Brookfield Properties releases 2Q results.

Brookfield Properties Corporation announced operating results for the second quarter ended June 30. For the three months ended June 30, 2002, funds from operations, prior to lease termination income and gains, increased to $98 million or $0.57 per share, compared with $87 million or $0.51 per share for the same period in 2001. Total funds from operations and gains for the six months ended June 30, 2002 increased to $223 million or $1.31 per diluted share, compared, to $218 million or $1.27 per diluted share for the same period in 200l.

Net income per share on a diluted basis for the six months ended June 30 was $0.80 compared with $0.76 per share for the same period in 2001.

Ric Clark, president and CEO of Brookfield, characterized the results as "evidence of the strength of Brookfleld's strategy in delivering solid earnings performance over the long-term and throughout economic cycles. We are confident that our long lease terms and solid tenant base will translate into continued growth in cashflows and net asset values."

The Board of Directors of Brookfield declared a quarterly common share dividend of US$0.10 per share, payable Sept. 30 to shareholders of record at the close of business on Sept. 1. Shareholders resident in the United States will receive payment in US dollars and shareholders resident in Canada will receive their dividends in Canadian dollars at the exchange rate on the date of record, unless they elect otherwise.

Among major initiatives in the second quarter were:

* Agreed to sell a 50% interest in Bankers Hall in Calgary. Brookfield has entered into an agreement to sell a 50% interest in the 2.7 million-SF Bankers Hall complex to a major Canadian institutional investor, anticipated to close August 1, 2002. Bankers Hall is a premier office development in the heart of downtown Calgary, which features twin 44-story office towers atop a four-story retail podium. Bankers Hall is 96% leased to high-quality tenants including EnCana Corporation, Talisman Energy, RBC Financial and Canadian Natural Resources. Acquired in mid-2000 with over 400,000 SF of vacancy, and with one of the two towers under construction, the property was leased at rates higher than projected, the land leases under the property were acquired, and a long-term refinancing for the property was finalized. This brings to conclusion Brookfield's plan after acquisition of Bankers Hall, which included the refinancing of both Fifth Avenue Place and Bankers Hall and the sale of 50% interests in both properties.

* Refinanced 300 Madison Ave. development. Brookfield completed the permanent financing of 300 Madison Ave. in a transaction providing refinancing of the existing $300 million construction loan and additional funds to complete the development of the property.

* Progressed reconstruction of the Winter Garden. Reconstruction of the World Financial Center Winter Garden, including the newly-designed eastern facade, continues on time and on budget with a public reopening in mid-September 2002. Once reopened, access and tenant amenities at the center will be restored to what existed prior to Sept. 11, 2001.

* Progressed construction on CIBC World Markets Tower at 42nd Street and Madison Avenue. This project continues on time and on budget for an anticipated delivery date in August 2003. Steel has been erected up to the 17th floor of the 35-floor development with the installation of curtain wall currently also underway. CIBC has master-leased the entire property for a 30-year term as the future U.S. headquarters for CIBC World Markets.

* Acquired common shares of the company, bringing the total number of shares repurchased to date in 2002 to over 750,000 under the company's normal course issuer bid at an average price of $18 per share. The Board of Directors also approved the renewal of the corporation's normal course issuer bid, which expires in September 2002.

* Received proceeds from insurance claims. To date, $170 million has been received for property and business interruption claims relating to the events of Sept 11, consistent with the costs incurred to re-tenant the properties in Lower Manhattan.

Brookfield achieved its financial and operating objectives year to date despite a more difficult leasing environment and increased sublet space in most markets. Brookfield's long-term lease profile and minimal lease maturities over the next few years, as well as below-market embedded rents, insulated the company from most of this impact on performance in the last six months, and will stand the company well in the years ahead.

During the second quarter of 2002, Brookfield:

* Increased commercial operating income by 6%. During the second quarter of 2002, net operating income from commercial property operations, before lease termination income and gains, increased 6% to $152 million, compared with $143 million in 2001 after removing the impact of properties sold. Internal growth from the same properties owned last year accounted for virtually 100% of the increase.

* Leased approximately 600,000 SF of space in the second quarter of 2002, despite a generally slower leasing environment. This increased total year to date leasing to 1.1 million SF. Notable transactions included a recently completed lease renewal for 112,000 SF with Duke Energy at Republic Plaza in Denver.

* Increased contribution from residential property operations to $26 million in the second quarter, an increase of 13% over 2001. These operations continued to benefit from the low interest rate environment, fueling consumer demand for new homes across North America. Residential property operations have achieved 100% of expected sales for 2002 at this point in time, and sales for 2003 are now being booked.

* Continued return of New York tenants. Merrill Lynch has fully occupied Four World Financial Center with 7,000 employees. The repopulation of Two World Financial Center continues, presently at 70%, including 1,500 Merrill Lynch employees. American Express is in the process of consolidating its 4,000 employees at Three World Financial Center, which is expected to be complete by September. Deloitte & Touche, along with Dow Jones, Refco, Cargill and others, have returned to One World Financial Center. One Liberty Plaza is currently 75% reoccupied.