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 September 30, 2012 was $75.1
million or $0.81 per unit, compared to $50.7 million or $0.55 per
unit during the same period in 2011. Included in net income was a
fair value gain of $39.6 million, compared to $20.7 million during
the same period in 2011. The current IFRS value increased to $31.08
per unit from $30.55 per unit at the end of the prior quarter.
Funds from operations ("FFO") for the three months ended
September 30, 2012, was $35.5 million or $0.38 per unit, compared
with $30.0 million or $0.32 per unit during the same period in
2011. Adjusted funds from operations ("AFFO") was $27.4 million or
$0.29 per unit for the three months ended September 30, 2012,
compared to $23.6 million or $0.25 per unit during the same period
in 2011.
Commercial property net operating income for the three months
ended September 30, 2012 was $67.9 million, compared with $56.9
million during the same period in 2011. Achieved same-store net
operating income of $60.8 million, an increase of $4.3 million over
the prior year and $1.7 million over the prior quarter.
HIGHLIGHTS OF THE THIRD QUARTER
Continuing its pro-active leasing strategy in the third quarter
of 2012, Brookfield Canada Office Properties leased 435,000 square
feet of space during the quarter.
The Trust's occupancy rate finished the quarter at 97.1%, up 90
basis points from year-end 2011 and up 10 basis points from prior
quarter. This rate compares favourably with the Canadian national
average of 92.9%.
Leasing highlights include:
Toronto - 297,000 square feet
- A five-year, 145,000-square-foot renewal with Bennett Jones
Services Limited at First Canadian Place
- An average 14-year, 29,000-square-foot renewal with the Royal
Bank of Canada at Hudson's Bay Centre
- A five-year, 25,000-square-foot renewal with St. Michael's
Hospital at 2 Queen St. E.
- A five-year, 18,000-square-foot new lease with Geosoft Inc. at
Queen's Quay Terminal
Vancouver - 75,000 square feet
- A five-year, 40,000-square-foot renewal with Spectra Energy
Corp. at Royal Centre
Calgary - 57,000 square feet
- A five-year, 20,000-square-foot renewal with BMO Nesbitt Burns
Inc. at Bankers Hall
Achieved LEED Gold certification at Bay
Wellington Tower in Toronto and Fifth Avenue Place in Calgary.
These sustainability accomplishments reaffirm the Trust's
commitment to owning environmentally conscious real estate and
lowering the portfolio's carbon footprint.
OUTLOOK "Our portfolio occupancy continues
to climb, reflecting strong fundamentals in our core office
markets," said Jan Sucharda, president and chief executive officer.
"Due to the Trust's continued success and strong financial
position, we were pleased to be able to increase our annual
distribution to unitholders by 8% during the last quarter."
All dollar references are in Canadian dollars unless noted
otherwise.
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 one-time transaction costs, fair value gains
(losses), and certain other non-cash items if any. 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.
Distribution Declaration
The Board of Trustees of Brookfield Canada Office Properties
announced a distribution of $0.0975 per Trust unit payable on
December 14, 2012 to holders of Trust Units of record at the close
of business on November 30, 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 contains "forward-looking information" within the meaning
of Canadian provincial securities laws and "forward-looking
statements" within the meaning of Section 27A of the U.S.
Securities Act of 1933, as amended, Section 21E of the U.S.
Securities Exchange Act of 1934, as amended, "safe harbor"
provisions of the United States Private Securities Litigation
Reform Act of 1995 and in any applicable Canadian securities
regulations. Forward-looking statements include statements that are
predictive in nature, depend upon or refer to future events or
conditions, include statements regarding the operations, business,
financial condition, expected financial results, performance,
prospects, opportunities, priorities, targets, goals, ongoing
objectives, strategies and outlook of the Trust and its
subsidiaries, 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" 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 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 known and unknown risks, uncertainties and
other factors, many of which are beyond the control of the Trust,
which 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.
