June 27 (Bloomberg) -- Apollo Management LP, the New York buyout firm run by Leon Black, has cut more than 1,500 jobs at the U.K.'s largest residential property broker since buying the company at the peak of the market last year.

Countrywide Plc, acquired by Apollo for about 1 billion pounds ($2 billion), said it shed 14 percent of the staff and 52 branches across the country. The company operates about 1,200 brokers, known as estate agencies in Britain, and is trying to halt a slide in profit.

The biggest slump in the U.K. housing market for more than a decade may lead to the elimination of 15,000 jobs in the industry this year, according to the Centre for Economic Business Research. Earnings at Realogy, the U.S. broker bought by Apollo last year, have also dropped since its purchase.

``Agencies owned by leveraged-buyout firms are having to respond quickest to the downturn,'' said Peter Bolton-King, chief executive officer of the National Association of Estate Agents, in a telephone interview. ``Their investors have a short-term view.''

Countrywide is twice as big as its closest competitor, Connells. The company, based in the English town of Witham, also has the country's largest residential valuations and property surveying business.

Apollo acquired Countrywide at a time when U.K. house prices were rising at the fastest pace in almost four years, figures compiled by London-based researcher Hometrack Ltd. show. Apollo outbid 3i Group Plc two months after Countrywide reported a record profit and forecast ``another very satisfactory year.''

Lack of Demand

Since then, demand from homebuyers has collapsed because of stricter lending conditions and higher borrowing costs. In May, U.K. mortgage approvals fell to the lowest in at least 11 years, a June 24 report by the British Bankers' Association showed.

There are now about 15 homes for sale in Britain for every potential buyer, double the ratio of a year ago, making it harder for brokers to make money.

Apollo paid a ``full'' price ``for top-of-the-cycle earnings,'' said Katrina Preston, an analyst at Landsbanki Securities who covered Countrywide until the removal of its shares from the London exchange in May 2007. ``I never understood the interest of private equity,'' she said.

Unsecured bonds of Castle Holdco 4, a company that Apollo created to purchase Countrywide, have lost 62 percent of their initial face value in the past year. That's on concern Countrywide will struggle to repay the 740 million pounds Apollo borrowed to finance the buyout.

Quarterly Loss

Countrywide disclosed its cost cuts to bondholders last month as it reported a loss before interest, taxes, depreciation and amortization in the first quarter, said Stefano Del Zompo, an analyst at Moody's Investors Service. He estimates Countrywide has enough cash and an additional loan to allow it to pay interest for about three years.

Countrywide spokeswoman Gemma Stacey confirmed the figures in the Moody's report, and declined to comment or disclose earnings figures. Apollo spokesman Steven Anreder also declined to comment.

Realogy Corp., the largest U.S. real-estate broker, also reported a net loss of $132 million for the first quarter as home prices declined. That compared with a $32 million profit a year earlier. Last month, Apollo invested in Vantium Management LP to buy U.S. residential mortgages and hired a London-based team specialized in European distressed debt investment.

Realogy's $1.67 billion of 10.5 percent notes due in 2014 are trading at 69 cents on the dollar, after being sold in April 2007 at about 99 cents, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The notes yield 19.7 percent, or 1,630 basis points more than similar- maturity Treasuries, Trace data show. A basis point is 0.01 percentage point.

Gloomy Outlook

The U.K. housing market may not recover until 2018, derivatives contracts pegged to the HBOS home price index indicate, according to Tradition Financial Services.

``This is all about availability of credit,'' said Jim Ward, a research director at Savills Plc, the U.K. property broker that's lost 60 percent of its market value in a year. Home prices will drop between 10 percent and 25 percent by the end of 2009, he said.

Other companies in the industry trying to reduce their costs include LSL Property Services Plc, operator of Britain's third- largest chain of estate agencies. It eliminated 200 jobs and closed 12 of its Your Move and Reeds Reins branches in the fourth quarter after the number of transactions fell by a third.

Humberts Plc, a property-services company employing more than 700 people, agreed to sell all of its units to Mercantile Group June 11 after a slump in business.

Countrywide's fee structure and strengths in valuation, financial and rental services will help the company weather the slump, Landsbanki's Preston said. ``It may not be faring as badly as the rest of the market.''

Demand for rental accommodation in particular has increased with the drop in home-buying, which is keeping rental agents busy, said Bolton-King at NAEA.

Still, Countrywide may have to make deeper cuts to become profitable again, said Del Zompo of Moody's, who lowered his rating on Castle Holdco 4's bonds to Caa1 from B2 in April 2007.

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net.

Last Updated: June 26, 2008 19:00 EDT