Brookfield Reports A 13% Increase In Funds From Operations Per Share For The First Quarter of 2003.Business Editors NEW YORK--(BUSINESS WIRE)--April 25, 2003 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): 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 at www.brookfieldproperties.com. Brookfield's first quarter investor conference call can be accessed by teleconference on April 25, 2003 at 2:00 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT at 416-695-6120 or 1-877-461-2816. The archived teleconference may be accessed by dialing 416-695-5292 or 1-877-605-9320 with access code 6119 through May 25, 2003. Alternatively, the conference call can be accessed by webcast at www.brookfieldproperties.com. Brookfield Properties Corporation (BPO: NYSE, TSX) today announced operating results for the first quarter ended March 31, 2003. --------------------------------------------------------------------- Results of Operations For the 3 Months Ended March 31 (US$ millions, ------------------------------- except per share information) %Increase 2003 2002 --------------------------------------------------------------------- Funds from operations prior to lease termination income and gains 10% $86 $78 FFO per share prior to lease termination income and gains 13% $0.51 $0.45 Net income per share prior to lease termination income and gains 16% $0.29 $0.25 --------------------------------------------------------------------- FINANCIAL HIGHLIGHTS For the three months ended March 31, 2003, 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. prior to lease termination income and gains increased to $86 million or 13% to $0.51 per share, compared with $0.45 per share for the same period in 2002. Net income prior to lease termination income and gains for the three months ended March 31, 2003 increased to $50 million, or $0.29 per diluted share, compared to $45 million or $0.25 per diluted share for the same period in 2002. "The strength of our performance in the first quarter of 2003 reflects the merits of our strategy and disciplined approach to capital management. Despite unsettled economic conditions and the continued weakness in demand for office space, our strong financial position together with recent operational and capital transactions provide us with a solid foundation for achieving our targets in 2003," commented 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 Properties Corporation. The Board of Directors of Brookfield declared a quarterly common share dividend of $0.10 per share, payable June 30, 2003 to shareholders of record at the close of business on June 1, 2003. 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 date of record, unless they elect otherwise. MAJOR INITIATIVES IN THE FIRST QUARTER OF 2003 - Completed the spin-out of Brookfield Homes Corporation which was distributed to shareholders on January 6, 2003 and began trading on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. on January 7, 2003 under the symbol BHS BHS beta-hemolytic streptococci. . Since its listing on January 7, 2003, the share price of Brookfield Homes increased by almost 40%, and coupled with the increase in Brookfield's share price, the initiative has surfaced approximately $650 million of value for shareholders. - Refinanced One World Financial Center in Lower Manhattan Lower Manhattan is the southernmost part of the island of Manhattan, the main island and center of business and government of the City of New York. Lower Manhattan is generally defined as the area delineated on the north by Chambers Street, on the west by the Hudson River (North with a $300 million recourse, three-year first mortgage credit facility. The previous $402 million mortgage carried an interest rate of 7.51% and a maturity of November 2003. The new floating rate financing is set at LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). plus 2%. This financing provides maximum operating and leasing flexibility at One World Financial Center, a 40-story, 1.6 million square foot tower, until leases expiring, primarily in 2005 are addressed. - Refinanced Canada Trust CT Financial Services Inc. was a financial services holding company that was founded in London, Ontario and later had its headquarters in Toronto, Ontario and operated in Canada through subsidiaries including Canada Trustco Mortgage Company and The Canada Trust Company Tower at BCE BCE abbr. 1. Bachelor of Chemical Engineering 2. Bachelor of Civil Engineering BCE Abbreviation for before the Common Era. Place in Toronto with an additional $23 million following the acquisition of a further 10% interest in this office property in the first quarter of 2002. - Sold the retail and parking condominium condominium In modern property law, individual ownership of one dwelling unit within a multidwelling building. Unit owners have undivided ownership interest in the land and those portions of the building shared in common. at 100 Bloor Street West for $40 million to a foreign real estate investor A real estate investor is someone who actively or passively invests in real estate. An active investor may buy a property, make repairs and/or improvements to the property, and sell it later for a profit. subsequent to the end of the first quarter. Brookfield owns 50% of the recently-completed 57,500 square foot premier retail and condominium project in Toronto's most upscale retail neighborhood. - Added an additional $30 million to the three-year $100 million credit facility, recently announced in the fourth quarter of 2002, with two major financial institutions. - Progressed construction on 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. The project continues on time and on budget for an anticipated delivery date of fall 2003. The curtain wall curtain wall Nonbearing wall of glass, metal, or masonry attached to a building's exterior structural frame. After World War II, low energy costs gave impetus to the concept of the tall building as a glass prism, an idea originally put forth by Le Corbusier and Ludwig Mies is 98% erected and lobby construction is expected to be completed in June. Testing and commissioning of the mechanical, electrical and plumbing systems are underway. - Acquired 1.8 million common shares of the company at an average price of $18.47 per share. Subsequent to March 31, 2003, the company acquired a further 912,800 shares at an average price of $19.61 per share. This brings the total number of shares repurchased since the inception of Brookfield's normal course issuer bid in 1999 to almost 8.5 million. OPERATING HIGHLIGHTS Brookfield achieved its financial and operating objectives for the first quarter of 2003 despite a more challenging leasing environment and pressure from sublet sub·let tr.v. sub·let, sub·let·ting, sub·lets 1. To rent (property one holds by lease) to another. 2. To subcontract (work). n. space which continued to be a factor 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, help to insulate 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. the company from these market conditions, and positions the company for continued strong performance. - Increased commercial 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 5%. During the first quarter of 2003, net operating income from commercial property operations before lease termination and other gains increased 5% to $150 million, compared with $143 million in 2002. - Leased more than 750,000 square feet of space in the first quarter of 2003 despite a generally slower leasing environment including: -- 400,000 square feet in Toronto - 300,000 square feet at BCE Place in a ten year lease renewal with Marsh Mercer and a new 15-year lease with McMillan Binch, and 100,000 square feet in the HSBC Building Several buildings carry the HSBC name:
HSBC Humane Society of Broward County (Florida) HSBC Humane Society of Bay County (Bay County, Michigan) Bank of Canada Bank of Canada Canada's central bank, established under the Bank of Canada Act (1934). It was founded during the Great Depression to regulate credit and currency. The Bank acts as the Canadian government's fiscal agent and has the sole right to issue paper money. -- 90,000 square feet in Calgary to Inter Pipeline Fund, Anadarko Canada Corp. and Star Oil & Gas -- 43,000 square feet in Minneapolis and Denver to UBS UBS Union Bank of Switzerland UBS United Bible Societies UBS United Blood Services UBS United Buying Service UBS Used Bookstore UBS University Business Services UBS Universal Building Society (UK) UBS Ulaanbaatar Broadcasting System Paine Webber and a further 43,000 square feet in an extended and expanded lease with Patina patina (păt`ənə), coating of carbonate of copper on articles of copper or bronze, formed after long exposure to a moist atmosphere or burial in the earth. Oil & Gas at the Denver Trade Center -- 24,000 square feet in Boston in a new ten year lease with Harbor Capital -- 13,000 square feet of retail space 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 at the World Financial Center to Eckerd Drugs, Hallmark and Kodak. - Long-term land development operations contributed $7 million to Brookfield's operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , an increase of $1 million over 2002. OUTLOOK "As we look to the balance of the year and beyond, we remain focused on owning, developing and managing premier office properties in select, supply-constrained, high-growth office markets. Through disciplined asset and capital management, we are committed to increasing our return on capital and maintaining growth in funds from operations per share," concluded Ric Clark. Brookfield Properties Corporation, with a stock market value of $9 billion in assets, 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 50 commercial properties and development sites totaling 46 million square feet, including landmark properties such as the World Financial Center in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. 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. For more information, visit www.brookfieldproperties.com. 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 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.
CONSOLIDATED STATEMENT OF INCOME
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Unaudited Three months ended Mar. 31
(US Millions, except per share amounts) 2003 2002 2001
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Total Revenue $295 $345 $366
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Net Operating Income
Commercial property operations
Operating income from current properties $150 $143 $136
Operating income from properties sold - 7 23
Lease termination income and gains - 40 25
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Total commercial property operations 150 190 184
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Development and residential income 7 6 6
Interest and other 15 10 12
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Income before non-cash items 172 206 202
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Expenses
Interest 70 73 86
Administrative and development 11 11 12
Interests of others in properties 5 10 8
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Income before undernoted 86 112 96
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Depreciation and amortization 18 19 18
Taxes and other non-cash items 18 21 23
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Net income from continuing operations 50 72 55
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Income from discontinued operations - 8 5
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Net income $50 $80 $60
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Funds From Operations Per Share - Diluted
FFO per share - prior to lease termination
income and gains $0.51 $0.45 $0.41
Lease termination income and gains - 0.21 0.14
Discontinued operations - 0.08 0.06
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$0.51 $0.74 $0.61
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Net Income Per Share - Diluted
Net income - prior to lease termination
income and gains $0.29 $0.25 $0.21
Lease termination income and gains - 0.17 0.09
Discontinued operations - 0.05 0.03
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$0.29 $0.47 $0.33
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CONSOLIDATED BALANCE SHEET
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Pro-
Unaudited Forma(a)
Mar. 31 Dec. 31 Dec. 31 Dec. 31
(US Millions) 2003 2002 2002 2001
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Assets
Commercial properties $5,750 $5,661 $5,661 $5,802
Development properties 1,016 944 944 575
Receivables and other 737 769 769 847
Cash and cash equivalents 116 76 76 195
Assets of Brookfield Homes Corporation - - 879 -
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$7,619 $7,450 $8,329 $7,419
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Liabilities
Commercial property debt $4,102 $4,038 $4,038 $4,376
Commercial development property debt 597 550 550 230
Accounts payable and other liabilities 451 429 429 460
Liabilities of Brookfield Homes Corporation - - 556 -
Shareholders' interests
Interests of others in properties 91 84 84 113
Preferred shares - subsidiaries
and corporate 605 579 579 585
Common shares 1,773 1,770 2,093 1,655
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$7,619 $7,450 $8,329 $7,419
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(a) Excludes Brookfield Homes Corporation which was spun-off on
January 6, 2003
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