
                                             -------------   -------------
ASSETS
Current assets:
  Cash and cash equivalents                  $         235   $         255
  Trade receivables (net of allowance
   for doubtful accounts of $66 and $66)               140             102
  Relocation receivables                               437             334
  Relocation properties held for sale                   28               -
  Deferred income taxes                                 71              85
  Other current assets                                 102              98
                                             -------------   -------------
    Total current assets                             1,013             874

Property and equipment, net                            185             211
Goodwill                                             2,591           2,577
Trademarks                                             732             732
Franchise agreements, net                            2,925           2,976
Other intangibles, net                                 488             453
Other non-current assets                               228             218
                                             -------------   -------------
Total assets                                 $       8,162   $       8,041
                                             =============   =============

LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
  Accounts payable                           $         168   $          96
  Securitization obligations                           338             305
  Due to former parent                                 117             505
  Revolving credit facilities and current
   portion of long-term debt                           170              32
  Accrued expenses and other current
   liabilities                                         631             502
                                             -------------   -------------
    Total current liabilities                        1,424           1,440

Long-term debt                                       6,678           6,674
Deferred income taxes                                  875             760
Other non-current liabilities                          166             148
                                             -------------   -------------
Total liabilities                                    9,143           9,022
                                             -------------   -------------
Commitments and contingencies

Equity (deficit):
  Common stock                                           -               -
  Additional paid-in capital                         2,024           2,020
  Accumulated deficit                               (2,979)         (2,971)
  Accumulated other comprehensive loss                 (28)            (32)
                                             -------------   -------------
    Total Realogy stockholder's deficit               (983)           (983)
                                             -------------   -------------
  Noncontrolling interests                               2               2
                                             -------------   -------------
Total equity (deficit)                                (981)           (981)
                                             -------------   -------------
Total liabilities and equity (deficit)       $       8,162   $       8,041
                                             =============   =============





Table 3
                           REALOGY CORPORATION
                            2010 KEY DRIVERS

                            Three Months Ended        Nine Months Ended
                               September 30,            September 30,
                         ------------------------  -----------------------
                                              %                        %
                           2010     2009   Change    2010     2009   Change
                         -------- -------- ------  -------- -------- ------
Real Estate Franchise
 Services (a)
Closed homesale sides     229,241  281,973   (19%)  711,061  719,682   (1%)
Average homesale price   $202,272 $194,881     4%  $196,641 $189,600    4%
Average homesale broker
 commission rate             2.53%    2.53%    -       2.54%   2.55% (1)bps
Net effective royalty
 rate                        4.95%   5.11% (16)bps     5.01%  5.12% (11)bps
Royalty per side         $    267 $    260     3%  $    261 $    257    2%

Company Owned Real
 Estate Brokerage
 Services
Closed homesale sides      61,092   81,025   (25%)  197,207  200,886   (2%)
Average homesale price   $457,782 $407,398    12%  $432,996 $384,930   12%
Average homesale broker
 commission rate             2.47%    2.49%  (2)bps    2.48%   2.51% (3)bps
Gross commission income
 per side                $ 12,209 $ 10,816    13%  $ 11,522 $ 10,413   11%

Relocation Services
Initiations (b)            36,743   28,326    30%   115,361   89,077   30%
Referrals (c)              19,625   20,320    (3%)   53,504   48,388   11%

Title and Settlement
 Services
Purchase title and
 closing units             22,963   30,653   (25%)   73,042   77,612   (6%)
Refinance title and
 closing units             17,546   14,493    21%    39,860   57,119  (30%)
Average price per
 closing unit            $  1,381 $  1,405    (2%) $  1,406 $  1,293    9%


(a) Includes all franchisees except for our Company Owned Real Estate
    Brokerage Services segment.
(b) Includes initiations of 6,516 and 19,305 for the three and nine months
    ended September 30, 2010, respectively, related to the Primacy
    acquisition in 2010.
(c) Includes referrals of 1,513 and 3,756 for the three and nine months
    ended September 30, 2010, respectively, related to the Primacy
    acquisition in 2010.





Table 4
                             REALOGY CORPORATION
                              2009 KEY DRIVERS

                                        Quarter Ended           Year Ended
                              --------------------------------- ----------
                                March    June  September December December
                                 31,      30,      30,      31,      31,
                                2009     2009     2009     2009     2009
                              -------- -------- -------- -------- --------

Real Estate Franchise
 Services (a)
Closed homesale sides          178,233  259,476  281,973  263,834  983,516
Average homesale price        $182,865 $188,489 $194,881 $192,604 $190,406
Average homesale broker
 commission rate                  2.57%    2.57%    2.53%    2.54%    2.55%
Net effective royalty
 rate                             5.15%    5.10%    5.11%    5.04%    5.10%
Royalty per side              $    253 $    256 $    260 $    255 $    257

Company Owned Real Estate
 Brokerage Services
Closed homesale sides           47,499   72,362   81,025   72,931  273,817
Average homesale price        $355,838 $378,870 $407,398 $406,549 $390,688
Average homesale broker
 commission rate                  2.55%    2.52%    2.49%    2.51%    2.51%
Gross commission income
 per side                     $  9,909 $ 10,292 $ 10,816 $ 10,814 $ 10,519

Relocation Services
Initiations                     27,677   33,074   28,326   25,607  114,684
Referrals                       10,719   17,349   20,320   16,607   64,995

Title and Settlement
 Services
Purchase title and
 closing units                  18,811   28,148   30,653   27,077  104,689
Refinance title and
 closing units                  19,933   22,693   14,493   12,808   69,927
Average price per
 closing unit                 $  1,211 $  1,258 $  1,405 $  1,396 $  1,317


(a) Includes all franchisees except for our Company Owned Real Estate
    Brokerage Services segment.



Table 5a
                               REALOGY CORPORATION
                          SELECTED 2010 FINANCIAL DATA
                                 (In millions)

                                                              For the Three
                               For the Three   For the Three  Months ended
                                Months ended    Months ended  September 30,
                               March 31, 2010  June 30, 2010      2010
                               --------------  -------------  -------------
Revenue (a)
  Real Estate Franchise
   Services                   $          122  $         173  $         138
  Company Owned Real Estate
   Brokerage Services                    601            956            762
  Relocation Services                     76            106            122
  Title and Settlement
   Services                               65             86             84
  Corporate and Other                    (45)           (68)           (54)
                              --------------  -------------  -------------
  Total Company               $          819  $       1,253  $       1,052
                              ==============  =============  =============
EBITDA (b)
  Real Estate Franchise
   Services                   $           65  $         123  $          90
  Company Owned Real Estate
   Brokerage Services                    (34)            84             31
  Relocation Services                      4             27             51
  Title and Settlement
   Services                               (5)            11              8
  Corporate and Other                    (19)           299             (3)
                              --------------  -------------  -------------
  Total Company               $           11  $         544  $         177
                              --------------  -------------  -------------
  Depreciation and
   amortization                           50             49             49
  Interest expense, net                  152            155            151
  Income tax expense
   (benefit)                               6            118             10
                              --------------  -------------  -------------
  Net income (loss)
   attributable to
   Realogy                    $         (197) $         222  $         (33)
                              ==============  =============  =============


(a) Transactions between segments are eliminated in consolidation. Revenues
    for the Real Estate Franchise Services segment include intercompany
    royalties and marketing fees paid by the Company Owned Real Estate
    Brokerage Services segment of $45 million, $68 million, and $54 million
    for the three months ended March 31, June 30, and September 30 2010,
    respectively. Such amounts are eliminated through the Corporate and
    Other line. Revenues for the Relocation Services segment include $7
    million, $10 million and $12 million of intercompany referral and
    relocation fees paid by the Company Owned Real Estate Brokerage
    Services segment during the three months ended March 31, June 30 and
    September 30, 2010, respectively. Such amounts are recorded as contra-
    revenues by the Company Owned Real Estate Brokerage Services segment.
    There are no other material inter-segment transactions.

(b) Includes $6 million and $5 million of restructuring costs and former
    parent legacy items, respectively, for the three months ended March 31,
    2010, $4 million of restructuring costs offset by a net benefit of $314
    million of former parent legacy items primarily as a result of tax and
    other liability adjustments for the three months ended June 30, 2010
    and $2 million of restructuring costs offset by a net benefit of $6
    million of former parent legacy items for the three months ended
    September 30, 2010 broken down by business units as follows:

                                                             For the Three
                              For the Three   For the Three  Months ended
                               Months ended    Months ended  September 30,
                              March 31, 2010  June 30, 2010      2010
                              --------------  -------------  -------------

Real Estate Franchise
 Services                     $            -  $           -  $           -
Company Owned Real Estate
 Brokerage Services                        3              2              2
Relocation Services                        2              1              -
Title and Settlement Services              1              -              -
Corporate and Other                        5           (313)            (6)
                              --------------  -------------  -------------
Total Company                 $           11  $        (310) $          (4)
                              ==============  =============  =============


EBITDA by segment before restructuring and other items detailed above for
the three months ended March 31, 2010  was:  RFG $65 million, NRT ($31)
million, Cartus $6 million, TRG ($4) million and Corporate ($14) million.
EBITDA by segment before restructuring and other items detailed above for
the three months ended June 30, 2010  was:  RFG $123 million, NRT $86
million, Cartus $28 million, TRG $11 million and Corporate ($14) million.
EBITDA by segment before restructuring and other items detailed above for
the three months ended September 30, 2010  was:  RFG $90 million, NRT $33
million, Cartus $51 million, TRG $8 million and Corporate ($9) million.




Table 5b
                              REALOGY CORPORATION
                         SELECTED 2009 FINANCIAL DATA
                                 (In millions)

                           For the   For the   For the   For the
                            Three     Three     Three     Three    For the
                           Months    Months    Months    Months     Year
                            ended     ended     ended     ended     Ended
                          March 31,  June 30, September December  December
                            2009       2009   30, 2009  31, 2009  31, 2009
                          --------  --------  --------  --------  --------
Revenue (a)
  Real Estate Franchise
   Services               $    105  $    143  $    151  $    139  $    538
  Company Owned Real
   Estate Brokerage
   Services                    491       764       896       808     2,959
  Relocation Services           71        80        92        77       320
  Title and Settlement
   Services                     68        88        91        81       328
  Corporate and Other          (38)      (57)      (61)      (57)     (213)
                          --------  --------  --------  --------  --------
  Total Company           $    697  $  1,018   $ 1,169  $  1,048  $  3,932
                          ========  ========  ========  ========  ========
EBITDA (b)
  Real Estate Franchise
   Services               $     44  $     85  $    107  $     87  $    323
  Company Owned Real
  Estate Brokerage Services    (84)       24        48        18         6
  Relocation Services            -        72        34        16       122
  Title and Settlement
   Services                     (5)       12        10         3        20
  Corporate and Other          (17)       (8)       54       (35)       (6)
                          --------  --------  --------  --------  --------
  Total Company           $    (62) $    185  $    253  $     89  $    465
                          --------  --------  --------  --------  --------
  Depreciation and
   amortization                 51        48        48        47       194
  Interest expense, net        144       147       139       153       583
  Income tax expense
   (benefit)                     2         5         8       (65)      (50)
                          --------  --------  --------  --------  --------
  Net income (loss)
   attributable to
   Realogy                $   (259) $    (15) $     58  $    (46) $   (262)
                          ========  ========  ========  ========  ========


