Brookfield Properties Reports Third Quarter 2007 Results




    All dollar references are in U.S. dollars unless noted otherwise.

    NEW YORK, October 31 /CNW/ - Brookfield Properties Corporation (BPO:
NYSE, TSX) today announced that net income for the nine months ended September
30, 2007 was $135 million or $0.33 per diluted share, compared with $114
million or $0.33 per diluted share during the same period in 2006. Net income
for the three months ended September 30, 2007 totaled $3 million, or nil per
share, compared to $35 million or $0.10 per share during the same period in
2006. The decrease was due in part to a one-time debt break fee of $27 million
(or $0.07 per diluted share) related to the defeasance of debt on One Liberty
Plaza in New York.

    During the third quarter, Brookfield Properties leased 1.4 million square
feet of space, bringing the year-to-date total leasing to 5.0 million square
feet, at an average net rent of $30.62 per square foot, which represents a 33%
improvement versus the average in-place net rent of $23.04 per square foot on
expiring leases. The company's portfolio-wide occupancy rate finished the
quarter at 95.0%.

    FINANCIAL RESULTS

    Funds from operations ("FFO") for the quarter ended September 30, 2007,
was $146 million or $0.36 per share, up from $109 million or $0.31 per share
during the same period in 2006. For the nine months ended September 30, 2007,
funds from operations totaled $442 million or $1.10 per diluted share, up from
$318 million or $0.90 per diluted share during the same period in 2006. Funds
from operations and gains for the nine months ended September 30, 2007 was
$517 million or $1.29 per diluted share.

    Commercial property net operating income for the third quarter of 2007
was $332 million, up from $179 million for the third quarter of 2006. The
increase is primarily due to the contribution from the U.S. Office Fund which
was fully invested in the fourth quarter of 2006. It also reflects same-store
growth of 7% as a result of the continued improvement in occupancy and lease
rates. Commercial property net operating income for the nine months ended
September 30, 2007 was $972 million, up from $524 million for the same period
in 2006.

    Residential development operations contributed $43 million of net
operating income in the third quarter of 2007, up from $37 million in the
third quarter of 2006. Residential development operations contributed $157
million of net operating income in the first nine months of 2007, up from $93
million in the same period of 2006.

    HIGHLIGHTS OF THE THIRD QUARTER

    Advanced construction at Bay-Adelaide Centre, Toronto; Bankers Court,
Calgary; and 77 K Street, Washington, D.C. These three active developments are
on time, on budget and 40% leased in aggregate.

    Sold 2 and 40 St. Clair Ave. West, Toronto, resulting in a gain of
approximately $6 million for Brookfield Properties' 25% interest. Brookfield
Properties acquired its interest in the two buildings totaling 450,000 square
feet with the O&Y portfolio in 2005.

    Refinanced One Liberty Plaza, New York, with an $850 million,
non-recourse 10-year loan. The financing was completed with Goldman Sachs at a
fixed rate of 6.139%, repaying a $397 million loan at a fixed rate of 6.75%.

    Repurchased over two million common shares of the company at an average
price of $23.56 during the quarter, bringing the total number of shares
repurchased in 2007 to approximately 3.1 million at an average price of
$23.97. Since the inception of the company's normal course issuer bid in 1999,
Brookfield Properties has invested $388 million acquiring 34.5 million common
shares at an average price of $11.23.

    OPERATING HIGHLIGHTS

    Brookfield Properties leased 1.4 million square feet of space across the
portfolio during the third quarter of 2007. New leases represent 80% of the
total while renewals represent the remainder. Highlights include:

    Calgary - 220,000 square feet

    --  Five-year renewal with Blake, Cassells and Graydon for 82,000 square
feet at Bankers Hall

    --  Eight-year lease with Tristar Oil & Gas for 68,000 square feet and
10-year lease with Alberta Utilities Board for 45,000 square feet at Fifth
Avenue Place

    Minneapolis - 157,000 square feet

    --  10-year lease with PDI for 74,000 square feet at 33 South Sixth
Street, replacing space recently vacated by Rider Bennett

    Boston - 116,000 square feet

    --  New 14-year lease with Hill Holiday for 103,000 square feet at 53
State Street

    IN MEMORIAM

    Brookfield Properties Corporation pays tribute to Sam Pollock, a
long-time Brookfield director who passed away in August after a remarkable
life as a sports legend. As General Manager of the Montreal Canadiens from
1964-1978, Mr. Pollock led the team to nine Stanley Cup championships. He also
served as Director of the Toronto Blue Jays from 1993-1999 and Chairman from
1997-1999. Mr. Pollock was inducted into the Hockey Hall of Fame in 1978 and
into Canada's Sports Hall of Fame in 1982. He was named a Great Montrealer in
1978, a distinguished Officer of the Order of Canada in 1985 and a Knight of
the National Order of Quebec in 2002. One of our great mentors, Sam was an
inspiration to all of us, and will be deeply missed.

    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," stated Ric Clark, President & CEO of Brookfield
Properties Corporation. "Based on the seasonality of results in our
residential land development division, we expect to have a strong fourth
quarter, meeting our expectations for the year."

    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. Brookfield Properties
defines FFO as net income prior to extraordinary items, one-time transaction
costs, 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
information 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 Brookfield 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; including the
acquisition of Trizec Properties, Inc. and Trizec Canada Inc.; 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 and the United States, including in the Annual
Information Form under the heading "Business of Brookfield Properties -
Company and Real Estate Industry Risks," in the company's annual report under
the heading "Management's Discussion and Analysis," as well as the risks
described in the company's final prospectus dated December 14, 2006, filed
with Canadian securities regulators and forming a part of a registration
statement on Form F-10 filed with the Securities and Exchange Commission under
the heading "Risk Factors." 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 Brookfield Properties declared a quarterly
common share dividend of $0.14 per share payable on December 31, 2007 to
shareholders of record at the close of business on December 3, 2007.
Shareholders resident in the United States will receive payment in U.S.
dollars and shareholders resident in Canada will receive their dividends in
Canadian dollars at the exchange rate on the record date, unless they elect
otherwise. The quarterly dividends payable for the Class AAA Series F, G, H,
I, J and K preferred shares were also declared payable on December 31, 2007 to
shareholders of record at the close of business on December 14, 2007.

    Conference Call

    Analysts, investors and other interested parties are invited to
participate in the company's live conference call reviewing 2007 third quarter
results on Wednesday, October 31, 2007 at 11:00 a.m. Eastern Time. Scheduled
speakers are Ric Clark, President and Chief Executive Officer, and Bryan
Davis, Chief Financial Officer. Management's presentation will be followed by
a question and answer period.

    To participate in the conference call, please dial 800.299.7928, pass
code 82540837, five minutes prior to the scheduled start of the call.

    A replay of this call can be accessed through November 30, 2007 by
dialing 888.286.8010, pass code 95613091. A live web cast of the call will be
available at www.brookfieldproperties.com for 30 days.

    Along with the earnings news release, an updated supplemental information
package will be available on the company's web site,
www.brookfieldproperties.com, before the market open on October 31, 2007.

    Supplemental Information

    Investors, analysts and other interested parties can access Brookfield
Properties' Supplemental Information Package at www.brookfieldproperties.com
under the Investor Relations/Financial Reports section. This additional
financial information should be read in conjunction with this press release.

    Brookfield Properties Profile

    One of North America's largest commercial real estate companies, the
corporation owns, develops and manages premier office properties. The office
properties portfolio is comprised of interests in 110 properties totaling 74
million square feet in the downtown cores of New York, Boston, Washington,
D.C., Los Angeles, Houston, Toronto, Calgary and Ottawa. Landmark assets
include the World Financial Center in Manhattan, Brookfield Place in Toronto,
Bank of America Plaza in Los Angeles and Bankers Hall in Calgary. The
corporation also holds interests in 17 million square feet of high-quality,
centrally-located development and redevelopment properties in its major
markets. The corporation's common shares trade on the NYSE and TSX under the
symbol BPO. For more information, visit www.brookfieldproperties.com.

