TORONTO, March 10, 2016 /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 its fourth quarter and
annual financial results (including its cash flow from operations)
("CFFO"), and the approval of a monthly dividend to holders of the
Company's restricted voting shares.
HIGHLIGHTS
- CFFO for the quarter increased by 21% to $6.9 million ($0.54
per Share), compared to the fourth quarter of 2014.
- For the year ended December 31,
2015, CFFO increased by 12% to $28.9
million ($2.26 per Share)
compared to 2014.
- The Company's network of REALTORS® (the "Network")
increased to 16,794, up from 15,377 as at December 31,
2014.
- Canadian housing market transactional dollar volume and
national average house price continued to increase driven
primarily by strong markets in the greater Toronto and greater Vancouver areas.
- The Board of Directors of the Company approved a dividend to
shareholders of $0.1083
per restricted voting share payable April 29, 2016 to
shareholders of record March 31,
2016, representing a target annual dividend of $1.30 per restricted voting share.
- Subsequent to December 31, 2015
the Company acquired 33 Franchise Agreements in January 2016 representing an annual royalty
stream of $1.0 million.
FOURTH QUARTER OPERATING RESULTS
CFFO for the fourth quarter of 2015 increased to $6.9 million or $0.54 per share on a diluted
basis ("Share"), an increase of 21% as compared to
$5.7 million or $0.45 per Share in the fourth quarter
of 2014. For the year ended December
31, 2015, CFFO was $28.9
million or $2.26 per
Share compared to $25.9 million
or $2.02 per Share in 2014.
Royalties for the three months ended December 31, 2015 were $9.5 million as compared to $8.6 million in the fourth quarter of 2014.
Net losses for the three months ended December 31, 2015 were $3.0 million or a loss of $0.32 per Share as compared to net earnings
of $2.5 million, or $0.26 per Share in 2014.
Royalty revenues for the year were $39.9
million compared to $37.4
million in 2014. Net earnings in 2015 were
$1.3 million or $0.14 per Share as compared to $3.9 million, or $0.41 per Share last year.
The increased royalties and improvement in CFFO were driven
primarily by an increase in the number
of REALTORS® in the Network and strong
Canadian real estate markets, posting double digit increases in the
greater Toronto and Vancouver markets.
"We are very pleased with the Company's progress during 2015,"
said Phil Soper, President and Chief
Executive Officer, Brookfield Real Estate Services Inc.
"Across Canada, we improved the reach and impact of our
brands through carefully-considered expansion. Positive fourth
quarter results closed 2015 on a strong note, with cash flow from
operations growing by over 20% year-over-year. Through a focus on
enhancing the value we offer Canadian REALTORS® and by efficiently
managing operating costs, both royalties and cash flow from
operations reached record levels during the year - metrics that
align well with improvements in shareholder value."
THE COMPANY NETWORK
As at December 31, 2015, the Network
was comprised of 16,794 REALTORS®, operating under 305
franchise agreements (providing services from 662 locations,
with approximately one fifth share of the Canadian residential real
estate market based on 2015 transactional dollar volume).
In 2015, the Company purchased 52 Franchise Agreements
representing an annual revenue stream of approximately $2.9 million from
1,577 REALTORS®. This increase was partly offset by
net attrition of 160 REALTORS®.
REAL ESTATE MARKET
According to the Canadian Real Estate Association
("CREA")2, for the 12 month period ended December
31, 2015, the Canadian Residential Real Estate Market (the
"Canadian Market"), as defined by total transactional dollar
volume, increased 14%, to reach $224.2
billion, compared to 2014, driven by an increase of 9% in
national average selling price and a 5% increase in units
sold. For the three month period ended December 31, 2015, the
Canadian Market was up 16%, at $48.1
billion, over the same period in 2014, driven by a 10%
increase in national average selling price and a 6% increase in
units sold.
The most notable increases were in the greater Toronto area ("GTA") and in greater
Vancouver area ("GVA"), according
to the Toronto Real Estate Board ("TREB")3 and
CREA. In 2015, the housing market in the GTA experienced
a year-over-year transactional dollar volume increase of 20%
driven by a 10% increase in average selling price, and a 9%
increase in the number of units sold. In the fourth quarter of
2015, the GTA market experienced an 18% transactional dollar
volume increase based on a 9% increase in average selling price and
an 8% increase in number of units sold over the same period in
2014. The GVA market experienced larger increases for both the
three months and the year ended December 31,
2015 periods compared to 2014. For the year,
transactional dollar volumes increased by 42% driven by an 11%
increase in average selling price, and a 28% increase in number of
units sold compared to 2014. For the three months ended
December 31, 2015, the GVA market
experienced a 52% transactional dollar volume increase based
on a 17% increase in average selling price and a 30% increase
in the number of units sold over the same period in
2014
OUTLOOK
"South of the border, a recovering U.S. economy has driven
employment to levels we have not seen in a decade," continued
Soper. "The provinces that benefit most from American trade -
B.C., Ontario, Quebec and Manitoba - are expected to lead the nation in
economic growth and housing expansion during the year ahead.
Housing price appreciation in these regions is expected to grow
based on strong demand and structural inventory shortages,
particularly in the Toronto and
Vancouver detached home
segments."
"Our energy-centric markets of Alberta, Saskatchewan and Newfoundland are expected to see continued
fall-off in demand during 2016. Home prices in these regions
have been more resilient than many expected as consumers, reluctant
to sell their homes at what they perceived to be a discount to
their true value, simply withdrew from the market, resulting in a
drop in unit sales for 2015. We believe that soft markets will
prevail in these more resource-dependent regions throughout the
year ahead," concluded Mr. Soper.
CASH DIVIDEND
The Company declared a cash dividend of $0.1083 per restricted voting share payable on
April 29, 2016, to shareholders on
record on March 31, 2016. This
represents a targeted annual dividend of $1.30 per restricted
voting share.
CONFERENCE CALL
Brookfield Real Estate Services Inc. will host a conference call on
Thursday, March 10, 2016 at
2 p.m. ET to discuss its annual and
fourth quarter financial results for 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 in the Investor
Centre section of the Company's website by Friday March 11, 2016.
CFFO
This news release and accompanying financial statements make
reference to CFFO on a total and per 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 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 "target",
"outlook", "recovering", "expected", "lead", "believe",
"continued", "grow", "will", "ahead" 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
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 indicated in the
forward looking statements include: changes in the Company's
strategy with respect to dividends, changes in the supply of houses
for sale in Canada, changes in the
demand for houses in Canada,
changes in general economic conditions (including interest rates,
consumer confidence and other general economic factors or
indicators), changes in the global and regional economic growth
changes in the Company's corporate strategy, the demand for and
prices of natural resources on local and international markets, 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 Corporation 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 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.
About Brookfield Real Estate Services Inc.
Brookfield Real Estate Services Inc. is a leading provider of
services to residential real estate brokers and a network of over
16,000 REALTORS®. We operate in Canada under the Royal LePage, Via Capitale
and Johnston & Daniel brands. Further information is
available at www.brookfieldresinc.com
Brookfield Real Estate Services Inc. is an affiliate of
Brookfield Asset Management, a leading global alternative asset
manager with over $200 billion of
assets under management. For more information, go
to www.Brookfield.com
1 REALTORS® is a trademark identifying
real estate licensees in Canada
who are members of the Canadian Real Estate Association.
2 Source: National MLS® Report: The Canadian
Real Estate Association News Release as of January 15, 2016, and January 15, 2015.
3 Source: Toronto Real Estate Board Market Watch as of
December 2015 and December 2014.
SOURCE Brookfield Real Estate Services Inc.