BPO Properties Reports Third Quarter 2007 Results



    TORONTO, November 6 /CNW/ - BPO Properties Ltd. (TSX: BPP) today
announced financial results for the quarter ended September 30, 2007.

    BPO Properties' net income for the three months ended September 30, 2007
was $15.4 million ($0.38 per share) compared to $16.3 million ($0.42 per
share) during the same period in 2006. The decrease is primarily attributable
to $4.0 million of non-recurring transaction costs and a reduction of interest
income due to repayment of loan receivables.

    Funds from operations was $37.4 million ($1.15 per share) for the three
months ended September 30, 2007 compared to $41.2 million ($1.30 per share)
during the same period in 2006. Funds from operations and gains was $43.0
million ($1.35 per share) for the three months ended September 30, 2007
compared to $41.2 million ($1.30 per share) during the same period in 2006.

    Same store commercial property revenue for the three months ended
September 30, 2007 was $81.1 million compared to $80.1 million during the same
period in 2006. Same store commercial property net operating income for the
three months ended September 30, 2007 was $46.1 million compared to $45.5
during the same period in 2006.

    MAJOR TRANSACTIONS

    Advanced construction at Bay Adelaide Centre, Toronto and Bankers Court,
Calgary. These two active developments are on time and on budget. Subsequent
to the quarter ended September 30, 2007, KPMG exercised an expansion option by
taking two additional floors totaling 50,000 square feet at Bay Adelaide
Centre, bringing the tower to 42.5% pre-leased. Bankers Court is 100%
pre-leased.

    Sold 2 St. Clair West and 40 St. Clair West, Toronto, for $21.8 million,
resulting in a gain of $5.6 million for BPO Properties' 25% interest. BPO
Properties acquired the interest in these buildings with the O&Y portfolio in
2005. Since June 2006, BPO Properties has disposed of thirteen non-core
properties totaling 1.9 million square feet acquired with the O&Y portfolio,
generating gains of $27.0 million on a 25% basis.

    Completed a land exchange with the Province of Ontario whereby BPO
Properties received 121 acres in North Pickering for 92 acres in Richmond Hill
that had been frozen by the Province in 2002 as a result of the Oakridges
Moraine Conservation Act. The land in North Pickering is approved for
residential land use and is expected to be built out over the next 12 years.

    Repurchased 20,800 shares of the company at an average price of $68.23
during the quarter.

    OPERATIONS REVIEW

    BPO Properties continued its pro-active leasing strategy in the third
quarter of 2007, capitalizing on positive market conditions to increase
occupancy and rental rates throughout the portfolio. During the quarter, BPO
Properties leased 365,000 square feet of space at an average net rent of $28
per square foot, representing approximately 27% improvement over the average
in-place net rent of $22 per square foot on expiring leases. The BPO
Properties portfolio was 98.3% leased at the end of the third quarter of 2007,
compared to a Canadian national average of 93.6%. Highlights include:

    
    -- 220,000 square feet in Calgary

        -- Five-year lease renewal and expansion with Blake Cassels &
           Gordon at Bankers Hall for 82,000 square feet

        -- New eight-year lease with Tristar Oil & Gas Ltd. at
           Fifth Avenue Place for 68,000 square feet

        -- New ten-year lease with Alberta Energy & Utilities Board at
           Fifth Avenue Place for 45,000 square feet

        -- New twelve-year lease with AJM Petroleum Consultants at Fifth
           Avenue Place for 23,000 square feet

    -- 76,000 square feet in Toronto

        -- Six-year lease renewal and expansion with Middlefield Group
           Limited at First Canadian Place for 16,000 square feet

        -- New seven-year lease with McCague, Peacock, Borlack, McInnis &
           Lloyd LLP at Exchange Tower for 7,000 square feet
    

    In the quarter, BPO Properties wrote down its $4.0 million investment in
the development of a financing vehicle that it had expected to launch in the
quarter to refinance eleven properties. The vehicle, which provided for the
flexibility for substitution rights, modification of mortgage loans and
reduced overall cost of capital, has been delayed as a result of the current
issues in the credit markets. These transaction costs have been excluded from
the calculation of funds from operations.

