By Peter Ricci
Realogy shares have leapt 25 percent in the first day of trading after a hugely successful IPO for the real estate services company, according to market reports.
This marks the second successful real estate IPO in as many months; in September, syndication site Trulia went public, and shares shot up more than 41 percent in the day’s trading.
Realogy IPO – A Rousing Success
As we wrote last week, Realogy, which owns the Century 21, Better Homes and Gardens Real Estate and Coldwell Banker franchises, was hoping to sell 40 million shares for $23 to $27 in its IPO, and according to MarketWatch, it not only met those projects (and raised $1.08 billion in funds), but it’s stock then opened today at $32.85 a share. You can track the progress of Realogy’s stock here.
Realogy was purchased by private-equity firm Apollo Global Management five years ago, and the $8.5 billion deal left the company with a sizable debt; thus, Realogy is using the funds from the IPO to mainly pay down its debt burden.
Positive Sign for the Real Estate Industry
Realogy’s IPO represents, after the respective IPOs of Zillow and Trulia, the third consecutive IPO in the real estate industry in the last year – and the fact that all three have exceeded initial expectations says quite a bit about how far housing has traveled since 2008.
As Megan McGrath, an analyst with MKM Partners, explained after the Trulia IPO, investors are now feeling optimistic with where the housing market is headed, and are attempting to get in on the action.
“The debate has moved away from, ‘Is housing really recovering?’ to ‘How fast is it going to recover, and what’s the best way to play that?'” she said.