EX-99.1 2 v339646_ex99-1.htm EXHIBIT 99.1

 

 

 

 

 

BROOKFIELD OFFICE PROPERTIES INC.

 

RENEWAL ANNUAL INFORMATION FORM

 

 

 

March 28, 2013

 

 
 

 

ANNUAL INFORMATION FORM
TABLE OF CONTENTS

 

Notes Regarding This Annual Information Form   1
Note Regarding Financial Information   1
Forward-Looking Statements   1
Corporate Structure   2
Name, Address and Incorporation   2
Intercorporate Relationships and History   2
General Development of the Business   5
Acquisitions and Dispositions   5
Development   7
Financings and Refinancings   7
Capital Markets   8
Business of Brookfield Office Properties   10
Commercial Property Operations   10
Business Strategy   10
Investment Strategy   11
Commercial Development   12
Prudent and Flexible Capital Plan   13
Primary Markets and Properties   15
Service Businesses   34
Employees   34
Environmental Protection   34
Company and Real Estate Industry Risks   35
Dividends and Dividend Policy   44
Description of Capital Structure   45
General Description of Capital Structure   45
Ratings   46
Market for Securities   47
Directors and Officers   50
Directors   50
Officers   51
Share Ownership   52
Legal Proceedings   52
Interest of Management and Others in Material Transactions   52
Cease Trade Orders, Bankruptcies, Penalties or Sanctions   52
Auditors, Transfer Agent and Registrar   52
Audit Committee Information   53
Relevant Education and Experience   53
Pre-Approval Policies and Procedures   53
External Auditor Service Fees (By Category)   54
Additional Information   54
     
Appendix A – Subsidiaries   55
Appendix B – Commercial Properties by Region as of December 31, 2012   58
Appendix C – Summary of Terms and Conditions of Authorized Securities   61
Appendix D – Audit Committee Charter   89

 

 
 

 

Notes Regarding this Annual Information Form

 

In this Annual Information Form (“AIF”), “BPO”, “Brookfield Office Properties”, “we”, “us” and “our” refers to Brookfield Office Properties Inc. and its consolidated subsidiaries, unless otherwise noted or the context requires otherwise.

 

Note Regarding Financial Information

 

Financial data included in this AIF has been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). All dollar references, unless otherwise stated, are in U.S. dollars. Amounts in Canadian dollars are identified as “C$” and amounts in Australian dollars are identified as “A$”. This AIF should be read in conjunction with our management’s discussion and analysis and audited consolidated financial statements and appended notes each of which appear in our annual report. Unless otherwise indicated, the statistical and financial data contained in this AIF are presented as at December 31, 2012.

 

Forward-Looking Statements

 

This AIF, particularly the sections entitled “General Development of the Business” and “Business of Brookfield Office Properties”, contains “forward-looking information” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding our operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods, and include words such as “expects”, “anticipates”, “plans”, “believes”, “estimates”, “seeks”, “intends”, “targets”, “projects”, “forecasts”, “likely”, or negative versions thereof and other similar expressions, or future or conditional verbs such as “may”, “will”, “should”, “would” and “could”.

 

Although we believe that our 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, many of which are beyond our control, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.

 

Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: risks incidental to the ownership and operation of real estate properties including local real estate conditions; the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business; the ability to enter into new leases or renew leases on favorable terms; business competition; dependence on tenants’ financial condition; the use of debt to finance our business; the behavior of financial markets, including fluctuations in interest and foreign exchanges rates; uncertainties of real estate development or redevelopment; global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; risks relating to our insurance coverage; the possible impact of international conflicts and other developments including terrorist acts; potential environmental liabilities; changes in the tax laws and other tax related risks; dependence on management personnel; illiquidity of investments; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits therefrom; operational and reputational risks; catastrophic events, such as earthquakes and hurricanes; and other risks and factors detailed from time to time in our documents filed with the securities regulators in Canada and the United States.

 

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements or information, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise.

 

| Brookfield Office Properties | 2013 Annual Information Form1
 

 

CORPORATE STRUCTURE

 

Name, Address and Incorporation

 

Brookfield Office Properties owns, develops and manages premier office properties in the United States, Canada, Australia and the United Kingdom. Our portfolio is comprised of interests in 111 properties totaling 76 million square feet in the downtown cores of New York, Washington, D.C., Houston, Los Angeles, Denver, Seattle, Toronto, Calgary, Ottawa, London, Sydney, Melbourne and Perth, making us the global leader in the ownership and management of office assets. Landmark properties include the Brookfield Places in New York, Toronto and Perth, Bank of America Plaza in Los Angeles, Bankers Hall in Calgary and Darling Park in Sydney. Our common shares trade on the New York Stock Exchange (“NYSE”) and Toronto Stock Exchange (“TSX”) under the symbol “BPO”.

 

Brookfield Office Properties Inc. was formed under the Canada Business Corporations Act on September 5, 1978 to continue the business of Canadian Arena Corporation which was incorporated in 1923 under the Quebec Companies Act, 1920. Our articles were restated on September 5, 2002 and since then have been amended from time to time to change our capital structure, to adjust the number of directors on our Board of Directors and to change our name.

 

Our registered office is P.O. Box 770, Suite 330, Brookfield Place Toronto, 181 Bay Street Toronto, Ontario, M5J 2T3. We operate head offices in New York, Toronto, Sydney and London.

 

Intercorporate Relationships and History

 

Our principal subsidiaries and the cities where they own properties are set out below. All interests are 100% ownership interests unless otherwise indicated. Our principal subsidiaries and their jurisdiction of formation are listed in Appendix A hereto.

 

 

| Brookfield Office Properties | 2013 Annual Information Form2
 

 

BPO has been active in various facets of the real estate business since the 1960’s. Canadian Arena Corporation, the predecessor company to BPO, built the Montreal Forum in 1924 to provide facilities for hockey and other sporting and cultural events and its earnings were derived principally from the ownership of the Montreal Forum and the Montreal Canadiens of the National Hockey League until the sale of the franchise in 1978.

 

In 1976, a subsidiary of BPO, then called Carena Properties, expanded its real estate interests by acquiring a controlling interest in one of Canada’s largest public real estate companies, Trizec Corporation Ltd. The steady escalation in commercial property values over the next ten years provided the capital base to expand BPO’s residential land development and home building activities. In 1990, we made a strategic decision to invest capital in the premier office property business in select, high-growth, supply-constrained markets in North America and in 2010, we announced a strategic repositioning plan to transform ourselves into a global pure-play office property company. This plan included the acquisition of an interest in a significant portfolio of premier office properties in Australia from Brookfield Asset Management Inc. (“BAM”) in September 2010 as well as the divestment of our residential land and housing business in March 2011.

 

The accumulation of our assets was completed through various corporate and property purchases, including eight major portfolio acquisitions:

 

1.BCE Development Acquisition

 

In 1990, we acquired a 50% interest in a portfolio of office properties in Toronto, Denver and Minneapolis from BCE Inc. In 1994, this interest was increased to 100%. Brookfield Place Toronto, our flagship office complex in Toronto, was acquired in this transaction.

 

2.Olympia & York (U.S.A.) Acquisition

 

On November 21, 1996, we completed the acquisition of a 46% interest in World Financial Properties, L.P., a New York-based Delaware limited partnership. World Financial Properties, L.P. owned 10 million square feet of Class A office space in New York and Boston, including interests in three of the four towers of Brookfield Place New York, One Liberty Plaza and 245 Park Avenue in Manhattan and 53 State Street in Boston. From 1997 to 2003, we acquired further interests in World Financial Properties, L.P. (now Brookfield Financial Properties LLC) gradually increasing our holdings to our current interest of approximately 99.4%.

 

3.Gentra Acquisition

 

On September 30, 1997, we completed the acquisition of a 43% interest in BPO Properties Ltd., a Canadian corporation and an owner of commercial properties primarily in the Toronto area (“BPP”, formerly Gentra Inc. and Royal Trustco Limited) and from 1997 to 2003, we increased our ownership to 89% through a series of private transactions, share repurchases, consolidations and issuances by BPP. In May 2010, BPP was reorganized creating a real estate investment trust (“REIT”) which is named Brookfield Canada Office Properties (“BOX”). Following this transaction, our ownership interest in BPP increased to 100% and our ownership interest in BOX was approximately 90%. We subsequently sold down a portion of our interest in BOX in November 2010 and we currently have an interest in BOX of approximately 83.3%. We serve as property and asset manager for BOX.

 

4.Trizec Western Canada Acquisition

 

In June 2000, we acquired a Western Canadian office portfolio consisting of four office towers in Calgary and Vancouver. The portfolio included the flagship Bankers Hall East and West Towers in Calgary.

 

5.O&Y REIT Acquisition

 

In October and November of 2005, we completed the acquisition of O&Y Properties Corporation and the assets and liabilities of O&Y Real Estate Investment Trust which consisted of 27 office buildings and one development site in five Canadian cities. The portfolio was acquired by a consortium of institutional investors, led and managed by us investing directly through property level joint ventures (collectively, the “Canadian Office Fund”). BPP provided 25% of the equity and serves as property and asset manager for the Canadian Office Fund.

 

| Brookfield Office Properties | 2013 Annual Information Form3
 

 

6.Trizec Properties Acquisition

 

In October 2006, we acquired Trizec Properties, Inc. (“Trizec Properties”), a publicly traded U.S. REIT, and Trizec Canada Inc., a Canadian company that held, among other assets, an approximate 38% ownership interest in Trizec Properties. The portfolio was acquired in a joint venture (the “Joint Venture”) involving a consortium of institutional investors, led and managed by us, investing through direct and indirect investment vehicles (collectively, the “U.S. Office Fund”) and The Blackstone Group, a New York-based private equity firm (“Blackstone”). The Trizec portfolio consisted of 74 high-quality office properties totaling approximately 40 million square feet in nine U.S. markets, including New York City, Washington, D.C. and Los Angeles.

 

7.Australian Acquisition

In September 2010, we completed the acquisition of an interest in an Australian portfolio of premier office properties from BAM for an investment of $1.4 billion. The acquisition included interests in 18 Australian office properties in Sydney, Melbourne and Perth encompassing eight million square feet. The portfolio included the landmark properties Darling Park in Sydney and Brookfield Place Perth.

 

8.Hammerson Acquisition

 

In June 2012, we announced the acquisition of a portfolio of properties in the City of London from Hammerson plc (“Hammerson”) for approximately $871 million. The portfolio includes four operating assets totaling 884,000 square feet and two development sites which can accommodate approximately 1.4 million square feet of density. The acquisition of 99 Bishopsgate and a group of smaller assets closed on September 28, 2012. The acquisitions of 125 Old Broad Street and Leadenhall Court are expected to close in June 2013.

 

| Brookfield Office Properties | 2013 Annual Information Form4
 

 

GENERAL DEVELOPMENT OF THE BUSINESS

 

The significant events affecting our business during the last three financial years and to the date of this AIF are summarized below. A number of these events and conditions are discussed in greater detail under the headings “Corporate Structure – Intercorporate Relationships and History” and “Business of Brookfield Office Properties”.

 

Acquisitions and Dispositions

 

On May 13, 2010, we purchased the remaining equity interest in 77 K Street, Washington, D.C. from our 50% partner in the venture for $38.6 million.

 

In May 2010, we reorganized our subsidiary BPP to create a premier Canadian office REIT which is named Brookfield Canada Office Properties. The transaction included the sale of Bay Wellington Tower from BPO to the REIT.

 

On September 28, 2010, we completed the acquisition of an interest in an Australian portfolio of premier office properties from BAM for an investment of $1.4 billion. The acquisition included interests in 18 Australian office properties in Sydney, Melbourne and Perth. In the fourth quarter of 2010, we also acquired an option to purchase an interest in a property adjacent to the City Square development site in Perth, Australia from BAM.

 

On November 23, 2010, we sold our interests in Canadian Western Bank Place and Enbridge Tower in Edmonton, Alberta for a gross sale price of C$169.6 million, resulting in a loss of approximately $1 million for our 25% interest in these buildings.

 

On November 30, 2010, we completed the sale of 6,820,000 trust units of BOX to a syndicate of underwriters at a purchase price of C$22 per unit. The gross proceeds raised by us from the sale were C$150,040,000.

 

On December 2, 2010, we acquired the office building at 650 Massachusetts Avenue, NW in Washington, D.C. from Washington Television Center LLC for $113 million. 650 Massachusetts Avenue, NW is an eight-story office building containing 313,000 rentable square feet and a four-story parking garage.

 

On December 9, 2010, we acquired Heritage Plaza in Houston from Goddard Investment Group LLC for $321.5 million. The acquisition was financed using our available liquidity and a $200 million fixed rate, 4.97% loan maturing in January 2023. Heritage Plaza is a 53-story, 1.2-million square foot office tower in Houston’s central business district (“CBD”).

 

On December 10, 2010, we sold 1225 Connecticut Avenue in Washington, D.C. to the World Bank for $216 million.

 

On December 23, 2010, we sold 1250 23rd Street in Washington, D.C. for $40 million.

 

In the first quarter of 2011, we sold a 49% interest in Heritage Plaza, Houston, to an institutional investment fund for approximately $60 million.

 

On March 31, 2011, we combined our U.S. residential land development business (“BPO Residential”) with Brookfield Homes Corporation to form Brookfield Residential Properties Inc. (“BRPI”), a diversified North American residential land and housing company with $2.5 billion of assets and an equity value of approximately $1 billion.

 

On June 24, 2011, we sold 1400 Smith Street in Houston to full-building tenant Chevron for $340 million.

 

In July 2011, we acquired an interest in Southern Cross West Tower, a 20-story, 495,000 square foot office tower in Melbourne’s CBD, and BankWest Tower, a 52-story, 423,000 square foot office tower in Perth’s CBD. The acquisitions were at a total price of A$250 million and were made through Brookfield Prime Property Fund (“BPPF”), in which BPO currently has an 80.47% interest.

 

In the third quarter of 2011, we acquired a 75% interest in 450 West 33rd Street in New York through a joint venture with Broadway Partners valued at approximately $520 million. The 1.8-million-square-foot office building is directly adjacent to our 5.4 million square foot Manhattan West development site on 9th Avenue. In August 2012, we purchased an additional interest from our partner bringing our ownership interest to approximately 75% and we became the property manager for this building.

 

| Brookfield Office Properties | 2013 Annual Information Form5
 

 

In August 2011, Blackstone exercised its call option on 18 of the office assets it managed in the Joint Venture in exchange for 100% of its interests in the 38 office assets that we manage. Simultaneous with the exercise of the call option, Blackstone retired its share of the Joint Venture debt and assumed the property-specific debt on the properties that it acquired.

 

On September 12, 2011, we purchased Three Bethesda Metro Center, a 17-story, 368,400 square foot office building directly adjacent to the Bethesda Metro Station in Bethesda, Maryland from The Meridian Group for $150.1 million.

 

On October 19, 2011, we sold the Newport Tower office building in Jersey City to Multi-Employer Property Trust for $377.5 million.

 

On October 31, 2011, we purchased an additional 49% interest in 250 Vesey Street in New York for $264 million, increasing our ownership of the building to 100%.

 

On December 9, 2011, we acquired, together with an investment consortium, 1801 California Street in Denver from PSEG Energy Holdings for $215 million. 1801 California Street is a 54-story, Class A office building containing 1.4 million rentable square feet and more than 1,500 parking spaces.

 

On December 21, 2011, we sold 53 State Street in Boston for $610 million.

 

In 2011, we increased our interest in the U.S. Office Fund to approximately 84%.

 

On March 8, 2012, we, together with our Canadian Office Fund partners, sold the Altius Centre office building in downtown Calgary for C$179.8 million.

 

On March 30, 2012, we, through BPPF, sold our interest in Defence Plaza in Melbourne for proceeds of A$86.7 million.

 

On May 1, 2012, we acquired Bow Parkade, a seven-story public parking facility located on a half city block in downtown Calgary for C$90 million. Our Herald Site development property is located on the other half of the block and the entire block can now accommodate approximately 2.8 million square feet of new development. In connection with the acquisition, we entered into a C$55 million financing with a term of four years on a floating rate, interest-only basis at banker’s acceptance + 185 bps.

 

On June 5, 2012, we purchased Metropolitan Park East and West in Seattle, a 700,000 square foot office campus, for $210 million. In connection with the acquisition, we entered into a loan agreement placing $126 million of debt on the property at a rate of LIBOR plus 3.00% with a maturity date of June 10, 2016 with a one year extension option.

 

On June 19, 2012, we announced the acquisition of a portfolio of properties in the City of London from Hammerson for approximately $871 million. The portfolio includes four operating assets totaling 884,000 square feet and two development sites which can accommodate approximately 1.4 million square feet of density. The acquisition of 99 Bishopsgate and a group of smaller assets closed on September 28, 2012. The acquisitions of 125 Old Broad Street and Leadenhall Court are expected to close in June 2013.

 

On June 25, 2012, we purchased 799 9th Street NW, a 10-story 203,000 square foot property in Washington, D.C., for $106 million. In connection with the acquisition we entered into a new property-level financing of $71.5 million at LIBOR + 2.25% maturing on December 24, 2015.

