Bridgemarq Real Estate Services Inc. (BRE) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. It is now 10:00 a.m. and time to start the annual meeting of Bridgemarq Real Estate Services, Inc. My name is Spencer Enright, and as Chairman of the corporation, I will be chairing the meeting today. In light [Audio Gap] regarding the COVID-19 pandemic and uncertainty around our ability to hold the meeting in person, given the frequency of changes to government restrictions, Bridgemarq will be holding its annual meeting of shareholders virtually. We are holding the meeting virtually primarily to protect our employees, shareholders, directors and other stakeholders from the potential dangers of COVID-19 and its variants. We did hold our AGM virtually last year and found that it ran much like our in-person meetings of prior years. Before we begin with the formal business portion of the meeting, I will provide some comments on voting and asking questions at today's meeting. In making the decision to hold the meeting virtually, we have ensured that shareholders' rights are protected. As such, this meeting offers shareholders opportunities to participate as an in-person meeting. I welcome all guests who are not registered shareholders or holding proxies for registered shareholders. As a reminder and as with in-person meetings, registered shareholders and duly appointed proxy holders are able to vote [Audio Gap] questions during the formal portion of the meeting. Guests will be permitted to ask questions during the management presentation and after the meeting. We will conduct the votes on the matters before us by a poll. On a poll, every shareholder entitled to vote has one vote for each share entitled to be voted on the matter held by that shareholder. Voting during this meeting can only be done through the virtual voting platform on the webcast. The polls are now open for all matters to be voted on at this meeting, and you should see your voting options on the left side of the screen. Voting can be completed at any time from now until the end of the formal business of the meeting. Thank you to those of you who have already voted. Votes collected by the [Audio Gap] will reflect selections at the time the poll closes. If you have already voted in advance of the meeting, you do not need to do anything as your vote has already been recorded. [Audio Gap] wish to change your vote or if you have not yet voted, we encourage you to vote now. Shareholders and guests can submit questions at any time during the meeting. There will be opportunities for registered shareholders and duly appointed proxy holders to ask questions specific to each resolution. [Operator Instructions] In particular, we ask that you identify whether your question relates to a motion being considered as part of the formal business of this meeting or whether it is of a general nature. We will address all questions that directly relate to a particular motion at the appropriate time of the meeting. We will respond to general questions following the formal portions of the meeting during the management presentation time permitting. Since you have finished typing out your question, click the arrow beside where you typed your question. The secretary will receive the questions and at the appropriate time, we'll read them out in order to be aware of the question being addressed. And with that, I'd like to call the meeting to order. Again, I remind you that the polls are open for all matters to be voted on at this moment. I will now ask AST Trust Company through its representative to act as scrutineer to report on the restricted voting shareholders present online and the number of restricted voting shares represented by proxy at this meeting. To compute the votes on any polls taken or ballots of the meeting or any adjournment and in each case to report to me as Chairman. Together with me today is Phil Soper, the Corporation's President and Chief Executive. Also with us today is Glenn McMillan, Chief Financial Officer and Secretary of the corporation, who is to act as secretary of today's meeting. Mr. Soper and McMillan have joined me in our offices for this meeting, and I can assure you that we have taken appropriate measures to conduct the meeting with all appropriate safety procedures in place. First, I will deal with the formal business of the meeting as outlined in the management proxy circular you received in April. Mr. Soper will then make a presentation on the corporation's financial and operating performance. And finally, we'll be happy to answer your questions. In order to expedite the formal part of the meeting, I've asked certain individuals to nominate and second various resolutions. Although this procedure will assist in the handling of the formal matters, it is not intended to discourage anyone from participating in reference to any resolution after it has been proposed and seconded. Any proposed amendments or objections to motion will need to be submitted as questions using the messaging tab at the top of the web page. All proposed amendments or objections submitted by shareholders or duly appointed proxy holders who are entitled to vote at the meeting will be addressed during the meeting provided that they are submitted before the polls are closed. As I previously mentioned, questions which do not specifically relate to the formal matters being addressed at the meeting will be considered during the presentation of management at the conclusion of the meeting, time permitting. I've been advised by the secretary that he has received the declaration from AST Trust Company dated April 14, 2021, that the notice and access calling this meeting and the accompanying management information circular, form of proxy and related financial statements for the year ended December 31, 2020, and related auditor's report were mailed to shareholders of record at the close of business on April 9, 2021. Therefore, we will dispense with the reading of the notice of the meeting. We received the scrutineer's preliminary report on attendance, and I confirm that we have the required quorum for the meeting. A copy of the scrutineer's final report on attendance will be filed with the records of the meeting and posted on SEDAR. I now declare the meeting to be properly constituted for the transaction of the business for which it has been called. The minutes of the annual meeting of shareholders held on August 7, 2020, were reviewed by the Board of Directors of the corporation at its quarterly meeting on November 5, 2020. Such minutes were found to be in order and were approved by the Board at that meeting and have been included in the minute books of the corporation. I trust that everyone has had an opportunity to read the materials that were provided prior to the meeting, including the annual report, which includes the letter to shareholders, the management's discussion and analysis for the year ended December 31, 2020, and the audited financial statements for the corporation, including the auditor's report thereon. Copies of these materials were made available to all shareholders and are available on SEDAR or on the corporation's website at www.bridgemarq.com. Should anyone have any questions relating to these materials or questions of a more general nature, we will be pleased to respond to them during management's presentation after the conclusion of the meeting. The Chief Financial Officer has tabled the consolidated financial statements of the corporation for the year ended December 31, 2020, together with the auditor's report and such financial statements will form part of the record of this meeting. The next item of business is the appointment of auditors and the authorization to fix their remuneration. It is the intention of the persons named in the management proxy sent to all shareholders to vote in favor of a resolution reappointing Deloitte LLP as external auditor of the corporation until the next annual meeting and authorizing the Board of Directors to fix the remuneration to be paid to the auditors. As stated in the management information circular, the Audit Committee of the Board of Directors has recommended to shareholders that Deloitte LLP be reappointed as the corporation's external auditor. Will someone please move a resolution for the appointment of auditors?

