Brookfield Properties Reports Second Quarter 2008 Results

All dollar references are in U.S. dollars unless noted otherwise.
NEW YORK--(Business Wire)--
Brookfield Properties Corporation (BPO: NYSE, TSX) today announced
that net income for the three months ended June 30, 2008 was $45
million or $0.11 per diluted share, compared to $79 million or $0.20
per diluted share during the same period in 2007. The prior period
included a $17 million net gain or $0.04 per share on the sale of two
properties. Funds from operations ("FFO") was $157 million or $0.40
per diluted share for the three months ended June 30, 2008 compared
with $167 million or $0.42 per diluted share during the same period in
2007.

Commercial property net operating income for the second quarter of
2008 was $345 million, up 9% from $317 million during the second
quarter of 2007. Residential operations contributed $35 million of net
operating income, compared with $72 million in the same period in
2007.

During the second quarter, Brookfield Properties leased two
million square feet of space at an average net rent of $27.83 per
square foot. Excluding a contractual renewal with Continental Airlines
in Houston, the average net rent in leased space was $31.43 per square
foot which represents a 36% improvement over the average in-place net
rent at the beginning of the quarter. The company's managed portfolio
occupancy rate finished the quarter at 96.2%.

HIGHLIGHTS OF THE SECOND QUARTER

Sold TD Canada Trust Tower, Toronto, subsequent to the second
quarter. The company sold its 50% interest to OMERS Realty
Corporation, the co-owner in the building, for gross proceeds of C$425
million and received net proceeds of C$191 million. The 51-story,
1.1-million-square-foot tower is one of the two office towers
comprising the 2.6-million-square-foot Brookfield Place office and
retail complex in Toronto's financial district. The sale price
translates to a value of C$721 per square foot.

Completed seven financings, generating gross proceeds of $663
million and net new proceeds of $144 million, including 75 State
Street, Boston; Two Ballston Plaza, Maryland; Hudson's Bay Centre and
2 Queen Street East, Toronto; Royal Centre, Vancouver; Altius Centre,
Calgary and Canadian Western Bank building, Edmonton. The amount of
debt refinanced in the first six months of 2008 totals approximately
$1 billion.

Repurchased 500,000 common shares of the company at an average
price of $18.60 during the quarter, bringing the total number of
shares repurchased in 2008 to 800,000 at an average price of $18.48.
Since the inception of the company's normal course issuer bid in 1999,
Brookfield Properties has invested $432 million acquiring 36.8 million
common shares at an average price of $11.75.

Advanced developments under construction. At Bay Adelaide Centre,
Toronto, the concrete core has topped out and curtain wall has been
installed to the 33rd floor; at Bankers Court, Calgary, floors have
been poured to the 12th floor and curtain wall has been installed to
the 7th floor; 77 K Street in Washington is substantially complete and
has received its certificate of occupancy; Two Reston Crescent,
Virginia, is substantially complete; and the redevelopment of 1225
Connecticut Avenue, Washington, D.C., is on target for its scheduled
completion date in the fourth quarter of 2008.

Leased two million square feet of space including 300,000 square
feet of lease take-backs. New leases represent 50% of the total during
the second quarter while renewals represent the remaining 50%. Second
quarter leasing highlights include:

Houston - 612,000 square feet

-- 424,000 square foot renewal for five years with Continental
Airlines at Continental Center I

-- 29,000 square foot expansion for 11 years with Devon Energy at
Two Allen Center

Toronto - 365,000 square feet

-- 145,000 square foot renewal and expansion for seven years with
Bennett Jones at First Canadian Place

-- 66,000 square foot lease for ten years with Macquarie at Bay
Wellington Tower

-- 31,000 square foot lease for ten years with Credit Suisse
Securities at First Canadian Place

Washington, D.C. - 310,000 square feet

-- 47,000 square foot lease for ten years with Argosy at 1550
Wilson Boulevard

-- 44,000 square foot lease for five years with Ketchum Public
Relations at 2000 L Street NW

-- 30,000 square foot lease for five years with the GSA at
Sunrise Technology Park

