Brookfield Real Estate Services Fund Announces Third Quarter Results and Monthly Cash Distribution

Brookfield Real Estate Services Fund Announces Third Quarter Results and Monthly Cash Distribution

The Fund’s structure minimizes the impact of slowing market as royalties and distributable cash only decreased 2.5% and 3.2%, respectively

Toronto, ON – November 8, 2010 - Brookfield Real Estate Services Fund (the “Fund”) (TSX – BRE.UN) today announced that royalties for the quarter ended September 30, 2010 were $9.8 million, down 2.5% from the same period in 2009.

Distributable cash1 during the quarter was $6.9 million ($0.54 per unit), down 3.2% from the third quarter of 2009. Net earnings decreased 9.4% to $2.0 million ($0.21 per unit) from $2.2 million ($0.23 per unit) in the third quarter of 2009.

The year-over-year decrease in royalties, distributable cash and earnings in the third quarter of 2010 reflect the decline in sales activity (measured as transaction dollar volume) for the industry in the quarter, compared with the robust sales rebound in housing markets across the country that began in the second quarter of 2009. The Fund outperformed the industry, which experienced a 23.3% decline in sales activity in the quarter based on Canadian Real Estate Association (CREA) data for MLS listings. The Fund’s fixed fees, which are based on the size of its REALTOR®2 network, were 5.4% higher than the same quarter a year ago, while its variable and premium fees combined were down 11.7%. Additionally, some of the fees reflect housing sales that were made in the second quarter, when industry sales activity was ahead by
5.1%, but closed in the third quarter. As the Fund’s variable fees are recorded when a sale closes, while industry data is based on when a sale is made, there is a 45 to 60 day lag relative to industry data, and therefore the industry sales decline in the third quarter is expected to affect the Fund’s fourth quarter results.

“The year is unfolding much as we predicted, with the unusually active first half giving way to slower markets in the latter part of the year,” said Phil Soper, President and Chief Executive. “Helped by very low rates in a competitive mortgage financing market, the third quarter was slightly stronger than anticipated, on new demand fuelled by improved affordability in many regions. Looking ahead, it is very unlikely that the period from now to year end can keep pace with the activity levels in the overheated market of the final quarter of 2009; however, the Fund’s performance is insulated from market fluctuations to the extent that approximately 69% of the Fund’s fees are fixed in nature, based on the number of agents and sales representatives in the network, and the Fund’s strategy is to steadily grow its REALTOR® network and increase REALTOR® productivity. Additionally, given Canada’s strong position in the global economy, we maintain our positive outlook for the real estate market and look forward to improved results in the future.” ...Click here for the full release
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