Published: August 08, 2011
Brookfield Office Properties Canada Reports Second Quarter 2011 Results
TORONTO - (BUSINESS WIRE) - Brookfield Office Properties Canada (BOX.UN: TSX), a Canadian REIT (Real
Estate Investment Trust), today announced that net income for the three
months ended June 30, 2011 was $47.5 million or $0.51 per unit, compared
to $12.0 million or $0.13 per unit during the same period in 2010.
Funds from operations ("FFO" ) for the three months ended June 30, 2011,
was $32.5 million or $0.35 per unit, compared with $29.9 million or
$0.32 per unit during the same period in 2010. Adjusted funds from
operations ("AFFO" ) was $23.9 million or $0.26 per unit for the three
months ended June 30, 2011, compared to $20.5 million or $0.22 per unit
during the same period in 2010.
Commercial property net operating income for the three months ended June
30, 2011 was $58.8 million, compared with $54.8 million during the same
period in 2010.
HIGHLIGHTS OF THE SECOND QUARTER
Continuing its pro-active leasing strategy in the second quarter of
2011, Brookfield Office Properties Canada leased 423,000 square feet of
space during the quarter. Pre-leasing and renewals represent 87% of the
total with new leases representing the remainder. The Trust's occupancy
rate finished the quarter at 97.6%, up 50 basis points from year-end
2010. This compares favourably with the Canadian national average of
91.9%.
Leasing highlights include:
Toronto - 303,000 square feet
-
An average seven-year renewal and expansion with Citco Inc. for
116,000 square feet at Hudson's Bay Centre
-
A 10-year renewal and expansion with the McGraw-Hill Companies for
37,000 square feet at Exchange Tower
-
An average five-year renewal and expansion with DIALOG for 32,000
square feet at Hudson's Bay Centre
-
An average 14-year renewal and expansion with Burgundy Asset
Management Ltd. for 27,000 square feet at Bay Wellington Tower
-
A 10-year renewal with Prime Office Toronto Inc. for 25,000 square
feet at Exchange Tower
Calgary - 78,000 square feet
-
An 11-year renewal and expansion with Colliers International for
25,000 square feet at Bankers Hall
-
A 16-year expansion with Enbridge Inc. for 23,000 square feet at Fifth
Avenue Place
-
A five-year renewal with Q9 Networks Inc. for 22,000 square feet at
Bankers Hall
Vancouver - 42,000 square feet
-
A 10-year renewal with The Economical Insurance Group for 20,000
square feet at Royal Centre
-
A five-year renewal with Xerox Canada Ltd. for 14,000 square feet at
Royal Centre
Established $125 million revolving credit facility with a number
of Canadian chartered banks with a three-year term and one one-year
extension option at an interest rate of bankers' acceptance + 2%.
Refinanced Fifth Avenue Place, Calgary with 10-year first mortgage
bonds totaling $350 million (BOX's share: $175 million) at a fixed
interest rate of 4.71%, subsequent to the second quarter. The bonds have
been given an 'A' rating by DBRS.
Extended the $420 million construction loan on Bay Adelaide Centre for
a further one-year period to July 2012. This is the second of two
one-year options exercised past the original maturity date.
Announced management and director changes. Jan Sucharda was
promoted to president and chief executive officer of Canadian Commercial
Operations, and was named to the board of trustees. Tom Farley was named
chairman of the board of trustees.
OUTLOOK
"Vacancy rates continue to decrease in our core markets of Toronto and
Calgary, and our liquidity position has been significantly enhanced
through financing transactions completed during the quarter," said Jan
Sucharda, president and chief executive officer of Brookfield Office
Properties Canada.
