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 2016
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 26, 2016
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 25, 2016 |
![](http://www.sec.gov/Archives/edgar/data/1537063/000114420416076914/image_001.jpg)
PRESS RELEASE
BROOKFIELD CANADA OFFICE PROPERTIES REPORTS
FOURTH QUARTER AND FULL-YEAR 2015 RESULTS
---
All dollar references are in Canadian dollars unless noted
otherwise.
TORONTO, January 25, 2016 -
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, 2015 was $351.4 million or $3.76 per unit, compared with $116.1 million or
$1.24 per unit in 2014. Included in net income for the year ended December 31, 2015 were fair value gains of $207.5 million, compared
to fair value losses of $38.8 million in the prior year. Net income for the three months ended December 31, 2015 was $158.8 million
or $1.70 per unit, compared to $25.8 million or $0.28 per unit during the same prior year period. Included in net income for the
fourth quarter were fair value gains of $120.8 million, compared to fair value losses of $14.3 million during the same period in
2014. The current IFRS value increased to $35.72 per unit from $33.19 per unit at the end of 2014.
Funds from operations (“FFO”)
for the year ended December 31, 2015 was $145.8 million or $1.56 per unit, compared with $158.2 million or $1.70 per unit in 2014.
FFO for the three months ended December 31, 2015 was $38.5 million or $0.41 per unit, compared to $40.6 million or $0.44 per unit
during the same prior year period. Adjusted funds from operations (“AFFO”) was $112.4 million or $1.21 per unit for
the year ended December 31, 2015, compared with $129.4 million or $1.39 per unit in 2014. AFFO was $30.6 million or $0.33 per unit
for the three months ended December 31, 2015, compared with $32.1 million or $0.34 per unit during the same prior year period.
Same-store commercial property net operating
income for the year ended December 31, 2015 was $249.3 million, compared with $251.6 million in 2014. Same-store commercial property
net income for the three months ended December 31, 2015 was $61.5 million, compared with $61.7 million during the same prior year
period.
FOURTH QUARTER HIGHLIGHTS
Brookfield Canada Office Properties leased
596,000 square feet of space during the fourth quarter of 2015. The significant leasing efforts during the quarter brought the
Trust's full-year leasing total to 2.1 million square feet. The Trust’s occupancy rate finished the quarter at 95.8%, an
increase of 30 basis points from the prior quarter. This rate compares favourably with the Canadian national average of 89.6%.
Leasing highlights include:
Toronto - 525,000
square feet
| • | A seven-year, 82,000-square-foot renewal and expansion with Thomson Reuters Corporation at Bay
Adelaide West |
| • | A 10-year, 62,000-square-foot renewal and expansion with Royal Bank of Canada at Brookfield Place
Toronto |
| • | A 12-year, 58,000-square-foot renewal with Labatt Brewing Company Limited at Queen's Quay Terminal |
| • | A 10-year, 47,000-square-foot new lease with Aviva Canada Inc. at First Canadian Place |
| • | A five-year, 37,000-square-foot renewal and expansion with Liberty Mutual Insurance Co. at Brookfield
Place Toronto |
| • | A four-year, 25,000-square-foot expansion with Air Canada at 2 Queen St. East |
| • | A five-year, 25,000-square-foot renewal with The Bank of Nova Scotia at Exchange Tower |
| • | A 10-year, 19,000-square-foot new lease with New Gold at Brookfield Place Toronto |
| • | A 10-year, 13,000-square-foot new lease with Eagle Professional Resources at 2 Queen St. East |
Ottawa - 28,000
square feet
| • | A one-year, 28,000-square-foot renewal with Public Works and Government Services Canada at Place de Ville I |
Vancouver -
19,000 square feet
| • | A 10-year, 13,000-square-foot new lease with Western Forest Products Inc. at Royal Centre |
Unitholders’ distribution increased
by 5.7% to $1.31 per unit annually. The monthly payout will be $0.1092 per unit, an increase from the previous monthly payout
of $0.1033 per unit or $1.24 per unit annually. The increase will commence with the distribution declared in March 2016 payable
on April 15, 2016.
Bay Adelaide East development reached
substantial completion and transferred into income-producing properties with its first tenant lease commencing in December
2015.
Construction continues on schedule
at Brookfield Place Calgary East. The project has reached a tower core level of 44 and the structural steel erection is underway
up to level 39. 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
achieved another strong operational year in 2015 as we leased 2.1 million square feet of premium office space while maintaining
sub-5% vacancy across the portfolio,” said Jan Sucharda, president and chief executive officer. “In addition, we completed
development of Bay Adelaide East in Toronto on schedule and are on track to deliver our other development project in Calgary in
late 2017. We are also pleased to announce that we are increasing our unitholder distribution by 5.7% starting with our April 2016
payment.”
* * *
Monthly Distribution Increase and Declaration
The Board of Trustees of Brookfield Canada
Office Properties announced a distribution of $0.1033 per Trust unit payable on March 15, 2016 to holders of Trust units of record
at the close of business on February 29, 2016.
