Brookfield Canada Office Properties Reports First Quarter

New Post Public Reply Private Reply Replies (0) Message Board
News Desk 2018
66
Brookfield Canada Office Properties Reports First Quarter 2017 Results

All dollar references are in Canadian dollars unless noted otherwise.

BROOKFIELD NEWS, April 24, 2017 (GLOBE NEWSWIRE) -- Brookfield Canada Office Properties (TSX:BOX.UN) (NYSE: BOXC ) (the "Trust"), a Canadian REIT (Real Estate Investment Trust), today announced that net income for the three months ended March 31, 2017 was $59.4 million or $0.64 per unit, compared to net income of $11.0 million or $0.12 per unit during the same period in 2016.

Revaluation gain for the three months ended March 31, 2017 was $20.3 million, compared to a revaluation loss of $27.6 million during the same period in 2016. The value per unit was $34.14 at the end of the first quarter, an increase over the $33.82 per unit reported at the end of 2016.

Trust funds from operations (“Trust FFO”) for the three months ended March 31, 2017 was $39.4 million or $0.42 per unit, compared to $39.0 million or $0.42 per unit during the same period in 2016. Adjusted funds from operations (“AFFO”) was $31.9 million or $0.34 per unit for the three months ended March 31, 2017, compared to $31.6 million or $0.34 per unit during the same period in 2016.

Commercial property net operating income ("NOI") for the three months ended March 31, 2017 was $68.7 million, which was consistent with the same period in 2016. Same property NOI for the three months ended March 31, 2017 was $68.3 million, compared with $66.9 million during the same period in 2016.

FIRST QUARTER HIGHLIGHTS Brookfield Canada Office Properties leased 195,000 square feet of space during the first quarter of 2017. The Trust’s occupancy rate finished the quarter at 94.7%, consistent with the prior quarter. This rate compares favourably with the Canadian national average of 88.3%.

Leasing highlights:

  • A 15-year, 57,000-square foot new lease with Harlequin Enterprises Limited at Bay Adelaide East
  • A seven-year, 34,000-square foot renewal with Public Works & Government Services Canada at Exchange Tower
  • A six-year, 21,000-square foot new lease with EventMobi at Queen's Quay Terminal

Construction continues on schedule at Brookfield Place Calgary East. The pavilion and lobby finishes are well underway and commissioning and testing of base building systems has commenced. The project is currently 81% pre-leased to Cenovus and The Bank of Nova Scotia. Completion remains on target for late 2017.

OUTLOOK

“The revaluation gain recognized in the first quarter of 2017 compared to a loss from a year ago speaks to the strength of the Toronto market,” said Jan Sucharda, president and chief executive officer. “In addition, our Brookfield Place Calgary East development project has entered its final stages and the tower remains on schedule for delivery in late 2017.”

THE TRUST ENTERS INTO DEFINITIVE AGREEMENT WITH BROOKFIELD PROPERTY PARTNERS (“BPY”) FOR GOING PRIVATE TRANSACTION. Pursuant to the agreement which was announced on April 20 th , 2017, BPY would effectively acquire the approximately 17.0% equity interest in the Trust that it or its subsidiaries do not own (approximately 15.9 million units) for $32.50 cash per unit. The transaction is structured as a redemption of units by the Trust. The Board of Trustees intends to unanimously recommend that unitholders of the Trust approve the redemption.

Monthly Distribution Declaration  The Board of Trustees of Brookfield Canada Office Properties announced a distribution of $0.1092 per Trust unit payable on June 15, 2017 to holders of Trust units of record at the close of business on May 31, 2017. The distributions are declared in Canadian dollars. Registered unitholders resident in Canada will receive payment in Canadian dollars and registered unitholders resident in the United States will receive the U.S. dollar equivalent unless they request otherwise. The U.S. dollar equivalent of the distribution will be based on the Bank of Canada exchange rate on the record date or, if the record date falls on a weekend or holiday, on the Bank of Canada exchange rate on the preceding business day. Beneficial unitholders will receive payment in Canadian dollars unless they request to receive the U.S. dollar equivalent.

