TORONTO, March 11, 2015 /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 twelve months ended
December 31, 2014 was $5.7 million or $0.45 per Restricted Voting Share ("Share") and
$25.9 million or $2.02 per Share, respectively, as compared to
$6.0 million or $0.46 per Share and $25.2
million or $1.97 per Share,
respectively, for the same period in 2013.
Royalties for the three and twelve months ended December 31, 2014 were $8.6 million and $37.4
million, respectively, compared to $8.3 million and $36.3
million, respectively, for the same period in 2013. Net
earnings for the three and twelve months ended December 31, 2014 were $2.5 million or $0.26 per Share and $3.9
million or $0.41 per Share,
respectively, as compared to net earnings of $0.6 million or $0.06 per Share and net earnings of $0.9 million or $0.09 per Share, respectively, for the same
period in 2013.
OVERVIEW OF FOURTH QUARTER OPERATING RESULTS
During the Quarter, the Company generated CFFO of $5.7 million, down 4.0% from $6.0 million for the same period of 2013, driven
primarily by an increase in operating costs related to bad debt
recoveries recorded in the last quarter of 2013 and a $0.3 million increase in interest costs related
to the early refinancing of the Company's $53 million debt facilities and $2 million operating line. The new $53 million debt facility has a variable rate
interest obligation which the Company swapped under contract to a
fixed rate of 3.64%. The swap results in an annual interest
obligation of $1.9 million, which is
approximately $1.0 million less than
the estimated interest obligation for 2014 under the previous debt
arrangements.
Royalties for the quarter were up $0.3
million or 3% due primarily to an increase in the number of
REALTORS® in the Network as a result of the acquisition
of Franchise Agreements at the beginning of the year, the
implementation of the previously announced $2 per month increase in the Royal LePage fixed
franchise fee, and increased premium fees from a robust GTA
market.
For the twelve months ended December 31, 2014, the Canadian market, as
defined by market transactional dollar volume, closed up 12.1%, at
$196.3 billion, compared to the same
period in 2013, driven by an increase of 6.7% in selling price and
5.1% increase in units sold. For the three months ended
December 31, 2014, the Canadian
market transactional dollar volume was up 11.8%, at $41.4 billion over the same period in 2013,
driven by a 5.9% increase in selling price and a 5.6% increase in
home sale activity.
For the twelve months ended December 31,
2014, the GTA Market, as defined by market transactional
dollar volume, closed up 13.4% at $52.8
billion driven by a 8.1% increase in selling price, and a
4.9% increase in home sale activity. For the three months ended
December 31, 2014, the GTA market
experienced a 14.1% increase in transactional dollar volume to
$11.3 billion, driven by a 7.9%
increase in selling price and a 5.7% 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 pleased with the strong financial and operational
performance of the Company during the fourth quarter and the full
fiscal year. We are delighted that as of January 1, 2015, our network of REALTORS®
exceeded 16,000 for the first time. This important milestone
represents an almost doubling of our network since our initial
public offering 12 years ago," said Phil
Soper, President and Chief Executive Officer, Brookfield
Real Estate Services Inc.
The Company Network
As at December 31, 2014, the Company
Network was comprised of 15,377 REALTORS®, operating
under 302 franchise agreements providing services from 637
locations, with approximately one fifth share of the market based
on 2014 transactional dollar volume.
Outlook
"In the final quarter of 2014 most
Canadian provinces experienced modest year-over-year house
price appreciation, while select markets in Toronto and Vancouver saw continued steep price
increases," added Soper. "We expect the rapid drop in the value of
oil will indirectly impact housing markets across the
country. In central Canada,
the correspondingly lower Canadian dollar and stimulative effect of
lower fuel costs are expected to lift the export sector, buoy
consumer spending and be generally supportive of the residential
real estate industry. In the energy producing provinces of
Alberta, Saskatchewan and Newfoundland, we expect to see lower consumer
confidence and expect that low priced oil will be a drag on the
market, firstly through lower transaction volumes, followed by
softness in home prices. The Bank of Canada's move to lower the bank rate is
expected to mitigate the negative impact of lower energy prices in
the energy producing regions, and to further strengthen housing
activity in other regions."
Monthly Cash Dividend
The Company declared a cash dividend of $0.10 per share for the month of March 2015, payable on April 30, 2015, to shareholders of record on
March 31, 2015.
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 15,377 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, March 11, 2015 at
10 a.m. ET to discuss its financial
results for the fourth 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
March 12, 2015 at
http://www.brookfieldresinc.com/content/investor_centre-25063.html.
Supplemental Information
The Company's Condensed Consolidated Financial Statements,
Supplemental Information and IFRS overview for the three and
twelve months ended December 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. (TSX:
BRE) is a leading provider of services to residential real
estate brokers and a network of 15,377 REALTORS®, as
at December 31, 2014. It generates cash flow from fixed and
variable fees derived from real estate brokers and agents operating
in Canada under the Royal LePage, Via Capitale and
Johnston & Daniel brands. Approximately 71 per cent of company
revenue is based on fees that are fixed in nature, providing
revenue stability and helping insulate cash flows from market
fluctuations. The recurring fixed revenue structure combined with
strong brands and a successful growth strategy position it to
continue generating stable, long-term cash flows and paying monthly
dividends to shareholders. For further information, 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.