Brookfield Office Properties Reports Second Quarter 2013 Results

Brookfield Office Properties Inc. announced its financial results for the quarter ended June 30, 2013. The financial results are based on International Financial Reporting Standards unless otherwise noted.

 
All Dollar References Are in U.S. Dollars Unless Noted Otherwise   
1 Non-IFRS measure. See definition under "Basis of Presentation"
   
Funds from operations (FFO) was $162 million or $0.28 per diluted common share for the quarter ended June 30, 2013, or $171 million or $0.30 per diluted common share prior to one-time items that compares with $171 million or $0.30 per diluted common share during the same period in 2012.
 
Net income attributable to common shareholders in the second quarter of 2013 was $441 million or $0.78 per diluted share, compared with $217 million or $0.38 per diluted share in the second quarter of 2012.
 
Commercial property net operating income for the second quarter of 2013 increased to $344 million, compared with $342 million in the second quarter of 2012. Same property net operating income during the second quarter of 2013 increased by 1.9%, compared with the same period in the prior year.
 
Common equity per share at June 30, 2013 increased to $20.53 from $19.80 as at December 31, 2012, and earned a total return of $1.51 per diluted share representing a 15% annualized return on opening common equity per share.
 
OUTLOOK
 
"The second quarter of 2013 marked a new phase of growth for Brookfield Office Properties as we announced the proposed acquisition of the MPG portfolio in Los Angeles and advanced the construction of the second tower at Brookfield Place Perth," said Dennis Friedrich, chief executive officer of Brookfield Office Properties.
 
HIGHLIGHTS OF THE SECOND QUARTER
Leased 1.6 million square feet of space during the quarter at an average net rent of $29.41 per square foot, representing an 11% increase over expiring net rents in the period. The portfolio occupancy rate finished the quarter at 91.7%.
 
Leasing highlights from the second quarter include:
 
Washington, DC - 619,000 square feet
  • A four-year renewal with TSA for 548,000 square feet at 601 & 701 S. 12th Streets (Arlington, VA) 
New York - 286,000 square feet
  • A three-year new lease with AIG Employee Services for 68,000 square feet at One New York Plaza
  • A 15-year new lease with Hunter Roberts Construction Group for 43,000 square feet at 225 Liberty St. 
Houston - 180,000 square feet
 
  • A four-year expansion with Chevron for 72,000 square feet at 1600 Smith St.
  • A 10-year renewal with Sequent Energy for 46,000 square feet at Two Allen Center 
Los Angeles - 147,000 square feet
 
  • A seven-year renewal with Wells Fargo Bank for 66,000 square feet at Landmark Square
  • A 10-year new lease with Zara USA for 27,000 square feet at FIGat7th retail center 
Toronto - 130,000 square feet
 
  • A 10-year renewal with The Toronto Board of Trade for 36,000 square feet at First Canadian Place
  • A five-year new lease with Vision Critical Communications for 32,000 square feet at Hudson Bay Centre 
 
Advanced MPG Office Trust acquisition following a vote in favor of the transaction by MPG common shareholders. 97% of votes cast (representing 73% of total outstanding MPG common shares) voted to approve MPG's merger into BPO. The transaction is expected to close in the third quarter.
 
Commenced development of phase one of Brookfield Place Calgary with a lease commitment from anchor tenant Cenovus Energy for one million square feet of the project's 1.4-million-square-foot east tower, subsequent to quarter-end. 
 
Commenced development of Brookfield Place Tower 2 in Perth this June with tenant pre-commitments for approximately 40% of the 16-level, 366,000-square-foot premium-grade office tower. Construction is expected to be completed in late 2015.
 
Completed London portfolio acquisition with the closing of the final two buildings from the Hammerson portfolio, 125 Old Broad Street and Leadenhall Court.
 
Entered into JV agreement on residential portion of Principal Place development in Shoreditch area of London, subsequent to quarter-end. A 50:50 joint venture was formed with leading international residential specialist Concord Pacific on the 50-story residential tower planned at the mixed-use project, at a premium to our original investment.
 
Sold our investment in Puddle Dock, London, acquired as part of the Hammerson portfolio, at a 50% premium to our original investment.
 
Completed approximately 191,000 sq. ft. of leasing at Brookfield Place New York subsequent to quarter-end. Includes 99,000 square feet to Scotiabank, 55,000 square feet to Oppenheimer, and 37,000 square feet to Equinox.
 
Closed on $1 billion financing at Brookfield Place New York for 225 Liberty St. and 250 Vesey St. through a consortium of banks that provided $800 million in initial financing with the ability to draw an additional $200 million. The term of the floating rate, 1 Month Libor + 3.25%, loan is three years (June 2016), with two one-year extension options available.

on July 26, 2013