Highlights 

• The S&P/TSX Capped Real Estate Index rose by 0.226 per cent at market close on Thursday, October 27.
• This Canadian real estate company posted a year-over-year (YoY) surge of 14 per cent in its consolidated revenues in Q3 2021.
• FSV held a return on equity of 16.69 per cent as of October 29.

The Canadian real estate sector, which holds an average market capitalization of C$ 3.908 billion, has survived the COVID-19 pandemic as well as political elections. 

The Canadian Real Estate Association Across (CREA) reports that home sales for the months of July to August 2021 witnessed a minimal reduction of 0.5 per cent, while it fell by 14 per cent in the previous year.

Further, the S&P/TSX Capped Real Estate Index marked a year-to-date (YTD) growth of 30.73 per cent and noted a surged of 6.50 per cent on a quarter-to-date (QTD) basis.

Keeping this in mind, market experts believe that increased demand and tight supply may accelerate real estate prices again, and the sector might find its way back to pre-pandemic levels or even perform better.

One Canadian property manager in particular has noted a double-digit surge in its latest quarterly revenue amid Canada’s housing bubble.

We are talking about FirstService Corporation (TSX:FSV), a property manager that currently holds a market capitalization of C$ 10.9 billion.

How FirstService Corporation (TSX: FSV) grew to be a real estate leader

North American real estate leader FirstService Corporation provides residential and essential outsourced property services to commercial and institutional clients.

According to the company's website, FirstService Residential division is the largest manager of residential communities in North America, with more than 1.7 million residential units.

FirstService Brands, an FSV essential property service provider, leverages individually branded franchise systems. This division holds over 1,400 franchisees and numerous company-owned locations and generates $ 2.6 billion as annual system-wide sales, says the company.

Furthermore, FirstService Corporation claims to earn an overall revenue of US$ 3.1 billion annually.

Apart from the TSX, the real estate company also trades its common share on NASDAQ.

FSV’s notable stock performance

The real estate stock recorded a 52-week high of C$ 254.99 during the trading session on Tuesday, October 26. 

FSV stock swelled by almost 45 per cent in the last twelve months, and noted a year-to-date (YTD) return of roughly 43 per cent.

Throughout the year, the stock has been quite a performer, with a nine-month return of over 41 per cent and a six-month gain of about 22 per cent.

Image source: © 2021 Kalkine Media Inc

FSV’s double-digit revenue surge in Q3 2021

FirstService reported a year-over-year (YoY) surge of 14 per cent in its consolidated revenues to US$ 849.4 million in the third quarter of 2021. This rise included organic growth of eight per cent.

 Image source: © 2021 Kalkine Media Inc

Its residential division recorded a YoY growth of 13 per cent to US$ 423.1 million in revenue. Out of the total increase, eight per cent was due to organic growth, and the rest was the outcome of tuck-under acquisitions.

This revenue surge also resulted from the ongoing contract wins and was supported by rising labour-backed services in amenity management due to post-COVID reopening.

On the other hand, FirstService Brands revenue was up by 16 per cent to US$ 426.4 million, which includes organic growth of nine per cent.

In the latest quarter, its adjusted EBITDA grew by six per cent to US$ 94.2 million on a YoY basis, while its adjusted earnings per share (EPS) was up by 26 per cent YoY to US$ 1.5.

Its GAAP operating earnings amounted to US$ 61.5 million in Q3 2021, up from US$ 59.1 million in the same period a year ago. Further, the GAAP diluted EPS was US$ 1.03 in this quarter, corresponding to US$ 0.75 in Q3 2020.

In addition, it pays a quarterly dividend of US$ 0.182 per share, which posted a dividend yield of 0.371 per cent on October 29.

Bottom line

FirstService's Scott Patterson noted that all the company's businesses contributed to the significant organic growth in the latest quarter, resulting in double-digit revenue growth across divisions. This growth, the company pointed, came despite the ongoing labour and resource limits.

With demand in the housing market expected to expand with time, a property manager like FirstService is likely to grow as well.