Mr. Chairman, I move that Deloitte LLP be reappointed auditors of the corporation to hold office until the next annual meeting and that the directors be authorized to fix the remuneration.

Thank you, Glen. May I have a seconder?

Mr. Chairman, I second the motion.

Thank you, Phil. Adoption of this motion requires a favorable vote of a majority of the votes cast at the meeting by the shareholders. Management has received proxies representing approximately 18% of the corporation's restricted voting shares. In addition, management has received a proxy for the special voting share, which is entitled to 3,327,666 votes. These proxies represent approximately 39% of the total votes eligible to be cast at this meeting and direct me to vote over 99% of the vote of eligible votes in favor of the resolution. I will now ask the secretary to please advise if any questions specific to this motion were submitted or if there are any objections or amendments to this motion. We will wait for a brief period of time to allow for the broadcast delay and to allow eligible shareholders to submit their questions related to this motion.

Mr. Chairman, there have been no questions specific to this motion or any objections to or amendments submitted.

Thank you. As there have been no questions or comments submitted related to this motion, we will now proceed with the vote. If you have not already recorded your vote, please record it now, remembering that if you have already voted in advance of the meeting and do not wish to change your vote, no further action is required. We will wait for a brief moment to allow you to record your vote. [Voting]

The next segment business is the election of directors. The corporation's Board is comprised of 5 persons, Brookfield Business Partners, through its subsidiary Brookfield BBP Canada Holdings LP, is entitled to designate up to 2/5 of the members of the Board and has chosen to designate myself, Spencer Enright; and Mr. Joe Freedman, as their representatives to the Board of Directors. With the designation of 2 directors by Brookfield Business Partners, there are 3 directors to be elected at this meeting, who will hold office until the earlier of the end of the next annual meeting or until their successors are elected or appointed. The proposed nominees for election as directors are: Colum Bastable, Lorraine Bell and Gail Kilgour. Mr. Bastable, Ms. Bell and Ms. Kilgour all served on the Board of Directors of the corporation this past year and are present virtually on this call today. Additional information on the proposed director nominees is set out in our management information circular, which was sent to all shareholders. I now declare the meeting open for nominations.

Mr. Chairman, I nominate for election of directors of the corporation the 3 nominees named in the corporation's management information circular relating to the annual meeting of shareholders dated March 26, 2021.

Thank you, Phil. May I have a seconder.

Mr. Chairman, I second the nomination.

Thank you, Glen. I've just been advised that for the portion of the broadcast, that sound is rather poor and the organizers of the sound have asked to take a break to redial in. So please take a minute to allow us to make this correction.

Excuse me, this is the operator. I apologize that there will be a slight delay in today's conference. Please hold and the conference will resume shortly. Thank you for your patience.

This is Spencer Enright, your Chair for the meeting. Thank you for your patience while we adjust our sound quality for the call and the webcast. I'll pick up where we left off on the matter of election of directors. I will now ask the secretary to please advise if any questions specific to this motion were submitted or if there are any additional director nominees to be proposed at this time. We'll wait for a brief period of time to allow for the broadcast delay and to allow eligible shareholders to submit their questions related to this motion.