    OUTLOOK

    "Looking to the near-term, having seen little evidence of fundamentals
changing in any of our markets resulting from the volatility in the financial
markets, we remain confident," said Tom Farley, President & CEO of BPO
Properties Ltd. "We are excited about our prospects for the remainder of the
year as we continue to advance our two developments, Bankers Court in Calgary
and Bay Adelaide Centre in Toronto, and work pro-actively to renew and expand
our tenants."

    Net Operating Income and FFO

    This press release and accompanying financial information make reference
to net operating income and funds from operations ("FFO") on a total and per
share basis. Net operating income is defined as income from property
operations after operating expenses have been deducted, but prior to deducting
financing, administrative and income tax expenses. BPO Properties defines FFO
as net income prior to extraordinary items, one-time transaction costs, income
taxes, non-cash items and depreciation and amortization. The company uses net
operating income and FFO to assess its operating results. Net operating income
is important in assessing operating performance and FFO is a relevant measure
to analyze real estate, as commercial properties generally appreciate rather
than depreciate. The company provides the components of net operating income
and a full reconciliation from net income to FFO with the financial statements
accompanying this press release. The company reconciles FFO to net income as
opposed to cash flow from operating activities as it believes net income is
the most comparable measure. Net operating income and FFO are both non-GAAP
measures which do not have any standard meaning prescribed by GAAP and
therefore may not be comparable to similar measures presented by other
companies.

    Forward-Looking Statements

    This press release, particularly the "Outlook" section, contains
forward-looking statements and information within the meaning of applicable
securities legislation. Although BPO Properties 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 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 and information. Accordingly, the company
cannot give any assurance that its expectations will in fact occur and
cautions that actual results may differ materially from those in the
forward-looking statements. Factors that could cause actual results to differ
materially from those set forth in the forward-looking statements and
information include general economic conditions; local real estate conditions,
including the development of properties in close proximity to the company's
properties; timely leasing of newly-developed properties and re-leasing of
occupied square footage upon expiration; dependence on tenants' financial
condition; the uncertainties of real estate development and acquisition
activity; the ability to effectively integrate acquisitions; interest rates;
availability of equity and debt financing; the impact of newly-adopted
accounting principles on the company's accounting policies and on
period-to-period comparisons of financial results; and other risks and factors
described from time to time in the documents filed by the company with the
securities regulators in Canada, including in the Annual Information Form
under the heading "Business of BPO Properties - Company and Real Estate
Industry Risks," in the company's annual report under the heading
"Management's Discussion and Analysis." The company undertakes no obligation
to publicly update or revise any forward-looking statements or information,
whether as a result of new information, future events or otherwise.

    Dividend Declaration

    The Board of Directors of BPO Properties declared a quarterly common
share dividend of $0.15 per share, payable on December 31, 2007 to
shareholders of record at the close of business on December 1, 2007.

    The Board of Directors also declared dividends on series G, J and M
preferred shares, payable February 14, 2008 to shareholders of record at the
close of business on January 31, 2008, for the period November 14, 2007 to
February 13, 2008. The dividend per preferred share is to be computed in
accordance with the terms of the shares.

    Conference Call

    BPO Properties' third quarter 2007 conference call can be accessed by
teleconference on Tuesday, November 6, 2007 at 4:00 p.m. E.T. at
1-866-315-3366. The call will be archived through December 6, 2007 and can be
accessed by dialing toll free 1-800-558-5253, passcode # 21351085. The
conference call can also be accessed by webcast on the BPO Properties website
at www.bpoproperties.com.

    Supplemental Information

    Investors, analysts and other interested parties can access BPO
Properties' Supplemental Information Package on BPO Properties' website under
the Investor Relations/Financial Reports section.

    BPO Properties Profile

    BPO Properties Ltd., 89% owned by Brookfield Properties Corp., is a
Canadian company that invests in real estate, focusing on the ownership and
value enhancement of premier office properties. The current property portfolio
is comprised of interests in 29 commercial properties totaling 19.5 million
square feet and five development sites totalling 5.6 million square feet.
Landmark properties include First Canadian Place in Toronto and Bankers Hall
in Calgary. BPO Properties' common shares trade on the TSX under the symbol
BPP. For more information, visit www.bpoproperties.com.

