BPO Properties Ltd.
TSX : BPP

BPO Properties Ltd.

November 07, 2005 11:00 ET

BPO Properties Reports Third Quarter 2005 Results

TORONTO, ONTARIO--(CCNMatthews - Nov. 7, 2005) - BPO Properties Ltd. (TSX:BPP) today announced financial results for the three months ended September 30, 2005.



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Three months Nine months
ended Sept. 30 ended Sept. 30
(Millions, except per share amounts) 2005 2004 2005 2004
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Funds from operations (FFO)
- $ (millions) $ 24.1 $ 21.9 $ 75.6 $ 77.4
- per share 0.74 0.68 2.34 2.43
Net income
- $ (millions) 9.9 14.1 56.4 47.5
- per share 0.24 0.41 1.67 1.38
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For the three months ended September 30, 2005, BPO Properties' funds from operations ("FFO") was $24.1 million ($0.74 per share) compared to $21.9 million ($0.68 per share) for the same period in 2004. For the nine months ended September 30, 2005, FFO was $75.6 million ($2.34 per share) compared to $77.4 million ($2.43 per share) for the same period in 2004.

Net income for the three months ended September 30, 2005 was $9.9 million ($0.24 per share) compared to $14.1 million ($0.41 per share) during the same period in 2004. For the nine months ended September 30, 2005, net income was $56.4 million ($1.67 per share) compared to $47.5 million ($1.38 per share) for the same period in 2004.

BPO Properties' portfolio-wide occupancy rate increased to 96.3% as at September 30, 2005 compared to 94.8% at the end of 2004.

INVESTMENT ACTIVITY UPDATE

Completed the acquisition of O&Y Properties Corporation on October 21, 2005. A newly formed company ("Newco") owned by a Consortium which includes the Company and two institutional investors (the "Consortium"), completed the acquisition of O&Y Properties Corporation on October 21, 2005 at a price of $12.72 per share in cash. O&Y Properties Corporation's principal assets include First Canadian Place in Toronto and a 41% interest in O&Y Real Estate Investment Trust ("O&Y REIT").

On October 21, 2005, the Company also announced that Newco had taken up all of the 30.3 million limited voting units of O&Y REIT validly deposited under its take-over bid for limited voting units of O&Y REIT. The Consortium intends to cause O&Y REIT to effect a subsequent acquisition transaction whereby all issued and outstanding limited voting units of O&Y REIT will be redeemed for $16.25 per unit in cash and the properties held by O&Y REIT will be transferred to the members of the Consortium directly. A special meeting of O&Y REIT unitholders to approve the subsequent acquisition transaction has been scheduled for November 28, 2005. All of the limited voting units acquired by Newco under the take-over bid will be voted in favor of the subsequent acquisition transaction and may be counted towards the "majority of minority" approval requirement, thereby ensuring that the subsequent acquisition transaction will be approved.

The $2 billion acquisition of the O&Y portfolio, one of the largest real estate deals in Canadian history, adds 24 office properties consisting of 29 buildings and development sites totaling 10.8 million square feet in five Canadian cities to BPO Properties' roster of premier properties.

BPO Properties will provide 25% of the equity (which approximates $200 million) and serve as property and asset manager for the portfolio.

Acquired the remaining 50% interest in the Bay-Adelaide development site on October 31, 2005 for $105 million, providing the company with full flexibility to realize long-term value in the ownership of this 1.8 million square foot site which spans two city blocks in the heart of downtown Toronto.

OPERATIONAL HIGHLIGHTS

Compared to a Canadian national average of 91.1%, the BPO Properties portfolio was 96.3% occupied at the end of the third quarter. During the quarter, BPO Properties pro-actively leased over 180,000 square feet of space, bringing the total year to date leasing to 890,000 square feet, approximately two times the amount contractually expiring.

Transactional highlights from the third quarter include:

Toronto

- New 15-year lease for 29,000 square feet with TNS Canadian Facts at Hudson's Bay Centre

- New 10-year lease for 16,500 square feet with the Consulate of the Federal Republic of Germany at Hudson's Bay Centre

Calgary

- New 10-year lease for 23,300 square feet with Crescent Point Energy at Petro-Canada Centre

- New 8-year lease for 10,000 square feet with PricewaterhouseCoopers at Petro-Canada Centre.

BPO PROPERTIES' NEWEST ASSET: FIRST CANADIAN PLACE

First Canadian Place is located in the downtown Toronto financial district at Bay and King Street, directly connected to BPO Properties' Exchange Tower. The 2.8 million square foot 72-story center was constructed in 1975. Three levels of high-end retail shops and restaurants serve as an amenity to the prominent roster of office tenants at First Canadian Place. Renowned as the tallest office, banking and shopping complex in Canada, this landmark property is a distinctive addition to BPO Properties' premier portfolio.

OUTLOOK

"We remain well-positioned for long-term growth as we capitalize on many opportunities. First, we are adding tremendous value to our portfolio with the soon-to-be completed acquisition of the O&Y portfolio. Second, we are in pre-development planning and pre-leasing negotiations with both of our development sites. And third, our pro-active leasing has enabled us to successfully increase occupancy and reduce rollover risk throughout the 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 on the last business day in December 2005 to shareholders of record at the close of business on December 1, 2005.

The Board of Directors also declared dividends on series G, J and M preferred shares, payable February 14, 2006 of record at the close of business on January 31, 2006, for the period November 14, 2005 to February 13, 2006. The dividend per preferred share is to be computed in accordance with the terms of the shares.

Conference Call

BPO Properties' third quarter 2005 conference call can be accessed by teleconference on Monday, November 7, 2005 at 2:30 p.m. E.T. at (800) 653-4799. The call will be archived through November 14, 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. Including First Canadian Place in Toronto, the current property portfolio is comprised of interests in 18 commercial properties and development sites totaling approximately 17 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. For more information, visit 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 15 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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(Millions) Sept. 30, 2005 Dec. 31, 2004
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Assets
Commercial properties $ 1,001.5 $ 1,003.9
Marketable securities and other
investments 239.7 377.9
Loans receivable 97.6 91.7
Cash and cash equivalents 151.0 11.2
Future income taxes 52.8 49.2
Other assets 39.9 28.5
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$ 1,582.5 $ 1,562.4
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Liabilities and Shareholders' Equity
Commercial property debt $ 647.2 $ 655.8
Accounts payable and other liabilities 40.2 45.6
Shareholders' equity 895.1 861.0
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$ 1,582.5 $ 1,562.4
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CONSOLIDATED STATEMENT OF INCOME

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Three months Nine months
ended Sept. 30 ended Sept. 30
(Millions, except per share amounts) 2005 2004 2005 2004
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Commercial properties
Revenue $ 54.4 $ 52.7 $ 163.2 $ 160.5
Expenses 26.6 25.0 78.1 77.8
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27.8 27.7 85.1 82.7
Loans and investment income 9.0 7.1 28.6 28.0
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36.8 34.8 113.7 110.7
Expenses
Interest expense 10.8 10.9 32.3 33.1
Administrative expenses and large
corporation tax 1.9 2.0 5.8 6.2
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24.1 21.9 75.6 71.4
Property disposition gains - - - 6.0
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24.1 21.9 75.6 77.4
Depreciation and amortization 7.6 6.8 22.8 20.1
Future income taxes 6.6 1.0 (3.6) 9.8
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Net income $ 9.9 $ 14.1 $ 56.4 $ 47.5
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Net income per common share $ 0.24 $ 0.41 $ 1.67 $ 1.38
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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 should be directed to:
    Craig Laurie, Senior Vice President and
    Chief Financial Officer
    (416) 956-5170