UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report
of Foreign Private Issuer Pursuant to
Rule
13a-16 or 15d-16
Under
the Securities Exchange Act of 1934
For the month of January 2015
Commission File Number 001-35391
BROOKFIELD CANADA OFFICE PROPERTIES
(Exact name of registrant as specified in
its charter)
181 Bay Street, Suite 330, Brookfield Place
Toronto, Ontario, Canada M5J 2T3
(Address of principal executive offices)
Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form 40-F.
Form
20-F o Form 40-F Yes
þ
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):o
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):o
DOCUMENTS FILED AS PART OF THIS FORM
6-K
See the Exhibit List to this Form 6-K.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: January 27, 2015 |
Brookfield Canada Office Properties |
|
By: /s/
Michelle L. Campbell |
|
Name: Michelle L. Campbell |
|
Title: Assistant Secretary |
EXHIBIT LIST
Exhibit |
Description |
|
99.1 |
Brookfield Canada Office Properties Press Release dated January 26, 2015 |
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![](image_001.gif)
NEWS RELEASE
BROOKFIELD
CANADA OFFICE PROPERTIES REPORTS
FOURTH
QUARTER AND FULL-YEAR 2014 RESULTS
---
All dollar references are in Canadian
dollars unless noted otherwise.
TORONTO, January 26, 2015 –
Brookfield Canada Office Properties (TSX: BOX.UN, NYSE: BOXC), a Canadian REIT (Real Estate Investment Trust), today announced
that funds from operations (“FFO”) for the year ended December 31, 2014 was $158.2 million or $1.70 per unit, compared
with $144.7 million or $1.55 per unit in 2013. Adjusted funds from operations (“AFFO”) was $129.4 million or $1.39
per unit for the year ended December 31, 2014, compared with $114.0 million or $1.22 per unit in 2013.
FFO for the three months ended December
31, 2014 was $40.6 million or $0.44 per unit, compared to $37.8 million or $0.41 per unit in the same prior year period. AFFO was
$32.1 million or $0.34 per unit for the three months ended December 31, 2014, compared to $30.2 million or $0.32 per unit during
the same prior year period. Included in the current quarter FFO and AFFO was a one-time positive parking allocation settlement
totaling $4.0 million or $0.04 per unit.
Commercial property net operating income
for the year ended December 31, 2014 was $269.3 million, compared with $271.9 million in 2013. Commercial property net operating
income for the three months ended December 31, 2014 was $67.9 million, compared with $67.2 million during the same prior year period.
Net income for the year ended December
31, 2014 was $116.1 million or $1.24 per unit, compared to $164.8 million or $1.77 per unit in 2013. Net income for the three months
ended December 31, 2014 was $25.8 million or $0.28 per unit, compared to $50.5 million or $0.54 per unit during the same prior
year period. The current IFRS value increased to $33.19 per unit from $33.18 per unit at the end of 2013.
FOURTH QUARTER HIGHLIGHTS
Brookfield Canada Office Properties leased
875,000 square feet of space during the fourth quarter of 2014. 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 quarter at 95.4%, an increase of 30 basis points from the prior quarter. This rate compares favourably with the Canadian national
average of 91.1%.
Leasing highlights include:
Toronto –
657,000 square feet
| · | A two-year, 203,000-square-foot renewal with Public Works & Government
Services Canada at Exchange Tower |
| · | A 12-year, 83,000-square-foot renewal with Blaney McMurtry at 2 Queen
St. East |
| · | A 10-year, 48,000-square-foot pre-lease at Bay Adelaide Centre East
development |
| · | A 10-year, 37,000-square-foot renewal with Adelaide Club at First
Canadian Place |
| · | A seven-year, 34,000-square-foot renewal with National Bank of Canada
at Exchange Tower |
| · | A nine-year, 31,000-square-foot expansion with Zurich Insurance Company
Ltd. at First Canadian Place |
| · | A five-year, 26,000-square-foot renewal with Cleveland Clinic at Brookfield
Place Toronto |
| · | An 11-year, 25,000-square-foot new lease with Sherritt International
Corporation at Brookfield Place Toronto |
Calgary –
154,000 square feet
| · | A five-year, 97,000-square-foot expansion with TransCanada Pipelines
at Fifth Avenue Place |
| · | A 13-year, 24,000-square-foot expansion with Enbridge at Fifth Avenue
Place |
| · | A five-year, 21,000-square-foot renewal with Towers Watson at Suncor
Energy Centre |
Vancouver –
59,000 square feet
| · | An 11-year, 28,000-square-foot new lease with RBC Dominion Securities
at Royal Centre |
| · | A 10-year, 20,000-square-foot renewal and expansion with Avison Young
Commercial Real Estate at Royal Centre |
Refinanced debt at First Canadian Place,
Toronto for $315 million ($79 million at BOX’s ownership), generating net proceeds of $10 million after repayment of
the previous mortgage. The new financing has a nine-year term maturing December 1, 2023 with a fixed interest rate of 3.559% per
annum.
