BPO Properties Announces Financial Results For Third Quarter 2004.TORONTO Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing -- Small Shareholder Selling and Purchase Policy Instituted BPO BPO Business Process Outsourcing BPO Benevolent & Protective Order (of Elks of the USA) BPO Benzoyl Peroxide BPO Business Process Optimization BPO Broker Price Opinions BPO Buffalo Philharmonic Orchestra Properties Ltd. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :BPP (Bits Per Pixel) See bit depth. bpp - bits per pixel ) today announced financial results for the third quarter ended September 30, 2004. BPO Properties also announced that the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. has accepted a notice filed by the company to institute a small shareholder selling and purchase arrangement which offers shareholders owning a small number of shares the opportunity to sell their holdings or purchase certain additional shares.
FINANCIAL HIGHLIGHTS
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Three Months Ended Nine Months Ended
September 30 September 30
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(Millions, except per
share amounts) 2004 2003 2004 2003
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Funds from operations
and gains $21.9 $41.1 $77.4 $108.2
- per share 0.68 1.33 2.43 3.46
Net income 14.1 24.9 47.5 66.4
- per share 0.41 0.77 1.38 1.99
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For the nine months ended September 30, 2004, BPO Properties' funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. and gains was $2.43 per share compared with $3.46 per share during the same period in 2003. Net income was $1.38 per share compared with $1.99 per share during the same period in 2003. For the three months ended September 30, 2004, BPO Properties' funds from operations was $0.68 per share compared with $1.33 per share during the same period in 2003. Net income was $0.41 per share compared with $0.77 per share during the same period in 2003. These changes are primarily attributable to lower interest income after the payment of the special common share dividend totaling $428 million in the first quarter of 2004. MAJOR INITIATIVES IN THE THIRD QUARTER OF 2004 --Acquired a $35.9 million, seven-year, 11.2% fixed rate mezzanine mez·za·nine n. 1. A partial story between two main stories of a building. 2. The lowest balcony in a theater or the first few rows of that balcony. debt investment for the Bank of America Center There are two Bank of America Centers
--Instituted a small shareholder selling and purchase arrangement. The Toronto Stock Exchange has accepted a notice filed by BPO Properties to institute a small shareholder selling and purchase arrangement (the "Program") pursuant to the Policy Statement on Small Shareholder Selling and Purchase Arrangements of the Toronto Stock Exchange. The Program is voluntary and offers eligible shareholders resident in Canada the opportunity to sell all, but not less than all, of their holdings or to purchase a sufficient number of shares so that they hold at least one-hundred shares. Under the Program, shareholders holding 99 or fewer common shares of BPO Properties as of November 8, 2004 are eligible to participate. Participating shareholders will not incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. commission charges; however, shareholders whose shares are held by a nominee nominee n. 1) a person or entity who is requested or named to act for another, such as an agent or trustee. 2) a potential successor to another's rights under a contract. may be required to pay a fee to their nominee. The Program will terminate December 15, 2004 at 4:00 p.m. (Toronto time), unless extended. The offer is open to both registered and beneficial holders resident in Canada whose shares are held by a broker, bank, trust company or other nominee. Participating organizations are requested to contact clients eligible to participate and provide them with the relevant information. Further details of the Program are set out in the information packages being distributed by CIBC CIBC Canadian Imperial Bank of Commerce CIBC Centres Interinstitutionnels de Bilan de Compétences CIBC Commonwealth Institute of Biological Control (Trinidad) CIBC Commercial International Brokerage Company Mellon Trust Company to eligible shareholders on or about November 15, 2004. Additional copies may be obtained by contacting CIBC Mellon, toll-free at 1-800-387-0825. --Renewed the normal course issuer bid, permitting the company to acquire up to 342,830 common shares during the period from September 15, 2004 to September 14, 2005. OPERATIONS REVIEW BPO Properties' portfolio was 95.6% leased at the end of the third quarter, compared to a Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. national average of 88.9%. The company leased 491,000 square feet during the third quarter of 2004. Highlights include: 361,000 square feet in Toronto --a ten-year lease renewal with Canadian Imperial Bank of Commerce The Canadian Imperial Bank of Commerce TSX: CM NYSE: CM, better known to most customers as CIBC, is one of Canada's major banks. CIBC is classified as a Domestic Chartered Bank (Schedule I). for 331,000 square feet at Atrium on Bay The Atrium on Bay is a retail and office complex on the former site of the Ford Hotel on Dundas Street West, extending from Yonge Street to Bay Street. The 14-floor building was built in 1981 with two floors of retail stores. ; --a new seven-year lease with Everest Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Company for 9,000 square feet at Exchange Tower; 123,000 square feet in Calgary --a new six-year lease with Imperial Oil for 68,000 square feet at Fifth Avenue Place; --a ten-year renewal and expansion with management consulting Noun 1. management consulting - a service industry that provides advice to those in charge of running a business service industry - an industry that provides services rather than tangible objects firm Towers Perrin Towers Perrin is a global professional services firm. It was established 1 March 1934 as Towers, Perrin, Forster & Crosby. The umbrella name of Towers Perrin was adopted in 1987. for 45,000 square feet at Petro-Canada Centre The Petro-Canada Centre is a 1,945,000 square foot (181,000 m²) project composed of two granite and reflective glass-clad office towers of 32 floors and 53 floors, situated in the office core of downtown Calgary, Alberta. ; and 7,000 square feet in Vancouver --a new seven-year lease with Hybridge Investment Management for 4,000 square feet. This brings the total amount of square feet leased year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. to 794,000 square feet, approximately four times the amount of space contractually expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. . OUTLOOK "BPO Properties' overall occupancy rate Noun 1. occupancy rate - the percentage of all rental units (as in hotels) are occupied or rented at a given time pct, per centum, percent, percentage - a