TORONTO,
March 5, 2013 /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 and twelve months ended December 31, 2012 was $5.4
million or $0.42 per
restricted voting share ("Share"), the same level as 2011 and
$25.4 million or $1.98 per Share, up slightly from $25.3 million or $1.97 per Share for the same period in 2011.
Royalties for the three and twelve months ended
December 31, 2012 were $8.1 million and $36.5
million, respectively, compared to $8.4 million and $36.7
million, respectively for the same period in 2011. Net
earnings for the three and twelve months ended December 31, 2012 was $0.8
million and $3.0 million, or
$0.08 and $0.31 earnings per Share, respectively, as
compared to net loss and earnings of $3.2
million and $8.0 million or
$0.33 loss and $0.85 earnings per Share, respectively, for the
same period in 2011.
OVERVIEW OF FOURTH QUARTER OPERATING
RESULTS
During the Quarter the Company generated CFFO of $5.4 million, which was in Iine with the same
period of 2011. Royalties were down slightly due in part to the
pushing of market activity to the first half of 2012 as compared to
the same period in 2011 as a result of the tightening of
mortgage-lending rules. Offsetting this decrease was a $0.3 million reduction in administration costs
due primarily to a lower year over year bad debt provision
resulting from the success of increased collection efforts.
For the twelve months ended December 31,
2012, the Canadian market transactional dollar volume of
$165.1 billion decreased by 1% from
the same period in 2011, driven solely by a decrease in units sold.
The average sales price of a home remained largely unchanged due
primarily to a balanced market supported by reduced listings and
low interest rates. For the three months ended December 31, 2012, the Canadian market
transactional dollar volume was down 9% over the same period in
2011, also driven solely by a decrease in home sale activity.
"The Canadian real estate market was challenged in 2012
as more stringent mortgage regulations
temporarily squeezed younger buyers out of the market, while
the overhang of economic malaise across Europe and the US continued to unsettle
consumer confidence," said Phil
Soper, President
and Chief Executive Officer, Brookfield Residential Real Estate Services
Inc. "Despite these concerns, the slowing of Canadian market
activity, which began in the second quarter of 2012, has been
moderate. We anticipate that the industry will strengthen towards
the end of 2013."
The Company's revenue is primarily fixed in
nature, based on the number of REALTORS® in the network. This
structure provides revenue protection from the impact of revenue
declines when the market cools, but also reduces the degree to
which the Company participates in periods of rapid market
expansion.
The Company Network
As at December 31, 2012 the Company
Network was comprised of 15,086 REALTORS®, operating under 406
franchise agreements providing services from 656 locations, with an
approximate 24% share of the Market based on 2012 transactional
dollar volume.
Outlook
"Activity in the Canadian residential real estate market is
unfolding as forecast. Compared to 2012, fewer homes are
expected to trade hands in the first half of 2013, which should
further slow the pace at which home prices are rising. By the end
of 2013, Management expects the average national home price to be
one percent higher compared to the same period in 2012. Based on
early 2013 sales activity, the forecasted market correction has
been milder than anticipated, as first time buyers adjust to new
mortgage regulations and the stimulative effect of low mortgage
rates continues."
Monthly Cash Dividend
The Company declared a cash dividend of $0.092 per share for the month of March 2013, payable on April 30, 2013, to shareholders of record on
March 28, 2013.
On February
15th the Company declared a dividend of
$0.092 per share for the month of
February 2013, payable on
March 29th, 2013 to shareholders of
record on February 28th, 2013.
This dividend will be paid on March
28th`, 2013.
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.
Management Services Agreement
The Company is managed pursuant to a Management Services Agreement
(the "MSA") between the Company and Brookfield Real Estate Services
Manager Limited (the "Manager"), a subsidiary of Brookfield
Asset Management Inc. The MSA has been in effect since 2003 and was
originally designed for an income trust structure. The Company and
the Manager have agreed to extend the termination date of the MSA
to December 31, 2013 and the date for
delivery of such notice to on or before June
30, 2013.
The Board of Directors of the Company have
convened a Special Committee to evaluate various alternatives
associated with the renewal of the MSA and have engaged an external
advisor.
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 Company's network of
15,238 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 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
Wednesday, March 6, 2013 at
10 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 March 7, 2013 at
http://www.brookfieldresinc.com/content/investor_centre-25063.html.
Supplemental Information
The Company's Interim Condensed Consolidated Financial Statements,
Supplemental Information and IFRS overview for the three and nine
months ended September 30, 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 December 31, 2012, the Company
network consisted of 15,086 REALTORS®. The Company network has an
approximate 24% 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 73% 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.