Brookfield Canada Office Properties Reports Fourth Quarter and Full-Year 2012 Results

Brookfield Canada Office Properties Reports Fourth Quarter and Full-Year 2012 
Results 
TORONTO -- (Marketwire) -- 01/28/13 --  Brookfield Canada Office
Properties (TSX: BOX.UN) (NYSE: BOXC), a Canadian REIT (Real Estate
Investment Trust), today announced that net income for the year ended
December 31, 2012 was $527.5 million or $5.66 per unit, compared to
$355.4 million or $3.81 per unit in 2011. Net income for the three
months ended December 31, 2012 was $165.6 million or $1.78 per unit,
compared to $216.9 million or $2.33 per unit during the same period
in 2011. Included in net income for the year ended December 31, 2012
was a fair value gain of $388.5 million, compared to $229.3 million
in 2011. IFRS value increased to $32.57 per unit at the end of 2012
from $28.01 per unit at the end of 2011.  
Funds from operations ("FFO") for the year ended December 31, 2012,
was $139.0 million or $1.49 per unit, compared with $127.0 million or
$1.36 per unit in 2011. FFO for the three months ended December 31,
2012, was $35.9 million or $0.39 per unit, compared with $33.1
million or $0.36 per unit during the same period in 2011. Adjusted
funds from operations ("AFFO") was $107.4 million or $1.15 per unit
for the year ended December 31, 2012, compared to $95.4 million or
$1.02 per unit in 2011. AFFO was $28.0 million or $0.30 per unit for
the three months ended December 31, 2012, compared to $25.5 million
or $0.27 per unit during the same period in 2011. 
Commercial property net operating income for the year ended December
31, 2012 was $269.2 million, compared with $234.6 million in 2011.
Commercial property net operating income for the three months ended
December 31, 2012 was $68.5 million, compared with $62.3 million
during the same period in 2011. The Trust achieved same-store net
operating income of $240.8 million in 2012, an increase of $11.0
million over 2011. Same-store net operating income was $61.4 million
for the three months ended December 31, 2012, an increase of $2.9
million over the same period in 2011. 
HIGHLIGHTS OF THE FOURTH QUARTER 
Continuing its pro-active leasing strategy, Brookfield Canada Office
Properties leased 331,000 square feet of space during the fourth
quarter of 2012. The significant leasing efforts during the quarter
brought the Trust's full-year leasing total to 1.34 million square
feet. 
The Trust's occupancy rate finished the year at 96.9%, down 20 basis
points from the prior quarter, but up 70 basis points from year-end
2011. This rate compares favourably with the Canadian national
average of 92.8%.  
Leasing highlights include: 
Toronto - 158,000 square feet  


 
--  A 10-year, 27,000-square-foot renewal with Information and Privacy
    Commission at Hudson's Bay Centre
--  A five-year, 18,000-square-foot renewal with Toronto Convention &
    Visitors at Queen's Quay Terminal

  
Calgary - 157,000 square feet 


 
--  A six-year, 95,000-square-foot renewal with PwC Management Services at
    Suncor Energy Centre. The lease was extended for another four years
    subsequent to year-end.
--  A 14-year, 43,000-square-foot new lease with Deloitte Management at
    Bankers Court
--  A five-year, 12,000-square-foot new lease with Phillips 66 Canada LLC
    at Bankers Hall