    
    CONSOLIDATED BALANCE SHEET
    (US Millions)                     September 30, 2007 December 31, 2006
    ----------------------------------------------------------------------

    Assets
    Commercial properties                        $15,450           $15,287
    Commercial development                         1,093               735
    Residential development                        1,130               706
    Receivables and other                          1,023               974
    Intangible assets                                787               853
    Restricted cash and deposits                     417               507
    Cash and cash equivalents                        202               188
    Assets related to discontinued
     operations (i)                                   76                64
    ----------------------------------------------------------------------
                                                 $20,178           $19,314
    ----------------------------------------------------------------------

    Liabilities
    Commercial property debt                     $11,865           $11,185
    Accounts payable and other
     liabilities                                   1,231               923
    Intangible liabilities                           871               919
    Future income tax liability                      559               584
    Liabilities related to
     discontinued operations (ii)                     39                36
    Capital securities - corporate                 1,058             1,093
    Capital securities - fund
     subsidiaries                                    769               803
    Non-controlling interests - fund
     subsidiaries                                    239               266
    Non-controlling interests - other
     subsidiaries                                     82                67
    Preferred equity - subsidiaries                  385               326

    Shareholders' equity
    Preferred equity - corporate                      45                45
    Common equity                                  3,035             3,067
    ----------------------------------------------------------------------
                                                 $20,178           $19,314
    ----------------------------------------------------------------------
    (i) Includes $67 million of commercial properties and $9 million of
     other assets associated with discontinued operations at September 30,
     2007 (December 31, 2006 - $61 million and $3 million, respectively).
    (ii) Includes commercial property debt of $31 million and $8 million
     of other liabilities associated with discontinued operations at
     September 30, 2007 (December 31, 2006 - $34 million and $2 million,
     respectively).
    

    
    CONSOLIDATED STATEMENT OF INCOME

                                   Three months ended  Nine months ended
                                         Sept. 30            Sept. 30
    (US Millions, except per share
     amounts)                        2007      2006      2007      2006
    ----------------------------------------------------------------------

    Total revenue                      $705      $421    $2,063    $1,222
    ----------------------------------------------------------------------

    Net operating income
    Commercial property operations     $332      $179      $972      $524
    Residential development
     operations                          43        37       157        93
    Interest and other                   13         9        32        30
    ----------------------------------------------------------------------
                                        388       225     1,161       647
    Expenses
    Interest
         Commercial property debt       177        83       523       237
         Capital securities -
          corporate                      15        13        46        39
         Capital securities - fund
          subsidiaries                   (8)       --       (22)       --
    General and administrative           23        15        76        44
    Transaction costs                    35        --        42        --
    Non-controlling interests
         Fund subsidiaries              (12)       --       (27)       --
         Other subsidiaries               6         7        21        17
    Depreciation and amortization       135        49       392       140
    Future income taxes                  20        23        66        86
    ----------------------------------------------------------------------
    Net income from continuing
     operations                         $(3)      $35        44       $84
    ----------------------------------------------------------------------
    Discontinued operations               6        --        91        30
    Net income                           $3       $35      $135      $114
    ----------------------------------------------------------------------

    Net income per share - diluted
    Continuing operations            $(0.01)    $0.10     $0.11     $0.24
    Discontinued operations            0.01        --      0.22     $0.09
    ----------------------------------------------------------------------
                                         --     $0.10     $0.33     $0.33
    ----------------------------------------------------------------------

    Funds from operations per
     share -
    diluted
    Prior to discontinued
     operations and property
     disposition gains                $0.35     $0.30     $1.08     $0.87
    Discontinued operations            0.01      0.01      0.02      0.03
    Property disposition gains         0.02        --      0.19     $0.13
    ----------------------------------------------------------------------
                                      $0.38     $0.31     $1.29     $1.03
    ----------------------------------------------------------------------
    

    
    RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS

                                Three months ended    Nine months ended
                                      Sept. 30              Sept. 30
    (US Millions)                 2007       2006       2007       2006
    ----------------------------------------------------------------------
    Net income                        $3        $35       $135       $114
    Depreciation and
     amortization(i)                 136         51        395        147
    Future income taxes(ii)           22         23         95        101
    Non-cash items included in
     fund
    interests                        (45)        --       (146)        --
    Transaction costs(iii)            35         --         38         --
    Property disposition
     gains(iv)                        (5)        --        (75)       (44)
    ----------------------------------------------------------------------
    Funds from operations           $146       $109       $442       $318
    ----------------------------------------------------------------------
    (i) Includes depreciation and amortization from discontinued
     operations of $1 million and $3 million for the three and nine months
     ended September 30, 2007, respectively (2006 - $2 million and $7
     million, respectively).
    (ii) Includes future income taxes from discontinued operations of $2
     million and $29 million for the three and nine months ended September
     30, 2007, respectively (2006 - nil and $ 15 million, respectively).
    (iii) Net of non-controlling interests of nil and $4 million for the
     three and nine months ended September 30, 2007, respectively.
    (iv) Net of non-controlling interests of $2 million and $41 million
     for the three and nine months ended September 30, 2007 (2006 - nil
     and nil, respectively).
    