In addition, The Board of Trustees has
announced a 5.7% increase in unitholders’ distribution to $1.31 per unit annually. The monthly payout will be $0.1092 per
unit, an increase from the previous monthly payout of $0.1033 per unit or $1.24 per unit annually. The increase will commence with
the distribution declared in March 2016 payable on April 15, 2016.
The distributions are declared in Canadian
dollars. Registered unitholders resident in Canada will receive payment in Canadian dollars and registered unitholders resident
in the United States will receive the U.S. dollar equivalent unless they request otherwise. The U.S. dollar equivalent of the distribution
will be based on the Bank of Canada noon exchange rate on the record date or, if the record date falls on a weekend or holiday,
on the Bank of Canada noon exchange rate of the preceding business day. Beneficial unitholders will receive payment in Canadian
dollars unless they request to receive the U.S. dollar equivalent.
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 assess 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.
About Brookfield Canada Office Properties
Brookfield Canada Office Properties is
Canada’s preeminent Real Estate Investment Trust (REIT). Our portfolio is comprised of 27 premier office properties totaling
21 million square feet in the downtown cores of Toronto, Calgary, Ottawa and Vancouver, and a development site in Calgary. Our
landmark assets include Brookfield Place and First Canadian Place in Toronto, and Bankers Hall in Calgary. Further information
is available at www.brookfieldcanadareit.com. Important information may be disseminated
exclusively via the website; investors should consult the site to access this information.
Brookfield Canada Office Properties is
the flagship Canadian REIT of Brookfield Asset Management, a leading global alternative asset manager with approximately $225 billion
in assets under management. For more information, go to www.brookfield.com.
Please note that Brookfield Canada Office
Properties’ previous audited annual and unaudited quarterly reports have been filed on SEDAR and can also be found in the
Investors section of its website at www.brookfieldcanadareit.com. Hard copies of the annual
and quarterly reports can be obtained free of charge upon request.
Contact:
Sherif El-Azzazi
Manager, Investor Relations & Communications
Tel: (416) 359-8593
Email: sherif.elazzazi@brookfield.com
Conference Call and Quarterly Earnings
Details
Investors, analysts and other interested
parties can access Brookfield Canada Office Properties’ 2015 fourth quarter and full-year results as well as Supplemental
Information on Brookfield Canada Office Properties’ website under the Investors section at www.brookfieldcanadareit.com.
The conference call can be accessed via
webcast on January 26, 2016 at 9:00 a.m. Eastern Time at www.brookfieldcanadareit.com
or via teleconference toll free at 1-888-427-9419 or toll at 1-719-457-2689, passcode: 964805 at approximately 8:50 a.m. Eastern
Time. A recording of the teleconference can be accessed toll free at 1-888-203-1112 or toll at 1-719-457-0820, passcode: 964805.
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.
CONSOLIDATED BALANCE SHEET
(Cdn $ Millions) |
December 31, 2015 |
December 31, 2014 |
|
|
|
|
|
Assets |
|
|
|
|
Investment properties |
|
|
|
|
Commercial properties |
|
$ |
5,805.1 |
|
|
$ |
5,131.7 |
|
Commercial developments |
|
462.7 |
|
|
670.7 |
|
|
|
6,267.8 |
|
|
5,802.4 |
|
|
|
|
|
|
Tenant and other receivables |
|
23.8 |
|
|
34.3 |
|
Other assets |
|
7.3 |
|
|
8.9 |
|
Cash and cash equivalents |
|
57.6 |
|
|
58.9 |
|
Assets held for sale |
|
— |
|
|
38.9 |
|
|
|
$ |
6,356.5 |
|
|
$ |
5,943.4 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Investment property and corporate debt |
|
$ |
2,838.5 |
|
|
$ |
2,649.7 |
|
Accounts payable and other liabilities |
|
185.0 |
|
|