  
Other - 17,000 square feet 
Refinanced debt at HSBC Building, Toronto for $45 million. After
repayment of the previous mortgage, the Trust generated net proceeds
of $24 million. The new financing has a ten-year term with a fixed
interest rate of 4.056% per annum. 
Early refinanced debt on Bay Wellington Tower, Toronto for $525
million, subsequent to year-end. After repayment of the previous
mortgage, the Trust generated net proceeds of $213 million of which a
portion of the proceeds was used to fully repay the Trust's corporate
revolver. The new financing has a seven-year term with a fixed
interest rate of 3.244% per annum. 
Celebrated the completion of the three-year rejuvenation program at
First Canadian Place, Toronto, Canada's tallest building. Property
improvements include the total recladding of the iconic 72-storey
tower's exterior facade, a refurbished main entrance, retail
concourse, office lobbies, and common areas. Sustainability and
environmental upgrades in association with the rejuvenation effort
led to the building being awarded LEED (Leadership in Energy &
Environmental Design) - Gold certification for Existing Buildings
from the Canadian Green Building Council.  
Achieved LEED Gold certification at Suncor Energy Centre and Bankers
Hall in Calgary. These sustainability accomplishments reaffirm the
Trust's commitment to owning environmentally conscious real estate
and lowering the portfolio's carbon footprint as 72% of our portfolio
is LEED Gold-certified.  
OUTLOOK
 "Brookfield Canada Office
Properties made great strides over the course of 2012, increasing our
portfolio-wide occupancy, refinancing debt at low interest rates,
integrating our newly acquired properties in Toronto and Ottawa, and
increasing our annual distribution to unitholders by 8 percent," said
Jan Sucharda, president and chief executive officer. "Our operating
markets remain strong and we will continue to look for opportunities
to grow our business and add value for our unitholders in 2013."  
Net Operating Income, FFO and AFFO 
 This press release and
accompanying financial information make reference to net operating
income, funds from operations ("FFO") and adjusted funds from
operations ("AFFO") on a total and per unit basis. Net operating
income is defined by the Trust as income from commercial property
operations after direct property operating expenses, including
property administration costs have been deducted, but prior to
deducting interest expense, general and administrative expenses and
fair value gains (losses). FFO is defined by the Trust as net income
prior to one-time transaction costs, fair value gains (losses), and
certain other non-cash items if any. AFFO is defined by the Trust as
FFO net of normalized second-generation leasing commissions and
tenant improvements, normalized sustaining capital expenditures and
straight-line rental income. The Trust uses net operating income, FFO
and AFFO to assess its operating results. Net operating income is
important in assessing operating performance and FFO is a widely used
measure to analyze real estate. AFFO is typically a measure used to
asses an entity's ability to pay distributions. The components of net
operating income, FFO and AFFO are outlined in the financial
information accompanying this press release. Net operating income,
FFO and AFFO do not have any standard meaning prescribed by IFRS and
therefore may not be comparable to similar measures presented by
other companies. 
Monthly Distribution Declaration 
 The Board of Trustees of
Brookfield Canada Office Properties announced a distribution of
$0.0975 per Trust unit payable on March 15, 2013 to holders of Trust
Units of record at the close of business on February 28, 2013.
Unitholders resident in Canada will receive payment in Canadian
dollars and unitholders resident in the United States will receive
their distributions in U.S. dollars at the exchange rate on the
record date, unless they elect otherwise.  
Forward-Looking Statements
 This press release contains
"forward-looking information" within the meaning of Canadian
provincial securities laws and "forward-looking statements" within
the meaning of Section 27A of the U.S. Securities Act of 1933, as
amended, Section 21E of the U.S. Securities Excha
nge Act of 1934, as
amended, "safe harbor" provisions of the United States Private
Securities Litigation Reform Act of 1995 and in any applicable
Canadian securities regulations. Forward-looking statements include
statements that are predictive in nature, depend upon or refer to
future events or conditions, include statements regarding the
operations, business, financial condition, expected financial
results, performance, prospects, opportunities, priorities, targets,
goals, ongoing objectives, strategies and outlook of the Trust and
its subsidiaries, as well as the outlook for the Canadian economy for
the current fiscal year and subsequent periods, and include words
such as "expects", "anticipates", "plans", "believes", "estimates",
"seeks", "intends", "targets", "projects", "forecasts" or negative
versions thereof and other similar expressions, or future or
conditional verbs such as "may", "will", "should", "would" and
"could". 
Although the Trust believes that the anticipated future results,
performance or achievements expressed or implied by the
forward-looking statements and information are based upon reasonable
assumptions and expectations, the reader should not place undue
reliance on forward-looking statements and information because they
involve known and unknown risks, uncertainties and other factors,
many of which are beyond the control of the Trust, which may cause
the actual results, performance or achievements of the Trust to
differ materially from anticipated future results, performance or
achievement expressed or implied by such forward-looking statements
and information.  
Factors that could cause actual results to differ materially from
those contemplated or implied by forward-looking statements include,
but are not limited to: risks incidental to the ownership and
operation of real estate properties including local real estate
conditions, the ability to enter into new leases or renew leases on
favorable terms, dependence on tenants' financial condition,
uncertainties of real estate development, acquisition and disposition
activity; the impact or unanticipated impact of general economic,
political and market factors in Canada; the behavior of financial
markets, including fluctuations in interest rates; equity and capital
markets and the availability of equity and debt financing and
refinancing within these markets; the ability to complete and
effectively integrate acquisitions into existing operations and the
ability to attain expected benefits therefrom; changes in accounting
policies and methods used to report financial condition (including
uncertainties associated with critical accounting assumptions and
estimates); the effect of applying future accounting changes;
business competition; operational and reputational risks; changes in
government regulation and legislation; changes in tax laws,
catastrophic events, such as earthquakes and hurricanes; the possible
impact of international conflicts and other developments including
terrorist acts; and other risks and factors detailed from time to
time in our documents filed with the securities regulators in Canada
and the United States. 
Caution should be taken that the foregoing list of important factors
that may affect future results is not exhaustive. When relying on the
Trust's forward-looking statements, investors and others should
carefully consider the foregoing factors and other uncertainties and
potential events. Except as required by law, the Trust undertakes no
obligation to publicly update or revise any forward-looking
statements or information, whether written or oral, that may be as a
result of new information, future events or otherwise. 
Supplemental Information
 Investors, analysts and other interested
parties can access the Trust's Supplemental Information Package at
www.brookfieldcanadareit.com under the Investor Relations/Financial
Reports section. This additional financial information should be read
in conjunction with this press release.  
About Brookfield Canada Office Properties
 Brookfield Canada Office
Properties is Canada's preeminent Real Estate Investment Trust
(REIT). Its portfolio is comprised of interests in 28 premier office
properties totaling 20.7 million square feet in the downtown cores of
Toronto, Calgary, Ottawa and Vancouver. Landmark assets include
Brookfield Place and First Canadian Place in Toronto and Bankers Hall
in Calgary. For more information, visit www.brookfieldcanadareit.com. 
All dollar references are in Canadian dollars unless noted otherwise. 


