Stock Name: BRE
Amount: CAD 0.092
Announcement Date: 01/05/2012
Record Date: 29/05/2012
Dividend Detail:
TORONTO, May 1, 2012 /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 months ended March 31, 2012 was $5.6 million as compared to
$5.7 million for the same period in 2011.
CFFO for the rolling 12 month period ended March 31, 2012 is $1.96 per
restricted voting share ("RVS") as compared to $1.97 for the rolling 12
month period ended March 31, 2011. Royalties were $8.2 million for the
quarter, the same level as the first quarter of 2011. The net loss for
the three months ended March 31, 2012 was $3.2 million or $0.34 per
RVS, as compared to a loss of $1.8 million for the same period in 2011.
OVERVIEW OF FIRST QUARTER OPERATING RESULTS
During the quarter, the Company generated cash flow from operations
("CFFO") of $5.6 million as compared to $5.7 million for the same
period in 2011. The Company had an increase in variable franchise fees
due to increased market activity, offset by a decrease in fixed royalty
fees as a result of net attrition experienced in the underlying agent
network during 2011 and the decrease in other revenue and services.
Other revenue and services decreased by 10% quarter over quarter (1.2%
of overall revenue), as the Company discontinued an agent website
program that was no longer relevant.
On a rolling twelve-month basis, the Canadian market transactional
dollar volume of $168.0 billion increased by 11% from March 31, 2011,
driven by a 6% and 5% increase in selling price and home sale activity,
respectively. For the three months ended March 31, 2012, the Canadian
market transactional dollar volume was up 5% over the same period in
2011, driven by a 1% and 4% increase in selling price and home sale
activity, respectively.
On a rolling twelve-month basis, the GTA Market experienced a
quarter-over-same-quarter increase of 19% driven by a 9% increase in
selling price and 10% increase in home sale activity. For the three
months ended March 31, 2012, the GTA Market experienced an 18% increase
on a 10% and 8% increase in selling price and home sale activity,
respectively over the same period in 2011. The higher than anticipated
rise in home prices is largely driven by the consistent shortage of
listings, resulting in competition among home buyers for the Quarter,
and low interest rates, which continue to draw home buyers into the
Market.
The Company's revenue is primarily fixed in nature, based on the number
of REALTORS�� in the network, which was essentially flat, period over
period. This structure provides revenue protection from the impact of
revenue dips when the market cools, but also reduces the degree to
which the Company participates in periods of rapid market expansion.
"In terms of network expansion, our contract sales funnel is healthy,"
said Phil Soper, President and Chief Executive Officer, Brookfield Real
Estate Services, Inc. "On a year-over-year basis, the number of agents
in our growth funnel is up considerably."
Since the Company recognizes variable fees when home sales close, which
typically is 45 to 60 days after the sales date used for Canadian
market data, the improved market activity is expected to materialize as
increased variable and premium fees in the second quarter.
"Price appreciation and strong unit sales reflect Canadians taking
advantage of a highly competitive banking environment and borrowing
rates that for the first time fell below 3.0 per cent for a five year
fixed mortgage," continued Mr. Soper. "The lure of historically low
mortgage rates, as well as unseasonably warm weather, particularly in
Central Canada, encouraged sellers to list their homes earlier than
normal, pulling ahead transactions into the early part of the year."
The Company Network
As at March 31, 2012 the Company Network was comprised of 15,250
REALTORS��, operating under 414 franchise agreements providing services
from 668 locations, with an approximate 22% share of the Market based
on 2011 transactional dollar volume.
Outlook
On a year-over-year basis, price appreciation and housing sales are
expected to modestly increase in 2012. While the pace of appreciation
is slowing in some regions across Canada as higher home prices
negatively impact affordability, the positive impact of a gradually
improving domestic and U.S. economy, and a gentle upward pressure on
wages and salaries, should support the residential real estate market
through 2012.
Monthly Cash Dividend
The Company declared a cash dividend of $0.092 per share for the month
of May 2012, payable on June 29, 2012, to shareholders of record on May
31, 2012.
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, 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
Tuesday, May 1, 2012 at 2 p.m. ET to discuss its first quarter
financial 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 on the Company's website by
Wednesday, May 2, 2012 at http://www.brookfieldresinc.com/content/investor_centre-25063.html.
Supplemental Information
The Company's Interim Condensed Consolidated Financial Statements and
Supplemental Information for the three months ended March 31, 2012
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 March 31, 2012, the Company network consisted of 15,250
REALTORS��. The Company network has an approximate 22% 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:
Tammy Gilmer
Director, Public Relations & National Communications
Brookfield Real Estate Services Inc.
tgilmer@brookfieldres.com
Tel: 416.510.5783
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