Brookfield Reports 37% Increase In Funds From Operations For First Quarter Of 2004.News Editors/Business Editors NEW YORK--(BUSINESS WIRE)--April 28, 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 first quarter ended March 31, 2004. 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. ("FFO FFO See: Funds from operations ") increased 37% to $0.70 per share for the three months ended March 31, 2004, over $0.51 per share during the same period in 2003.
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Three months ended March 31, 2004 March 31, 2003
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Funds from operations (FFO)
- $ (millions) $ 120 $ 86
- per share - diluted $ 0.70 $ 0.51
Net income
- $ (millions) $ 56 $ 50
- per share - diluted $ 0.30 $ 0.29
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Net income increased $6 million for the three months ended March 31, 2004 to $56 million or $0.30 per share, compared to $50 million or $0.29 per share for 2003. "Our focused strategy of investing in high-barrier, high-growth markets, pro-actively leasing to solid tenants, along with disciplined asset and capital management programs, has enabled us to produce consistently strong results," 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. MAJOR INITIATIVES IN THE FIRST QUARTER OF 2004 - Acquired Edison Place, 701 9th Street, N.W., in Washington, D.C. for $167.1 million, including the assumption of $151.6 million of long-term mortgage debt. The 547,000 square foot, 10-story office building was completed in 2001 and is fully occupied by the Potomac Electric Potomac Electric corporation is a US manufacturer and repair provider of servo motors and servo drives. Potomac Electric was founded in 1992 by design and manufacturing engineers from Westamp, Baldor, EG&G Tourque Systems. Power Company under a 25-year master lease. The transaction marks Brookfield's second acquisition of a major Class A office building in Washington, D.C., following the purchase of 1625 Eye St., N.W., in December 2003. - Refinanced Republic Plaza Republic Plaza can refer to
- Sold the company's 20% interest in Gulf Canada Square
Canada Square is a public square at Canary Wharf, on the Isle of Dogs in London's Docklands. in Calgary. The sale occurred following the successful renewal of a 400,000 square foot lease with Canadian Pacific Railway Canadian Pacific Railway, transcontinental transportation system in Canada and extending into the United States, privately owned and operated. The construction of a railroad crossing the continent in Canadian territory was one of the conditions on which British Company and marked the completion of the company's strategy to invest, reposition, and monetize unsurfaced value from this asset, all within a 14-month time frame. - Repurchased 650,400 common shares of the company year-to-date at an average price of $29.59 per share. This brings the total number of shares repurchased since the inception of the normal course issuer bid to 11.4 million at an average price of $18.91 per share. - Agreed to issue C$200 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. with a dividend rate of 5.0% subsequent to quarter-end. The issuance further strengthens the company's balance sheet and reduces its overall cost of capital. Closing is expected to occur on April 30, 2004. OPERATING HIGHLIGHTS Brookfield's markets are beginning to improve, as evidenced by the absorption of sublease sublease n. the lease of all or a portion of premises by a tenant who has leased the premises from the owner. A sublease may be prohibited by the original lease, or require written permission from the owner. space and modestly declining vacancy rates. At quarter-end, the company had 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 96.7% in its core markets of 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 , Boston, Washington, D.C., Toronto and Calgary, and an occupancy rate of 93.9% across the portfolio. - Increased current 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. by $37 million. During the first quarter of 2004, net operating income from current commercial property operations was $179 million, compared with $142 million in 2003. The increase includes the contribution from 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. and 1625 Eye Street, the $16 million net leasing fee realized upon the successful completion of the sublease at 300 Madison Avenue, and an increment To add a number to another number. Incrementing a counter means adding 1 to its current value. of $5 million of straight-line rent due to the change in accounting policy. - Leased 1.2 million square feet of space during the first quarter of 2004, approximately five times the amount contractually expiring, including: New York - a twenty-year lease with Cadwalader, Wickersham & Taft for 460,000 square feet in One World Financial Center. The transaction will result in a one-time $60 million net gain in the second quarter of 2004 upon the termination of the existing lease on the space which Cadwalader will occupy; - a fifteen-year lease renewal with Dow Jones Dow Jones the best known of several U.S. indexes of movements in price on Wall Street. [Am. Hist.: Payton, 202] See : Finance & Company for 151,000 square feet in One World Financial Center; and - a ten-year lease renewal with Fleming, Zulack & Williamson for 44,000 square feet in 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. . Toronto - a five-year renewal with TD Bank for 187,000 square feet at BCE BCE abbr. 1. Bachelor of Chemical Engineering 2. Bachelor of Civil Engineering BCE Abbreviation for before the Common Era. Place, the third of BCE Place's three anchor tenants to renew in the past twelve months, further reducing the 2005 rollover A graphic element in an application or on a Web page that changes its color or shape when the pointer is moved (rolled) over it. See JavaScript rollover. See also n-key rollover. exposure in this market. Minneapolis - a ten-year lease with Target for 94,000 square feet at 33 South Sixth Street; and - a twelve-year lease with Rider Bennett for 88,000 square feet at 33 South Sixth Street. - Earned $8 million from residential land development operations, an increase of $1 million over the first quarter of 2003, as the housing market 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. remains strong. OUTLOOK "As we look to the balance of the year, we expect our pro-active leasing strategy of reaching out to tenants in advance of maturities wherever possible will continue to strengthen our financial results. In addition, we will strive to continue enhancing value for shareholders through the implementation of our solid growth strategy which includes the acquisition of high-quality properties in stable, high-growth markets," concluded Clark. Change in Accounting Policy Historically, Brookfield's accounting policy has been to record revenues in accordance 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 $5 million and additional depreciation of $13 million before the effect of taxes for the three months ended March 31, 2004. A schedule reconciling FFO 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 Brookfield declared a quarterly common share dividend of $0.15 per share, payable on June 30, 2004 to shareholders of record at the close of business on June 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 at the exchange rate on the record date, 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, I and J preferred shares were also declared payable on June 30, 2004 to shareholders of record at the close of business on June 15, 2004. Conference Call Brookfield's first-quarter investor conference call can be accessed by teleconference on April 28, 2004 at 3:00 p.m. E.T. at 1-888-789-0089 or 416-695-9753. The archived teleconference may be accessed by dialing 1-866-518-1010 or 416-695-5275 through May 6, 2004. The conference call can also be accessed by Webcast on the Brookfield Web site at www.brookfieldproperties.com. In addition, Brookfield's Annual General Meeting for shareholders will be Webcast on Brookfield's Web site on April 28, 2004 at 11:30 a.m. (E.T.). 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 47 commercial properties and development sites totaling 45 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, 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, 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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Unaudited Three months ended Mar. 31
(US Millions, except per share amounts) 2004 2003
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Total revenue $ 326 $ 295
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Net operating income
Commercial property operations
Operating income from
current properties $ 179 $ 142
Operating income from properties sold - 8
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Total commercial property operations 179 150
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Development and residential operations 8 7
Interest and other 14 15
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201 172
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Expenses
Interest 66 70
Administrative and development 10 11
Interests of others in properties 5 5
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Income before undernoted 120 86
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Depreciation and amortization 34 18
Taxes and other non-cash items 30 18
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Net income $ 56 $ 50
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Funds from operations per
share - diluted $0.70 $0.51
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Net income per share - diluted $0.30 $0.29
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CONSOLIDATED BALANCE SHEET
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Mar. 31, 2004 Dec. 31, 2003
(US Millions) Unaudited Audited
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Assets
Commercial properties $6,493 $6,297
Development properties 725 684
Receivables and other 646 717
Marketable securities 317 267
Cash and cash equivalents 148 132
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$8,329 $8,097
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Liabilities
Commercial property debt $4,582 $4,537
Accounts payable and other liabilities 717 545
Future income tax liability 53 18
Shareholders' interests
Interests of others in properties 47 81
Preferred shares
Subsidiaries 412 415
Corporate 586 586
Common shares 1,932 1,915
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$8,329 $8,097
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