TORONTO,
Nov. 6, 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 nine months ended
September 30, 2013 was $7.1 million or $0.55 per Restricted Voting Share ("Share") and
$19.3 million or $1.50 per Share, respectively, as compared to
$7.1 million or $0.55 per Share and $20.0
million or $1.56 per Share,
respectively, for the same period in 2012.
OVERVIEW OF THIRD QUARTER OPERATING RESULTS
CFFO for the rolling 12 month period ended September 30, 2013 was $1.92 per Share as compared to $1.98 for the 12 months ended December 31, 2012. Royalties for the three and
nine months ended September 30, 2013
were $10.1 million or $0.79 per Share and $27.9
million or $2.18 per Share,
respectively, down slightly from $10.2
million or $0.80 per Share and
$28.4 million or $2.22 per Share, respectively, for the same
period in 2012. Net earnings (loss) for the three and nine months
ended September 30, 2013 was
$2.5 million loss or $0.26 loss per Share and $0.3 million income or $0.03 income per Share, respectively, as compared
to net loss of $2.5 million or
$0.26 loss per Share and $2.2 million income or $0.23 income per Share, respectively, for the
same period in 2012.
During the Quarter, the Company generated CFFO of $7.1 million, which was largely unchanged from
the same period of 2012 as a $0.1
million reduction in year-over-year administration expenses
resulting from reduced bad debt expenses was offset by reduced
variable and premium fees, which was in part attributable to the
timing of the increased market activity in 2012 closing out in the
third quarter of 2012 and the ramping up of market activity in the
third quarter of 2013.
On a rolling twelve-month basis, the Canadian market transactional
dollar volume of $169.3 billion
increased by 0.8% from September 30,
2012, driven by a 3.4% increase in selling price, partially
offset by a 2.5% decrease in home sale activity. For the three
months ended September 30, 2013, the
Canadian market transactional dollar volume was up 22.1% over the
same period in 2012, driven by an 8.3% increase in selling price
and a 12.7% increase in home sale activity.
On a rolling twelve-month basis, the GTA Market experienced a
quarter-over-same-quarter increase of 1.6% driven by a 4.7%
increase in selling price, partially offset by a 2.9% decrease in
home sale activity. For the three months ended September 30, 2013, the GTA Market experienced a
28.0% increase on a 6.5% increase in selling price and a 20.2%
increase in home sale activity over the same period in 2012.
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.
"We saw the housing market emerge from a 12-month correction in the
third quarter of 2013, the first period of solid expansion for both
house prices and sales volumes since the Ministry of Finance
instituted new mortgage rules in July
2012," said Phil Soper,
President and Chief Executive Officer, Brookfield Real Estate
Services Inc. "In the previous four quarters there was a marked
decline in the number of homes trading hands, which kept house
prices relatively flat in most markets. That trend was reversed in
Q3, as homebuyers returned to the market in large numbers, pushing
values northward."
"The housing market in Canada was
in overdrive in 2011 and the first half of 2012, and rising prices
combined with more restrictive mortgage regulation pushed buyers
temporarily out of the market," continued Soper. "Predictions of
serious declines in house values have not materialized. Pent-up
demand and an acceptance that current market conditions are likely
to hold through into 2014 prompted a much busier buying season that
is normally experienced during July, August and September."
The Company Network
As at September 30, 2013, the Company
Network was comprised of 15,451 REALTORS®, operating
under 435 franchise agreements providing services from 669
locations, with an approximate 24% share of the Market based on
2012 transactional dollar volume.
Outlook
"While there have been sobering reminders in recent weeks that our
economy remains fragile, the fundamental economic indicators in
this country and south of the border are in sum positive, which is
a good sign for the Canadian real estate market," said Soper. "We
witnessed the conclusion of a normal cyclical market correction in
the third quarter of 2013 and monetary policymakers on both sides
of the border are being patient to ensure the sustainability of the
rebound. Turning to a longer-term view, it is the view of
management that a strengthening labour market and economic growth
will serve to offset the drag that interest rate hikes may have on
the housing market."
Monthly Cash Dividend
The Company declared a cash dividend of $0.092 per share for the month of November 2013, payable on December 31, 2013, to shareholders of record on
November 29, 2013.
The Company declared a cash dividend of $0.092 per share for the month of December 2013, payable on January 31, 2014, to shareholders of record on
December 31, 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 prescribed 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 Company's network of
15,451 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, November 6, 2013 at
10 a.m. ET to discuss its financial
results for the third quarter of 2013.
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
November 8, 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, 2013
contain further information on the company's strategy, operations
and financial results and 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®. 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,
2013, the Company network consisted of 15,451
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.
1REALTOR® is a trademark identifying
real estate licensees in Canada
who are members of the Canadian Real Estate Association.
SOURCE Brookfield Real Estate Services Inc.