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, 2012 was $134.4
million or $1.44 per unit, compared to $47.5 million or $0.51 per
unit during the same period in 2011. Included in net income was a
fair value gain of $100 million, compared to $15 million during the
same period in 2011. The current IFRS value increased to $30.55
from $29.38 at the end of the prior quarter.
Funds from operations ("FFO") for the three months ended June
30, 2012, was $34.1 million or $0.37 per unit, compared with $32.5
million or $0.35 per unit during the same period in 2011. Adjusted
funds from operations ("AFFO") was $26.3 million or $0.28 per unit
for the three months ended June 30, 2012, compared to $23.9 million
or $0.26 per unit during the same period in 2011.
Commercial property net operating income for the three months
ended June 30, 2012 was $66.8 million, compared with $58.8 million
during the same period in 2011.
HIGHLIGHTS OF THE SECOND QUARTER
Continuing its pro-active leasing strategy in the second quarter
of 2012, Brookfield Canada Office Properties leased 233,000 square
feet of space during the quarter.
The Trust's occupancy rate finished the quarter at 97.0%, up 80
basis points from year-end 2011 and up 20 basis points from prior
quarter. This rate compares favourably with the Canadian national
average of 92.9%.
Leasing highlights include:
Toronto - 169,000 square feet
- An average six-year, 24,000-square-foot renewal and expansion
with Harry Rosen at First Canadian Place
- A 10-year, 23,000-square-foot new lease with Duff & Phelps
at Bay Adelaide Centre West Tower
- An average three-year, 20,000-square-foot renewal and expansion
with Vision Critical Communication at Hudson's Bay Centre
Calgary - 42,000 square
feet
- A seven-year, 23,000-square-foot extension with Enbridge at
Fifth Avenue Place
Vancouver - 22,000 square
feet
- A three-year, 18,000-square-foot renewal with Fluor Canada Ltd.
at Royal Centre
Refinanced debt at Royal Centre, Vancouver for
$150 million. After repayment of the previous mortgage, the
Trust generated net proceeds of $39 million. The new financing has
a three-year term with a fixed interest rate of 3.325% per
annum.
Extended the $10 million debt at 151 Yonge St.,
Toronto, subsequent to the second quarter, for a two-year
period to July 2014 at a rate of bankers' acceptance plus 170 basis
points.
Achieved LEED Gold certification at HSBC
Building in Toronto, the Trust's fourth LEED Gold certified
property.
OUTLOOK "Brookfield Canada Office
Properties had a strong first half of 2012, achieving operational
milestones and an uptick in occupancy," said Jan Sucharda,
president and chief executive officer. "We are particularly proud
of the stabilization of Bay Adelaide Centre West at 95% leased, our
two recent LEED certifications, and the nearing completion of our
First Canadian Place refurbishment project."
All dollar references are in Canadian dollars unless noted
otherwise.
DISTRIBUTION INCREASE The Board of
Trustees of Brookfield Canada Office Properties has declared an 8%
increase to the yearly distribution per trust unit from $1.08 to
$1.17, effective with the distribution payable on October 15, 2012
to holders of trust units of record at the close of business on
September 28, 2012. Distribution payment on trust units is reviewed
quarterly by the Trustees to assess the appropriateness of the
distribution in light of changes to reported cash-flow.
