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Press release from Marketwire

Brookfield Canada Office Properties Reports First Quarter 2012 Results

Monday, April 30, 2012

Brookfield Canada Office Properties Reports First Quarter 2012 Results17:00 EDT Monday, April 30, 2012TORONTO--(Marketwire - April 30, 2012) - Brookfield Canada Office Properties (TSX: BOX.UN) (NYSE: BOXC), a Canadian REIT (Real Estate Investment Trust), today announced that net income for the three months ended March 31, 2012 was $152.4 million or $1.64 per unit, compared to $40.3 million or $0.43 per unit during the same period in 2011.Funds from operations ("FFO") for the three months ended March 31, 2012, was $33.5 million or $0.36 per unit, compared with $31.4 million or $0.34 per unit during the same period in 2011. Adjusted funds from operations ("AFFO") was $25.7 million or $0.28 per unit for the three months ended March 31, 2012, compared to $22.4 million or $0.24 per unit during the same period in 2011.Commercial property net operating income for the three months ended March 31, 2012 was $66.0 million, compared with $56.6 million during the same period in 2011.HIGHLIGHTS OF THE FIRST QUARTER</b>Continuing its pro-active leasing strategy in the first quarter of 2012, Brookfield Canada Office Properties leased 341,000 square feet of space during the quarter.The Trust's occupancy rate finished the quarter at 96.8%, up 60 basis points from year-end 2011. This rate compares favourably with the Canadian national average of 92.7%.Leasing highlights include:Toronto - 172,000 square feet </b>- An 11-year, 34,000-square-foot new lease with Citco (Canada) Inc. at 151 Yonge St.- An average seven-year, 33,000-square-foot new lease with ARUP Canada Inc. at Hudson's Bay Centre</ul>Calgary -</b> 91,000 square feet</b>- An average 13-year, 39,000-square-foot expansion with Suncor Energy Inc. at Suncor Energy Centre- A five-year, 20,000-square-foot renewal with Regus Business Centre at Bankers Hall</ul>Vancouver -</b> 77,000 square feet</b>- An average six-year, 56,000-square-foot renewal and expansion with McMillan LLP at Royal Centre</ul>Refinanced BOX's ownership interest in Exchange Tower for $120 million</b> subsequent to the first quarter. After repayment of the previous mortgage, BOX generated net proceeds of approximately $65 million at ownership. The new financing has a 10-year term with a fixed interest rate of 4.031%.Achieved LEED EB:O&M Gold certification at Exchange Tower, Toronto, </b>subsequent to the first quarter. In a multi-phase effort over the past several years, Brookfield engaged green solution providers and building tenants and worked diligently to enhance the building's environmental profile. The property's LEED certification score placed it in the 94th percentile among comparable buildings.OUTLOOK</b>"Brookfield Canada Office Properties had a successful first quarter as we integrated our newly acquired office assets in Toronto and Ottawa," said Jan Sucharda, president and chief executive officer. "Our proactive leasing strategy coupled with strong fundamentals in our markets helped us realize an uptick in occupancy from year-end 2011."All Dollar References Are in Canadian Dollars Unless Noted OtherwiseNet Operating Income, FFO and AFFO</b>This press release and accompanying financial information make reference to net operating income, funds from operations ("FFO") and adjusted funds from operations ("AFFO") on a total and per unit basis. Net operating income is defined by us as income from commercial property operations after direct property operating expenses, including property administration costs have been deducted, but prior to deducting interest expense, general and administrative expenses and fair value gains (losses). FFO is defined by us as net income prior to one-time transaction costs, fair value gains (losses), and certain other non-cash items if any. AFFO is defined by us as FFO net of normalized second-generation leasing commissions and tenant improvements, normalized sustaining capital expenditures and straight-line rental income. The Trust uses net operating income, FFO and AFFO to assess its operating results. Net operating income is important in assessing operating performance and FFO is a widely used measure to analyze real estate. AFFO is typically a measure used to asses an entity's ability to pay distributions. The components of net operating income, FFO and AFFO are outlined in the financial information accompanying this press release. Net operating income, FFO and AFFO do not have any standard meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies.Distribution Declaration</b>The Board of Trustees of Brookfield Canada Office Properties announced a distribution of $0.09 per trust unit payable on June 15, 2012 to holders of Trust units of record at the close of business on May 31, 2012.Forward-Looking Statements</b>This press release contains forward-looking statements and information within the meaning of applicable securities legislation. These forward-looking statements reflect management's current beliefs and are based on assumptions and information currently available to the management of Brookfield Canada Office Properties. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "forecast", "outlook", "potential", "continue", "should", "likely", or the negative of these terms or other comparable terminology. Although the Trust 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 assumptions, known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Trust to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information. Accordingly, the Trust 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, but are not limited to, general economic conditions; local real estate conditions, including the development of properties in close proximity to the Trust'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 Trust'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 Trust with the securities regulators in Canada and the United States, including in the Annual Information Form under the heading "Business of Brookfield Canada Office Properties - Risk Factors" and in the Trust's most recent Interim Report under the heading "Management's Discussion and Analysis." The Trust 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, except as required by law.Supplemental Information</b>Investors, analysts and other interested parties can access the Trust's Supplemental Information Package at under the Investor Relations/Financial Reports section. This additional financial information should be read in conjunction with this press release.About Brookfield Canada Office Properties</b>Brookfield Canada Office Properties is Canada's preeminent Real Estate Investment Trust (REIT). Its portfolio is comprised of interests in 28 premier office properties totaling 20.7 million square feet in the downtown cores of Toronto, Calgary, Ottawa and Vancouver. Landmark assets include Brookfield Place and First Canadian Place in Toronto and Bankers Hall in Calgary. For more information, visit BALANCE SHEETS March 31, December 31,(Cdn Millions) 2012 2011 ------------- -------------AssetsInvestment properties $ 4,773.3 $ 4,637.9Tenant and other receivables 18.8 17.5Other assets 7.8 7.2Cash and cash equivalents 32.8 35.5 ------------- ------------- $ 4,832.7 $ 4,698.1 ------------- -------------LiabilitiesCommercial property and corporate debt $ 1,973.0 $ 1,980.3Accounts payable and other liabilities 121.4 106.9EquityUnitholders' equity 754.6 718.8Non-controlling interest(1) 1,983.7 1,892.1 ------------- ------------- $ 4,832.7 $ 4,698.1 ------------- -------------(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 Three months Three months(Cdn Millions, except per unit amounts) ended ended ------------- ------------- March 31, March 31, 2012 2011 ------------- -------------Commercial property operationsRevenue $ 125.2 $ 107.3Operating expenses 59.2 50.7 ------------- ------------- 66.0 56.6Investment and other income - 0.4 ------------- ------------- 66.0 57.0ExpensesInterest 27.5 21.8General and administrative 5.0 3.8 ------------- -------------Income before fair value gains 33.5 31.4Fair value gains 118.9 8.9 ------------- -------------Net income $ 152.4 $ 40.3 ------------- -------------Net income attributable to: Unitholders $ 42.7 $ 11.3 Non-controlling interest 109.7 29.0 ------------- ------------- $ 152.4 $ 40.3 ------------- -------------Weighted average Trust units outstanding 26.1 26.1Net income per Trust unit $ 1.64 $ 0.43 ============= =============RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS Three months Three months(Cdn Millions, except per unit amounts) ended ended ------------- ------------- March 31, March 31, 2012 2011 ------------- -------------Net income $ 152.4 $ 40.3Deduct:Fair value gains (118.9) (8.9) ------------- -------------Funds from operations $ 33.5 $ 31.4 ------------- -------------Funds from operations - unitholders 9.4 8.8Funds from operations - non-controlling interest 24.1 22.6 ------------- ------------- $ 33.5 $ 31.4 ------------- -------------Weighted average Trust units outstanding 26.1 26.1Funds from operations per Trust unit $ 0.36 $ 0.34 ------------- -------------RECONCILIATION OF FUNDS FROM OPERATIONS TOADJUSTED FUNDS FROM OPERATIONS Three months Three months(Cdn Millions, except per unit amounts) ended ended -------------- -------------- March 31, 2012 March 31, 2011 -------------- --------------Funds from operations $ 33.5 $ 31.4Deduct:Straight-line rental income (1.9) (4.3)Normalized second-generation leasing commissions and tenant improvements(1) (4.5) (3.8)Normalized sustaining capital expenditures(1) (1.4) (0.9) -------------- --------------Adjusted funds from operations $ 25.7 $ 22.4 -------------- --------------Adjusted funds from operations - unitholders 7.2 6.3Adjusted funds from operations - non- controlling interest 18.5 16.1 -------------- -------------- $ 25.7 $ 22.4 -------------- --------------Weighted average Trust units outstanding 26.1 26.1Adjusted funds from operations per Trust unit $ 0.28 $ 0.24 -------------- --------------(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.FOR FURTHER INFORMATION PLEASE CONTACT: Matthew CherryContact:Director, Investor Relations and CommunicationsTel: 416.359.8593Email: