Re/Max Wants To Go Public
Guess the housing market is back. Re/Max Holdings, the Colorado-based real estate franchise, this morning filed documents with the Securities and Exchange Commission for a $100 million public offering, essentially confirming that the housing market is making a comeback.
The company plans to use $27.3 million of the funds to reacquire franchise rights in the Southwest and Central Atlantic regions. It wants to use the rest to acquire a holding company, RMCO, a holding company that is the technical operator of the Re/Max franchise. RMCO, in turn, will make payments to the company's owners, including the private equity group Weston Presidio and another group controlled by Re/Max executives and the company's founders, Dave and Gail Liniger.
Weston Presidio bought a minority stake in Re/Max in 2010, during the depths of the housing crash. Three years later that investment is looking brilliant.
Re/Max's success is highly correlated to the number of agents in the system, and the number of agents peaked in 2006 at 120,000, according to the company's SEC filings. That number fell 26.2 percent by 2011, when the company had fewer than 88,000 agents in the system. But the number of agents has grown each of the past two years and the company is back up to more than 92,000 agents around the world. Nearly three-quarters of the company's revenue comes from the U.S.
That revenue grew 4 percent last year. EBITDA grew 12.5 percent. And the company believes those numbers will grow further, thanks to a combination of an improving economy, low interest rates, a growing number of new households and improving home values.
Morgan Stanley, Bank of America Merrill Lynch and J.P. Morgan are underwriting the IPO.