Brookfield Residential Reports 2012 Year End Results

Brookfield Residential Reports 2012 Year End Results 
CALGARY, ALBERTA -- (Marketwire) -- 02/12/13 --  
Investors, analysts and other interested parties can access
Brookfield Residential's 2012 Year End Results, Letter to
Shareholders and Corporate Profile on the website at
www.brookfieldrp.com. 
The 2012 Fourth Quarter Results conference call can be accessed via
webcast on Wednesday, February 13, 2013 at 11 a.m. (EST) at
www.brookfieldrp.com or via teleconference at 1-800-319-4610 toll
free in North America or for overseas calls, 1-604-638-5340. Please
dial in approximately ten minutes prior to the start time and use
passcode 1231#. The teleconference recorded rebroadcast can be
accessed until March 13, 2013 by dialing 1-800-319-6413 or
604-638-9010 using passcode 1231#. 
Brookfield Residential Properties Inc. (TSX:BRP)(NYSE:BRP)
("Brookfield Residential") today announced financial results based on
U.S. Generally Accepted Accounting Principles (U.S. GAAP) for the
three and twelve months ended December 31, 2012. 
Fourth Quarter Highlights 
"We are pleased to report that Brookfield Residential delivered
strong performance in 2012. Income before income taxes increased to
$129 million compared to recurring income before income taxes of $81
million in 2011. Our net income also improved markedly, increasing to
$93 million, or $0.91 per share, from net income of $7 million, or
$0.07 per share, in 2011," commented Alan Norris, President and CEO
of Brookfield Residential. "Our fourth quarter is typically our most
profitable and this held true in 2012. As a result, we exceeded the
guidance targets we set at the end of the third quarter for annual
pre-tax income by approximately $9 million." 


 
                                             Three Months     Twelve Months 
                                                    Ended             Ended 
Results of Operations                             Dec. 31           Dec. 31 
                                        ------------------------------------
(US$ millions, except per share amounts)    2012     2011     2012     2011 
----------------------------------------------------------------------------
Total revenue                            $   715  $   365  $ 1,340  $ 1,008 
Income before income taxes         
           65       49      129      130 
Income tax expense                            (9)     (24)     (36)    (125)
Net income attributable to Brookfield                                       
 Residential                                  56       26       93        7 
Basic income per share                   $  0.52  $  0.25  $  0.92  $  0.07 
Diluted income per share                 $  0.52  $  0.25  $  0.91  $  0.07 
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Total assets                                               $ 2,815  $ 2,579 
Total liabilities                                          $ 1,475  $ 1,571 
----------------------------------------------------------------------------

 
Net income for the three months ended December 31, 2012 totalled $56
million or $0.52 per share, compared to $26 million or $0.25 per
share for the three months ended December 31, 2011. For the twelve
months ended December 31, 2012, net income increased significantly to
$93 million or $0.91 per share from $7 million or $0.07 per share for
the twelve months ended December 31, 2011. This increase was the
result of improved operating results in Canada and the U.S. and the
inclusion in the 2011 results of a one-time valuation allowance taken
against the Company's U.S. deferred tax assets on the completion of
the merger of Brookfield Office Properties' residential division and
Brookfield Homes Corporation on March 31, 2011. 
The following table breaks out normalized and non-recurring items as
a result of the merger that impacted revenue and income before income
taxes. 2011 included $49 million of income before income taxes from a
non-recurring change in business practice and the first quarter of
2012 included $9 million of interest on the transaction debt that was
not included in the comparable period in 2011. Taking these items
into account, income before income taxes for the three and twelve
months ended December 31, 2012, improved $8 million and $57 million
on a comparable basis over the same periods in 2011. 


