Brookfield Reports 62% Increase in Funds from Operations.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 -- 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 second quarter ended June 30, 2004. For the six months ended June 30, 2004, Brookfield recorded substantial growth in 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. , which increased by 62% to $1.68 per share from $1.04 per share during the same period in 2003. Funds from operations prior to lease termination income increased by 25% to $1.30 per share from $1.04 per share during the same period in 2003. Net income increased by 27% to $0.75 per share from $0.59 per share during the same period in 2003.
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Three months Six months
ended ended
June 30 June 30
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(Millions, except per share amounts) 2004 2003 2004 2003
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Funds from operations $ 162 $ 90 $ 282 $ 176
- per share 0.98 0.53 1.68 1.04
Net income 80 53 136 103
- per share 0.45 0.30 0.75 0.59
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For the three months ended June 30, 2004, Brookfield's funds from operations increased by 85% to $0.98 per share from $0.53 per share during the same period in 2003. Funds from operations prior to lease termination income increased by 13% to $0.60 per share from $0.53 per share during the same period in 2003. Net income increased by 50% to $0.45 per share from $0.30 per share during the same period in 2003. "Our solid financial performance for the first six months of 2004 reflects the merits of our strategy of prudently investing in premier office properties in high-growth markets, and pro-actively leasing on a long-term basis to high-quality tenants. This strategy has continued to produce consistently strong and market-leading results across economic cycles," 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 SECOND QUARTER OF 2004 --Completed the issue of C$200 million 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 J 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. at a dividend rate of 5.0%. The proceeds were used to pay down corporate debt. --Recorded a net gain of $60 million in lease termination income resulting from the commencement of a new twenty-year lease with Cadwalader, Wickersham & Taft for 460,000 square feet in One World Financial Center in New York in conjunction with the termination of a previously existing lease. --Acquired 724,800 common shares of the company at an average price of $28.37 per share during the second quarter. This brings the total number of shares repurchased year-to-date to 1.1 million at an average price of $28.77 per share. Since the inception of the normal course issuer bid, the company has purchased approximately 12 million shares at an average price of $19.24 per share. The Board of Directors also approved the application to renew the corporation's normal course issuer bid, which expires in September 2004. --Increased the quarterly common share dividend by 7% to $0.16 per share from the prior quarterly dividend of $0.15 per share. OPERATING HIGHLIGHTS The majority of Brookfield's markets are showing signs of improvement, including increased 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 VACANCY. A place which is empty. The term is principally applied to cases where an office is not filled. 2. By the constitution of the United States, the president has the power to fill up vacancies that may happen during the recess of the senate. rates. At June 30, 2004, 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, Boston, Washington, D.C., Toronto and Calgary, and an occupancy rate of 93.9% across the portfolio, consistent with the first quarter of 2004. Operating highlights for the second quarter included: --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 $25 million. During the second quarter of 2004, net operating income from current commercial property operations was $166 million, compared with $141 million during the same period in 2003 when the impact of dispositions of $11 million is removed. --Leased approximately 500,000 square feet of space during the second quarter of 2004, including: In New York --15 year 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 at One World Financial Center for 41,000 square feet; --15 year renewal and expansion with Vestar Capital at 245 Park Avenue for 38,000 square feet; --15 year renewal with Heidrick & Struggles at 245 Park Avenue for 35,000 square feet. In Calgary --a new two-year lease with Pengrowth Management Pengrowth Management Ltd. is an energy trust company based out of Calgary, Alberta Canada. The Pengrowth Saddledome, home to the Calgary Flames of the NHL, is named after the company. External link
--a new seven-year lease with Canadian Natural Resources for 20,000 square feet at 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 Toronto --a new four-year lease with Northwater Capital Management for 22,000 square feet at Bay Wellington Tower. This brings Brookfield's year-to-date leasing total to approximately 1.6 million square feet, representing five 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. . --Earned $10 million from residential land development operations, an increase of $3 million over the second quarter of 2003, as the housing markets 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. remain strong. OUTLOOK "Brookfield's prime objective is to continue to deliver double-digit growth in FFO FFO See: Funds from operations per share prior to gains for 2004 which we remain on target to achieve. As the economy has continued to improve, so has demand for office space. This, coupled with our pro-active approach to asset management and the premiere quality of our assets, positions us well to continue to meet our financial goals," concluded Clark. Change in Accounting Policy Historically, Brookfield's 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 $10 million and additional depreciation of $28 million before the effect of taxes for the six months ended June 30, 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 an increase of 7% in the quarterly common share dividend to $0.16 per share, payable on September 30, 2004 to shareholders of record at the close of business on September 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 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, Series F, G, H, I and J preferred shares were also declared payable on September 30, 2004 to shareholders of record at the close of business on September 15, 2004. Conference Call Brookfield's second quarter investor conference call can be accessed by teleconference on July 28, 2004 at 10:00 a.m. E.T. at 1-800-446-4472 or at 416-695-5259. The call will be archived through August 27, 2004 and can be accessed by dialing toll free 1-866-518-1010 or 416-695-5275. The conference call can also be accessed by Webcast 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 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 BCE abbr. 1. Bachelor of Chemical Engineering 2. Bachelor of Civil Engineering BCE Abbreviation for before the Common Era. 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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Unaudited Three months Six months
ended ended
June 30 June 30
(US Millions, except per share amounts) 2004 2003 2004 2003
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Total revenue $381 $301 $707 $596
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Net operating income
Commercial property operations
Operating income from properties $166 $152 $345 $302
Lease termination income 60 - 60 -
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Total commercial property operations 226 152 405 302
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Development and residential operations 10 7 18 14
Interest and other 11 14 25 29
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247 173 448 345
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Expenses
Interest 68 67 134 137
Administrative and development 11 11 21 22
Interests of others in properties 6 5 11 10
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Income before non-cash items 162 90 282 176
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Depreciation and amortization 35 20 69 38
Taxes and other non-cash items 47 17 77 35
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Net income $80 $53 $136 $103
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Funds from operations per share -
diluted
Prior to lease termination income $0.60 $0.53 $1.30 $1.04
Lease termination income 0.38 - 0.38 -
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$0.98 $0.53 $1.68 $1.04
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Net income per share - diluted
Prior to lease termination income $0.23 $0.30 $0.53 $0.59
Lease termination income 0.22 - 0.22 -
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$0.45 $0.30 $0.75 $0.59
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CONSOLIDATED BALANCE SHEET
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June 30, Dec. 31,
2004 2003
(US Millions) Unaudited Audited
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Assets
Commercial properties $6,465 $6,297
Development properties 653 684
Receivables and other 619 717
Marketable securities 312 267
Cash and cash equivalents 108 132
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$8,157 $8,097
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Liabilities
Commercial property debt $4,395 $4,537
Accounts payable and other liabilities 526 545
Future income tax liability 101 18
Shareholders' interests
Interests of others in properties 48 81
Preferred shares
Subsidiaries 406 415
Corporate 732 586
Common shares 1,949 1,915
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$8,157 $8,097
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