 

In October 2012, we, along with a group of funds controlled by BAM, acquired substantially all of the outstanding equity of a public real estate entity based in Australia. Our equity interest in the entity is approximately 41%.

 

| Brookfield Office Properties | 2013 Annual Information Form6
 

 

On November 15, 2012, we sold, along with our joint venture partner KBR Inc., the KBR Tower office building and adjacent garage in Houston to Corporate Property Associates 17-Global, a public non-traded REIT affiliate of W. P. Carey Inc., for gross proceeds of $174.6 million. We owned 50% of the joint venture.

 

On November 20, 2012, we sold the 33 South 6th Street / Minneapolis City Center property in Minneapolis to Shorenstein Properties LLC on behalf of its tenth investment fund, Shorenstein Realty Investors Ten, L.P., for a gross sale price of $205.5 million.

 

On February 1, 2013, in connection with a reorganization of Brookfield Johnson Controls Canada, our interest in this joint venture decreased from 40% to 33.1%.

 

In January 2013, we sold RBC Plaza in Minneapolis for $127 million.

 

Development

 

On March 31, 2010, we announced that we had entered into a joint venture with Great Portland Estates, a United Kingdom based REIT, to acquire a 50% ownership interest in the 100 Bishopsgate partnership for $64 million. 100 Bishopsgate is a strategically located development opportunity in the heart of the City of London, close to the popular Liverpool Street Station. Current plans envision development of an 820,000 square foot, 40-story landmark tower which will redefine London’s skyline. Under the terms of the joint venture agreement, we will manage construction and development, including the initial lease-up of the new properties, which will be designed and built to the same best-in-class standards as our recently developed office buildings in North America. In October 2012, we increased our ownership interest in this joint venture to 87.5%.

 

On June 16, 2011, we announced plans for a $250 million renovation of the retail areas of Brookfield Place New York. The plans include a new 600-seat dining terrace overlooking the North Cove Marina and Hudson River, a 25,000 square foot European-style marketplace and a new double-stacked fashion corridor.

 

On May 18, 2012, we achieved practical completion of our 953,000 square foot Perth development project, which was renamed “Brookfield Place Perth.”

 

On June 12, 2012, we announced plans to commence development of the second office tower of Bay Adelaide Centre in Toronto and that professional services firm Deloitte LLP has signed a commitment to lease 420,000 square feet – approximately 43% of the building – as the anchor tenant. Construction on the 44-story, 980,000 square foot tower commenced in the second half of 2012 with an expected completion date of late 2015.

 

On June 27, 2012, Hammerson assigned its option to develop and lease London Wall Place, a 1.8 acre development site which has consent for 500,000 square feet of offices in two buildings. We subsequently entered into a 50/50 joint venture with Oxford Properties to develop this site.

 

In October 2012, we completed the large-scale renovation of First Canadian Place in Toronto. We embarked on the refurbishment program in 2009 and have completely reclad the exterior of the 72-story tower, upgraded the lobby and retail areas and integrated energy-efficient systems that enabled the property to achieve LEED EB: O&M Gold certification.

 

On January 16, 2013, we announced that we had commenced construction of a $680 million deck at the Manhattan West development site on Ninth Avenue between West 33rd and West 31st Streets. Platform construction is expected to be completed in the spring of 2014 at which time tower construction can commence.

 

Financings and Refinancings

 

In 2010, we refinanced approximately $1 billion at historically low interest rates, generating net proceeds of approximately $500 million, including: 245 Park Avenue, New York, for $800 million ($400 million at our share) with a 3.88% interest rate and seven-year term; Heritage Plaza, Houston, for $200 million with a 4.97% interest rate and 12-year term; 200 Vesey Street, New York, for $150 million with a LIBOR + 2.75% interest rate and a four-year term; Reston Crescent, Virginia, for $75 million with a LIBOR + 1.75% interest rate and five-year term; 1250 Connecticut Ave., Washington, D.C., for $53 million with a 5.86% interest rate and five-year term; and Bankers Court, Calgary for C$48 million with a 4.95% interest rate and 10-year term.

 

| Brookfield Office Properties | 2013 Annual Information Form7
 

 

On March 8, 2011, we renewed our $695 million revolving credit facility with a syndicate of banks through March 2014, with two one-year extension options.

 

In July 2011, our subsidiary, BOX, entered into bilateral agreements with a number of Canadian chartered banks for an aggregate revolving credit facility of C$200 million with a three-year term and one one-year extension option.

 

In 2011, we also refinanced or secured $4.5 billion of new financing during the year including the recapitalization of our U.S. Office Fund and the financing of Bay Adelaide Centre West in Toronto which was completed at a 4.4% interest rate. This $4.5 billion breaks down as $1.5 billion in the U.S. Office Fund; $900 million in North America; $900 million in Australia; and acquisition-related financings of $1.2 billion. The average rate on these financings was 5.3%.

 

On January 17, 2012, we completed an offering of C$200 million principal amount of 4.30% senior unsecured notes due January 17, 2017.

 

On April 16, 2012, we completed an offering of C$150 million principal amount of 4.00% senior unsecured notes due April 16, 2018.

 

In 2012, we also refinanced or secured nearly $2.1 billion in financings or refinancings during the year including raising net new capital of $0.9 billion.

 

On January 9, 2013, we refinanced the debt on Bay Wellington Tower, Toronto for C$525 million. The new financing has a seven-year term with a fixed interest rate of 3.244% per annum.

 

On February 1, 2013, we repaid the debt at 105 Adelaide St. West, Toronto for C$20.7 million.

 

Capital Markets

 

On January 20, 2010, we completed an offering of 11 million preference shares, Series N to a syndicate of underwriters at a purchase price of C$25 per share. The gross proceeds raised by us from the share issuance were C$275 million.

 

On October 21, 2010, we completed an offering of 12 million preference shares, Series P to a syndicate of underwriters at a purchase price of C$25 per share. The gross proceeds raised by us from the share issuance were C$300 million.

 

In connection with the divestiture of BPO Residential, we distributed rights to our common shareholders which entitled them to acquire, at $10 per share, the BRPI shares that we received in exchange for our contribution of BPO Residential. This was done to allow our shareholders the opportunity to participate in the ownership of BRPI. We completed the rights offering on June 15, 2011. BAM acquired all of our shares of BRPI that were not subscribed for in the rights offering. The gross proceeds raised by us from the rights offering and the sale to BAM were $515 million.

 

On September 2, 2011, we completed an offering of 10 million preference shares, Series R to a syndicate of underwriters at a purchase price of C$25 per share. The gross proceeds raised by us from the share issuance were C$250 million.

 

In January 2012, we filed a short form base shelf prospectus with the securities regulatory authorities in all of the provinces of Canada and a registration statement on Form F-10 with the United States Securities and Exchange Commission. This base shelf prospectus allows us to issue up to $1 billion of Class AAA preference shares, common shares and unsecured debt securities.

 

On March 30, 2012, we redeemed all 6,138,022 of our outstanding class AAA Preference Shares, Series I for C$25 per share.

 

On September 13, 2012, we completed an offering of 10 million preference shares, Series T to a syndicate of underwriters at a purchase price of C$25 per share. The gross proceeds raised by us from the share issuance were C$250 million.

 

| Brookfield Office Properties | 2013 Annual Information Form8
 

 

On September 19, 2012, we announced that we had renewed our common share normal course issuer bid for a further one year period. During the twelve month period commencing September 22, 2012 and ending September 21, 2013, we may purchase on the TSX and/or the NYSE up to 12,603,728 common shares, representing approximately 2.5% of our issued and outstanding common shares.

 

On January 31, 2013, we redeemed all 8,000,000 of our outstanding class AAA Preference Shares, Series F for C$25 per share plus accrued and unpaid dividends.

 

On March 22, 2013, BPP announced a proposal to exchange its existing preferred shares for new class AAA preference shares of BPO with substantially the same terms and conditions. If BPP’s preferred shareholders approve the proposed transaction at a special meeting, and the requisite court approval is obtained for the plan of arrangement, it is anticipated that the proposed transaction will be completed on or about April 29, 2013.

 

| Brookfield Office Properties | 2013 Annual Information Form9
 

 

BUSINESS OF BROOKFIELD Office Properties

 

Commercial Property Operations

 

Our commercial property portfolio consists of interests in 111 properties totaling 76 million square feet, including 10 million square feet of parking. Our development portfolio comprises interests in 17 sites totaling 17 million square feet. Our primary markets are the financial, energy and government center cities of New York, Washington, D.C., Houston, Los Angeles, Denver, Seattle, Toronto, Calgary and Ottawa in North America as well as Sydney, Melbourne and Perth in Australia and London in the United Kingdom. Landmark assets include Brookfield Places in New York, Toronto and Perth, Bank of America Plaza in Los Angeles, Bankers Hall in Calgary and Darling Park in Sydney.

 

We are focused on the following strategic priorities:

·Realizing value from our properties through proactive leasing and select redevelopment initiatives;
·Prudent capital management including refinancing mature properties and disposition of select mature or non-core assets; and
·Advancing development assets as the economy rebounds and supply constraints create opportunities.

 

Business Strategy

 

Long-Term Lease Profile Limits Market Risk. Our strategy is to sign long-term leases in order to mitigate risk and reduce our overall re-tenanting costs. We typically commence discussions with tenants regarding their space requirements well in advance of the contractual expiration, and although each market is different, the majority of our leases, when signed, extend between 10- and 20-year terms. We attempt to stagger our lease expiry profile so that we are not faced with disproportionate amounts of space expiring in one year.

 

Diversified, High Credit Quality Tenants. An important characteristic of our portfolio is the strong credit quality of our tenants. We direct special attention to credit quality, particularly in the current economic environment, in order to ensure the long-term sustainability of rental revenues through economic cycles. The following list shows major tenants with over one million square feet of space in our portfolio by leased area and their respective credit ratings and lease commitments:

 

Tenant   Primary Location   Credit Rating(1)     Year of
Expiry(2)
    Total
(000’s Sq.
Ft.)
    % of Sq.
 Ft.(3)
 
Government & Government Agencies   All Markets   AA+/AAA     Various       5,279       8.5 %
Bank of America/Merrill Lynch(4)   NY/Toronto/Denver/LA   A/A-     Various       4,948       8.0 %
CIBC World Markets(5)   NY/Toronto/Calgary   A+     2033       1,436       2.3 %
Suncor Energy   Calgary   BBB+     2025       1,356       2.2 %
RBC   Van./Tor./Cal./NY/LA/Minn.   AA-     2024       1,270       2.1 %
Morgan Stanley   NY/Los Angeles/Denver   A-     2030       1,219       2.0 %
Bank of Montreal   Calgary/Toronto   A+     2023       1,169       1.9 %

  

(1)From Standard & Poor’s, Moody’s or DBRS
(2)Weighted average basis based on square feet
(3)Prior to considering partnership interests in partially owned properties
(4)Bank of America/Merrill Lynch leases 4.6 million square feet at Brookfield Place New York, of which they occupy 2.7 million square feet with the balance being subleased to various subtenants ranging in size up to 500,000 square feet. Of this 2.7 million square feet, 1.9 million is in 250 Vesey Street and 0.8 million square feet is in 225 Liberty Street
(5)CIBC World Markets leases 1.1 million square feet at 300 Madison Avenue in New York, of which they sublease 925,000 square feet to PricewaterhouseCoopers

 

Proactive Leasing Strategy. Our proactive leasing strategy produced total 2012 leasing of 6.8 million square feet. Our vacancy rates are significantly below the market average in almost all of our primary markets. Our occupancy rate, at December 31, 2012, was 92%. Increasing occupancy and reducing rollover exposure allows for continued stable cashflow and low levels of capital expenditures and leasing costs.

 

| Brookfield Office Properties | 2013 Annual Information Form10
 

 

Investment Strategy

 

Acquire high quality properties in our target markets. Our strategy is to opportunistically acquire assets in high growth markets, namely markets where financial services, government and energy sectors drive the market, and assets which exhibit an opportunity to improve or preserve returns through repositioning (through a combination of capital improvements and shifts in marketing strategy), changes in management focus and re-leasing as existing leases terminate.

 

Expand asset management platform. We have historically explored property-level joint venture opportunities with strategic institutional partners. Although we plan to continue with these endeavors we also consider opportunities to pursue the acquisition of individual assets and portfolios through joint venture fund vehicles. In 2005 we formed our Canadian Office Fund to acquire the O&Y portfolio, in 2006 we formed our U.S. Office Fund to consummate the acquisition of the Trizec portfolio, in 2009 we co-sponsored with our parent company, BAM, the Real Estate Turnaround Program dedicated to investing in under-performing real estate and in 2012 we participated in an investment made by the BAM sponsored Brookfield Strategic Real Estate Partners Fund. Our participation in these funds is focused only on investments in the office sector. Of our 111 commercial office properties, 37 are wholly owned, 23 are held in property-level joint ventures, co-tenancies or through participating loan interests, and 51 are held in our funds.

 

Our Canadian Office Fund, which consists of 10 properties in Toronto and Ottawa, is a consortium of institutional investors, led and managed by us. Affiliates of the consortium members own direct interests in property-level joint ventures and have entered into several agreements relating to property management, fees, transfer rights and other material issues associated with the operation of the properties. Our U.S. Office Fund, which consists of 36 properties in New York, Washington, D.C., Houston and Los Angeles and 2.9 million square feet of development sites, which we lead and manage, invests through direct and indirect investment vehicles that have also entered into several agreements relating to property management, fees, transfer rights and other material issues associated with the operation of the properties.

 

We believe that investing our liquidity with partners in fund formats enables us to enhance returns. The funds and associated asset management fees represent an important area of growth as we expand our assets under management. Purchasing properties or portfolios of properties in a fund format allows us to earn the following categories of fees:

 

· Asset Management Stable base fee for providing regular, ongoing services.
     
· Transaction Development, redevelopment and leasing activities conducted on behalf of funds.
     
· Performance Earned when certain predetermined benchmarks are exceeded. Performance fees, which can add considerably to fee revenue, typically arise later in a fund’s life cycle and are therefore not fully reflected in current results.

 

| Brookfield Office Properties | 2013 Annual Information Form11
 

 

Commercial Development

 

We hold interests in 17 million square feet of high-quality, centrally-located development sites. With the exception of Manhattan West in New York and Bay Adelaide East in Toronto, these development sites are in planning stages. We will seek to monetize these sites through development only when we meet our risk-adjusted return hurdles and when we achieve preleasing targets.

 

The following table summarizes our commercial development projects at December 31, 2012:

 

         Number       Assets Under 
(Square feet in 000’s)  Region  Location  of Sites   Owned %   Management 
Active Developments                     
Manhattan West  New York  Between 31st and 33rd Street across from Moynihan train station   1    100%   5,000 
Bay Adelaide East  Toronto  Bay and Adelaide Streets   1    100%   980 
Total active developments      2         5,980 
                      
U.S. Developments in Planning                  
1501 Tremont Place  Denver  One block from Republic Plaza   1    100%   733 
Block 173  Denver  One block from Republic Plaza   1    100%   600 
Reston Crescent(1)  Washington  36-acre landscaped campus adjacent to Reston, Virginia   1    84%   724 
1500 Smith Street(1)   Houston  Between 1600 and 1400 Smith Street   1    84%   500 
Five Allen Center(1)  Houston  A sky bridge connection to the Allen Center   1    84%   1,100 
Allen Center Clay Street(1)  Houston  Located in the heart of the Allen Center/Cullen Center complex   1    84%   600 
          6         4,257 
Canadian Developments in Planning               
Bay Adelaide North  Toronto  Bay and Adelaide Streets   1    100%   420 
Brookfield Place III  Toronto  Third Tower of current project   1    54%   800 
Bankers West Parkade  Calgary  West parkade adjacent to Bankers Hall   1    50%   250 
225 Sixth  Calgary  Within one block of Fifth Avenue Place, Bankers Hall and Suncor Energy Centre   1    100%   2,400 
300 Queen Street(2)  Ottawa  Third phase of Place de Ville project   1    25%   577 
          5         4,447 
Australian Developments in Planning                  
Brookfield Place Tower 2  Perth  14-story tower block adjacent to Brookfield Place Perth   1    100%   345 
          1         345 
U.K. Developments in Planning                  
100 Bishopsgate  London  Located in the central core of the City of London   1    88%   950 
London Wall Place(3)  London  Located in the heart of the City of London financial district and close to the Bank of England   1    50%   500 
Principal Place(4)  London  Located on the City of London/Shoreditch border   1    100%   625 
          3         2,075 
Total developments in planning      15         11,124 
                      
Total commercial developments      17         17,104 

 

(1) Represents U.S. Office Fund assets

(2) Represents Canadian Office Fund asset

(3) Represents jointly controlled interest

(4) Represents a contribution

 

| Brookfield Office Properties | 2013 Annual Information Form12
 

 

Prudent and Flexible Capital Plan

 

Our strong balance sheet allows us to simultaneously pursue numerous growth initiatives including development and acquisitions.

