TORONTO, Nov. 11, 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 and nine months
ended September 30, 2014 was
$7.5 million or $0.59 per Restricted Voting Share ("Share") and
$20.2 million or $1.57 per Share, respectively, as compared to
$7.1 million or $0.55 per Share and $19.3
million or $1.50 per Share,
respectively, for the same period in 2013.
OVERVIEW OF THIRD QUARTER OPERATING RESULTS
CFFO for the rolling 12 month period ended September 30, 2014 was $2.04 per Share as compared to $1.97 for the 12 months ended December 31, 2013. Royalties for the three and
nine months ended September 30, 2014
were $10.8 million and $28.8 million, respectively, compared to
$10.1 million and $27.9 million, respectively for the same period
in 2013. Net earnings for the three and nine months ended
September 30, 2014 was $2.2 million or $0.23 per Share and $1.4
million or $0.15 per Share,
respectively, as compared to net loss of $2.5 million or $0.26 per Share and net earnings of $0.3 million or $0.03 per Share, respectively, for the same
period in 2013.
During the Quarter, the Company generated CFFO of $7.5 million, up 6.0% from $7.1 million for the same period of 2013 driven
primarily by increased royalties and offset partially by an
increase in operating costs. Royalties were up $0.7 million due primarily to an increase in the
number of Agents in the Network as a result of the acquisition of
Franchise Agreements at the beginning of the year and the
implementation of the previously announced $2 per month increase in the Royal LePage fixed
franchise fee. Operating costs were up $0.3
million year-over-year due primarily to bad debt provision
recorded for certain franchisees that are experiencing financial
challenges.
For the rolling twelve months ended September 30, 2014, the Canadian Market, as
defined by Market transactional dollar volume, closed up 13.4%, at
$192.0 billion, compared to the same
period of 2013, driven by an increase of 7.3% in selling price and
5.7% increase in units sold. For the three months ended
September 30, 2014, the Canadian
market transactional dollar volume was up 12.3%, at $52.9 billion over the same period in 2013,
driven by a 6.9% increase in selling price and a 6.5% increase in
home sale activity.
On a rolling twelve-month basis, the GTA Market experienced a
quarter-over-same-quarter increase of 14.9%, at $51.5 billion driven by a 8.0% increase in
selling price, and a 6.3% increase in home sale activity. For the
three months ended September 30,
2014, the GTA Market experienced a 13.9% increase, at
$13.8 billion on an 11.1% increase in
selling price and a 5.6% 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.
"We are delighted with the strong financial and operational
results the Company delivered in the third quarter. Company
royalties for the quarter were up seven per cent over the same
quarter in 2013, while cash flow from operations for the quarter
was up six per cent over the same period last year. The robust
growth in these key measures was driven by an increase in the
number of REALTORS® in our network, an increase in our fixed
franchise fee, as well as an increase in market activity during the
period," said Phil Soper, President
and Chief Executive Officer, Brookfield Real Estate Services
Inc.
The Company Network
As at September 30, 2014, the Company
Network was comprised of 15,593 REALTORS®, operating
under 306 franchise agreements providing services from 634
locations, with approximately one fifth share of the Market based
on 2013 transactional dollar volume.
Outlook
"The Canadian housing market enjoyed strong
increases in both unit sales and average price in the quarter.
Broader economic factors remain consistent with prior quarters and
we expect similar conditions to remain in place through to the end
of the year," added Soper.
Monthly Cash Dividend
The Company declared a cash dividend of $0.10 per share for the month of November 2014, payable on December 31, 2014, to shareholders of record on
November 28, 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 15,593 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, November 11, 2014 at
10 a.m. ET to discuss its financial
results for the third 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
November 13, 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 and
nine months ended September 30, 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 September 30, 2014, the
Company network consisted of 15,593 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.