BPO Properties Reports First Quarter 2009 Results

TORONTO, May 4, 2009 – BPO Properties Ltd. (TSX: BPP) today announced financial results for the quarter ended March 31, 2009 and declared a special dividend for common shares of $4.95 per common share totaling approximately $140.2 million, payable on May 29, 2009 to shareholders of record at the close of business on May 15, 2009. This special dividend is being funded from the company’s cash resources.

BPO Properties’ net income for the quarter ended March 31, 2009 was $16.0 million ($0.49 per share), compared to $17.4 million ($0.46 per share) during the same period in 2008. Net operating income from commercial properties increased by $2.3 million to $50.0 million, compared to $47.7 million during the same period in 2008.

Funds from operations was $31.6 million ($1.04 per share) for the quarter ended March 31, 2009, compared to $37.4 million ($1.16 per share) during the same period in 2008.

HIGHLIGHTS OF THE FIRST QUARTER

Advanced developments under construction which are 78% leased in aggregate.

• In Toronto, the 1.2-million-square-foot Bay Adelaide Centre West Tower continues to be on budget and on time for completion in July 2009. The hoist bay has been dismantled and the remaining curtain wall panels have been installed. Two tenants have begun build-outs, and work is progressing in the lobby, concourse level retail and on the Adelaide tunnel connection to Scotia Plaza. Total pre-leasing at the building stands at 73%. 
• In Calgary, the 265,000-square-foot Bankers Court project reached substantial completion during the quarter. In addition, the occupancy permit was obtained from the City of Calgary. Office and retail premises have been turned over to tenants for build-outs, which are expected to be completed by the end of the second quarter. The building is 100% pre-leased.

OPERATIONS REVIEW
BPO Properties continued its proactive leasing strategy in the first quarter of 2009 with the portfolio 98.4% leased at the end of the quarter, compared to a Canadian national average of 93.9%. During the quarter, BPO Properties leased 305,000 square feet of space.

Transactional highlights from the first quarter include:

• 249,000 square feet in Toronto
  • A 10-year lease renewal with Hudson’s Bay at Hudson’s Bay Centre for 209,000 square feet 
  • A new 16-year lease with Goodmans LLP at Bay Adelaide Centre for 12,000 square feet 
  • A new 10-year lease with A.S.A.P Reporting Services at Bay Adelaide Centre for 10,000 square feet 
• 39,000 square feet in Calgary 
  • A five-year lease renewal with Tristone Capital Inc. at Bankers Hall for 37,000 square feet
• 17,000 square feet in Other Markets

Subsequent to quarter-end, BPO Properties completed two leases: a new 12-year, 58,000-square-foot lease with Globalive Wireless Management Corp. at Queen’s Quay Terminal in Toronto, and a five-year, 52,000-square-foot lease renewal with Public Works and Government Services Canada at 151 Yonge St. in Toronto.

OUTLOOK
“We believe our strategy of owning well-located, high-quality assets in Canada’s strongest markets, 98.4% leased to high-quality tenants, with manageable near-term lease and debt maturities, keeps us positioned well, even in these uncertain economic times,” said Tom Farley, president and chief executive officer of BPO Properties.

* * * * *

Net Operating Income and FFO
This press release and accompanying 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, administration, depreciation, amortization and income tax expenses. FFO is defined as net income prior to extraordinary items, one-time transaction costs, future income taxes, certain other non-cash items and depreciation and amortization. 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 statements 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 BPO 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 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 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, including in the Annual Information Form under the heading “Business of BPO 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 law.

Dividend Declaration
The Board of Directors of BPO Properties declared a quarterly common share dividend of $0.15 per share, payable on June 30, 2009 to shareholders of record at the close of business on June 1, 2009. The Board also declared a special dividend for common shares of $4.95 per common share totaling approximately $140.2 million, payable on May 29, 2009 to shareholders of record at the close of business on May 15, 2009. This special dividend is being funded from the company’s cash resources.

The Board of Directors also declared dividends on series G, J and M preferred shares, payable August 14, 2009 to shareholders of record at the close of business on July 31, 2009, for the period May 14, 2009 to August 13, 2009. The dividend per preferred share is to be computed in accordance with the terms of the shares.