Net Operating Income, FFO and AFFO
This press release and accompanying financial information make reference
to net operating income, funds from operations ("FFO" ) and adjusted
funds from operations ("AFFO" ) on a total and per unit basis. Net
operating income is defined as income from property operations after
operating expenses have been deducted, but prior to deducting interest
expense, general and administrative expenses and fair value gains
(losses). FFO is defined as net income prior to extraordinary items,
one-time transaction costs, valuation adjustments, and certain other
non-cash items if any. AFFO is defined as FFO net of normalized second
generation leasing commissions and tenant improvements, normalized
sustaining capital expenditures and straight-line rental income. The
Trust uses net operating income, FFO and AFFO to assess its operating
results. Net operating income is important in assessing operating
performance and FFO is a widely used measure to analyze real estate.
AFFO is typically a measure used to asses an entity's ability to pay
distributions. The components of net operating income, FFO and AFFO are
outlined in the financial information accompanying this press release.
Net operating income, FFO and AFFO do not have any standard meaning
prescribed by IFRS and therefore may not be comparable to similar
measures presented by other companies.
Distribution Declaration
The Board of Trustees of Brookfield Office Properties Canada announced a
distribution of $0.09 per trust unit payable on September 15, 2011 to
holders of trust units of record at the close of business on August 31,
2011.
Forward-Looking Statements
This press release, particularly the "Outlook" section, contains
forward-looking statements and information within the meaning of
applicable securities legislation. These forward-looking statements
reflect management's current beliefs and are based on assumptions and
information currently available to the management of Brookfield Office
Properties Canada. In some cases, forward-looking statements can be
identified by terminology such as "may" , "will" , "expect" , "plan" ,
"anticipate" , "believe" , "intend" , "estimate" , "predict" , "forecast" ,
"outlook" , "potential" , "continue" , "should" , "likely" , or the negative
of these terms or other comparable terminology. Although the Trust
believes that the anticipated future results, performance or
achievements expressed or implied by the forward-looking statements and
information are based upon reasonable assumptions and expectations, the
reader should not place undue reliance on forward-looking statements and
information because they involve assumptions, known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of the Trust to differ materially from
anticipated future results, performance or achievement expressed or
implied by such forward-looking statements and information. Accordingly,
the Trust cannot give any assurance that its expectations will in fact
occur and cautions that actual results may differ materially from those
in the forward-looking statements. Factors that could cause actual
results to differ materially from those set forth in the forward-looking
statements and information include, but are not limited to, general
economic conditions; local real estate conditions, including the
development of properties in close proximity to the Trust's properties;
timely leasing of newly-developed properties and re-leasing of occupied
square footage upon expiration; dependence on tenants' financial
condition; the uncertainties of real estate development and acquisition
activity; the ability to effectively integrate acquisitions; interest
rates; availability of equity and debt financing; the impact of newly
adopted accounting principles on the Trust's accounting policies and on
period-to-period comparisons of financial results; and other risks and
factors described from time to time in the documents filed by the Trust
with the securities regulators in Canada including the Trust's most
recent Interim Report under the heading "Management's Discussion and
Analysis." The Trust undertakes no obligation to publicly update or
revise any forward-looking statements or information, whether as a
result of new information, future events or otherwise, except as
required by law.
Supplemental Information
Investors, analysts and other interested parties can access the Trust's
Supplemental Information Package at www.brookfieldofficepropertiescanada.com
under the Investor Relations/Financial Reports section. This additional
financial information should be read in conjunction with this press
release.