proportion in relation to a whole (which is usually the amount per hundred) of 95.6% compares favourably to our markets. These high lease levels reflect the premier quality of our assets and keep us well-positioned for growth," concluded Tom Farley, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of BPO Properties. Change in Accounting Policy Historically, BPO Properties' accounting policy has been to record revenues in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the actual payments received under the terms of the company's leases, which typically increase over time, and to record depreciation on a sinking-fund basis. However, commencing January 1, 2004, accounting standards require both straight-line rent recognition and straight-line depreciation A method employed to calculate the decline in the value of income-producing property for the purposes of federal taxation. Under this method, the annual depreciation deduction that is used to offset the annual income generated by the property is determined by dividing the . This change resulted in additional revenue of $4.9 million and additional depreciation of $3.0 million before the effect of taxes for the nine months ended September 30, 2004 ($1.6 million of additional revenue and $1.1 million of additional depreciation for the three months ended September 30, 2004). A schedule reconciling FFO FFO See: Funds from operations to a non straight-line rent basis can be found in the supplemental information package to allow for comparability with prior periods. Dividend Declaration The Board of Directors of BPO Properties declared a quarterly common share dividend of $0.15 per share, payable on December 31, 2004 to shareholders of record at the close of business on December 1, 2004. The quarterly dividends payable Dividends payable The declared dividend dollar amount that a company is obligated to pay. for the Class G, J, and M preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. were also declared payable on February 14, 2005 to shareholders of record on January 31, 2005. Conference Call BPO Properties' third quarter investor conference call can be accessed by teleconference on Tuesday, November 9, 2004 at 11 a.m. (E.T.) toll free at 877-461-2814 or 416-695-9753. The archived call may be accessed by dialing toll free 866-523-1010 or 416-695-6034 with access code 5271 through December 8, 2004. The conference call can also be accessed by Webcast on the BPO Properties' Web site at www.bpoproperties.com. Supplemental Information Investors, analysts and other interested parties can access BPO Properties' supplemental information package on BPO Properties' Web site, www.bpoproperties.com, under the Investor Information/ Financial Reports section. This additional financial information should be read in conjunction with this press release. BPO Properties Profile BPO Properties Ltd. is a Canadian company that invests in real estate, focusing on the ownership and value enhancement of premier office properties. The current property portfolio is comprised of interests in 16 commercial properties and development sites totaling 13.5 million square feet, including landmark properties such as the Exchange Tower, home of the Toronto Stock Exchange, and Bankers Hall Bankers Hall is a building complex located in downtown Calgary, Alberta, which includes twin 52-storey office towers (197 metres high), designed by the architectural firm Cohos Evamy in postmodern architectural style. in Calgary. BPO Properties' common shares trade on the TSX under the symbol BPP. Further information about the company can be found at www.bpoproperties.com. Note: This press release contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " that are based on certain assumptions and reflect the company's current expectations. The words "believe," "expect," "anticipate," "intend," "estimate" and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Reliance should not be placed on forward-looking statements because they involve 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. Factors that could cause actual results to differ materially from those set forth in the forward-looking statements include general economic conditions, local real estate conditions, timely re-leasing of occupied square footage upon expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created , interest rates, availability of equity and debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay and other risks detailed from time to time in the documents filed by the company with the securities regulators in Canada. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This press release makes reference to "funds from operations" on a total and per share basis. Management uses funds from operations as a key measure to evaluate performance. Shareholders are encouraged to consider both net income and funds from operations in assessing BPO Properties' results.
CONSOLIDATED BALANCE SHEET
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September 30 December 31
2004 2003
(Millions) Unaudited Audited
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Assets
Commercial properties $ 1,003.3 $ 1,039.7
Marketable securities 379.6 349.6
Loans receivable 90.6 50.4
Future income taxes 49.7 59.5
Other assets 29.6 31.9
Cash and cash equivalents 23.0 491.1
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$ 1,575.8 $ 2,022.2
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Liabilities and shareholders'
equity
Commercial property debt $ 662.6 $ 703.5
Accounts payable and other
liabilities 60.8 64.7
Shareholders' equity 852.4 1,254.0
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$ 1,575.8 $ 2,022.2
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CONSOLIDATED STATEMENT OF INCOME
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Three months ended Nine months ended
Unaudited September 30 September 30
(Millions, except per
share amounts) 2004 2003 2004 2003
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Commercial properties
Revenue $ 52.7 $ 52.4 $ 160.5 $ 162.9
Expenses 25.0 26.0 77.8 79.8
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27.7 26.4 82.7 83.1
Loans and investment
income 7.1 26.0 28.0 61.3
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34.8 52.4 110.7 144.4
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Expenses
Interest expense 10.9 11.0 33.1 32.7
Administrative expenses
and large corporation
tax 2.0 3.0 6.2 7.1
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Income before the
following items 21.9 38.4 71.4 104.6
Property disposition
gains - 2.7 6.0 3.6
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Income before undernoted 21.9 41.1 77.4 108.2
Depreciation and
amortization 6.8 5.8 20.1 17.0
Future income taxes 1.0 10.4 9.8 24.8
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Net income $ 14.1 $ 24.9 $ 47.5 $ 66.4
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Net income per common
share $ 0.41 $ 0.77 $ 1.38 $ 1.99
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