# Brookfield Real Estate Services Inc (BRE.TO)



## ddkay (Nov 20, 2010)

Hey everyone,

Thought I would start a thread on this Brookfield stock (which only seems to be Brookfield by name?). Looks like their cash flow is generated through a couple of residential real estate brokerage and franchise brands in Canada (Royal LePage [Canada], Johnston & Daniel [Luxury Portfolio affiliate for Toronto], Via Capitale [Quebec]). 31% of revenue comes from transaction volume aka agent productivity (1% of each agents gross commission) and 69% of revenue comes from the number of contracted realtor agents paying royalties/service fees. Trading history goes back to the beginning of this year. It's down over 9% in the last 5 trading sessions. The last closing price was $13.50. Dividend yield currently sitting at 8.15%. Can this be more resistant to an RE correction because of excess supply and additional listing agents needed that will be paying fixed royalties/service fees? What do you guys think overall?

Hmm their CEO Phil Soper says, "Brookfield continues to generate strong and stable cash flow from operations for investors despite Canadian house price appreciation having potentially peaked for the next year or so - a testament to the strength and structure of our organization," said Phil Soper, president and chief executive officer, Brookfield Real Estate Services Inc. "We're entering a period of more modest house price growth and lower transaction volumes in the Canadian real estate market. Despite these conditions, Brookfield continues to grow and expand its REALTOR® network." [...] "After an unusually active six month winter and early spring period, the number of home sales in Canada is expected to take a small dip in the second quarter of 2011,".

Disclaimer: I don't know anything about real estate

Edit: Just found out this used to be an income trust listed as BRE.UN and before that as RSF.UN.

Dividend payout history:
$0.092/month ($1.10/yr) 2004
$0.092/month ($1.10/yr) 2005
$0.096/month ($1.15/yr) 2006
$0.100/month ($1.20/yr) 2007
$0.109/month ($1.31/yr) 2008
$0.120/month ($1.44/yr) 2009
$0.133/month ($1.60/yr) 2010
$0.092/month ($1.10/yr) beginning January 2011

IPO Date: 08/07/2003, IPO Price: $10, IPO Symbol: RSF.UN








The historical low in the chart above is $6.15 on 11/20/2008. 120% away from todays closing price. I guess I answered my own question - BRE is not recession proof, even though they did not gain/lose a significant number of realtor agents in that period transaction volume falling across the industry also effected them quite a bit:








Scary chart below








Ontario seems to have an alarmingly high percentage of Canadian realtor agents








Images from the Q3 2010 report

SEDAR page for filings (under both old and new entity names)

Their corporate structure is just a bit less complicated than GE:
BRE is a wholly-owned subsidiary of RL RES Holding Trust ("RLHT"), which is 75% owned by Residential Income Fund General Partner Limited ("RIFGP") and Residential Income Fund L.P. (the "Partnership"). RIFGP is the managing general partner of the Partnership. Trilon Bancorp Inc. (the "non-controlling interest") owns the remaining 25% interest in the Partnership and RIFGP. The Fund receives certain management, administrative and support services from Brookfield Real Estate Services Limited ("BRESL") (formerly Residential Income Fund Manager Limited), a party related to the non-controlling interest via common control.

BRE is not an operating unit of Brookfield Asset Management ("BAM"), but BAM holds 26% controlling interest and acts as BRE's general manager via "BRESL".

Per share:
Net Book Value (NBV): $3.69
Valuation ratios:
P/E Ratio (TTM [Trailing Twelve Months]): BRE 40.87; Industry 13.56; Sector 20.81, S&P500 16.93
Price-to-Book Value Ratio (MRQ [Most Recent Quarter]): BRE 18.96; Industry 1.90; Sector 1.50; S&P500, 3.14

TA: Price crossed under its 200-day Moving Average of $14.03 towards close on June 8 and gapped down on June 9. Short term support is $13.00, resistance $14.85. Long term support $11.50, resistance $14.85

Apologise for the constantly evolving post--adding new info as I find it.


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## kcowan (Jul 1, 2010)

I think real estate is a risk segment to bet on over the next several years. If any of the bubbles burst, there will be a freeze on sales.


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## FrugalTrader (Oct 13, 2008)

I wouldn't buy anything that resembles BRE-X.


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## ddkay (Nov 20, 2010)

Just discovered the Canadian equivalent of Case-Shiller, the Teranet House Price Index


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## crazyjackcsa (Aug 8, 2010)

I'm putting my money into waffles, with warm maple syrup!


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## I'm Howard (Oct 13, 2010)

We have owned Brookefield for awhile and will continue to hold, it is only a small % but compensates for low Bond Yields.

I do not follow the daily fluctuations, no intention to sell, strictly a revenue generator.

Interest Rates look like they may gradually climb, when GIC's start paying 8% i will be mainly deployed into GIC's.


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