TORONTO, Dec. 6, 2013 /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 20 real estate offices and 493 REALTORS®1
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,
2014.
Acquisition of Franchise Agreements
Royal LePage Agreements
Under the Royal LePage brand, the Company will acquire franchise
agreements representing 19 real estate brokerage offices and 484
REALTORS® for approximately $6.1
million. These agreements are estimated to generate an
annual royalty stream of $0.9
million
As outlined in the Company's Management Services Agreement
("MSA"), 80% of the 2014 acquisition price will be paid in
January 2014. The purchase price will
be finalized and the balance paid at the end of 2014, in accordance
with the MSA between the Company and the Manager.
Via Capitale Agreements
Under the Via Capitale brand, the Company will acquire franchise
agreements representing one real estate brokerage office and nine
REALTORS® for approximately $0.2
million. These agreements are estimated to generate an
annual royalty stream of $0.03
million
As agreed with the independent directors, 80% of the 2014
acquisition price is to be paid in January
2014. 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,
2014 of approximately $5.6
million, which includes applicable taxes, will be funded
internally.
About Brookfield Real Estate Services Inc.
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.
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.
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.