Los Angeles - 228,000 square feet

-- 32,000 square foot lease for 11 years with Hotchkis & Wiley at
Ernst & Young Plaza

Calgary - 215,000 square feet

-- 140,000 square foot extension and expansion for 11 years with
Crescent Point at Petro Canada Centre

-- 45,000 square foot expansion for four years with Enbridge at
Fifth Avenue Place

New York - 99,000 square feet

-- 37,000 square foot expansion for 14 years with BNP Paribas at
Newport Tower, NJ

Ottawa - 40,000 square feet

-- 32,000 square foot lease for five years with the Canadian
Government at Place de Ville I

OUTLOOK

"Our U.S. and Canadian commercial operations continue to exhibit
strong performance notwithstanding the current unsettled economic
climate, and our residential operations continue to perform in line
with our expectations," stated Ric Clark, president & CEO of
Brookfield Properties Corporation.

Net Operating Income and FFO

This press release and accompanying financial information make
reference to net operating income and funds from operations 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.
Brookfield Properties defines FFO as net income prior to extraordinary
items, one-time transaction costs, income taxes, depreciation and
amortization, and certain other non-cash items. The company uses net
operating income and FFO to assess its operating results. 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. The company
provides the components of net operating income and a full
reconciliation from net income to FFO with the financial information
accompanying this press release. The company reconciles FFO to net
income as opposed to cash flow from operating activities as it
believes net income is the most comparable measure. Net operating
income and FFO are both non-GAAP measures which do not have any
standard meaning prescribed by GAAP and therefore may not be
comparable to similar measures presented by other companies.

Forward-Looking Statements

This press release, particularly the "Outlook" section, contains
forward-looking statements and information within the meaning of
applicable securities legislation. Although Brookfield Properties
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
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 and information. Accordingly, the company
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 company'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 company'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 company with the securities
regulators in Canada and the United States, including in the Annual
Information Form under the heading "Business of Brookfield Properties
- Company and Real Estate Industry Risks," and in the company's annual
report under the heading "Management's Discussion and Analysis." The
company 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
securities laws.

Dividend Declaration

The Board of Directors of Brookfield Properties declared a
quarterly common share dividend of $0.14 per share payable on
September 30, 2008 to shareholders of record at the close of business
on September 1, 2008. Shareholders resident in the United States will
receive payment in U.S. dollars and shareholders resident in Canada
will receive their dividends in Canadian dollars at the exchange rate
on the record date, unless they elect otherwise. The quarterly
dividends payable for the Class AAA Series F, G, H, I, J and K
preferred shares were also declared payable on September 30, 2008 to
shareholders of record at the close of business on September 15, 2008.

Conference Call

Analysts, investors and other interested parties are invited to
participate in the company's live conference call reviewing 2008
second quarter results on Thursday, July 31, 2008 at 11:00 a.m.
Eastern time. Scheduled speakers are Ric Clark, president and chief
executive officer, and Bryan Davis, chief financial officer.
Management's presentation will be followed by a question and answer
period.

To participate in the conference call, please dial 800.374.0199,
pass code 53530779 five minutes prior to the scheduled start of the
call. A replay of this call can be accessed through August 29, 2008 by
dialing 800.642.1687, pass code 53530779. A webcast of the call will
be available at www.brookfieldproperties.com for 30 days.

Supplemental Information

Investors, analysts and other interested parties can access
Brookfield Properties' Supplemental Information Package before the
market open on July 31, 2008 at www.brookfieldproperties.com under the
Investor Relations/Financial Reports section. This additional
financial information should be read in conjunction with this press
release.

Brookfield Properties Profile

One of North America's largest commercial real estate companies,
Brookfield Properties owns, develops and manages premier office
properties in major U.S. and Canadian cities. The portfolio is
comprised of interests in 108 properties totaling 74 million square
feet in the downtown cores of New York, Boston, Washington, D.C., Los
Angeles, Houston, Toronto, Calgary and Ottawa. Landmark assets include
the World Financial Center in Manhattan, Brookfield Place in Toronto,
Bank of America Plaza in Los Angeles and Bankers Hall in Calgary. The
company also holds interests in 17 million square feet of
high-quality, centrally located development and redevelopment
properties in its major markets. The company's common shares trade on
the NYSE and TSX under the symbol BPO. For more information, visit
www.brookfieldproperties.com.

