TORONTO,
March 12, 2012 /PRNewswire/ -
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 Market.
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.
Outlook
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.
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
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
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.
Supplemental Information
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 visit
www.brookfieldresinc.com.
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.
