Brookfield Achieves Cashflow Targets, Delivering 16% Growth in Third Quarter Cashflow From Operations.Business Editors NEW YORK--(BUSINESS WIRE)--Nov. 5, 2001 Brookfield Properties Brookfield Properties Corporation TSX: BPO NYSE: BPO is a Toronto-based North American commercial real estate company. Brookfield Asset Management owns 50% of its outstanding common shares. Corporation (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 : NYSE NYSE See: New York Stock Exchange , TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). ) today announced strong operating results for the third quarter ended September 30, 2001.
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Results of Operations For the 3 Months For the 9 Months
Ended Sept. 30 Ended Sept. 30
------------------------------------------
(US$Millions, except
per share % %
information) Increase 2001 2000 Increase 2001 2000
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Cashflow from operations 16% $89 $77 31% $307 $234
Cashflow per common share
- diluted 13% $0.52 $0.46 28% $1.79 $1.40
Cashflow per share prior
to lease termination and
other office
property gains 13% $0.52 $0.46 16% $1.50 $1.29
Net income 36% $53 $39 51% $187 $124
Net income per share
- diluted 36% $0.30 $0.22 51% $1.06 $0.70
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FINANCIAL HIGHLIGHTS For the three months ended September 2001, cashflow from operations increased to $89 million or $0.52 per share compared with $77 million or $0.46 per share during the same period in 2000. Net income in the third quarter was $53 million, a 36% increase over the $39 million reported in 2000, or $0.30 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. common share. Richard B. Clark, President and CEO-elect of the corporation stated that, "Brookfield delivered on its earnings and cashflow targets during the third quarter, despite events of the past two months. This highlighted the stability of the company's cashflows from its portfolio of premier quality assets. With a strong balance sheet, long-term lease contracts and substantial financial flexibility, we are well positioned to weather the economic slowdown and take advantage of opportunities which we believe will present themselves in this environment." OPERATING HIGHLIGHTS -- Achieved 9% internal growth of same commercial property operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the three months ended September 30, 2001. Commercial operating income in the quarter increased to $154 million before lease terminations and other office property gains. -- Accelerated plans for re-tenanting of downtown Manhattan properties. Working closely with city and state authorities, Brookfield is ahead of schedule in returning tenants to its properties. Occupancy was originally targeted for 60 days from September 18, 2001. One Liberty Plaza One Liberty Plaza is a skyscraper in lower Manhattan, New York, which resides at the location of the former Singer Building (in 1968, the second tallest building to be demolished). One Liberty Plaza is currently owned and operated by Brookfield Properties. was opened to tenants on October 24, 2001, 36 days from our original plan. Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. began to re-occupy their premises at Tower Four World Financial Center the week of October 22, 2001. Tenants at One World Financial Center are scheduled to begin re-occupying their premises on November 19th and Two World Financial Center has been turned over to the net lessor One who rents real property or Personal Property to another. A lessor of land is a landlord. Cross-references Landlord and Tenant. lessor n. the owner of real property who rents it to a lessee pursuant to a written lease. . -- Funds from Operation insulated in·su·late tr.v. in·su·lat·ed, in·su·lat·ing, in·su·lates 1. To cause to be in a detached or isolated position. See Synonyms at isolate. 2. by insurance. Brookfield held comprehensive insurance coverage, with $50 million of casualty and business interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. payments to the company received to date. Brookfield renewed its insurance on October 31, 2001, placing new business interruption and property insurance to cover the replacement cost of its properties. The company also continues to have liability risk insurance for terrorism. The new property and business interruption policy however, excludes coverage related to terrorism. Brookfield and other real estate owners are working with the insurance industry and the US government to ensure that the government supported terrorism risk program being proposed is enacted at the earliest practical opportunity. -- Proactively leased over 3 million square feet year to date, which represents 6% of the office portfolio and nearly three times what was contractually due. This strong leasing activity positions the company to maintain strong financial performance in the event of a prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. economic slowdown. -- Extended average lease term to 10 years, with no major lease rollovers in the portfolio until 2005. Brookfield's 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) remained at 97% throughout the portfolio and 98% in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , Toronto and Boston, Brookfield's largest markets. -- Reported residential development income of $23 million in the quarter, with sales to date totaling approximately 100% of the units planned for delivery in 2001. Notwithstanding the economic slowdown, the low interest rate environment and home equity refinancing Refinancing An extension and/or increase in amount of existing debt. market continues to fuel demand for homes across