(a) Transactions between segments are eliminated in consolidation. Revenues
    for the Real Estate Franchise Services segment include intercompany
    royalties and marketing fees paid by the Company Owned Real Estate
    Brokerage Services segment of $38 million, $57 million, $61 million and
    $57 million for the three months ended March 31, 2009, June 30, 2009,
    September 30, 2009 and December 31, 2009, respectively. Such amounts
    are eliminated through the Corporate and Other line. Revenues for the
    Relocation Services segment include $6 million, $9 million, $11 million
    and $8 million of intercompany referral and relocation fees paid by the
    Company Owned Real Estate Brokerage Services segment during the three
    months ended March 31, 2009, June 30, 2009, September 30, 2009 and
    December 31, 2009, respectively. Such amounts are recorded as contra-
    revenues by the Company Owned Real Estate Brokerage Services segment.
    Revenues for the Real Estate Franchise Services segment include
    intercompany royalties and marketing fees paid by the Company Owned
    Real Estate Brokerage Services segment of $213 million for the year
    ended December 31, 2009.  Revenues for the Relocation Services segment
    include intercompany referral and relocation fees paid by the Company
    Owned Real Estate Brokerage Services segment of $34 million for the
    year ended December 31, 2009.  There are no other material inter-
    segment transactions.
(b) Includes $34 million and $4 million of restructuring costs and former
    parent legacy items, respectively, for the three months ended March 31,
    2009, $10 million of restructuring costs offset by a benefit of $46
    million of former parent legacy items (comprised of a benefit of $55
    million recorded at Cartus related to Wright Express Corporation
    partially offset by $9 million of expenses recorded at Corporate) for
    the three months ended June 30, 2009, $15 million and $5 million of
    restructuring costs and former legacy items along with a $75 million
    gain on extinguishment of debt for the three months ended September 30,
    2009 and $11 million, $3 million and $1 million of restructuring costs,
    former legacy items and merger cost, respectively for the three months
    ended December 31, 2009. EBITDA for the year ended December 31, 2009
    includes $70 million of restructuring costs and $1 million of merger
    costs offset by a benefit of $34 million of former parent legacy items
    (comprised of a benefit of $55 million recorded at Cartus related to
    Wright Express Corporation partially offset by $21 million of expenses
    recorded at Corporate) and a gain on the extinguishment of debt of $75
    million.

                           For the   For the   For the   For the
                            Three     Three     Three     Three    For the
                           Months    Months    Months    Months     Year
                            ended     ended     ended     ended     Ended
                          March 31,  June 30, September December  December
                            2009       2009   30, 2009  31, 2009  31, 2009
                          --------  --------  --------  --------  --------
Real Estate Franchise
 Services                 $      1  $      1  $      1  $      -         3
Company Owned Real Estate
 Brokerage Services             25         5        13         4        47
Relocation Services              5       (52)        -         2       (45)
Title and Settlement
 Services                        1         1         -         1         3
Corporate and Other              6         9       (69)        8       (46)
                          --------  --------  --------  --------  --------
Total Company             $     38  $    (36) $    (55) $     15  $    (38)
                          ========  ========  ========  ========  ========


EBITDA by segment before restructuring and other items detailed above for
the three months ended March 31, 2009 was:  RFG $45 million, NRT ($59)
million, Cartus $5 million, TRG ($4) million and Corporate ($11) million.
EBITDA by segment before restructuring and other items detailed above for
the corresponding three months ended June 30, 2009 was as follows:  RFG $86
million, NRT $29 million, Cartus $20 million, TRG $13 million, and
Corporate $1 million.  EBITDA by segment before restructuring and other
items detailed above for the corresponding three months ended September 30,
2009 was as follows:  RFG $108 million, NRT $61 million, Cartus $34
million, TRG $10 million, and Corporate ($15) million. EBITDA by segment
before restructuring and other items detailed above for the corresponding
three months ended December 31, 2009 was as follows:  RFG $87 million, NRT
$22 million, Cartus $18 million, TRG $4 million, and Corporate ($27)
million. EBITDA by segment before restructuring and other items detailed
above for the corresponding year ended December 31, 2009 was as follows:
RFG $326 million, NRT $53 million, Cartus $77 million, TRG $23 million, and
Corporate ($52) million.