 

We monitor both the amount of our leverage and the mix of our fixed/floating-rate debt to provide a more reliable stream of earnings. We regularly review various credit ratios to monitor our leverage. In order to mitigate the risk of rising interest rates, we finance our commercial properties through a combination of fixed and variable rate debt. Our optimum financing goal is to place long-term fixed rate non-recourse debt on each of our commercial properties. However, when an asset is being repositioned or released we may temporarily use a variety of short-term variable rate financing facilities, including loans from BAM and its affiliates, bridge financing from financial institutions and recourse debt. In addition, from time to time, we may enter into interest rate derivative contracts in order to limit our exposure to increasing interest rates.

 

Depending on market conditions, we opportunistically access the public equity markets through the issuance of common or preference shares. To the extent that we believe it is necessary and efficient, we may also raise capital through a variety of other means, including, but not limited to, public debt offerings, selling assets, entering into joint ventures or partnerships with equity providers, or a combination of these and other methods.

 

The details of our commercial property debt at December 31, 2012 are as follows:

 

($ in Millions)  Location  Rate   Maturity Date    Dec. 31, 2012(1,2)   Mortgage Details(3)
Commercial property debt                      
West 31st Street(4)  New York   6.00%  January 2013   $105   Non-recourse, floating rate
105 Adelaide  Toronto   5.32%  February 2013    21   Non-recourse, fixed rate
Bay Wellington Tower  Toronto   6.49%  April 2013    310   Non-recourse, fixed rate
Hudson's Bay Centre(5)  Toronto   5.20%  May 2013    105   Non-recourse, fixed rate
KPMG Tower(6,7)  Sydney   8.48%  May 2013    78   Non-recourse, fixed/floating rate
75 State Street  Boston   5.50%  June 2013    249   Non-recourse, floating rate
Three Bethesda Metro Center  Washington, D.C.   6.60%  June 2013    111   Non-recourse, fixed rate
225 Liberty Street  New York   6.91%  September 2013    70   Non-recourse, fixed rate
601 South 12th Street  Washington, D.C.   5.42%  October 2013    52   Non-recourse, fixed rate
701 South 12th Street  Washington, D.C.   5.42%  October 2013    43   Non-recourse, fixed rate
Bankers Hall  Calgary   7.17%  November 2013    158   Non-recourse, fixed rate
250 Vesey Street  New York   3.48%  November 2013    350   Non-recourse, floating rate
1550 & 1560 Wilson Boulevard(8)  Washington, D.C.   2.81%  January 2014    69   Non-recourse, floating rate
Ernst & Young Tower  Los Angeles   5.07%  February 2014    103   Non-recourse, fixed rate
650 Massachusetts Avenue  Washington, D.C.   2.96%  March 2014    88   Non-recourse, floating rate
2401 Pennsylvania Avenue(8)  Washington, D.C.   2.41%  May 2014    30   Non-recourse, floating rate
500 Jefferson Street(7,8)  Houston   4.39%  May 2014    20   Non-recourse, fixed/floating rate
601 Figueroa(7,8)  Los Angeles   4.39%  May 2014    193   Non-recourse, fixed/floating rate
1600 Smith Street(7,8)  Houston   4.39%  May 2014    140   Non-recourse, fixed/floating rate
Continental Center II(7,8)  Houston   4.39%  May 2014    27   Non-recourse, fixed/floating rate
Landmark Square(7,8)  Los Angeles   4.39%  May 2014    63   Non-recourse, fixed/floating rate
One Allen Center(7,8)  Houston   4.39%  May 2014    118   Non-recourse, fixed/floating rate
Sunrise Tech Park(7,8)  Washington, D.C.   4.39%  May 2014    29   Non-recourse, fixed/floating rate
Two Ballston Plaza(7,8)  Washington, D.C.   4.39%  May 2014    44   Non-recourse, fixed/floating rate
Suncor Energy Centre(9)  Calgary   6.38%  June 2014    207   Non-recourse, fixed rate
Brookfield Place Perth  Perth   5.70%  June 2014    540   Non-recourse, floating rate
Brookfield Prime Property Fund pool debt  Various   5.30%  June 2014    495   Non-recourse, floating rate
151 Yonge Street(10)  Toronto   2.92%  July 2014    10   Non-recourse, floating rate
2000 L Street  Washington, D.C.   2.12%  August 2014    98   Non-recourse, floating rate
Bank of America Plaza(8)  Los Angeles   5.31%  September 2014    224   Non-recourse, fixed rate
Silver Spring Metro Plaza(8)  Washington, D.C.   2.36%  September 2014    103   Non-recourse, floating rate
235 St Georges Terrace(7)  Perth   6.40%  September 2014    48   Non-recourse, fixed/floating rate
225 Liberty Street  New York   9.00%  October 2014    183   Non-recourse, fixed rate
First Canadian Place(10)  Toronto   5.37%  December 2014    73   Non-recourse, fixed rate
2001 M Street(8)  Washington, D.C.   5.25%  December 2014    43   Non-recourse, fixed rate
200 Vesey Street  New York   3.00%  December 2014    143   Non-recourse, floating rate
Mezzanine Loan  Various   5.71%  January 2015    198   Non-recourse, floating rate
Southern Cross East Tower(6)  Melbourne   5.03%  June 2015    121   Non-recourse, floating rate
Royal Centre  Vancouver   3.33%  June 2015    148   Non-recourse, fixed rate

 

| Brookfield Office Properties | 2013 Annual Information Form13
 

 

($ in Millions)  Location  Rate   Maturity Date    Dec. 31, 2012(1,2)   Mortgage Details(3)
799 9th Street  Washington, D.C.   2.89%  December 2015    70   Non-recourse, fixed rate
One & Two Reston Crescent(8)  Washington, D.C.   1.96%  December 2015    74   Non-recourse, floating rate
1250 Connecticut Avenue(8)  Washington, D.C.   5.86%  January 2016    51   Non-recourse, fixed rate
One Shelley Street(7)  Sydney   7.13%  January 2016    199   Non-recourse, fixed/floating rate
One New York Plaza(8)  New York   5.50%  March 2016    376   Non-recourse, fixed rate
225 Sixth(4)  Calgary   3.07%  May 2016    55   Non-recourse, floating rate
Three Allen Center(8)  Houston   6.12%  May 2016    163   Non-recourse, fixed rate
Metropolitan Park East & West  Seattle   3.75%  June 2016    124   Non-recourse, fixed rate
U.S. Office Fund acquisition financing(11)  Various   8.50%  October 2016    269   Non-recourse, fixed rate
1801 California Street  Denver   3.46%  December 2016    143   Non-recourse, floating rate
200 Liberty Street  New York   5.83%  February 2017    309   Non-recourse, fixed rate
52 Goulburn Street(7)  Sydney   5.63%  July 2017    62   Non-recourse, fixed/floating rate
99 Bishopsgate  London   4.27%  September 2017    215   Non-recourse, fixed rate
One Liberty Plaza  New York   6.14%  September 2017    830   Non-recourse, fixed rate
Southern Cross West Tower  Melbourne   5.45%  November 2017    82   Non-recourse, fixed rate
2 Queen Street East(10)  Toronto   5.64%  December 2017    29   Non-recourse, fixed rate
1400 K Street(8)  Washington, D.C.   5.30%  February 2018    51   Non-recourse, fixed rate
West 33rd Street(4)  New York   5.90%  April 2018    122   Non-recourse, fixed rate
Two Allen Center(8)  Houston   6.45%  May 2018    202   Non-recourse, fixed rate
1201 Louisiana Street  Houston   4.65%  October 2018    96   Non-recourse, fixed rate
Potomac Tower  Washington, D.C.   4.50%  January 2019    83   Non-recourse, fixed rate
22 Front Street  Toronto   6.24%  October 2020    18   Non-recourse, fixed rate
Bankers Court  Calgary   4.96%  November 2020    46   Non-recourse, fixed rate
1200 K Street(8)  Washington, D.C.   5.88%  February 2021    130   Non-recourse, fixed rate
Bethesda Crescent(8)  Washington, D.C.   5.58%  February 2021    59   Non-recourse, fixed rate
Queen's Quay Terminal  Toronto   5.40%  April 2021    87   Non-recourse, fixed rate
Fifth Avenue Place  Calgary   4.71%  August 2021    171   Non-recourse, fixed rate
Bay Adelaide West  Toronto   4.43%  December 2021    399   Non-recourse, fixed rate
Exchange Tower  Toronto   4.03%  April 2022    117   Non-recourse, fixed rate
77 K Street  Washington, D.C.   4.58%  June 2022    109   Non-recourse, fixed rate
Republic Plaza  Denver   4.24%  December 2022    279   Non-recourse, fixed rate
HSBC Building  Toronto   4.06%  January 2023    44   Non-recourse, fixed rate
Heritage Plaza  Houston   4.97%  January 2023    199   Non-recourse, fixed rate
Jean Edmonds Towers(10)  Ottawa   6.79%  January 2024    17   Non-recourse, fixed rate
701 9th Street  Washington, D.C.   6.73%  December 2028    150   Non-recourse, fixed rate
300 Madison Avenue  New York   7.26%  April 2032    390   Non-recourse, fixed rate
Total commercial property debt      5.38%        $11,030    
Corporate debt                      
C$200M BOX Corporate Revolver     3.22%  June 2014    68   Non-recourse, floating rate
Senior Notes     4.30%  January 2017    200   Recourse, fixed rate
Senior Notes     4.00%  April 2018    150   Recourse, fixed rate
Total corporate debt      4.02%         418    
                       
Total commercial property debt      5.33%         11,448    
Commercial property debt associated with assets held for sale                   
RBC Plaza  Minneapolis   2.25%  April 2013    64   Non-recourse, floating rate
Total commercial property debt associated with assets held for sale   2.25%         64    
                    
Total      5.31%        $11,512    

 

(1)Represents our consolidated interest before non-controlling interests
(2)Net of $61 million of transaction costs
(3)Non-recourse to Brookfield Office Properties
(4)Development debt
(5)A two-year extension option that extends the maturity to May 2015 is available to us provided that certain debt service and loan-to-value thresholds are met
(6)Represents liability payable to a subsidiary of BAM
(7)These debt balances are floating, but a portion of each balance has interest rate swaps in place to fix the interest rate through maturity
(8)U.S. Office Fund debt
(9)This loan consists of $174 million 1st mortgage bonds that are non-recourse to Brookfield Office Properties and a $33 million unsecured loan from an affiliate
(10)Canadian Office Fund debt
(11)Represents financing provided by seller of an approximate 20% interest in the U.S. Office Fund, which is secured by a limited partnership interest in the U.S. Office Fund

 

| Brookfield Office Properties | 2013 Annual Information Form14
 

 

Primary Markets and Properties

 

The following is a brief overview of the commercial property markets in which we operate as of the date of this AIF and includes discussion of management’s expectations with respect to certain markets which, by its nature, contains certain forward-looking statements. Forward-looking statements require us to make certain assumptions and are subject to inherent risks and uncertainties that could cause actual results or events to differ materially from current expectations. Please refer to the sections “Forward-looking Statements” and “Business of Brookfield Office Properties – Company and Real Estate Industry Risks” for a discussion of certain of these risks and uncertainties and material facts and assumptions related to the statements set forth in this section.

 

The term “BPO Direct” refers to those properties which are wholly-owned or owned through property-level joint ventures. When referring to ownership of properties by the U.S. or Canadian Office Fund, such ownership percentage refers to that of the applicable fund and not the proportionate percentage ownership of BPO. See “Business of Brookfield Office Properties — Commercial Property Operations — Investment Strategy” for a description of our interest in our funds. References to “BPPF” refer to our 80.47% controlling interest in Brookfield Prime Property Fund, an entity that holds direct ownership interests in certain of the properties in our Australian portfolio. Total area includes commercial office, retail, storage and parking.

 

The following overview includes references to various classes of properties in some of our markets. These classes represent a subjective quality rating of buildings which indicates the competitive ability of each building to attract similar types of tenants. A combination of factors, including rent, building finishes, system standards and efficiency, building amenities, location/accessibility and market perception, are used as relative measures. The difference between each of these classifications varies by market and Class B and C buildings are generally classified relative to Class A buildings. There is no definitive formula for classifying a building, but the general characteristics of each are as follows:

 

Class A: Most prestigious buildings competing for premier office tenants with rents above average for the area. Buildings have high quality standard finishes, state of the art systems, very strong accessibility and a clear market presence. “Class AA” is also used in certain markets to refer to premium buildings at the top end of the Class A category.

 

Class B: Buildings competing for a wide range of tenants with rents in the average range for the area. Building finishes are fair to good for the area and systems are adequate, but the buildings rent for less than Class A buildings.

 

Class C: Buildings competing for tenants requiring functional space at rents below the average for the area and the buildings rent for less than both Class A and Class B buildings.

 

This rating system is broadly used in the commercial real estate industry.

 

| Brookfield Office Properties | 2013 Annual Information Form15
 

 

New York

 

The New York City office market contains the largest area of office space in North America with approximately 242 million square feet of office space in Midtown Manhattan and approximately 85 million square feet in Lower Manhattan.

 

New York Midtown

 

The Midtown Manhattan overall vacancy rate at December 31, 2012 was 10.3%, a 7.3% increase from 9.6% at December 31, 2011. Our vacancy rate in this market is approximately 8.5%. Absorption was approximately negative 971,523 square feet during 2012 compared to approximately 3.2 million square feet in 2011. Our average in-place net rent per square foot in this market was $40.64 per square foot as at December 31, 2012, as compared to the average market net rent of $62.00 per square foot at that time.

 

BPO Direct

 

Property   Total Area 
(000’s Sq.Ft.)
  Form and Percentage
of Ownership
  Description
245 Park Avenue   1,787   51% fee interest.  New York State Teachers’ Retirement System owns remaining 49% interest.   Located on a full square block in Midtown Manhattan, 245 Park Avenue is a 46-story office tower.  The building is constructed of glazed brick, glass and steel and has an outdoor plaza for both tenant and public use. The building was built in 1967 and has undergone a complete renovation of the lobby, plaza and elevators.
             
300 Madison Avenue   1,140   100% fee interest.  

Designed by Skidmore, Owings & Merrill and completed in 2003, 300 Madison Avenue rises 35 stories in the heart of Midtown Manhattan, one block west of Grand Central Terminal. The elevated, spacious lobby features a striking 8-story glass atrium ascending above the building’s main entrance at the corner of 42nd Street and Madison Avenue. The building features an auditorium, dining facilities and other amenities on the lower levels.

 

450 West 33rd Street   1,792   75% fee interest.   450 West 33rd Street is positioned in the middle of Manhattan’s West Side construction zone. The property's footprint stretches from West 31st to West 33rd Streets, taking up a half block between 9th and 10th Avenues. The building is located in close proximity to Penn Station, Madison Square Garden, the Lincoln Tunnel, the Hudson River and the Jacob Javits Convention Center.

 

U.S. Office Fund

 

Property   Total Area 
(000’s Sq.Ft.)
  Form and Percentage
of Ownership
  Description
The Grace Building  

1,557

 

  49.9% fee interest.     The Grace Building is centrally located in Midtown Manhattan at 6th Avenue and 42nd Street. Built in 1971, Skidmore, Owings & Merrill designed the tower. The building’s distinctive curved tower walls are set back from the street and oversized windows provide views of the Manhattan skyline, the Hudson River and Bryant Park. The building has a 188-space parking garage.

  

| Brookfield Office Properties | 2013 Annual Information Form16
 

  

New York Downtown

 

The Lower Manhattan overall vacancy rate at December 31, 2012 was 8.8%, a 7.4% decrease from 9.5% at December 31, 2011. Our vacancy rate in this market is approximately 5.9%. Absorption was 810,119 square feet during 2012 compared to 854,921 square feet in 2011. Our average in-place net rent per square foot in this market was $29.11 per square foot as at December 31, 2012, as compared to the average market net rent of $32.00 per square foot at that time.

 

BPO Direct

 

Property   Total Area 
(000’s Sq.Ft.)
  Form and Percentage
of Ownership
  Description

Brookfield Place New York

-       200 Liberty Street

 

  1,721   100% leasehold interest.   200 Liberty Street is located at the south end of the four unique office towers, designed by Cesar Pelli, comprising the landmark Brookfield Place New York complex that includes extensive public spaces and the spectacular Winter Garden.  200 Liberty Street is a 40-story tower which was completed in 1986.  The building is connected to the complex through an enclosed passageway.
             
-      225 Liberty Street   2,706   100% leasehold interest.     225 Liberty Street is a 44-story tower which was completed in 1987.  225 Liberty Street is directly connected to the retail area of Brookfield Place New York and the Winter Garden.
             
-      200 Vesey Street   1,307   Share of a tenancy in common interest.   Completed in 1985, 200 Vesey Street is a 52-story tower, with our share of the building measuring 1,299,000 square feet, and is world headquarters for American Express.  200 Vesey Street is connected to the rest of the Brookfield Place New York complex through a courtyard, leading to the Winter Garden.  
             
