Brookfield Real Estate Services Inc. reports fourth quarter and annual 2011 results and monthly dividend
March 12 2012 - 7:00AM
PR Newswire (Canada)
TORONTO, March 12, 2012 /CNW/ - Brookfield Real Estate Services
Inc. (the Company) , 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 and twelve months ended
December 31, 2011 was $5.4 million and $25.3 million, respectively,
as compared to $5.0 million and $25.2 million, respectively, for
the same period in 2010. CFFO per Restricted Voting Share ("Share")
for the three and twelve months ended December 31, 2011 was $0.42
and $1.97 per Share, respectively, as compared to $0.39 and $1.97
per Share, respectively, in the same period of 2010. Royalties for
the three and twelve months ended December 31, 2011 were $8.4
million and $36.7 million, respectively, compared to $8.2 million
and $36.6 million, respectively for the same period in 2010. Net
earnings (loss) for the three and twelve months ended December 31,
2011 was $3.2 million loss and $8.0 million income, or $0.34 loss
per share and $0.85 basic earnings per Share, respectively, as
compared to a net loss of $29.2 million and $50.7 million. OVERVIEW
OF FOURTH QUARTER OPERATING RESULTS During the quarter, the Company
generated cash flow from operations ("CFFO") of $5.4 million as
compared to $5.0 million for the same period in 2010. To understand
what has transpired in the Market for the 2011 and how it impacts
our outlook for 2012, a review of year-to-date 2011 and 2010 Market
activity is required. On a rolling twelve-month basis, the fourth
quarter of 2011 closed out at a Market transactional dollar volume
of $166.1 billion, up 10% from December 31, 2010, driven by a 7%
increase in selling price and a modest increase in home sale
activity of 3%. For the three months ended December 31, 2011,
transactional dollar volume was up 11% over the same period in
2010, driven by an 4% and a 7% increase in selling price and home
sale activity, respectively. The steady increase in selling price
on a twelve-month rolling and quarterly basis is largely driven by
consistent shortage of listings, resulting in competition among
home buyers, and low interest rates continue to draw homebuyers to
the Market. While the sales activity for the twelve months ended
December 31, 2011 as compared to December 31, 2010 increased
moderately by 3%, home sale activity on a quarter-over-same-quarter
basis increased by 7% due to an active 2011 summer Market, the
carry-through of second-quarter 2011 home sales and the fall-off of
Market activity in 2010. In 2010, the Market was up significantly
for the first two quarters as consumers sought to complete their
home purchases ahead of the Harmonized Sales Tax ("HST") and
tighter mortgage-lending rules, which reduced home sale activity in
the third and fourth quarters. The fourth of 2011, which is
typically the slower season of the home-purchase cycle, saw a
normalization of Market activity to a ten year National average.
"Brookfield Real Estate Services Inc. is pleased to report with the
fourth quarter financial performance for 2011," said Phil Soper,
President and Chief Executive Officer, Brookfield Real Estate
Services, Inc. "The two primary measures used to determine our
financial performance - namely, royalty revenues and cash flow from
operations - both experienced quarter-over-quarter increases in Q4,
underscoring the strength of the Company structure and its ability
to generate strong, stable dividends for our shareholders." The
Company Network As at December 31, 2011 the Company Network was
comprised of 15,061 REALTORS®, operating under 389 franchise
agreements providing services from 654 locations, with an
approximate 22% share of the Market based on 2011 transactional
dollar volume. Outlook On a year over year basis, price
appreciation and housing sales activity are expected to modestly
increase during 2012. While there appears to have been some
overshooting in home prices in select markets, the pace of
appreciation is slowing in regions like the Greater Vancouver
Area. The positive impact of a gradually improving domestic
and U.S. economy, and a gentle upward pressure on wages and
salaries, should mitigate the natural cyclical correction that
often follows a period of strong price appreciation. Our outlook is
based in part upon the expectation that low interest rates will
continue to attract a diverse group of home buyers and encourage
move-up demand. Monthly Cash Dividend The Company declared a cash
dividend of $0.092 per share for the month of March 2012, payable
on April 30, 2012, to shareholders of record on March 30, 2012.
IFRS During the first 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 Share 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
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. 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 pre- scribed 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 15,295 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 Monday March 12, 2012 at 10:00 a.m. ET to discuss its
fourth quarter and year-end financial results. To access the call
by telephone, please dial (888) 231-8191 or (647) 427-7450. Please
connect approximately ten minutes prior to the beginning of the
call to ensure participation. A recording of the conference call
will be available on the Company's website by Tuesday March 13,
2012 at
http://www.brookfieldresinc.com/content/investor_centre-25063.html.
Supplemental Information The Company's Consolidated Financial
Statements, Supplemental Information and IFRS overview for the year
ended December 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 December 31, 2011, the Company network consisted of
15,061 REALTORS®. The Company network has an approximate 22% 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.
(1 )(REALTOR® is a trademark identifying real estate licensees
in Canada who are members of the Canadian Real Estate
Association.) Brookfield Real Estate Services Inc. CONTACT: Tammy
GilmerDirector, Public Relations & National
CommunicationsBrookfield Real Estate Services
Inc.tgilmer@brookfieldres.comTel: 416.510.5783
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