TORONTO, Aug. 10, 2018 /CNW/ - Brookfield Real Estate
Services Inc. (TSX: BRE) (the "Company"), a leading provider of
services to residential real estate brokers and their
REALTORS®1 today announced its second quarter
financial results and the approval of a monthly dividend to holders
of the Company's restricted voting shares.
HIGHLIGHTS
- Softer real estate markets contributed to lower royalty
revenues and lower operating income relative to the prior year
despite an increase in the number of REALTORS®
representing the Company's brands.
- The Company distributed dividends of $3.2 million to holders of restricted voting
shares.
- Cash flow from operations ("CFFO") on a rolling twelve-month
basis decreased by 2.1% compared to 2017 to $2.51 per Share, driven by a decrease in variable
fees and premium fees.
- The Company's network of REALTORS® (the
"Network") increased to 18,780, up from 18,135 as at December
31, 2017.
- The Board of Directors of the Company approved a dividend to
shareholders of $0.1125 per
restricted voting share payable September 28, 2018 to
shareholders of record August 31,
2018, representing a target annual dividend of $1.35 per restricted voting share.
SECOND QUARTER OPERATING RESULTS
Royalties for the three months ended June
30, 2018 were $11.5 million,
compared to $12.1 million in Q2 2017
as a result of weaker real estate markets in Canada, particularly in the Greater Vancouver and Greater Toronto regions. For the rolling
twelve-month period ended June 30,
2018, royalties were $43.6 million, down marginally
compared to $44.7 million for the
same period in 2017.
The Company generated a net loss of $3.7
million, or $0.39 per share
("Share") for the three months ended June
30, 2018, compared to net earnings of $3.3 million or $0.35 per Share, for the same period in 2017. In
addition to lower operating income, net earnings were negatively
affected by a loss on the fair value of its Exchangeable Units of
$7.0 million in the quarter compared
to a loss of $1.1 million in the
second quarter of 2017. The non-cash loss on the fair value of
Exchangeable Units is the result of an increase in the market price
of the Company's restricted voting share, which are used to
determine the fair value of the obligation associated with the
Exchangeable Units.
CFFO for the second quarter was $8.4
million or $0.66 per Share on
a diluted basis, an 8.4% decrease as compared to $9.2 million or $0.72 per Share for the same period in 2017. For
the rolling twelve-month period ended June
30, 2018, CFFO was $2.51 per
Share as compared to $2.56 per Share
for the rolling twelve-month period ended June 30, 2017.
During the second quarter, the Company paid dividends totaling
$3.2 million (or $0.34 per share) to holders of restricted voting
shares, an increase of 4% over the second quarter of 2017.
"Despite a significant year-over-year decline in Canadian home
sales, the decrease in royalty revenue realized by the Company has
been limited to 2.6% compared to last year as the majority of our
fees are fixed in nature." said Phil
Soper, President and Chief Executive Officer, Brookfield
Real Estate Services Inc. "Network growth remains paramount to our
Company's success and we are pleased that our brands have continued
to attract, develop and support top producers this quarter."
THE COMPANY NETWORK
As at June 30, 2018, the Network
was comprised of 18,780 REALTORS®, operating under 295
franchise agreements providing services from 673 locations, with an
approximate 20% share of the Canadian residential real estate
market ("Canadian Market") based on 2017 transactional dollar
volume.
CASH DIVIDEND
The Company declared a cash dividend of $0.1125 per restricted voting share payable on
September 28, 2018, to shareholders
of record on August 31, 2018. This
represents a targeted annual dividend of $1.35 per restricted voting share.
CONFERENCE CALL
Brookfield Real Estate Services Inc. will host a conference call
on Friday, August 10, 2018 at
10:00 a.m. ET to discuss its second
quarter results.
Participants can join via webcast at:
https://event.on24.com/wcc/r/1798154/C2AD2E0B64531DF1EE6F9BF2375F47D4
Please connect approximately ten minutes prior to the beginning
of the webcast to ensure participation.
A recording of the conference call will be available in the
Investor Centre section of the Company's website by Wednesday, August 15, 2018.
CFFO
This news release and accompanying financial highlights 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 pay
income taxes and distributions 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
financial position 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 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 "continued",
"targeted", "remains" 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: changes in the Company's strategy with respect
to dividends, changes in the supply of houses for sale in
Canada or in any particular region
within Canada, changes in the
demand for houses in Canada or any
particular region within Canada,
changes in general economic conditions (including interest rates,
consumer confidence and other general economic factors or
indicators), changes in global and regional economic growth, 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, changes in tax laws 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
18,000 REALTORS®. We operate in Canada under the Royal LePage, Via
Capitale and Johnston & Daniel brands. For more information, go
to www.Brookfieldresinc.com.
Brookfield Real Estate Services Inc. is an affiliate of
Brookfield Asset Management, a leading global alternative asset
manager with $285 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.
Brookfield Real
Estate Services Inc.