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 September 14, 2012
to holders of Trust Units of record at the close of business on
August 31, 2012. 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, 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
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
(Cdn Millions) June 30, 2012 December 31, 2011
---------------- -----------------
Assets
Investment properties $ 4,887.2 $ 4,637.9
Tenant and other receivables 17.2 17.5
Other assets 8.0 7.2
Cash and cash equivalents 49.0 35.5
---------------- -----------------
$ 4,961.4 $ 4,698.1
---------------- -----------------
Liabilities
Commercial property and corporate debt $ 2,001.9 $ 1,980.3
Accounts payable and other liabilities 111.8 106.9
Equity
Unitholders' equity 785.3 718.8
Non-controlling interest(1) 2,062.4 1,892.1
---------------- -----------------
$ 4,961.4 $ 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
(Cdn Millions, except per unit
amounts) Three months ended Six months ended
------------------- -------------------
6/30/12 6/30/11 6/30/12 6/30/11
--------- --------- --------- ---------
Commercial property operations
Revenue $ 124.0 $ 109.7 $ 249.2 $ 217.0
Operating expenses 57.2 50.9 116.4 101.6
--------- --------- --------- ---------
66.8 58.8 132.8 115.4
Investment and other income -- 0.1 -- 0.5
--------- --------- --------- ---------
66.8 58.9 132.8 115.9
Expenses
Interest 27.5 22.3 55.0 44.1
General and administrative 5.2 4.1 10.2 7.9
--------- --------- --------- ---------
Income before fair value gains 34.1 32.5 67.6 63.9
Fair value gains 100.3 15.0 219.2 23.9
--------- --------- --------- ---------
Net income and comprehensive income $ 134.4 $ 47.5 $ 286.8 $ 87.8
--------- --------- --------- ---------
Net income and comprehensive income
attributable to:
Unitholders $ 37.6 $ 13.3 $ 80.3 $ 24.6
Non-controlling interest 96.8 34.2 206.5 63.2
--------- --------- --------- ---------
$ 134.4 $ 47.5 $ 286.8 $ 87.8
--------- --------- --------- ---------
Weighted average Trust units
outstanding 26.1 26.1 26.1 26.1
Net income per Trust unit $ 1.44 $ 0.51 $ 3.08 $ 0.94
--------- --------- --------- ---------
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
(Cdn Millions, except per Unit
amounts) Three months ended Six months ended
------------------ ------------------
6/30/12 6/30/11 6/30/12 6/30/11
-------- -------- -------- --------
Net income $ 134.4 $ 47.5 $ 286.8 $ 87.8
Add (deduct):
Fair value gains (100.3) (15.0) (219.2) (23.9)
-------- -------- -------- --------
Funds from operations $ 34.1 $ 32.5 $ 67.6 $ 63.9
-------- -------- -------- --------
Funds from operations - unitholders 9.6 9.1 19.0 17.9
Funds from operations - non-
controlling interest 24.5 23.4 48.6 46.0
-------- -------- -------- --------
$ 34.1 $ 32.5 $ 67.6 $ 63.9
-------- -------- -------- --------
Weighted average Trust units
outstanding 26.1 26.1 26.1 26.1
Funds from operations per Trust unit $ 0.37 $ 0.35 $ 0.73 $ 0.69
-------- -------- -------- --------
RECONCILIATION OF FUNDS FROM OPERATIONS TO ADJUSTED FUNDS FROM OPERATIONS
(Cdn Millions, except per unit
amounts) Three months ended Six months ended
------------------ ------------------
6/30/12 6/30/11 6/30/12 6/30/11
-------- -------- -------- --------
Funds from operations $ 34.1 $ 32.5 $ 67.6 $ 63.9
Add (deduct):
Straight-line rental income (1.9) (3.9) (3.8) (8.2)
Normalized 2nd generation leasing
commissions and tenant
improvements(1) (4.5) (3.8) (9.0) (7.6)
Normalized sustaining capital
expenditures(1) (1.4) (0.9) (2.8) (1.8)
-------- -------- -------- --------
Adjusted funds from operations $ 26.3 $ 23.9 $ 52.0 $ 46.3
-------- -------- -------- --------
Adjusted funds from operations -
unitholders 7.4 6.7 14.6 13.0
Adjusted funds from operations -
non-controlling interest 18.9 17.2 37.4 33.3
-------- -------- -------- --------
$ 26.3 $ 23.9 $ 52.0 $ 46.3
-------- -------- -------- --------
Weighted average Trust units
outstanding 26.1 26.1 26.1 26.1
Adjusted funds from operations per
Trust unit $ 0.28 $ 0.26 $ 0.56 $ 0.50
-------- -------- -------- --------
(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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