 
                                                                            
CONSOLIDATED BALANCE SHEETS                                                 
                                                                            
                                         ----------------- -----------------
(Cdn Millions)                           December 31, 2012 December 31, 2011
                                         ----------------- -----------------
                                                                            
Assets                                                                      
Investment properties                    $         5,090.2 $         4,637.9
Tenant and other receivables                          25.4              17.5
Other assets                                           7.0               7.2
Cash and cash equivalents                             41.0              35.5
                                         ----------------- -----------------
                                         $         5,163.6 $         4,698.1
                                         ----------------- -----------------
                                                                            
Liabilities                                                                 
Commercial property and corporate debt   $         2,013.0 $         1,980.3
Accounts payable and other liabilities               115.0             106.9
                                                                            
Equity                                                                      
Unitholders' equity                                  838.1             718.8
Non-controlling interest(1)                        2,197.5           1,892.1
                                         ----------------- -----------------
                                         $         5,163.6 $         4,698.1
                                         ----------------- -----------------
(1)Non-controlling interest represents Class B LP units that are            
economically equivalent to Trust units and are required to be presented     
separately under IFRS.                                                      
                                                                            
                                                                            
CONSOLIDATED STATEMENTS OF INCOME                                           
                                                                            
                                            Three months                    
(Cdn Millions, except per unit amounts)        ended           Year ended   
                                         ----------------- -----------------
                                         12/31/12 12/31/11 12/31/12 12/31/11
                                         -------- -------- -------- --------
Commercial property revenue              $  137.8 $  119.4 $  515.1 $  445.4
Direct commercial property expense           69.3     57.1    245.9    210.8
Investment and other income                     -      0.7        -      1.3
Interest expense                             27.2     24.7    109.3     91.9
General and administrative expense            5.4      5.2     20.9     17.0
Transaction costs                               -      0.9        -      0.9
                                         -------- -------- -------- --------
Income before fair value gains               35.9     32.2    139.0    126.1
Fair value gains                            129.7    184.7    388.5    229.3
                                         -------- -------- -------- --------
Net income and comprehensive income      $  165.6 $  216.9 $  527.5 $  355.4
                                         -------- -------- -------- --------
                                                                            
