TORONTO, May 6, 2014 /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 months ended March 31, 2014 was $5.7
million or $0.44 per
Restricted Voting Share ("Share"), up $0.1
million as compared to $5.6
million or $0.44 per for the
same period in 2013.
OVERVIEW OF FIRST QUARTER OPERATING RESULTS
CFFO for the rolling 12 month period ended March 31, 2014 was $1.98 per Share as compared to $1.97 for the 12 months ended December 31, 2013. Royalties for the three months
ended March 31, 2014 was $8.15 million or $0.64 per Share, up from $8.06 million or $0.63 per Share for the same period in 2013. Net
loss for the three months ended March 31,
2014 was $4.8 million or
$0.51 loss per as compared to net
loss of $0.5 million or $0.06 loss per for the same period in 2013.
During the Quarter, the Company generated CFFO of $5.7 million, up 1.9% from $5.6 million for the same period of 2013 driven
primarily by an increase in year-over-year royalty fees resulting
from a larger Agent base, the implementation of the previously
announced $2 increase in the monthly
Royal LePage fixed franchise fee, and a modest increase in market
activity. Partially offsetting the increase in royalties was the
non-recognition of $0.2 million of
fees associated with non-performing franchisees that are
experiencing financial challenges.
For the rolling twelve months ended March
31, 2014, the Canadian Market, as defined by Market
transactional dollar volume, closed up 11.7%, at $179 billion, compared to the same period of
2013, driven by an increase of 6.7% in selling price and 4.8%
increase in units sold. For the three months ended March 31, 2014, the Canadian market transactional
dollar volume was up 11.1% over the same period in 2013, driven by
an 8.2% increase in selling price and a 2.7% increase in home sale
activity.
On a rolling twelve-month basis, the GTA Market experienced a
quarter-over-same-quarter increase of 13.2% driven by a 6.1%
increase in selling price, and a 6.7% increase in home sale
activity. For the three months ended March
31, 2014, the GTA Market experienced an 8.4% increase on an
8.1% increase in selling price and a 0.3% increase in home sale
activity over the same period in 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 began 2014 on solid footing," said Phil Soper, President and Chief Executive
Officer, Brookfield Real Estate Services Inc. "Royalties edged up,
year-over-year, against a backdrop of weather-stifled housing
activity. It is common for winter to negatively impact home
sales somewhere in Canada during
the first quarter of any given year. What made the first
months of 2014 stand out was the wide geographic span and staying
power of the severe cold and snowstorms across the country."
"As the worst of the inclement weather subsided in the final
weeks of the quarter, the market came to life, listing inventory
began to grow and buyer demand was strong, particularly in the
largest metropolitan markets in British
Columbia, Alberta and
Ontario," continued Soper. "The
combination of pent-up demand, reasonable inventory levels and
sound underlying economic fundamentals has set the stage for a
robust 2014 spring market."
The Company Network
The Company added 375 net agents in the first quarter. As at
March 31, 2014, the Company Network
was comprised of 15,685 REALTORS®, operating under 313
franchise agreements providing services from 646 locations, with
approximately one fifth share of the Market based on 2013
transactional dollar volume.
Outlook
"The Company has made significant enhancements
to our operating platforms during the past year," said Soper. "We
are encouraged by the adoption of new mobile and web technologies
by home buyers and sellers which should improve our ability to
attract Brokers and Agents to our network."
"We believe that the underlying fundamentals of the Canadian
housing market remain sound. With the continuation of solid
economic performance coupled with the persistently low interest
rates, we expect to see growth in both sales volumes and price
appreciation for the remainder of 2014," concluded Soper.
Monthly Cash Dividend
The Company declared a cash dividend of $0.10 per share for the month of May 2014, payable on June
30, 2014, to shareholders of record on May 30, 2014.
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 15,685 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
Tuesday, May 6, 2014 at 2 p.m. ET to discuss its financial results for
the first quarter of 2014.
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
May 7, 2014 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
months ended March 31, 2014 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 March 31,
2014, the Company network consisted of 15,685
REALTORS®. The Company network has approximately one
fifth share of the Canadian residential resale real estate market
based on 2013 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 71% 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.