About Brookfield Canada Office Properties Brookfield Canada Office Properties is Canada’s preeminent Real Estate Investment Trust (REIT). Our portfolio is comprised of 26 premier office properties totaling 20 million square feet in the downtown cores of Toronto, Calgary and Ottawa, and a development site in Calgary. Our landmark assets include Brookfield Place and First Canadian Place in Toronto, and Bankers Hall in Calgary. Further information is available at www.brookfieldcanadareit.com . Important information may be disseminated exclusively via the website; investors should consult the site to access this information.

Brookfield Canada Office Properties is the flagship Canadian REIT of Brookfield Asset Management, a leading global alternative asset manager with approximately $250 billion of assets under management. For more information, go to www.brookfield.com .

Please note that Brookfield Canada Office Properties’ previous audited annual and unaudited quarterly reports have been filed on SEDAR and can also be found in the Investors section of its website at www.brookfieldcanadareit.com . Hard copies of the annual and quarterly reports can be obtained free of charge upon request.

For more information, please visit our website at www.brookfieldcanadareit.com  or contact:

Contact: Sherif El-Azzazi Director, Investor Relations Tel: (416) 359-8593 Email: sherif.elazzazi@brookfield.com  

Conference Call and Quarterly Earnings Details Investors, analysts and other interested parties can access Brookfield Canada Office Properties’ 2017 first quarter results as well as Supplemental Information on Brookfield Canada Office Properties’ website under the Investors section at www.brookfieldcanadareit.com .

The conference call can be accessed via webcast on April 25, 2017 at 9:00 a.m. Eastern Time at www.brookfieldcanadareit.com . It can also be accessed via teleconference toll-free at 844-536-4457 in the U.S and Canada or for overseas calls please dial 574-990-3011, passcode: 3478735, at approximately 8:50 a.m. Eastern Time. A recording of the teleconference can be accessed by dialing 855-859-2056 toll-free in the U.S and Canada or for overseas calls please dial 404-537-3406, passcode: 3478735. Due to the pending going private transaction, management will not be hosting a question and answer session on the call.

Non-IFRS Measures This press release and accompanying financial information make reference to NOI, same property NOI, FFO, Trust FFO and AFFO on a per unit and/or total basis.

NOI, same property NOI, FFO, Trust FFO and AFFO do not have any standardized meaning prescribed by Internal Financial Reporting Standards (“IFRS”) and therefore may not be comparable to similar measures presented by other companies. The Trust uses these non-IFRS measures to assess its operating results. These measures should not be used as alternatives to other operating measures determined in accordance with IFRS but rather to provide supplemental insights into performance.  NOI is an important measure that both investors and management use to assess operating performance of our commercial properties, FFO is a widely used measure by securities analysts, investors and other interested parties in analyzing the performance of real estate notwithstanding the variability of its fair value, and AFFO is a measure used to assess an entity’s ability to pay distributions.

The Trust defines NOI as adjusted commercial property revenue net of direct property operating expenses, including property administration costs that have been deducted, but prior to deducting interest expense, general and administrative expenses and revaluation gain (loss).  Included in adjusted commercial property revenue and revaluation gain (loss) is the impact of rental payments received pursuant to a related party lease, which in accordance with IFRS, would be included in fair value gains (losses). Management believes the inclusion of the rental lease payments, net of non-cash rental revenue, is important to help investors understand the contracted economics of the Bay Adelaide East acquisition on an "as-if-completed-and-stabilized basis" and the related recurring operating cash flows generated pursuant to that arrangement.

Same property NOI is a subset of NOI, which excludes NOI that is earned from assets acquired, disposed of or developed during the periods presented, or not of a recurring nature. Same property NOI allows the Trust to segregate the performance of leasing and operating initiatives on the portfolio from the impact to performance from investing activities and non-recurring income (charges), which for the historical periods presented consist primarily of lease termination income.

Trust FFO is defined as net income prior to transaction costs, revaluation gain (loss) which include the impact of rental payments received from the related party lease as described above, and certain other non-cash items, if any.  Trust FFO does not represent or approximate cash generated from operating activities and is consistent with the definition of FFO per the Real Property Association of Canada ("REALPAC") FFO white paper, except that Trust FFO further includes the adjustment for the related party lease payments. AFFO is defined as Trust FFO net of normalized second-generation leasing commissions and tenant improvements, normalized maintaining value capital expenditures and straight-line rental income.