Table 6
                                REALOGY CORPORATION
                            EBITDA AND ADJUSTED EBITDA
                                   (In millions)

A reconciliation of net income (loss) attributable to Realogy to EBITDA and
Adjusted EBITDA for the twelve months ended September 30, 2010 is set forth
in the following table:
                        
                                   Less     Equals     Plus     Equals
                                 --------  --------  --------  --------
                                   Nine      Three     Nine     Twelve
                         Year     Months    Months    Months    Months
                        Ended     Ended      Ended     Ended    Ended
                       December September  December September September
                       31, 2009  30, 2009  31, 2009  30, 2010  30, 2010
                       --------  --------  --------  --------  --------

Net loss attributable
 to Realogy            $   (262) $   (216) $    (46) $     (8) $    (54)(a)
Income tax expense
 (benefit)                  (50)       15       (65)       134       69
                       --------  --------  --------  --------  --------
Income (loss) before
 income taxes              (312)     (201)     (111)      126        15
Interest expense, net       583       430       153       458       611
Depreciation and
 amortization               194       147        47       148       195
                       --------  --------  --------  --------  --------
EBITDA                      465       376        89       732       821 (b)
Covenant calculation adjustments:
  Restructuring costs, merger costs and former parent legacy
   cost (benefit) items, net (c)                                   (288)
  Pro forma cost-savings for 2010 restructuring initiatives (d)      11
  Pro forma cost-savings for 2009 restructuring initiatives (e)       1
  Pro forma effect of business optimization initiatives (f)          50
  Non-cash charges (g)                                                6
  Non-recurring fair value adjustments for purchase
   accounting (h)                                                     4
  Pro forma effect of acquisitions and new franchisees (i)            6
  Apollo management fees (j)                                         15
  Incremental securitization interest costs (k)                       2
                                                               --------
Adjusted EBITDA                                                 $   628
                                                               --------
Total senior secured net debt (l)                               $ 2,873
Senior secured leverage ratio                                      4.57x

(a) Net income (loss) attributable to Realogy consists of: (i) a loss of
    $46 million for the fourth quarter of 2009; (ii) a loss of $197 million
    for the first quarter of 2010; (iii) income of $222 million for the
    second quarter of 2010; and (iv) a loss of $33 million for the third
    quarter of 2010.
(b) EBITDA consists of: (i) $89 million for the fourth quarter of 2009;
    (ii) $11 million for the first quarter of 2010; (iii) $544 million for
    the second quarter of 2010; and (iv) $177 million for the third quarter
    of 2010.
(c) Consists of $23 million of restructuring costs and $1 million of merger
    costs offset by a net benefit of $312 million for former parent legacy
    items.
(d) Represents actual costs incurred that are not expected to recur in
    subsequent periods due to restructuring activities initiated during the
    first nine months of 2010. From this restructuring, we expect to reduce
    our operating costs by approximately $19 million on a twelve-month run-
    rate basis and estimate that $8 million of such savings were realized
    from the time they were put in place. The adjustment shown represents
    the impact the savings would have had on the period from October 1,
    2009 through the time they were put in place had those actions been
    effected on October 1, 2009.
(e) Represents actual costs incurred that are not expected to recur in
    subsequent periods due to restructuring activities initiated during the
    year ended December 31, 2009. From this restructuring, we expect to
    reduce our operating costs by approximately $103 million on a twelve-
    month run-rate basis and estimate that $102 million of such savings
    were realized from the time they were put in place. The adjustment
    shown represents the impact the savings would have had on the period
    from October 1, 2009 through the time they were put in place had those
    actions been effected on October 1, 2009.
(f) Represents the twelve-month pro forma effect of business optimization
    initiatives that have been completed to reduce costs of $22 million as
    well as $28 million for employee retention accruals.
(g) Represents the elimination of non-cash expenses, including a $14
    million write-down of a cost method investment acquired in 2006, $6
    million of stock-based compensation expense, less $14 million for the
    change in the allowance for doubtful accounts and notes reserves from
    October 1, 2009 through September 30, 2010.
(h) Reflects the adjustment for the negative impact of fair value
    adjustments for purchase accounting at the operating business segments
    primarily related to deferred rent.
(i) Represents the estimated impact of acquisitions and new franchisees as
    if they had been acquired or signed on October 1, 2009. We have made a
    number of assumptions in calculating such estimate and there can be no
    assurance that we would have generated the projected levels of EBITDA
    had we owned the acquired entities or entered into the franchise
    contracts as of October 1, 2009.
(j) Represents the elimination of annual management fees payable to Apollo
    for the twelve months ended September 30, 2010.
(k) Incremental borrowing costs incurred as a result of the securitization
    facilities refinancing for the twelve months ended September 30, 2010.
(l) Represents total borrowings under the senior secured credit facility
    which are secured by a first priority lien on our assets of $3,067
    million plus $12 million of capital lease obligations less $206 million
    of readily available cash as of September 30, 2010.  Pursuant to the
    terms of the senior secured credit agreement, senior secured net debt
    does not include Second Lien Loans, other bank indebtedness not secured
    by a first lien on our assets, securitization obligations or Unsecured
    Notes.