North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . Land development approvals received to date position these operations for similar results in 2002. PORTFOLIO AND CAPITAL INITIATIVES Year to date, Brookfield completed a number of initiatives which enhance the value of the company's premier office portfolio and strengthen the balance sheet. These initiatives have generated over $1 billion of net cash for repayment of short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. and for re-deployment into higher growth opportunities and the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of common equity interests. Major transactions during the period include the following: Third Quarter Transactions -- Enhanced the value of the 2.6 million square foot 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. complex in Calgary with the acquisition of the land lease and a subsequent refinancing. In October 2001, Brookfield acquired the land lease under Bankers Hall creating a 100% freehold Freehold, borough, United States Freehold, borough (1990 pop. 10,742), seat of Monmouth co., E central N.J.; settled c.1650, called Monmouth Courthouse (1715–1801), inc. as a town 1869, as a borough 1919. property ownership structure. This freehold unitization paved pave tr.v. paved, pav·ing, paves 1. To cover with a pavement. 2. To cover uniformly, as if with pavement. 3. To be or compose the pavement of. the way for the subsequent refinancing of this property with a $240 million, non-recourse, 12-year mortgage at a rate of 7.2%. Together these two transactions enhance the attractiveness of the property for the planned sale of a 50% interest of Bankers Hall in 2002. -- Disposed of major retail assets. Brookfield disposed of Bramalea City Centre The Bramalea City Centre is an indoor shopping mall located in the city of Brampton, Ontario, Canada. With over a million square feet of retail space and more than 280 outlets, it is one of Canada's largest shopping malls. in October, a 1.2 million square foot regional shopping center shopping center, a concentration of retail, service, and entertainment enterprises designed to serve the surrounding region. The modern shopping center differs from its antecedents—bazaars and marketplaces—in that the shops are usually amalgamated into complex located in Toronto, the last major retail center owned by Brookfield. This transaction, together with the recent sale of Seven Oaks Seven Oaks (ISSN 1710-3061) is an online political magazine based in Vancouver, Canada. It was founded by four activists and journalists, and launched its first issue February 21, 2004. and West Oaks retail centers, generated approximately $200 million in proceeds to Brookfield. -- Renewed normal course issuer bid and to date in 2001 acquired 2.2 million common shares. Brookfield renewed its normal course issuer bid for a one-year period commencing September 13, 2001. Total authorization enables Brookfield to acquire up to 8,165,400 shares, approximately 5% of the issued and outstanding common shares of the company. -- Included in two Wilshire Associates' Real Estate Indices. Brookfield was added to the Wilshire Real Estate Securities Index and Real Estate Operating Companies operating company A business that engages in transactions with outsiders. Index effective September 30, 2001. Inclusion in these two real estate industry benchmark indices affirms Brookfield's leadership position within the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. real estate industry and contributes to raising Brookfield's profile with dedicated real estate funds and institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. who benchmark their performance against the major real estate industry participants. -- Increased dividend and payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. schedule. During the quarter, Brookfield announced a 50% increase in the annual common share dividend from the former annual pay-out of $0.26 to $0.40. The company also introduced quarterly payments rather than the previous semi-annual dividend pay-out. The new dividend payout plan commenced September 30, 2001 with a quarterly dividend of $0.10 per share to shareholders of record on September 1, 2001. A further common share dividend of $0.10 was declared by the board of directors on November 2, 2001 to shareholders of record on December 1, 2001 with payment on December 31, 2001. -- Strengthened the balance sheet with the conversion of debentures and warrants into 5.1 million shares. During August, Brookfield eliminated the last senior convertible instruments from the balance sheet through: the conversion of $50 million of June 2008 convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. by the holder into 2,622,100 shares 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 their terms; and the exercise by the holder of 2.5 million May 2003 warrants into 2.5 million common shares. First Half Transactions -- Refinanced and sold a 50% interest in Fifth Avenue Place office complex in Calgary. Brookfield refinanced this 1.7 million square foot property with a $105 million non-recourse, 10-year first mortgage at a rate of 7.6%. A 50% equity interest in the property was also sold on a gross value of $178 million to an institutional investor. This generated a gain of $30 million and net cash to the company of $80 million. -- Completed the sale of a 49% interest in two Boston office properties, 53 and 75 State Street, to an institutional investor for total proceeds of $337 million, $168 million of cash for the equity component and their assumption of $169 million of property level debt. -- Completed two refinancings in the New York property portfolio, totaling nearly $1 billion. During the first six months of the