Brookfield Canada Office Properties Reports Fourth Quarter and
Full-Year 2013 Results
All Dollar References Are in Canadian Dollars Unless Noted
Otherwise
TORONTO, ON--(Marketwired - Jan 27, 2014) - Brookfield Canada
Office Properties (TSX: BOX.UN) (NYSE: BOXC), a Canadian REIT (Real
Estate Investment Trust), today announced that net income for the
year ended December 31, 2013 was $164.8 million or $1.77 per unit,
compared to $527.5 million or $5.66 per unit in 2012. Net income
for the three months ended December 31, 2013 was $50.5 million or
$0.54 per unit, compared to $165.6 million or $1.78 per unit during
the same prior year period. Included in net income for the three
months and year ended December 31, 2013 was a fair value gain of
$13.3 million and $22.6 million, compared to $129.7 million and
$388.5 million in 2012, respectively. The IFRS value increased to
$33.18 per unit at the end of 2013 from $32.57 per unit at the end
of 2012.
Funds from operations ("FFO") for the year ended December 31,
2013 was $144.7 million or $1.55 per unit, compared with $139.0
million or $1.49 per unit in 2012. FFO for the three months ended
December 31, 2013 was $37.8 million or $0.41 per unit, compared
with $35.9 million or $0.39 per unit in the same prior year period.
Adjusted funds from operations ("AFFO") was $114.0 million or $1.22
per unit for the year ended December 31, 2013, compared with $107.4
million or $1.15 per unit in 2012. AFFO was $30.2 million or $0.32
per unit for the three months ended December 31, 2013, compared to
$28.0 million or $0.30 per unit during the same prior year
period.
Commercial property net operating income for the year ended
December 31, 2013 was $271.9 million, compared with $269.2 million
in 2012. Commercial property net operating income for the three
months ended December 31, 2013 was $67.2 million, compared with
$68.5 million during the same prior year period. The Trust achieved
same-store net operating income of $272.9 million in 2013, an
increase of $5.0 million over 2012. Same-store net operating income
was $68.0 million for the three months ended December 31, 2013, an
increase of $0.1 million over the same prior year period.
FOURTH QUARTER HIGHLIGHTS Brookfield Canada Office Properties
leased 1.4 million square feet of space during the fourth quarter
of 2013. The significant leasing efforts during the quarter brought
the Trust's full-year leasing total to 2.2 million square feet.
The Trust's occupancy rate finished the year at 96.0%, comparing
favourably with the Canadian national average of 91.9%.
Leasing highlights include:
Ottawa - 1,039,000 square feet
- A short term renewal for 1,036,000 square feet, and obtained
approval from the Treasury Board of Canada Secretariat to an
average 9-year, 1,036,000-square-foot renewal, with Public Works
and Government Services Canada at Place de Ville I & II
Calgary - 299,000 square feet
- A 10-year, 290,000-square-foot new lease with a North American
energy infrastructure company at Fifth Avenue Place
Toronto - 49,000 square feet
- A three-year, 16,000-square-foot new lease with the Bank of
Nova Scotia at Exchange Tower
Refinanced debt at Bankers Hall, Calgary for $300 million,
generating net proceeds of $146 million after repayment of the
previous mortgage. The new financing has a 10-year term with a
fixed interest rate of 4.377% per annum.
OUTLOOK "The fourth quarter was highlighted by the progress made
on two important leases in our portfolio -- the securing of a
290,000-square-foot lease in Calgary and obtaining Treasury Board
approval for the Government of Canada renewal in Ottawa," 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, FFO and 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 maintaining value 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 March 14, 2014 to holders of
Trust Units of record at the close of business on February 28,
2014. 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 and a development
site of 980,000 square feet in Toronto. 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 |
|
(Cdn $ Millions) |
|
December 31, 2013 |
|
December 31, 2012 |
|
|
|
|
|
Assets |
|
|
|
|
Investment properties |
|
|
|
|
|
Commercial properties |
|
$ |
5,158.2 |
|
$ |
5,090.2 |
|
Commercial developments |
|
|
232.0 |
|
|
3/4 |
|
|
|
5,390.2 |
|
|
5,090.2 |
|
|
|
|
|
|
|
Tenant and other receivables |
|
|
17.5 |
|
|
25.4 |
Other assets |
|
|
6.3 |
|
|
7.0 |
Cash and cash equivalents |
|
|
194.8 |
|
|
41.0 |
|
|
$ |