-      250 Vesey Street   1,952   100% leasehold interest.     250 Vesey Street is a 34-story tower which was completed in 1986.  250 Vesey Street is the westernmost office tower in the Brookfield Place New York complex and offers views of the New York City harbor, Statue of Liberty and Manhattan skyline.  
             

-      Brookfield Place

Retail and Winter Garden

  291   100% leasehold interest.   Consists of the retail space in Brookfield Place New York which houses numerous restaurants, retailers and business services.
             
One Liberty Plaza   2,346   100% fee interest.   One Liberty Plaza is located in the financial district at Liberty Street and Broadway. This 54-story steel and glass tower which was completed in 1972 was designed by Skidmore, Owings & Merrill for U.S. Steel and the strength of the building lies in the simplicity of its sleek glass and steel architecture. One Liberty Plaza offers sweeping views of New York Harbor and the five boroughs, soaring above Zuccotti Park, which received the 2007 American Institute of Architects Merit Award.  

  

U.S. Office Fund

 

Property   Total Area 
(000’s Sq.Ft.)
  Form and Percentage of
Ownership 
  Description
One New York Plaza   2,587   100% fee interest.   One New York Plaza is located at Water and Whitehall Street and is the southernmost of all Manhattan skyscrapers. Constructed in 1970, this 50-story Downtown building has a unique 111,000 square foot base. The building underwent a renovation in 1995.  

 

| Brookfield Office Properties | 2013 Annual Information Form17
 

 

Boston, Massachusetts

 

The Boston financial district market, where BPO’s 75 State Street property is located, is Boston’s largest with approximately 35.4 million square feet. The Boston CBD overall vacancy rate at December 31, 2012 was 17.5%, a 10.7% decrease from 19.6% at December 31, 2011. Our vacancy rate in this market is approximately 25.4%. Absorption was 839,000 square feet during 2012 compared to negative 109,000 square feet in 2011. Our average in-place net rent per square foot in this market was $24.56 per square foot as at December 31, 2012, as compared to the average market net rent of $26.00 per square foot at that time.

 

BPO Direct

 

Property   Total Area 
(000’s Sq.Ft.)
  Form and Percentage
of Ownership
  Description
75 State Street   1,031   100% fee interest.     75 State Street is located in the heart of Boston's financial district.  This 31-story Art Deco office building, built in 1988, represents classic architectural design with extensive use of granite on the exterior facade and marble throughout the six-story great hall lobby, leading to the on-site retail, banking and food services.

 

| Brookfield Office Properties | 2013 Annual Information Form18
 

 

Washington, D.C.

 

The Washington, D.C. office market consists of approximately 376 million square feet of space. The Washington, D.C. overall vacancy rate at December 31, 2012 was 13.4%, a 10.7% increase from 12.1% at December 31, 2011. Our vacancy rate in this market is approximately 9.5%. Absorption was approximately negative 3,022,000 square feet during 2012 compared to 1,401,000 square feet in 2011. Our average in-place net rent per square foot in this market was $28.24 per square foot as at December 31, 2012, as compared to the average market net rent of $32.00 per square foot at that time.

 

BPO Direct

 

Property  

Total Area

(000’s Sq.Ft.)

 

Form and Percentage

Of Ownership

  Description
1625 Eye Street  

571

 

  10% fee interest.  The remaining 90% is owned by Edge.  

1625 Eye Street’s prominent design features a limestone and glass façade with a 9-story light-filled atrium facing Eye Street. An illuminated 160-foot campanile offers upper floor tenants panoramic views of the Washington skyline. The building was built in 2003.

 

701 9th Street   547   100% fee interest.     Built in 2001, 701 9th Street is located across from the national Portrait Gallery and one block west of the Verizon Center.
             
799 9th Street   265   100% fee interest.    

799 9th Street, NW, on the corner of 9th and H Streets, is in the heart of D.C.’s Penn Quarter and immediately adjacent to City Center. Built in 2001, this 10-story building provides tenants direct access to city transit and is located just two blocks from the 7th Street corridor with a variety of restaurants, retail and entertainment venues.

 

Potomac Tower  

441

 

  100% fee interest.     Located at 1001 North 19th Street in Rosslyn, Virginia, Potomac Tower is situated across the Potomac River from Georgetown.  The building offers a panorama of the Washington, D.C. skyline including the national monuments and the Capitol and an open view corridor up and down the Potomac River. Designed by I.M. Pei and completed in 1989, Potomac Tower is one Metro stop from Washington, D.C.’s CBD, and less than 10 minutes from Washington Reagan National Airport.
             
601 & 701 South 12th Street  

562

 

  100% fee interest.     Located on five acres in the Pentagon City submarket of Arlington, Virginia, 601 and 701 South 12th Street consists of two 12-story office buildings. Green space connects the buildings. Built in 1982, the buildings were renovated in 2003 and 2004.
             
77 K Street   327   100% fee interest.   Located in the Capitol Hill submarket of Washington, D.C., two blocks from Union Station, 77 K Street is an 11-story office building. 77 K Street features a rooftop terrace with dramatic views of the U.S. Capitol and a private fitness facility.
             
650 Massachusetts Avenue, NW   387   100% fee interest.   Attractively situated at the corner of Massachusetts Avenue, NW and 7th Street, NW overlooking historic Mt. Vernon square, 650 Massachusetts Avenue, NW is an eight-story office building and a four-story parking garage.  The building is 1 ½ blocks from the Gallery Place Metro Station and is within short walking distance of the Verizon Center sports and entertainment venue and the Washington Convention Center.
             
Three Bethesda Metro Center   368   100% leasehold interest.   Three Bethesda Metro Center is ideally located in the heart of downtown Bethesda. Sitting adjacent to the Bethesda Metro Station and the Hyatt Regency Hotel, this building is two blocks away from the shops and restaurants of Bethesda Row. This building features high window ratios, several on-site amenities, underground parking and glass elevators overlooking a dramatic 16-story atrium.

 

| Brookfield Office Properties | 2013 Annual Information Form19
 

 

U.S. Office Fund

 

Property  

Total Area

(000’s Sq.Ft.)

  Form and Percentage of
Ownership
  Description
             
1200 K Street  

434

 

  100% fee interest.     Built in 1992, 1200 K Street is a 12-story building that is well located in the East End submarket of Washington, D.C.   
             
1250 Connecticut Avenue   210   100% fee interest.     A unique Downtown building, 1250 Connecticut Avenue is a freestanding 8-story structure with windows on all four sides. Originally built in 1963, the property was renovated in 1996 and offers restaurants, retail and underground parking on site.
             
1400 K Street  

224

 

  100% fee interest.     1400 K Street was designed by Skidmore, Owings & Merrill and opened in 1981. Located in the East End business district, the building has views of beautiful Franklin Park. The 12-story building has windows on all four sides allowing abundant natural light.
             
2000 L Street  

383

 

  100% fee interest.  

Centrally located in the CBD, 2000 L Street is a 13-story office building that opened in 1968. In 1998, the building entrance, lobby, storefronts and common areas were remodeled as part of a redesign by RTKL Associates. A large floor plate offers remarkable flexibility and efficiency for tenants large and small.

 

2001 M Street  

264

 

  98% fee interest.  The remaining 2% is owned by other partners.   Built in 1986 and located in the West End of the CBD and within the Golden Triangle business improvement district, this polished granite, 12-story, Class A office building has abundant parking and is close to numerous restaurants and shopping.
             
2401 Pennsylvania Ave  

93

 

  100% fee interest.     Designed by Keyes Condon Florance, 2401 Pennsylvania Avenue was the recipient of The Washington Chapter of the American Institute of Architects (AIA/DC) “Award for Excellence in Architecture”. The mixed-use office, retail and residential building, built in 1990, is situated on the corner of Pennsylvania Avenue right at Washington Circle.
             
Bethesda Crescent  

336

 

  100% fee interest.     Designed by Keyes Condon Florance, Bethesda Crescent is comprised of three office buildings located just across Wisconsin Avenue from the Bethesda Metro Station.  The buildings were built in 1955 and renovated in 1988.
             
One Reston Crescent  

185

 

  100% fee interest.     One Reston Crescent, built in 2000, is the first building of the Reston Crescent development, a 6-story structure with state-of-the-art building systems and an elegant 2-story lobby.  Reston Crescent is a 36-acre, carefully phased master development set in a wooded park along the Dulles Corridor in Reston, Virginia.
             
Silver Spring Metro Plaza  

771

 

  100% fee interest.     Built in 1986, Silver Spring Metro Plaza is comprised of three buildings conveniently located in the Downtown Silver Spring business district.
             
Sunrise Tech Park  

316

 

  100% fee interest.     Sunrise Tech Park is a professional complex of four contemporary office and research and development buildings situated in Northern Virginia’s Reston/Herndon Corridor. Built in 1985, each single story structure features wrap-around window lines.
             
Two Ballston Plaza  

223

 

  100% fee interest.     Built in 1988, Two Ballston Plaza is an 11-story building located at the west end of the Rosslyn-Ballston corridor.  
              
Victor Building  

347

 

  49.9% of the fee interest.  The remaining interest is held by Principal.   Expanded and renovated in 2000, the Victor Building is an historic property located in the East End submarket in Washington, D.C. It is a freestanding 9-story office building.  The lobby and entrance have recently been renovated and a fitness center and rooftop terrace have been added.
             
1550 & 1560 Wilson Blvd  

359

 

  100% fee interest.     The 1550 building is a 7-story pre-cast concrete building built in 1984. The lobby was upgraded in 2001 with an earth-tone marble floor and light wood accents on the walls. The 1560 building is 12-stories tall and was delivered in 1986 with a glass curtain wall system offering sweeping views of Arlington, Virginia.
             
Two Reston Crescent   185   100% fee interest.   Two Reston Crescent, the second building of the Reston Crescent development, was completed in 2007.  It is a 6-story structure with state-of-the-art building systems and an elegant 2-story lobby.  Reston Crescent is a 36-acre, carefully phased master development set in a wooded park along the Dulles Corridor in Reston, Virginia.

 

| Brookfield Office Properties | 2013 Annual Information Form20
 

 

Houston, Texas

 

The Houston CBD office market consists of approximately 49.8 million square feet of space. The Houston CBD overall vacancy rate at December 31, 2012 was 8.7%, a 18.7% decrease from 10.7% at December 31, 2011. Our vacancy rate in this market is approximately 13.4%. Absorption was approximately 713,860 square feet during 2012 compared to negative 650,593 square feet in 2011. Our average in-place net rent per square foot in this market was $16.99 per square foot as at December 31, 2012, as compared to the average market net rent of $22.00 per square foot at that time.

 

BPO Direct

 

Property  

Total Area

(000’s Sq.Ft.)

  Form and Percentage
of Ownership
  Description
1201 Louisiana   892   100% fee interest.   Situated in Houston's CBD, 1201 Louisiana is a 35-story building.  The property features direct connection to Houston's all-weather tunnel/skywalk system which provides direct access to Allen Center and the Hyatt Regency Hotel as well as many eateries and retail shops. Outfitted with mirror-finished reflective glass, 1201 Louisiana offers distinctive architecture and views of the city are highlighted by full floor-to-ceiling windows. The building was built in 1971 and renovated in 1981 and 1996.  The building is three blocks from the light rail and has three levels of on-site parking.
             
Heritage Plaza   1,821   51% fee interest.   Situated on the western perimeter of Downtown Houston, this 53-story office tower overlooks historic Sam Houston Park and is well-known for its distinctive design elements, a recognizable marker on the Houston skyline. The building is convenient to major thoroughfares and provides direct passage to adjacent buildings and surrounding amenities via sky bridge. Tenant amenities include ample on-site parking and a fitness center.

 

U.S. Office Fund

 

Property  

Total Area

(000’s Sq.Ft.)

  Form and Percentage
of Ownership
  Description
Allen Center           Allen Center is a Class A office complex in Downtown Houston.    Allen Center is the only Downtown Houston development that incorporates a significant amount of green space into the common area plazas.  Served by the Downtown tunnel system, Allen Center is adjacent to several Metro bus and Downtown trolley stops.
             
-     One Allen Center   993   100% fee interest.     Completed in 1972 and renovated in 1992, One Allen Center is a 34-story office tower in Allen Center.  
             
-     Two Allen Center   996   100% fee interest.     Completed in 1978 and renovated in 1992, Two Allen Center is a 36-story office tower in Allen Center.  
             
-     Three Allen Center   1,195   100% fee interest.     Completed in 1980, Three Allen Center is a 50-story office tower in Allen Center.  
             
Cullen Center           The Cullen Center complex consists of three office towers: 500 Jefferson, 1600 Smith and Continental Center II.  Parking is available in attached garages and there are several adjacent Metro stops. Cullen Center is inter-connected via an overhead walkway and is accessible to the Downtown tunnel system.
             
-     1600 Smith   1,509   100% fee interest.     Built in 1984, 1600 Smith is a 51-story office tower in Cullen Center.
             
-     Continental Center II   530   100% fee interest.     Built in 1972, Continental Center II is a 20-story office tower in Cullen Center.
             
-     500 Jefferson   434   100% fee interest.     Built in 1962, 500 Jefferson is a 20-story office tower in Cullen Center.

 

| Brookfield Office Properties | 2013 Annual Information Form21
 

 

Los Angeles, California

 

The Los Angeles County office market consists of approximately 194.2 million square feet of space. The Los Angeles County overall vacancy rate at December 31, 2012 was 18.4%, a 2.1% decrease from 18.8% at December 31, 2011. Our vacancy rate in this market is approximately 11.9%. Absorption was 1,001,453 square feet during 2012 compared to negative 507,850 square feet during 2011. Our average in-place net rent per square foot in this market was $21.84 per square foot as at December 31, 2012, as compared to the average market net rent of $22.00 per square foot at that time.

 

U.S. Office Fund

 

Property  

Total Area

(000’s Sq.Ft.)

  Form and Percentage of
Ownership
  Description
601 Figueroa  

1,162

 

  100% fee interest.   The 52-story office tower, completed in 1990, features a Brazilian Rose polished granite exterior, two dramatic, 75-foot high atria lobbies and an open-air plaza highlighted by a 36-foot tall fire and water feature.
             
Bank of America Plaza   1,765   100% fee interest.   Bank of America Plaza was completed in 1974. The 55-story office tower is situated on a 4.21-acre site that features a unique formal garden with over 200 trees and three 24-foot waterfalls. Near the building’s main entrance is the 42-foot-high “Four Arches” sculpture by Alexander Calder.
             
Ernst & Young Tower  

1,636

 

  100% fee interest.   Built in 1985 and designed by Skidmore, Owings and Merrill, Ernst & Young Tower is a 41-story granite and glass tower situated in the Los Angeles CBD on approximately four acres. Situated below the park-like plaza area is FIG at 7th, a tri-level open air retail center.
             
Marina Towers   468   50% leasehold interest.
A family trust holds the remaining 50% interest.
  Marina Towers is comprised of two 12-story towers, completed in 1970 and 1972, overlooking the Los Angeles County small boat and yacht harbor in Marina Del Rey. The towers are architecturally mirrored with vertical bands of glass and engaged columns. A free-standing, six level parking structure and retail storefront sits between the two towers. Located prominently at the east border of Marina del Rey, tenants have unobstructed views in every direction.  
             
Landmark Square  

655

 

  100% fee interest.   Located in Downtown Long Beach, Landmark Square, was built in 1991.  The 26-story office building features granite throughout the lobby, high ceilings, and unique works by local artists.  A beautifully designed garden located on the rooftop of the parking structure can be seen from almost every floor of the building.

 

| Brookfield Office Properties | 2013 Annual Information Form22
 

 

Denver, Colorado

 

The Downtown Denver office market consists of approximately 30.5 million square feet. The Downtown Denver overall vacancy rate at December 31, 2012 was 14.9%, a 3.5 increase from 14.4% at December 31, 2011. Our vacancy rate in this market is approximately 33.4%. Absorption was approximately negative 140,704 square feet during 2012 compared to 933,919 square feet in 2011. Our average in-place net rent per square foot in this market was $18.79 per square foot as at December 31, 2012, as compared to the average market net rent of $19.00 per square foot at that time.

 

BPO Direct

 

Property  

Total Area

(000’s Sq.Ft.)

 

Form and Percentage

of Ownership

  Description
Republic Plaza   1,832   100% fee interest.   Built in 1984, Republic Plaza is Denver's tallest office building at 714 feet tall and 56 stories. Designed by Skidmore, Owings & Merrill and built of reinforced concrete clad in Sardinian granite, Republic Plaza includes office space and three retail levels. The building is known for its three-story marble lobby that features a quarterly "Art in Public Places" program of Colorado and regional artists.
             
1801 California Street   1,316   51% fee interest. The other 49% interest owner is an investment consortium.   Located in Denver’s CBD, 1801 California Street, formerly known as Qwest Tower, is a 54-story, Class A office building.  1801 California Street is conveniently located within five blocks of Denver’s major shopping and entertainment, including the 16th Street Mall, the Colorado Convention Center and the Denver Pavilions, in addition to major hotels.

