TORONTO, May 7, 2019 /CNW/ - Brookfield Real Estate
Services Inc. (dba Bridgemarq Real Estate Services) ("Bridgemarq"
or the "Company") (TSX: BRE) today announced its first quarter
financial results (including its distributable cash flow), and the
approval of a monthly dividend to holders of the Company's
restricted voting shares.
HIGHLIGHTS
- Net loss for the quarter was $8.4
million as a result of a loss of $7.8
million on the fair value of the exchangeable units issued
by the Company, driven by a rise in the Company's share price.
- The Company's network of REALTORS® (the "Network")
increased to 19,231, up from 18,725 as at December 31, 2018.
- Distributable cash flow for the first quarter was $3.5 million compared to negative distributable
cash flow of $2.2 million for the
same period in 2018.
- The Board of Directors of the Company approved a dividend of
$0.1125 per restricted voting share,
payable June 28, 2019 to shareholders
of record on May 31, 2019.
FIRST QUARTER OPERATING RESULTS
Net loss for the quarter was $8.4
million, or $0.88 per Share,
compared to a net loss of $0.4
million or $0.04 per Share,
for the same period in 2018. The primary driver of the net loss
is the determination of the fair value on the exchangeable
units. The fair value of the exchangeable units is determined with
reference to the trading price of the Company's restricted voting
shares. The Company's share price rose from $14.57 as at December 31,
2018 to $16.91 as at
March 31, 2019.
Distributable cash flow for the quarter was $3.5 million, compared to negative distributable
cash flow of $2.2 million generated
in the first quarter of 2018. Under the terms of the previous
management services agreement, the Company acquired franchise
agreements from the Manager during the first quarter of each fiscal
year resulting in a deficiency in distributable cash flow. In 2018,
the Company borrowed $7.2 million on
its debt facilities to finance the acquisition of franchise
agreements. These borrowings permitted the Company to pay out a
substantial portion of its remaining distributable cash flow to
shareholders and holders of exchangeable units.
Revenues during the first quarter were $10.0 million, compared to $10.5 million in the same period in 2018. For the
rolling twelve-month period ended March, 31, 2019, revenues were
$41.6 million, compared to
$44.3 million for the same period in
2018. Reduced revenues are primarily due to the expiry in
August 2018 of the arrangement
whereby certain franchisees paid premium franchise fees, partly
offset by the transfer of ancillary revenues that were previously
earned by the Company's manager under the recently amended
management services agreement. Revenues generated by the Company
are primarily fixed in nature, based on the number of
REALTORS® in the network. This fixed nature of the
Company's revenues provides the Company some protection from the
impact of a cooling housing market, but also reduces the degree to
which the Company participates in periods of rapid market
expansion.
"Given the current dynamics of the Canadian real estate market,
we are pleased with the Company's performance this quarter," said
Phil Soper, President and Chief
Executive Officer, Bridgemarq Real Estate Services. "The Company
continues to see a high rate of renewals and healthy agent count
growth. We are continuing to develop best-in-class tools to attract
and retain brokers and agents seeking to differentiate their
offering in an increasingly competitive real estate services
industry."
THE COMPANY NETWORK
As at March 31, 2019, the Network
was comprised of 19,231 REALTORS®, operating under 298
franchise agreements providing services from 682 locations, with an
approximate one-fifth share of the Canadian residential real estate
market ("Canadian Market") based on 2018 transactional dollar
volume. On January 3, 2019, the
Company was assigned franchise agreements comprised of 495
REALTORS® operating under the Royal LePage and Via
Capitale Brands, for nominal consideration. The estimated annual
royalty stream related to these Franchise Agreements is
$0.9 million.
Since 2003, the Company's network has grown at a 5% compound
annual growth rate, outperforming the 4% growth in the industry
despite the addition of competitive offerings over the same time
period.
CASH DIVIDEND
The Company declared a cash dividend of $0.1125 per restricted voting share payable on
June 28, 2019, to shareholders of
record on May 31, 2019. This
represents a targeted annual dividend of $1.35 per restricted voting share.
CONFERENCE CALL
Bridgemarq Real Estate Services will discuss its first quarter
financial results at the Company's Annual Meeting on Tuesday May 7, 2019 at 10:00 a.m. at Vantage Venues, Inverness Room, 27th Floor, 150 King Street
West, Toronto, Ontario.
Participants can join via webcast
at: https://event.on24.com/wcc/r/1991721/895F5E94D8C8E8B847BADADAEF4A4AEF
Please connect approximately ten minutes prior to the beginning of
the webcast to ensure participation.
A copy of the Annual Meeting presentation will be available on
the Company's website by Monday, May 13,
2019 at: https://www.bridgemarq.com/investor-centre
DISTRIBUTABLE CASH FLOW
This news release and accompanying financial statements make
reference to distributable cash flow. Distributable cash flow is
defined as operating income before deducting amortization and net
impairment or recovery of intangible assets minus current income
tax expense and minus cash used in investing activities.
