Brookfield Properties Reports Second Quarter 2007 Results

Business Wire, July 27, 2007

All dollar references are in U.S. dollars unless noted otherwise.

NEW YORK -- Brookfield Properties Corporation (BPO: NYSE, TSX) today announced net income of $79 million or $0.20 per share and funds from operations ("FFO") of $167 million or $0.42 per share for the quarter ended June 30, 2007.

During the second quarter, Brookfield Properties leased 2.0 million square feet of space at an average net rent of $29 per square foot, which represented a 45% improvement versus the average in-place net rent of $20 per square foot on expiring leases. The company's portfolio-wide occupancy rate finished the quarter at 94.6%.

FINANCIAL RESULTS

Net income for the three months ended June 30, 2007 totaled $79 million, or $0.20 per share, compared to $30 million or $0.09 per share during the same period in 2006. For the three months ended June 30, 2007, funds from operations totaled $167 million or $0.42 per share, up from $106 million or $0.30 per share during the same period in 2006.

Commercial property net operating income for the second quarter of 2007 was $326 million, up from $177 million for the second quarter of 2006. The increase is primarily due to the contribution from the U.S. Office Fund which was fully invested in the fourth quarter of 2006. It also reflects same-store growth of 3% as a result of the continued improvement in occupancy and lease rates.

Residential development operations contributed $72 million of net operating income in the second quarter of 2007, up from $31 million in the second quarter of 2006. Margins improved to 40%, up from 38% in the first quarter of 2007 and 29% in the second quarter of 2006.

HIGHLIGHTS OF THE SECOND QUARTER

Purchased 1201 Louisiana, Total Plaza, Houston for $151.5 million or $179 per square foot. The 35-story building comprising 844,000 square feet is located one block east of the Allen Center and is directly linked to the Houston CBD tunnel system; it is 90% leased, with lead tenant Total Petrochemicals, a French petrochemical manufacturing company, occupying 244,000 square feet and PriceWaterhouseCoopers occupying 154,000 square feet. Brookfield's presence in downtown Houston has reached 9.1 million square feet in nine buildings.

Sold the office component of Waterview, Rosslyn, VA, for $435 million, resulting in a gain of $58 million, earning incentive and termination fees of $16 million for Brookfield Properties' 25% interest. Acquired with the Trizec portfolio in October 2006, Brookfield Properties held a 25% interest in the 633,900 square foot, 24-story office building with JGB Companies and CIM Group. The 901-space parking structure was part of the sale; the hotel-condominium structure was not part of the sale.

Sold 18 King St., Toronto, for $10 million, resulting in a gain of $4 million for Brookfield Properties' 25% interest. Brookfield Properties acquired the interest in this 250,000 square foot building with the O&Y portfolio in 2005. Since June 2006, Brookfield Properties has disposed of eleven non-core properties totaling 1.8 million square feet acquired with the O&Y portfolio, generating gains of $18 million on a 25% basis.

Expanded the Herald Block development site in Calgary with the acquisition of the Heagle building for $5 million, adding 100,000 square feet of additional density to the site, which now has a capacity of 1.2 million rentable square feet. The acquisition of the building also links the site to existing skybridge connections.

Repurchased one million common shares of the company during the quarter and year-to-date at an average price of $24.80. Since the inception of its normal course issuer bid in 1999, the company has invested $340 million acquiring 32.5 million common shares at an average price of $10.44.

Renamed BCE Place in Toronto to Brookfield Place, following the recent expiration of a license agreement with BCE. The renaming to Brookfield Place signifies Brookfield Properties' long-term commitment to being a major commercial real estate presence in downtown Toronto. In addition, the project's Heritage Square has been renamed Sam Pollock Square in honor of the long-time Brookfield Properties director. The interior square is adjacent to the Hockey Hall of Fame, where Sam Pollock is among the most respected of its members: as General Manager of the Montreal Canadiens, he led the team to nine Stanley Cups.

OPERATING HIGHLIGHTS

Brookfield Properties leased 2.0 million square feet of space across the portfolio during the second quarter of 2007. New leases represent 45% of the total while renewals represent the remaining 55%. Highlights include:

In Calgary:

* 5-year lease renewal with ConocoPhillips Canada at Gulf Canada Square for 434,000 square feet

* 10-year renewal and expansion with Inter Pipeline Fund at Fifth Avenue Place for 59,000 square feet

In New York:

* 15-year lease extension with Rabobank at 245 Park Avenue for 107,000 square feet

* 10-year lease extension with Royal Bank of Canada at One Liberty Plaza for 83,000 square feet

In Toronto:

* 17-year new lease with Goodmans LLP at the Bay Adelaide Centre for 170,000 square feet, bringing the pre-leasing at this development to 38%