TORONTO, Aug. 5, 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 months ended
June 30, 2015 was $7.5 million or $0.59 per fully diluted Restricted Voting Share
("Share"), an increase of 8.4% as compared to the $6.9 million or $0.54 per Share generated in 2014. For the six
months ended June 30, 2015, CFFO was
$13.5 million or $1.06 per Share as compared to $12.6 million or $0.99 per Share in 2014.
OVERVIEW OF SECOND QUARTER OPERATING RESULTS
CFFO for the rolling 12 month period ended June 30, 2015 was $2.09 per Share as compared to $2.00 per Share for the 12 months ended
June 30, 2014. Royalties for the
three and six months ended June 30,
2015 were $10.3 million and
$18.8 million, respectively, compared
to $9.9 million and $18.0 million, respectively, for the same periods
in 2014. Net earnings for the three months ended June 30, 2015 were less than $0.1 million, or nil per Share as compared to
$4.0 million, or $0.26 per share in 2014. For the six months ended
June 30, 2015, the Company generated
a net loss of $3.5 million, or
$0.37 per Share as compared to a net
loss of $0.8 million, or $0.08 per Share in 2014.
The improvement in CFFO was driven by increased royalty fees and
a reduction in operating costs. Royalties in the quarter were up
$0.4 million compared to 2014 due
primarily to an increase in the number of Agents in the Company's
network of REALTORS® ("Network") as a result
of the acquisition of franchise agreements on January 1, 2015. As at June 30, 2015, the total number of
REALTORS® in the Company Network stood at 16,105 as
compared to 15,697 at June 30,
2014. Cash operating expenses were lower in the quarter as
compared to the second quarter of 2014 due to reduced interest
costs and lower bad debt expenses.
For the rolling twelve months ended June
30, 2015, the Canadian residential resale real estate market
("Canadian Market"), as defined by total transactional dollar
volume, closed up 13.7%, at $211.7
billion, compared to the same period of 2014, driven by an
increase of 7.2% in selling price and 6.1% increase in units sold.
For the three months ended June 30,
2015, the Canadian Market was up 17.0%, at $74.2 billion, over the same period in 2014,
driven by a 9.3% increase in selling price and a 7.1% increase in
home sale activity.
On a rolling twelve-month basis, the housing market in the
greater Toronto area ("GTA")
experienced a year-over year increase of 19% driven by a 9.3%
increase in selling price, and a 8.9% increase in home sale
activity. For the three months ended June
30, 2015, the GTA housing market experienced a 25.6%
increase on an 11.1% increase in selling price and a 13% increase
in home sale activity over the same period in 2014.
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 have had a successful first half of 2015 from both a
financial and operational perspective," said Phil Soper, President and Chief Executive
Officer, Brookfield Real Estate Services Inc. "Our cash flow from
operations, was up over 8% for the quarter compared to the same
period last year, thanks to the combination of an increase in
royalties and a decrease in operating costs."
"Several exciting initiatives were announced during the second
quarter, including a mid-year addition of 719 REALTORS® to our
network, an expansion of our borrowing capacity and an increase in
our distribution to shareholders, the second increase in our
dividend since the beginning of 2014," added Soper.
The Company Network
As at June 30, 2015, the Company
Network was comprised of 16,105 REALTORS®, operating
under 301 franchise agreements providing services from 660
locations, with approximately one fifth share of the Canadian
Market based on 2014 transactional dollar volume.
Outlook
"Brookfield Real Estate Services Inc. reached
the mid-point of 2015 in excellent shape, and the outlook for our
business remains promising. Even with the strong growth we have
seen in our agent count over the past 18 months, we believe that
attractive investment opportunities remain to further grow the
Company Network," said Soper. "Looking at the broader market, six
months in, 2015 is shaping up to be a record year in terms of total
sales, thanks in large part to booming markets in Toronto and Vancouver and a far more subdued than expected
adjustment in Calgary. While
economic headwinds do persist at home and abroad, we are confident
that the market will remain healthy for the sum of the year."
Monthly Cash Dividend
The Company declared a cash dividend of $0.1042 per share payable on September 30, 2015, to shareholders of record on
August 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 operating income
prior to deducting impairment and amortization of intangible
assets. 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
and the value of its business and believes that many of its
shareholders and analysts also find this measure useful. CFFO does
not have any standard meaning prescribed by International Financial
Reporting Standards ("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".
Words such as "outlook", "believe", "further", "grow", "shaping
up", "will", "remain", and other expressions that are predictions
of or could 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 Company 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 indicated in
the forward looking statements include: a change in general
economic conditions (including interest rates, consumer confidence
and other general economic factors or indicators), the level of
residential real estate resale transactions, the availability of
attractive investment opportunities, the average rate of
commissions charged, competition from other real estate brokers or
from discount and/or Internet-based real estate alternatives, the
closing of existing real estate brokerage offices, other
developments in the residential real estate brokerage industry or
the Company that reduce the number of REALTORS® in the
Company's Network or royalty revenue from the Company's
Network, our ability to maintain brand equity through the use of
trademarks, the methods used by shareholders or analysts to
evaluate the value of the Company and its publicly traded
securities, the availability of equity and debt financing, a change
in tax law or regulations, 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 Company
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, August 5, 2015 at
10 a.m. ET to discuss its financial
results for the second quarter of 2015.
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
Thursday August 6, 2015 in the
Investor Centre.
Supplemental Information
The Company's Management Discussion and Analysis, Financial
Statements and associated regulatory filings will follow within
prescribed timelines and will be posted on the Company's website at
www.brookfieldresinc.com. 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 June 30, 2015, the Company
Network consisted of 16,105 REALTORS®. The Company Network has
approximately one fifth share of the Canadian Market based on 2014
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 Company's 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.
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1
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REALTOR® is a trademark identifying
real estate licensees in Canada who are members of the Canadian
Real Estate Association.
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SOURCE Brookfield Real Estate Services Inc.