Brookfield Canada Office Properties (TSX: BOX.UN) (NYSE: BOXC), a
Canadian REIT (Real Estate Investment Trust), today announced that
net income for the three months ended March 31, 2012 was $152.4
million or $1.64 per unit, compared to $40.3 million or $0.43 per
unit during the same period in 2011.
Funds from operations ("FFO") for the three months ended March
31, 2012, was $33.5 million or $0.36 per unit, compared with $31.4
million or $0.34 per unit during the same period in 2011. Adjusted
funds from operations ("AFFO") was $25.7 million or $0.28 per unit
for the three months ended March 31, 2012, compared to $22.4
million or $0.24 per unit during the same period in 2011.
Commercial property net operating income for the three months
ended March 31, 2012 was $66.0 million, compared with $56.6 million
during the same period in 2011.
HIGHLIGHTS OF THE FIRST QUARTER
Continuing its pro-active leasing strategy in the first quarter
of 2012, Brookfield Canada Office Properties leased 341,000 square
feet of space during the quarter.
The Trust's occupancy rate finished the quarter at 96.8%, up 60
basis points from year-end 2011. This rate compares favourably with
the Canadian national average of 92.7%.
Leasing highlights include:
Toronto - 172,000 square feet
- An 11-year, 34,000-square-foot new lease with Citco (Canada)
Inc. at 151 Yonge St.
- An average seven-year, 33,000-square-foot new lease with ARUP
Canada Inc. at Hudson's Bay Centre
Calgary - 91,000 square
feet
- An average 13-year, 39,000-square-foot expansion with Suncor
Energy Inc. at Suncor Energy Centre
- A five-year, 20,000-square-foot renewal with Regus Business
Centre at Bankers Hall
Vancouver - 77,000 square
feet
- An average six-year, 56,000-square-foot renewal and expansion
with McMillan LLP at Royal Centre
Refinanced BOX's ownership interest in Exchange
Tower for $120 million subsequent to the first quarter. After
repayment of the previous mortgage, BOX generated net proceeds of
approximately $65 million at ownership. The new financing has a
10-year term with a fixed interest rate of 4.031%.
Achieved LEED EB:O&M Gold certification at
Exchange Tower, Toronto, subsequent to the first quarter. In a
multi-phase effort over the past several years, Brookfield engaged
green solution providers and building tenants and worked diligently
to enhance the building's environmental profile. The property's
LEED certification score placed it in the 94th percentile among
comparable buildings.
OUTLOOK "Brookfield Canada Office
Properties had a successful first quarter as we integrated our
newly acquired office assets in Toronto and Ottawa," said Jan
Sucharda, president and chief executive officer. "Our proactive
leasing strategy coupled with strong fundamentals in our markets
helped us realize an uptick in occupancy from year-end 2011."
All Dollar References Are in Canadian Dollars Unless Noted
Otherwise
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 by us as income from commercial
property operations after direct property operating expenses,
including property administration costs have been deducted, but
prior to deducting interest expense, general and administrative
expenses and fair value gains (losses). FFO is defined by us as net
income prior to one-time transaction costs, fair value gains
(losses), and certain other non-cash items if any. AFFO is defined
by us 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 Canada Office Properties announced a
distribution of $0.09 per trust unit payable on June 15, 2012 to
holders of Trust units of record at the close of business on May
31, 2012.
Forward-Looking Statements This press
release 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 Canada Office Properties. 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 Canada
Office Properties - 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.brookfieldcanadareit.com
under the Investor Relations/Financial Reports section. This
additional financial information should be read in conjunction with
this press release.
About Brookfield Canada Office Properties
Brookfield Canada Office Properties 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.brookfieldcanadareit.com.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
(Cdn Millions) 2012 2011
------------- -------------
Assets
Investment properties $ 4,773.3 $ 4,637.9
Tenant and other receivables 18.8 17.5
Other assets 7.8 7.2
Cash and cash equivalents 32.8 35.5
------------- -------------
$ 4,832.7 $ 4,698.1
------------- -------------
Liabilities
Commercial property and corporate debt $ 1,973.0 $ 1,980.3
Accounts payable and other liabilities 121.4 106.9
Equity
Unitholders' equity 754.6 718.8
Non-controlling interest(1) 1,983.7 1,892.1
------------- -------------
$ 4,832.7 $ 4,698.1
------------- -------------
(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
Three months Three months
(Cdn Millions, except per unit amounts) ended ended
------------- -------------
March 31, March 31,
2012 2011
------------- -------------
Commercial property operations
Revenue $ 125.2 $ 107.3
Operating expenses 59.2 50.7
------------- -------------
66.0 56.6
Investment and other income - 0.4
------------- -------------
66.0 57.0
Expenses
Interest 27.5 21.8
General and administrative 5.0 3.8
------------- -------------
Income before fair value gains 33.5 31.4
Fair value gains 118.9 8.9
------------- -------------
Net income $ 152.4 $ 40.3
------------- -------------
Net income attributable to:
Unitholders $ 42.7 $ 11.3
Non-controlling interest 109.7 29.0
------------- -------------
$ 152.4 $ 40.3
------------- -------------
Weighted average Trust units outstanding 26.1 26.1
Net income per Trust unit $ 1.64 $ 0.43
============= =============
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
Three months Three months
(Cdn Millions, except per unit amounts) ended ended
------------- -------------
March 31, March 31,
2012 2011
------------- -------------
Net income $ 152.4 $ 40.3
Deduct:
Fair value gains (118.9) (8.9)
------------- -------------
Funds from operations $ 33.5 $ 31.4
------------- -------------
Funds from operations - unitholders 9.4 8.8
Funds from operations - non-controlling
interest 24.1 22.6
------------- -------------
$ 33.5 $ 31.4
------------- -------------
Weighted average Trust units outstanding 26.1 26.1
Funds from operations per Trust unit $ 0.36 $ 0.34
------------- -------------
RECONCILIATION OF FUNDS FROM OPERATIONS TOADJUSTED FUNDS FROM OPERATIONS
Three months Three months
(Cdn Millions, except per unit amounts) ended ended
-------------- --------------
March 31, 2012 March 31, 2011
-------------- --------------
Funds from operations $ 33.5 $ 31.4
Deduct:
Straight-line rental income (1.9) (4.3)
Normalized second-generation leasing
commissions and tenant improvements(1) (4.5) (3.8)
Normalized sustaining capital
expenditures(1) (1.4) (0.9)
-------------- --------------
Adjusted funds from operations $ 25.7 $ 22.4
-------------- --------------
Adjusted funds from operations - unitholders 7.2 6.3
Adjusted funds from operations - non-
controlling interest 18.5 16.1
-------------- --------------
$ 25.7 $ 22.4
-------------- --------------
Weighted average Trust units outstanding 26.1 26.1
Adjusted funds from operations per Trust
unit $ 0.28 $ 0.24
-------------- --------------
(1) 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.
Contact: Matthew Cherry Director, Investor Relations and
Communications Tel: 416.359.8593 Email: Email Contact
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