Brookfield Canada Office Properties Reports Second Quarter 2013 Results

 

All Dollar References Are in Canadian Dollars Unless Noted Otherwise
 
Brookfield Canada Office Properties, a Canadian REIT, announced that net income for the three months ended June 30, 2013 was $35.2 million or $0.38 per unit, compared to $134.4 million or $1.44 per unit during the same period in 2012. Included in net income for the three months ended June 30, 2013 was a fair value gain of $0.3 million, compared to $100.3 million during the same period in 2012. The current IFRS value increased to $32.87 per unit from $32.57 per unit at the end of 2012.
 
Funds from operations (FFO) for the three months ended June 30, 2013, was $35.4 million or $0.38 per unit, compared with $34.1 million or $0.37 per unit during the same period in 2012. Adjusted funds from operations (AFFO) was $27.7 million or $0.30 per unit for the three months ended June 30, 2013, compared to $26.3 million or $0.28 per unit during the same period in 2012.
 
Commercial property net operating income for the three months ended June 30, 2013 was $68.4 million, compared with $66.8 million during the same period in 2012.
 
HIGHLIGHTS OF THE SECOND QUARTER
Continuing its pro-active leasing strategy, Brookfield Canada Office Properties leased 168,000 square feet of space during the second quarter of 2013.
 
The Trust's occupancy rate finished the quarter at 96.9% an increase of 30 basis points from the prior quarter. This rate compares favourably with the Canadian national average of 92.5%.
 
Leasing highlights include:
 
Toronto - 130,000 square feet
  • A 10-year, 36,000-square-foot renewal with the Toronto Board of Trade at First Canadian Place
  • An average three-year, 32,000-square-foot renewal and expansion with Vision Critical Communications at Hudson's Bay Centre
  • An eight-year, 15,000-square-foot new lease with Catlin Canada at First Canadian Place
  • A 10-year, 11,000-square-foot new lease with Enwave Energy Corporation at Bay Adelaide West
Calgary - 30,000 square feet
 
  • A five-year, 11,000-square-foot renewal with Cushman & Wakefield LePage at Suncor Energy Centre

Purchased the Bay Adelaide East development from parent company Brookfield Office Properties Inc. for an aggregate total investment of $602 million, subsequent to quarter-end. The Trust purchased the building on an "as-if-completed-and-stabilized basis," and will earn $32 million of net operating income upon substantial completion of the project, which is currently 60% pre-leased.

Extended the $103 million debt at Hudson's Bay Centre, Toronto, for an additional two-year period extending the maturity to May 2015 with a fixed interest rate of 2.999% per annum.
 
OUTLOOK
"The recent acquisition of Bay Adelaide East affirms BOX's growth strategy as we were able to deploy available capital to purchase the newest best-in-class office tower in Toronto's financial core," said Jan Sucharda, president and chief executive officer.
 
CONSOLIDATED BALANCE SHEETS
 
(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
 
   
   
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS 
 
   
RECONCILIATION OF FUNDS FROM OPERATIONS TO ADJUSTED FUNDS FROM OPERATIONS
 
(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.
 

 

on July 22, 2013