BROOKFIELD REAL ESTATE SERVICES INC. REPORTS FIRST QUARTER 2011 RESULTS AND MONTHLY DIVIDEND
May 24 2011 - 7:00AM
PR Newswire (Canada)
TORONTO, May 24, 2011 /CNW/ -- Royalties and cash flow from
operations steady amidst year-over-year decline in market activity
TORONTO, May 24, 2011 /CNW/ - Brookfield Real Estate Services Inc.
(the Company) (TSX: BRE), a leading provider of services to
residential real estate brokers and their REALTORS®(1), today
announced that cash flow from operations ("CFFO") for the three
months ended March 31, 2011 was $5.7 million or $0.44 per
restricted voting share ("RVS") which was unchanged from the same
period in 2010. CFFO for the rolling 12 month period ended March
31, 2011 of $1.97 per RVS was unchanged from the 12 months ended
December 31, 2010. Royalties were $8.2 million for the quarter, the
same level as the first quarter of 2010. The net loss for the three
months ended March 31, 2011 was $1.6 million or $0.17 per RVS, as
compared to a loss of $18.4 million for the same period in 2010,
when calculated on a consistent basis. OVERVIEW OF FIRST QUARTER
OPERATING RESULTS During the quarter the Company commenced
reporting in accordance with International Financial Reporting
Standards ("IFRS"). It is important to note that under IFRS our key
financial performance measure is CFFO per RVS which is commensurate
with the previous distributable cash per unit measure. The net loss
for the quarter and the comparative period in 2010 were driven by
the accounting for various non-cash items under IFRS. A copy of our
interim consolidated financial statements for the quarter with an
explanation of these adjustments and a discussion of the impact of
IFRS on our financial results can be found on our website. During
the quarter, the Company's increase in fixed royalty fees as a
result of the growth in the underlying agent network was offset by
lower premium and variable franchise fees due to reduced market
activity, which after management fees, administration costs and
interest on our long term debt, generated CFFO of $5.7 million
which was at the same level as the first quarter in 2010.
"Brookfield continues to generate strong and stable cash flow from
operations for investors despite Canadian house price appreciation
having potentially peaked for the next year or so - a testament to
the strength and structure of our organization," said Phil Soper,
president and chief executive officer, Brookfield Real Estate
Services Inc. "We're entering a period of more modest house price
growth and lower transaction volumes in the Canadian real estate
market. Despite these conditions, Brookfield continues to grow and
expand its REALTOR® network." The Company Network As at March 31,
2011, the Company Network is comprised of 15,449 REALTORS®
operating from 665 locations under 394 franchise agreements. The
number of REALTORS® during the quarter increased by 141 agents
(0.9%) as a result of the January 1, 2011 acquisition of 23
franchise agreements with 247 REALTORS® operating under the Royal
LePage and Via Capitale brands, which were partially offset by net
organic attrition of 106 agents. The net organic attrition was
primarily attributed to the province of Quebec where the
introduction of Quebec's new Real Estate Brokerages Act in May 2010
has resulted in dramatically fewer new entrants to the industry and
as a result the attrition of agents that brokers experience as low
producers exit the industry is not being replaced as quickly.
Outlook During the first quarter, low interest rates and a
recovering economy continued to spark activity in Canada's housing
markets. Country-wide, average home prices increased, with the
national average price of a detached bungalow rising 4.3 per cent
year-over-year to $341,355, while standard two-storey homes rose
3.5 per cent to $379,388 and standard condominiums rose 4 per cent
to $237,919. On May 9(th), the Canadian Real Estate Association
(CREA) revised its 2011 forecast predicting that national sales
activity will now decline 1.3 per cent from 2010 levels, a slight
improvement from the 1.6 per cent decline predicted earlier in
February. This revised forecast along with Q1 national average
house price appreciation indicates Canada's post-recession recovery
is continuing. "After an unusually active six month winter and
early spring period, the number of home sales in Canada is expected
to take a small dip in the second quarter of 2011," added Soper.
