TORONTO, June 28, 2013 /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 it will be
continuing its relationship with Brookfield Real Estate Services
Manager Limited (the Manager), a subsidiary of Brookfield Asset
Management Inc. (Brookfield) under an amended and restated Management
Services Agreement effective January 1, 2014 (MSA). The agreement
provides new growth opportunities for the Company and enhances the
value of Canada's premier real estate services brands, including Royal
LePage, Johnston & Daniel and Via Capitale Real Estate Network.
"The changes to the agreement all provide significant benefit to
shareholders," said Spencer Enright, President and Chief Executive
Officer of Brookfield Real Estate Services Manager Limited. "With the
new MSA in place, we will see a close alignment of the Manager and
Company goals, reduced management fees, a new incentive arrangement
emphasising organic agent growth, and the ability to grow market share
while safeguarding the existing return on investment."
While the majority of the provisions under the MSA remain intact from
the existing agreement, management fees have been streamlined to 20%
across all branded franchise networks and the existing Royal LePage
formula used to calculate the value of incremental franchises assigned
by the Manager has now been adopted across all branded franchises.
Additionally, the MSA provides for an incentive fee to the Manager
based on organic growth within the franchise networks and provides the
Manager the ability to sell other Canadian branded franchises to the
Company in addition to Royal LePage and Via Capitale. The initial term
of the MSA is five years, with a provision for automatic renewal of
successive five year terms.
Since 2003, the Company has been managed pursuant to a ten-year
agreement with the Manager. This agreement had recently been extended
to December 31, 2013, allowing a Special Committee of the Board of
Directors of the Company along with external advisors to conduct a
thorough review and assessment of alternatives in advance the expiry of
the term of the current agreement. Entering into the MSA with the
Manager was determined to be the best possible option at this time, as
it builds upon the strong existing relationship between the Company and
Brookfield and maintains consistency in a vital part of the
infrastructure to the Company.
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 March 31, 2013, the
Company network consisted of 15,558 REALTORS®. The Company network has an approximate 24% share of the Canadian
residential resale real estate market based on 2012 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 73% 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.