Distributable cash flow 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 holders of exchangeable units converted Class B LP
units into restricted voting shares. The Company uses distributable
cash flow 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. Distributable cash flow 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 "attract", "believes",
"continues", "driver", "have", "has", "grown", "growth",
"outperforming", "reduces", "representing", "retain", "through",
"targeted" 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 supply or demand of houses for
sale in Canada or in any
particular region within Canada,
changes in the selling price for houses in Canada or any particular region within
Canada, changes in the Company's
strategy with respect to dividends, changes in the productivity of
the Company's REALTORS® or the commissions they charge their
customers, changes in government policy, laws or regulations which
could reasonably affect the housing markets in Canada, consumer response to any changes in
the housing markets in Canada or
any changes in government policy, laws or regulations, 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, 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, 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. Forward-looking information is based on
various material factors or assumptions, which are based on
information currently available to management. Material factors or
assumptions that were applied in drawing conclusions or making
estimates set out in the forward-looking statements include, but
are not limited to: anticipated economic conditions, anticipated
impact of government policies, anticipated financial performance,
anticipated market conditions, business prospects, the successful
execution of the Company's business strategies and recent
regulatory developments. The factors underlying current
expectations are dynamic and subject to change. Although the
forward-looking statements contained in this MD&A are based
upon what management believes are reasonable assumptions, the
Company cannot assure readers that actual results will be
consistent with these forward-looking statements. 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 Bridgemarq Real Estate Services
Bridgemarq 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.
Bridgemarq Real Estate Services is the registered trade name of
Brookfield Real Estate Services Inc. For more information, go
to bridgemarq.com.
Bridgemarq is an affiliate of Brookfield Business Partners, a
business services and industrials company focused on owning and
operating high-quality businesses that benefit from barriers to
entry and/or low production costs. Brookfield Business Partners is
listed on the New York and
Toronto stock exchanges. Further
information is available at bbu.brookfield.com.
1 REALTORS® is a
trademark identifying real estate licensees in Canada who are
members of the Canadian Real Estate Association.
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Bridgemarq Real
Estate Services
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Interim Balance
Sheet Highlights
|
|
|
As at
|
March
31,
|
December
31,
|
(Unaudited, in
thousands of Canadian dollars)
|
2019
|
2018
|
Cash
|
$
|
3,635
|
$
|
4,339
|
Other current
assets
|
6,604
|
4,954
|
Total current
assets
|
10,239
|
9,293
|
Non-current
assets
|
93,070
|
86,366
|
Total
assets
|
$
|
103,309
|
$
|
95,659
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
995
|
$
|
1,003
|
Interest payable on
Exchangeable Units
|
484
|
484
|
Dividends payable to
shareholders
|
1,067
|
1,067
|
Other current
liabilities
|
3,243
|
-
|
Total current
liabilities
|
5,789
|
2,554
|
Debt
facilities
|
73,307
|
71,297
|
Other non-current
liabilities
|
6,211
|
-
|
Exchangeable
Units
|
56,271
|
48,484
|
Total
Liabilities
|
141,578
|
122,335
|
Shareholders'
deficit
|
(38,269)
|
(26,676)
|
Total Liabilities
and Shareholders' deficit
|
$
|
103,309
|
$
|
95,659
|
|
|
|
Interim Loss
Highlights
|
|
|
|
|
|
For three months
ended March 31,
|
|
|
(Unaudited, in
thousands of Canadian dollars)
|
2019
|
2018
|
Revenues
|
$
|
10,008
|
$
|
10,470
|
Administration,
Management Fee and Interest Expense
|
(4,857)
|
(2,915)
|
|
5,151
|
7,555
|
Impairment, write-off
and amortization of intangible assets
|
(3,138)
|
(2,009)
|
Interest on
Exchangeable Units
|
(1,452)
|
(1,452)
|
Loss on fair value of
Exchangeable Units
|
(7,787)
|
(2,928)
|
Gain (Loss) on
interest rate swap
|
(969)
|
59
|
Loss on fair value of
purchase obligation
|
-
|
(518)
|
Income tax
expense
|
(197)
|
(1,072)
|
Net and
comprehensive loss
|
$
|
(8,392)
|
$
|
(365)
|
Basic loss per
Restricted Voting Share
|
$
|
(0.88)
|
$
|
(0.04)
|
Diluted loss per
Share
|
$
|
(0.88)
|
$
|
(0.04)
|
|
|
|
Interim Cash Flow
Highlights
|
|
|
|
|
|
For three months
ended March 31,
|
|
|
(Unaudited, in
thousands of Canadian dollars)
|
2019
|
2018
|
Cash provided by
Operating activities:
|
$
|
1,459
|
$
|
3,721
|
Cash provided used
for Investing activities:
|
(962)
|
(8,530)
|
Cash provided by
Financing activities:
|
(1,201)
|
3,999
|
Change in cash for
the period
|
(704)
|
(810)
|
Cash, beginning of
the period
|
4,339
|
3,458
|
Cash, end of the
period
|
$
|
3,635
|
$
|
2,648
|
SOURCE Brookfield Real Estate Services Inc.