Brookfield Real Estate Services Inc. reports first quarter 2012 results and monthly dividend
May 01 2012 - 7:00AM
PR Newswire (Canada)
TORONTO, May 1, 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 months ended March 31, 2012
was $5.6 million as compared to $5.7 million for the same period in
2011. CFFO for the rolling 12 month period ended March 31, 2012 is
$1.96 per restricted voting share ("RVS") as compared to $1.97 for
the rolling 12 month period ended March 31, 2011. Royalties were
$8.2 million for the quarter, the same level as the first quarter
of 2011. The net loss for the three months ended March 31, 2012 was
$3.2 million or $0.34 per RVS, as compared to a loss of $1.8
million for the same period in 2011. OVERVIEW OF FIRST QUARTER
OPERATING RESULTS During the quarter, the Company generated cash
flow from operations ("CFFO") of $5.6 million as compared to $5.7
million for the same period in 2011. The Company had an increase in
variable franchise fees due to increased market activity, offset by
a decrease in fixed royalty fees as a result of net attrition
experienced in the underlying agent network during 2011 and the
decrease in other revenue and services. Other revenue and services
decreased by 10% quarter over quarter (1.2% of overall revenue), as
the Company discontinued an agent website program that was no
longer relevant. On a rolling twelve-month basis, the Canadian
market transactional dollar volume of $168.0 billion increased by
11% from March 31, 2011, driven by a 6% and 5% increase in selling
price and home sale activity, respectively. For the three months
ended March 31, 2012, the Canadian market transactional dollar
volume was up 5% over the same period in 2011, driven by a 1% and
4% increase in selling price and home sale activity, respectively.
On a rolling twelve-month basis, the GTA Market experienced a
quarter-over-same-quarter increase of 19% driven by a 9% increase
in selling price and 10% increase in home sale activity. For the
three months ended March 31, 2012, the GTA Market experienced an
18% increase on a 10% and 8% increase in selling price and home
sale activity, respectively over the same period in 2011. The
higher than anticipated rise in home prices is largely driven by
the consistent shortage of listings, resulting in competition among
home buyers for the Quarter, and low interest rates, which continue
to draw home buyers into the Market. The Company's revenue is
primarily fixed in nature, based on the number of REALTORS® in the
network, which was essentially flat, period over period. This
structure provides revenue protection from the impact of revenue
dips when the market cools, but also reduces the degree to which
the Company participates in periods of rapid market expansion. "In
terms of network expansion, our contract sales funnel is healthy,"
said Phil Soper, President and Chief Executive Officer, Brookfield
Real Estate Services, Inc. "On a year-over-year basis, the number
of agents in our growth funnel is up considerably." Since the
Company recognizes variable fees when home sales close, which
typically is 45 to 60 days after the sales date used for Canadian
market data, the improved market activity is expected to
materialize as increased variable and premium fees in the second
quarter. "Price appreciation and strong unit sales reflect
Canadians taking advantage of a highly competitive banking
environment and borrowing rates that for the first time fell below
3.0 per cent for a five year fixed mortgage," continued Mr. Soper.
"The lure of historically low mortgage rates, as well as
unseasonably warm weather, particularly in Central Canada,
encouraged sellers to list their homes earlier than normal, pulling
ahead transactions into the early part of the year." The Company
Network As at March 31, 2012 the Company Network was comprised of
15,250 REALTORS®, operating under 414 franchise agreements
providing services from 668 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 are expected to modestly increase in 2012. While the pace of
appreciation is slowing in some regions across Canada as higher
home prices negatively impact affordability, the positive impact of
a gradually improving domestic and U.S. economy, and a gentle
upward pressure on wages and salaries, should support the
residential real estate market through 2012. Monthly Cash Dividend
The Company declared a cash dividend of $0.092 per share for the
month of May 2012, payable on June 29, 2012, to shareholders of
record on May 31, 2012. 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, 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 Tuesday, May 1, 2012 at 2 p.m. ET to discuss its first
quarter 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 Wednesday, May 2, 2012 at
http://www.brookfieldresinc.com/content/investor_centre-25063.html.
Supplemental Information The Company's Interim Condensed
Consolidated Financial Statements and Supplemental Information for
the three months ended March 31, 2012 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, 2012, the Company network
consisted of 15,250 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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