 
                                               Three Months   Twelve Months 
                                                      Ended           Ended 
                                                    Dec. 31         Dec. 31 
                                           ---------------------------------
(US$ millions)                                 2012    2011    2012    2011 
----------------------------------------------------------------------------
Income before income taxes                  $    65 $    49 $   129 $   130 
Non-recurring land income                         -       8       -     (49)
Transaction debt interest expense                 -       -       9       - 
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Comparable income before income taxes       $    65 $    57 $   138 $    81 
----------------------------------------------------------------------------

 
"Our Canadian operations in both Alberta and Ontario continued to
perform well throughout 2012," commented Mr. Norris. "We have also
seen great improvement in the U.S. housing market over the last year.
In general, while each regional market is at a slightly different
stage of recovery, supply is tightening, demand is increasing and,
hence, house prices are rising." 
Fourth Quarter Financial Highlights 


 
                                    Three Months Ended   Twelve Months Ended
                                               Dec. 31                Dec.31
                                --------------------------------------------
(US$ millions, except per unit                                              
 activity and avg. selling                                                  
 price)                                2012       2011       2012       2011
----------------------------------------------------------------------------
Land revenue - normalized        $      407 $      130 $      622 $      335
Land revenue - non-recurring              -         36          -        189
Lot closings - normalized                                                   
 (single family lots)                 1,019        733      2,142      1,869
Lot closings - non-recurring                                                
 (single family lots)                     -        201          -      1,043
Lot closings - for                                                          
 unconsolidated entities (single                                            
 family lots)                           140          -        140        179
Avg lot selling price -                                                     
 normalized (single family lots) $  159,000 $  139,000 $  155,000 $  160,000
Avg lot selling price - non-                                                
 recurring (single family lots)           - $  165,000          - $  166,000
Avg lot selling price - for                                                 
 unconsolidated entities (single                                            
 family lots)                    $  131,000          - $  131,000 $   63,000
Acre closings - normalized                                                  
 (multi, industrial, commercial                                             
 parcels)                                79         26        104         34
Acre closings - non-recurring                                               
 (multi, industrial, commercial                                             
 parcels)                                 -          3          -         19
Avg per acre selling price -                                                
 normalized (multi, industrial,                                             
 commercial parcels)             $3,110,000 $1,037,000 $2,619,000 $1,010,000
Avg per acre selling price -                                                
 non-recurring (multi,                                                      
 industrial, commercial parcels)          - $1,089,000          - $  848,000
                                                                            
