Brookfield Canada Office Properties (TSX: BOX.UN) (NYSE: BOXC), a
Canadian REIT (Real Estate Investment Trust), today announced that
net income for the year ended December 31, 2012 was $527.5 million
or $5.66 per unit, compared to $355.4 million or $3.81 per unit in
2011. Net income for the three months ended December 31, 2012 was
$165.6 million or $1.78 per unit, compared to $216.9 million or
$2.33 per unit during the same period in 2011. Included in net
income for the year ended December 31, 2012 was a fair value gain
of $388.5 million, compared to $229.3 million in 2011. IFRS value
increased to $32.57 per unit at the end of 2012 from $28.01 per
unit at the end of 2011.
Funds from operations ("FFO") for the year ended December 31,
2012, was $139.0 million or $1.49 per unit, compared with $127.0
million or $1.36 per unit in 2011. FFO for the three months ended
December 31, 2012, was $35.9 million or $0.39 per unit, compared
with $33.1 million or $0.36 per unit during the same period in
2011. Adjusted funds from operations ("AFFO") was $107.4 million or
$1.15 per unit for the year ended December 31, 2012, compared to
$95.4 million or $1.02 per unit in 2011. AFFO was $28.0 million or
$0.30 per unit for the three months ended December 31, 2012,
compared to $25.5 million or $0.27 per unit during the same period
in 2011.
Commercial property net operating income for the year ended
December 31, 2012 was $269.2 million, compared with $234.6 million
in 2011. Commercial property net operating income for the three
months ended December 31, 2012 was $68.5 million, compared with
$62.3 million during the same period in 2011. The Trust achieved
same-store net operating income of $240.8 million in 2012, an
increase of $11.0 million over 2011. Same-store net operating
income was $61.4 million for the three months ended December 31,
2012, an increase of $2.9 million over the same period in 2011.
HIGHLIGHTS OF THE FOURTH QUARTER
Continuing its pro-active leasing strategy, Brookfield Canada
Office Properties leased 331,000 square feet of space during the
fourth quarter of 2012. The significant leasing efforts during the
quarter brought the Trust's full-year leasing total to 1.34 million
square feet.
The Trust's occupancy rate finished the year at 96.9%, down 20
basis points from the prior quarter, but up 70 basis points from
year-end 2011. This rate compares favourably with the Canadian
national average of 92.8%.
Leasing highlights include:
Toronto - 158,000 square feet
- A 10-year, 27,000-square-foot renewal with Information and
Privacy Commission at Hudson's Bay Centre
- A five-year, 18,000-square-foot renewal with Toronto Convention
& Visitors at Queen's Quay Terminal
Calgary - 157,000 square feet
- A six-year, 95,000-square-foot renewal with PwC Management
Services at Suncor Energy Centre. The lease was extended for
another four years subsequent to year-end.
- A 14-year, 43,000-square-foot new lease with Deloitte
Management at Bankers Court
- A five-year, 12,000-square-foot new lease with Phillips 66
Canada LLC at Bankers Hall
Other - 17,000 square feet
Refinanced debt at HSBC Building, Toronto for
$45 million. After repayment of the previous mortgage, the
Trust generated net proceeds of $24 million. The new financing has
a ten-year term with a fixed interest rate of 4.056% per annum.
Early refinanced debt on Bay Wellington Tower,
Toronto for $525 million, subsequent to year-end. After
repayment of the previous mortgage, the Trust generated net
proceeds of $213 million of which a portion of the proceeds was
used to fully repay the Trust's corporate revolver. The new
financing has a seven-year term with a fixed interest rate of
3.244% per annum.
Celebrated the completion of the three-year
rejuvenation program at First Canadian Place, Toronto,
Canada's tallest building. Property improvements include the total
recladding of the iconic 72-storey tower's exterior façade, a
refurbished main entrance, retail concourse, office lobbies, and
common areas. Sustainability and environmental upgrades in
association with the rejuvenation effort led to the building being
awarded LEED (Leadership in Energy & Environmental Design) -
Gold certification for Existing Buildings from the Canadian Green
Building Council.
Achieved LEED Gold certification at Suncor
Energy Centre and Bankers Hall in Calgary. These
sustainability accomplishments reaffirm the Trust's commitment to
owning environmentally conscious real estate and lowering the
portfolio's carbon footprint as 72% of our portfolio is LEED
Gold-certified.
OUTLOOK "Brookfield Canada Office
Properties made great strides over the course of 2012, increasing
our portfolio-wide occupancy, refinancing debt at low interest
rates, integrating our newly acquired properties in Toronto and
Ottawa, and increasing our annual distribution to unitholders by 8
percent," said Jan Sucharda, president and chief executive officer.
"Our operating markets remain strong and we will continue to look
for opportunities to grow our business and add value for our
unitholders in 2013."
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.