"Continuing economic recovery, and especially job growth, is
expected to support activity in the remainder of the year at
approximately the same level seen in 2010." Monthly Cash Dividend
Today, the Company declared a cash dividend of $0.0917 per share
for the month of May 2011, payable on June 30, 2011, to
shareholders of record on May 31, 2011. CFFO This news release and
accompanying financial statements make reference to cash flow from
operations ("CFFO") on a total and per restricted voting share
basis. CFFO is defined as net income prior to fair value changes,
amortization, interest on exchangeable units, interest on Trust
units, income taxes, items related to other income and interests of
exchangeable unitholders. CFFO is used by the Company to measure
the amount of cash generated from operations which is available to
the Company's shareholders on a diluted basis where such dilution
represents the total number of shares of the Company that would be
outstanding if exchangeable unitholders converted Class B LP units
into shares of the Company. The Company uses CFFO to assess its
operating results, the value of its business and believes that many
of its shareholders and analysts also find this measure of value to
them. CFFO does not have any standard meaning prescribed by IFRS
and therefore may not be comparable to similar measures presented
by other companies. Forward-Looking Statements This news release
contains forward-looking information and other "forward-looking
statements". The words such as "should", "will", "continue",
"plan", "believe", "expect", "anticipate", "intend", "estimate",
"approximate", "expected" and other expressions that are
predictions of or indicate future events and trends and that do not
relate to historical matters identify forward-looking statements.
Reliance should not be placed on forward-looking statements because
they involve known and unknown risks, uncertainties and other
factors that may cause the actual results, performance or
achievements of the Corporation to differ materially from
anticipated future results, performance or achievement expressed or
implied by such forward-looking statements. Factors that could
cause actual results to differ materially from those set forward in
the forward looking statements include a change in general economic
conditions, interest rates, consumer confidence, the level of
residential real estate resale transactions, the average rate of
commissions charged, competition from other traditional real estate
brokers or from discount and/or Internet-based real estate
alternatives, the availability of acquisition opportunities and/or
the closing of existing real estate brokerage offices, other
developments in the residential real estate brokerage industry or
the Corporation that reduce the number of and/or royalty revenue
from the Corporation's network of REALTORS®, our ability to
maintain brand equity through the use of trademarks, the
availability of equity and debt financing, a change in tax
provisions, and other risks detailed in the Fund's annual
information form, which is filed with securities commissions and
posted on SEDAR at www.sedar.com. The Corporation undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law. Conference Call Brookfield
Real Estate Services Inc. will host a conference call on Tuesday
May 24, 2011 at 10:00 a.m. Eastern Time to discuss its first
quarter financial results. To access the call by telephone, dial
(647) 427-7450 or (888) 231 -8191. Please connect approximately 10
minutes before the beginning of the call to ensure participation. A
recording of the conference call will be available on the Company's
website by Wednesday May 25, 2011 at
http://www.brookfieldresinc.com/content/investorcentre-25063.html.
Supplemental Information The Company's Consolidated Interim
Financial Statements, Supplemental Information and IFRS overview
for the quarter ended March 31, 2011 containing further information
on the company's strategy, operations and financial results can be
found on our website at www.brookfieldresinc.com. The Company's
Management Discussion and Analysis, Financial Statements and
associated regulatory filings will follow within prescribed
timelines. Shareholders are encouraged to read these documents,
Brookfield Real Estate Services Inc. Profile The Company is a
leading provider of services to residential real estate brokers and
their REALTORS®(1). The Company generates cash flow from franchise
royalties and service fees derived from a national network of real
estate brokers and agents in Canada operating under the Royal
LePage, Via Capitale Real Estate Network and Johnston & Daniel
brand names. At March 31, 2011, the Company network consisted of
15,449 REALTORS®. The Company network has an approximate 23% share
of the Canadian residential resale real estate market based on
transactional dollar volume. The Company generates both fixed and
variable fee components. Variable fees are primarily driven by the
total transactional dollar volume from the sales commissions of
REALTORS®, while fixed fees are based on the number of agents and
sales representatives in the network. Approximately 68% of the
Company's revenue is based on fees that are fixed in nature; this
provides revenue stability and helps insulate the Company's cash
flows from market fluctuations. The Company is listed on the TSX
and trades under the symbol "BRE". For further information about
the Company, please visit www.brookfieldresinc.com To view this
news release in HTML formatting, please use the following URL:
http://www.newswire.ca/en/releases/archive/May2011/24/c6827.html p
Tammy Gilmerbr/ Director, Public Relations & National
Communicationsbr/ Brookfield Real Estate Servicesbr/ a
href="mailto:tgilmer@brookfieldres.com"tgilmer@brookfieldres.com/a
Tel: 416.510.5783 /p
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