Mr. Chairman, there have been no questions specific to this motion nor any additional director nominees proposed at this time.

Thank you, ladies and gentlemen. I now declare the nominations closed. If you have not already recorded your vote, please record it now, remembering that if you have already voted in advance of the meeting and do not wish to change your vote, no further action is required. We will wait for a brief moment to allow you to record your vote. [Voting]

The voting for all resolutions brought before the meeting is now closed. Now that the voting is closed, I can declare the results of the votes. On the basis of the voting completed prior to the meeting, the proxies received by management and the results of voting received online during this meeting, the motion to reappoint Deloitte LLP as auditors of the corporation is carried. As to the election of directors, as there are 3 directors to be elected and the same number of nominees, I now declare that those nominated have been duly elected as directors of the corporation until the next annual meeting or until their successors are elected or appointed. Ladies and gentlemen, that brings us to the conclusion of the formal agenda of the meeting. And as such, may I please call for a motion to terminate the meeting.

Mr. Chairman, I move that the meeting be terminated.

Thank you, Glen. May I have a seconder?

Mr. Chairman, I second the motion.

Thank you, Phil. I will now ask the secretary to please advise if any questions specific to this motion were submitted or if there are any objections or amendments to this motion. We will wait for a brief period of time to allow for the broadcast delay and to allow eligible shareholders to submit their questions related to this motion.

Mr. Chairman, there have been no questions specific to this motion nor any objections or amendments submitted.

Thank you. As there have been no questions or comments submitted related to this motion, I declare the motion carried and this meeting to be concluded. I will now turn the webcast over to Mr. Philip Soper, President and Chief Executive Officer of the corporation, who'll provide a strategic update on the corporation and present the corporation's 2020 and first quarter 2021 financial results. After Phil's presentation, we will be happy to answer any questions that have been submitted. Again, if you wish to ask a question, you can access the messaging tab on your screen. Before Phil starts, I should caution that in talking about our strategic initiatives and our financial and operating performance and in answering any of your questions, we may make forward-looking statements. These statements are subject to known and unknown risks and future results may differ materially from those implied or imputed from those forward-looking statements. For further information on known risk factors, I would encourage you to review the Risk Factors section in our annual information form, which is posted on the corporation's website and on SEDAR.

