Stock Name: BRE
Amount: CAD 0.092
Announcement Date: 04/11/2011
Record Date: 27/10/2011
Dividend Detail:
TORONTO, Nov. 4, 2011 /CNW/ - Brookfield Real Estate Services Inc. (the
Company) (TSX: BRE), a leading provider of services to residential real
estate brokers and their REALTORS, today announced that cash flow
from operations ("CFFO") for the three and nine months ended September
30, 2011 was $7.3 million and $19.9 million, respectively, as compared
to $6.9 million and $20.2 million, respectively, for the same period in
2010.
CFFO per Restricted Voting Share ("Share") for the three and nine months
ended September 30, 2011 was $0.57 and $1.55 per Share, respectively,
as compared to $0.54 and $1.58 per Share, respectively, in the same
period of 2010. CFFO for the rolling 12 month period ended September
30, 2011 was $1.94 per Share as compared to $1.97 for the 12 months
ended December 31, 2010.
Royalties for the three and nine months ended September 30, 2011 were
$10.3 million and $28.3 million, respectively, compared to $9.8 million
and $28.5 million, respectively for the same period in 2010.
Net earnings for the three and nine months ended September 30, 2011 was
$8.1 million and $11.2 million, or $0.85 and $1.18 earnings per Share,
respectively, as compared to a net loss of $12.1 million and $21.5
million, or $1.28 and $2.27 loss per Share, respectively, for the same
period in 2010.
OVERVIEW OF THIRD QUARTER OPERATING RESULTS
During the quarter, the Company generated cash flow from operations
("CFFO") of $7.3 million as compared to $6.9 million for the same
period in 2010. Management anticipates the 12-month rolling CFFO by the
end of 2011 will be ahead of 2010's $1.97 per share as a result of a
projected steady 2011 housing market and the non-recurrence of a $0.05
per share one-time charge for the Conversion of the Company to a
corporation in the fourth quarter of 2010.
To understand what has transpired in the Market for the first nine
months of 2011 and how it impacts our outlook for the remainder of the
year, a review of year-to-date 2011 and 2010 Market activity is
required.
On a rolling twelve month basis, the third quarter of 2011 closed out at
a Market transactional dollar volume of $162.8 billion, up 7% from
December 31, 2010, driven by a 6% increase in selling price and a
modest 1% increase in home sale activity. For the three months ended
September 30, 2011, transactional dollar volume was up 22% over the
same period in 2010, driven by an 8% and 14% increase in selling price
and home sale activity, respectively. The increase in selling price on
a twelve-month rolling and quarterly basis is largely driven by a
combination of a consistent shortage of listings resulting in more
competition between homebuyers, positive employment and income growth,
and continued expectation of low mortgage rates. While the twelve-month
rolling home sale activity for September 30, 2011 as compared to
December 31, 2010 increased moderately by 1%; home sale activity on a
quarter-over-same-quarter basis increased by 14% due to an active 2011
summer Market, the carry-through of second quarter 2011 homes sales and
the fall off of the 2010 comparative Market activity. The carry-through
of second quarter 2011 home sales arises as much of the increased home
sale activity experienced in the second quarter of 2011 came through in
the month of June which benefited the Quarter due to the lag effect of
the Company recording royalty revenue when the home closes, which is
typically 30 to 45 days after the sale has been reported by the Market.
In 2010 the Market was up significantly for the first two quarters as
consumers sought to complete their home purchases ahead of the
Harmonized Sale Tax and tighter mortgage lending rules, with a
subsequent reduction in home sale activity in the third and fourth
quarters.
"Brookfield Real Estate Services Inc. is pleased to report its third
consecutive quarter of positive financial performance for 2011," said
Phil Soper, president and chief executive officer, Brookfield
Residential Real Estate Services Inc. "The two primary measures used to
determine our financial performance - namely royalty revenues and cash
flow from operations - both experienced quarter-over-quarter increases
in Q3, underscoring the strength of the Company structure and its
ability to generate strong, stable dividends for its shareholders."