5,608.8 |
|
$ |
5,163.6 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Investment property and corporate debt |
|
$ |
2,354.9 |
|
$ |
2,013.0 |
Accounts payable and other liabilities |
|
|
161.6 |
|
|
115.0 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Unitholders' equity |
|
|
854.7 |
|
|
838.1 |
Non-controlling interest(1) |
|
|
2,237.6 |
|
|
2,197.5 |
|
|
$ |
5,608.8 |
|
$ |
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 Dec. 31, |
|
Year ended |
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
Commercial property revenue |
|
$ |
132.7 |
|
$ |
137.8 |
|
$ |
521.9 |
|
$ |
515.1 |
Direct commercial property expense |
|
|
65.5 |
|
|
69.3 |
|
|
250.0 |
|
|
245.9 |
Investment and other income |
|
|
0.1 |
|
|
3/4 |
|
|
0.9 |
|
|
3/4 |
Interest expense |
|
|
23.3 |
|
|
27.2 |
|
|
105.2 |
|
|
109.3 |
General and administrative expense |
|
|
6.8 |
|
|
5.4 |
|
|
25.4 |
|
|
20.9 |
Income before fair value gains |
|
|
37.2 |
|
|
35.9 |
|
|
142.2 |
|
|
139.0 |
Fair
value gains |
|
|
13.3 |
|
|
129.7 |
|
|
22.6 |
|
|
388.5 |
Net
income and comprehensive income |
|
$ |
50.5 |
|
$ |
165.6 |
|
$ |
164.8 |
|
$ |
527.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income and comprehensive income attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
Unitholders |
|
$ |
14.1 |
|
$ |
46.4 |
|
$ |
46.1 |
|
$ |
147.7 |
Non-controlling interest |
|
|
36.4 |
|
|
119.2 |
|
|
118.7 |
|
|
379.8 |
|
|
$ |
50.5 |
|
$ |
165.6 |
|
$ |
164.8 |
|
$ |
527.5 |
Weighted average Trust units outstanding |
|
|
26.1 |
|
|
26.1 |
|
|
26.1 |
|
|
26.1 |
Net
income per Trust unit |
|
$ |
0.54 |
|
$ |
1.78 |
|
$ |
1.77 |
|
$ |
5.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NET INCOME TO FUNDS FROM
OPERATIONS |
|
|
|
(Cdn $ Millions, except per unit amounts) |
|
Three months ended Dec. 31, |
|
Year ended |
|
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
|
Net
income |
|
$ |
50.5 |
|
$ |
165.6 |
|
$ |
164.8 |
|
$ |
527.5 |
|
Add
(deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value gains |
|
|
(13.3 |
) |
|
(129.7 |
) |
|
(22.6 |
) |
|
(388.5 |
) |
Amortization of lease incentives |
|
|
0.6 |
|
|
3/4 |
|
|
2.5 |
|
|
3/4 |
|
Funds
from operations |
|
$ |
37.8 |
|
$ |
35.9 |
|
$ |
144.7 |
|
$ |
139.0 |
|
Funds
from operations - unitholders |
|
|
10.6 |
|
|
10.1 |
|
|
40.5 |
|
|
38.9 |
|
Funds
from operations - non-controlling interest |
|
|
27.2 |
|
|
25.8 |
|
|
104.2 |
|
|
100.1 |
|
|
|
$ |
37.8 |
|
$ |
35.9 |
|
$ |
144.7 |
|
$ |
139.0 |
|
Weighted average Trust units outstanding |
|
|
26.1 |
|
|
26.1 |
|
|
26.1 |
|
|
26.1 |
|
Funds
from operations per Trust unit |
|
$ |
0.41 |
|
$ |
0.39 |
|
$ |
1.55 |
|
$ |
1.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF FUNDS FROM OPERATIONS TOADJUSTED
FUNDS FROM OPERATIONS |
|
|
|
(Cdn $ Millions, except per unit amounts) |
|
Three months ended Dec. 31, |
|
|
Year ended |
|
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
Funds from operations |
|
$ |
37.8 |
|
|
$ |
35.9 |
|
|
$ |
144.7 |
|
|
$ |
139.0 |
|
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line rental income |
|
|
(1.2 |
) |
|
|
(2.0 |
) |
|
|
(5.1 |
) |
|
|
(8.0 |
) |
|
Normalized 2nd generation leasing commissions and tenant
improvements(1) |
|
|
(5.1 |
) |
|
|
(4.5 |
) |
|
|
(20.4 |
) |
|
|
(18.0 |
) |
|
Normalized maintaining value capital expenditures(1) |
|
|
(1.3 |
) |
|
|
(1.4 |
) |
|
|
(5.2 |
) |
|
|
(5.6 |
) |
Adjusted funds from operations (2) |
|
$ |
30.2 |
|
|
$ |
28.0 |
|
|
$ |
114.0 |
|
|
$ |
107.4 |
|
Adjusted funds from operations - unitholders |
|
|
8.5 |
|
|
|
7.8 |
|
|
|
31.9 |
|
|
|
30.1 |
|
Adjusted funds from operations - non-controlling
interest |
|
|
21.7 |
|
|
|
20.2 |
|
|
|
82.1 |
|
|
|
77.3 |
|
|
|
$ |
30.2 |
|
|
$ |
28.0 |
|
|
$ |
114.0 |
|
|
$ |
107.4 |
|
Weighted average Trust units outstanding |
|
|
26.1 |
|
|
|
26.1 |
|
|
|
26.1 |
|
|
|
26.1 |
|
Adjusted funds from operations per Trust unit |
|
$ |
0.32 |
|
|
$ |
0.30 |
|
|
$ |
1.22 |
|
|
$ |
1.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. Maintaining value 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. (2) AFFO calculated using
actual leasing commissions, tenant improvements and maintaining
value capital expenditures would result in AFFO of $22.4 million
and $110.1 million for the quarter and year ended December 31,
2013, respectively.
Contact: Matthew Cherry Director, Investor Relations and
Communications Tel: 416.359.8593 Email: Email Contact
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