Thank you very much, Spencer. At this point last year, things were very different. In April of 2020, thousands of our salespeople prepared as they were for the best spring market since 2017 suddenly saw their business practices disappear. Sales in the spring were down as much as 65% in our major markets and when those dark days might end was anybody's guess. Bridgemarq's Board convened and launched the Pandemic Fee Relief Program, a program that supported thousands of the company's agents through uncertain times and into the strong recovery in late 2020. We believe that this important emergency measure is critically important step in the strong agent retention that we had through the pandemic's early challenges. I'm very proud how the team managed through the pandemic. We launched programs to support our people virtually as our agents ventured out again into the marketplace, having been declared an essential service, the provision of housing by provincial governments from coast to coast. We enacted work safe programs, programs that supported our team in their efforts to keep their clients safe, to keep each other safe, to keep the administrative people in our large companies safe. And I can say it was sounding success. I'd also say that I was proud that we shared these programs. As the industry's largest firm, we shared these programs widely across the country and across the industry, which allowed the entire real estate industry in Canada to safely serve people during these unusual times. With that, I will launch into my presentation. I'm going to provide an update on the business itself to begin with, and then we'll dive into some of the things that the company has done specifically to capture the business that we have or leading share. And then finally, the -- a look at the Canadian real estate market itself. It's been a very unusual market, strong market, frustrating market at times. So I'll give you some of our thinking behind why it has evolved the way it has and where it might be going. [Operator Instructions] By now, those people are quite comfortable with these online presentations and chat these questions and things. So so if you have any, please do put them forward, and Glenn and I and Spencer will be pleased to address them at the end of the presentation. So let's start with a view of our basic strategy, which has allowed us to grow significantly by 9,500 agents since inception. And that 9,500 number, by the way, would -- alone would place it among the largest real estate companies in this country. Firstly, starting at the top of the chart, we purposely deliver dividend income. This is an income-producing investment. As I look back over the past year, an investor of a year ago would have returned over 18%; 2 years, 14.5%; 5 years, 10.9%; 10 years, 9%. Historically, it's been a very stable and reliable income-producing investment. We do this by leading with innovative, effective technology in business services. We, dating back to our early days a century ago, were a company built on innovation. In the 1990s, we were the very first firm to launch a national web portal, and we remain the most popular real estate company web portal in the country, and I'll talk about that later in the session. And we're very pleased to have introduced in 2020 rlpSPHERE, a revolutionary new digital operating platform for the real estate to capitalize on opportunities in the real estate industry. So more on that later. We do leverage our size and scale as the largest -- industry's largest firm. We need to -- we do so by operating in every nook and cranny of this country, centers large and small right across the nation. We recruit and retain premium practitioners, and I'll dive into how our people are stronger than the industry in general in what they produce and the markets they serve. And finally, we offer the security to investors of long-term franchise agreements, typically 10 years in length. We operate through recognized and celebrated brands. Of course, there is Royal LePage, which is the bedrock of our business, operating since 1913. The country's oldest national real estate firm and largest, and I would say the most innovative. We operate in luxury boutiques in Ontario and Québec through our Johnson & Daniel and [indiscernible] businesses, and specifically serve the market of Québec with the Via Capitale franchise system. Let me move into our operating results, focusing on the first quarter of 2021. We saw an increase of 18% compared to the first quarter of 2020, and I would remind listeners that the first quarter of 2020 was actually the strongest start to a year that we've seen since 2017. And Bridgemarq realtors do produce. They have higher production than the average in the Canadian real estate industry, which I'll talk about in more detail later. We produce a healthy dividend that has been steady through both the market corrections of 2018 and '19. If you recall, in 2018, the national stress test, the B-20, was introduced, which caused major markets across the country to go into a correction mode after strong growth in the middle of the previous decade. And then there was the pandemic of 2020. So the business has done well and produced steady dividends through that period. In the first quarter, we saw our revenue increase from $11 million to $13.1 million, which is attributed to the strong housing market and an increase in the number of realtors we have in the company. We did report a net loss in the first quarter, and I'd remind viewers that a rise in our share price also increases the value of exchangeable units and accounting principle statement earnings must be adjusted downward to reflect those higher-valued exchangeable units. All right. Let's move on to key business drivers. There are 5. First is the stability of the company's revenues. In very strong markets like we're seeing in the first quarter of 2021, a business does grow, and you saw that, but it doesn't grow as strong as our, say, our agents themselves would see in their businesses because so much of our revenue is fixed in nature. But in difficult times, such as in the 2018 time period, when the national mortgage stress test was implemented and sales volumes fell, our revenues remained stable. The number of realtors in the company's network is our second driver. More people means more Canadians served and more royalties for Bridgemarq. Transactional dollar volume or the revenue of our industry is the next driver and driving that is a combination of the number of realtors and their productivity. So if they sell more, obviously, the business does better. The final driver is our products and services. We offer products and services to our brokerages and to