TORONTO, March 12, 2012 /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 that cash
flow from operations ("CFFO") for the three and twelve months ended
December 31, 2011 was $5.4 million and $25.3 million, respectively, as
compared to $5.0 million and $25.2 million, respectively, for the same
period in 2010.
CFFO per Restricted Voting Share ("Share") for the three and twelve
months ended December 31, 2011 was $0.42 and $1.97 per Share,
respectively, as compared to $0.39 and $1.97 per Share, respectively,
in the same period of 2010.
Royalties for the three and twelve months ended December 31, 2011 were
$8.4 million and $36.7 million, respectively, compared to $8.2 million
and $36.6 million, respectively for the same period in 2010.
Net earnings (loss) for the three and twelve months ended December 31,
2011 was $3.2 million loss and $8.0 million income, or $0.34 loss per
share and $0.85 basic earnings per Share, respectively, as compared to
a net loss of $29.2 million and $50.7 million.
OVERVIEW OF FOURTH QUARTER OPERATING RESULTS
During the quarter, the Company generated cash flow from operations
("CFFO") of $5.4 million as compared to $5.0 million for the same
period in 2010.
To understand what has transpired in the Market for the 2011 and how it
impacts our outlook for 2012, a review of year-to-date 2011 and 2010
Market activity is required.
On a rolling twelve-month basis, the fourth quarter of 2011 closed out
at a Market transactional dollar volume of $166.1 billion, up 10% from
December 31, 2010, driven by a 7% increase in selling price and a
modest increase in home sale activity of 3%. For the three months ended
December 31, 2011, transactional dollar volume was up 11% over the same
period in 2010, driven by an 4% and a 7% increase in selling price and
home sale activity, respectively. The steady increase in selling price
on a twelve-month rolling and quarterly basis is largely driven by
consistent shortage of listings, resulting in competition among home
buyers, and low interest rates continue to draw homebuyers to the
While the sales activity for the twelve months ended December 31, 2011
as compared to December 31, 2010 increased moderately by 3%, home sale
activity on a quarter-over-same-quarter basis increased by 7% due to an
active 2011 summer Market, the carry-through of second-quarter 2011
home sales and the fall-off of Market activity in 2010.
In 2010, the Market was up significantly for the first two quarters as
consumers sought to complete their home purchases ahead of the
Harmonized Sales Tax ("HST") and tighter mortgage-lending rules, which
reduced home sale activity in the third and fourth quarters. The
fourth of 2011, which is typically the slower season of the
home-purchase cycle, saw a normalization of Market activity to a ten
year National average.
"Brookfield Real Estate Services Inc. is pleased to report with the
fourth quarter financial performance for 2011," said Phil Soper,
President and Chief Executive Officer, Brookfield 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 Q4, underscoring the
strength of the Company structure and its ability to generate strong,
stable dividends for our shareholders."
The Company Network
As at December 31, 2011 the Company Network was comprised of 15,061
REALTORS®, operating under 389 franchise agreements providing services
from 654 locations, with an approximate 22% share of the Market based
on 2011 transactional dollar volume.
On a year over year basis, price appreciation and housing sales activity
are expected to modestly increase during 2012. While there appears to
have been some overshooting in home prices in select markets, the pace
of appreciation is slowing in regions like the Greater Vancouver Area.
The positive impact of a gradually improving domestic and U.S. economy,
and a gentle upward pressure on wages and salaries, should mitigate the
natural cyclical correction that often follows a period of strong price
appreciation. Our outlook is based in part upon the expectation that
low interest rates will continue to attract a diverse group of home
buyers and encourage move-up demand.
Monthly Cash Dividend
The Company declared a cash dividend of $0.092 per share for the month
of March 2012, payable on April 30, 2012, to shareholders of record on
March 30, 2012.
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 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
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.
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.
Brookfield Real Estate Services Inc. will host a conference call on
Monday March 12, 2012 at 10:00 a.m. ET to discuss its fourth quarter
and year-end 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 Tuesday March 13, 2012 at http://www.brookfieldresinc.com/content/investor_centre-25063.html.
The Company's Consolidated Financial Statements, Supplemental
Information and IFRS overview for the year ended December 31, 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®¹. 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 December 31, 2011, the Company network consisted of 15,061
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
1 REALTOR® is a trademark identifying real estate licensees in Canada who
are members of the Canadian Real Estate Association.
SOURCE Brookfield Real Estate Services Inc.
For further information:
Director, Public Relations & National Communications
Brookfield Real Estate Services Inc.