Bridgemarq Real Estate Services Inc.

Good morning. My name is Ian, and I would like to welcome everyone to the Bridgemark Real Estate Services Inc. 2020 Third Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to introduce... you to Mr. Phil Soper, President and CEO of Bridgemark Real Estate Services, Inc. Mr. Soper, you may begin your conference.

Thank you, Ian, and good morning, everyone. With me today is our Chief Financial Officer, Glenn McMillan. We appreciate you joining us on this call. Today, I will begin with a brief overview of the company's third quarter results and business updates. Afterwards, Glenn will discuss our financial results in more detail, And I'll conclude today's call by providing some remarks on operational highlights and market development. Following our remarks, both Glen and I would be happy to take your questions. I want to remind you that some of the remarks expressed during this call may contain forward-looking statements. You should not place reliance on these forward-looking statements because they involve known and unknown risks and uncertainties that may cause the actual results and performance of the company to differ from the anticipated future results expressed or implied by such forward-looking statements. I encourage everyone to read the cautionary language found in our news release and in all of our regulatory filings, which can be found on our website and of course on CDAR. Related to our traditional cautionary language, I feel it is important to speak about the impact that COVID-19, the pandemic, may have on the economy, on the real estate market, and on the company. Our world of page business is recognized as a leader in Canadian real estate and has been providing quarterly insights into the Canadian housing market for decades through its forecasting program. While many organizations have suspended providing forecasts, RollaPage did release its forecast on schedule at the end of the first quarter. It was one of the few forecasts that got the general flow of 2020 to date correct, a drop in activity levels and home prices during the spring lockdown, followed by a rise in activity levels and prices thereafter, as buyers, encouraged by historically low mortgage rates and the perceptions of bargains to be had, reentered the market. What Royal LePage underestimated was the unprecedented strength of the recovery. You're going to hear numbers on today's call like plus 63% year over year. Last quarter, we shared numbers that were equally jaw-dropping on the downside during the actual lockdown. This is uncharted territory for the economy and for our industry. The fundamentals driving our business are strong. And we remain positive about the medium-term outlook for the company. But it is important to note that the uncertainty in the duration and the magnitude of the pandemic, the possibility of additional government intervention in response to the pandemic, and even the impact of advances or setbacks from science and medicine may make the immediate future a very murky place upon which to gaze. Simply put, the company cannot reasonably determine the impact that the pandemic may have on operations or financial position. Throughout the third quarter, realtors across Canada have been able to provide services during the pandemic. By using precautions and social distancing, it was determined by provincial governments that business activity could safely continue. The company is pleased with Canada's housing market recovery. During the third quarter, transactional dollar volume increased 63% year over year to a record-breaking $109 billion. It was the first time quarterly dollar volume crossed the $100 billion mark in history. Remarkably, despite the historic shutdown of the industry during the all-important spring market, year-to-date company revenues of $33.3 million are less than half a million dollars behind last year's total during the same period. Glenn will provide further detail on this in a moment. The Board of Directors has approved a dividend payable on December 31st of $11.25 per share to shareholders of record on November 30th. This indicates an annualized dividend of $1.35 a share, which is consistent with last year. Based on the underlying strength of our operations and the Canadian real estate industry itself, the company has continued to maintain its dividend payments to shareholders despite the uncertainty created by the pandemic. The strength of the real estate market in the third quarter supported this position. The company has benefited from the support of its largest investor, which has agreed to allow the company to defer payment of its management fees and interest on exchangeable units to support these dividend payments and the company overall and its liquidity. And with that, I'll turn the call over to Glenn for a look at our third quarter financial performance.

Thank you, Phil, and good morning, everyone. As Phil mentioned, revenue in the third quarter was $10.7 million compared to $11.7 million in the third quarter of last year. In April of 2020, the company introduced the Pandemic Fee Relief Plan as an alternative to its standard fee plan. Under the relief plan, the company suspended fixed franchise fees for approximately 82% of its network and implemented an increased variable fee subject to a cap. Strong real estate markets in the third quarter have contributed to a large number of agents reaching that cap. As a result, we do expect revenues in Q4 to be lower than they were last year. For the nine months ending September 30th, revenues were $33.3 million, comparable to the $33.7 million generated last year, as Phil mentioned. The net loss for the third quarter is $2.2 million or 23 cents per fully diluted share. These results included a $3.5 million loss on the fair value of the exchangeable units issued by the company. The fair value of the units is driven by the closing share price of the company's restricted voting shares as of the balance sheet date. The loss reflects an increase in the company's share price from $11.75 at the start of the quarter to $1,281 at the end of the quarter. In the third quarter of last year, the company generated net earnings of $2.4 million, which included a gain on the fair valuation of the exchangeable units of $0.6 million due to a decrease in the share price during that quarter. Distributable cash flow for the third quarter of 2020 amounted to $4.2 million compared to $4.8 million generated in the third quarter of last year. The decrease in distributable cash flow was driven by lower revenues. On a rolling 12-month basis, distributable cash flow came in at $1.24 per share, just slightly below the $1.26 generated for the 12 months ended September 30th last year. As Phil mentioned, during the quarter, the Canadian residential real estate market closed up 63% compared to last year, The increase was driven by a 39% increase in unit sales and a 22% increase in average selling price. The Greater Toronto Area real estate market saw a significant year-over-year improvement as well, rising 60% to $31.2 billion. The primary driver was a 37% increase in unit sales as average selling prices increased 13%. The Greater Vancouver market closed up 55% at almost $11 billion in the third quarter, driven by a 40% increase in units sold and a 12% increase in price. Likewise, Montreal was up 66%, reflecting a 43% increase in unit sales and a 24% increase in average selling price. I'll turn it back over to Phil, who will provide you with some additional insights into the markets and an update on our operations.