Brookfield Office Properties Canada Profile
Brookfield Office Properties Canada is Canada's preeminent Real Estate
Investment Trust. Its portfolio is comprised of interests in 19 premier
office properties totaling 14.4 million square feet in the downtown
cores of Toronto, Calgary and Vancouver. Landmark assets include
Brookfield Place in Toronto and Bankers Hall in Calgary. For more
information, visit www.brookfieldofficepropertiescanada.com
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
(Cdn Millions)
|
|
|
|
|
|
|
|
|
|
Jun. 30, 2011
|
|
|
|
|
|
|
Dec. 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial properties
|
|
|
|
|
|
|
|
|
|
$
|
4,029
|
.2
|
|
|
|
|
|
|
$
|
3,965
|
.0
|
|
Tenant receivables and other assets
|
|
|
|
|
|
|
|
|
|
|
24
|
.8
|
|
|
|
|
|
|
|
21
|
.8
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
42
|
.4
|
|
|
|
|
|
|
|
20
|
.4
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,096
|
.4
|
|
|
|
|
|
|
$
|
4,007
|
.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial property debt
|
|
|
|
|
|
|
|
|
|
$
|
1,638
|
.5
|
|
|
|
|
|
|
$
|
1,591
|
.8
|
|
Accounts payable and other liabilities
|
|
|
|
|
|
|
|
|
|
|
75
|
.4
|
|
|
|
|
|
|
|
70
|
.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust units
|
|
|
|
|
|
|
|
|
|
|
550
|
.3
|
|
|
|
|
|
|
|
550
|
.2
|
|
Unitholders' retained earnings
|
|
|
|
|
|
|
|
|
|
|
104
|
.5
|
|
|
|
|
|
|
|
93
|
.9
|
|
Non-controlling interest(1)
|
|
|
|
|
|
|
|
|
|
|
1,727
|
.7
|
|
|
|
|
|
|
|
1,700
|
.8
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,096
|
.4
|
|
|
|
|
|
|
$
|
4,007
|
.2
|
|
(1)Non-controlling interest represents Class
B LP units that are economically equivalent to Trust units and are
required to be presented separately under IFRS.
|
|
|
|
CONSOLIDATED STATEMENTS OF INCOME (1)
|
|
|
|
(Cdn Millions, except per unit amounts)
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
Six months ended
|
|
|
|
|
|
|
|
|
|
6/30/11
|
|
|
|
|
6/30/10
|
|
|
|
|
|
|
|
|
6/30/11
|
|
|
|
|
6/30/10
|
|
Commercial property operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
|
|
|
109.7
|
|
|
|
$
|
104.1
|
|
|
|
|
$
|
|
|
|
217.0
|
|
|
|
$
|
205.9
|
|
Operating expenses
|
|
|
|
|
|
|
|
50.9
|
|
|
|
|
49.3
|
|
|
|
|
|
|
|
|
101.6
|
|
|
|
|
99.4
|
|
|
|
|
|
|
|
|
|
58.8
|
|
|
|
|
54.8
|
|
|
|
|
|
|
|
|
115.4
|
|
|
|
|
106.5
|
|
Investment and other income
|
|
|
|
|
|
|
|
0.1
|
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
0.5
|
|
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
58.9
|
|
|
|
|
55.0
|
|
|
|
|
|
|
|
|
115.9
|
|
|
|
|
107.4
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
|
|
|
|
|
22.3
|
|
|
|
|
21.3
|
|
|
|
|
|
|
|
|
44.1
|
|
|
|
|
42.5
|
|
General and administrative
|
|
|
|
|
|
|
|
4.1
|
|
|
|
|
3.8
|
|
|
|
|
|
|
|
|
7.9
|
|
|
|
|
7.6
|
|
Transaction costs
|
|
|
|
|
|
|
|
-
|
|
|
|
|
4.2