our agents directly. We've enjoyed strong network growth since inception with a compound annual growth rate of 5%. Steady growth represented right across the country through 287 franchise agreements in 663 office locations, which represents a 16% market share across the national -- the Canadian industry. Our productivity is $300,000 more on average for our realtors compared to the average Canadian realtor. Our distribution is right across the country. You can see the black lines on this chart represent the total number of registrants of realtors in that province and their percentage of the total in Canada, and the gray line represent the company. And they -- those lines match up very well. It's also important to note that we're very strong in markets where most of the realtors are in the country, like Ontario, British Columbia and Québec. Canada is a market of markets and geographic diversity mitigates risk. Our contract portfolio is spread out over time. So with 10-year contracts, roughly speaking, 10% of those contracts will come up for renewal in any 1 year, and this is generally a much more stable portfolio of contracts than the industry at large, which typically are 5-year contracts. We've enjoyed, over time, very high renewal rates, about 98% contract renewal rate historically, and I'd liken this to the golden rule in client retention. If a client will do business with you again after they've done business with you, that is the most sincere form of satisfaction that they can exhibit. So how do we grow? Our royalty growth is achieved through increasing the number of realtors through organic recruitment, bringing both experienced and new people into our brokerages across the country. It is driven by converting competitive brokerages who are either independent or who have reached the end of their contract period with their existing franchisor and believe that their future would be better served with one of our brands. Growth is achieved by increasing realtor productivity. This is where we focus on training and tools that allow our agents to spend less time on administrative tasks and more time with clients and driving their productivity and, therefore, the productivity of the company. We do it by introducing new products and services or expanding the existing products and services already in market, and we do it by increasing the adoption of products and services through our internal marketing and communication processes and through training. In the sales services industry, momentum is contagious. Leading agents choose a winner. So what is our focus for 2021? First and foremost, we are in the process of digital brokerage transformation. What I mean by that, and I'm going to provide some detail later, is the digitization of the end-to-end process that we use to prospect for market to transact with, account for and keep track for future business in the marketplace. So end-to-end, the digitization of how our agents, our offices and the national firm interacts with Canadian consumers. We're going to focus on continuing to guide the company through pandemic-related business challenges. Although the industry and the company has done very well through the pandemic, it has not been without its challenges. As I mentioned earlier, we have close to 700 offices, and as the pandemic has affected different regions, different parts of the country at different times and with different severity, we've had to react accordingly. We're going to continue to focus on offering competing brokerages an opportunity to do better, to be better by joining our firm. We're going to capitalize on the growing number of real estate teams through the development of specialized team training, tools and services. And our business development efforts increasingly focus on doing well in epic real estate markets, high-growth markets that service new Canadians. And I'll talk about the importance of new Canadians to our business when I move to an update on the market itself. And finally, we want to leverage the success and the growth of Royal LePage Commercial during the economic recovery. It has been a difficult time for the commercial brokerage industry in certain sectors. So office leasing has been difficult. Industrial leasing and industrial brokerage has been incredibly strong. We believe, as the economy recovers, the entire commercial sector is ripe for growth. All right. Let's shift to our focus on technology-driven innovation. And with this, I want to focus on rlpSPHERE. This program, or ecosystem, digital ecosystem is a cloud-based, AI-driven end-to-end environment. We began development way back in 2018. We're into testing in 2019 and began rollout in 2020. Some believe that we launched this in response to the pandemic because it allows our people to access what they need to get their jobs done on any device, smartphone, tablet, desktop, laptop, from anywhere. And it is secure and has automation that will do things for them when it's difficult for administrators to help them. So it's a perfect operating system for the pandemic era, but it was conceived well before the pandemic era. I'm not going to walk you through this entire chart, but I thought it would be useful just to understand the scope of what we're attempting to accomplish here, which is to pull together the external and internal touch points and eliminate islands of technology and human handouts, places where errors can be made, where additional cost is incurred and where cycle times to complete transactions expand and eat away at our people's productivity and the company's profitability. Tied to the architecture of rlpSPHERE is the country's oldest real estate portal and the most successful real estate company portal in Canada, generating incredible volumes. We're looking at 7 million people a month this spring, 90 million visits last year and 363,000 leads, prospective buyers or sellers who are interested in properties to begin their search, interacting with our digital tools, our information-rich website and then are handed off to one of our realtors to consummate the sale. Of course, you can have the best solution, the best tool in the world, but if no one hears about it, it doesn't -- it isn't of much use. In this end, we put a tremendous amount of focus on marketing and communications. We lead the industry. We are a trademark turn, the voice of Canadian industry, and we take that responsibility very, very seriously. We lead the industry in medium impressions, generating billions, literally billions of times that the company's names, our brands are impressed upon Canadian consumers. This earned media, as opposed to purchased or advertised media, this earned media focus has won us