-0-
*T
CONSOLIDATED BALANCE SHEET
(US Millions) June 30, 2008 December 31, 2007
----------------------------------------------------------------------

Assets
Commercial properties $ 15,577 $ 15,889
Commercial development 1,161 1,172
Residential development 1,283 1,228
Receivables and other 946 1,056
Intangible assets 725 759
Restricted cash and deposits 119 151
Cash and cash equivalents 187 214
Assets related to discontinued
operations (i) 364 4
----------------------------------------------------------------------
$ 20,362 $ 20,473
----------------------------------------------------------------------

Liabilities
Commercial property debt $ 11,963 $ 12,125
Accounts payable and other liabilities 1,222 1,357
Intangible liabilities 792 834
Future income tax liability 625 600
Liabilities related to discontinued
operations (ii) 313 3
Capital securities - corporate 1,033 1,053
Capital securities - fund subsidiaries 766 762
Non-controlling interests - fund
subsidiaries 196 193
Non-controlling interests - other
subsidiaries 65 86
Preferred equity - subsidiaries 374 382

Shareholders' equity
Preferred equity - corporate 45 45
Common equity 2,968 3,033
----------------------------------------------------------------------
$ 20,362 $ 20,473
----------------------------------------------------------------------
*T

(i) Includes $352 million of commercial properties and $12 million
of other assets associated with discontinued operations at June 30,
2008 (December 31, 2007 - $3 million and $1 million, respectively).

(ii)Includes commercial property debt of $302 and $11 million of
other liabilities associated with discontinued operations at June 30,
2008 (December 31, 2007 - nil and $3 million, respectively).

-0-
*T
CONSOLIDATED STATEMENT OF INCOME

Three months Six months ended
ended June 30 June 30
(US Millions, except per share
amounts) 2008 2007 2008 2007
----------------------------------------------------------------------

Total revenue $ 719 $ 706 $ 1,374 $ 1,330
----------------------------------------------------------------------

Net operating income
Commercial property operations $ 345 $ 317 $ 688 $ 624
Residential development operations 35 72 53 114
Interest and other 16 10 26 19
----------------------------------------------------------------------
396 399 767 757
Expenses
Interest
Commercial property debt 153 169 317 338
Capital securities - corporate 15 16 30 31
Capital securities - fund
subsidiaries (4) (5) (12) (14)
General and administrative 30 24 59 53
Transaction costs -- 3 -- 7
Non-controlling interests
Fund subsidiaries (3) (31) (5) (41)
Other subsidiaries 6 6 12 10
Depreciation and amortization 136 134 273 257
Future income taxes 21 28 30 46
----------------------------------------------------------------------
Net income from continuing
operations $ 42 $ 55 $ 63 $ 70
----------------------------------------------------------------------
Discontinued operations 3 24 5 62
Net income $ 45 $ 79 $ 68 $ 132
----------------------------------------------------------------------

Net income per share - diluted
Continuing operations $ 0.11 $ 0.15 $ 0.16 $ 0.18
Discontinued operations -- 0.05 0.01 0.15
----------------------------------------------------------------------
$ 0.11 $ 0.20 $ 0.17 $ 0.33
----------------------------------------------------------------------

Funds from operations per share -
diluted
Prior to discontinued operations and
property disposition gains $ 0.39 $ 0.41 $ 0.70 $ 0.72
Discontinued operations 0.01 0.01 0.02 0.02
Property disposition gains -- 0.06 -- 0.17
----------------------------------------------------------------------
$ 0.40 $ 0.48 $ 0.72 $ 0.91
----------------------------------------------------------------------
*T