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
4.9
|
|
Income before fair value gains (losses)
|
|
|
|
|
|
|
|
32.5
|
|
|
|
|
25.7
|
|
|
|
|
|
|
|
|
63.9
|
|
|
|
|
52.4
|
|
Fair value gains (losses)
|
|
|
|
|
|
|
|
15.0
|
|
|
|
|
(13.7
|
)
|
|
|
|
|
|
|
|
23.9
|
|
|
|
|
3.2
|
|
Net income and comprehensive income
|
|
|
|
$
|
|
|
|
47.5
|
|
|
|
$
|
12.0
|
|
|
|
|
$
|
|
|
|
87.8
|
|
|
|
$
|
55.6
|
|
Net income and comprehensive income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unitholders
|
|
|
|
$
|
|
|
|
13.3
|
|
|
|
$
|
2.6
|
|
|
|
|
$
|
|
|
|
24.6
|
|
|
|
$
|
12.1
|
|
Non-controlling interest
|
|
|
|
|
|
|
|
34.2
|
|
|
|
|
9.4
|
|
|
|
|
|
|
|
|
63.2
|
|
|
|
|
43.5
|
|
|
|
|
|
$
|
|
|
|
47.5
|
|
|
|
$
|
12.0
|
|
|
|
|
$
|
|
|
|
87.8
|
|
|
|
$
|
55.6
|
|
Weighted average Trust units outstanding
|
|
|
|
|
|
|
|
26.1
|
|
|
|
|
20.3
|
|
|
|
|
|
|
|
|
26.1
|
|
|
|
|
20.3
|
|
Net income per Trust unit
|
|
|
|
$
|
|
|
|
0.51
|
|
|
|
$
|
0.13
|
|
|
|
|
$
|
|
|
|
0.94
|
|
|
|
$
|
0.60
|
|
(1)Prior year financial results
are presented on a continuity-of-interest basis in which results
prior to the closing of the REIT transaction represent a carve-out
from the consolidated financial statements of BPO
Properties Ltd., combined with the acquired interest in Brookfield
Place. Prior year results may not necessarily be reflective of the
results had the Trust been a stand-alone entity during the
years presented.
|
|
|
|
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS(1)
|
|
|
|
(Cdn Millions, except per unit amounts)
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
|
Six months ended
|
|
|
|
|
|
|
|
|
6/30/11
|
|
|
|
|
|
|
|
|
6/30/10
|
|
|
|
|
|
|
|
6/30/11
|
|
|
|
|
|
|
|
|
6/30/10
|
|
|
Net income
|
|
|
|
|
|
$
|
47.5
|
|
|
|
|
|
|
|
$
|
12.0
|
|
|
|
|
|
|
$
|
87.8
|
|
|
|
|
|
|
|
$
|
55.6
|
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value (gains) losses
|
|
|
|
|
|
|
(15.0
|
)
|
|
|
|
|
|
|
|
13.7
|
|
|
|
|
|
|
|
(23.9
|
)
|
|
|
|
|
|
|
|
(3.2
|
)
|
|
Transaction costs
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
4.2
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
4.9
|
|
|
Funds from operations
|
|
|
|
|
|
$
|
32.5
|
|
|
|
|
|
|
|
$
|
29.9
|
|
|
|
|
|
|
$
|
63.9
|
|
|
|
|
|
|
|
$
|
57.3
|
|
|
Funds from operations - unitholders
|
|
|
|
|
|
|
9.1
|
|
|
|
|
|
|
|
|
6.5
|
|
|
|
|
|
|
|
17.9
|
|
|
|
|
|
|
|
|
12.5
|
|
|
Funds from operations - non-controlling interest
|
|
|
|
|
|
|
23.4
|
|
|
|
|
|
|
|
|
23.4
|
|
|
|
|
|
|
|
46.0
|
|
|
|
|
|
|
|
|
44.8
|
|
|
|
|
|
|
|
|
$
|
32.5
|
|
|
|
|
|
|
|
$
|
29.9
|
|
|
|
|
|
|
$
|
63.9
|
|
|
|
|
|
|
|
$
|
57.3
|
|
|
Weighted average Trust units outstanding
|
|
|
|
|
|
|
26.1
|
|
|
|
|
|
|
|
|
20.3
|
|
|
|
|
|
|
|
26.1
|
|
|
|
|
|
|
|
|
20.3
|
|
|
Funds from operations per Trust unit
|
|
|
|
|
|
$
|
0.35
|
|
|
|
|
|
|
|
$
|
0.32
