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, 2013 was $46.5
million or $0.50 per unit, compared to $152.4 million or $1.64 per
unit during the same period in 2012. Included in net income for the
three months ended March 31, 2013 was a fair value gain of $9.0
million, compared to $118.9 million during the same period in 2012.
The current IFRS value increased to $32.78 per unit from $32.57 per
unit at the end of 2012.
Funds from operations ("FFO") for the three months ended March
31, 2013, was $38.2 million or $0.41 per unit, compared with $33.5
million or $0.36 per unit during the same period in 2012. Adjusted
funds from operations ("AFFO") was $30.3 million or $0.33 per unit
for the three months ended March 31, 2013, compared to $25.7
million or $0.28 per unit during the same period in 2012.
Commercial property net operating income for the three months
ended March 31, 2013 was $68.8 million, compared with $66.0 million
during the same period in 2012.
HIGHLIGHTS OF THE FIRST QUARTER
Continuing its pro-active leasing strategy, Brookfield Canada
Office Properties leased 530,000 square feet of space during the
first quarter of 2013.
The Trust's occupancy rate finished the quarter at 96.6%. This
rate compares favourably with the Canadian national average of
92.7%.
Leasing highlights include:
Toronto - 244,000 square feet
- An 11-year, 89,000-square-foot new lease with Zurich Insurance
at First Canadian Place
- A two-year, 61,000-square-foot new lease with Osler, Hoskin
& Harcourt LLP at First Canadian Place
- A five-year, 16,000-square-foot renewal with Harper Collins
Canada Limited at Hudson's Bay Centre
- A seven-year, 13,000-square-foot renewal with Freidberg
Mercantile at Bay Wellington Tower
Calgary - 282,000 square feet
- A 12-year, 181,000-square-foot new lease with Canadian Natural
Resources at Bankers Hall
- A four-year, 95,000-square-foot renewal with PwC Management
Services at Suncor Energy Centre, extending the renewal term to a
total of 10-years.
Refinanced debt at Bay Wellington Tower,
Toronto for $525 million, generating net proceeds of $213
million after repayment of the previous mortgage. The new financing
has a seven-year term with a fixed interest rate of 3.244% per
annum. With the completion of this refinancing, the Trust has
lowered its overall cost of borrowing to 4.6% and extended its
average term to maturity to six years. Furthermore, the Trust used
a portion of the proceeds to fully repay its corporate revolver and
currently has $372 million of liquidity available for future
strategic initiatives.
Refinanced debt at 105 Adelaide St. West,
Toronto for $37.5 million, subsequent to the quarter. The new
debt has a 10-year term maturing May 1, 2023 and bears interest at
3.87% per annum. The property previously had debt of $20.7 million
at an interest rate of 5.32% that matured and was repaid on
February 1, 2013.
Extended the $103 million debt at Hudson's Bay
Centre, Toronto, subsequent to the quarter, for a two-year
period to May 2015. Interest will be on a fixed rate basis and will
be set on May 15, 2013.
OUTLOOK "The first quarter of 2013 was
highlighted by healthy leasing and financing activity, as office
fundamentals remain strong and the debt environment is conducive to
refinancings at attractive terms," 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). FFO is defined by the Trust
as net income prior to transaction costs, fair value gains
(losses), and certain other non-cash items, in accordance 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 June 14, 2013 to
holders of Trust Units of record at the close of business on May
31, 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.
All dollar references are in Canadian dollars unless noted
otherwise.
CONSOLIDATED BALANCE SHEETS
(Cdn Millions) March 31, 2013 December 31, 2012
----------------- -----------------
Assets
Investment properties $ 5,105.6 $ 5,090.2
Tenant and other receivables 22.4 25.4
Other assets 7.5 7.0
Cash and cash equivalents 171.8 41.0
----------------- -----------------
$ 5,307.3 $ 5,163.6
----------------- -----------------
Liabilities
Commercial property and corporate debt $ 2,130.8 $ 2,013.0
Accounts payable and other liabilities 121.4 115.0
Equity
Unitholders' equity 843.8 838.1
Non-controlling interest(1) 2,211.3 2,197.5
----------------- -----------------
$ 5,307.3 $ 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
-----------------------------
March 31, 2013 March 31, 2012
-------------- --------------
Commercial property revenue $ 128.3 $ 125.2
Direct commercial property expense 59.5 59.2
Investment and other income 0.2 -
Interest expense 25.9 27.5
General and administrative expense 5.6 5.0
-------------- --------------
Income before fair value gains 37.5 33.5
Fair value gains 9.0 118.9
-------------- --------------
Net income and comprehensive income $ 46.5 $ 152.4
============== ==============
Net income and comprehensive income
attributable to:
Unitholders $ 13.0 $ 42.7
Non-controlling interest 33.5 109.7
-------------- --------------
$ 46.5 $ 152.4
-------------- --------------
Weighted average Trust units outstanding 26.1 26.1
Net income per Trust unit $ 0.50 $ 1.64
============== ==============
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
(Cdn Millions, except per unit amounts) Three months ended
------------------------------
March 31, 2013 March 31, 2012
-------------- --------------
Net income $ 46.5 $ 152.4
Add (deduct):
Fair value gains (9.0) (118.9)
Tenant inducement amortization 0.7 -
-------------- --------------
Funds from operations 38.2 33.5
-------------- --------------
Funds from operations - unitholders $ 10.7 $ 9.4
Funds from operations - non-controlling
interest 27.5 24.1
-------------- --------------
$ 38.2 $ 33.5
-------------- --------------
Weighted average Trust units outstanding 26.1 26.1
Funds from operations per Trust unit $ 0.41 $ 0.36
============== ==============
RECONCILIATION OF FUNDS FROM OPERATIONS TO ADJUSTED FUNDS FROM OPERATIONS
(Cdn Millions, except per unit amounts) Three months ended
------------------------------
March 31, 2013 March 31, 2012
-------------- --------------
Funds from operations $ 38.2 $ 33.5
Add (deduct):
Straight-line rental income (1.5) (1.9)
Normalized 2nd generation leasing
commissions and tenant improvements(1) (5.1) (4.5)
Normalized sustaining capital
expenditures(1) (1.3) (1.4)
-------------- --------------
Adjusted funds from operations 30.3 25.7
-------------- --------------
Adjusted funds from operations - unitholders $ 8.5 $ 7.2
Adjusted funds from operations - non-
controlling interest 21.8 18.5
-------------- --------------
$ 30.3 $ 25.7
-------------- --------------
Weighted average Trust units outstanding 26.1 26.1
Adjusted funds from operations per Trust
unit $ 0.33 $ 0.28
============== ==============
(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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