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 ability to enter into new leases or renew leases on
favorable terms, dependence on tenants' financial condition,
uncertainties of real estate development, acquisition and
disposition activity; the impact or unanticipated impact of general
economic, political and market factors in Canada; 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; the ability to
complete and effectively integrate acquisitions into existing
operations and the ability to attain expected benefits therefrom;
changes in accounting policies and methods used to report financial
condition (including uncertainties associated with critical
accounting assumptions and estimates); the effect of applying
future accounting changes; business competition; operational and
reputational risks; changes in government regulation and
legislation; changes in tax laws, catastrophic events, such as
earthquakes and hurricanes; the possible impact of international
conflicts and other developments including terrorist acts; 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, 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 20.7 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
September 30, December 31,
(Cdn Millions) 2012 2011
------------- -------------
Assets
Investment properties $ 4,942.0 $ 4,637.9
Tenant and other receivables 15.7 17.5
Other assets 6.4 7.2
Cash and cash equivalents 36.0 35.5
------------- -------------
$ 5,000.1 $ 4,698.1
------------- -------------
Liabilities
Commercial property and corporate debt $ 1,993.8 $ 1,980.3
Accounts payable and other liabilities 109.2 106.9
Equity
Unitholders' equity 799.2 718.8
Non-controlling interest(1) 2,097.9 1,892.1
------------- -------------
$ 5,000.1 $ 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 Nine months ended
------------------- -------------------
9/30/12 9/30/11 9/30/12 9/30/11
--------- --------- --------- ---------
Commercial property operations
Revenue $ 128.1 $ 109.0 $ 377.3 $ 326.0
Operating expenses 60.2 52.1 176.6 153.7
--------- --------- --------- ---------
67.9 56.9 200.7 172.3
Investment and other income -- 0.1 -- 0.6
--------- --------- --------- ---------
67.9 57.0 200.7 172.9
Expenses
Interest 27.1 23.1 82.1 67.2
General and administrative 5.3 3.9 15.5 11.8
--------- --------- --------- ---------
Income before fair value gains 35.5 30.0 103.1 93.9
Fair value gains 39.6 20.7 258.8 44.6
--------- --------- --------- ---------
Net income and comprehensive income $ 75.1 $ 50.7 $ 361.9 $ 138.5
--------- --------- --------- ---------
Net income and comprehensive income
attributable to:
Unitholders $ 21.0 $ 14.2 $ 101.3 $ 38.8
Non-controlling interest 54.1 36.5 260.6 99.7
--------- --------- --------- ---------
$ 75.1 $ 50.7 $ 361.9 $ 138.5
--------- --------- --------- ---------
Weighted average Trust units
outstanding 26.1 26.1 26.1 26.1
Net income per Trust unit $ 0.81 $ 0.55 $ 3.88 $ 1.49
========= ========= ========= =========
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
(Cdn Millions, except per Unit
amounts) Three months ended Nine months ended
------------------ ------------------
9/30/12 9/30/11 9/30/12 9/30/11
-------- -------- -------- --------
Net income $ 75.1 $ 50.7 $ 361.9 $ 138.5
Add (deduct):
Fair value gains (39.6) (20.7) (258.8) (44.6)
-------- -------- -------- --------
Funds from operations $ 35.5 $ 30.0 $ 103.1 $ 93.9
-------- -------- -------- --------
Funds from operations - unitholders 9.9 8.4 28.9 26.3
Funds from operations - non-
controlling interest 25.6 21.6 74.2 67.6
-------- -------- -------- --------
$ 35.5 $ 30.0 $ 103.1 $ 93.9
-------- -------- -------- --------
Weighted average Trust units
outstanding 26.1 26.1 26.1 26.1
Funds from operations per Trust unit $ 0.38 $ 0.32 $ 1.11 $ 1.01
-------- -------- -------- --------
RECONCILIATION OF FUNDS FROM OPERATIONS TO ADJUSTED FUNDS FROM OPERATIONS
(Cdn Millions, except per unit
amounts) Three months ended Nine months ended
------------------ ------------------
9/30/12 9/30/11 9/30/12 9/30/11
-------- -------- -------- --------
Funds from operations $ 35.5 $ 30.0 $ 103.1 $ 93.9
Add (deduct):
Straight-line rental income (2.2) (1.7) (6.0) (9.9)
Normalized 2nd generation leasing
commissions and tenant
improvements(1) (4.5) (3.8) (13.5) (11.4)
Normalized sustaining capital
expenditures(1) (1.4) (0.9) (4.2) (2.7)
-------- -------- -------- --------
Adjusted funds from operations $ 27.4 $ 23.6 $ 79.4 $ 69.9
-------- -------- -------- --------
Adjusted funds from operations -
unitholders 7.7 6.6 22.2 19.6
Adjusted funds from operations -
non-controlling interest 19.7 17.0 57.2 50.3
-------- -------- -------- --------
$ 27.4 $ 23.6 $ 79.4 $ 69.9
-------- -------- -------- --------
Weighted average Trust units
outstanding 26.1 26.1 26.1 26.1
Adjusted funds from operations per
Trust unit $ 0.29 $ 0.25 $ 0.85 $ 0.75
-------- -------- -------- --------
(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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