Sold 151 Yonge St. in Toronto, together with our Canadian
Office Fund partners, for $154 million ($38 million at BOX’s ownership) subsequent to year end.
Construction continues on schedule at the Bay Adelaide Centre
East and Brookfield Place Calgary East development projects. The 44-storey Bay Adelaide Centre East in Toronto was topped off
during the quarter. The podium curtain wall is complete with structural glass installation underway and mechanical and electrical
work nearing completion. Bay Adelaide East is currently 69% pre-leased and is on target to be completed in late 2015.
Excavation at Brookfield Place Calgary East is complete with
the tower core at grade. Ramp work and below grade structure is underway. The project is currently 71% pre-leased to anchor tenant
Cenovus and is on target to be completed in late 2017.
OUTLOOK
“Brookfield Canada Office Properties
enjoyed a strong operational year in 2014 as we leased 2.2 million square feet of premium office space while maintaining sub-5%
vacancy across the portfolio,” said Jan Sucharda, president and chief executive officer. “Furthermore, our acquisition
of the east tower of the Brookfield Place Calgary development in the fourth quarter of 2014 will enhance our overall growth strategy
and help us realize higher returns for our unitholders.”
* * *
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 $0.1033 per Trust unit payable on March 13, 2015 to holders of Trust Units of record
at the close of business on February 27, 2015. 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.
Conference Call
Analysts,
investors and other interested parties are invited to participate in Brookfield Canada Office Properties’ live conference
call reviewing 2014 fourth quarter and full-year results on Tuesday, January 27, 2015 at 9:00 a.m. eastern time to discuss with
members of senior management the company’s results and current business initiatives. Management’s presentation will
be followed by a question and answer period.
To participate in the conference call, please dial toll free 888.504.7963 or toll 719.457.2727, pass code 8917358, five minutes
prior to the scheduled start of the call. Live audio of the call will also be available via webcast at www.brookfieldcanadareit.com.
A replay of this call can be accessed through February 27, 2015 by dialing toll free 888.203.1112 or toll 719.457.0820, pass code
8917358. A replay of the webcast will be available at www.brookfieldcanadareit.com for 90 days.
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 27 premier office properties
totaling 20.4 million square feet in the downtown cores of Toronto, Calgary, Ottawa and Vancouver, and development sites of 980,000
square feet and 1.4 million square feet in Toronto and Calgary, respectively. Landmark assets include Brookfield Place and First
Canadian Place in Toronto and Bankers Hall in Calgary. For more information, visit www.brookfieldcanadareit.com.
Contact: Matthew Cherry, Vice President,
Investor Relations and Communications
Tel: 416.359.8593; Email: matthew.cherry@brookfield.com
CONSOLIDATED BALANCE SHEET
(Cdn $ Millions) |
December 31, 2014 |
December 31, 2013 |
|
|
|
|
|
Assets |
|
|
|
|
Investment properties |
|
|
|
|
Commercial properties |
$ |
5,131.7 |
$ |
5,158.2 |
Commercial developments |
|
670.7 |
|
232.0 |
|
|
5,802.4 |
|
5,390.2 |
|
|
|
|
|
Tenant and other receivables |
|
34.3 |
|
17.5 |
Other assets |
|
8.9 |
|
6.3 |
Cash and cash equivalents |
|
58.9 |
|
194.8 |
Assets held for sale |
|
38.9 |
|
¾ |
|
$ |
5,943.4 |
$ |
5,608.8 |
|
|
|
|
|
Liabilities |
|
|
|
|
Investment property and corporate debt |
$ |
2,649.7 |
$ |
2,354.9 |
Accounts payable and other liabilities |
|
196.9 |
|
161.6 |
Liabilities associated with assets held for sale |
|
0.5 |
|
¾ |
|
|
|
|
|
Equity |
|
|
|
|
Unitholders’ equity |
|
856.7 |
|
854.7 |
Non-controlling interest(1) |
|
2,239.6 |
|
2,237.6 |
|
$ |
5,943.4 |
$ |
5,608.8 |
| (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 STATEMENT OF INCOME