Monthly Distribution Declaration The Board
of Trustees of Brookfield Canada Office Properties announced a
distribution of $0.0975 per Trust unit payable on March 15, 2013 to
holders of Trust Units of record at the close of business on
February 28, 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 "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.
All dollar references are in Canadian dollars unless noted
otherwise.
CONSOLIDATED BALANCE SHEETS
----------------- -----------------
(Cdn Millions) December 31, 2012 December 31, 2011
----------------- -----------------
Assets
Investment properties $ 5,090.2 $ 4,637.9
Tenant and other receivables 25.4 17.5
Other assets 7.0 7.2
Cash and cash equivalents 41.0 35.5
----------------- -----------------
$ 5,163.6 $ 4,698.1
----------------- -----------------
Liabilities
Commercial property and corporate debt $ 2,013.0 $ 1,980.3
Accounts payable and other liabilities 115.0 106.9
Equity
Unitholders' equity 838.1 718.8
Non-controlling interest(1) 2,197.5 1,892.1
----------------- -----------------
$ 5,163.6 $ 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
Three months
(Cdn Millions, except per unit amounts) ended Year ended
----------------- -----------------
12/31/12 12/31/11 12/31/12 12/31/11
-------- -------- -------- --------
Commercial property revenue $ 137.8 $ 119.4 $ 515.1 $ 445.4
Direct commercial property expense 69.3 57.1 245.9 210.8
Investment and other income - 0.7 - 1.3
Interest expense 27.2 24.7 109.3 91.9
General and administrative expense 5.4 5.2 20.9 17.0
Transaction costs - 0.9 - 0.9
-------- -------- -------- --------
Income before fair value gains 35.9 32.2 139.0 126.1
Fair value gains 129.7 184.7 388.5 229.3
-------- -------- -------- --------
Net income and comprehensive income $ 165.6 $ 216.9 $ 527.5 $ 355.4
-------- -------- -------- --------
Net income and comprehensive income
attributable to:
Unitholders $ 46.4 $ 60.7 $ 147.7 $ 99.5
Non-controlling interest 119.2 156.2 379.8 255.9
-------- -------- -------- --------
$ 165.6 $ 216.9 $ 527.5 $ 355.4
-------- -------- -------- --------
Weighted average Trust units outstanding 26.1 26.1 26.1 26.1
-------- -------- -------- --------
Net income per Trust unit $ 1.78 $ 2.33 $ 5.66 $ 3.81
-------- -------- -------- --------
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
(Cdn Millions, except per Unit
amounts) Three months ended Year ended
------------------ ------------------
12/31/12 12/31/11 12/31/12 12/31/11
-------- -------- -------- --------
Net income $ 165.6 $ 216.9 $ 527.5 $ 355.4
Add (deduct):
Fair value gains (129.7) (184.7) (388.5) (229.3)
Transaction costs - 0.9 - 0.9
-------- -------- -------- --------
Funds from operations $ 35.9 $ 33.1 $ 139.0 $ 127.0
-------- -------- -------- --------
Funds from operations - unitholders 10.1 9.3 38.9 35.6
Funds from operations - non-
controlling interest 25.8 23.8 100.1 91.4
-------- -------- -------- --------
$ 35.9 $ 33.1 $ 139.0 $ 127.0
-------- -------- -------- --------
Weighted average Trust units
outstanding 26.1 26.1 26.1 26.1
Funds from operations per Trust unit $ 0.39 $ 0.36 $ 1.49 $ 1.36
-------- -------- -------- --------
RECONCILIATION OF FUNDS FROM OPERATIONS TO ADJUSTED FUNDS FROM OPERATIONS
(Cdn Millions, except per unit
amounts) Three months ended Year ended
------------------ --------------------
12/31/12 12/31/11 12/31/12 12/31/11
-------- -------- -------- ----------
Funds from operations $ 35.9 $ 33.1 $ 139.0 $ 127.0
Add (deduct):
Straight-line rental income (2.0) (2.9) (8.0) (12.8)
Normalized 2nd generation leasing
commissions and tenant
improvements(1) (4.5) (3.8) (18.0) (15.2)
Normalized sustaining capital
expenditures(1) (1.4) (0.9) (5.6) (3.6)
-------- -------- -------- ----------
Adjusted funds from operations $ 28.0 $ 25.5 $ 107.4 $ 95.4
-------- -------- -------- ----------
Adjusted funds from operations -
unitholders 7.8 7.1 30.1 26.7
Adjusted funds from operations -
non-controlling interest 20.2 18.4 77.3 68.7
-------- -------- -------- ----------
$ 28.0 $ 25.5 $ 107.4 $ 95.4
-------- -------- -------- ----------
Weighted average Trust units
outstanding 26.1 26.1 26.1 26.1
Adjusted funds from operations per
Trust unit $ 0.30 $ 0.27 $ 1.15 $ 1.02
-------- -------- -------- ----------
(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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