 

| Brookfield Office Properties | 2013 Annual Information Form23
 

 

Seattle, Washington

 

The Seattle CBD office market consists of approximately 42 million square feet. The Seattle CBD overall vacancy rate at December 31, 2012 was 16.5%, a 16.7% decrease from 19.8% at December 31, 2011. Our vacancy rate in this market is approximately 10.3%. Absorption was approximately 1,427,932 square feet during 2012 compared to 1,076,474 square feet in 2011. Our average in-place net rent per square foot in this market was $17.95 per square foot as at December 31, 2012, as compared to the average market net rent of $18.00 per square foot at that time.

 

BPO Direct

 

Property  

Total Area

(000’s Sq.Ft.)

 

Form and Percentage

of Ownership

  Description
Metropolitan Park East & West   856   100% fee interest   Metropolitan Park is a multi-building, Class A office campus strategically located at the intersection of Seattle’s most dynamic submarkets, South Lake Union, the Denny Triangle and the CBD.  Metropolitan Park East and West are 20 and 18 stories respectively and have unobstructed views of Lake Union, the Cascades and Olympic Mountains.

 

| Brookfield Office Properties | 2013 Annual Information Form24
 

 

Toronto, Ontario

 

The Downtown Toronto office market consists of approximately 68.0 million square feet of space. The Downtown Toronto overall vacancy rate at December 31, 2012 was 4.4%, a 6.4% decrease from 4.7% at December 31, 2011. Our vacancy rate in this market is approximately 5.5%. Absorption in the Downtown Toronto financial core was 209,755 square feet during 2012 compared to 426,616 square feet in 2011. Our average in-place net rent per square foot in this market was $27.76 per square foot as at December 31, 2012, as compared to the average market net rent of $31.00 per square foot at that time.

 

BPO Direct

 

Property  

Total Area

(000’s Sq.Ft.)

 

Form and Percentage

of Ownership

  Description
Brookfield Place Toronto           Brookfield Place Toronto consists of almost 2.2 million square feet of rentable commercial and parking space comprising two high-rise office towers located in Toronto’s financial core in the block bounded by Bay, Wellington, Yonge and Front Streets.  A 90-foot high glass enclosed galleria integrates the two office towers, the related retail space, the Hockey Hall of Fame and 13 other historical buildings.  With direct access to Union Station, the Metro Toronto subway system and Commerce Court, Brookfield Place Toronto is a key point of entry in the underground pedestrian walkway system in Toronto.  
             
-    Bay Wellington Tower  

1,339

 

  100% fee interest.     Built in 1992, the Bay Wellington Tower is a 47-story tower located on the northern portion of Brookfield Place Toronto.
             
-    22 Front Street   144   100% fee interest in 22 Front Street.   22 Front Street is one of the 12 surviving historic buildings at the Brookfield Place Toronto site that were incorporated as an integral component of the complex’s design and preserved as part of Toronto’s living heritage.
             

-    Retail and Parking

 

742

 

 

50% interest (on a psf basis) in Retail and a 56% interest in Parking. The remaining 50% interest in Retail and 44% interest in Parking is owned by OMERS Realty Corporation.

 

This retail, heritage, office and parking complex is located between TD Canada Trust and Bay Wellington Towers and encompasses the office space in the historic and entertainment portions of Brookfield Place Toronto. Brookfield Place Toronto includes retail on the concourse and main street levels, as well as below-grade parking stalls serving the Brookfield Place Toronto complex and the Downtown district.

             
The Exchange Tower Block           The Exchange Tower Block consists of two office towers including the Exchange Tower and 105 Adelaide, and the retail and parking components of the complex.  
             
-    Exchange Tower  

1,160

 

  50% leasehold interest in the north parcel (containing a 3-story building) and a 50% freehold and leasehold interest in the south parcel (which includes the Exchange Tower).  The remaining 50% leasehold and freehold interests are held by TTC Pension Fund (25%) and Hospitals of Ontario Pension Fund (25%).   Exchange Tower is located in Toronto’s financial core at the corner of York and King Streets.  The office property is integrated with the Toronto financial core and the underground pedestrian network as a component of the Exchange Tower Block.  The building was built 1981 and renovated in 1999.
             
-    105 Adelaide Street  West  

232

 

  100% leasehold interest and a 25% fee interest in the Canadian Office Fund’s 50% interest.  The other 50% freehold interest is owned by a Canadian life insurance company.   105 Adelaide Street West, also known as Lombard Place, is a 12-story office property located in the financial core between the Exchange Tower and First Canadian Place. This Class A building was built in 1962 and completely renovated in 1990.

 

| Brookfield Office Properties | 2013 Annual Information Form25
 

 

Property  

Total Area

(000’s Sq.Ft.)

 

Form and Percentage

of Ownership

  Description
             
Hudson’s Bay Centre   931   100% leasehold interest and 100% fee interest in certain components.  

The Hudson’s Bay Centre comprises an office tower at 2 Bloor Street East, the Bay department store and an extensive retail concourse with a variety of shops and services. Built in 1973 and renovated in 2001, the building is directly above the intersection of two subway lines at the corner of Yonge and Bloor Streets and in close proximity to the Don Valley Expressway.

 

Queen’s Quay Terminal  

505

 

  100% fee interest.     Built in 1926 and renovated in 1983, Queen’s Quay Terminal is located on the waterfront in Downtown Toronto’s financial district.  The property also contains  condominium units which are owned freehold by other parties.
             
HSBC Building  

225

 

  100% fee interest in 1/3 of the property and a 100% leasehold interest in 2/3 of the property.  The other freehold owner is a private investor.   The HSBC Building is located in Toronto’s financial core at the corner of Wellington and York Streets. The project is a 17-story office tower completed in 1990 and is integrated with the Toronto financial core and underground pedestrian network.
             
Bay Adelaide Centre West Tower   1,574  

100% fee interest.

 

 

  Bay Adelaide West is located in Toronto’s financial core at the corner of Bay and Adelaide Streets. It is a 51-story office tower and is integrated with the underground pedestrian network.  Bay Adelaide Centre was the first major development in the Toronto financial district in over 17 years.

 

Canadian Office Fund

 

Property  

Total Area

(000’s Sq.Ft.)

  Form and Percentage of
Ownership
  Description
First Canadian Place  

2,780

 

  100% leasehold interest to 2023.  50% fee interest thereafter.   Located in Downtown Toronto, First Canadian Place is a complex consisting of office, banking, shopping and parking. With 72-stories, the office tower has remained unchallenged as the tallest office building in Canada since it was constructed in 1975.  
             
151 Yonge St.  

372

 

  100% fee interest.     The Yonge Richmond Centre is situated in Toronto’s financial core.  The building was built in 1991 and renovated in 1998.  The property provides a direct connection to the city’s underground pedestrian walkway and is connected to  2 Queen Street East to the north as well as the Queen Street subway station.  
             
2 Queen St. E.  

545

 

  83.5% fee interest and 16.5% leasehold interest.     2 Queen Street East is situated in Toronto’s financial core and built in 2003.  The property’s unique design incorporates an historic 1910 bank branch.  The property provides a direct connection to the city’s underground pedestrian walkway and is integrated with the Queen Street subway station.

 

| Brookfield Office Properties | 2013 Annual Information Form26
 

 

Calgary, Alberta

 

The Downtown Calgary office market consists of approximately 39.6 million square feet of space. The Downtown Calgary overall vacancy rate at December 31, 2012 was 3.7%, a 17.8% decrease from 4.5% at December 31, 2011. Our vacancy rate in this market is approximately 0.4%. Absorption in Downtown Calgary was approximately 1.8 million square feet during 2012 compared to approximately 2.0 million square feet in 2011. Our average in-place net rent per square foot in this market was $28.44 per square foot as at December 31, 2012, as compared to the average market net rent of $36.00 per square foot at that time.

 

BPO Direct

 

Property  

Total Area

(000’s Sq.Ft.)

 

Form and Percentage

of Ownership

  Description
Bankers Hall  

2,577

 

 

50% fee interest. The remaining 50% interest is owned by British Columbia Investment Management Corporation ("bcIMC").

  Built in 1988, the Bankers Hall complex is comprised of three towers: East Tower, West Tower and the Royal Bank Building.  The East and West Towers are twin 52-story office towers sitting above a 7-story office/retail podium that integrates the historic Hollingsworth Building and the adjacent 26-story Royal Bank Building.
             
Bankers Court  

325

 

 

50% fee interest. The remaining 50% interest is owned by bcIMC.

 

  Bankers Court, substantially completed in March 2009, is a 15-story office tower and is directly adjacent to Bankers Hall and connected by sky bridge.  
Suncor Energy Centre  

1,952

 

  50% fee interest. The remaining 50% interest is owned by ARCI Ltd.   Suncor Energy Centre consists of a two-tower office-retail complex and underground parking garage.  The office towers are the 52-story west tower and the 32-story east tower.  The property is located in the Calgary CBD and is connected to the above-ground pedestrian walkway system. The property was constructed in 1983 and is one of the top three office complexes in Calgary.
             
Fifth Avenue Place  

1,682

 

  50% fee interest.  The remaining 50% interest is owned by Alberta Investment Management (“AIMCo”).     Fifth Avenue Place is comprised of two 35-story office towers.  Fifth Avenue Place, which is connected to the above-ground pedestrian walkway system, was completed in 1981, and since acquisition has undergone a substantial capital investment program.

 

| Brookfield Office Properties | 2013 Annual Information Form27
 

 

Ottawa, Ontario

 

The Ottawa CBD office market consists of approximately 15.2 million square feet of space. The Ottawa CBD overall vacancy rate at December 31, 2012 was 6.0%, a 1.7% increase from 5.9% at December 31, 2011. Our vacancy rate in this market is approximately 0.3%. Absorption in the Ottawa CBD market was approximately 62,070 square feet during 2012 compared to negative 296,325 square feet in 2011. Our average in-place net rent per square foot in this market was $18.61 per square foot as at December 31, 2012, as compared to the average market net rent of $21.00 per square foot at that time.

 

Canadian Office Fund

 

Property  

Total Area

(000’s Sq.Ft.)

  Form and Percentage of
Ownership
  Description
Place de Ville I  

1,084

 

  100% leasehold interest.   Place de Ville I is located in the western portion of Ottawa’s Downtown core in the block bounded by Albert Street, Kent Street, Queen Street and Lyon Street. Built in 1974 and renovated in 1994, the property is comprised of two towers (A and B), situated at right angles to each other.
             
Place de Ville II   1,042   100% fee interest.     Place de Ville II is located in the western portion of Ottawa’s Downtown core in the block bounded by Sparks Street, Kent Street, Queen Street and Lyon Street.  It is comprised of Tower C, a 29-story building, the Podium, a smaller 4-story building, a below grade retail service concourse which includes office space, retail outlets, a food court, storage space and, a four-level underground parking facility.  The building was built in 1971 and renovated in 1995.
             
Jean Edmonds Towers  

649

 

  100% fee interest.     Jean Edmonds Towers is located in the western portion of Ottawa’s Downtown core in the block bounded by Slater Street, Kent Street, Laurier Avenue West and Bank Street. Built in 1974 and renovated in 1994, the property is comprised of two 20-story buildings linked at ground level by a 1-story building which serves as a restaurant. The remaining ground floor premises, situated in the towers themselves, offer retail services.

 

| Brookfield Office Properties | 2013 Annual Information Form28
 

 

Vancouver, British Columbia

 

The Vancouver Downtown office market consists of approximately 19.3 million square feet. The Vancouver Downtown overall vacancy rate at December 31, 2012 was 5.8%, a 4.9% decrease from 6.1% at December 31, 2011. Our vacancy rate in this market is approximately 0.3%. Absorption in the Vancouver Downtown market was approximately 48,236 square feet during 2012 compared to 63,034 square feet in 2011. Our average in-place net rent per square foot in this market was $21.75 per square foot as at December 31, 2012, as compared to the average market net rent of $33.00 per square foot at that time.

 

BPO Direct

 

Property  

Total Area

(000’s Sq.Ft.)

 

Form and Percentage

of Ownership

  Description
Royal Centre  

853

 

  100% fee interest.   Royal Centre is a Class A office building located in the prime CBD of Downtown Vancouver that was most recently renovated in 2001. This 36-story building is adjacent to the Vancouver Hyatt Regency Hotel.  Located on the corner of Georgia and Burrard, Royal Centre is conveniently situated within the business and retail amenities of Downtown Vancouver.  The property has two retail levels with shops and services with direct access to the Burrard Skytrain station, in addition to parking for 688 vehicles in a three-level underground parking garage.

 

| Brookfield Office Properties | 2013 Annual Information Form29
 

 

Sydney, Australia

 

The Sydney office market consists of approximately 53.2 million square feet. The Sydney overall vacancy rate at December 31, 2012 was 8.4%, which is consistent with 8.4% at December 31, 2011. Our vacancy rate in this market is approximately 1.5%. Absorption was approximately negative 166,000 square feet during 2012 compared to 1,001,000 square feet in 2011. Our average in-place net rent per square foot in this market was $64.65 per square foot as at December 31, 2012, as compared to the average market net rent of $74.00 per square foot at that time.

 

BPO Direct

 

Property  

Total Area

(000’s Sq.Ft.)

 

Form and Percentage

of Ownership

  Description
One Shelley Street   392   100% leasehold interest.     The property consists of a nine-story tower plus rooftop terrace, ground floor with retail, commercial lobby and office space at level 1 and basement parking.  One Shelley Street has achieved a 6 Star Green Star – Office Design v2 rating. The property is located in the King Street Wharf precinct in close proximity to Wynyard bus and rail interchanges and is surrounded by retail and restaurants.
             
KPMG Tower   318   50% freehold interest.   KPMG Tower was developed and built in December 2003. The building comprises a ground level foyer, lobby café, auditorium and 15 levels of office accommodation. There are four floors of basement car parking.  The property is located between Sussex and Shelley Streets at King Street Wharf. It is within walking distance of Wynyard Train Station and Pitt Street Mall and is well serviced by retail and restaurants at King Street Wharf.
             
American Express House   171   100% freehold interest held by BPPF.   American Express House is comprised of 10 levels of commercial office space, fully occupied by American Express, with ancillary retail and underground parking.  The property is located within the western corridor precinct of the Sydney CBD with frontage on Shelley Street. The building is proximate to Wynyard bus and rail interchange and King Street Wharf public ferry terminal and the retail and restaurants at King Street Wharf.
             
World Square Retail   253   50% freehold interest.   Located within the block bounded by Sydney’s George, Liverpool, Pitt and Goulburn Streets, World Square Shopping Centre offers fresh and prepared food services and a unique selection of fashion, homewares and lifestyle items within over 90 specialty retailers. World Square Car Park has five levels of underground parking.
             
52 Goulburn Street   277   50% freehold interest.   This building was built in 2007 and is positioned on the southern border of the midtown precinct of the Sydney CBD.  The property is bounded by George, Liverpool, Pitt and Goulburn Streets, Sydney. It is located close to the Downing Centre and Family Law Courts, Ernst & Young Centre and World Square Shopping Centre. Train and bus services are available at Town Hall, Museum and Central Stations.
             
King Street Wharf Retail   61   100% leasehold interest.   King Street Wharf is a premium waterfront restaurant and tourist precinct. All premises incorporate water views over Darling Harbour towards Wharves 8 and 9 at Pyrmont Bay and the National Maritime Museum.
             
NAB House   461   25% freehold interest.   NAB House is an office tower with 29 levels of office accommodation, ground floor banking and cafeteria, and car parking.  The property is located in Sydney’s CBD and is bounded by George, Grosvenor, Lang and Jamison Streets. The property enjoys excellent access to major bus, rail and ferry terminals.
             
IAG House   428   50% freehold interest.   IAG House was completed in 1976 and refurbished in 1998 and 2009. The property comprises basement and ground floor retail, 28 levels of office accommodation and on-site parking. The property is located in the core commercial precinct of the Sydney CBD on the corner of George and King Streets
             
E&Y Centre   787   50% freehold interest held by BPPF.   E&Y Centre is a landmark commercial office tower within the southern periphery of the midtown precinct of the Sydney CBD. The property comprises a substantial lobby with two retail areas and 35 upper levels of office accommodation incorporating low, mid, high and sky rise.  Surrounding development includes the World Square Shopping Centre and the property is well serviced by bus, rail and car.
             
Darling Park Complex   1,322   30% leasehold interest.   This landmark commercial and retail complex is located on Sussex Street, between Market and Druitt Streets. The property includes two buildings, Darling Park 1 and Darling Park 2, and comprises a total of 58 levels of office accommodation, basement car spaces, storage area and retail accommodation.  

 

| Brookfield Office Properties | 2013 Annual Information Form30
 

 

Melbourne, Australia

 

The Melbourne office market consists of approximately 46.6 million square feet. The Melbourne overall vacancy rate at December 31, 2012 was approximately 8.1%, a 40.0% increase from 5.8% at December 31, 2011. Our vacancy rate in this market is approximately 1.5%. Absorption was approximately negative 435,000 square feet during 2012 compared to 527,000 square feet in 2011. Our average in-place net rent per square foot in this market was $44.01 per square foot as at December 31, 2012, as compared to the average market net rent of $40.00 per square foot at that time.

