TORONTO, June 17, 2015 /CNW/ - Brookfield Real Estate
Services Inc. (the "Company") (TSX: BRE) announced today that it
has approved the acquisition of certain franchise agreements from
Brookfield Real Estate Services Manager Limited ("the Manager") and
an increase in the Company's borrowing capacity.
Acquisition of Franchise Agreements
Under the Royal LePage brand, the Company will purchase franchise
agreements representing 12 real estate operations and 719
REALTORS®1 across Canada for approximately $9.8 million. These agreements are estimated to
generate an annual royalty stream of $1.4
million and will be effective July 1,
2015.
As outlined in the Company's Management Services Agreement
("MSA") with the Manager, 80 per cent of the acquisition price will
be paid in July 2015 and the balance
paid in January 2017 when the
purchase price is finalized, based on the actual performance of the
acquired agreements.
The payment due July 1, 2015 of
approximately $7.8 million, plus
applicable HST, will be funded through a combination of cash on
hand and a draw down on the Company's debt facilities.
"The Company had a very strong year in 2014, and positive
momentum continues to drive the business forward today," said
Phil Soper, president and chief
executive officer, Brookfield Real Estate Services Inc. "Real
estate professionals continue to be attracted by our unique
operating platform featuring the nation's premium marketing
services and business tools. The more than 700 agents joining the
firm in the first half of 2015 are a testament to the strength of
our Royal LePage brand."
Increased Borrowing Capacity
The Company also announced that it has completed an agreement with
CIBC Business Banking to increase the Company's credit facilities
to provide an incremental $10 million
in available financing. This will increase the maximum borrowings
under the Company's financing arrangements from $68 million to $78
million.
"We are very pleased to announce the expansion of our financing
facilities with our long-term partner, CIBC Business Banking. The
$10 million increase in our financing
capacity is an important step towards supporting our ambitious
growth plans," added Soper.
About Brookfield Real Estate Services
Inc.
Brookfield Real Estate Services Inc. (TSX: BRE)
is a leading provider of services to residential real estate
brokers and a network of 16,206 REALTORS®, as at
March 31, 2015. 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 REALTORS® is a trademark
identifying real estate licensees in Canada who are members of the Canadian Real
Estate Association.
SOURCE Brookfield Real Estate Services Inc.