Table 7

Reconciliation of net income (loss) attributable to Realogy to EBITDA
 before restructuring and other items (In millions)

A reconciliation of net income (loss) attributable to Realogy to EBITDA
and EBITDA before restructuring and other items for the three and nine
months ended September 30, 2010 and 2009 are set forth in the following
tables:



                                              Three Months Ended
                                                 September 30,
                                              ------------------
                                                2010      2009
                                              --------  --------
Net income (loss) attributable to Realogy     $    (33) $     58
Income tax expense                                  10         8
                                              --------  --------
Income (loss) before income taxes                  (23)       66
Interest expense, net                              151       139
Depreciation and amortization                       49        48
                                              --------  --------
EBITDA                                        $    177  $    253
                                              --------  --------
Legacy costs (benefits), net                        (6)        5
Restructuring costs                                  2        15
Gain on extinguishment of debt                       -       (75)
                                              --------  --------
Total restructuring and other items                 (4)      (55)
                                              --------  --------
EBITDA before restructuring and other items   $    173  $    198
                                              ========  ========




                                               Nine Months Ended
                                                 September 30,
                                              ------------------
                                                2010      2009
                                              --------  --------
Net income (loss) attributable to Realogy     $     (8) $   (216)
Income tax expense                                 134        15
                                              --------  --------
Income (loss) before income taxes                  126      (201)
Interest expense, net                              458       430
Depreciation and amortization                      148       147
                                              --------  --------
EBITDA                                        $    732  $    376
                                              --------  --------
Legacy costs (benefits), net                      (315)      (37)
Restructuring costs                                 12        59
Gain on extinguishment of debt                       -       (75)
                                              --------  --------
Total restructuring and other items               (303)      (53)
                                              --------  --------
EBITDA before restructuring and other items   $    429  $    323
                                              ========  ========

Table 8

Definitions

EBITDA is defined by the Company as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is calculated by adjusting EBITDA by restructuring, legacy, and other items as described in Table 7 above. Adjusted EBITDA is calculated by adjusting EBITDA by the items described in Table 6 above. Adjusted EBITDA corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio and substantially corresponds to the definition of "EBITDA" used in the indentures governing the Unsecured Notes to test the permissibility of certain types of transactions, including debt incurrence. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation, and Adjusted EBITDA is used in measuring compliance with debt covenants relating to certain of our borrowing arrangements. EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP.

We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results.

EBITDA and EBITDA before restructuring and other items have limitations as an analytical tool, and you should not consider EBITDA either in isolation or as a substitute for analyzing our results as reported under GAAP. Some of these limitations are:

--  EBITDA does not reflect changes in, or cash requirement for, our
    working capital needs;
--  EBITDA does not reflect our interest expense (except for interest
    related to our securitization obligations), or the cash requirements
    necessary to service interest or principal payments, on our debt;
--  EBITDA does not reflect our income tax expense or the cash requirements
    to pay our taxes;
--  EBITDA does not reflect historical cash expenditures or future
    requirements for capital expenditures or contractual commitments;
--  although depreciation and amortization are non-cash charges, the assets
    being depreciated and amortized will often require replacement in the
    future, and these EBITDA measures do not reflect any cash requirements
    for such replacements; and
--  other companies in our industry may calculate these EBITDA measures
    differently so they may not be comparable.

In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost-savings and the pro forma full year effect of NRT acquisitions and RFG acquisitions/new franchisees. These adjustments may not reflect the actual cost-savings or pro forma effect recognized in future periods.

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