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Brookfield Real Estate Services Inc. Reports First Quarter 2012 Results And Monthly Dividend

Stocks in this article: BRE

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®¹, 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.

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