Net income and comprehensive income                                         
 attributable to:                                                           
Unitholders                              $   46.4 $   60.7 $  147.7 $   99.5
Non-controlling interest                    119.2    156.2    379.8    255.9
                                         -------- -------- -------- --------
                                         $  165.6 $  216.9 $  527.5 $  355.4
                                         -------- -------- -------- --------
Weighted average Trust units outstanding     26.1     26.1     26.1     26.1
                                         -------- -------- -------- --------
Net income per Trust unit                $   1.78 $   2.33 $   5.66 $   3.81
                                         -------- -------- -------- --------
                                                                            
                                                                            
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS                       
                                                                            
(Cdn Millions, except per Unit                                              
 amounts)                            Three months ended      Year ended     
                                     ------------------  ------------------ 
                                     12/31/12  12/31/11  12/31/12  12/31/11 
                                     --------  --------  --------  -------- 
Net income                           $  165.6  $  216.9  $  527.5  $  355.4 
Add (deduct):                                                               
Fair value gains                       (129.7)   (184.7)   (388.5)   (229.3)
Transaction costs                           -       0.9         -       0.9 
                                     --------  --------  --------  -------- 
Funds from operations                $   35.9  $   33.1  $  139.0  $  127.0 
                                     --------  --------  --------  -------- 
Funds from operations - unitholders      10.1       9.3      38.9      35.6 
Funds from operations - non-                                                
 controlling interest                    25.8      23.8     100.1      91.4 
                                     --------  --------  --------  -------- 
                                     $   35.9  $   33.1  $  139.0  $  127.0 
                                     --------  --------  --------  -------- 
Weighted average Trust units                                                
 outstanding                             26.1      26.1      26.1      26.1 
Funds from operations per Trust unit $   0.39  $   0.36  $   1.49  $   1.36 
                                     --------  --------  --------  -------- 
                                                                            
                                                                            
RECONCILIATION OF FUNDS FROM OPERATIONS TO ADJUSTED FUNDS FROM OPERATIONS   
                                                                            
(Cdn Millions, except per unit                                              
 amounts)                          Three months ended          Year ended   
                                   ------------------  -------------------- 
                                   12/31/12  12/31/11  12/31/12   12/31/11  
                                   --------  --------  --------  ---------- 
Funds from operations              $   35.9  $   33.1  $  139.0  $    127.0 
Add (deduct):                                                               
Straight-line rental income            (2.0)     (2.9)     (8.0)      (12.8)
Normalized 2nd generation leasing                                           
 commissions and tenant                                                     
 improvements(1)                       (4.5)     (3.8)    (18.0)      (15.2)
Normalized sustaining capital                                               
 expenditures(1)                       (1.4)     (0.9)     (5.6)       (3.6)
                                   --------  --------  --------  ---------- 
Adjusted funds from operations     $   28.0  $   25.5  $  107.4  $     95.4 
                                   --------  --------  --------  ---------- 
Adjusted funds from operations -                                            
 unitholders                            7.8       7.1      30.1        26.7 
Adjusted funds from operations -                                            
 non-controlling interest              20.2      18.4      77.3        68.7 
                                   --------  --------  --------  ---------- 
                                   $   28.0  $   25.5  $  107.4  $     95.4 
                                   --------  --------  --------  ---------- 
Weighted average Trust units                                                
 outstanding                           26.1      26.1      26.1        26.1 
Adjusted funds from operations per                                          
 Trust unit                        $   0.30  $   0.27  $   1.15  $     1.02 
                                   --------  --------  --------  ---------- 
                                                                            
(1)As the components used in calculating AFFO vary quarter over quarter, a  
normalized level of activity is estimated based on historical spend levels  
as well as anticipated spend levels over the next few years. Sustaining     
capital expenditures relate to capital items that are required to maintain  
the properties in their current operating state and exclude projects that   
are considered to add productive capacity.                                  

  
Contact: 
Matthew Cherry
Director, Investor Relations and Communications
Tel: 416.359.8593
Email: matthew.cherry@brookfield.com