Housing revenue                  $      308 $      199 $      718 $      484
Home closings for Brookfield                                                
 Residential (units)                    725        528      1,808      1,295
Home closings for unconsolidated                                            
 entities (units)                        30         21         74         35
Avg home selling price           $  425,000 $  378,000 $  397,000 $  374,000
Net new orders for Brookfield                                               
 Residential (units)                    447        358      1,980      1,584
Net new orders for                                                          
 unconsolidated entities (units)         19         12         77         51
Backlog for Brookfield                                                      
 Residential (units at end of                                               
 period)                                817        645        817        645
Backlog for unconsolidated                                                  
 entities (units at end of                                                  
 period)                                 17         14         17         14
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Three Months Ended December 31, 2012 
For the three months ended December 31, 2012, land revenue totalled
$407 million, compared to $166 million during the same period in
2011. Included in 2012 land revenue was approximately $264 million
from the sale of three apartment sites totalling approximately 22
acres and 195 for-sale residential lots at the recently acquired
Playa Vista community. Approximately $36 million of the land revenue
from 2011 was due to the non-recurring change in business practice
for lot sales in Alberta. Taking both of these items into account,
land revenue increased by $13 million over the same period of 2011
and was driven by increased lot sales in the U.S. as our markets
improved. 
For the three months ended December 31, 2012, housing revenue
increased to $308 million from $199 million during the same period of
2011. This reflects a 37% increase in home closings and a 12%
increase in our average home selling price. Sales activity continued
to be strong in the fourth quarter with a 25% year-over-year increase
in overall net new home orders. 
Twelve Months Ended December 31, 2012 
For the twelve months ended December 31, 2012, land revenue totalled
$622 million, compared to $524 million during the same period in
2011. Approximately $189 million of the land revenue from 2011 was
due to the change in business practice referred to above, while, $264
million of the 2012 revenue was from the sales at Playa Vista. Taking
this into account land revenue for the twelve months ended December
31, 2012 increased by $23 million or 7% over the same period of 2011,
driven by the sale of multi-family and commercial parcels in Canada
and higher lot closings in both Canada and the U.S. 
For the twelve months ended December 31, 2012, housing revenue
increased by $234 million from the same period in 2011 to $718
million. This improvement reflects a 40% increase in home closings
and a 6% increase in our average home selling price compared to the
same period in 2011. At December 31, 2012, the backlog of units
increased by approximately 27% to 817 homes from 645 homes at
December 31, 2011, reflecting strong sales demand in all of our
markets. 
Key Initiatives  
During the fourth quarter, the Company completed several key
strategic initiatives. In December, building on its relationship with
California State Teachers' Retirement System (CalSTRS) in Southern
California, Brookfield Residential entered into a joint venture with
CalSTRS to develop a 370-acre parcel of premier land in the highly
desirable northwest quadrant of Calgary with an anticipated
development of 2,500 units. 
Brookfield Residential also acquired the Playa Capital Company LLC
("PCC"), which owned approximately 2,250 units on more than 65 acres
of land at Playa Vista in Los Angeles, California. Playa Vista is in
a highly desirable Los Angeles community located close to the ocean,
job markets, and schools and also hosts an array of amenities.
Brookfield Residential purchased PCC, which comprises the remaining
residential units in Playa Vista, along with other ancillary assets
and the assumption of infrastructure liabilities pursuant to the
Master Plan as well as certain additional ongoing obligations.  
Immediately after the acquisition of PPC, three apartment sites were
sold totalling approximately 22 acres, or 1,500 units, and 195
for-sale residential lots to three different and well respected
builders. Brookfield Residential will be developing the second and
final phase of this live-work-play community that will include
approximately 500 mixed-use residential lots located between the
Westchester Bluffs and Marina del Rey.  
"We were also successful in executing our capital plan in the fourth
quarter. In addition to issuing $233 million of common equity, we
completed an offering of $600 million of eight-year unsecured senior
notes at 6.5%. The equity offering allowed us to reduce our year-end
debt-to-total capitalization ratio to 43%, and to provide a more
robust public float for our shareholders. The new debt replaced our
existing transaction debt, which arose from our 2011 merger, and
enabled us to pay down certain other project debt while lowering our
overall interest cost," stated Mr. Norris. "We ended 2012 with a
market capitalization of over $2 billion and available liquidity of
approximately $650 million, including undrawn credit lines and cash
on hand, providing a very solid capital base from which to move
forward." 
Mr. Norris added that Brookfield Residential's "strategic focus
remains on enhancing our market position and developing land and
building homes in premier regions across North America. We have key
parcels of land in every market we are in and will continue to focus
on strengthening our land and homebuilding operations. In 2013,
homebuilding operations have been added in Denver, Colorado where
