TORONTO, May 1, 2012 /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, 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.
SOURCE Brookfield Real Estate Services Inc.