TORONTO, June 17, 2015 /CNW/ – Brookfield Real Estate Services Inc. (the “Company”) (TSX: BRE) announced today that it has approved the acquisition of certain franchise agreements from Brookfield Real Estate Services Manager Limited (“the Manager”) and an increase in the Company’s borrowing capacity.
Acquisition of Franchise Agreements
Under the Royal LePage brand, the Company will purchase franchise agreements representing 12 real estate operations and 719 REALTORS®1 across Canada for approximately $9.8 million. These agreements are estimated to generate an annual royalty stream of $1.4 million and will be effective July 1, 2015.
As outlined in the Company’s Management Services Agreement (“MSA”) with the Manager, 80 per cent of the acquisition price will be paid in July 2015 and the balance paid in January 2017 when the purchase price is finalized, based on the actual performance of the acquired agreements.
The payment due July 1, 2015 of approximately $7.8 million, plus applicable HST, will be funded through a combination of cash on hand and a draw down on the Company’s debt facilities.
“The Company had a very strong year in 2014, and positive momentum continues to drive the business forward today,” said Phil Soper, president and chief executive officer, Brookfield Real Estate Services Inc. “Real estate professionals continue to be attracted by our unique operating platform featuring the nation’s premium marketing services and business tools. The more than 700 agents joining the firm in the first half of 2015 are a testament to the strength of our Royal LePage brand.”
Increased Borrowing Capacity
The Company also announced that it has completed an agreement with CIBC Business Banking to increase the Company’s credit facilities to provide an incremental $10 million in available financing. This will increase the maximum borrowings under the Company’s financing arrangements from $68 million to $78 million.
“We are very pleased to announce the expansion of our financing facilities with our long-term partner, CIBC Business Banking. The $10 million increase in our financing capacity is an important step towards supporting our ambitious growth plans,” added Soper.
About Brookfield Real Estate Services Inc.
Brookfield Real Estate Services Inc. (TSX: BRE) is a leading provider of services to residential real estate brokers and a network of 16,206 REALTORS®, as at March 31, 2015. It generates cash flow from fixed and variable fees derived from real estate brokers and agents operating in Canada under the Royal LePage, Via Capitale and Johnston & Daniel brands. Approximately 71 per cent of company revenue is based on fees that are fixed in nature, providing revenue stability and helping insulate cash flows from market fluctuations. The recurring fixed revenue structure combined with strong brands and a successful growth strategy position it to continue generating stable, long-term cash flows and paying monthly dividends to shareholders. For further information, please visit www.brookfieldresinc.com.
1 REALTORS® is a trademark identifying real estate licensees in Canada who are members of the Canadian Real Estate Association.
SOURCE Brookfield Real Estate Services Inc.