we've previously focused on land development and we are also
exploring the opportunity to develop a program that will support the
infrastructure financing of third party residential real estate
development in select markets."  
Outlook 
Our view for the coming year is for a much improved U.S. housing
market and a generally stable Canadian market. As the U.S. housing
market improves and house prices increase, we anticipate that our
land assets will continue to appreciate in value. In many of our
markets, a 10% increase in house prices can translate into a 20% to
30% increase in the underlying finished lot value. This inherent
leverage in our existing lands is what differentiates us from many
others in the residential arena. Our sizable land inventory places us
in the enviable position of not having to replenish lands each year
at ever-increasing prices. Instead, we are able to optimize returns
on our assets by selling finished lots into a supply constrained
environment. 
"We remain excited about the potential for our Company," commented
Mr. Norris. "Given our strong asset base, our solid capital position,
and our industry-leading teams of residential real estate
specialists, we believe we have at hand all of the tools we need to
create tremendous shareholder value as the U.S. markets recover and
the Canadian economy remains stable. We are therefore optimistic that
our 2013 income before income taxes will exceed 2012," stated Mr.
Norris. 
ADDITIONAL INFORMATION 
The attached financial statements are based primarily on information
that has been extracted from our financial statements for the three
and twelve months ended December 31, 2012, which have been prepared
using the standards and interpretations currently issued under U.S.
GAAP.  
The Letter to Shareholders and the Company's Corporate Profile for
the quarter ended December 31, 2012 contain further information on
the Company's strategy, operations, financial results and outlook.
Shareholders are encouraged to read these documents, which are
available on the Company's website at www.brookfieldrp.com. 
Brookfield Residential Properties Inc. is a North American land
developer and homebuilder, active in ten principal markets with over
100,000 lots controlled. We entitle and develop land and build homes
for our own communities, as well as sell lots to third-party
builders. The Company is listed on the New York Stock Exchange and
the Toronto Stock Exchange under the symbol BRP. For more
information, please visit our website at www.brookfieldrp.com. 
Please note that Brookfield Residential's unaudited quarterly reports
and audited annual report are filed on EDGAR and SEDAR and can also
be found in the investor section of our website at
www.brookfieldrp.com. Hard copies of the quarterly and annual reports
can be obtained free of charge upon request.  
For more information, please visit our website at
www.brookfieldrp.com. 
Note: This news release contains "forward-looking statements" within
the meaning of Canadian securities laws and United States federal
securities laws. Certain statements in this news release that are not
historical facts, including information concerning possible or
assumed future results of operations of the company, potential
acquisition opportunities, timing of entitlements and development and
expected number of lots at our northwest Calgary asset, development
of the Playa Vista asset, operations in Denver, Colorado, potential
infrastructure financing programs, guidance for 2013, expected
strength of the Alberta and Ontario housing markets, anticipated
improvements in the U.S. housing markets and impact on land values,
the company's 2013 outlook, and those statements preceded by,
followed by, or that include the words "believe," "projected,"
"planned," "anticipate," "should," "goals," "expected," "potential,"
"estimate," "targeted," "scheduled" or similar expressions,
constitute "forward-looking statements." Undue 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 to differ materially from the anticipated future
results 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, but are
not limited to: changes in general economic, real estate and other
conditions; changes in interest rates; mortgage rate changes;
availability of suitable undeveloped land at acceptable prices;
adverse legislation or regulation; ability to obtain necessary
permits and approvals for the development of our land; availability
of labour or materials or increases in their costs; ability to
develop and market our master-planned communities successfully; laws
and regulations related to property development and to the
environment that could lead to additional costs and delays;
confidence levels of consumers; ability to raise capital on
favourable terms; our debt and leverage; adverse weather conditions
and natural disasters; relations with the residents of our
communities; risks associated with increased insurance costs or
unavailability of adequate coverage and ability to obtain surety
bonds; competitive conditions in the homebuilding industry, including
product and pricing pressures; ability to retain our executive
officers; relationships with our affiliates; any increase in
unemployment or underemployment; decline of the market value of our
land and housing inventories; significant inflation or deflation;
inability to raise capital on favorable terms or at all; failure in
our financial and commercial controls; changes to foreign currency
exchange rates; difficultly enforcing civil liabilities in the United
States against us and our directors and officers; higher cancellation
rates of existing agreements of sale; major health and safety
incident relating to our business; utility and resource shortages or
rate fluctuations; and additional risks and uncertainties referred to
in our filings with the securities regulators in Canada and the
United States, many of which are beyond our control. Except as
required by law, we undertake no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future events or otherwise. However, any further disclosures made on
related subjects in subsequent reports should be consulted. 