Forward-Looking Statements

This press release contains “forward-looking information” within the meaning of Canadian provincial securities laws and applicable regulations and “forward-looking statements” within the meaning of “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding the Trust’s operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook, as well as the outlook for the Canadian economy for the current fiscal year and subsequent periods, and include words such as “expects,” “anticipates,” “plans,” “believes,” “estimates,” “seeks,” “intends,” “targets,” “projects,” “forecasts,” “likely,” or negative versions thereof and other similar expressions, or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.”

Although the Trust believes that our 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, many of which are beyond the control of the Trust, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.

Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: the successful completion of the redemption by the Trust of the units not owned by BPY and its subsidiaries; risks incidental to the ownership and operation of real estate properties including local real estate conditions; the impact or unanticipated impact of general economic, political and market factors in Canada; the ability to enter into new leases or renew leases on favourable terms; business competition; dependence on tenants’ financial condition; the use of debt to finance the Trust’s business; the behavior of financial markets, including fluctuations in interest rates; equity and capital markets and the availability of equity and debt financing and refinancing within these markets; risks relating to the Trust’s insurance coverage; the possible impact of international conflicts and other developments including terrorist acts; potential environmental liabilities; changes in tax laws and other tax related risks; dependence on management personnel; illiquidity of investments; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits therefrom; operational and reputational risks; catastrophic events, such as earthquakes and hurricanes; and other risks and factors detailed from time to time in our documents filed with the securities regulators in Canada and the United States.

Caution should be taken that the foregoing list of important factors that may affect future results is not exhaustive. When relying on the Trust’s forward-looking statements or information, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, the Trust undertakes no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise.

CONSOLIDATED BALANCE SHEET

(Cdn $ Millions) Mar 31, 2017 Dec 31, 2016
Assets        
Investment properties        
Commercial properties   $ 5,486.1     $ 5,397.0  
Commercial development   714.3     684.3  
    6,200.4     6,081.3  
         
Tenant and other receivables   16.9     15.8  
Other assets    7.2     7.9  
Cash and cash equivalents   59.2     52.2  
    $ 6,283.7     $ 6,157.2  
         
Liabilities        
Investment property and corporate debt   $ 2,869.9     $ 2,828.0  
Accounts payable and other liabilities   222.1     166.8  
         
Equity        
Unitholders' equity   887.5     879.0  
Non-controlling interest (1)   2,304.2     2,283.4  
    $ 6,283.7     $ 6,157.2  

(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 STATEMENT OF INCOME

(Cdn $ Millions, except per unit amounts)           Three months ended Mar. 31    
    2017     2016    
Commercial property revenue   $ 131.2     $ 129.3    
Direct commercial property expense   64.9     66.9    
Interest expense   22.5     23.8    
General and administrative expense   7.1     6.3    
Income before fair value gains (losses)   36.7     32.3    
Fair value gains (losses)   22.7     (21.3 )  
Net income and comprehensive income   $ 59.4     $ 11.0    
         
Net income and comprehensive income attributable to:        
Unitholders   $ 16.6     $ 3.1    
Non-controlling interest   42.8     7.9    
    $ 59.4     $ 11.0    
Weighted average Trust units outstanding   26.4     26.3    
Net income per Trust unit   $ 0.64     $ 0.12    
                   

RECONCILIATION OF COMMERCIAL PROPERTY REVENUE TO NET OPERATING INCOME

(Cdn $ Millions, except per unit amounts) Three months ended Mar. 31  
    2017     2016  
Commercial property revenue   $ 131.2     $ 129.3  
Impact of related party lease rental payments   2.4     6.3  
Adjusted commercial property revenue   $ 133.6     $ 135.6  
Deduct:        
Direct commercial property expense   64.9     66.9  
Commercial property net operating income   $ 68.7     $ 68.7  
                 

RECONCILIATION OF FAIR VALUE TO REVALUATION GAIN (LOSS)

(Cdn $ Millions, except per unit amounts) Three months ended Mar. 31    
    2017       2016    
Fair value gains (losses) per Statement of Income   $ 22.7       $ (21.3 )  
Impact of related party lease rental payments   (2.4 )     (6.3 )  
Revaluation gain (loss)   $ 20.3       $ (27.6 )  
                     

