Brookfield Reports a 13% Increase in Funds from Operations Per Share for the Second Quarter of 2003.Business Editors NEW YORK--(BUSINESS WIRE)--July 29, 2003 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 second quarter investor conference call can be accessed by teleconference on July 29, 2003 at 3:00 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 877-888-4605 or 416-695-5261. The archived teleconference may be accessed by dialing 877-605-9370 or 416-695-6050 with access code 8907 through August 12, 2003. Alternatively, the conference call can be accessed by webcast at www.brookfieldproperties.com. 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 operating results for the second quarter ended June 30, 2003.
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Results of Operations For the 3 Months For the 6 Months
Ended June 30 Ended June 30
Unaudited -----------------------------------------
(US$millions, except per
share information) Increase 2003 2002 Increase 2003 2002
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Funds from operations prior to
lease termination income
and gains 10% $90 $82 11% $176 $159
FFO per share prior to lease
termination income and gains 13% $0.53 $0.47 13% $1.04 $0.92
Net income prior to lease
termination income and gains 4% $53 $51 8% $103 $95
Net income per share prior to
lease termination income
and gains 7% $0.30 $0.28 11% $0.59 $0.53
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FINANCIAL HIGHLIGHTS Funds 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 , prior to lease termination income and gains, for the three months ended June 30, 2003 increased to $90 million or $0.53 per share, compared with $82 million or $0.47 per share for the same period in 2002. Funds from continuing operations, prior to lease termination income and gains, for the six months ended June 30, 2003, increased to $176 million or $1.04 per share, compared with $159 million or $0.92 per share for the same period in 2002. Net income from continuing operations, prior to lease termination income and gains, for the six months ended June 30, 2003 increased to $103 million or $0.59 per share, compared with $95 million or $0.53 per share for the same period in 2002. Total net income for the six months ended June 30, 2002, when the impact 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. and lease termination income and gains are included, was $140 million or $0.80 per share. "The strength of our performance during the first six months of 2003 reflects our long-term lease stream, minimal lease maturities in the near-term, and high-quality tenant base. When combined with our strong balance sheet and significant financial flexibility, this lease profile will continue to translate into growth in cashflows and net asset values," 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. The Board of Directors of Brookfield declared an increase in the quarterly common share dividend to $0.15 per share, payable September 30, 2003 to shareholders of record at the close of business on September 1, 2003. This represents an increase of 50% over the previous quarterly dividend of $0.10 per common share. 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. MAJOR INITIATIVES IN THE SECOND QUARTER OF 2003 -- Nearing completion of 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 with an anticipated delivery date in the fall of 2003. The curtain wall is erected and lobby construction is nearly complete. Testing and commissioning of the mechanical, electrical and plumbing systems are 80% complete. -- Completed $110 million preferred share issue. Brookfield issued 4.4 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. Preference Shares, Series G at a price of $25.00 per share yielding 5.25% per annum Per annum Yearly. . The Series G Preference Shares commenced trading on the Toronto Stock Exchange on June 12, 2003 under the symbol BPO.PR.U. -- Acquired 2.5 million common shares of the company at an average price of $21.19 per share during the second quarter. This brings the total number of shares repurchased year-to-date to 4.4 million at an average price of $19.98. The Board of Directors also approved the application to renew the corporation's normal course issuer bid, which expires in September 2003. -- Purchased 574,900 additional voting common shares of BPO Properties in a private transaction, increasing Brookfield's equity interest in BPO Properties from 87% to 89%. -- Announced several senior management changes including the promotion of Dennis Friedrich to President of U.S. Commercial Operations and the hiring of David Sternberg as Senior Vice President responsible for running the Midwest and Mountain regions in the U.S. In Canada, Steve Douglas has been promoted to President of Canadian Commercial Operations and will also remain as Chief Financial Officer. Tom Farley has been promoted to Executive Vice President and Chief Operating Officer responsible for Canadian Operations. In addition, at the company's headquarters 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 , 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, has been named Senior Vice President, Finance, responsible for managing the debt profile of the company and directing the company's strategic initiatives. Craig Laurie has been appointed Senior Vice President, Finance, responsible for corporate finance, financial reporting, tax and treasury for Brookfield and its subsidiaries. -- Hired Urban Retail Properties as the new retail leasing and marketing consultant for Gaviidae Common ''This article or section is being rewritten at Gaviidae Common is an upscale shopping mall located in downtown Minneapolis, Minnesota, off of the Nicollet Mall. It is anchored by Neiman Marcus on one end and a Saks Off Fifth. and Minneapolis City Center, Brookfield's two urban malls in downtown Minneapolis, and for Chicago Place Chicago Place is a mixed-use high-rise on the 700 block of North Michigan Avenue (between Huron and Superior) in Chicago along the Magnificent Mile. The base is an enclosed eight-story shopping mall anchored by Saks Fifth Avenue and featuring 45 shops and restaurants; above that is , Brookfield's vertical mall on Michigan Avenue in downtown Chicago. OPERATING HIGHLIGHTS During the second quarter of 2003, Brookfield: -- 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. . Net operating income from commercial property operations before lease termination and other gains increased to $152 million, compared with $147 million in 2002. -- Leased nearly 800,000 square feet of space, including: Minneapolis: Over 370,000 square feet of renewals including ten-year leases with RBC RBC red blood cell. RBC or rbc abbr. red blood cell RBC, n See red blood cell count. RBC red blood cells; red blood (cell) count (see blood count). Dain Rauscher for 250,000 square feet and with Martin Williams Martin T. Williams (1924–1992) was born in Richmond, Virginia. He was a critic, specializing in jazz and American popular culture. He wrote for major jazz magazines, notably Down Beat, cofounded The Jazz Review for 77,000 square feet, both in Dain Rauscher Plaza; and at 33 South Sixth Street, a 24,000 square foot 13-year lease with Bassford Remele. Denver: Over 140,000 square feet including a renewal with Gary-Williams Energy for 38,000 square feet at Republic Plaza Republic Plaza can refer to