Conference Call
BPO Properties’ Q1 2009 conference call can be accessed by teleconference on Monday, May 4 at 3:30 p.m. E.T. at 866.551.1530, pass code: 7670296#. The call will be archived for 90 days and can be accessed by dialing 866.551.4520, pass code: 246577#. Live audio of the call will also be available via webcast on the BPO Properties website 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., 89% owned by Brookfield Properties Corporation, 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 27 commercial properties totaling 18.1 million square feet and five development sites totaling 5.7 million square feet. Landmark properties include First Canadian Place in Toronto and Bankers Hall in Calgary. BPO Properties’ common shares trade on the TSX under the symbol BPP. For more information, visit www.bpoproperties.com.

Contact
Investor relations and media inquiries should be directed to Melissa Coley, vice president, Investor Relations and Communications at (416) 359-8593. Inquiries regarding financial results should be directed to Bryan Davis, senior vice president and chief financial officer, at (416) 359-8612.

* * * * *

CONSOLIDATED BALANCE SHEET

(Millions)	March 31, 2009		December 31, 2008
Assets
Commercial properties	$	1,329.7	$	1,338.01
Commercial developments		722.9		689.1
Loans receivable		26.2		150.6
Tenant receivables and other assets		87.0		82.3
Cash and cash equivalents		182.3		61.5
Intangible assets		28.5		30.3
Assets related to discontinued operations		-		-
	$	2,376.6	$	2,351.8
Liabilities and shareholders’ equity
Commercial and development property debt	$	1,279.2	$	1,255.3
Accounts payable and other liabilities		97.3		105.6
Intangible liabilities		69.3		71.9
Future income tax liabilities		60.7		58.6
Liabilities related to discontinued operations		-		-
Shareholders’ equity		870.1		860.41
	$	2,376.6	$	2,351.8

⁽¹⁾ As of January 1, 2009, the company adopted CICA Handbook Section 3064 “Goodwill and Intangible Assets,” requiring the company to restate certain comparative figures. As at December 31, 2008, the company reduced commercial properties and shareholders’ equity by $0.7 million representing the cumulative impact on adoption of this Handbook Section.



CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

						Three months ended March 31
(Millions, except per share amounts)							2009		2008
Commercial Properties
Revenue						$	86.8	$	83.7
Expenses							36.8		36.01
Net operating income							50.0		47.7
Loans and investment income							1.9		3.6
							51.9		51.3
Expenses
Interest expense							9.1		8.8
General and administrative expenses							5.3		5.1
							37.5		37.4
Depreciation and amortization							13.3		12.51
Income taxes							8.2		7.5
Net income and comprehensive income							16.0		17.4
Net income per common share						$	0.49	$	0.46

(1) As of January 1, 2009, the company adopted CICA Handbook Section 3064 “Goodwill and Intangible Assets,” requiring the company to restate certain comparative figures. For the quarter ended March 31, 2008, the company increased commercial properties expenses by $nil and decreased depreciation and amortization by $0.1 million representing the impact on adoption of this Handbook Section.



RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS (“FFO”)

						Three months ended March 31
(Millions)							2009		2008
Net income						$	16.0	$	17.4
Add:
Depreciation and amortization							13.3		12.5
Future income taxes (i)							2.3		7.5
FFO							31.6		37.4

⁽ⁱ⁾ Funds from operations was redefined in the quarter as net income prior to extraordinary items, one-time transaction costs, depreciation and amortization, future income taxes, and certain non-cash items.



FFO PER COMMON SHARE

						Three months ended March 31
(Millions, except per share amounts)							2009		2008
FFO						$	31.6	$	37.4
Preferred share dividends							(2.1)		(4.3)
Funds available to common shareholders							29.5		33.1
Weighted average shares outstanding							28.3		28.5
FFO per common share						$	1.04	$	1.16

INCOME FROM DISCONTINUED OPERATIONS

						Three months ended March 31
(Millions, except per share amounts)							2009		2008
Property disposition gains						$	-	$	-
Revenue from discontinued operations							-		0.1
Operating expenses							-		(0.1)
Net operating income and gains from discontinued operations							-		-
Interest expense							-		-
Funds from discontinued operations and gains							-		-
Depreciation and amortization							-		-
Income taxes							-		-
Net income from discontinued operations						$	-	$	-