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 June 30, 2013 was $35.2
million or $0.38 per unit, compared to $134.4 million or $1.44 per
unit during the same period in 2012. Included in net income for the
three months ended June 30, 2013 was a fair value gain of $0.3
million, compared to $100.3 million during the same period in 2012.
The current IFRS value increased to $32.87 per unit from $32.57 per
unit at the end of 2012.
Funds from operations ("FFO") for the three months ended June
30, 2013, was $35.4 million or $0.38 per unit, compared with $34.1
million or $0.37 per unit during the same period in 2012. Adjusted
funds from operations ("AFFO") was $27.7 million or $0.30 per unit
for the three months ended June 30, 2013, compared to $26.3 million
or $0.28 per unit during the same period in 2012.
Commercial property net operating income for the three months
ended June 30, 2013 was $68.4 million, compared with $66.8 million
during the same period in 2012.
HIGHLIGHTS OF THE SECOND QUARTER
Continuing its pro-active leasing strategy, Brookfield Canada
Office Properties leased 168,000 square feet of space during the
second quarter of 2013.
The Trust's occupancy rate finished the quarter at 96.9% an
increase of 30 basis points from the prior quarter. This rate
compares favourably with the Canadian national average of
92.5%.
Leasing highlights include:
Toronto - 130,000 square feet
- A 10-year, 36,000-square-foot renewal with the Toronto Board of
Trade at First Canadian Place
- An average three-year, 32,000-square-foot renewal and expansion
with Vision Critical Communications at Hudson's Bay Centre
- An eight-year, 15,000-square-foot new lease with Catlin Canada
at First Canadian Place
- A 10-year, 11,000-square-foot new lease with Enwave Energy
Corporation at Bay Adelaide West
Calgary - 30,000 square feet
- A five-year, 11,000-square-foot renewal with Cushman &
Wakefield LePage at Suncor Energy Centre
Purchased the Bay Adelaide East
development from parent company Brookfield Office Properties
Inc. (TSX: BPO) (NYSE: BPO) for an aggregate total investment of
$602 million, subsequent to quarter-end. The Trust purchased the
building on an "as-if-completed-and-stabilized basis," and will
earn $32 million of net operating income upon substantial
completion of the project, which is currently 60% pre-leased.
Extended the $103 million debt at Hudson's Bay
Centre, Toronto, for an additional two-year period extending
the maturity to May 2015 with a fixed interest rate of 2.999% per
annum.
OUTLOOK "The recent acquisition of Bay
Adelaide East affirms BOX's growth strategy as we were able to
deploy available capital to purchase the newest best-in-class
office tower in Toronto's financial core," said Jan Sucharda,
president and chief executive officer.
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 the Trust 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). The Trust's definition of
FFO includes all of the adjustments that are outlined in the
National Association of Real Estate Investment Trusts ("NAREIT")
definition of FFO including the exclusion of gains (or losses) from
the sale of real estate property and the add back of any
depreciation and amortization related to real estate assets. In
addition to the adjustments prescribed by NAREIT, the Trust also
makes adjustments to exclude any unrealized fair value gains (or
losses) that arise as a result of reporting under IFRS. These
additional adjustments result in an FFO measure that would be
similar to that which would result if the Trust determined net
income in accordance with U.S. GAAP and is also consistent with the
Real Property Association of Canada ("REALPAC") white paper on
funds from operations for IFRS issued November 2012. AFFO is
defined by the Trust 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.
Monthly Distribution Declaration The Board
of Trustees of Brookfield Canada Office Properties announced a
distribution of $0.0975 per Trust unit payable on September 13,
2013 to holders of Trust Units of record at the close of business
on August 30, 2013. Unitholders resident in Canada will receive
payment in Canadian dollars and unitholders resident in the United
States will receive their distributions in U.S. dollars at the
exchange rate on the record date, unless they elect otherwise.
Forward-Looking Statements This press
release contains "forward-looking information" within the meaning
of Canadian provincial securities laws and applicable regulations
and "forward-looking statements" within the meaning of "safe
harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995. Forward-looking statements include
statements that are predictive in nature, depend upon or refer to
future events or conditions, include statements regarding the
Trust's operations, business, financial condition, expected
financial results, performance, prospects, opportunities,
priorities, targets, goals, ongoing objectives, strategies and
outlook, as well as the outlook for the Canadian economy for the
current fiscal year and subsequent periods, and include words such
as "expects," "anticipates," "plans," "believes," "estimates,"
"seeks," "intends," "targets," "projects," "forecasts," "likely,"
or negative versions thereof and other similar expressions, or
future or conditional verbs such as "may," "will," "should,"
"would" and "could."
Although the Trust believes that our 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 known and unknown risks, uncertainties and
other factors, many of which are beyond the control of the Trust,
which may cause our actual results, performance or achievements to
differ materially from anticipated future results, performance or
achievement expressed or implied by such forward-looking statements
and information.