The Company Network
As at September 30, 2011 the Company Network was comprised of 15,295
REALTORS, operating under 390 franchise agreements providing services
from 656 locations, with an approximate 23% share of the Market based
on 2010 transactional dollar volume. For the nine months ended
September 30, 2011 the Company Network decreased by 13 Agents or 0.1%.
Outlook
Based on data from the Royal LePage House Price Survey, the average
price of a home in Canada increased between 5.7% and 7.8% in the third
quarter of 2011, depending on housing type, compared to the previous
year. The strength of home price appreciation in the third quarter
exceeded expectations as very low interest rates buoyed consumer
confidence in a comparatively stable Canadian economy. However,
year-over-year gains appear deceptively strong in comparison to a weak
third quarter of 2010. A resilient domestic economy, coupled with the
stimulative effect of very low interest rates, has extended the
post-recession recovery in house prices. The third quarter saw a return
to a normal seasonal business cycle as price appreciation slowed in
many areas - with some average values even falling slightly - after the
busy spring trading season. The strength in Canada's national housing
market is being driven by the country's largest urban centres. While a
broader slowdown is expected in the year ahead the structure of the
Company's royalty stream is expected to mitigate this impact.
Monthly Cash Dividend
Today, the Company declared a cash dividend of $0.092 per share for the
month of October 2011, payable on November 30, 2011, to shareholders of
record on October 31, 2011.
IFRS
During the first quarter the Company commenced reporting in accordance
with International Financial Reporting Standards ("IFRS"). It is
important to note that under IFRS our key financial performance measure
is CFFO per Share which is commensurate with the previous distributable
cash per unit measure. The net loss for the quarter and the comparative
period in 2010 were driven by the accounting for various non-cash items
under IFRS. A copy of our interim consolidated financial statements for
the quarter with an explanation of these adjustments and a discussion
of the impact of IFRS on our financial results can be found on our
website.
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 net income prior to fair value
changes, amortization, interest on exchangeable units, interest on
Trust units, income taxes, items related to other income and interests
of exchangeable unitholders. 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, the value of its business and believes that many of its
shareholders and analysts also find this measure of value to them. CFFO
does not have any standard meaning pre- scribed 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". The words such as "should", "will",
"continue", "plan", "believe", "expect", "anticipate", "intend",
"estimate", "approximate", "expected" and other expressions that are
predictions of or 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 set forward in the forward looking statements
include a change in general economic conditions, interest rates,
consumer confidence, the level of residential real estate resale
transactions, the average rate of commissions charged, competition from
other traditional real estate brokers or from discount and/or
Internet-based real estate alternatives, the availability of
acquisition opportunities and/or 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 and/or
royalty revenue from the Corporation's network of 15,295 REALTORS, our
ability to maintain brand equity through the use of trademarks, the
availability of equity and debt financing, a change in tax provisions,
and other risks detailed in the Fund'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.
Conference Call
Brookfield Real Estate Services Inc. will host a conference call on
Friday November 4, 2011 at 10:00 a.m. Eastern Time to discuss its third
quarter financial results.
To access the call by telephone, dial (647) 427-7450 or (888) 231-8191.
Please connect approximately 10 minutes before the beginning of the
call to ensure participation. A recording of the conference call will
be available on the Company's website by November 7, 2011 at http://www.brookfieldresinc.com/content/investor_centre/webcasts_and_presentations-25072.html.
Supplemental Information
The Company's Consolidated Interim Financial Statements, Supplemental
Information and IFRS overview for the quarter ended September 30, 2011
containing further information on the company's strategy, operations
and financial results can be found on our website at www.brookfieldresinc.com. The Company's Management Discussion and Analysis, Financial Statements
and associated regulatory filings will follow within prescribed
timelines. 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 September 30, 2011, the Company network consisted of 15,295
REALTORS. The Company network has an approximate 23% share of the
Canadian residential resale real estate market based on 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 network. Approximately 68% 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.
1 REALTOR is a trademark identifying real estate licensees in Canada who
are members of the Canadian Real Estate Association.
For further information:
Contact
TammyGilmer
Director, Public Relations & National Communications
Brookfield Real Estate Services Inc.
tgilmer@brookfieldres.com
Tel: 416.510.5783
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