Brookfield Reports 15% Growth In Funds From Operations.Business Editors NEW YORK--(BUSINESS WIRE)--Feb. 5, 2004 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 (NYSE NYSE See: New York Stock Exchange :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 )(TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :BPO) today announced strong financial results for the year and fourth quarter ended December 31, 2003. Results from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the exclude those of Brookfield Homes Corporation, which was distributed to common shareholders on January 6, 2003 and as such is classified as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . RESULTS OF OPERATIONS Total funds from continuing operations and gains for the year ended December 31, 2003 increased 28% to $460 million or $2.78 per share, compared to $374 million or $2.18 per share for 2002. The 2003 results included $100 million in gains on the sale of a 49% interest in 245 Park Avenue 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 , while the 2002 results included $60 million in gains on the sale of 50% interests in 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 and Exchange Tower in Toronto. Funds from continuing operations, prior to property disposition gains, increased 15% to $361 million or $2.15 per share, compared with $322 million or $1.87 per share in 2002. Net income from continuing operations for the year ended December 31, 2003 increased 22% to $1.63 per share, compared to $1.34 per share for 2002. Including the results of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , net income was $1.61 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. share for the year ended December 31, 2002.
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Including Excluding
Property Gains Property Gains
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For the year ended
December 31 2003 2002(a) 2003 2002(a)
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Funds from operations (FFO)
- $ (millions) $ 460 $ 374 $ 361 $ 322
- per share $ 2.78 $ 2.18 $ 2.15 $ 1.87
Net income
- $ (millions) $ 279 $ 236 $ 209 $ 194
- per share $ 1.63 $ 1.34 $ 1.19 $ 1.09
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(a) Excludes the results of Brookfield Homes Corporation
Total funds from continuing operations and gains for the three months ended December 31, 2003 increased to $193 million or $1.19 per share, compared to $81 million or $0.47 per share for 2002. Net income from continuing operations for the three months ended December 31, 2003 was $0.75 per share, compared to $0.29 per share for 2002. Including the results of discontinued operations, net income was $0.39 per diluted share for the three months ended December 31, 2002. Funds from continuing operations, prior to property disposition gains, for the three months ended December 31, 2003, increased to $94 million or $0.56 per share, compared with $81 million or $0.47 per share in the prior year.
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Including Excluding
Property Gains Property Gains
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For the three months ended
December 31 2003 2002(a) 2003 2002(a)
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Funds from operations
- $ (millions) $ 193 $ 81 $ 94 $ 81
- per share $ 1.19 $ 0.47 $ 0.56 $ 0.47
Net income
- $ (millions) $ 126 $ 50 $ 56 $ 50
- per share $ 0.75 $ 0.29 $ 0.31 $ 0.29
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(a) Excludes the results of Brookfield Homes Corporation
On January 6, 2003, the company distributed all of the common shares of Brookfield Homes to shareholders of record on January 2, 2003. Shareholders received one common share of Brookfield Homes for each five shares of Brookfield Properties held on the date of record. The transaction was recorded as a distribution to shareholders at the carried value of the company's investment in Brookfield Homes, and resulted in a reduction in the stated capital stated capital See legal capital. of Brookfield Properties of $323 million. The company's results for the year 2002 and prior periods include the results of Brookfield Homes classified as a discontinued operation. "Brookfield's solid tenant base, pro-active asset management strategies and gains on sales of partial interests in the company's core office portfolio contributed to our strong financial results for the year, including 15% growth in FFO FFO See: Funds from operations per share. Our shareholders in turn benefited from a 60% total return for the year prior to factoring in the appreciation of the Brookfield Homes common stock," said Ric Clark, 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 Brookfield. "The continued strength of our results and our confident outlook for the company in 2004 reflect our focus on reducing risk throughout the portfolio in order to consistently deliver value to our shareholders." MAJOR 2003 INITIATIVES During 2003, Brookfield undertook a number of initiatives to expand its portfolio, strengthen its balance sheet and generate additional liquidity to position the company for continued growth. -- Sold a 49% interest in 245 Park Avenue to NYSTRS NYSTRS New York State Teachers Retirement System (New York State Teachers' Retirement System) based on a property valuation of $894 million. This transaction generated cash proceeds of approximately $195 million net of non-recourse debt on the property. Brookfield retains the management and leasing of the property. -- Entered new, targeted market with the acquisition of 1625 Eye Street, N.W., in Washington, D.C. for $157.5 million, establishing a solid beachhead beach·head n. 1. A position on an enemy shoreline captured by troops in advance of an invading force. 