Mr. Phil Soper reports

BRIDGEMARQ REAL ESTATE SERVICES(TM) REPORTS THIRD QUARTER RESULTS AND MONTHLY DIVIDEND

Bridgemarq Real Estate Services Inc. has released its third quarter consolidated financial results and declared a monthly dividend to holders of the company's restricted voting shares.

Highlights:

• Revenue in the third quarter amounted to $12.8-million, compared with the $12.2-million generated in the third quarter of 2022. The increase is due to improved markets as overall activity in the Canadian market increased by 9.5 per cent compared with Q3 of last year.
• The company generated net earnings of $8.6-million or 91 cents per share, compared with a net loss of $1.1-million or 12 cents per share in 2022, primarily due to a gain on the fair value of exchangeable units compared with a loss last year.
• Distributable cash flow was $5.1-million or 40 cents per share compared with $4.8-million or 37 cents per share recorded in the third quarter of 2022.
• The board of directors approved a dividend to shareholders of 11.25 cents per share payable on Dec. 29, 2023, to shareholders of record on Nov. 30, 2023.

Third quarter operating results

Revenues during the third quarter were $12.8-million, compared with the $12.2-million generated in Q3 of 2022. The change in revenues is primarily due to improved markets as sales activity across Canada increased by almost 6 per cent and prices increased by more than 3 per cent compared with the third quarter of 2022.

During the quarter, the company generated net earnings of $8.6-million or 91 cents per fully diluted restricted voting share, compared with a net loss of $1.1-million or 12 cents per share in the same quarter in 2022. Net earnings increased primarily due to a gain of $6.8-million on the fair value of the exchangeable units compared with a loss of $3-million in the third quarter last year. The fair valuation adjustment on the exchangeable units is directly related to changes in the market price of the company's shares.

Distributable cash flow amounted to $5.1-million for the quarter, compared with $4.8-million in the same quarter last year driven by higher revenues, lower cost of sales and lower current income tax expense, partly offset by higher administration expenses and management fees. For the year to date, distributable cash flow amounted to $14.5-million compared with $16.4-million last year.

"Once again in the third quarter, we have shown that the company has the ability to deliver compelling results during a period of slower real estate markets with significantly lower transactional volumes," said Phil Soper, president and chief executive officer, Bridgemarq Real Estate Services. "The Bank of Canada's year-and-a-half-long battle with pandemic-fuelled inflation has taken a toll on the real estate industry, with the volume of transactions this year sitting below the 10-year average. Yet, while the market continued to cool in the third quarter, our revenues were up year-over-year and compared to the previous quarter, albeit modestly.

"This growth is possible as we have continued to expand our network of real estate professionals -- thanks to the attraction of industry-leading technology platforms and best-in-class training and coaching, as well as the premium attributes agents associate with the company's brands. In slower markets, we typically experience a flight to quality as Realtors seek advantage in their drive to earn a slice of the smaller pie," added Mr. Soper.

"Taming inflation is taking longer than policy makers had originally anticipated. While the timing of any potential rate cuts is uncertain, we believe the company can continue to successfully navigate slower residential and commercial markets. Furthermore, it is possible that we will see a modest market lift in the spring of 2024 as pent-up demand builds, and consumers adjust to the higher rate environment."

Market update

The Canadian market posted a national increase in transactional dollar volume of 9.5 per cent in the third quarter of 2023, compared with the same period last year. Since April, 2022, the Bank of Canada has increased its key lending rate ten times, causing a slowdown in housing market activity and a decline in home prices across the country. According to the Canadian Real Estate Association, the national average selling price increased 3.5 per cent in the third quarter compared with the same period last year, while transactions rose 5.9 per cent. On a quarter-over-quarter basis, however, the national average selling price and volumes declined 8.5 per cent and 21.3 per cent, respectively.

As activity slowed through the third quarter relative to the second quarter, major markets in Canada saw an increase in listings inventory, allowing critically low supply levels to build marginally. However, the number of available homes for sale remains well below what is needed to satisfy existing and anticipated demand, from both current residents sitting on the sidelines and new immigrants arriving under Canada's expansive immigration targets. Once interest rates begin to ease, buyers may begin to return to the market, once again creating competitive conditions and putting upward pressure on home prices.

The Bank of Canada held interest rates steady in September and October, following two 25-basis-point hikes in the summer, keeping the overnight lending rate at 5 per cent. The central bank noted that while higher interest rates are moderating inflation on many goods, including food, elevated mortgage interest costs, rent and other housing costs remain a concern. The central bank said it will raise the policy rate further in the future if necessary. In September, Canada's consumer price index was up 3.8 per cent compared with the same month last year; down from the 4-per-cent increase recorded in August. The central bank remains committed to achieving its target inflation rate of 2 per cent, which it does not expect it will reach before the middle of 2025.

Cash dividend

The company declared a cash dividend of 11.25 cents per restricted voting share payable on Dec. 29, 2023, to shareholders of record on Nov. 30, 2023. The dividend distribution represents a target annual dividend of $1.35 per restricted voting share.

The company network

As at Sept. 30, 2023, the company network comprised 20,796 Realtors operating under 288 franchise agreements from 729 locations. This figure, up less than 1 per cent, is consistent with the agent count as at Sept. 30, 2022. Based on 2022 transactions, Realtors in the company network participate in approximately 28 per cent of all home resales in Canada.

Conference call

Bridgemarq Real Estate Services will host a conference call on Thursday, Nov. 9, 2023, at 10 a.m. Eastern Daylight Time to discuss its third quarter financial results.

To access the call by telephone, please dial 1-888-664-6383 or 416-764-8650.

Please connect approximately 10 minutes prior to the beginning of the call to ensure participation.

A recording of the conference call will be available in the investor centre section of the company's website by Monday, Nov. 20, 2023.

About Bridgemarq Real Estate Services Inc.

Bridgemarq is a leading provider of services to residential real estate brokers and a network of approximately 21,000 Realtors. It operates in Canada under the Royal LePage, Via Capitale, and Johnston & Daniel brands.

Bridgemarq is an affiliate of Brookfield Business Partners, a business services and industrials company focused on owning and operating high-quality businesses that benefit from barriers to entry and/or low production costs. Brookfield Business Partners is listed on the New York and Toronto stock exchanges.

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