Cendant may consider other options if spin-off plans fizzle
Company expects real estate business to be flat in ’06
If Cendant Corp. plans for spinning off its massive real estate franchise and company-owned brokerage business as a separate publicly traded company fall flat, the company might consider other options, CEO and chairman Henry Silverman said today during a discussion of the company’s first-quarter earnings.
He did not rule out the potential for a private sale of the company’s real estate segment, which re-branded this year as Realogy, or other business segments that the company plans to spin-off as separate companies. Silverman, who will serve as chairman and CEO for the first 18 months of the spin-off real estate company, prefaced the comment with a statement that there is no plan at this time to sell off the real estate business.
He also said that Cendant’s real estate business should be roughly flat this year, with some improvement expected in the second half of the year.
In its first-quarter earnings announcement, Cendant announced that transaction volume dropped 10 percent for its franchise business and 6 percent for company-owned business compared to first-quarter 2005, and total revenue for franchise and company-owned business dropped slightly while earnings before interest, income taxes, depreciation and amortization, or EBITDA, fell 25 percent compared to first-quarter 2005. The first quarter is typically slow for the real estate industry, with most profits coming during the second and third quarters of the year, Silverman said.
While the National Association of Realtors released existing-home sales data this week that showed an improving market from February to March, Silverman said he is unconvinced that the market is getting better at this time. “I’m not sure the (association) data is terribly relevant. They typically sample only 20 percent of MLSs and then they adjust those numbers with a number of variables. I think that with 30 percent of the market — as we believe we have at least on price and size in terms of dollar volume — statistically you could argue we are the market.”
He added, “So our results are more likely to be accurate as to the market than whatever (the association) is projecting or … has reported.”
For those who don’t know who Cendant is, I’ll give you a hint… They own Century 21, Coldwell Banker, ERA Real Estate, and Sotheby’s International Realty.
It’s rather suprising that the CEO of Cendant doesn’t put much weight on the National Association of Realtors numbers.. They only 20% of the market and adjusting “those numbers with a number of variables”? I can see why he wouldnt. I wonder just who gets to pick which markets are sampled?