year, Brookfield refinanced the 1.7 million square foot 245 Park Avenue property in midtown mid·town n. A central portion of a city, between uptown and downtown. midtown Noun US & Canad the centre of a town Manhattan with a $500 million investment grade mortgage, which has a term of 10 years and a fixed-rate coupon of 6.65%. Brookfield also refinanced the 2.2 million square foot One Liberty Plaza in downtown Manhattan with a $432 million investment grade mortgage which has a term of 10 years and a fixed-rate coupon of 6.75%. -- Acquired an additional 5.4% interest in the company's New York and Boston assets, owned through Brookfield Financial Properties, from Citibank N.A., bringing Brookfield's ownership to 95%. This transaction was completed in the second quarter of 2001 for a total cost of $202 million. OUTLOOK Brookfield is confident in the company's ability to deliver on its stated financial targets, and with a balance sheet financially positioned for the current environment, it is well positioned to benefit from the opportunities likely to arise. ---------- Brookfield Properties Corporation, with over US$8 billion in assets, owns, develops and manages premier North American office properties. The Brookfield portfolio spans 55 commercial properties and development sites totaling 45 million square feet. Brookfield also operates real estate service businesses and develops master planned residential communities. Brookfield is inter-listed on the New York and Toronto Stock Exchanges Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. under the symbol BPO. For more information, visit the Brookfield Properties website at www.brookfieldproperties.com. Contact: Katherine C. Vyse, Senior Vice President, Investor Relations Investor relations The process by which the corporation communicates with its investors. and Communications, Tel. (416) 369 - 8246, or via email at: kvyse@brookfieldproperties.com. Investors, analysts and other interested parties can access Brookfield's Supplementary Information Package and Corporate Profile, which form the basis of this release, on Brookfield's website under Investor Information/Financial Reports at www.brookfieldproperties.com. Brookfield's third quarter investor conference call can be accessed by teleconference on November 5, 2001 at 2:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. at 1-800-633-8749 or by Webcast on the Brookfield website at www.brookfieldproperties.com. The replay of the teleconference is available by dialing 1-800-558-5253 with reservation number 19777795. ---------- 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. " within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 forward 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 company's 40-F filed with the Securities and Exchange Commission. 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.
BROOKFIELD PROPERTIES CORPORATION
CONSOLIDATED BALANCE SHEET
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(US$Millions) Sept. 30 Dec. 31 Dec. 31
2001 2000 1999
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US$ US$ US$
Assets
Commercial properties $5,892 $6,326 $5,897
Development properties 730 637 447
Residential housing inventory 577 559 562
Receivables and other 900 893 945
Cash and cash equivalents 234 209 217
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$8,333 $8,624 $8,068
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Liabilities
Commercial property debt $4,782 $4,702 $4,139
Advances and residential
construction financing 582 951 1,086
Accounts payable 319 368 276
Capital base
Interests of others in properties 110 159 326
Preferred shares
- corporate and subsidiaries 590 607 607
Common shares and convertible debentures 1,950 1,837 1,634
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$8,333 $8,624 $8,068
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BROOKFIELD PROPERTIES CORPORATION
CONSOLIDATED STATEMENT OF INCOME
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Three months ended Nine months ended
Sept. 30 Sept. 30
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(US$Millions,
except per share amounts) 2001 2000 1999 2001 2000 1999
---------------------------------------------------------------
US$ US$ US$ US$ US$ US$
Total revenue $556 $483 $463$1,603 $1,371 $1,253
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Net operating income
Commercial office
property operations
Operating income from
current properties $153 $139 $129 $454 $406 $373
Operating income from
properties sold 1 12 12 14 33 35
Lease termination
and other office
property gains - - - 55 19 -
------------------------------------
154 151 141 523 458 408
Development and
residential income 23 23 18 61 54 44
Interest and other 10 9 10 31 31 38
------------------------------------
187 183 169 615 543 490
Expenses
Interest expense 80 85 76 252 240 228
Administrative
and development 11 10 14 34 33 41
Interests of others
in properties 7 11 16 22 36 45
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Cashflow from operations 89 77 63 307 234 176
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Depreciation and
amortization 19 17 13 56 47 42
Non-cash taxes and
other provisions 17 21 14 64 63 36
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Net income $53 $39 $36 $187 $124 $98
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Cashflow per share
- diluted $0.52 $0.46 $0.36 $1.79 $1.40 $1.02
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Cashflow per share
prior to lease
termination and
other office
property gains $0.52 $0.46 $0.36 $1.50 $1.29 $1.02
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Net income per share
- diluted $0.30 $0.22 $0.20 $1.06 $0.70 $0.53
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