considerable accolades in the marketplace for both managing important messaging on the health and the direction of the Canadian real estate industry, but also on managing internal communications and very specific studies, such as the importance of millennials or newcomers to the Canadian market. All of this work, our digital platform, our leading website and portal, our excellent marketing communication process is used to generate leads. Leads are what feeds our real estate practice and it's what attracts and retains real estate professionals. Smart leads is our term for the programs we use to generate these leads and hand them off to agents and drive additional revenue for the company. Smart leads volumes were up 108% quarter-over-quarter, driving 100% more revenue. So we're very pleased with the direction of this e-commerce or digital business line on top of our traditional brokerage service. All right. With that, I want to bridge into looking at the Canadian market itself. In looking at the Canadian market, there's no better place to start than Canada itself. So as Canada's real estate company, another trademark term, we are very proud of Canada, but it's important to realize it's more than pride. It is understanding that we're in a competitive world. And just like a company, a real estate company needs to attract and retain the best agents, and if you recruit more of the best agents, you're going to be more successful, a country needs to attract the best and brightest people from around the world in order to grow their economy, and attracting those people and bringing those people to the shores drives the real estate market forward. So starting with Canada, let me describe just why Canada has become such an important driver of newcomer real estate sales. First of all, in independent global rankings, Canada moved up to #1 globally. This is a U.S. News & World Report, Wharton Business School analysis. We have scored -- Canada as scored #1 in quality of life, which is a subcategory here, for a number of years, but just unseeded Switzerland in 2020 to become the #1 ranked country globally, on a wide variety of economic and social categories. This is an interesting one, a study that looked at countries as if they were brands as if they were Royal LePage or Citibank or Microsoft or Google and put a value against those brands. And in this study, Canada was rated as the #1 national or country brand in the world for its people, governance, immigration, investment, et cetera. This ranking, where Canada also ranks #1, specifically looks at professionals and at business owners and says, if you were to move somewhere in the world, where would you choose? And Canada won by a large margin. You can see on the chart, a huge number of people said, if I was to relocate my career somewhere in the world other than [indiscernible] I would choose Canada. Interestingly, #2, Japan, was the country that Canadians themselves went out. If they were to relocate, they would choose Japan. But I contrast, the Japanese real estate market to the Canadian real estate market as it ties to our brand overall and attracting people globally. Japan has a poorly functioning immigration program or culture. Canada has arguably the best in the world. In Japan today, it's [stark] contrast to the situation we find ourselves in Canada, there is an oversupply of homes. And it is the oldest country in the world, because it does not have a significant number of immigrants. People get older and older, they have excellent health care. But they find themselves with excess housing supply. So there is approximately 1 million of abandoned homes in Japan. People just simply, there's no market for them so they walk away from them. And of course, our challenge for the past decade, and I will say likely for the decade ahead, is that we have a housing shortage. There's more demand for housing and, therefore, more demand for real estate brokerage services in Canada that we can even supply. So moving to our economy. You can see that 2020, when we artificially or purposely shut down the economy to keep each other safe during the peak early months of the pandemic, took a real hit to GDP, and we've seen a tremendous bounce back. You see the forecast, 6.5% from Bank of Canada forecast in 2021 and very strong growth in 2022. If you look at GDP in the fourth quarter, it was very strong. That's just a quarter growth. But look at real estate, up 39% in the fourth quarter. So real estate was the leading economic category of growth during the Canadian recovery, very strong growth. Home sales climbed in March month-over-month to set a new record. If you look at the February to March climb, it was 5.2%. But look at the year-over-year in March, 76% more volume in March. And although March 2020 was impacted, the later part of the month, by the pandemic, it started very strong. But this March and this first quarter was among the strongest we've ever seen in the industry. Sales activity was coast-to-coast lifted. I'm very, very pleased to see sales volumes up in places like Alberta, Saskatchewan and Newfoundland, that have struggled since the end of 2014, fourth quarter of 2014, when oil lost 70% of its value. So we see that the COVID catalyst, the pandemic-driven interest to improve one's housing situation has lifted real estate markets everywhere in the country. One of the things I was very pleased to see in March, and I will say in April as well, is we were finally starting to see an increase in inventory levels. So particularly through the fourth quarter of 2020 and January and February and the first week of March, sales volumes were growing faster than inventories. So the inventory crisis, the lack of homes to sell, was getting worse each week as opposed to improving. And we appear to have turned a corner in late March and through April, where people are encouraged to come into the market and while it is still a strong market and there's more demand than there are properties for sale, at least it's not getting worse. And in many parts of the country, it's getting better. Why is this so important? Well, for the industry, obviously, more inventory means more product to sell. But more importantly, for the Canadian economy and for Canadians, this should keep a lid on price inflation. It should moderate and mitigate the sharp upward pressure on home prices, which is good for the industry and good for Canadian consumers. Of course, all of this required a desire to own homes. All of this growth, all of this strength we've seen in the marketplace. So what you're looking at here is a study that focuses on expectations. This is first-time homebuyers are buying a home, done by [Will Danine] at Mortgage