 

BPO Direct

 

Property  

Total Area

(000’s Sq.Ft.)

 

Form and Percentage

of Ownership

  Description
Southern Cross East Tower   991   100% freehold interest (BPO holds a 75% interest and BPPF a 25% interest).   Southern Cross East Tower is a landmark office building with premium grade services. The building comprises a ground level foyer and retail tenancies, 36 upper levels of office accommodation and basement parking.  The property is located at the eastern end of the Melbourne CBD, bordering Exhibition, Bourke and Little Collins Streets. Public transport facilities include tram and bus services and Parliament Railway Station is situated nearby.
             
Southern Cross West Tower   510   100% freehold interest (BPO holds a 50% interest and BPPF a 50% interest).   Southern Cross West Tower forms part of the Southern Cross landmark development. The building was completed in 2009 and comprises ground floor retail tenancies, lobby and 20 upper levels of office accommodation.  The property is located at the eastern end of the Melbourne CBD, bordering Bourke and Little Collins Streets. Public transport facilities include tram and bus services and Parliament Railway Station is situated nearby.
             
Bourke Place Trust   810   42.96% freehold interest.   Bourke Place Trust comprises Bourke Place Tower, a premium-grade high rise office building with 45 office levels, retail space and basement parking; 558 Little Bourke Street, a commercial car park, with a restaurant at ground level; and Bourke Place Studios, retail and studio office accommodation.   Bourke Place Tower is located on the corner of Bourke and King Streets in the western end of the Melbourne CBD.

 

| Brookfield Office Properties | 2013 Annual Information Form31
 

 

Perth, Australia

 

The Perth office market consists of approximately 17.4 million square feet. The Perth overall vacancy rate at December 31, 2012 was 5.6%, a 124% increase from 2.5% at December 31, 2011. Our vacancy rate in this market is approximately 0.3%. Absorption was approximately 321,000 square feet during 2012 compared to 1,173,000 square feet in 2011. Our average in-place net rent per square foot in this market was $63.60 per square foot as at December 31, 2012, as compared to the average market net rent of $72.00 per square foot at that time.

 

BPO Direct

 

Property  

Total Area

(000’s Sq.Ft.)

 

Form and Percentage

of Ownership

  Description
235 St. Georges Terrace   206   50% leasehold interest.   The property comprises nine levels of office accommodation and three levels of basement car-parking. The generous floor plates provide considerable design flexibility with minimal core openings. Adjoining the site is the Bishops Gardens, a unique heritage garden that provides active and visual amenity to the property.  The property is located at the western end of St. Georges Terrace in the heart of Perth’s commercial and mining precinct, sharing the precinct with QV1, St. Georges Square and Woodside Plaza. The location marks the western entry point to the Perth CBD.
             
BankWest Tower   437   50% freehold interest.   BankWest Tower is a Class A, 52-level commercial office tower and includes the four-level Palace Hotel, a heritage-listed ground floor banking chamber with associated offices on the upper levels. The building is prominently located on the corner of St. Georges Terrace and Williams Street in the core of the Perth CBD and has expansive city views from the upper floors.
             
Brookfield Place Perth   953   100% freehold interest.   Brookfield Place Perth is a premium commercial grade tower and is the largest commercial office building in Western Australia.  Completed in 2012, the building has large efficient floor plates to optimize the amount of natural light and views of the Swan River to the south.

 

| Brookfield Office Properties | 2013 Annual Information Form32
 

 

London, United Kingdom

 

The London office market consists of approximately 75 million square feet. The London CBD overall vacancy rate at December 31, 2012 was 9.3%. Our vacancy rate in this market is approximately 38.2%. Absorption was approximately 4.2 million square feet during 2012. Our average in-place net rent square foot in this market was $85.83 per square foot as of December 31, 2012, as compared to the average market net rent of $89.00 per square foot at that time.

 

BPO Direct

 

Property  

Total Area

(000’s Sq.Ft.)

 

Form and Percentage

of Ownership

  Description
99 Bishopsgate   339   100% leasehold interest.   99 Bishopsgate provides 26 floors of high specification office accommodation in the heart of the City of London.  The building was extensively reconstructed in 1995 and refurbishments of the building occurred in 2006 and 2012.
             
Shoreditch   437   100% freehold interest   These properties are located at the southern end of Shoreditch High Street adjacent to the Principal Place development site.

 

| Brookfield Office Properties | 2013 Annual Information Form33
 

 

Service Businesses

 

Brookfield Johnson Controls Canada

 

Brookfield Johnson Controls Canada, one of the largest facilities management operations in Canada, is owned 33.1% by BPO in partnership with Johnson Controls and BAM. This joint venture currently delivers services to clients with portfolios in excess of 138 million square feet of space.

 

Brookfield Residential Management Services

 

Brookfield Residential Services Ltd. (“BRSL”) manages approximately 65,000 condominium units in the greater Metropolitan Toronto area.

 

Employees

 

As of December 31, 2012, we had approximately 1,899 employees: 74 in our Corporate Group, 656 in our U.S. Commercial Operations Group, 542 in our Canadian Commercial Operations Group, 177 in our Australian Commercial Operations Group, 33 in our UK Commercial Operations Group and 417 employees in BRSL. Approximately 224 of our U.S. Commercial Operations employees and 75 of our Canadian Commercial Operations employees are represented by labor unions. We consider our labor relations to be positive and anticipate maintaining agreements with our labor unions.

 

Environmental Protection

 

Environmental initiatives are a major component of our strategic business plan. Environmental stewardship is a high priority for us and we treat it as a key business objective, along with revenue growth and risk management.

 

Our objective is to maximize energy and resource efficiency and environmental stewardship at our properties, together with the wellness and safety of our tenants, employees and those that live in the neighborhoods that house our properties.

 

We achieve this through an integrated strategy based on three principles that are embedded in our corporate culture. These tenets are the foundation of our commitment to environmental responsibility.

 

(i)To operate, develop, retrofit, redesign and renovate properties to achieve optimum energy efficiency, occupant satisfaction and reduced carbon emissions.

 

(ii)To incorporate innovative environmental strategies in order to achieve best-in-industry environmental performance in all new office developments.

 

(iii)To seek best-in-class environmental certifications, actively participate in green industry organizations and support new initiatives that foster the energy and resource-efficient operation of office buildings and environmentally sustainable communities and practices.

 

| Brookfield Office Properties | 2013 Annual Information Form34
 

 

Company and Real Estate Industry Risks

 

Our strategy is to invest in high-quality commercial properties defined by the certainty of receiving rental payments generated by the tenants of those assets. However, we remain exposed to certain risks specific to our portfolio and those inherent in the commercial property business. Therefore, in evaluating BPO and our business, the following challenges, uncertainties and risks should be considered in addition to the other information contained in this AIF.

 

Our economic performance and the value of our real estate assets are subject to the risks incidental to the ownership and operation of real estate properties.

 

Our economic performance, the value of our real estate assets and, therefore, the value of our shares are subject to the risks normally associated with the ownership and operation of real estate properties, including but not limited to: downturns and trends in the national, regional and local economic conditions where our properties are located; the cyclical nature of the real estate industry; local real estate market conditions such as an oversupply of office properties, including space available by sublease, or a reduction in demand for such properties; changes in interest rates and the availability of financing; competition from other properties; changes in market rental rates and our ability to rent space on favorable terms; the bankruptcy, insolvency, credit deterioration or other default of our tenants; the need to periodically renovate, repair and re-lease space and the costs thereof; increases in maintenance, insurance and operating costs; civil disturbances, earthquakes and other natural disasters, or terrorist acts or acts of war which may result in uninsured or underinsured losses; the decrease in the attractiveness of our properties to tenants; the decrease in the underlying value of our properties; and certain significant expenditures, including property taxes, maintenance costs, mortgage payments, insurance costs and related charges that must be made regardless of whether or not a property is producing sufficient income to service these expenses.

 

We are dependent upon the economic conditions of the markets where our properties are located.

 

We are affected by local, regional, national and international economic conditions and other events and occurrences that affect the markets in which we own properties. A protracted decline in economic conditions will cause downward pressure on our operating margins and asset values as a result of lower demand for space.

 

Our properties are located in the United States, Canada, the United Kingdom and Australia. A prolonged downturn in one or more of these economies or the economy of any other country where we own property would result in reduced demand for space and number of prospective tenants and will affect the ability of our properties to generate significant revenue. If there is an increase in operating costs resulting from inflation or other factors, we may not be able to offset such increases by increasing rents. Because our portfolio consists primarily of office buildings (as compared to a more diversified real estate portfolio), a decrease in demand for office space could adversely affect our results of operations. Additionally, there are submarkets within our primary and secondary markets that are dependent upon a limited number of industries, and a significant downturn in one or more of these industries could also adversely affect our results of operations.

 

Our inability to enter into renewal or new leases on favorable terms for all or a substantial portion of space that is subject to expiring leases would adversely affect our cash flows and operating results.

 

Our income-producing properties generate revenue through rental payments made by tenants of the properties. Upon the expiry of any lease, there can be no assurance that the lease will be renewed or the tenant replaced. The terms of any renewal or replacement lease may be less favorable to us than the existing lease. We would be adversely affected, in particular, if any major tenant ceases to be a tenant and cannot be replaced on similar or better terms or at all.

 

Our competitors may adversely affect our ability to lease our properties which may cause our cash flows and operating results to suffer.

 

Numerous other developers, managers and owners of office properties compete with us in seeking tenants and management revenues. Some of the properties of our competitors may be newer, better located or better capitalized. These competing properties may have vacancy rates higher than our properties, which may result in their owners being willing to make space available at lower prices than the space in our properties, particularly if there is an oversupply of space available in the market. Competition for tenants could have an adverse effect on our ability to lease our properties and on the rents that we may charge or concessions that we must grant. If our competitors adversely impact our ability to lease our properties, our cash flows and operating results may suffer.

 

| Brookfield Office Properties | 2013 Annual Information Form35
 

 

Our ability to realize our strategies and capitalize on our competitive strengths are dependent on our ability to effectively operate our large group of commercial properties, maintain good relationships with tenants and remain well capitalized, and our failure to do any of the foregoing would affect our ability to compete effectively in the markets in which we do business.

 

Reliance on significant tenants could adversely affect our results of operations.

 

Many of our properties are occupied by one or more significant tenants and, therefore, our revenues from those properties will be materially dependent on the creditworthiness and financial stability of those tenants. Our business would be adversely affected if any of those tenants failed to renew certain of their significant leases, became insolvent, declared bankruptcy or otherwise refused to pay rent in a timely fashion or at all. In the event of a default by one or more significant tenants, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing the property. If a lease of a significant tenant is terminated, it may be difficult, costly and time consuming to attract new tenants and lease the property for the rent and on terms as favorable as the previous lease.

 

Our tenant base is concentrated heavily in three industries and unfavourable conditions in these industries may adversely impact our financial condition and results of operations.

 

As part of our strategy is to focus on markets underpinned by the financial services, government and resources and energy industries, a significant downturn in one or more of the industries in which these businesses operate would adversely affect our results of operations. In addition, austerity measures and governmental deficit reduction programs may lead governments to consolidate and reduce their office space and decrease their workforce, which may reduce demand for office space in the government sector.

 

We face potential adverse effects from tenant defaults, bankruptcies or insolvencies.

 

A tenant may experience a downturn in its business, which could cause the loss of that tenant or weaken its financial condition and result in the tenant’s inability to make rental payments when due or, for retail tenants, a reduction in percentage rent payable. If a tenant defaults, we may experience delays and incur costs in enforcing our rights as landlord and protecting our investments.

 

We cannot evict a tenant solely because of its bankruptcy. In addition, in certain jurisdictions where we own properties, a court may authorize a tenant to reject and terminate its lease. In such a case, our claim against the tenant for unpaid, future rent would be subject to a statutory cap that might be substantially less than the remaining rent owed under the lease. In any event, it is unlikely that a bankrupt or insolvent tenant will pay in full amounts it owes under a lease. The loss of rental payments from tenants and costs of re-leasing would adversely affect our cash flows and results of operations. In the event of a significant number of lease defaults and/or tenant bankruptcies, our cash flow may not be sufficient to pay cash dividends to our shareholders and repay maturing debt and any other obligations.

 

We face risks associated with the use of debt to finance our business, including refinancing risk.

 

We incur debt in the ordinary course of our business and therefore are subject to the risks associated with debt financing. These risks, including the following, may adversely affect our financial condition and results of operations: our cash flow may be insufficient to meet required payments of principal and interest; payments of principal and interest on borrowings may leave us with insufficient cash resources to pay operating expenses; we may not be able to refinance indebtedness on our properties at maturity due to business and market factors including: disruptions in the capital and credit markets; the estimated cash flow of our properties; the value of our properties; financial, competitive, business and other factors, including factors beyond our control; and if refinanced, the terms of a refinancing may not be as favorable as the original terms of the related indebtedness. If we are unable to refinance our indebtedness on acceptable terms, or at all, we may need to dispose of one or more of our properties upon disadvantageous terms. In addition, prevailing interest rates or other factors at the time of refinancing could increase our interest expense, and if we mortgage property to secure payment of indebtedness and are unable to make mortgage payments, the mortgagee could foreclose upon such property or appoint a receiver to receive an assignment of our rents and leases. This may adversely affect our ability to pay dividends or payments to our shareholders and lenders.

 

| Brookfield Office Properties | 2013 Annual Information Form36
 

 

If we are unable to manage our interest rate risk efficiently, our cash flows and operating results may suffer.

 

Advances under credit facilities and certain property-level mortgage debt bear interest at a variable rate. We may incur further indebtedness in the future that also bears interest at a variable rate or we may be required to refinance our debt at higher rates. In addition, though we attempt to manage interest rate risk, there can be no assurance that we will hedge such exposure effectively or at all in the future. Accordingly, increases in interest rates above that which we anticipate based upon historical trends would adversely affect our cash flows.

 

The impact of foreign exchange fluctuations may have a negative impact on our future revenues and net income.

 

Our financial results will be affected by fluctuations in foreign currency markets as certain assets and liabilities denominated in currencies other than the U.S. dollar will give rise to a foreign currency gain or loss reflected in our revenue and income.  Consequently, due to the substantial volatility of currency exchange rates, we cannot predict the effect of exchange rate fluctuations upon our future revenue.

 

Restrictive covenants in current and future indebtedness may limit management’s discretion with respect to certain business matters.

 

Instruments governing any of our indebtedness or indebtedness of our subsidiaries may contain restrictive covenants limiting our discretion with respect to certain business matters. These covenants could place significant restrictions on, among other things, our ability to create liens or other encumbrances, to pay dividends on our common shares or make certain other payments, investments, loans and guarantees and to sell or otherwise dispose of assets and merge or consolidate with another entity. These covenants could also require us to meet certain financial ratios and financial condition tests. A failure to comply with any such covenants could result in a default which, if not cured or waived, could result in a termination of our distributions and permit acceleration of the relevant indebtedness.

 

We are subject to risks relating to development and redevelopment projects.

 

On a strategic and selective basis, we may develop and redevelop properties.  The real estate development and redevelopment business involves significant risks that could adversely affect our business, financial condition and results of operations, including:  we may not be able to complete construction on schedule or within budget, resulting in increased debt service expense and construction costs and delays in leasing the properties; we may not have sufficient capital to proceed with planned redevelopment or expansion activities; we may abandon redevelopment or expansion activities already under way, which may result in additional cost recognition; we may not be able to obtain, or may experience delays in obtaining, all necessary zoning, land-use, building, occupancy and other governmental permits and authorizations; we may not be able to lease properties at all or on favorable terms or occupancy rates and rents at a completed project might not meet projections and therefore the project might not be profitable;  construction costs, total investment amounts and our share of remaining funding may exceed our estimates and projects may not be completed and delivered as planned; and upon completion of construction, we may not be able to obtain, or obtain on advantageous terms, permanent financing for activities that we have financed through construction loans.

 

Our insurance may not cover some potential losses or may not be obtainable at commercially reasonable rates, which could adversely affect our financial condition and results of operations.

 

We maintain insurance on our properties in amounts and with deductibles that we believe are in line with what owners of similar properties carry; however, our insurance may not cover some potential losses or may not be obtainable at commercially reasonable rates in the future.

 

Where properties are insured by our partners, all risk property insurance and rental value coverage is provided with limits that we believe are in line with what owners of similar properties carry.

 

| Brookfield Office Properties | 2013 Annual Information Form37
 

 

There also are certain types of risks (such as war, or environmental contamination, such as toxic mold) which are either uninsurable or not economically insurable. Should any uninsured or underinsured loss occur, we could lose our investment in, and anticipated profits and cash flows from, one or more of our properties, and would continue to be obligated to repay any recourse mortgage indebtedness on such properties.

 

Possible terrorist activity could adversely affect our financial condition and results of operations and our insurance may not cover some losses due to terrorism or may not be obtainable at commercially reasonable rates.