196.9 |
|
Liabilities related to assets held for sale |
|
— |
|
|
0.5 |
|
|
|
|
|
|
Equity |
|
|
|
|
Unitholders' equity |
|
923.8 |
|
|
856.7 |
|
Non-controlling interest(1) |
|
2,409.2 |
|
|
2,239.6 |
|
|
|
$ |
6,356.5 |
|
|
$ |
5,943.4 |
|
(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 |
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Commercial property revenue |
|
$ |
134.7 |
|
|
$ |
134.8 |
|
|
$ |
516.9 |
|
|
$ |
517.2 |
|
Direct commercial property expense |
|
69.9 |
|
|
66.9 |
|
|
265.6 |
|
|
247.9 |
|
Investment and other income |
|
— |
|
|
0.1 |
|
|
— |
|
|
1.1 |
|
Interest expense |
|
21.4 |
|
|
22.0 |
|
|
84.3 |
|
|
91.9 |
|
General and administrative expense |
|
5.4 |
|
|
5.9 |
|
|
23.1 |
|
|
23.6 |
|
Income before fair value gains (losses) |
|
38.0 |
|
|
40.1 |
|
|
143.9 |
|
|
154.9 |
|
Fair value gains (losses) |
|
120.8 |
|
|
(14.3 |
) |
|
207.5 |
|
|
(38.8 |
) |
Net income and comprehensive income |
|
$ |
158.8 |
|
|
$ |
25.8 |
|
|
$ |
351.4 |
|
|
$ |
116.1 |
|
|
|
|
|
|
|
|
|
|
Net income and comprehensive income attributable to: |
|
|
|
|
|
|
Unitholders |
|
$ |
44.7 |
|
|
$ |
7.2 |
|
|
$ |
98.6 |
|
|
$ |
32.5 |
|
Non-controlling interest |
|
114.1 |
|
|
18.6 |
|
|
252.8 |
|
|
83.6 |
|
|
|
$ |
158.8 |
|
|
$ |
25.8 |
|
|
$ |
351.4 |
|
|
$ |
116.1 |
|
Weighted average Trust units outstanding |
|
26.2 |
|
|
26.2 |
|
|
26.2 |
|
|
26.2 |
|
Net income per Trust unit |
|
$ |
1.70 |
|
|
$ |
0.28 |
|
|
$ |
3.76 |
|
|
$ |
1.24 |
|
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
(Cdn $ Millions, except per unit amounts) |
Three months ended Dec. 31 |
Year ended |
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Net income |
|
$ |
158.8 |
|
|
$ |
25.8 |
|
|
$ |
351.4 |
|
|
$ |
116.1 |
|
Add (deduct): |
|
|
|
|
|
|
|
|
Fair value (gains) losses |
|
(120.8 |
) |
|
14.3 |
|
|
(207.5 |
) |
|
38.8 |
|
Amortization of lease incentives |
|
0.5 |
|
|
0.5 |
|
|
1.9 |
|
|
2.2 |
|
Foreign exchange losses |
|
— |
|
|
— |
|
|
— |
|
|
1.1 |
|
Funds from operations |
|
$ |
38.5 |
|
|
$ |
40.6 |
|
|
$ |
145.8 |
|
|
$ |
158.2 |
|
Funds from operations - unitholders |
|
10.8 |
|
|
11.4 |
|
|
40.8 |
|
|
44.3 |
|
Funds from operations - non-controlling interest |
|
27.7 |
|
|
$ |
29.2 |
|
|
105.0 |
|
|
$ |
113.9 |
|
|
|
$ |
38.5 |
|
|
$ |
40.6 |
|
|
$ |
145.8 |
|
|
$ |
158.2 |
|
Weighted average Trust units outstanding |
|
26.2 |
|
|
26.2 |
|
|
26.2 |
|
|
26.2 |
|
Funds from operations per Trust unit |
|
$ |
0.41 |
|
|
$ |
0.44 |
|
|
$ |
1.56 |
|
|
$ |
1.70 |
|
RECONCILIATION OF FUNDS FROM OPERATIONS TO ADJUSTED FUNDS
FROM OPERATIONS
(Cdn $ Millions, except per unit amounts) |
Three months ended Dec. 31 |
Year ended |
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Funds from operations |
|
$ |
38.5 |
|
|
$ |
40.6 |
|
|
$ |
145.8 |
|
|
$ |
158.2 |
|
Add (deduct): |
|
|
|
|
|
|
|
|
Straight-line rental income |
|
(0.3 |
) |
|
(1.5 |
) |
|
(3.0 |
) |
|
(0.8 |
) |
Normalized 2nd generation leasing commissions and tenant improvements(1) |
|
(5.8 |
) |
|
(5.3 |
) |
|
(23.2 |
) |
|
(21.2 |
) |
Normalized maintaining value capital expenditures(1) |
|
(1.8 |
) |
|
(1.7 |
) |
|
(7.2 |
) |
|
(6.8 |
) |
Adjusted funds from operations(2) |
|
$ |
30.6 |
|
|
$ |
32.1 |
|
|
$ |
112.4 |
|
|
$ |
129.4 |
|
Adjusted funds from operations - unitholders |
|
8.6 |
|
|
9.0 |
|
|
31.5 |
|
|
36.2 |
|
Adjusted funds from operations - non-controlling interest |
22.0 |
|
|
23.1 |
|
|
80.9 |
|
|
93.2 |
|
|
|
$ |
30.6 |
|
|
$ |
32.1 |
|
|
$ |
112.4 |
|
|
$ |
129.4 |
|
Weighted average Trust units outstanding |
|
26.2 |
|
|
26.2 |
|
|
26.2 |
|
|
26.2 |
|
Adjusted funds from operations per Trust unit |
|
$ |
0.33 |
|
|
$ |
0.34 |
|
|
$ |
1.21 |
|
|
$ |
1.39 |
|
(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 $19.6 million and $94.6 million for the quarter and year ended December 31, 2015, respectively.
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