TORONTO, May 7, 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 cash flow from operations ("CFFO") for the three months ended March 31, 2013 was $5.6 million or $0.436 per restricted voting share ("Share"), compared to $5.6 million or $0.434 per Share for the same period in 2012.
Royalties for the three months ended March 31, 2013 were $8.1 million, down slightly from $8.2 million for the same period in 2012. The net loss for the three months ended March 31, 2013 was $0.5 million, or $0.06 loss per Share, as compared to net loss of $3.2 million or $0.33 loss per Share, for the same period in 2012.
OVERVIEW OF FIRST QUARTER OPERATING RESULTS During the Quarter the Company generated CFFO of $5.6 million, which was up slightly from the same period of 2012. The tightening of mortgage-lending rules introduced in July 2012, contributed to a pull of market activity into the first half of 2012, resulting in an abnormally active comparative period. Royalties were down slightly this quarter as the industry returns to more normalized transactional patterns and cycle over the last year's period of heightened activity. Offsetting this decrease was a $0.2 million reduction in administration costs due primarily to a lower quarter-over-quarter bad debt provision resulting from the success of increased collection efforts as well as a reduction in professional fees as a result of the completion of activities in 2012 related IFRS requirements and the conversion of the Company from a Fund to a corporation.
For the three months ended March 31, 2013, the Canadian market transactional dollar volume of $34.8 billion decreased by 12.2% from the same period in 2012, driven solely by a decrease in units sold. The average sales price of a home remained largely unchanged due primarily to a balanced market supported by reduced listings and low interest rates. For the three months ended March 31, 2013, the Toronto market transactional dollar volume was down 10.5% over the same period in 2012, also driven primarily by a decrease in home sale activity."The first quarter of 2013 saw an unusual grouping of economic factors which brought stability to the Canadian housing market: consistently low interest rates, an expanding economy, with essentially flat home prices," said Phil Soper, President and Chief Executive Officer, Brookfield Real Estate Services Inc. "Together, these factors should mitigate the length and severity of the current cyclical correction." "We saw a year-over-year decline in sales volumes in the quarter, as the lingering impact of last summer's introduction of more restrictive mortgage rules affected entry-level buyers, and some sellers delayed listing their homes on speculation of a real estate price correction," continued Soper. "Buyers looking to make opportunistic purchases in a soft market, however, were largely disappointed as home prices held firm across almost all markets."
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