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Interim Balance
Sheet Highlights
|
|
|
|
|
As at
|
|
|
June
30,
|
December
31,
|
(Unaudited, in
thousands of Canadian dollars)
|
|
|
2018
|
2017
|
Cash
|
|
|
$
|
4,888
|
$
|
3,458
|
Other current
assets
|
|
|
5,730
|
4,645
|
Total current
assets
|
|
|
10,618
|
8,103
|
Non-current
assets
|
|
|
90,452
|
85,420
|
Total
assets
|
|
|
$
|
101,070
|
$
|
93,523
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
|
$
|
1,109
|
$
|
803
|
Purchase
obligation
|
|
|
2,310
|
1,497
|
Interest payable on
Exchangeable Units
|
|
|
484
|
484
|
Dividends payable to
shareholders
|
|
|
1,067
|
1,067
|
Other current
liabilities
|
|
|
-
|
400
|
Total current
liabilities
|
|
|
4,970
|
4,251
|
Debt
facilities
|
|
|
72,906
|
65,677
|
Exchangeable
Units
|
|
|
64,890
|
54,973
|
Total
Liabilities
|
|
|
142,766
|
124,901
|
Shareholders'
deficit
|
|
|
(41,696)
|
(31,378)
|
Total Liabilities
and Shareholders' deficit
|
|
|
$
|
101,070
|
$
|
93,523
|
|
|
|
|
|
Interim Earnings
(Loss) Highlights
|
|
|
|
|
|
Three
months
|
Three
months
|
Six
months
|
Six
months
|
|
ended
|
ended
|
ended
|
ended
|
|
June
30,
|
June 30,
|
June
30,
|
June 30,
|
(Unaudited, in
thousands of Canadian dollars)
|
2018
|
2017
|
2018
|
2017
|
Royalties
|
$
|
11,472
|
$
|
12,128
|
$
|
21,942
|
$
|
22,537
|
Administration
Expense
|
(280)
|
(6)
|
(634)
|
(543)
|
Management
Fee
|
(2,103)
|
(2,296)
|
(3,992)
|
(4,140)
|
Interest
Expense
|
(679)
|
(643)
|
(1,351)
|
(1,297)
|
Cash Flow from
Operations
|
8,410
|
9,183
|
15,965
|
16,557
|
Impairment, write-off
and amortization of intangible assets
|
(2,055)
|
(2,111)
|
(4,064)
|
(4,293)
|
Interest on
Exchangeable Units
|
(1,452)
|
(1,427)
|
(2,904)
|
(2,855)
|
Loss on fair value of
Exchangeable Units
|
(6,988)
|
(1,064)
|
(9,916)
|
(2,429)
|
Gain on interest rate
swap
|
4
|
420
|
63
|
470
|
Loss on fair value of
purchase obligation
|
(26)
|
(104)
|
(544)
|
(178)
|
Income tax
expense
|
(1,558)
|
(1,567)
|
(2,630)
|
(2,663)
|
Net and
comprehensive earnings
|
$
|
(3,665)
|
$
|
3,330
|
$
|
(4,030)
|
$
|
4,609
|
Basic earnings per
Restricted Voting Share
|
$
|
(0.39)
|
$
|
0.35
|
$
|
(0.42)
|
$
|
0.49
|
Diluted earnings
per Share
|
$
|
(0.39)
|
$
|
0.35
|
$
|
(0.42)
|
$
|
0.49
|
Cash Flow from
Operations per Share on a diluted basis
|
$
|
0.66
|
$
|
0.72
|
$
|
1.25
|
$
|
1.29
|
Cash Flow from
Operations per Share on a diluted basis - rolling
twelve-month period ended June 30,
|
|
|
$
|
2.51
|
$
|
2.56
|
|
|
|
|
|
Interim Cash Flow
Highlights
|
|
|
|
|
|
Three
months
|
Three
months
|
Six
months
|
Six
months
|
|
ended
|
ended
|
ended
|
ended
|
|
June
30,
|
June
30,
|
June
30,
|
June 30,
|
(Unaudited, in
thousands of Canadian dollars)
|
2018
|
2017
|
2018
|
2017
|
Cash provided by
Operating activities:
|
$
|
5,447
|
$
|
6,541
|
$
|
9,168
|
$
|
9,950
|
Cash provided used
for Investing activities:
|
(6)
|
(2,642)
|
(8,536)
|
(10,167)
|
Cash provided /
(used) by/for Financing activities:
|
(3,201)
|
(4,582)
|
798
|
(263)
|
Change in cash for
the period
|
2,240
|
(683)
|
1,430
|
(480)
|
Cash, beginning of
the period
|
2,648
|
3,305
|
3,458
|
3,102
|
Cash, end of the
period
|
$
|
4,888
|
$
|
2,622
|
$
|
4,888
|
$
|
2,622
|
SOURCE Brookfield Real Estate Services Inc.