    Contact

    Investor relations and media inquiries should be directed to Melissa
Coley, Vice President, Investor Relations and Communications at (416)
359-8593. Inquiries regarding financial results should be directed to Bryan
Davis, Senior Vice President and Chief Financial Officer, at (416) 359-8612.

    CONSOLIDATED BALANCE SHEET

    
    (Millions)                                    September  December 31,
                                                   30, 2007     2006(1)
    --------------------------------------------- ---------- -------------

    Assets
    Commercial properties                           $1,356.3     $1,373.7
    Commercial developments                            405.3        312.8
    Loans receivable                                   135.2        100.2
    Intangible assets                                   43.9         51.8
    Tenant receivables and other assets                 58.6         57.6
    Cash                                                43.8         27.7
    Assets related to discontinued operations           75.0        174.8
    --------------------------------------------- ---------- -------------
                                                    $2,118.1     $2,098.6
    --------------------------------------------- ---------- -------------

    Liabilities and shareholders' equity
    Commercial property debt                          $807.6       $887.2
    Intangible liabilities                              88.7         98.8
    Accounts payable and other liabilities             137.0         67.6
    Future income tax liability                         38.7         10.2
    Liabilities related to discontinued
     operations                                         38.8         95.8
    Shareholders' equity                             1,007.3        939.0
    --------------------------------------------- ---------- -------------
                                                    $2,118.1     $2,098.6
    --------------------------------------------- ---------- -------------
    

    (1) Certain comparative information has been reclassified to conform with
current year presentation.

    CONSOLIDATED STATEMENT OF INCOME

    
                                            Three months    Nine months
                                            ended Sept. 30  ended Sept. 30

    (Millions, except per share amounts)      2007 2006(1)    2007 2006(1)
    -------------------------------------- ------- ------- ------- -------
    Commercial Properties
       Revenue                               $81.1   $80.1  $245.4  $227.5
       Expenses                               35.0    34.6   105.3   100.0
    -------------------------------------- ------- ------- ------- -------
    Net operating income                      46.1    45.5   140.1   127.5
    Loans and investment income                2.3     6.4     7.3    17.1
    -------------------------------------- ------- ------- ------- -------
                                              48.4    51.9   147.4   144.6
    Expenses
    Interest expense                           8.1    10.5    23.8    31.5
    Administrative expenses and large
     corporation tax                           4.6     4.2    15.5    13.6
    Transaction costs                          4.0      --     4.0      --
    -------------------------------------- ------- ------- ------- -------
                                              31.7    37.2   104.1    99.5
    Depreciation and amortization             13.7    14.9    43.0    41.8
    Income taxes                               7.9     7.5    22.5    19.6
    -------------------------------------- ------- ------- ------- -------
    Net income from continuing operations     10.1    14.8    38.6    38.1
    Discontinued operations                    5.3     1.5    57.2    17.3
    -------------------------------------- ------- ------- ------- -------
    Net income                               $15.4   $16.3   $95.8   $55.4
    -------------------------------------- ------- ------- ------- -------

    Net income per common share
    Continuing operations                    $0.19   $0.37   $0.88   $0.92
    Discontinued operations                   0.19    0.05    2.01    0.61
    -------------------------------------- ------- ------- ------- -------
    Total                                    $0.38   $0.42   $2.89   $1.53
    -------------------------------------- ------- ------- ------- -------
    

    (1) Certain comparative information has been reclassified to conform with
current year presentation.

    RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS ("FFO")

    
                                            Three months    Nine months
                                            ended Sept. 30  ended Sept. 30

    (Millions)                                  2007  2006     2007   2006
    -------------------------------------- --------- ----- -------- ------
    Net income                                 $15.4 $16.3    $95.8  $55.4
    Add:
        Depreciation and amortization (i)       14.4  16.5     45.9   48.7
        Income taxes (ii)                        9.2   8.4     35.3   24.4
        Transaction costs                        4.0    --      4.0     --
    -------------------------------------- --------- ----- -------- ------
    FFO and gains                               43.0  41.2    181.0  128.5
    Property disposition gains                 (5.6)    --   (65.1) (15.9)
    -------------------------------------- --------- ----- -------- ------
    FFO prior to property disposition
     gains                                     $37.4 $41.2   $115.9 $112.6
    -------------------------------------- --------- ----- -------- ------
    

    (i) Includes depreciation and amortization from discontinued operations
of $0.7 million and $2.9 million for the three and nine months ended September
30, 2007, respectively (2006 - $1.6 million and $6.8 million, respectively)

    (ii) Includes income taxes from discontinued operations of $1.3 million
and $12.9 million for the three and nine months ended September 30, 2007,
respectively (2006 - $0.9 million and $4.8 million, respectively)

    FFO PER COMMON SHARE

    
                                             Three months     Nine months
                                            ended Sept. 30  ended Sept. 30
    (Millions, except per share
     information)                             2007    2006    2007    2006
    -------------------------------------- ------- ------- ------- -------
    FFO prior to property disposition
     gains                                   $37.4   $41.2  $115.9  $112.6
    Preferred share dividends                (4.7)   (4.2)  (13.5)  (11.7)
    -------------------------------------- ------- ------- ------- -------
    Funds available to common shareholders    32.7    37.0   102.4   100.9
    Weighted average shares outstanding       28.5    28.5    28.5    28.5
    -------------------------------------- ------- ------- ------- -------
    FFO prior to property disposition
     gains per common share                  $1.15   $1.30   $3.60   $3.54
    -------------------------------------- ------- ------- ------- -------
    

    DISCONTINUED OPERATIONS

    
    (Millions)                                September 30,  December 31,
                                                   2007           2006
    ----------------------------------------- -------------- -------------

    Assets related to discontinued operations
    Commercial properties                              $66.6        $159.7
    Intangible assets                                    6.9          11.1
    Tenant receivables and other assets                  1.5           4.0
    ----------------------------------------- -------------- -------------
                                                       $75.0        $174.8
    ----------------------------------------- -------------- -------------

    Liabilities related to discontinued
     operations
    Commercial property debt                           $30.3         $86.6
    Intangible liabilities                               4.5           5.6
    Accounts payable and other liabilities               4.0           3.6
    ----------------------------------------- -------------- -------------
                                                       $38.8         $95.8
    ----------------------------------------- -------------- -------------
    

    INCOME FROM DISCONTINUED OPERATIONS

    
                                             Three months    Nine months
                                              ended Sept.    ended Sept.
                                                   30             30

    (Millions, except per share information)    2007   2006    2007   2006
    ---------------------------------------- ------- ------ ------- ------
    Property disposition gains                  $5.6    $--   $65.1  $15.9
    Revenue from discontinued operations         3.5    9.7    15.5   31.2
    Operating expenses                         (1.3)  (4.6)   (5.6) (13.4)
    ---------------------------------------- ------- ------ ------- ------
    Net operating income and gains
    from discontinued operations                 7.8    5.1    75.0   33.7
    Interest expense                           (0.5)  (1.1)   (2.0)  (4.8)
    ---------------------------------------- ------- ------ ------- ------
    Funds from discontinued operations and
     gains                                       7.3    4.0    73.0   28.9
    Depreciation and amortization              (0.7)  (1.6)   (2.9)  (6.8)
    Income taxes                               (1.3)  (0.9)  (12.9)  (4.8)
    ---------------------------------------- ------- ------ ------- ------
    Net income from discontinued operations     $5.3   $1.5   $57.2  $17.3
    ---------------------------------------- ------- ------ ------- ------

    Net income per share - discontinued
     operations                                $0.19  $0.05   $2.01  $0.61
    ---------------------------------------- ------- ------ ------- ------
    




For further information:

For further information: BPO Properties Ltd. Investor Relations/Media
Inquiries Melissa Coley, 416-359-8593 Vice President, Investor Relations and
Communications or Bryan Davis, 416-359-8612 Senior Vice President and Chief
Financial Officer

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