(Cdn Millions, except per unit amounts) |
Three months ended Dec. 31 |
Year ended |
2014 |
2013 |
|
2014 |
|
2013 |
Commercial property revenue (1) |
$ |
134.8 |
$ |
132.7 |
$ |
517.2 |
$ |
521.9 |
Direct commercial property expense |
|
66.9 |
|
65.5 |
|
247.9 |
|
250.0 |
Investment and other income |
|
0.1 |
|
0.1 |
|
1.1 |
|
0.9 |
Interest expense |
|
22.0 |
|
23.3 |
|
91.9 |
|
105.2 |
General and administrative expense |
|
5.9 |
|
6.8 |
|
23.6 |
|
25.4 |
Income before fair value (losses) gains |
|
40.1 |
|
37.2 |
|
154.9 |
|
142.2 |
Fair value (losses) gains |
|
(14.3) |
|
13.3 |
|
(38.8) |
|
22.6 |
Net income and comprehensive income |
$ |
25.8 |
$ |
50.5 |
$ |
116.1 |
$ |
164.8 |
|
|
|
|
|
|
|
|
|
Net income and comprehensive income attributable to: |
|
|
|
|
|
|
|
|
Unitholders |
$ |
7.2 |
$ |
14.1 |
$ |
32.5 |
$ |
46.1 |
Non-controlling interest |
|
18.6 |
|
36.4 |
|
83.6 |
|
118.7 |
|
$ |
25.8 |
$ |
50.5 |
$ |
116.1 |
$ |
164.8 |
Weighted average Trust units outstanding |
|
26.2 |
|
26.1 |
|
26.2 |
|
26.1 |
Net income per Trust unit |
$ |
0.28 |
$ |
0.54 |
$ |
1.24 |
$ |
1.77 |
|
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|
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|
| (1) | Included in the current quarter revenue was a one-time positive parking allocation settlement totaling $4.7 million (or
$4.0 million to net income net of fees) |
RECONCILIATION OF
NET INCOME TO FUNDS FROM OPERATIONS
(Cdn Millions, except per unit amounts) |
Three months ended Dec. 31 |
Year ended |
2014 |
2013 |
|
2014 |
|
2013 |
Net income |
$ |
25.8 |
$ |
50.5 |
$ |
116.1 |
$ |
164.8 |
Add (deduct): |
|
|
|
|
|
|
|
|
Fair value losses (gains) |
|
14.3 |
|
(13.3) |
|
38.8 |
|
(22.6) |
Amortization of lease incentives |
|
0.5 |
|
0.6 |
|
2.2 |
|
2.5 |
Foreign exchange loss |
|
¾ |
|
¾ |
|
1.1 |
|
¾ |
Funds from operations |
$ |
40.6 |
$ |
37.8 |
$ |
158.2 |
$ |
144.7 |
Funds from operations – unitholders |
|
11.4 |
|
10.6 |
|
44.3 |
|
40.5 |
Funds from operations – non-controlling interest |
|
29.2 |
|
27.2 |
|
113.9 |
|
104.2 |
|
$ |
40.6 |
$ |
37.8 |
$ |
158.2 |
$ |
144.7 |
Weighted average Trust units outstanding |
|
26.2 |
|
26.1 |
|
26.2 |
|
26.1 |
Funds from operations per Trust unit |
$ |
0.44 |
$ |
0.41 |
$ |
1.70 |
$ |
1.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) | Included in the current quarter FFO was a one-time positive parking allocation settlement totaling $4.0 million or $0.04
per unit. |
RECONCILIATION
OF Funds from Operations TO ADJUSTED FUNDS FROM OPERATIONS
(Cdn Millions, except per unit amounts) |
Three months ended Dec. 31 |
Year ended |
2014 |
2013 |
|
2014 |
|
2013 |
Funds from operations |
$ |
40.6 |
$ |
37.8 |
$ |
158.2 |
$ |
144.7 |
Add (deduct): |
|
|
|
|
|
|
|
|
Straight-line rental income |
|
(1.5) |
|
(1.2) |
|
(0.8) |
|
(5.1) |
Normalized 2nd generation leasing commissions and tenant improvements(1) |
|
(5.3) |
|
(5.1) |
|
(21.2) |
|
(20.4) |
Normalized sustaining capital expenditures(1) |
|
(1.7) |
|
(1.3) |
|
(6.8) |
|
(5.2) |
Adjusted funds from operations(2) |
$ |
32.1 |
$ |
30.2 |
$ |
129.4 |
$ |
114.0 |
Adjusted funds from operations – unitholders |
|
9.0 |
|
8.5 |
|
36.2 |
|
31.9 |
Adjusted funds from operations – non-controlling interest |
|
23.1 |
|
21.7 |
|
93.2 |
|
82.1 |
|
$ |
32.1 |
$ |
30.2 |
$ |
129.4 |
$ |
114.0 |
Weighted average Trust units outstanding |
|
26.2 |
|
26.1 |
|
26.2 |
|
26.1 |
Adjusted funds from operations per Trust unit |
$ |
0.34 |
$ |
0.32 |
$ |
1.39 |
$ |
1.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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| (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 $21.7 million and $121.5 million for the quarter and year ended December 31, 2014, respectively. Included in the current
quarter AFFO was a one-time positive parking allocation settlement totaling $4.0 million or $0.04 per unit. |
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