2. A first achievement that opens the way for further developments; a foothold: in the most stable office market in the U.S. Located two blocks from the White House, the 386,000 square foot office property was developed by the Union Labor Life Insurance Company The Union Labor Life Insurance Company (ULLICO) is a privately held life and health insurance company in the United States. ULLICO was founded in 1925 by the American Federation of Labor (AFL), which wanted to offer working people affordable health and life insurance. and completed in April 2003. Amenities of the building include a five-level underground parking facility, 12,000 square feet of street-level retail and convenient access to public transportation. -- Completed the 300 Madison Avenue Madison Avenue, celebrated street of Manhattan, borough of New York City. It runs from Madison Square (23d St.) to the Madison Bridge over the Harlem River (138th St.). In the 1940s and 50s, some of the major U.S. development at 42nd Street 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. Subsequent to year-end, Brookfield announced that PricewaterhouseCoopers is subleasing 800,000 square feet of space from CIBC World Markets CIBC World Markets is the investment banking division of the Canadian Imperial Bank of Commerce. It helps governments, large companies, and other large institutions obtain capital and credit and is a primary dealer in U.S. Treasury securities. , which will occupy the balance of the building. Expected to be named the "PricewaterhouseCoopers Center," the building rises 35 stories in the heart of Midtown Manhattan, one block west of Grand Central Terminal. The elevated, spacious lobby features a striking eight-story glass atrium atrium (ā`trēəm), term for an interior court in Roman domestic architecture and also for a type of entrance court in early Christian churches. The Roman atrium was an unroofed or partially roofed area with rooms opening from it. ascending ascending /as·cend·ing/ (ah-send´ing) having an upward course. ascending progressing to higher levels, usually used in reference to the nervous system. above the main entrance at the corner of 42nd Street. The building features an auditorium auditorium Portion of a theater or hall where an audience sits, as distinct from the stage. The auditorium originated in the theaters of ancient Greece, as a semicircular seating area cut into a hillside. , dining facilities and other amenities on the expansive lower levels. -- Financed four properties, One World Financial Center in Lower Manhattan, Republic Plaza Republic Plaza can refer to
abbr. 1. Bachelor of Chemical Engineering 2. Bachelor of Civil Engineering BCE Abbreviation for before the Common Era. Place in Toronto, and 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. in Calgary for total proceeds of $491 million. -- Repurchased five million common shares of the company at an average price of $21.10 per share. Subsequent to year-end, Brookfield acquired an additional 160,100 shares. This brings the total number of shares repurchased since the inception of the company's normal course issuer bid in 1999 to 10.9 million at an average of $18.41. -- Issued $415 million of 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. through three offerings with favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. dividend rates averaging 5.4%, further strengthening the balance sheet and reducing the company's cost of capital. -- Increased corporate credit facility by $50 million to $150 million, further enhancing liquidity and financial flexibility. -- Announced several senior management appointments including the promotion of Dennis Friedrich to President of U.S. Commercial Operations and Tom Farley to President of Canadian Commercial Operations, and the naming of Frederick Kelly Frederick ("Fred") Warren Kelly (September 12, 1891 – May 7, 1974) was an American athlete, winner of 110 m hurdles at the 1912 Summer Olympics. Born in Orange, California, Fred Kelly attended Orange High School and was a freshman at University of Southern California, as Senior Vice President and Chief Investment Officer, Craig Laurie as Senior Vice President and Chief Financial Officer, and David Sternberg as Senior Vice President, U.S. Midwest and Mountain Regions. -- Separated the U.S. home building assets into its own public vehicle with the spin-out of Brookfield Homes Corporation, distributed to shareholders on January 6, 2003. Since its NYSE listing on January 7, 2003, the share price of Brookfield Homes has more than doubled. -- Increased ownership in its New York and Boston assets to 99.4% and in its significant Canadian operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. to 89%. -- Gained investment-grade rating from Standard & Poor's, creating new opportunities to access debt and preferred share markets. OPERATING HIGHLIGHTS During 2003, Brookfield strengthened the cashflows achieved from its operating business while continuing its pro-active leasing strategy, addressing roll-over exposures in the coming years. The portfolio was 94.1% leased at year-end, with an 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 97.3% in the company's core markets of New York, Boston, Toronto and Calgary. -- Achieved growth of $19 million in 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 year to $571 million from $552 million in 2002, after removing the impact of dispositions. -- Pro-actively leased 3.5 million square feet during 2003, three times the amount contractually expiring. This strong leasing activity is driven in large part by market rents that have been relatively stable over the past year, coupled with a belief that the economy may be improving, both factors motivating tenants to renew leases early. In addition, companies looking to relocate re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. or consolidate are moving to higher quality properties such as Brookfield's. A total of 19 million square feet has been leased across the portfolio since 1999. -- Earned $31 million from residential land development operations, an increase of $9 million over 2002. The low interest rate environment in which Brookfield's retained land and housing business operates has greatly enhanced market demand for lots and homes. OUTLOOK "We look forward to 2004 with cautious optimism, as we continue to see encouraging signs of tenants making long-term decisions which we believe will make leasing markets stronger as the economy improves," said Ric Clark, President & CEO of Brookfield. "Our long-term lease profile, in conjunction with a strong balance sheet and significant financial flexibility, provide a solid foundation