TORONTO, May 4, 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 first quarter
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 three months ended March
31, 2016 increased by 12% to $6.8
million ($0.53 per Share),
compared to the same period in 2015.
- The Company's network of REALTORS® (the "Network")
increased to 17,320, up from 16,794 as at December 31,
2015.
- Canadian housing market transactional dollar volume and
national average house price continued to increase driven 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 June 30, 2016.
FIRST QUARTER OPERATING RESULTS
CFFO for the first quarter of 2016 improved to $6.8 million or $0.53 per share on a diluted
basis ("Share"), an increase of 12% as compared to
$6.0 million or $0.47 per Share for the same period in 2015. For
the rolling twelve-month period ended March
31, 2016, CFFO was $2.31 per
Share as compared to $2.04 per Share
for the rolling twelve-month period ended March 31, 2015.
Royalties for the three month ended March
31, 2016 were $9.4 million,
compared to $8.5 million for the same
period in 2015. For the rolling twelve-month period ended
March 31, 2016, royalties were
$40.8 million, compared to
$37.7 million for the rolling
twelve-month period ended March 31,
2015.
The increased royalties and improvement in CFFO were driven
primarily by an increase in the number
of REALTORS® in the Network.
Net earnings for the three months ended March 31, 2016 were $0.9
million, or $0.10 per Share,
compared to a net loss of $3.5
million or loss of $0.37 per
Share, for the same period in 2015.
"Through a focus on enhancing the value we offer Canadian
REALTORS®, we have delivered strong financial and
operational results in the first quarter of 2016," said
Phil Soper, President and Chief
Executive Officer of Brookfield Real Estate Services Inc. "Our
successful acquisition strategy has supported our sustained,
positive momentum, including the January 1,
2016 acquisition of franchise agreements representing an
additional 459 REALTORS® and a healthy pipeline for
2017, including signed franchise agreements representing more than
300 new REALTORS®. In a quarter where some Canadian real
estate markets continued to expand rapidly while others experienced
the ongoing drag of depressed energy prices, our results reflect
the ongoing stability of our Company, and the value of a business
model that emphasizes fixed and recurring revenue streams that
provide consistency and reliability in up and down markets."
THE COMPANY NETWORK
As at March 31, 2016, the Network was
comprised of 17,320 REALTORS®, operating under
308 franchise agreements providing services from 670
locations, with approximately a one fifth share of the Canadian
residential real estate market ("Canadian Market") based on
2015 transactional dollar volume. On January
1, 2016, The Company acquired 33 franchise agreements
representing an annual revenue stream of approximately $1.0 million from 459 REALTORS®. In
addition to this acquisition, the Company network was further
increased by net organic recruitment of 67
REALTORS®.
REAL ESTATE MARKETS
According to the Canadian Real Estate Association
("CREA")2, for the rolling twelve-month period
ended March 31, 2016, the Canadian Market, as defined by total
transactional dollar volume, closed up 18%, at $237.8 billion, compared to the rolling
twelve-month period ended March 31,
2015, driven by an increase of 11% in average selling price
and a 7% increase in units sold. For the three months ended March
31, 2016, the Canadian Market was up 32%, at $56.8 billion, compared to the same period in
2015, driven by a 16% increase in average selling price and a
13% increase in units sold.
The most marked increases were in the Greater Toronto Area ("GTA") and in
Greater Vancouver, according to
the Toronto Real Estate Board ("TREB")3 and
CREA. On a rolling twelve-month basis, the housing market
in the GTA experienced a year-over-year transactional dollar
volume increase of 22% driven by an 11% increase in average
selling price, and a 10% increase in number of units
sold. Greater Vancouver experienced a year-over-year
transactional dollar volume increase of 49% driven by a 16%
increase in average selling price, and a 29% increase in number of
units sold. For the three months ended March
31, 2016, the GTA market experienced a 31% increase in
transactional dollar volume driven by a 14% increase in
average selling price and a 15% increase in number of units
sold, compared to the same period in 2015. For the three months
ended March 31, 2016, the
Greater Vancouver market increased
by 65% on a transactional dollar volume basis, driven by a 25%
increase in average selling price and a 32% increase in number of
units sold, compared to the same period in 2015.