RECONCILIATION OF NET INCOME TO TRUST FUNDS FROM OPERATIONS

(Cdn $ Millions, except per unit amounts) Three months ended Mar. 31  
    2017       2016  
Net income   $ 59.4       $ 11.0  
Add (deduct):        
Revaluation (gain) loss   (20.3 )     27.6  
Amortization of lease incentives   0.3       0.4  
Trust funds from operations   $ 39.4       $ 39.0  
Trust funds from operations - unitholders   11.0       10.9  
Trust funds from operations - non-controlling interest   28.4         28.1  
    $ 39.4       $ 39.0  
Weighted average Trust units outstanding   26.4       26.3  
Trust funds from operations per Trust unit   $ 0.42       $ 0.42  
                   

RECONCILIATION OF TRUST FUNDS FROM OPERATIONS TO ADJUSTED FUNDS FROM OPERATIONS

(Cdn $ Millions, except per unit amounts) Three months ended Mar. 31    
    2017       2016    
Trust funds from operations   $ 39.4       $ 39.0    
Add (deduct):        
Straight-line rental income         (0.1 )  
Normalized 2nd generation leasing commissions and tenant improvements (1)   (5.7 )     (5.8 )  
Normalized maintaining value capital expenditures (1)   (1.8 )     (1.5 )  
Adjusted funds from operations (2)   $ 31.9       $ 31.6    
Adjusted funds from operations - unitholders   8.9       8.8    
Adjusted funds from operations - non-controlling interest   23.0       22.8    
    $ 31.9       $ 31.6    
Weighted average Trust units outstanding   26.4       26.3    
Adjusted funds from operations per Trust unit   $ 0.34       $ 0.34    

(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. Maintaining value capital expenditures relate to capital items that are required to maintain the properties in their current state and exclude projects that are considered to add productive capacity.

(2) AFFO calculated using actual leasing commissions, tenant improvements and maintaining value capital expenditures would result in AFFO of $31.1 million for the three months ended March 31, 2017.

 

Scroll down for more posts ▼

Top 10 Most Recent News Articles

Tampa General’s Innovation Excellence Earns No. 20 Spot

Updated Category News Views 5

A Bold Leap into Innovation at Tampa General There's a heck of a lot going on down in Tampa that's worth more than just a golf clap. Tampa General Hospital (TGH) just snagged the 20th spot on Fast Company's Best Workplaces for Innovators list, and let me tell you, that’s no small feat amidst the heavy hitters in verticals like biotech and consumer goods. It takes guts...

Continue Reading
MCatalysis Secures $5M to Disrupt Fuel Cost Dynamics

Updated Category News Views 3

Funding Fuels Innovation MCatalysis has just secured a hefty $5 million in seed funding to throw down with the big dogs in energy production. This isn't your regular backyard science project; this company is serious about changing the game with a tech-driven approach that could undercut current fuel prices. HL Energy Ventures and Oxford Science Enterprises are backing...

Continue Reading
Fresh Thyme Empowers Local Brands in Michigan Debut

Updated Category News Views 2

A Community-Driven Retail Innovation The grocery game just got a little more personal in Michigan, and we're not talking about run-of-the-mill retail pitches. Fresh Thyme Market, known for its commitment to local and natural products, is shaking things up with their Pitch Thyme Competition. This ain’t your usual product presentation. It’s a whole new ball game where...

Continue Reading
Cap Juluca: Caribbean Luxury Redefined on Maundays Bay

Updated Category News Views 2

The Tranquil Call of Maundays Bay Find me dipping my toes in the sands of Maundays Bay come October 10, 2026, and you'll understand why this slice of Anguilla stakes its claim to being the best beach on the globe. Cap Juluca, that crown jewel of Caribbean luxury, swings open its doors once more, promising indulgence framed by turquoise waters and the soft whisper of white...

Continue Reading
Are FULC, WEAV, TECH Shareholders Getting a Raw Deal?

Updated Category News Views 4

Pocketing Insider Gains Amidst Shareholder Concerns Let me tell you, it smells like another day in the financial jungle where insiders might be feasting while the regular Joe shareholders are left nibbling on crumbs. Fulcrum Therapeutics, Weave Communications, and Bio-Techne are in the crosshairs for deals that may favor those on the inside track over you and me, the...