|
|
|
|
|
|
|
$
|
0.69
|
|
|
|
|
|
|
|
$
|
0.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF FUNDS FROM OPERATIONS TO ADJUSTED FUNDS FROM
OPERATIONS(1)
|
|
|
|
(Cdn Millions, except per unit amounts)
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
|
Six months ended
|
|
|
|
|
|
|
|
|
|
6/30/11
|
|
|
|
|
|
|
|
6/30/10
|
|
|
|
|
|
|
|
6/30/11
|
|
|
|
|
|
|
|
6/30/10
|
|
|
Funds from operations
|
|
|
|
|
|
$
|
32.5
|
|
|
|
|
|
|
$
|
29.9
|
|
|
|
|
|
|
$
|
63.9
|
|
|
|
|
|
|
$
|
57.3
|
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line rental income
|
|
|
|
|
|
|
(3.9
|
)
|
|
|
|
|
|
|
(5.1
|
)
|
|
|
|
|
|
|
(8.2
|
)
|
|
|
|
|
|
|
(12.0
|
)
|
|
Normalized 2nd generation leasing commissions and
tenant improvements(2)
|
|
|
|
|
|
|
(3.8
|
)
|
|
|
|
|
|
|
(3.5
|
)
|
|
|
|
|
|
|
(7.6
|
)
|
|
|
|
|
|
|
(7.0
|
)
|
|
Normalized sustaining capital expenditures(2)
|
|
|
|
|
|
|
(0.9
|
)
|
|
|
|
|
|
|
(0.8
|
)
|
|
|
|
|
|
|
(1.8
|
)
|
|
|
|
|
|
|
(1.6
|
)
|
|
Adjusted funds from operations
|
|
|
|
|
|
$
|
23.9
|
|
|
|
|
|
|
$
|
20.5
|
|
|
|
|
|
|
$
|
46.3
|
|
|
|
|
|
|
$
|
36.7
|
|
|
Adjusted funds from operations - unitholders
|
|
|
|
|
|
|
6.7
|
|
|
|
|
|
|
|
4.5
|
|
|
|
|
|
|
|
13.0
|
|
|
|
|
|
|
|
8.0
|
|
|
Adjusted funds from operations - non-controlling interest
|
|
|
|
|
|
|
17.2
|
|
|
|
|
|
|
|
16.0
|
|
|
|
|
|
|
|
33.3
|
|
|
|
|
|
|
|
28.7
|
|
|
|
|
|
|
|
|
$
|
23.9
|
|
|
|
|
|
|
$
|
20.5
|
|
|
|
|
|
|
$
|
46.3
|
|
|
|
|
|
|
$
|
36.7
|
|
|
Weighted average Trust units outstanding
|
|
|
|
|
|
|
26.1
|
|
|
|
|
|
|
|
20.3
|
|
|
|
|
|
|
|
26.1
|
|
|
|
|
|
|
|
20.3
|
|
|
Adjusted funds from operations per Trust unit
|
|
|
|
|
|
$
|
0.26
|
|
|
|
|
|
|
$
|
0.22
|
|
|
|
|
|
|
$
|
0.50
|
|
|
|
|
|
|
$
|
0.39
|
|
|
(1)Prior year financial results are
presented on a continuity-of-interest basis in which results prior
to the closing of the REIT transaction represent a carve-out from
the consolidated financial statements of BPO Properties
Ltd., combined with the acquired interest in Brookfield Place.
Prior year results may not necessarily be reflective of the
results had the Trust been a stand-alone entity during the years
presented.
|
|
(2) As the components used in calculating
AFFO vary quarter over quarter, a normalized level of activity is
estimated based on historical spend levels as well as anticipated
spend levels over the next few years. Sustaining capital
expenditures relate to capital items that are required to maintain
the properties in their current operating state and exclude
projects that are considered to add productive capacity.
|
|
|
Brookfield Office Properties Canada
Matthew Cherry, 416-359-8593
Director,
Investor Relations and Communications
matthew.cherry@brookfield.com
Copyright © 2012, Business Wire, Inc., All rights reserved.
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