 

Possible terrorist attacks in the markets where our properties are located may result in declining economic activity, which could reduce the demand for space at our properties, reduce the value of our properties and reduce the financial stability of our tenants by harming the demand for goods and services offered by our tenants.

 

Additionally, terrorist activities could directly affect the value of our properties through damage, destruction or loss.

 

Our portfolio is concentrated in large metropolitan areas, some of which have been or may be perceived to be subject to terrorist attacks. Many of our properties consist of high-rise buildings, which may also be subject to this actual or perceived threat. Our insurance may not cover some losses due to terrorism or may not be obtainable at commercially reasonable rates.

 

We are subject to possible environmental liabilities and other possible liabilities.

 

As an owner and manager of real property, we are subject to various laws relating to environmental matters. These laws could hold us liable for the costs of removal and remediation of certain hazardous substances or wastes present in our buildings, released or deposited on or in our properties or disposed of at other locations. These costs could be significant and would reduce cash available for our business. The failure to remove or remediate such substances could adversely affect our ability to sell our properties or our ability to borrow using real estate as collateral, and could potentially result in claims or other proceedings against us.

 

Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling and also govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) and underground storage tanks are also regulated by federal, provincial and state laws. We are also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. We could incur fines for environmental compliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or tanks or related claims arising out of environmental contamination or human exposure to contamination at or from our properties.

 

Environmental laws and regulations can change rapidly and we may become subject to more stringent environmental laws and regulations in the future. Compliance with more stringent environmental laws and regulations could have an adverse effect on our business, financial condition or results of operations.

 

Regulations under building codes and human rights codes generally require that public buildings, including office buildings, be made accessible to disabled persons. Non-compliance could result in the imposition of fines by the government or the award of damages to private litigants. If we are required to make substantial alterations and capital expenditures in one or more of our properties to comply with these codes, it could adversely affect our financial condition and results of operations.

 

We may also incur significant costs complying with other regulations. Our properties are subject to various federal, state, provincial and local regulatory requirements, such as state, provincial and local fire and life safety requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. Existing requirements may change and compliance with future requirements may require significant unanticipated expenditures that could affect our cash flow and results from operations.

 

| Brookfield Office Properties | 2013 Annual Information Form38
 

 

 

If we are unable to recover from a business disruption on a timely basis our financial condition and results of operations would be adversely affected.

 

Our business is vulnerable to damages from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. If we are unable to recover from a business disruption on a timely basis, our financial condition and results of operations would be adversely affected. We may also incur additional costs to remedy damages caused by such disruptions.

 

We have no corporate limitation on the amount of debt we can incur.

 

Our management and Board of Directors have discretion under our articles of incorporation and bylaws to increase the amount of our outstanding debt. Our decisions with regard to the incurrence and maintenance of debt are based on available investment opportunities for which capital is required, the cost of debt in relation to such investment opportunities, whether secured or unsecured debt is available, the effect of additional debt on existing financial ratios and the maturity of the proposed new debt relative to maturities of existing debt. As a result, we could become more highly leveraged, resulting in increased debt service costs that could adversely affect our cash flows and operating results.

 

The failure of certain of our subsidiaries to qualify as REITs under U.S. federal income tax rules generally would have adverse tax consequences which could result in a material reduction in cash flow.

 

Certain of our subsidiaries intend to qualify for taxation as REITs for U.S. federal income tax purposes. However, no assurance can be provided that any such entity will qualify as a REIT. An entity’s ability to qualify as a REIT depends on its satisfaction of certain asset, income, organizational, distribution, shareholder ownership, and other requirements on a continuing basis. No assurance can be provided that the actual results of operations for any particular entity in a given taxable year will satisfy such requirements. If any such entity were to fail to qualify as a REIT in any taxable year, it would be subject to U.S. federal income tax, including any applicable alternative minimum tax, on its net taxable income at regular corporate rates, and distributions would not be deductible by it in computing its taxable income. Any such corporate tax liability could be substantial and could materially reduce the amount of cash available for distribution to our company, which in turn would materially reduce the amount of cash available for distribution to our shareholders and could have an adverse impact on the value of our common shares. Unless entitled to relief under certain U.S. federal income tax rules, any entity which so failed to qualify as a REIT would also be disqualified from taxation as a REIT for the four taxable years following the year during which it ceased to qualify as a REIT.

 

The failure of our Canadian REIT, BOX, to qualify for the REIT Exemption to the SIFT Rules would have adverse consequences.

 

The Income Tax Act (Canada) (the “Tax Act”) contains provisions which potentially impose tax on publicly traded trusts and partnerships that are specified investment flow through trusts or partnerships for purposes of the Tax Act (“SIFTs”) and their beneficiaries and partners (the “SIFT Rules”). There is an exemption from the application of the SIFT Rules for trusts that, throughout a taxation year, meet certain specified criteria relating to the nature of their income and investments (the “REIT Exemption”). Trusts that meet the REIT Exemption are excluded from the SIFT trust definition and, therefore, not subject to the SIFT Rules. The determination as to whether our Canadian REIT, BOX, qualifies for the REIT Exemption in a particular taxation year can only be made at the end of that taxation year. We expect that BOX will qualify for the REIT Exemption for purposes of the SIFT Rules throughout 2013. However, there can be no assurance in this regard and should BOX fail to qualify for the REIT Exemption, it would have adverse consequences on us, including a negative impact on our realizable cash flows.

 

| Brookfield Office Properties | 2013 Annual Information Form39
 

 

We participate in transactions and make tax calculations for which the ultimate tax determination may be uncertain.

 

We participate in many transactions and make tax calculations during the course of our business for which the ultimate tax determination is uncertain. While we believe we maintain provisions for uncertain tax positions that appropriately reflect our risk, these provisions are made using estimates of the amounts expected to be paid based on a qualitative assessment of several factors. It is possible that liabilities associated with one or more transactions may exceed our provisions due to audits by, or litigation with, relevant taxing authorities which may materially affect our financial condition and results of operations.

 

Changes in tax law and practice may have a material adverse effect on our financial condition and results of operations.

 

We hold certain of our subsidiaries through foreign subsidiaries and our decision to structure them in such a manner was based on prevailing taxation law and practice in such jurisdictions.  Any change in tax legislation (including in relation to taxation rates) and practice in these jurisdictions could adversely affect such company or entity and consequently have a material adverse effect on our financial condition and results of operations.

 

If we were a passive foreign investment company, or PFIC, for U.S. federal income tax purposes, U.S. shareholders generally would be subject to adverse U.S. federal income tax consequences.

 

Based on our organizational structure, as well as our expected income and assets, we do not believe that we will be classified for U.S. federal income tax purposes as a PFIC for our current taxable year, and we do not expect that we will be classified as a PFIC in the future. However, the determination of whether we are a PFIC in any taxable year depends on various facts and circumstances, some of which may not be entirely within our control. The PFIC determination also depends on application of complex tax rules concerning the classification of our assets and income, for which there are only limited judicial and administration interpretations, and therefore these rules are uncertain in some respects. Further, the PFIC determination is made annually and our circumstances may change. Accordingly, there can be no assurance that we will not be classified as a PFIC for the current taxable year or any future taxable year. If we were a PFIC, U.S. shareholders generally would be subject to adverse U.S. federal income tax consequences, including increased taxes and related interest charges on a disposition or constructive disposition of our common shares or the receipt of certain distributions or constructive distributions and increased reporting requirements. We urge U.S. shareholders to consult their own tax advisors regarding the tax consequences of our being a PFIC in light of their particular circumstances.

 

We are dependent on our management personnel.

 

Our management team has a significant role in our success. Our lack of a mature human capital strategy to address retention, development of talent and training may impede our ability to retain personnel or to attract suitable replacements should any members of the management group leave. The loss of services from members of the management group or a limitation in their availability could adversely affect our operations because of diminished relationships with lenders, prospective tenants and industry personnel.

 

Because real estate investments are illiquid, we may not be able to sell properties when appropriate or desired.

 

Large and high quality office properties like the ones that we own can be hard to sell, especially if local market conditions are poor. Such illiquidity could limit our ability to vary our portfolio promptly in response to changing economic or investment conditions. Additionally, financial difficulties of other property owners resulting in distressed sales could depress real estate values in the markets in which we operate in times of illiquidity. These restrictions could reduce our ability to respond to changes in the performance of our investments and could adversely affect our financial condition and results of operations.

 

We face risks associated with property acquisitions.

 

Competition from other well-capitalized real estate investors, including both publicly traded REITs and institutional investment funds, may significantly increase the purchase price of, or prevent us from acquiring, a desired property. Acquisition agreements will typically contain conditions to closing, including completion of due diligence to our satisfaction or other conditions that are not within our control, which may not be satisfied. Acquired properties may be located in new markets where we may have limited knowledge and understanding of the local economy, an absence of business relationships in the area or unfamiliarity with local government and applicable laws and regulations. We may be unable to finance acquisitions on favorable terms, or newly acquired properties may fail to perform as expected. We may underestimate the costs necessary to bring an acquired property up to standards established for its intended market position or may be unable to quickly and efficiently integrate new acquisitions into our existing operations. We may also acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities. Each of these factors could have an adverse effect on our results of operations and financial condition.

 

| Brookfield Office Properties | 2013 Annual Information Form40
 

 

We do not have sole control over the properties that we own with co-venturers, partners, fund investors or co-tenants or over the revenues and certain decisions associated with those properties, which may limit our flexibility with respect to these investments.

 

We participate in joint ventures, partnerships, funds and co-tenancies affecting many of our properties. Such investments involve risks not present were a third party not involved, including the possibility that our co-venturers, partners, fund investors or co-tenants might become bankrupt or otherwise fail to fund their share of required capital contributions.

 

Additionally, our co-venturers, partners, fund investors or co-tenants might at any time have economic or other business interests or goals which are inconsistent with our business interests or goals. In addition, we do not have sole control of certain major decisions relating to these properties, including decisions relating to: the sale of the properties; refinancing; timing and amount of distributions of cash from such properties to us; and capital improvements.

 

In some instances, although we are the property manager for a joint venture, the joint venture retains joint approval rights over various material matters such as the budget for the property, specific leases and our leasing plan. Moreover, in some of our property management arrangements the other venturer can terminate the property management agreement in limited circumstances relating to enforcement of the property managers’ obligations. In addition, the sale or transfer of interests in some of our joint ventures and partnerships is subject to rights of first refusal or first offer and some joint venture and partnership agreements provide for buy-sell or similar arrangements. Such rights may be triggered at a time when we may not want to sell but may be forced to do so because we may not have the financial resources at that time to purchase the other party’s interest. Such rights may also inhibit our ability to sell our interest in a property or a joint venture or partnership within our desired time frame or on any other desired basis.

 

Our organizational and ownership structure and strategy involve a number of relationships that may give rise to conflicts of interest between ourselves and BAM.

 

Our organizational and ownership structure and strategy involve a number of relationships that may give rise to conflicts of interest between us and our shareholders, on the one hand, and BAM, on the other. In particular, conflicts of interest could arise, among other reasons, because in originating and recommending real estate acquisition opportunities to us, BAM has significant discretion to determine the suitability of opportunities to us and to allocate such opportunities to us or to itself or its other subsidiaries or to third parties. In addition, because we frequently pursue the acquisition of individual assets and portfolios through joint venture fund vehicles, we will likely make co-investments with BAM and BAM sponsored funds or BAM sponsored or co-sponsored consortiums and partnerships, which typically require that BAM owe fiduciary duties to the other partners or consortium members that it does not owe to us. BAM also is permitted to pursue business activities and provide services to third parties that compete directly with our business and activities without providing us with the opportunity to participate, which could result in the allocation of BAM resources, personnel and acquisition opportunities to others who compete with us.

 

We may suffer a significant loss resulting from fraud, other illegal acts or inadequate or failed internal processes or systems.

 

We may suffer a significant loss resulting from fraud, other illegal acts or inadequate or failed internal processes or systems. We operate in different markets and rely on our employees to follow our policies and processes as well as applicable laws in their activities. Risk of illegal acts or failed systems is managed through our infrastructure, controls, systems, policies and people, complemented by central groups focusing on enterprise-wide management of specific operational risks such as fraud, trading, outsourcing, and business disruption, as well as people and systems risks. Failure to manage these risks can result in direct or indirect financial loss, reputational impact, regulatory censure or failure in the management of other risks such as credit or market risk.

 

| Brookfield Office Properties | 2013 Annual Information Form41
 

 

We may be subject to litigation.

 

In the ordinary course of our business, we may be subject to litigation from time to time. The outcome of any such proceedings may materially adversely affect us and may continue without resolution for long periods of time. Any litigation may consume substantial amounts of our management’s time and attention, and that time and the devotion of these resources to litigation may, at times, be disproportionate to the amounts at stake in the litigation.

 

The acquisition, ownership and disposition of real property expose us to certain litigation risks which could result in losses, some of which may be material. Litigation may be commenced with respect to a property we have acquired in relation to activities that took place prior to our acquisition of such property. In addition, at the time of disposition of an individual property, a potential buyer who is passed over in favor of another as part of our efforts to maximize sale proceeds may claim that it should have been afforded the opportunity to purchase the asset or alternatively that such buyer should be awarded due diligence expenses incurred or statutory damages for misrepresentation relating to disclosures made. Similarly, successful buyers may later sue us for losses associated with latent defects or other problems not uncovered in due diligence. We may also be exposed to litigation resulting from the activities of our tenants or their customers.

 

Negative publicity could damage our reputation and business.

 

Our ability to attract and retain tenants, investors and employees is impacted by our reputation and negative publicity can expose us to litigation and regulatory action. Negative public opinion concerning the financial services industry has been evidenced by the Occupy Wall Street demonstration that spawned similar protests in major cities and communities throughout North America.  The association of our properties with the financial services industry and the Occupy Wall Street demonstrations could damage our reputation, adversely affect our ability to attract and retain tenants and employees, and divert management’s attention from day-to-day operations.  The demonstrations themselves could cause physical damage to our properties and we could incur costs to prevent that damage and to ensure that our properties remain accessible.  Significant harm to our reputation can also arise from other sources, including employee misconduct, unethical behavior, environmental matters, litigation or regulatory outcomes, failing to deliver minimum or required standards of service and quality, compliance failures, unintended disclosure of confidential information and the activities of our tenants and counterparties, including vendors.

 

Climate change may adversely impact our operations and markets.

 

There is growing concern from members of the scientific community and the general public that an increase in global average temperatures due to emissions of greenhouse gases and other human activities have or will cause significant changes in weather patterns and increase the frequency and severity of climate stress events. Climate change, including the impact of global warming, creates physical and financial risk. Physical risks from climate change include an increase in sea level and changes in weather conditions, such as an increase in intense precipitation and extreme heat events, as well as tropical and non tropical storms.

 

We own buildings in coastal locations that may be particularly susceptible to climate stress events or adverse localized effects of climate change, such as sea-level rise and increased storm frequency or intensity. The occurrence of one or more natural disasters, such as hurricanes, fires, floods, and earthquakes (whether or not caused by climate change), could cause considerable damage to our properties, disrupt our operations and negatively impact our financial performance. To the extent these events result in significant damage to or closure of one or more of our buildings, our operations and financial performance could be adversely affected through lost tenants and an inability to lease or re-lease the space. In addition, these events could result in significant expenses to restore or remediate a property, increases in fuel (or other energy) prices or a fuel shortage and increases in the costs of insurance if they result in significant loss of property or other insurable damage.

 

| Brookfield Office Properties | 2013 Annual Information Form42
 

 

 

The expiration of long-term ground leases could adversely affect our results of operations.

 

Seventeen of our properties are subject to long-term ground leases and similar arrangements in which the underlying land is owned by a third party and leased to us and any co-venturers or partners. In addition, the ground leases may be subject to periodic rate resets which may fluctuate and may result in significant rental rate adjustments. Under the terms of a typical ground lease, we and any co-venturers or partners pay rent for the use of the land and are generally responsible for all costs and expenses associated with the building and improvements. Unless the lease term is extended, the land, together with all improvements, will revert to the owner of the land upon the expiration of the lease term. An event of default by us under the terms of a ground lease could also result in a loss of the property subject to such ground lease should the default not be rectified in a reasonable period of time. If possible, we may attempt to purchase these leases as they become available, but cannot be assured of this.