Professionals Canada. In 2019, the blue line showed how many first-time homebuyers, people that didn't have a home yet, expected to buy a home. That's a light blue line. In the middle of 2020, the dark blue line, the navy blue line shows how their expectation of near term getting into the market left up, and the red line was conducted at the end of 2020. So what you see is a sharp pull ahead and very strong interest in homeownership among people who didn't own a home. Generally, these are millennials, people in the 25- to 35-year age group. In a Royal LePage study of this age group, we saw the fastest increase in the homeownership rate of the 25- to 35-year cohort that we never mentioned. And in fact, we found that a full -- by the end of 2020, a full 50% of people, young adults, 25 to 35 year olds, own their home, and 25% of them purchased in just 7 months in 2020. But I'm going to talk about this in just a few minutes when I talk about what we see as 3 ways or periods of growth during this expansionary period, 2020 to 2022. Of course, behind all of this are historically low interest rates. With the cost of money so low, it positively impacted affordability across the country, and the pandemic turned Canadians into super savers. Typically, we save 2% to 3% of disposable income. That jumped to 28.2% in the second quarter of 2020, just a massive amount of savings. And in a separate Royal LePage survey, we found that 1/5 of Canadians used those savings to invest in the real estate market. This is a very interesting thing. Studies have shown over a long period of time that people that own their homes do better financially. Of course, it's difficult to isolate the socioeconomic factors specifically to home ownership. But this looks at the position, the economic position of people who own homes versus those who don't own homes at the end of 2020 versus the beginning. And you can see that there was a massive increase in the wealth of home -- those in homeownership. So it's not surprising that young people and older people put so much value on their housing and homeownership. I mentioned that there had been an upward pressure on prices. We've had spikes that are higher than this. But if you look at the first quarter of 2021, you can see across the country, ranging from healthy increases in Calgary to very, very strong and bartering on unhelpfully high jumps in real estate prices in places like Ottawa, Montreal and Halifax. But it's important to realize that the combination of the drop in transactional volumes in the early part of 2020 through the second quarter and the very low interest rates that policymakers implemented to support the economy in trouble resulted in the biggest improvement in housing affordability that we've seen since the middle of the last decade. So some people -- it's lost in the headlines about spiking prices in the suburbs, et cetera, the fact that the combination of very inexpensive money and the drop in competition for housing did make housing very affordable during 2020, which is part of the reason we saw this spike in young people's ownership rates. But what about unemployment, mortgage deferrals expiring, that sort of thing? Well, unemployment is -- it continues to be a real challenge in this country. Large swaps of people have been out of work for a year. Full-time employment is coming back strong, though, and there's a high degree of correlation between employment status and the probability that someone will become one of the 68%, 69% of Canadians that owns their home. And if you look at people's wage categories, you can see that higher wage earners were not only hardly hit by the economic impact of the pandemic, they, in fact, saw incomes rise. And there are numerous sectors in the North American economy where there are acute labor shortages and upward pressure on wages and salaries. These upper wage earners tended to correlate to our customers. They weren't impacted by the pandemic, they worked from home, and they put additional and new focus on housing and their personal family situation. So what about deferred mortgages? This is a modeling chart done by the Bank of Canada and released early 2020. The blue line shows if they had not implemented, and this was a model. This is an actual -- this is the Bank of Canada's model from the first quarter of 2020. And they felt that mortgage defaults, failures to meet commitments to financial institutions, would spike if there was no policy move taken to support homeowners. The yellow line is what they felt would happen if a mortgage deferral program was in place, and we were very pleased that the major financial institutions and policymakers got together, put in place the mortgage deferral program. This chart goes back a little longer, and it shows in the blue line the default rate on mortgages in the United States versus Canada in the red line. And you can see we have a very different appetite in history for writing mortgages where there's a greater opportunity for people not to meet their commitments and helping people stay in their homes if they do run into trouble. So our mortgage deferral rate is very, very low. And after the financial crisis, it was actually tightened up further. You can see in 2018 there with the implementation of the mortgage stress test, it got tighter yet and it remained about 12x lower than the American default rate coming into the pandemic. This is what it looked like through 2020, and you can see that as a result of the mortgage deferral program and tight lending standards, we actually saw a drop in the delinquency rate in Canada, not an increase as we had forecast. So it is a very tightly managed book of business. And it's part of the reason that we have great faith in Canadian housing stock and Canadians' ability to own housing. What about condominiums? They lacked other housing classes and investors, which make up an important part of the rental accommodation that we have in Canada. Well, the first thing we saw in the first quarter of 2021 was a huge bounce back in interest in the condominium sector. After lagging detached housing in urban, suburban and rural, call it, recreational areas, through 2020, condos made a real bounce back. And I'm going to talk a little bit about that as I get into the 3 waves of consumer demand next. Suffice to say that sales volumes are up sharply, particularly as the first quarter marched along, we expect home prices, which have been flat and economy and sector will follow as the year progresses. This chart looks at spikes in home prices over the last few decades, and I thought it was important to put it in perspective. Roughly once a decade, we see combination of factors come together to drive