BPO Properties Ltd.
TSX : BPP

BPO Properties Ltd.

August 04, 2005 12:06 ET

BPO Properties Reports Second Quarter 2005 Results

TORONTO, ONTARIO--(CCNMatthews - Aug. 4, 2005) - BPO Properties Ltd. (TSX:BPP) today announced financial results for the three months ended June 30, 2005.



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Three months ended Six months ended
(Millions, except June 30 June 30
per share amounts) 2005 2004 2005 2004
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Funds from operations (FFO)
- $ (millions) $ 25.3 $ 22.5 $ 51.5 $ 55.5
- per share 0.78 0.70 1.60 1.75
Net income
- $ (millions) 25.2 12.6 46.5 33.4
- per share 0.78 0.35 1.43 0.97
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For the three months ended June 30, 2005, BPO Properties' funds from operations ("FFO") was $25.3 million ($0.78 per share) compared to $22.5 million ($0.70 per share) for the same period in 2004. For the six months ended June 30, 2005, FFO was $51.5 million ($1.60 per share) compared to $55.5 million ($1.75 per share) for the same period in 2004. This decrease relates to the gain of $6.0 million ($0.21 per share) realized upon the disposition of the company's interest in Gulf Canada Square in 2004.

Net income for the three months ended June 30, 2005 was $25.2 million ($0.78 per share) compared to $12.6 million ($0.35 per share) during the same period in 2004. For the six months ended June 30, 2005, net income was $46.5 million ($1.43 per share) compared to $33.4 million ($0.97 per share) for the same period in 2004.

BPO Properties' portfolio-wide occupancy rate increased to 95.6% as at June 30, 2005 compared to 94.8% at the end of 2004.

INVESTMENT ACTIVITY UPDATE

BPO Properties' bidding consortium received approval from the shareholders of O&Y Properties Corporation for its acquisition of the shares of O&Y Properties in a July 7, 2005 vote, but did not receive the required level of approval by O&Y Real Estate Investment Trust minority unit-holders to complete the acquisition of 100% of its assets under the terms of the definitive agreements announced on June 1, 2005. While the O&Y REIT and O&Y Properties transactions are inter-conditional, the BPO consortium has until August 29, 2005 to waive this condition precedent, to pursue another course of action, or not to proceed with the transaction. The company is continuing to explore all of its options regarding this transaction.

OPERATIONAL HIGHLIGHTS

Compared to a Canadian national average of 90.6%, the BPO Properties portfolio was 95.6% occupied at the end of the second quarter. During the quarter, BPO Properties pro-actively leased over 300,000 square feet of space, approximately two times the amount contractually expiring.

Transactional highlights from the second quarter include:

Toronto

- New leases for 42,000 square feet with CIBC at Atrium on Bay for an average of six years

- Eleven-year renewal for 34,000 square feet with SCGM Management at Atrium on Bay

Calgary

- New eight-year lease for 23,000 square feet with Petro-Canada at Petro-Canada Centre

- New eight-year lease for 23,000 square feet with Enbridge Inc. at Fifth Avenue Place

- New seven-year lease for 23,000 square feet with Highpine Oil & Gas at Petro-Canada Centre

- Five-year renewal for 23,000 square feet with BMO Nesbitt Burns at Fifth Avenue Place

OUTLOOK

"With the completion of over 700,000 square feet of leasing in the first six months of the year, we have increased our occupancy levels and reduced our overall lease rollover risk. We remain well-positioned for growth as we explore the viability of our office developments in both Calgary and Toronto, and continue to evaluate our options going forward on the O&Y portfolio," concluded Tom Farley, President & CEO of BPO Properties.

Dividend Declaration

The Board of Directors of BPO Properties declared a quarterly common share dividend of $0.15 per share, payable September 30, 2005 to shareholders of record at the close of business on September 1, 2005.

The Board of Directors also declared dividends on series G, J and M preferred shares, payable November 14, 2005, record date of October 31, 2005, for the period August 14, 2005 to November 13, 2005. The dividend per preferred share is to be computed in accordance with the terms of the shares.