Factors that could cause actual results to differ materially
from those contemplated or implied by forward-looking statements
include, but are not limited to: risks incidental to the ownership
and operation of real estate properties including local real estate
conditions; the impact or unanticipated impact of general economic,
political and market factors in Canada; the ability to enter into
new leases or renew leases on favourable terms; business
competition; dependence on tenants' financial condition; the use of
debt to finance the Trust's business; the behavior of financial
markets, including fluctuations in interest rates; equity and
capital markets and the availability of equity and debt financing
and refinancing within these markets; risks relating to the Trust's
insurance coverage; the possible impact of international conflicts
and other developments including terrorist acts; potential
environmental liabilities; changes in tax laws and other tax
related risks; dependence on management personnel; illiquidity of
investments; the ability to complete and effectively integrate
acquisitions into existing operations and the ability to attain
expected benefits therefrom; operational and reputational risks;
catastrophic events, such as earthquakes and hurricanes; and other
risks and factors detailed from time to time in our documents filed
with the securities regulators in Canada and the United States.
Caution should be taken that the foregoing list of important
factors that may affect future results is not exhaustive. When
relying on the Trust's forward-looking statements or information,
investors and others should carefully consider the foregoing
factors and other uncertainties and potential events. Except as
required by law, the Trust undertakes no obligation to publicly
update or revise any forward-looking statements or information,
whether written or oral, that may be as a result of new
information, future events or otherwise.
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 20.8 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
June 30, December 31,
(Cdn Millions) 2013 2012
------------ ------------
Assets
Investment properties $ 5,112.0 $ 5,090.2
Tenant and other receivables 13.7 25.4
Other assets 6.7 7.0
Cash and cash equivalents 210.9 41.0
------------ ------------
$ 5,343.3 $ 5,163.6
------------ ------------
Liabilities
Commercial property and corporate debt $ 2,159.3 $ 2,013.0
Accounts payable and other liabilities 120.7 115.0
Equity
Unitholders' equity 846.2 838.1
Non-controlling interest(1) 2,217.1 2,197.5
------------ ------------
$ 5,343.3 $ 5,163.6
------------ ------------
(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 Six months ended
------------------- -------------------
6/30/13 6/30/12 6/30/13 6/30/12
--------- --------- --------- ---------
Commercial property revenue $ 130.9 $ 124.0 $ 259.2 $ 249.2
Direct commercial property expense 62.5 57.2 122.0 116.4
Investment and other income 0.4 - 0.6 -
Interest expense 25.5 27.5 51.4 55.0
General and administrative expense 8.4 5.2 14.0 10.2
--------- --------- --------- ---------
Income before fair value gains 34.9 34.1 72.4 67.6
Fair value gains 0.3 100.3 9.3 219.2
--------- --------- --------- ---------
Net income and comprehensive income $ 35.2 $ 134.4 $ 81.7 $ 286.8
========= ========= ========= =========
Net income and comprehensive income
attributable to:
Unitholders $ 9.9 $ 37.6 $ 22.9 $ 80.3
Non-controlling interest 25.3 96.8 58.8 206.5
--------- --------- --------- ---------
$ 35.2 $ 134.4 $ 81.7 $ 286.8
--------- --------- --------- ---------
Weighted average Trust units
outstanding 26.1 26.1 26.1 26.1
Net income per Trust unit $ 0.38 $ 1.44 $ 0.88 $ 3.08
========= ========= ========= =========
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
(Cdn Millions, except per Unit
amounts) Three months ended Six months ended
------------------ ------------------
6/30/13 6/30/12 6/30/13 6/30/12
-------- -------- -------- --------
Net income $ 35.2 $ 134.4 $ 81.7 $ 286.8
Add (deduct):
Fair value gains (0.3) (100.3) (9.3) (219.2)
Amortization of lease incentives 0.5 - 1.2 -
-------- -------- -------- --------
Funds from operations $ 35.4 $ 34.1 $ 73.6 $ 67.6
-------- -------- -------- --------
Funds from operations - unitholders 9.9 9.6 20.6 19.0
Funds from operations - non-
controlling interest 25.5 24.5 53.0 48.6
-------- -------- -------- --------
$ 35.4 $ 34.1 $ 73.6 $ 67.6
-------- -------- -------- --------
Weighted average Trust units
outstanding 26.1 26.1 26.1 26.1
Funds from operations per Trust unit $ 0.38 $ 0.37 $ 0.79 $ 0.73
======== ======== ======== ========
RECONCILIATION OF FUNDS FROM OPERATIONS TO
ADJUSTED FUNDS FROM OPERATIONS
(Cdn Millions, except per unit
amounts) Three months ended Six months ended
------------------ ------------------
6/30/13 6/30/12 6/30/13 6/30/12
-------- -------- -------- --------
Funds from operations $ 35.4 $ 34.1 $ 73.6 $ 67.6
Add (deduct):
Straight-line rental income (1.3) (1.9) (2.8) (3.8)
Normalized 2nd generation leasing
commissions and tenant
improvements(1) (5.1) (4.5) (10.2) (9.0)
Normalized sustaining capital
expenditures(1) (1.3) (1.4) (2.6) (2.8)
-------- -------- -------- --------
Adjusted funds from operations $ 27.7 $ 26.3 $ 58.0 $ 52.0
-------- -------- -------- --------
Adjusted funds from operations -
unitholders 7.7 7.4 16.2 14.6
Adjusted funds from operations -
non-controlling interest 20.0 18.9 41.8 37.4
-------- -------- -------- --------
$ 27.7 $ 26.3 $ 58.0 $ 52.0
-------- -------- -------- --------
Weighted average Trust units
outstanding 26.1 26.1 26.1 26.1
Adjusted funds from operations per
Trust unit $ 0.30 $ 0.28 $ 0.62 $ 0.56
======== ======== ======== ========
(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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