for our continued growth, both internally through contractual rent increases and externally through acquisitions and selective development opportunities," concluded Clark. Dividend Declaration The Board of Directors of Brookfield declared a quarterly common share dividend of $0.15 per share, payable on March 31, 2004 to shareholders of record at the close of business on March 1, 2004. Shareholders resident in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. will receive payment in U.S. dollars and shareholders resident in Canada will receive their dividends in Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents at the exchange rate on the date of record, unless they elect otherwise. The quarterly dividends payable Dividends payable The declared dividend dollar amount that a company is obligated to pay. for the Class AAA AAA: see American Automobile Association. (Triple A) A common single-cell battery used in a myriad of electronic devices of all variety. Like its double A (AA) cousin, it provides 1.5 volts of DC power. When used in series, the voltage is multiplied. , Series F, G, H and I preferred shares were also declared payable on March 31, 2004 to shareholders of record on March 15, 2004. Conference Call Brookfield's fourth-quarter investor conference call can be accessed by teleconference on February 6, 2004 at 10:00 a.m. E.S.T. at 877-888-7019 or 416-695-9757. The archived teleconference may be accessed by dialing 800-293-7783 or 416-695-5797 with access code 0705 through February 12, 2004. The conference call can also be accessed by Web cast on the Brookfield Web site at www.brookfieldproperties.com. Supplemental Information Investors, analysts and other interested parties can access Brookfield's Supplemental Information Package on Brookfield's Web site under the Investor Information/Financial Reports section. This additional financial information should be read in conjunction with this press release. Brookfield Profile Brookfield Properties Corporation owns, develops and manages premier North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. office properties. The Brookfield portfolio comprises 48 commercial properties and development sites totaling 46 million square feet, including landmark properties such as the World Financial Center in New York and BCE Place in Toronto. 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. 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 a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , 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 documents filed by the company with the securities regulators in Canada and the United States The United States and Canada share a unique legal relationship. U.S. law looks northward with a mixture of optimism and cooperation, viewing Canada as an integral part of U.S. economic and environmental policy. . 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.
CONSOLIDATED STATEMENT OF INCOME
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Three months ended Year ended
Dec. 31 Dec. 31
(US Millions, except
per share amounts) 2003 2002 2003 2002
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Total revenue and gains $447 $390 $1,363 $1,372
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Net operating income
Commercial property operations
Operating income from current
properties $144 $144 $571 $552
Operating income from properties
sold - 8 26 48
Property disposition gains 100 - 100 60
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Total commercial property
operations 244 152 697 660
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Development and residential income 10 2 31 22
Interest and other 17 11 62 48
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271 165 790 730
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Expenses
Interest 62 68 265 284
Administrative and development 11 9 44 42
Interests of others in properties 5 7 21 30
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Income before non-cash items 193 81 460 374
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Depreciation and amortization 21 22 79 80
Taxes and other non-cash items 46 9 102 58
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Net income from continuing
operations 126 50 279 236
Net income from discontinued
operations - 16 - 44
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Net income $126 $66 $279 $280
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Funds from operations per share
- diluted
Excluding property disposition
gains $0.56 $0.47 $2.15 $1.87
Property disposition gains 0.63 - 0.63 0.31
Discontinued operations - 0.16 - 0.45
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$1.19 $0.63 $2.78 $2.63
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Net income per share - diluted
Excluding property disposition
gains $0.31 $0.29 $1.19 $1.09
Property disposition gains 0.44 - 0.44 0.25
Discontinued operations - 0.10 - 0.27
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$0.75 $0.39 $1.63 $1.61
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CONSOLIDATED BALANCE SHEET
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Pro-Forma(b)
Dec. 31 Dec. 31 Dec. 31
(US Millions) 2003 2002 2002
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Assets
Commercial properties $6,297 $5,661 $5,661
Development properties 684 944 944
Receivables and other 717 769 769
Marketable securities 267 - -
Cash and cash equivalents 132 76 76
Assets of Brookfield Homes
Corporation - - 879
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$8,097 $7,450 $8,329
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Liabilities
Commercial property debt $4,537 $4,588 $4,588
Accounts payable and other
liabilities 563 429 429
Liabilities of Brookfield Homes
Corporation - - 556
Shareholders' interests
Interests of others in properties 81 84 84
Preferred shares - subsidiaries and
corporate 1,001 579 579
Common shares 1,915 1,770 2,093
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$8,097 $7,450 $8,329
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(b) Excludes Brookfield Homes Corporation which was distributed
to common shareholders on January 6, 2003.
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