Conference Call

BPO Properties' second quarter 2005 conference call can be accessed by teleconference on Thursday, August 4, 2005 at 3:30 p.m. E.T. at (800) 653-4799. The call will be archived through August 11, 2005 and can be accessed by dialing (800) 653-4806. The conference call can also be accessed by Web cast on the BPO Properties Web site at www.bpoproperties.com.

Supplemental Information

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

BPO Properties Profile

BPO Properties Ltd. is a Canadian company that invests in real estate, focusing on the ownership and value enhancement of premier office properties. The current property portfolio is comprised of interests in 17 commercial properties and development sites totaling 14.1 million square feet, including landmark properties such as the Exchange Tower, home of the Toronto Stock Exchange, and Bankers Hall in Calgary. BPO Properties' common shares trade on the TSX under the symbol BPP. Further information about the company can be found at www.bpoproperties.com.

Note: This press release contains "forward-looking statements" that are based on certain assumptions and reflect the company's current expectations. The words "believe," "expect," "anticipate," "intend," "estimate" and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Reliance should not be placed on forward-looking statements 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. Factors that could cause actual results to differ materially from those set forth in the forward-looking statements include general economic conditions, local real estate conditions, timely re-leasing of occupied square footage upon expiration, interest rates, availability of equity and debt financing and other risks detailed from time to time in the documents filed by the company with the securities regulators in Canada. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The accompanying press release and 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. FFO is defined as net income prior to extraordinary items, non-cash items and depreciation and amortization. The Company uses net operating income and funds from operations to assess the operating results of the company as 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. In the company's quarterly Supplemental Information package, the company provides the components of net operating income on page 16 and a full reconciliation from net income to FFO on page 17. Net operating income and FFO are both non-GAAP measures which do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies.



CONSOLIDATED BALANCE SHEET

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Jun. 30, 2005 Dec. 31, 2004
(Millions) Unaudited Audited
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Assets
Commercial properties $ 1,000.2 $ 1,003.9
Marketable securities and
other investments 307.0 377.9
Loans receivable 95.2 91.7
Cash and cash equivalents 81.2 11.2
Future income taxes 59.4 49.2
Other assets 38.2 28.5
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$ 1,581.2 $ 1,562.4
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Liabilities and shareholders' equity
Commercial property debt $ 649.4 $ 655.8
Accounts payable and other liabilities 39.5 45.6
Shareholders' equity 892.3 861.0
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$ 1,581.2 $ 1,562.4
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CONSOLIDATED STATEMENT OF INCOME

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Unaudited Three months ended Six months ended
(Millions, except June 30 June 30
per share amounts) 2005 2004 2005 2004
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Commercial Properties
Revenue $ 54.1 $ 53.0 $ 108.8 $ 107.8
Expenses 25.8 25.5 51.5 52.8
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28.3 27.5 57.3 55.0
Loans and investment income 9.6 7.9 19.6 20.9
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37.9 35.4 76.9 75.9

Expenses
Interest expense 10.7 10.8 21.5 22.2
Administrative expenses and
large corporation tax 1.9 2.1 3.9 4.2
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25.3 22.5 51.5 49.5
Property disposition gains - - - 6.0
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25.3 22.5 51.5 55.5
Depreciation and amortization 7.4 6.6 15.2 13.3
Future income taxes (7.3) 3.3 (10.2) 8.8
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Net income $ 25.2 $ 12.6 $ 46.5 $ 33.4
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Net income per common share $ 0.78 $ 0.35 $ 1.43 $ 0.97
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Contact Information

  • BPO Properties Ltd. - Investor relations and media inquiries
    Melissa Coley
    Vice President, Investor Relations and Communications
    (416) 359-8593
    or
    BPO Properties Ltd. - Inquiries regarding financial results
    Craig Laurie
    Senior Vice President and Chief Financial Officer
    (416) 956-5170
    www.bpoproperties.com