Brookfield Properties Reports First Quarter 2008 Results

Business Wire, April 25, 2008

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

NEW YORK -- Brookfield Properties Corporation (BPO: NYSE, TSX) today announced that net income for the three months ended March 31, 2008 was $23 million or $0.06 per diluted share, compared to $53 million or $0.13 per diluted share during the same period in 2007. The prior period included a net gain of $34 million or $0.08 per diluted share on the sale of three non-core properties in Toronto and Ottawa.

Strong commercial property results, largely offsetting slow residential operations, resulted in funds from operations ("FFO") of $126 million or $0.32 per diluted share for the three months ended March 31, 2008 compared with $129 million or $0.32 per diluted share during the same period in 2007.

Commercial property net operating income for the first quarter of 2008 was $349 million, up 11.5% from $313 million during the first quarter of 2007. Residential operations contributed $18 million of net operating income, compared with $42 million in the same period in 2007.

During the first quarter, Brookfield Properties leased over one million square feet of space at an average net rent of $32.71 per square foot, which represents a 42% improvement versus the average in-place net rent at the beginning of the quarter of $23.11 per square foot. The company's portfolio-wide occupancy rate finished the quarter at 95.4%.

The fundamentals of the Western Canadian residential operations remain strong despite a slow quarter as a result of higher-than-normal housing inventory levels. With oil and natural gas prices hitting new highs, Brookfield Properties expects the residential division to continue to increase its sales pace which has improved each month since the beginning of the year.

HIGHLIGHTS OF THE FIRST QUARTER

Delivered 4 Allen Center, Houston, to tenant Chevron, which has fully leased the building. The asset is being reclassified from a redevelopment to an operating property. Brookfield Properties acquired the 1.2 million square foot building at 1400 Smith Street in 2006 for $120 million.

Completed the disposition program for the non-core portfolio acquired from O&Y with the sale of Acres House in Niagara Falls subsequent to the first quarter. Proceeds generated from the disposition program following the November 2005 O&Y acquisition total $200 million from the sale of 15 properties comprised of 1.7 million square feet in Toronto, Calgary and Winnipeg.

Advanced developments under construction which are 53% leased in aggregate. In Toronto, the 1.2 million square foot Bay Adelaide Centre West Tower continues on budget and on schedule. The concrete core has reached the 27th floor, the structural steel is erected up to the 18th floor and the installation of the curtain wall has commenced. Total pre-leasing stands at 65%.

In Calgary, the 265,000 square foot Bankers Court project completed above-grade structural work to the sixth floor, nearing the halfway mark for the structure. Base building mechanical and electrical work is progressing and curtain wall installation is beginning. The building is 100% pre-leased.

In Washington, D.C., 77 K Street, at 327,000 square feet, continues towards completion on time by year-end. Two Reston Crescent, at 185,000 square feet, is complete; the garage will be completed in June 2008.

Refinanced or extended $370 million of debt maturing in the quarter. Transactions included Silver Spring Metro Plaza and 1250 Connecticut Ave. for $160 million, 2000 L Street for $56 million, and Bethesda Crescent for $33 million, in addition to various others. These financings carry an average interest rate of 5.5%.

Repurchased 300,000 common shares of the company at an average price of $18.64. Since the inception of the company's normal course issuer bid in 1999, Brookfield Properties has invested $423 million, acquiring 36.3 million common shares at an average price of $11.66.

Leased 1,044,000 square feet of space. New leases represent 62% of the total during the first quarter while renewals represent the remainder. Highlights include:

Los Angeles - 368,000 square feet

* A 10-year lease with Analysis Group for 26,000 square feet at Bank of America Plaza.

Houston - 157,000 square feet

* A 5-year lease with Susquent Energy Management for 46,000 square feet at Two Allen Center.

Washington, D.C. - 133,000 square feet

* A 10-year lease with the Federal Labor Relations Authority for 45,000 square feet at 1400 K Street.

* A 12-year lease with Westerman Hattori for 34,000 square feet at 1250 Connecticut Avenue.

Toronto - 114,000 square feet

* A 5-year lease renewal with St. Michael's Hospital for 25,000 square feet at 2 Queen St. East.

* An 8-year lease with Ammirati Puris/Interpublic for 24,000 square feet at Queen's Quay Terminal.

New York - 92,000 square feet

* An 11-year lease with Major League Baseball for 72,000 square feet at 245 Park Avenue.

Calgary - 87,000 square feet

* A 12-year lease with Sherritt International for 68,000 square feet at Fifth Avenue Place.

OUTLOOK

"With a strong tenant base and conservative lease expiry profile, Brookfield Properties is well-positioned in the face of softening U.S. economic conditions," stated Ric Clark, President & CEO of Brookfield Properties Corp. "For 2008, we are focused on positioning ourselves to take advantage of opportunities which may arise under these economic circumstances, and to advance our development pipeline."