Brookfield Office Properties Canada (TSX: BOX.UN) (NYSE: BOXC), a
Canadian REIT (Real Estate Investment Trust), today announced that
net income for the year ended December 31, 2011 was $355.4 million
or $3.81 per unit, compared with $329.0 million or $3.53 per unit
in 2010. Net income for the three months ended December 31, 2011
was $216.9 million or $2.33 per unit, compared to $234.4 million or
$2.51 per unit during the same period in 2010.
Funds from operations ("FFO") for the year ended December 31,
2011 was $127.0 million or $1.36 per unit, compared to $119.2
million or $1.28 per unit in 2010. FFO for the three months ended
December 31, 2011, was $33.1 million or $0.36 per unit, compared
with $27.0 million or $0.29 per unit during the same period in
2010. Adjusted funds from operations ("AFFO") was $95.4 million
($1.02 per unit) for the year ended December 31, 2011, compared to
$82.3 million ($0.88 per unit) in 2010. AFFO was $25.5 million or
$0.27 per unit for the three months ended December 31, 2011,
compared to $18.5 million or $0.20 per unit during the same period
in 2010.
Commercial property net operating income for the year ended
December 31, 2011 was $234.6 million, compared with $219.5 million
in 2010. Commercial property net operating income for the three
months ended December 31, 2011 was $62.3 million, compared with
$52.7 million during the same period in 2010.
NAME CHANGE The Trust also announced today
plans to officially change its name to "Brookfield Canada Office
Properties." The reasoning behind the change is to limit confusion
with the parent company (Brookfield Office Properties Inc.) and to
further emphasize the Trust's purely Canada-focused operating
strategy. The name change is currently in the process of obtaining
regulatory approval and should take effect later this month.
HIGHLIGHTS OF THE FOURTH QUARTER
Continuing its pro-active leasing strategy in the fourth quarter
of 2011, Brookfield Office Properties Canada leased 454,000 square
feet of space during the quarter. The significant leasing efforts
during the quarter brought the Trust's full-year leasing total to
2.9 million square feet.
The Trust's occupancy rate finished the year at 96.2%. On a
same-property basis, excluding the acquisition of the Canadian
Office Fund assets, occupancy increased to 97.7%, up 60 basis
points from year-end 2010. This rate compares favourably with the
Canadian national average of 92.7%.
Leasing highlights include:
Toronto - 402,000 square
feet
- Osler, Hoskin & Harcourt: 191,000-square-foot renewal at
First Canadian Place
- MCW Consultants Ltd.: 35,000-square-foot new lease at Queen's
Quay Terminal
- Spectrum Health Care Inc.: 14,000-square-foot renewal and
expansion at Hudson's Bay Centre
Calgary - 41,000 square
feet
- Enbridge Inc.: 11,000-square-foot new lease at Fifth Avenue
Place
Acquired a 25% interest in nine Canadian office
assets from parent company Brookfield Office Properties Inc.
(NYSE: BPO) (TSX: BPO) on December 1, 2011. The nine properties
encompass 6.5 million square feet in Toronto and Ottawa and have a
total asset value of $362 million. The Trust funded the transaction
through $222 million of existing liquidity and the remainder
through the assumption of debt.
Executed new financing on Bay Adelaide Centre
West Tower for $405 million. The financing holds a 10-year
term at a fixed rate of 4.426%. The new loan was used to repay the
existing construction financing of $405 million.
Upsized revolving corporate credit facility by
$75 million to $200 million, subsequent to quarter-end.
The Trust's units began trading on the New York
Stock Exchange on January 9, 2012 under the stock symbol
BOXC.
OUTLOOK
"Acquiring interests in the nine assets of the Canadian Office
Fund was an important milestone for BOX, bringing the Trust a new
market (Ottawa), and one of the finest office buildings in the
country in First Canadian Place," said Jan Sucharda, president and
chief executive officer of Brookfield Office Properties Canada.
"Strong real estate fundamentals in our core markets have us
optimistic for a prosperous 2012 operating under our new name,
'Brookfield Canada Office Properties.'"
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 March 15, 2012 to
holders of trust units of record at the close of business on
February 29, 2012.
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 and the United States, including in the Annual
Information Form under the heading "Business of Brookfield Office
Properties Canada - Risk Factors" and in 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.
About Brookfield Office Properties
Canada
Brookfield Office Properties Canada is Canada's preeminent Real
Estate Investment Trust (REIT). Its portfolio is comprised of
interests in 28 premier office properties totaling 20.7 million
square feet in the downtown cores of Toronto, Calgary, Ottawa and
Vancouver. Landmark assets include Brookfield Place and First
Canadian Place in Toronto and Bankers Hall in Calgary. For more
information, visit www.brookfieldofficepropertiescanada.com.
CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------------
(Cdn Millions) Dec. 31, 2011 Dec. 31, 2010
----------------------------------------------------------------------------
Assets
Investment properties $ 4,637.9 $ 3,965.0
Tenant and other receivables 17.5 15.4
Other assets 7.2 6.4
Cash and cash equivalents 35.5 20.4
----------------------------------------------------------------------------
$ 4,698.1 $ 4,007.2
----------------------------------------------------------------------------
Liabilities
Commercial property debt $ 1,980.3 $ 1,591.8
Accounts payable and other liabilities 106.9 70.5
Equity
Unitholders' equity 718.8 644.1
Non-controlling interest(1) 1,892.1 1,700.8
----------------------------------------------------------------------------
$ 4,698.1 $ 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
(Cdn Millions, except per unit
amounts) Three months ended Year ended
----------------------------------------------------------------------------
12/31/11 12/31/10 12/31/11 12/31/10(1)
----------------------------------------------------------------------------
Commercial property operations
Revenue $ 119.4 $ 109.4 $ 445.4 $ 426.4
Operating expenses 57.1 56.7 210.8 206.9
----------------------------------------------------------------------------
62.3 52.7 234.6 219.5
Investment and other income 0.7 -- 1.3 1.0
----------------------------------------------------------------------------
63.0 52.7 235.9 220.5
Expenses
Interest 24.7 22.0 91.9 86.2
General and administrative 5.2 3.7 17.0 15.1
Transaction costs 0.9 -- 0.9 4.9
----------------------------------------------------------------------------
Income before fair value gains 32.2 27.0 126.1 114.3
Fair value gains 184.7 207.4 229.3 214.7
----------------------------------------------------------------------------
Net income and comprehensive
income $ 216.9 $ 234.4 $ 355.4 $ 329.0
----------------------------------------------------------------------------
Net income and comprehensive
income attributable to:
Unitholders $ 60.7 $ 56.0 $ 99.5 $ 73.4
Non-controlling interest 156.2 178.4 255.9 255.6
----------------------------------------------------------------------------
$ 216.9 $ 234.4 $ 355.4 $ 329.0
----------------------------------------------------------------------------
Weighted average Trust units
outstanding 26.1 22.3 26.1 20.8
Net income per Trust unit $ 2.33 $ 2.51 $ 3.81 $ 3.53
----------------------------------------------------------------------------
(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
(Cdn Millions, except per
unit amounts) Three months ended Year ended
---------------------------------------------------------------------------
12/31/11 12/31/10 12/31/11 12/31/10(1)
---------------------------------------------------------------------------
Net income $ 216.9 $ 234.4 $ 355.4 $ 329.0
Add (deduct):
Fair value gains (184.7) (207.4) (229.3) (214.7)
Transaction costs 0.9 -- 0.9 4.9
---------------------------------------------------------------------------
Funds from operations $ 33.1 $ 27.0 $ 127.0 $ 119.2
-------------------------------------------------- ------------------------
Funds from operations -
unitholders 9.3 6.5 35.6 26.6
Funds from operations -
non-controlling interest 23.8 20.5 91.4 92.6
---------------------------------------------------------------------------
$ 33.1 $ 27.0 $ 127.0 $ 119.2
---------------------------------------------------------------------------
Weighted average Trust
units outstanding 26.1 22.3 26.1 20.8
Funds from operations per
Trust unit $ 0.36 $ 0.29 $ 1.36 $ 1.28
---------------------------------------------------------------------------
RECONCILIATION OF FUNDS FROM OPERATIONS TO
ADJUSTED FUNDS FROM OPERATIONS
(Cdn Millions, except per
unit amounts) Three months ended Year ended
---------------------------------------------------------------------------
12/31/11 12/31/10 12/31/11 12/31/10(1)
---------------------------------------------------------------------------
Funds from operations $ 33.1 $ 27.0 $ 127.0 $ 119.2
Add (deduct):
Straight-line rental income (2.9) (4.2) (12.8) (19.7)
Normalized 2nd generation
leasing commissions and
tenant improvements(2) (3.8) (3.5) (15.2) (14.0)
Normalized sustaining
capital expenditures(2) (0.9) (0.8) (3.6) (3.2)
---------------------------------------------------------------------------
Adjusted funds from
operations $ 25.5 $ 18.5 $ 95.4 $ 82.3
---------------------------------------------------------------------------
Adjusted funds from
operations - unitholders 7.1 4.4 26.7 18.3
Adjusted funds from
operations - non-
controlling interest 18.4 14.1 68.7 64.0
---------------------------------------------------------------------------
$ 25.5 $ 18.5 $ 95.4 $ 82.3
---------------------------------------------------------------------------
Weighted average Trust
units outstanding 26.1 22.3 26.1 20.8
Adjusted funds from
operations per Trust unit $ 0.27 $ 0.20 $ 1.02 $ 0.88
---------------------------------------------------------------------------
(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.
All dollar references are in Canadian dollars unless noted
otherwise.
Contact: Matthew Cherry Director, Investor Relations and
Communications Tel: 416.359.8593 Email: Email Contact
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