March 18, 2015
Safe Harbor Statement This presentation contains forward-looking statements. The Company desires to take advantage of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 and is including this statement for the express purpose of availing itself of the protections of the safe harbor with respect to all forward-looking statements. Therefore, the Company wishes to caution each participant to consider carefully the specific factors discussed with each forward- looking statement in this presentation and other factors contained in the Company’s Annual Report on Form 10- K for the year ended December 31, 2014, and the company’s other filings made from time to time with the Securities an d Exchange Commission under the captions “Forward - Looking Statements”, “Risk Factors” and “Management’s Discussion and Analysis of Financia l Condition and Results of Operations” as such factors in some cases have affected, and in the future (together with other fact ors) could affect, the ability of the Company to implement its business strategy and may cause actual results to differ materially from those contemplated by the statements expressed herein. The information contained in this presentation is as of March 18, 2015 except for the Company’s obligation to disclose material information under the federal securities laws, the Company assumes no obligation to update the information or the forward- looking statements contained herein, whether as a result of new information or otherwise. Non-GAAP Financial Measures The financial measures EBITDA, Adjusted EBITDA, and Free Cash Flow, as used in this presentation, are supplemental measures of the Company’s performance that are not Generally Accepted Accounting Principles (“GAAP”) measures. Refer to slides 85, 86 and 87 of this presentation and Tables 5a, 5b, 6a, 6b, 7, and 8 of the Company’s February 24, 2015 press release announcing full year 2014 f inancial results for the definitions of these non-GAAP financial measures, a reconciliation of these measures to their most comparable GAAP measures, and the Company’s explanation of why it believes these non -GAAP measures are useful to investors. Market and Industry Data and Forecasts This presentation includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this presentation to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period could materially differ. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. For further information regarding the Company’s use of industry data, forecasts and information, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 under the heading “Market and Industry Data and Forecasts.” 1
Richard A. Smith Chairman, Chief Executive Officer and President 2
Realogy Value Proposition Real Estate Franchise Services (RFG) Owned Brokerage Network (NRT) Largest U.S. Residential Real Estate Brokerage World’s Largest Real Estate Franchisor 25% Relocation Title Settlement Services and Services 13% 58% 5% Significant Provider of Title and Settlement Services Leading Global Relocation Company 3
Key Messages • Realogy’s 2014 homesale transaction volume outpaced the market by 4% Strong Market • Market penetration grew 100 basis points to 27% Position • NRT is 2x larger than next largest brokerage by sales volume • World’s largest residential real estate franchisor • Roll up acquisition strategy is low risk and highly accretive – 17 NRT and 3 TRG acquisitions in 2014 Growth • Strong potential in additional markets, i.e. the Sunbelt states Opportunities • ZipRealty Zap platform enhances RFG value proposition • Generated $367 million of free cash flow in 2014 • Significant Adj. EBITDA to free cash flow conversion Free Cash Flow • Excess free cash flow will be applied to debt Generation reduction, growth opportunities and the eventual return of capital 4
Next Stage of Housing Recovery: Return of the First-Time Buyer Homebuyer Classification 70% 59% 56% 57% 60% 54% 55% 53% 56% 54% 54% 53% 51% 51% 51% 46% 51% 50% 49% 49% 50% 47% 47% 48% 48% 48% 49% 50% 44% 46% 44% 38% 40% 38% 37% 36% 36% 35% 33% 35% 34% 31% 32% 32% 29% 31% 31% 30% 29% 30% 30% 28% 29% 30% 27% 23% 22% 22% 21% 20% 20% 20% 21% 21% 21% 18% 19% 19% 19% 18% 18% 18% 18% 20% 17% 16% 16% 15% 15% 16% 15% 12% 13% 12% 10% Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-15 Dec-15 15-Feb First-Time Buyer Investor All Other 5 Source: National Association of Realtors
Credit Remains Challenging Average FICO scores of all closed loans 760 748 745 742 742 740 734 732 728 731 728 727 727 726 726 724 720 699 699 697 694 696 700 692 690 686 685 683 683 682 681 682 680 30% of all closed loans had FICO 660 scores under 700 in Jan. 2015 FICO - All Loans FICO - FHA Purchase 640 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 6 Source: Ellie Mae Origination Insight Report, January 2015
Household Formation Improving Quarterly Household Formation Number of households added (‘000s) 1,500 1,000 500 0 (500) 1.3 million households added in Q4 2014 (1,000) Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 7 Source: Census Bureau Housing Vacancy Survey
Expansion of the Credit Box Progress on Policy Reinstatement of Reduction of 3% down- annual insurance Clarification on payment for low put-back premiums by income and first- 50 bps time buyers According to NAR estimates, reduced FHA fees alone could add an incremental 90,000 to 140,000 buyers to the market on an annual basis 8
Catalysts for Increased Inventory • Home price Annual Months’ Supply of Inventory appreciation 12 • Recovering negative 10 equity 8 • Move-up buyer 6.4 months is 25-year average activity 6 • New construction 4 • Rental rate increases 2 – rent vs. own 0 1989 1994 1999 2004 2009 2014 Source: National Association of Realtors 9
Historical Perspective U.S. Existing Home Sales Units and Median Home Price US home sale units (000) Median home price ($000) 8,000 250 2001 – 2002 7,080 2011 – 2014 CAGR +5.60% 1972 – 2014 6,778 +8.45% 6,477 7,000 Units 2% 6,176 Median price 5% 200 5,634 1982 – 1983 1975 – 1976 1991 – 1992 5,335 6,000 5,179 5,173 5,090 5,030 +35.53% 4,965 +23.75% +9.06% 4,940 4,660 4,374 4,340 5,000 4,260 4,167 4,190 4,110 150 3,986 3,884 3,849 3,827 3,737 3,650 3,513 3,474 3,436 3,431 4,000 3,290 3,184 3,146 3,134 3,064 2,973 2,829 2,697 100 2,476 2,419 2,334 3,000 2,272 1,990 2,000 50 1,000 0 0 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 US Home sale units Recovery Recession Median home price Source: National Association of Realtors 10
Management Initiatives to Drive Growth Owned Brokerage Network Real Estate Franchise Services Enhance value proposition of each brand Continue to selectively pursue tuck-in and strategic acquisitions Increase productivity of franchisees - Invest in technology Recruit, retain and develop productive agents - Assist franchisees with acquisitions Grow real estate related services - Lead generation and management Increase high-margin lead conversion Maintain historically high franchisee retention rate Relocation Services Title and Settlement Services Build on existing client relationships Increase NRT capture rates - Recruit sales reps for broader office coverage Grow affinity services, mobility market share, - Acquire local agencies to cover broker to broker referrals NRT acquisitions - Leverage and integrate technology with NRT Continue to pursue adjacent revenue growth - Build service delivery model for Zip agents opportunities Diversity through third party unaffiliated business Expand global footprint 11
Alex Perriello President and Chief Executive Officer Realogy Franchise Group 12
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