Bridgemarq Real Estate Services Inc. 2022 Earnings, 2023 Forecast

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Bridgemarq Real Estate Services Inc. (BRE), (formerly Brookfield Real Estate Services In. is a leading Canadian provider of services to residential real estate brokers and their realtors. Cash flow is generated 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. Effective May-1-2019 the name was changed to Bridgemarq to differentiate them from the Brookfield-owned group of companies and the terms of the management agreement were changed to increase the management fee. The ticker symbol remains the same at BRE. Bridgemarq continues to own 75% of the operating company Brookfield Business Partners (BBU.UN) owns 25%. BRE's board is comprised of five persons. Brookfield Business Partners is controlled by Brookfield Asset Management (BAM.A) designates two of the five directors. Brookfield receives approximately 30% of total distributions plus management fees equal to approximately 40% of revenues.

They generate revenues by both fixed and variable fee components with 70% of the revenue based on fixed fees, 30% from variable fees primarily driven by the total transactional dollar volume from the sales commissions of realtors, fixed fees are based on the number of agents and sales representatives in the network. Management fees paid to Brookfield comprise approximately 40% of revenues. By revenue, approximately 57% is from the Greater Toronto Area, 18% from BC, and approximately 10% each from Quebec and Alberta with the balance split between the Prairies and Maritimes. Compared to the distribution of realtors across Canada, they are under-represented in British Columbia and Alberta. They have a relatively strong presence in Ontario (as a result of a historical base there) and Quebec (due in part to the acquisitions of the Via Capitale Network).

On Sept-30-2022, the network consisted of 20,686 realtors operating through 283 franchise agreements at 722 locations compared to Dec-31-2021, there were 281 Franchise Agreements representing 20,159 realtors operating from 723 locations, providing services under the Royal LePage, Via Capitale, and Johnston & Daniel Brands. During 2021 agents participated in approximately 26% of all home resales in Canada, consistent with 27% in 2020. Royal LePage Franchise Agreements, which represent 94% of the company's realtors, are 10-20 year terms with a standard renewal term of 10 years

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