 
                                                                            
                   Brookfield Residential Properties Inc.                   
               Condensed Consolidated Statements of Operations              
                                 (Unaudited)                                
                                                                            
                               Three Months Ended       Twelve Months Ended 
                                      December 31               December 31 
                        ----------------------------------------------------
(US$ thousands, except                                                      
 per share amounts)             2012         2011         2012         2011 
----------------------------------------------------------------------------
                                                                            
Revenue                                                                     
Land                     $   406,746  $   165,116  $   621,905  $   524,095 
Housing                      308,303      199,385      718,465      483,990 
----------------------------------------------------------------------------
                             715,049      364,501    1,340,370    1,008,085 
Direct Cost of Sales                                                        
Land                        (345,464)    (106,483)    (449,313)    (326,712)
Housing                     (257,844)    (170,257)    (598,340)    (413,429)
----------------------------------------------------------------------------
                             111,741       87,761      292,717      267,944 
Selling, general and                                                        
 administrative expense      (40,681)     (28,691)    (128,377)    (101,030)
Equity in earnings from                                                     
 unconsolidated entities       6,383          191        9,882        4,119 
Depreciation                    (912)        (810)      (3,386)      (3,544)
Interest expense             (10,405)     (11,625)     (41,406)     (37,077)
Other (expense) / income      (1,007)       2,151         (800)        (252)
----------------------------------------------------------------------------
Income Before Income                                                        
 Taxes                        65,119       48,977      128,630      130,160 
Current income tax                                                          
 expense                     (14,149)      (4,645)     (45,879)     (22,240)
Deferred income tax                                                         
 recovery / (expense)          5,345      (19,305)       9,788     (103,085)
----------------------------------------------------------------------------
Net Income                    56,315       25,027       92,539        4,835 
Net (income) / loss                                                         
 attributable to non-                                                       
 controlling interests                                                      
 and other interests in                                                     
 consolidated                                                               
 subsidiaries                   (414)         777          622        2,453 
----------------------------------------------------------------------------
Net Income Attributable                                                     
 to Brookfield                                                              
 Residential             $    55,901  $    25,804  $    93,161  $     7,288 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Unrealized foreign                                                          
 exchange gain / (loss)                                                     
 on:                                                                        
Translation of the net                                                      
 investment in Canadian                                                     
 subsidiaries                 (4,200)      15,705       20,369      (13,648)
Translation of the                                                          
 Canadian dollar                                                            
 denominated debt                                                           
 designated as a hedge                                                      
 of the net investment                                                      
 in Canadian                                                                
 subsidiaries                      -      (14,230)     (18,240)      24,768 
----------------------------------------------------------------------------
Comprehensive Income                                                        
 Attributable to                                                            
 Brookfield Residential  $    51,701  $    27,279  $    95,290  $    18,408 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Earnings per Common                                                         
Share Attributable to                                                       
Brookfield Residential                                                      
  Basic                  $      0.52  $      0.25  $      0.92  $      0.07 
  Diluted                $      0.52  $      0.25  $      0.91  $      0.07 
                                                                            
Weighted Average Common                                                     
 Shares Outstanding (in                                                     
 thousands)                                                                 
  Basic                      107,160       99,343      101,609       99,949 
  Diluted                    107,759       99,611      102,054      100,217 
                                                                            
----------------------------------------------------------------------------
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                   Brookfield Residential Properties Inc.                   
                    Condensed Consolidated Balance Sheets                   
                                 (Unaudited)                                
                                                                            
                                                          As at             
                                            --------------------------------
(US$ thousands)                                Dec. 31, 2012   Dec. 31, 2011
----------------------------------------------------------------------------
                                                                            
Assets                                                                      
Land and housing inventory                   $     2,250,256 $     2,113,245
Investments in unconsolidated entities               155,352         143,821
Receivables and other assets                         335,611         310,443
Restricted cash                                       13,596           9,128
Cash and cash equivalents                             49,826           2,162
Deferred Income Tax Assets                            10,552               -
----------------------------------------------------------------------------
                                             $     2,815,193 $     2,578,799
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Liabilities and Equity                                                      
Project specific and other financings        $       459,329 $       825,687
Notes Payable                                              -         469,776
Unsecured Senior Notes payable                       590,845                
----------------------------------------------------------------------------
Total financings                                   1,050,174       1,295,463
Accounts payable and other liabilities               425,179         247,420
Deferred income tax liabilities                            -          27,773
----------------------------------------------------------------------------
Total liabilities                                  1,475,353       1,570,656
Other interests in consolidated subsidiaries          32,445          32,434
Total equity                                       1,307,395         975,709
----------------------------------------------------------------------------
                                             $     2,815,193 $     2,578,799
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Contacts:
Investors: Brookfield Residential Properties Inc.
Nicole French
Manager, Investor Relations & Communications
(403) 231-8952
nicole.french@brookfieldrp.com 
Media: Brookfield Residential Properties Inc.
Andrew Willis
SVP, Communications & Media
(416) 369-8236
andrew.willis@brookfield.com
www.brookfieldrp.com
 
 
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