Realogy Reports Results for Full Year 2007

Business Wire, March 19, 2008

Full-Year 2007 Pro Forma Combined Revenue of $6.0 Billion

Full-Year 2007 Pro Forma Combined Adjusted EBITDA of $816 Million

Pro Forma Combined 2007 Net Loss of $605 Million After $445 Million After-tax, Non-cash Impairment Charges

Cash Balance of $153 Million with Revolver Undrawn At Year-End

Exit from "At-Risk" Government Portion of Relocation Business Expected to Yield $50 Million of Additional Cash Flow in 2008

PARSIPPANY, N.J. -- Realogy Corporation, a global provider of real estate and relocation services, today reported results for the fourth quarter and full year 2007. The 2007 full-year results are reported on a pro forma combined basis. They have been prepared to give effect to the Company's April 10, 2007 acquisition by Apollo Management L.P. and the related financing transactions as if they had occurred on January 1, 2007 and combine the Company's financial results for the predecessor period, from January 1, 2007 to April 9, 2007, and the successor period, from April 10, 2007 through December 31, 2007.

Specifically, full-year 2007 pro forma combined revenue was $6.0 billion; pro forma combined Adjusted EBITDA was $816 million; and pro forma combined net loss was $605 million due largely to non-cash intangible assets and goodwill impairment charges recorded in the fourth quarter of 2007. (Please see Table 5 for a reconciliation of pro forma combined net income (loss) to pro forma combined Adjusted EBITDA and Table 6 for the definition of non-GAAP financial measures.)

Realogy's full-year 2007 pro forma combined operating results declined year-over-year primarily as a result of the continued industry-wide slowdown in U.S. existing home sales.

During 2007, year-over-year homesale transaction sides declined by 19% at Realogy Franchise Services Segment (RFG) and by 17% at NRT, the Company's owned brokerage unit. The larger decline at RFG reflected the softness in the broader housing market. NRT's decline in sides was partially offset by an 8% improvement in year-over-year average sales price. This reflects NRT's strategic presence in higher-priced markets such as New York City, the Hamptons, Beverly Hills and the Sotheby's International Realty markets across the country. The NRT average sales price has historically outperformed the overall market as well as RFG's average sales price, which was down 1% in 2007.

"Management continues to take proactive steps to keep the Company well positioned in the short term to contend with the current down cycle in the residential real estate market," said Richard A. Smith, Realogy's president and CEO. "At the same time, we are investing in growth opportunities that will improve our business and market position when cyclical growth continues over the long term. For example, we will be launching Better Homes and Gardens Real Estate in July 2008, as a new residential real estate franchise system, and we will continue to grow our existing franchise networks. We have also greatly reduced our fixed cost base while investing in technology that improves the efficiency of our businesses and their ability to serve their clients."

Realogy also announced that it has made the strategic decision to exit its "at-risk" government business at Cartus, its relocation services business. "Due to the current market environment, inventory staying on the market longer and the fixed-fee contracts required by the U.S. General Services Administration, we were taking losses on home sales in this line of business in 2007," Smith said. "Exiting the government relocation "at-risk" business is anticipated to improve our cash flow by $50 million in 2008."

Realogy's CFO, Anthony Hull, noted, "At year end, Realogy's revolver was undrawn and our cash balance was $153 million. Given net senior secured debt of $3.1 billion and pro forma combined Adjusted EBITDA of $816 million for 2007, our ratio of Senior Secured debt to pro forma combined Adjusted EBITDA was 3.8x at the end of 2007, well within the maximum 5.6x ratio that will be measured under the terms of our Credit Agreement at March 31 of this year."

Strategic, Operational and Financial Accomplishments

During 2007, the Company made considerable progress towards its strategic, operational and financial goals, including the following accomplishments:

* Entered into a long-term agreement to license the Better Homes and Gardens Real Estate brand from Meredith Corporation (NYSE: MDP) for a 50-year term with a 50-year renewal at Realogy's option, thereby adding a fifth residential brand under the Realogy umbrella. This new franchise system is on schedule to launch to the public in July 2008.

* Grew its international business contribution 64% through RFG master franchisee area developer fees, international franchise royalties, and the rapid expansion of Cartus's global relocation business.

* Expanded online listing distribution marketing agreements with Google, Trulia, Yahoo! and Zillow, among other leading Internet destination sites.

* Maintained a 98% success rate for franchisee retention as measured by gross commission income.