Brookfield Office Properties Inc. (NYSE: BPO) (TSX: BPO) today
announced that net income attributable to common shareholders for
the quarter ended March 31, 2012 was $352 million or $0.62 per
diluted share, compared with $306 million or $0.54 per diluted
share in the first quarter of 2011.
Funds from operations ("FFO") for the quarter ended March 31,
2012 was $154 million or $0.27 per diluted common share, compared
with $142 million or $0.25 per diluted common share during the same
period in 2011 on a comparable basis:
Three Months Three Months
(US Millions, except per share amounts) Ended Ended
--------------- ---------------
March 31, 2012 March 31, 2011
--------------- ---------------
Total FFO $ 154 $ 155
Less: discontinued residential operations -- 13
--------------- ---------------
Comparable FFO $ 154 $ 142
Per share $ 0.27 $ 0.25
--------------- ---------------
Commercial property net operating income for the first quarter
of 2012 increased to $312 million, compared with $216 million in
the first quarter of 2011, largely due to the impact of the
property acquisitions and the consolidation of the U.S. Office
Fund.
OUTLOOK
"Reflecting growing business confidence and the appeal of our
high-quality portfolio, we leased 1.1 million square feet of space
during the first quarter with a solid backlog of advanced leasing
discussions underway," stated Ric Clark, chief executive officer of
Brookfield Office Properties. "Subsequent to the end of the
quarter, we were pleased to complete a 1.2-million-square-foot
lease at One New York Plaza with Morgan Stanley."
HIGHLIGHTS OF THE FIRST QUARTER
Leased 1.1 million square feet of space
during the quarter at an average net rent of $28.71 per square
foot, representing a 33% increase over expiring net rents in the
period. The portfolio occupancy rate finished the quarter at 92.9%.
Highlights from the quarter include:
New York - 179,000 square feet
- Investment Technology Group: 132,000-square-foot, 17-year lease
at One Liberty Plaza
Toronto - 171,000 square feet
- Citco (Canada) Inc.: 34,000-square-foot, 11-year lease at 151
Yonge St.
- ARUP Canada: 33,000-square-foot, 10-year lease at Hudson's Bay
Centre
Houston - 155,000 square feet
- McGraw-Hill Companies: 29,000-square-foot, six-year lease at
Heritage Plaza
- BDO USA, LLP: 20,000-square-foot, 10-year renewal at Three
Allen Center
Denver - 103,000 square feet
- Gibson, Dunn & Crutcher: 36,000-square-foot, 11-year lease
at 1801 California St.
Calgary - 91,000 square feet
- Suncor Energy: 39,000-square-foot, 16-year lease at Suncor
Energy Centre
- Regus Business Centre: 20,000-square-foot, five-year lease at
Bankers Hall
Signed 1.2-million-square-foot lease with
Morgan Stanley at One New York Plaza, New York, subsequent to
the first quarter. The tenant is moving from a sublease at the
property to a direct lease with Brookfield, which includes over
300,000 square feet of expansion space.
Sold interest in Altius Centre, Calgary,
the last remaining Canadian office investment held outside of
subsidiary Brookfield Canada Office Properties (TSX: BOX.UN) (NYSE:
BOXC), for C$179.8 million, twice the purchase price.
Sold Defence Plaza, Melbourne, for A$87
million.
Renewed $1 billion shelf prospectus for an
additional 25 months.
Issued C$150 million in senior notes with
an April 2018 maturity date and a yield of 4.00% subsequent to the
first quarter.
Acquired Bow Parkade, Calgary, for C$90
million, adjacent to Brookfield's existing Herald development site
in the heart of downtown Calgary subsequent to the first quarter.
The entire block, known as 225 Sixth, is now able to accommodate up
to 2.8 million square feet of new development. The company paid $35
million in cash and secured $55 million in new financing.
Elected two new directors, Chris Clark and Paul
Massey, subsequent to the first quarter. (Note: Chris Clark is
no relation to Ric Clark.) The company extends its sincere
appreciation to Allan Olson and Diana Taylor who are leaving the
board to become directors at affiliate companies. Mr. Olson has
served on the board since 1995 and Ms. Taylor since 2007.
Dividend Declaration The Board of
Directors of Brookfield Office Properties declared a quarterly
common share dividend of $0.14 per share payable on June 29, 2012
to shareholders of record at the close of business on June 1, 2012.
Shareholders resident in the United States will receive payment in
U.S. dollars and shareholders resident in Canada will receive their
dividends in Canadian dollars at the exchange rate on the record
date, unless they elect otherwise. Common shareholders have the
option to participate in the company's Dividend Reinvestment
Program, in which all or a portion of cash dividends can be
automatically reinvested in common shares. The quarterly dividends
payable for the Class AAA Series F, G, H, J, K, L, N, P and R
preferred shares were also declared payable on June 29, 2012 to
shareholders of record at the close of business on June 15,
2012.