Continue Reading
Agroz's Big Leap: New Supply Deal in Malaysia

Updated Category News Views 3

Agroz Inc. Executes a Game-Changing Deal If anyone thought the ag tech players were sitting idle, think again. Agroz Inc., noted for their innovative controlled-environment agriculture, just inked a pivotal deal with Harvest Hive in Malaysia. It's not just a nod to expansion—it's a strategic leap into the big leagues. Picture this: Harvest Hive's sprawling 500-acre farm...

Continue Reading
ZEEKR's Shooting Brakes Dominate: Over 400K Sold

Updated Category News Views 4

ZEEKR's Stellar Performance in a Crowded Market Another month, another bumper crop for ZEEKR's shooting brakes. These beauties aren't just hanging in there; they're leading the pack. In August alone, global deliveries marched past the 10,000 mark for the third month running—a feat not easily achieved in today's saturated automotive landscape. It's no wonder the...

Continue Reading
Cove Capital Secures $9.96M for Debt-Free Logistics DST

Updated Category News Views 3

Unpacking Cove Capital's Latest Victory Cove Capital Investments has pulled off another coup, raising a hefty $9,964,510 for its Cove Essential Net Lease Industrial 108 DST. It's a Regulation D, Rule 506(c) offering, now fully subscribed, spotlighting a debt-free investment ethos and a rock-solid logistics site in Anchorage, Alaska. Strategic Facility Anchoring Investment...

Continue Reading
Hair Syrup's Big U.S. Leap: Target Welcomes Viral Brand

Updated Category News Views 2

From Kitchen Experiment to U.S. Debut Here's a story that barely fits the tight mold of your typical business textbook. Hair Syrup, born from the brain of a university student tinkering at her kitchen table, is about to make waves across the pond. Lucie Macleod did what many dream of—she took a DIY hair oil project and spun it into a multimillion-dollar brand, now set...

Continue Reading
Job Market Shifts: Adaptation vs. Fairness Dilemma

Updated Category News Views 3

The Chameleon Effect in Today's Job Market Walk into any open-space office these days, and you'll see faces plastered with composed, work-ready smiles—faces that might not look so familiar outside those walls. The modern workplace has draped its cloak over individual personalities, with the mighty pressure to 'fit in' often forcing a change in how folks present...

Continue Reading

Top 5 Most Recently Viewed Articles

Aurelion's Role in Shaping Gold Accessibility and Trust

Updated Category News Views 171

Aurelion Leading a New Era in Gold Investment In today's financial landscape, Aurelion is at the forefront of innovation, particularly with its focus on redefining how investors perceive gold as an asset. As global economies adjust to rapid technological advancement, the demand for stability is more critical than ever. Investors are now showing a heightened interest in...

Continue Reading
Charles & Colvard Enhances Reach Through VideoShops Partnership

Updated Category News Views 204

Charles & Colvard Partners with VideoShops for New Era of Shopping In an exciting development within the fine jewelry industry, Charles & Colvard, Ltd. (OTC: CTHR), renowned for its expertise in lab-grown diamonds and moissanite, has teamed up with VideoShops, an innovative social commerce network. This partnership aims to revolutionize how jewelry is bought and sold...

Continue Reading
Cultural AI Integration: Transforming Dating Experiences

Updated Category News Views 98

Revolutionizing Dating Apps with Cultural AI The partnership between Qloo and various dating platforms marks a significant leap towards enhancing user experiences in online matchmaking. By incorporating cultural artificial intelligence, apps like BLK, Chispa, Upward, and Yuzu now provide users with a tailored interaction that goes beyond simple profiles. Personalized...

Continue Reading
Pediatrix Medical Group Shows Impressive Q4 Growth and Outlook

Updated Category News Views 209

Pediatrix Medical Group's Fourth-Quarter Performance Recently, Pediatrix Medical Group, Inc. reported strong fourth-quarter sales of $502.36 million, marking an increase from $496.4 million compared to the previous year. This surpassed analysts' expectations, which had set the consensus at $486.21 million. Revenue Growth and Key Metrics The impressive rise in revenue...

Continue Reading
Empowering Educators: Clark's Crafting Futures Event Unveiled

Updated Category News Views 160

Clark Construction's Crafting Futures Event Brings Awareness Recently, Clark Construction Group held an inspiring event called Crafting Futures for high school educators within the DC region. This initiative highlights the essential role that skilled trades play in addressing the expected workforce shortages in the construction industry. Collaborating with Monumental...

Continue Reading