a rise to uncomfortable levels of home prices. And you can see in the 2020s that we've reached this, an uncomfortable level of home price appreciation, and we believe that this period will run itself out through the spring of 2022 as it did in previous decades. And these are price charts. This is looking at how a benchmark home prices change during each of these periods. All right. The 3 waves of pandemic-driven demand. You can see that buyers and sellers are spread across various generations. We see quite a few younger people. Young millennials, older millennials, GenX is fine. But as we get older, people become more sellers than buyers. In 2020, 2021 and 2022, we see 3 distinct buying waves. In 2020, it was the young. I've already described about how they use the period with lower interest rates, lower competition for homes and the fact that they were looking to markedly improve their housing situation to get into the market. They are the largest population cohort in Canadian history, larger than the baby boomers, and they have 30% higher after-tax household income than previous generations. Higher assets, higher net worth, but also carry more debt. The good news is the debt is predominantly real property secured debt, appreciating -- typically appreciating assets. If you look at what they say, what millennials say, 92% believe in homeownership. A significant percentage of people have purchased their home since the onset of the pandemic and almost 70% of people intend to purchase a home in the next 5 years. We move to the older group. So this is GenXers in their early 40s, into early 50s and the baby boomers. We're seeing lots of retirement and lots of interest in changing their housing situation. If you look specifically at boomers and their intention to purchase home, we see 1.4 million expect to transact over the next 5 years, and moving over to the right of that chart, a 52% say they will be buying a home that's the same size or larger. And finally, the third wave. So we've got 2020, the demand from new buyers; 2021, we see older existing homebuyers upgrading their housing, causing more inventory to come into market but extending the real estate expansion we saw in 2020. And now, through the back half of 2021 and into 2022, we see the new buyers, and these are new Canadians. Firstly, you notice that in 2020, we missed our immigration target by the biggest amount in recent history, a huge drop as borders were closed, and governments and provinces intend to make up for lost time with hard -- higher targets in the coming 3 years. And I started the presentation focusing on how Canada stands out in the world. That this is where we intend to use our brand, to use our reputation on the global stage to attract the best and brightest families with skills, and people with capital to invest in our country and to invest in our housing market. If you look at these people, 620,000 expect to purchase a home in the next 5 years. That's 1 in 5 home sales across the country, 75% arrive in Canada with savings that allow them to make a down payment or purchase a home outright, 55% by a home within the first 3 years. And interestingly, 75% didn't even consider the United States. These are people focused on wanting to move and make a life in Canada. If you look at new immigrants to Canada, we call people who are relatively recent immigrants, people who've been here for less than a decade as newcomers and those who have been here longer in the second part of that circled area. And you can see that gap, the 35% versus 72%. That's our potential. Moving the newcomers into homeownership, and that's a huge number. If you look at transactions on a region-by-region basis, you can see how important newcomers, recent immigrants are to the real estate markets across the country. And interestingly, in the more sparsely populated areas of the country, newcomers are even more important than they are in places like British Columbia and Ontario. And finally, and this ties into my statement on the recovery of condos and investors in condos, we're seeing not only a wave of new Canadians coming but also temporary residents. Canada is the #3 country in the world in inviting students, foreign students to study at our great institutions of higher learning. We have a full 830,000 of them are typically in the country, and they have just not been here and the housing that they have rented and the investors they support have suffered. Now those investors have sold many of their properties to first-time homebuyers, who are now homeowners, but they're getting back into the market ahead of the September wave of international students who have been welcomed back into the country. All right. My final piece of the presentation is just a nod to our social philanthropic leadership. We believe that because we are such a big and important part of our industry and because it is a community-based industry, our people are frontline, agents, our franchisees are -- they live and work in their communities across the country. And thus, we focus very deeply on social philanthropic initiatives. Our Royal LePage Shelter Foundation is the largest foundation in the country focused on eliminating domestic violence from our communities and supporting women and children to flee from it, Via Capitale in Québec focuses on food bank support and the Bridgemarq Charitable Foundation helps employees of the company, support the united way on other educational and health-related charities. It was very difficult time during the pandemic to raise money. Very proud of our people for stepping up and getting behind online auctions and things and pleased that in 2021, in the back half of the year, we are planning a return to major fundraising bids. We have set higher fundraising targets for 2021 and believe we'll be able to have significant number of Canadians. With that, I wrap things up and say, we believe that Bridgemarq Real Estate Services remains a compelling investment with a strong track record of attractive annual dividends, financial stability and liquidity support, a strong network of realtors that is supported by the leading digital technology in the industry. We have long-term franchise agreements, which mitigates risks. We have iconic brands and a proven successful growth strategy. With that, I'll wrap things up and turn it over to the operator to see if we have any questions.

If anybody does have any questions, please do so using the messaging tab. Spencer, we don't have any questions at this time.

Well, thank you, everyone, for participating on our annual general meeting and webcast. At this time, we'll conclude the virtual meeting and presentation. Thank you again for everything.