Net Operating Income and FFO This press
release and accompanying financial information make reference to
net operating income and funds from operations on a total and per
share basis. Net operating income is defined as income from
property operations after operating expenses have been deducted,
but prior to deducting financing, administrative, fair value
adjustments and income tax expenses. Brookfield Office Properties
defines FFO attributable to common shareholders as income before
fair value adjustments, income taxes and certain other non-cash
items as and when they arise, less non-controlling interests in the
foregoing. FFO is determined as FFO from consolidated properties,
FFO from equity accounted investments and FFO from discontinued
operations. The company uses net operating income and FFO 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. The company provides the components of net
operating income and a full reconciliation from net income to FFO
with the financial information accompanying this press release. The
company reconciles FFO to net income as opposed to cash flow from
operating activities as it believes net income is the most
comparable measure. Net operating income and FFO are both measures
which do not have any standard meaning and therefore may not be
comparable to similar measures presented by other companies.
Forward-Looking Statements This press
release, particularly the "Outlook" section, contains
forward-looking statements and information within the meaning of
applicable securities legislation. Although Brookfield Office
Properties 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 which may cause the actual results,
performance or achievements of the company to differ materially
from anticipated future results, performance or achievement
expressed or implied by such forward-looking statements and
information. Accordingly, the company 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 company'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
company'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 company with the
securities regulators in Canada and the United States, including in
the Annual Information Form under the heading "Business of
Brookfield Office Properties - Company and Real Estate Industry
Risks," and in the company's most recent interim report under the
heading "Management's Discussion and Analysis." The company
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.
Conference Call Analysts, investors and
other interested parties are invited to participate in the
company's live conference call reviewing first quarter 2012 results
on Friday, May 4, 2012 at 11:00 a.m. eastern time. Scheduled
speakers are Ric Clark, chief executive officer, and Bryan Davis,
chief financial officer. Management's presentation will be followed
by a question and answer period.
To participate in the conference call, please dial 888.857.6930;
pass code 5541414, five minutes prior to the scheduled start of the
call. Live audio of the call will also be available via webcast at
www.brookfieldofficeproperties.com. A replay of this call can be
accessed through June 4, 2012 by dialing 888.203.1112, pass code
5541414. A replay of the webcast, as well as a podcast download,
will be available at www.brookfieldofficeproperties.com for one
year.
Supplemental Information Investors,
analysts and other interested parties can access Brookfield Office
Properties' Supplemental Information Package before the market open
on May 4, 2012 at www.brookfieldofficeproperties.com under the
Investors/Financial Reports section. This additional financial
information should be read in conjunction with this press
release.
Brookfield Office Properties Profile
Brookfield Office Properties owns, develops and manages premier
office properties in the United States, Canada and Australia. Its
portfolio is comprised of interests in 108 properties totaling 78
million square feet in the downtown cores of New York, Washington,
D.C., Houston, Los Angeles, Toronto, Calgary, Ottawa, Sydney,
Melbourne and Perth, making Brookfield the global leader in the
ownership and management of office assets. Landmark properties
include the World Financial Center in Manhattan, Brookfield Place
in Toronto, Bank of America Plaza in Los Angeles, Bankers Hall in
Calgary, Darling Park in Sydney and City Square in Perth. The
company's common shares trade on the NYSE and TSX under the symbol
BPO. For more information, visit
www.brookfieldofficeproperties.com.
