TORONTO, June 28, 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 it will be continuing its relationship with
Brookfield Real Estate Services Manager Limited (the Manager), a
subsidiary of Brookfield Asset Management Inc. (Brookfield) under an amended and restated
Management Services Agreement effective January 1, 2014 (MSA). The agreement provides new
growth opportunities for the Company and enhances the value of
Canada's premier real estate
services brands, including Royal LePage, Johnston & Daniel and
Via Capitale Real Estate Network.
"The changes to the agreement all provide significant benefit to
shareholders," said Spencer Enright,
President and Chief Executive Officer of Brookfield Real Estate
Services Manager Limited. "With the new MSA in place, we will see a
close alignment of the Manager and Company goals, reduced
management fees, a new incentive arrangement emphasising organic
agent growth, and the ability to grow market share while
safeguarding the existing return on investment."
While the majority of the provisions under the MSA remain intact
from the existing agreement, management fees have been streamlined
to 20% across all branded franchise networks and the existing Royal
LePage formula used to calculate the value of incremental
franchises assigned by the Manager has now been adopted across all
branded franchises. Additionally, the MSA provides for an incentive
fee to the Manager based on organic growth within the franchise
networks and provides the Manager the ability to sell other
Canadian branded franchises to the Company in addition to Royal
LePage and Via Capitale. The initial term of the MSA is five years,
with a provision for automatic renewal of successive five year
terms.
Since 2003, the Company has been managed pursuant to a ten-year
agreement with the Manager. This agreement had recently been
extended to December 31, 2013,
allowing a Special Committee of the Board of Directors of the
Company along with external advisors to conduct a thorough review
and assessment of alternatives in advance the expiry of the term of
the current agreement. Entering into the MSA with the Manager was
determined to be the best possible option at this time, as it
builds upon the strong existing relationship between the Company
and Brookfield and maintains
consistency in a vital part of the infrastructure to the
Company.
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,
2013, the Company network consisted of 15,558
REALTORS®. The Company network has an approximate 24%
share of the Canadian residential resale real estate market based
on 2012 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.