Toronto: Over 120,000 square feet including 41,000 square feet with Ace INA Ina (ē`nä), city (1990 pop. 60,062), Nagano prefecture, central Honshu, Japan, on the Tenryu River. It is an agricultural and industrial center with a famous agricultural school. Insurance at Exchange Tower, 24,000 square feet with Western Town College at Atrium on Bay The Atrium on Bay is a retail and office complex on the former site of the Ford Hotel on Dundas Street West, extending from Yonge Street to Bay Street. The 14-floor building was built in 1981 with two floors of retail stores. and 17,000 square feet with A.D. Friedberg Inc. at Bay Wellington Tower. New York: Over 80,000 square feet including a 60,000 square foot 20-year lease with American Express American Express (NYSE: AXP), sometimes known as "AmEx" or "Amex", is a diversified global financial services company, headquartered in New York City. The company is best known for its credit card, charge card and traveler's cheque businesses. at Three World Financial Center and a 17,000 square foot renewal with Skandinaviska Enskilda Banke Corporation at 245 Park Avenue. Calgary: Over 60,000 square feet including 13,000 square feet with AON Consulting Inc. at Gulf Canada Square
Canada Square is a public square at Canary Wharf, on the Isle of Dogs in London's Docklands. . Boston: A new lease of 21,000 square feet with Parthenon Capital at 75 State Street. This brings Brookfield's year-to-date leasing total to 1.5 million square feet. -- Residential land development operations contributed $14 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 optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that the economy will continue its slow rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective , which contributed to the increase in lease activity we witnessed during the first half of the year. We are confident in our ability to deliver a 15% increase 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. per share as we execute our strategy of owning, developing and managing premier office properties in select, supply-constrained, high-growth office markets. Through disciplined asset and capital management, we will continue to increase our return on capital, maintain growth in net asset value, and enhance value for shareholders," 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 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. 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 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 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 BALANCE SHEET
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Pro-
Forma(a)
Unaudited Jun. 30 Dec. 31 Dec. 31
(US Millions) 2003 2002 2002
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Assets
Commercial properties $5,849 $5,661 $5,661
Development properties 1,089 944 944
Receivables and other 704 769 769
Cash and cash equivalents 95 76 76
Assets of Brookfield Homes Corporation - - 879
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$7,737 $7,450 $8,329
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Liabilities
Commercial property debt $4,106 $4,038 $4,038
Commercial development property debt 622 550 550
Accounts payable and other liabilities 457 429 429
Liabilities of Brookfield Homes Corporation - - 556
Shareholders' interests
Interests of others in properties 79 84 84
Preferred shares - subsidiaries and corporate 678 579 579
Common shares 1,795 1,770 2,093
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$7,737 $7,450 $8,329
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(a)Excludes Brookfield Homes Corporation which was spun-off on
January 6, 2003.
CONSOLIDATED STATEMENT OF INCOME
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Three months Six months
ended ended
Unaudited June 30 June 30
(US Millions, except per share amounts) 2003 2002 2003 2002
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Total Revenue $301 $322 $596 $667
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Net Operating Income
Commercial property operations
Operating income from current properties $152 $147 $302 $290
Operating income from properties sold - 5 - 12
Lease termination income and gains - - - 40
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Total commercial property operations 152 152 302 342
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Development and residential income 7 7 14 13
Interest and other 14 12 29 22
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173 171 345 377
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Expenses
Interest 67 72 137 145
Administrative and development 11 12 22 23
Interests of others in properties 5 5 10 15
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Income before non-cash items 90 82 176 194
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Depreciation and amortization 20 19 38 38
Taxes and other non-cash items 17 12 35 33
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Net income from continuing operations 53 51 103 123
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Income from discontinued operations - 9 - 17
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Net income $53 $60 $103 $140
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Funds From Operations Per Share - Diluted
Prior to lease termination income and gains $0.53 $0.47 $1.04 $0.92
Lease termination income and gains - - - 0.21
Discontinued operations - 0.10 - 0.18
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$0.53 $0.57 $1.04 $1.31
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Net Income Per Share - Diluted
Prior to lease termination income and gains $0.30 $0.28 $0.59 $0.53
Lease termination income and gains - - - 0.17
Discontinued operations - 0.05 - 0.10
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$0.30 $0.33 $0.59 $0.80
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