    
    FUNDS FROM OPERATIONS PER DILUTED SHARE

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

    (US Millions except per share
     amounts)                        2007      2006      2007      2006
    ----------------------------------------------------------------------
    Funds from operations               $146      $109      $442      $318
    ----------------------------------------------------------------------
    Preferred share dividends              2         1         3         2
    ----------------------------------------------------------------------
    Funds available to common
    shareholders                        $144      $108      $439      $316
    ----------------------------------------------------------------------
    Weighted average shares
    outstanding                        398.7     350.3     400.0     350.0
    ----------------------------------------------------------------------
    Funds from operations per
     share                             $0.36     $0.31     $1.10     $0.90
    ----------------------------------------------------------------------
    

    
    DISCONTINUED OPERATIONS
                                   Three months ended  Nine months ended
                                         Sept. 30            Sept. 30
    (US Millions)                    2007      2006      2007      2006
    ----------------------------------------------------------------------
    Property disposition gains           $7      $ --      $116       $44
    Revenue from properties sold          4         7        14        24
    Operating expenses                   (1)       (4)       (5)      (13)
    ----------------------------------------------------------------------
                                         10         3       125        55
    Interest expense                     (1)       (1)       (2)       (3)
    ----------------------------------------------------------------------
    Funds from discontinued
     operations and gains                 9         2       123       $52
    Depreciation and amortization        (1)       (2)       (3)       (7)
    Future income taxes                  (2)       --       (29)      (15)
    ----------------------------------------------------------------------
    Discontinued operations              $6      $ --       $91       $30
    ----------------------------------------------------------------------
    

    
    COMMERCIAL PROPERTY NET OPERATING INCOME

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

    (US Millions)                    2007      2006      2007      2006
    ----------------------------------------------------------------------
    Revenue from continuing
     operations (i)                    $552      $307    $1,602      $890
    Operating expenses                 (220)     (128)     (630)     (366)
    ----------------------------------------------------------------------
    Net operating income               $332      $179      $972      $524
    ----------------------------------------------------------------------
    (i) Including fee income
    

    
    RESIDENTIAL DEVELOPMENT NET OPERATING INCOME

                                   Three months ended  Nine months ended
                                         Sept. 30            June 30

    (US Millions)                    2007      2006      2007      2006
    ----------------------------------------------------------------------
    Revenue                            $140      $105      $429      $302
    Operating expenses                  (97)      (68)     (272)     (209)
    ----------------------------------------------------------------------
    Net operating income                $43       $37      $157       $93
    ----------------------------------------------------------------------
    

    
    INTEREST EXPENSE - CAPITAL SECURITIES - FUND SUBSIDIARIES

                                   Three months ended  Nine months ended
                                         Sept. 30            Sept. 30
    (US Millions)                    2007      2006      2007      2006
    ----------------------------------------------------------------------
    Interest on debt securities          $9         --      $22         --
    Interest on redeemable equity
    interests                             4         --       20         --
    ----------------------------------------------------------------------
                                         13         --       42         --
    Non-cash component                  (21)        --      (64)        --
    ----------------------------------------------------------------------
    Total interest expense -
     capital
    securities - fund subsidiaries      $(8)        --     $(22)        --
    ----------------------------------------------------------------------
    

    
    NON-CONTROLLING INTERESTS - FUND SUBSIDIARIES

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

    (US Millions)                    2007      2006      2007      2006
    ----------------------------------------------------------------------
    Non-controlling interests           $12         --      $55         --
    Non-cash component                  (24)        --      (82)        --
    ----------------------------------------------------------------------
    Total non-controlling
     interests - fund subsidiaries     $(12)        --     $(27)        --
    ----------------------------------------------------------------------
    




For further information:

For further information: Brookfield Properties Corporation Melissa
Coley, 212-417-7215 Vice President, Investor Relations and Communications
mcoley@brookfieldproperties.com

Organization Profile

BROOKFIELD PROPERTIES CORPORATION

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890