CONSOLIDATED BALANCE SHEETS
------------ ------------
March 31, December 31,
(US Millions, except per share amounts) 2012 2011
------------ ------------
Assets
Investment properties
Commercial properties $ 19,708 $ 19,258
Commercial developments 1,492 1,412
Equity accounted investments(1) 2,437 2,256
Receivables and other 1,186 1,290
Restricted cash and cash equivalents 71 69
Cash and cash equivalents 260 434
Assets held for sale(2) 346 425
------------ ------------
Total assets $ 25,500 $ 25,144
------------ ------------
Liabilities
Commercial property debt $ 10,795 $ 10,635
Accounts payable and other liabilities 986 1,072
Deferred tax liabilities 606 547
Liabilities associated with assets held for
sale(3) 171 217
Capital securities 862 994
------------ ------------
Total liabilities 13,420 13,465
------------ ------------
Equity
Preferred equity 1,095 1,095
Common equity 9,443 9,080
------------ ------------
Total shareholders' equity 10,538 10,175
Non-controlling interests 1,542 1,504
------------ ------------
Total equity 12,080 11,679
------------ ------------
Total liabilities and equity $ 25,500 $ 25,144
------------ ------------
Book value per common share $ 18.60 $ 17.90
Book value per common share - pre-tax $ 19.76 $ 18.94
------------ ------------
(1) Includes properties and entities held through joint ventures and
associates
(2) Comprises $344 million of commercial properties and $2 million of other
assets at March 31, 2012 (December 31, 2011 -- $423 million and $2
million, respectively)
(3) Comprises $163 million of commercial property debt and $8 million of
other liabilities at March 31, 2012 (December 31, 2011 -- $210 million
and $7 million, respectively)
CONSOLIDATED STATEMENTS OF INCOME
Three Months Three Months
(US Millions) Ended Ended
-------------- --------------
March 31, 2012 March 31, 2011
-------------- --------------
Total revenue $ 530 $ 380
-------------- --------------
Net operating income
Commercial operations 312 216
Interest and other income 22 27
-------------- --------------
334 243
Expenses
Interest
Commercial property debt 138 101
Capital securities - corporate 14 15
General and administrative 37 35
Depreciation 3 2
-------------- --------------
Income before gains, share of net earnings
from equity accounted investments and income
taxes 142 90
Fair value gains 293 130
Share of net earnings from equity accounted
investments(1) 47 118
-------------- --------------
Income before income tax expense 482 338
Income tax expense 80 33
-------------- --------------
Net income from continuing operations 402 305
Income from discontinued operations 5 26
-------------- --------------
Net income 407 331
Non-controlling interests 55 25
-------------- --------------
Net income attributable to common shareholders $ 352 $ 306
-------------- --------------
(1) Includes valuation gains of $22 million and $54 million, respectively,
for the three months ended March 31, 2012 and March 31, 2011
Three Months Three Months
Ended Ended
-------------- --------------
March 31, 2012 March 31, 2011
-------------- --------------
Earnings per share attributable to common
shareholders - basic
Continuing operations $ 0.66 $ 0.53
Discontinued operations 0.01 0.05
-------------- --------------
$ 0.67 $ 0.58
-------------- --------------
Three Months Three Months
Ended Ended
-------------- --------------
March 31, 2012 March 31, 2011
-------------- --------------
Earnings per share attributable to common
shareholders -diluted
Continuing operations $ 0.61 $ 0.49
Discontinued operations 0.01 0.05
-------------- --------------
$ 0.62 $ 0.54
-------------- --------------
RECONCILATION TO FUNDS FROM OPERATIONS
-------------- --------------
Three Months Three Months
(US Millions, except per share amounts) Ended Ended
-------------- --------------
March 31, 2012 March 31, 2011
-------------- --------------
Net income attributable to common
shareholders $ 352 $ 306
Add (deduct) non-cash and certain other
items:
Fair value and other gains (293) (130)
Fair value adjustments in earnings from
equity accounted investments (22) (54)
Non-controlling interests in above items 37 9
Income taxes 80 33
Discontinued operations(1) -- (8)
Cash payments under interest rate swap
contracts -- (1)
-------------- --------------
Funds from operations $ 154 $ 155
Preferred share dividends (17) (14)
-------------- --------------
FFO attributable to common shareholders $ 137 $ 141
-------------- --------------
Weighted average common shares outstanding 508.5 508.2
FFO per common share $ 0.27 $ 0.28
-------------- --------------
(1) Reflects fair value and other gains net of income taxes
Three Months Three Months
(US Millions, except per share amounts) Ended Ended
-------------- --------------
March 31, 2012 March 31, 2011
-------------- --------------
Total FFO $ 154 $ 155
Less: discontinued residential operations -- 13
-------------- --------------
Comparable FFO $ 154 $ 142
Per share $ 0.27 $ 0.25
-------------- --------------
COMMERCIAL PROPERTY NET OPERATING
INCOME
Three Months Three Months
(US Millions) Ended Ended
-------------- --------------
March 31, 2012 March 31, 2011
-------------- --------------
Revenue from continuing operations $ 508 $ 353
Operating expenses (196) (137)
-------------- --------------
Net operating income $ 312 $ 216
-------------- --------------
DISCONTINUED OPERATIONS
Three Months Three Months
(US Millions) Ended Ended
-------------- --------------
March 31, 2012 March 31, 2011
-------------- --------------
Commercial revenue from discontinued
operations $ 14 $ 13
Operating expenses (7) (7)
-------------- --------------
Commercial net operating income from
discontinued operations 7 6
Residential development revenue -- 83
Operating expenses -- (70)
-------------- --------------
Residential development net operating income -- 13
Interest and other income -- 1
Interest expense (2) (2)
-------------- --------------
Funds from discontinued operations 5 18
Fair value gains -- 12
Income taxes related to discontinued
operations and other -- (4)
-------------- --------------
Discontinued operations $ 5 $ 26
-------------- --------------
Contact: Melissa Coley Vice President, Investor Relations
and Communications Tel: 212.417.7215 Email: Email Contact
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