La Capitale Frequently Asked Questions

What is La Capitale's warranty program?
The warranty program offers insurance on such items as appliances, plumbing, electrical and heating systems.

The royalty stream earned by the Fund from this program is net of insurance costs.

Will the Royal LePage programs be offered to La Capitale?
It is management's and the board's intention to run Royal LePage and La Capitale as two distinct brands. There may be new services that the manager would develop and offer to both La Capitale and Royal LePage franchisees.

Why were only 1,060 agents sold to the Fund and the remaining 432 kept by the Manager?
The independent trustees use a set of criteria to ensure that franchisees that are acquired by the Fund meet the high standards that have been set. An example of the criteria is the length of time that a franchise has been operating under the brand. The trustees asked that some of the La Capitale franchisees be developed further prior to acquisition by the Fund.

Does Brookfield Real Estate Services Fund (the "Fund") have the ability to increase the fixed $170/agent per month fees?
There are provisions in the contracts with franchisees that allow for an increase in fees charged to franchisees.

Why was the accretive factor on the La Capitale acquisition price bumped up to 10% from traditional 7.5% and the balance of the purchase price is to be paid over three years from the traditional one year?
The standard La Capitale contract is different from the standard Royal LePage contract. For example, the standard La Capitale contract has a 5 year term, while the Royal LePage standard term is 10 years. The independent trustees negotiated a higher accretion and longer payment terms to reflect the different risk profile of the La Capitale contracts acquired. Future La Capitale contracts may have a different accretion factor and payment period.

What is the tax basis of the La Capitale contracts trademarks acquired by the Fund?
The Fund acquired a partnership that holds the trademarks and contracts of La Capitale. The assets of the partnership acquired by the Fund were obtained on a tax deferred basis with the related tax value attributed to the units of the partnership held by the Fund. Accordingly the individual trademark and contracts of the partnership at the time of acquisition by the Fund do not have a tax basis.