-0-
*T
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS

Three months Six months
ended June ended June
30 30
(US Millions) 2008 2007 2008 2007
----------------------------------------------------------------------
Net income $ 45 $ 79 $ 68 $ 132
Add (deduct) non-cash and extraordinary
items
Depreciation and amortization 136 134 273 257
Future income taxes 21 28 30 46
Transaction costs -- 3 -- 7
Discontinued operations 1 (18) 2 (49)
Non-controlling interests in above
items (46) (59) (90) (97)
----------------------------------------------------------------------
Funds from operations $ 157 $ 167 $ 283 $ 296
----------------------------------------------------------------------
*T

-0-
*T
FUNDS FROM OPERATIONS PER DILUTED SHARE

Three months Six months
ended June ended June 30
30
(US Millions, except per share amounts) 2008 2007 2008 2007
----------------------------------------------------------------------
Funds from operations $ 157 $ 167 $ 283 $ 296
Preferred share dividends -- -- (1) (1)
----------------------------------------------------------------------
Funds available to common shareholders 157 167 282 295
Weighted average shares outstanding 394.6 400.5 394.6 400.7
----------------------------------------------------------------------
Funds from operations per share $ 0.40 $ 0.42 $ 0.72 $ 0.74
----------------------------------------------------------------------
*T

-0-
*T
DISCONTINUED OPERATIONS

Three months Six months
ended June ended June
30 30
(US Millions) 2008 2007 2008 2007
----------------------------------------------------------------------
Property disposition gains $ -- $ 62 $ -- $ 109
Revenue from discontinued operations 14 18 28 38
Operating expenses (6) (7) (12) (16)
----------------------------------------------------------------------
8 73 16 131
Interest expense (4) (5) (9) (9)
----------------------------------------------------------------------
Funds from discontinued operations and
gains 4 68 7 122
Depreciation and amortization (1) 1 (2) (2)
Non-controlling interests -- (26) -- (31)
Future income taxes -- (19) -- (27)
----------------------------------------------------------------------
Discontinued operations $ 3 $ 24 $ 5 $ 62
----------------------------------------------------------------------
*T

-0-
*T
COMMERCIAL PROPERTY NET OPERATING INCOME

Three months Six months
ended June ended June 30
30
(US Millions) 2008 2007 2008 2007
----------------------------------------------------------------------
Revenue from continuing operations (i) $ 571 $ 518 $1,134 $1,022
Operating expenses (226) (201) (446) (398)
----------------------------------------------------------------------
Net operating income $ 345 $ 317 $ 688 $ 624
----------------------------------------------------------------------
*T

(i)Including fee income

-0-
*T
RESIDENTIAL DEVELOPMENT NET OPERATING INCOME

Three months Six months
ended June ended June
30 30
(US Millions) 2008 2007 2008 2007
----------------------------------------------------------------------
Revenue $ 132 $ 178 $ 214 $ 289
Operating expenses (97) (106) (161) (175)
----------------------------------------------------------------------
Net operating income $ 35 $ 72 $ 53 $ 114
----------------------------------------------------------------------
*T

-0-
*T
INTEREST EXPENSE - CAPITAL SECURITIES - FUND SUBSIDIARIES

Three months Six months
ended June ended June
30 30
(US Millions) 2008 2007 2008 2007
----------------------------------------------------------------------
Interest on debt securities $ 7 $ 6 $ 13 $ 13
Interest on redeemable equity interests 12 10 20 16
----------------------------------------------------------------------
19 16 33 29
Non-cash component (23) (21) (45) (43)
----------------------------------------------------------------------
Total interest expense - capital
securities - fund subsidiaries $ (4) $ (5) $ (12) $ (14)
----------------------------------------------------------------------
*T

-0-
*T
NON-CONTROLLING INTERESTS - FUND SUBSIDIARIES

Three months Six months
ended June ended June
30 30
(US Millions) 2008 2007 2008 2007
----------------------------------------------------------------------
Non-controlling interest $ 20 $ 39 $ 40 $ 45
Non-cash component (23) (70) (45) (86)
----------------------------------------------------------------------
Total non-controlling interests - fund
subsidiaries $ (3) $ (31) $ (5) $ (41)
----------------------------------------------------------------------
*T

Brookfield Properties Corporation
Melissa Coley, 212-417-7215
Vice President, Investor Relations and Communications
mcoley@brookfieldproperties.com

Copyright Business Wire 2008