Brookfield Real Estate Services Inc. Announces Acquisitions
TORONTO,
Dec. 14, 2012 /CNW/ - Brookfield Real
Estate Services Inc. (the "Company") (TSX - BRE) announced today
that it has approved the acquisition from Brookfield Real Estate
Services Manager Limited ("the Manager") of franchise agreements
representing 27 real estate offices and 526 REALTORS®
operating under the Royal LePage brand across Canada and the Via Capitale brand in the
province of Quebec. The
acquisitions will be effective January 1,
2013.
"It has been a very satisfying year for our business, as we
achieved the strongest network growth since before the 2008
recession," said Phil Soper,
President and CEO. "Our real estate businesses are destination
brands for brokers and agents; brands they aspire to belong to.
Looking ahead to 2013, Royal LePage will mark its 100-year
anniversary. As the voice of Canadian real estate, we will share
our stories and provide insight into the future of real estate
brokerage in Canada. "
Acquisition of Franchise Agreements
Royal LePage Agreements
Under the Royal LePage brand, the Company will acquire franchise
agreements representing 22 real estate brokerage offices and 473
REALTORS® for approximately $6.0
million. These agreements generated an estimated
annual royalty stream of $0.9 million
during the past year.
As outlined in the Company's MSA, 80% of the 2013 acquisition
price will be paid in January 2013.
The purchase price will be finalized and the balance paid at the
end of 2013, in accordance with the Management Services Agreement
("MSA") between the Company and the Manager.
Via Capitale Agreements
Under the Via Capitale brand, the Company will acquire franchise
agreements representing five real estate brokerage offices and 53
REALTORS® for approximately $0.8
million. These agreements generated an estimated annual
royalty stream of $0.15 million
during the past year.
As agreed with the independent directors, 80% of the 2013
acquisition price is to be paid in January
2013. Under terms negotiated with the Company's Directors,
the balance of the purchase price will be finalized over the next
three years and is to be paid in annual installments over the same
period.
Funding Through Internal Cash
The combined payment due January 1,
2013 of approximately $6.2
million, which includes applicable taxes, will be funded
internally.
Income Fund Conversion
Consistent with the process undertaken in 2010 to convert from an
income fund to a common share company, Brookfield Real Estate
Services Inc. will be completing the final stages of this
conversion on or about December 31,
2012. This final stage of the conversion is procedural
in nature and will not have any impact on the operations, strategy
or financial results of the Company.
About Brookfield Real Estate Services Inc.
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 September 30,
2012, the Company network consisted of 15,238
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.
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" and other expressions which are predictions of or
indicate future events and trends and which 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,
which may cause the actual results, performance or achievements of
the Company 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
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 offices, other developments in the residential
real estate brokerage industry or the Company that reduce the
number of and/or royalty revenue from the Company's 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 Company's annual
information form which is filed with securities commissions and
posted on SEDAR at www.sedar.com. The Company 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.
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.