OUTLOOK
"The first quarter of 2016 saw a very strong
Canadian real estate market with regional disparities of the kind
we haven't seen in over a decade," said Soper. "A noticeable
divergence between Canada's two
strongest markets appeared with the Greater Toronto Area experiencing moderately
strong home price appreciation, while home prices in the
Greater Vancouver market
accelerated at far greater levels. The Greater Montreal Area real estate market saw
signs of renewal, including a dramatic increase in home sales
activity which should put upward pressure on home values in the
region. In Alberta, the weak economy that has driven a
decrease in home sales volumes since early 2015 is beginning to put
downward pressure on prices. We expect to see further modest
declines to year end."
"Home prices are expected to increase in many markets across
Canada throughout 2016, but not at
the pace that has been the recent norm. Instead, the national
real estate market is expected to slow later this year, principally
due to the effects of a dampened economy in energy-dependent
markets, and eroding affordability in Toronto and Vancouver," said Soper.
CASH DIVIDEND
The Company declared a cash dividend of $0.1083 per restricted voting share payable on
June 30, 2016, to shareholders of
record on May 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
Wednesday, May 4, 2016 at
2 p.m. ET to discuss its first
quarter results.
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 May 6, 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",
"sustain", "momentum", "ongoing", "stability", "recurring",
"outlook", "renewal", "expected", "believe", "continued",
"throughout", "later" 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 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.
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
17,000 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 $225 billion of
assets under management. For more information, go
to www.Brookfield.com.
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1
REALTORS® is a trademark identifying real estate
licensees in Canada who are members of the Canadian Real Estate
Association.
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2 Source:
National MLS® Report: The Canadian Real Estate
Association News Release as of April 15, 2016, and April 15,
2015.
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3 Source:
Toronto Real Estate Board Market Watch as of April 2016 and April
2015.
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Brookfield Real
Estate Services Inc.
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Interim Balance
Sheet Highlights
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As at
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March
31,
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December
31,
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(Unaudited, in
thousands of Canadian dollars)
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2016
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2015
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Cash
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$
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4,607
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$
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5,645
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Other current
assets
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4,693
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4,245
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Total current
assets
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9,300
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9,890
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Non-current
assets
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92,577
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88,224
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Total
assets
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$
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101,877
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$
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98,114
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Accounts payable and
accrued liabilities
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$
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1,203
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$
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1,181
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Current portion of
purchase obligation
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7,571
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2,824
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Interest payable on
Exchangeable Units
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476
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476
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Dividends
payable
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1,027
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1,027
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Other current
liabilities
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67
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640
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Total current
liabilities
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10,344
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6,148
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Debt
facilities
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68,676
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64,662
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Other non-current
liabilities
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2,048
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3,890
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Exchangeable
Units
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48,318
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48,784
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Total
Liabilities
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129,386
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123,484
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Shareholders'
deficit
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(27,509)
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(25,370)
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Total Liabilities
and Shareholders' deficit
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$
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101,877
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$
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98,114
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Interim Earnings
(Loss) Highlights
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For three months
ended March 31,
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2016
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2015
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(Unaudited, in
thousands of Canadian dollars)
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Royalties
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$
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9,397
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$
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8,454
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Administration,
Management Fee and Interest Expense
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(2,647)
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(2,436)
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Cash Flow from
Operations
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6,750
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6,018
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Impairment, write-off
and amortization of intangible assets
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(2,605)
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(2,511)
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Interest on
Exchangeable Units
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(1,428)
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(1,318)
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Gain / (loss) on fair
value of Exchangeable Units
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466
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(3,827)
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Loss on interest rate
swap
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(112)
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(1,561)
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Loss on fair value of
purchase obligation
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(1,464)
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(17)
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Income
taxes
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(665)
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(310)
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Net and
comprehensive earnings / (loss)
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$
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942
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$
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(3,526)
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Basic earnings /
(loss) per Restricted Voting Share
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$
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0.10
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$
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(0.37)
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Diluted earnings /
(loss) per Share
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$
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0.10
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$
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(0.37)
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Cash Flow from
Operations per Share on a diluted basis
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$
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0.53
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$
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0.47
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Interim Cash Flow
Highlights
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For three months
ended March 31,
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2016
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2015
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(Unaudited, in
thousands of Canadian dollars)
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Cash provided by
Operating activities:
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$
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3,334
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$
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4,143
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Cash provided used
for Investing activities:
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(5,291)
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(8,122)
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Cash provided by
Financing activities:
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919
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5,155
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Change in cash for
the period
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(1,038)
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1,176
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Cash, beginning of
the period
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5,645
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3,052
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Cash, end of the
period
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$
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4,607
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$
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4,228
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SOURCE Brookfield Real Estate Services Inc.