Toronto, ON – December 13, 2012
– Brookfield Real Estate Services Inc. (the “Company”) (TSX – BRE) announced today that it has approved the acquisition from Brookfield Real Estate Services Manager Limited (“the Manager”) of franchise agreements representing 27 real estate offices and 526 REALTORS®
operating under the Royal LePage brand across Canada and the Via Capitale brand in the province of Quebec. The acquisitions will be effective January 1, 2013.
“It has been a very satisfying year for our business, as we achieved the strongest network growth since before the 2008 recession,” said Phil Soper, President and CEO. “Our real estate businesses are destination brands for brokers and agents; brands they aspire to belong to. Looking ahead to 2013, Royal LePage will mark its 100-year anniversary. As the voice of Canadian real estate, we will share our stories and provide insight into the future of real estate brokerage in Canada. ”
Acquisition of Franchise Agreements
Royal LePage Agreements
Under the Royal LePage brand, the Company will acquire franchise agreements representing 22 real estate brokerage offices and 473 REALTORS®
for approximately $6.0 million. These agreements generated an estimated annual royalty stream of $0.9 million during the past year.
As outlined in the Company’s MSA, 80% of the 2013 acquisition price will be paid in January 2013. The purchase price will be finalized and the balance paid at the end of 2013, in accordance with the Management Services Agreement (“MSA”) between the Company and the Manager.
Via Capitale Agreements
Under the Via Capitale brand, the Company will acquire franchise agreements representing five real estate brokerage offices and 53 REALTORS®
for approximately $0.8 million. These agreements generated an estimated annual royalty stream of $0.15 million during the past year.
As agreed with the independent directors, 80% of the 2013 acquisition price is to be paid in January 2013. Under terms negotiated with the Company’s Directors, the balance of the purchase price will be finalized over the next three years and is to be paid in annual installments over the same period.
Funding Through Internal Cash
The combined payment due January 1, 2013 of approximately $6.2 million, which includes applicable taxes, will be funded internally.
Income Fund Conversion
Consistent with the process undertaken in 2010 to convert from an income fund to a common share company, Brookfield Real Estate Services Inc. will be completing the final stages of this conversion on or about December 31, 2012. This final stage of the conversion is procedural in nature and will not have any impact on the operations, strategy or financial results of the Company.
About Brookfield Real Estate Services Inc.
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 September 30, 2012, the Company network consisted of 15,238 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
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” and other expressions which are predictions of or indicate future events and trends and which 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, which may cause the actual results, performance or achievements of the Company 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 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 offices, other developments in the residential real estate brokerage industry or the Company that reduce the number of and/or royalty revenue from the Company’s 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 Company’s annual information form which is filed with securities commissions and posted on SEDAR at www.sedar.com
. The Company 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.
is a trademark identifying real estate licensees in Canada who are members of the Canadian Real Estate Association.
Director, Public Relations & National Communications
Brookfield Real Estate Services Inc.