 

The following is a summary of our ground leases:

 

Building   City   Expiration   Notes
The Grace Building   New York   2014(1)   We own a 49.9% joint venture interest in the ground lessee, which holds a 100% leasehold interest and which is also the ground lessor.
First Canadian Place   Toronto   2023   We own a 12.5% freehold interest and a 25% leasehold interest in the property.
105 Adelaide Street West   Toronto   2043(2)   We own a 100% leasehold interest and a 12.5% freehold interest in the property.
Three Bethesda Metro Center   Bethesda  (Washington, D.C.)   2052   The entire parcel (office building, parking facility and plaza) is subject to the ground lease.  We own a 100% leasehold interest in this parcel. The ground lease includes one additional 49-year renewal option.
Marina Towers   Los Angeles   2063    
Place de Ville I   Ottawa   2065   We own a 25% leasehold interest in the property.
Brookfield Place New York   New York   2069    
Hudson’s Bay Centre   Toronto   2070   There is one ground lease that covers a portion of this property (approximately 63% by area). We own a 100% leasehold interest in the leasehold parcel and a 100% freehold interest in two freehold parcels.
HSBC Building (70 York Street)   Toronto   2083   The ground lease only covers a portion of the property (approximately 67% by area). We own a 100% leasehold interest in the leasehold parcel and a 100% freehold interest in the two freehold parcels.
235 St. Georges Terrace   Perth   2085   We own a 50% joint venture interest in the ground lessee, which holds a 100% leasehold interest.
Darling Park Complex   Sydney   2088   We own a 30% joint venture interest in the ground lessee, which holds a 100% leasehold interest.
2 Queen Street East   Toronto   2099   Only a small portion of this property is subject to a ground lease (approximately 16.5% by area). We own a 25% leasehold interest in the leasehold parcel and a 25% interest in the freehold parcel.
King Street Wharf Retail   Sydney   2099   We own a 100% leasehold interest.
NAB House   Sydney   2107   We own a 25% joint venture interest in the ground lessee, which holds a 100% leasehold interest. We also hold the same proportion in a freehold lease.
One Shelley Street   Sydney   2108   We own a 100% leasehold interest.
Exchange Tower   Toronto   2115(3)   There is one effective ground lease for a portion of this property (approximately 50% by area). We own a 50% subleasehold interest in the subleasehold parcel and a 50% interest in two freehold parcels.
99 Bishopsgate   London   2030   We own a 999 year leasehold interest.  The 999 year interest is subject to 98 year leasehold interest which we also own.  Further, we hold the freehold reversionary interest which is held on a bare trust for the benefit of The Prudential Assurance Company Limited.

(1) Ground lessee has the option to extend the ground lease for four additional 10-year periods and one 14-year period to 2068.

(2) Ground lessee has the option to extend the ground lease for an additional 30 years to 2073.

(3) Ground sublessee has 73 consecutive options to extend the ground sublease, each for a term of 10 years and 6 months, to November 30, 2881.

 

| Brookfield Office Properties | 2013 Annual Information Form43
 

 

DIVIDENDS AND DIVIDEND POLICY

 

The declaration and payment of dividends on our common shares are at the discretion of our Board of Directors, which supports a stable and consistent dividend policy. We declare dividends on a quarterly basis in U.S. dollars and remit payment to shareholders in accordance with the country of the registered address of shareholders. Shareholders with registered addresses in Canada receive payment in Canadian dollars (based on the exchange rate on the record date) unless they elect otherwise. Shareholders with registered addresses in the U.S. receive payment in U.S. dollars. It is our intention to continue to review the pay-out of dividends payable quarterly on March 31, June 30, September 30 and December 31 of each year and to increase the dividend amount in accordance with increases in cash flow.

 

A complete record of dividends per share paid on the common shares for the past three years is as follows:

    2012    2011    2010 
Per common share  $0.56 per annum   $0.56 per annum   $0.56 per annum 
   $0.14 per quarter   $0.14 per quarter   $0.14 per quarter 

 

We continue to pay dividends on our Class A preference shares semi-annually and dividends on our Class AA and Class AAA preference shares quarterly. A complete record of annual dividends per share paid on all classes of preference shares for the past three years is as follows:

($, except share information)   2012   2011   2010 
Authorized   Outstanding      Per Share   Per Share   Per Share 
 14,202,000    14,201,980   Class A redeemable voting, Series A & B  C$0.0833   C$0.0833   C$0.0833 
 2,000,000    2,000,000   Class AA Series E  C$0.5250   C$0.5250   C$0.4414 
 12,000,000    8,000,000   Class AAA Series E  C$0.5250   C$0.5250   C$0.4536 
 8,000,000    0(1)  Class AAA Series F  C$1.5000   C$1.5000   C$1.5000 
 6,000,000    4,400,000   Class AAA Series G  $1.3125   $1.3125   $1.3125 
 8,000,000    8,000,000   Class AAA Series H  C$1.4375   C$1.4375   C$1.4375 
 8,000,000    0(2)  Class AAA Series I  C$0.3250   C$1.3583   C$1.3000 
 8,000,000    8,000,000   Class AAA Series J  C$1.2500   C$1.2500   C$1.2500 
 8,000,000    6,000,000   Class AAA Series K  C$1.3000   C$1.3000   C$1.3000 
 11,500,000    11,500,000   Class AAA Series L  C$1.6875   C$1.6875   C$1.6875 
 11,000,000    11,000,000   Class AAA Series N(3)  C$1.5375   C$1.5375   C$1.4480 
 12,000,000    12,000,000   Class AAA Series P(4)  C$1.2875   C$1.2875   C$0.2504 
 10,000,000    10,000,000   Class AAA Series R(5)  C$1.2750   C$0.4192    - 
 10,000,000    10,000,000   Class AAA Series T(6)  C$0.3434    -    - 
(1)All outstanding Series F preference shares were redeemed on January 31, 2013
(2)All outstanding Series I preference shares were redeemed on March 30, 2012.
(3)The Series N preference shares were issued on January 20, 2010. The initial Series N dividend of C$0.2949 per share was paid on March 31, 2010.
(4)The Series P preference shares were issued on October 21, 2010. The initial Series P dividend of C$0.2504 per share was paid on December 31, 2010.
(5)The Series R preference shares were issued on September 2, 2011. The initial Series R dividend of C$0.4192 per share was paid on December 31, 2011.
(6)The Series T preference shares were issued on September 13, 2012. The initial Series T dividend of C$0.3434 per share was paid on December 31, 2012. The annual dividend rate on these shares is C$1.15 per share.

 

| Brookfield Office Properties | 2013 Annual Information Form44
 

 

DESCRIPTION OF CAPITAL STRUCTURE

 

General Description of Capital Structure

 

Common Shares - There are an unlimited number of common shares authorized, of which 505,012,766 common shares were issued and outstanding as of the date hereof.

 

There are currently three authorized classes of preference shares of BPO, as follows:

 

Class A Preference Shares — unlimited authorized

4,612,500 Class A preference shares, Series A authorized, of which 4,612,495 are issued and outstanding; and

9,589,500 Class A preference shares, Series B authorized, of which 9,589,485 are issued and outstanding.

 

Class AA Preference Shares — 6,000,000 authorized (2,400,000 shares have been issued and redeemed)

2,000,000 Class AA preference shares, Series E authorized, of which 2,000,000 are issued and outstanding.

 

Class AAA Preference Shares — unlimited authorized

12,000,000 Class AAA preference shares, Series E authorized, of which 8,000,000 are issued and outstanding;

6,000,000 Class AAA preference shares, Series G authorized, of which 4,400,000 are issued and outstanding;

8,000,000 Class AAA preference shares, Series H authorized, of which 8,000,000 are issued and outstanding;

8,000,000 Class AAA preference shares, Series J authorized, of which 8,000,000 are issued and outstanding;

8,000,000 Class AAA preference shares, Series K authorized, of which 6,000,000 are issued and outstanding;

11,500,000 Class AAA preference shares, Series L authorized, of which 11,500,000 are issued and outstanding;

11,500,000 Class AAA preference shares, Series M authorized, of which 0 are issued and outstanding;

11,000,000 Class AAA preference shares, Series N authorized, of which 11,000,000 are issued and outstanding;

11,000,000 Class AAA preference shares, Series O authorized, of which 0 are issued and outstanding;

12,000,000 Class AAA preference shares, Series P authorized, of which 12,000,000 are issued and outstanding;

12,000,000 Class AAA preference shares, Series Q authorized, of which 0 are issued and outstanding;

10,000,000 Class AAA preference shares, Series R authorized, of which 10,000,000 are issued and outstanding;

10,000,000 Class AAA preference shares, Series S authorized, of which 0 are issued and outstanding;

10,000,000 Class AAA preference shares, Series T authorized, of which 10,000,000 are issued and outstanding; and

10,000,000 Class AAA preference shares, Series U authorized, of which 0 are issued and outstanding.

 

There are currently no authorized Class AA preference shares, Series A, B, C or D, or Class AAA preference shares, Series A, B, C, D, F or I, as all authorized preference shares of each of these series were issued and subsequently redeemed and are no longer issuable.

 

Appendix C contains a summary of the material rights, privileges, restrictions and conditions attached to the Class A preference shares, the Class AA preference shares and the Class AAA preference shares, in each case as a class, and attached to the various issued and outstanding series thereof, as well as the material rights, privileges, restrictions and conditions attached to the common shares. The summary is qualified in its entirety by the full text of such attributes contained in the articles of BPO, which are available on our Web site, www.brookfieldofficeproperties.com and SEDAR, www.sedar.com.

 

| Brookfield Office Properties | 2013 Annual Information Form45
 

 

Ratings

 

Our access to financing depends on, among other things, suitable market conditions and the maintenance of suitable long-term credit ratings. Our credit ratings may be adversely affected by various factors, including increased debt levels, decreased earnings, declines in customer demand, increased competition, a further deterioration in general economic and business conditions and adverse publicity. Any downgrades in our credit ratings may impede our access to capital markets or raise our borrowing rates.

 

We are currently rated by two agencies. The following table shows the credit ratings issued by the rating agencies noted therein as at the date hereof:

 

   

DBRS Limited

(“DBRS”)

 

Standard & Poor’s

Rating Service

(“S&P”)

Corporate rating   BBB   BBB
Corporate debt rating   BBB   BBB-
Preferred shares   Pfd-3   P-3(high)
Outlook   Stable   Negative

 

S&P’s corporate credit ratings are on a rating scale that ranges from AAA to D, which represents the range from highest to lowest quality of such securities rated. According to the S&P rating system, an entity rated “BBB” has adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the entity to meet its financial commitments. The ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.

 

S&P’s Canadian preferred share ratings are on a rating scale that ranges from P-1 to D, which represents the range from highest to lowest quality of such securities rated. According to the S&P rating system, a preferred share rated P-3 is less vulnerable in the near term than other lower-rated securities. However, it faces major ongoing uncertainties and exposure to adverse business, financial or economic conditions, which could lead to the obligor’s inadequate capacity to meet its financial commitments. The ratings from P-1 to P-5 may be modified by the addition of a (high), (mid) or (low) modifier to show relative standing within the major rating categories.

 

DBRS’ corporate credit ratings are on a rating scale that ranges from AAA to D, which represents the range from highest to lowest quality of such securities rated. According to the DBRS rating system, an entity rated “BBB” is of adequate credit quality. The capacity for payment of financial obligations is considered acceptable. The entity may be vulnerable to future events. The ratings from AA to CCC may be modified by the addition of a (high) or (low) modifier to show relative standing within the major rating categories.

 

DBRS’ preferred share ratings are on a rating scale that ranges from Pfd-1 to D, which represents the range from highest to lowest quality of such securities rated. According to the DBRS rating system, a preferred share rated “Pfd-3” is of adequate credit quality. While protection of dividends and principal is still considered acceptable, the issuing entity is more susceptible to adverse changes in financial and economic conditions, and there may be other adverse conditions present which detract from debt protection. The ratings from Pfd-2 to Pfd-5 may be modified by the addition of a (high) or (low) modifier to show relative standing within the major rating categories.

 

Credit ratings are intended to provide investors with an independent measure of credit quality of an issue of securities. These credit ratings are not recommendations to purchase, hold or sell our securities and do not comment as to market price or suitability of a specific security for a particular investor. Credit ratings may not reflect the potential impact of all risks on the value of securities. There is no assurance that the ratings will remain in effect for any given period or that a rating will not be revised or withdrawn entirely by S&P or DBRS in the future if, in its judgment, circumstances so warrant.

 

We have paid customary rating fees to DBRS and S&P in connection with some of the above-mentioned ratings. In addition, we have made customary payments in respect of certain other services provided to us by each of DBRS and S&P during the last two years.

 

| Brookfield Office Properties | 2013 Annual Information Form46
 

 

MARKET FOR SECURITIES

 

Our common shares are listed on the NYSE and TSX under the symbol BPO. Our Class A preference shares, Series A and B, and Class AA preference shares, Series E are not listed on an exchange. Our Class AAA preference shares are listed on the TSX under the symbols “BPO.PR.U”, “BPO.PR.H”, “BPO.PR.J”, “BPO.PR.K”, “BPO.PR.L”, “BPO.PR.N”, “BPO.PR.P”, “BPO.PR.R” and “BPO.PR.T.”

 

The following table sets forth the reported high and low trading prices and trading volumes of our common shares as reported by the TSX and NYSE from January 2012 to December 2012:

 

   TSX   NYSE 
   Price Per Share
(C$)
       Price Per Share (US$)     
Month  High   Low   Volume   High   Low   Volume 
December   17.11    16.09    10,468,435    17.24    16.18    31,780,915 
November   16.50    15.37    20,192,715    16.53    15.42    53,178,597 
October   16.42    15.21    15,800,674    16.73    15.25    44,390,769 
September   17.22    15.77    15,305,707    17.82    16.07    50,334,591 
August   17.33    16.47    12,860,707    17.30    16.50    35,075,406 
July   18.48    16.87    7,453,116    17.96    16.58    28,725,936 
June   17.82    16.44    9,499,374    17.44    15.83    33,510,870 
May   18.38    16.99    8,952,492    18.60    16.28    30,022,225 
April   18.05    16.56    10,214,241    18.36    16.49    28,805,870 
March   17.97    16.81    13,061,048    18.18    16.76    28,958,146 
February   18.19    17.18    13,888,507    18.26    17.25    27,956,358 
January   18.05    15.79    10,129,840    18.05    15.48    35,574,427 

 

The following table sets forth the reported high and low trading prices and trading volumes of our Class AAA preference shares, Series G (BPO.PR.U) as reported by the TSX from January 2012 to December 2012:

 

   Price Per Share (C$)     
Month  High   Low   Volume 
December   25.97    25.25    58,411 
November   26.40    25.50    53,011 
October   26.34    25.65    42,896 
September   26.60    25.55    26,776 
August   26.65    25.77    29,536 
July   26.65    24.90    25,782 
June   26.00    25.52    32,590 
May   26.55    25.51    49,064 
April   26.80    25.50    44,418 
March   27.00    26.75    83,064 
February   27.23    25.95    41,122 
January   26.00    25.50    28,915 

 

The following table sets forth the reported high and low trading prices and trading volumes of our Class AAA preference shares, Series H (BPO.PR.H) as reported by the TSX from January 2012 to December 2012:

 

   Price Per Share (C$)     
Month  High   Low   Volume 
December   26.40    25.95    104,963 
November   26.44    26.17    164,491 
October   26.45    26.10    640,285 
September   26.20    25.81    57,678 
August   26.19    26.02    125,055 
July   26.78    26.00    502,550 
June   26.35    25.80    54,149 
May   26.35    25.95    36,644 
April   26.31    25.95    39,857 
March   26.37    25.90    165,457 
February   26.25    25.99    384,221 
January   26.23    25.74    527,195 

 

| Brookfield Office Properties | 2013 Annual Information Form47
 

 

The following table sets forth the reported high and low trading prices and trading volumes of our Class AAA preference shares, Series J (BPO.PR.J) as reported by the TSX from January 2012 to December 2012:

 

   Price Per Share (C$)     
Month  High   Low   Volume 
December   26.02    25.43    46,951 
November   26.14    25.80    85,990 
October   25.99    25.64    1,130,059 
September   25.82    25.25    60,634 
August   25.74    25.51    43,477 
July   26.15    25.41    400,235 
June   25.95    25.30    68,123 
May   26.10    25.22    62,170 
April   25.87    25.25    36,483 
March   26.00    25.21    71,221 
February   26.14    25.40    72,197 
January   25.88    25.20    102,417 

 

The following table sets forth the reported high and low trading prices and trading volumes of our Class AAA preference shares, Series K (BPO.PR.K) as reported by the TSX from January 2012 to December 2012:

 

   Price Per Share (C$)     
Month  High   Low   Volume 
December   26.55    26.15    16,613 
November   26.51    25.91    34,271 
October   26.17    25.76    53,819 
September   25.98    25.70    38,104 
August   26.09    25.60    40,173 
July   25.82    25.54    35,049 
June   26.02    25.31    99,873 
May   26.64    26.10    25,033 
April   26.77    26.00    43,102 
March   26.70    25.80    55,517 
February   26.69    25.50    94,851 
January   26.75    25.45    110,546 

 

The following table sets forth the reported high and low trading prices and trading volumes of our Class AAA preference shares, Series L (BPO.PR.L) as reported by the TSX from January 2012 to December 2012:

 

   Price Per Share (C$)     
Month  High   Low   Volume 
December   26.73    26.02    123,445 
November   26.85    26.40    108,169 
October   26.71    26.20    165,273 
September   26.84    26.15    158,642 
August   26.94    26.38    81,914 
July   26.98    26.40    180,355 
June   26.70    25.90    99,793 
May   26.75    26.11    158,745 
April   26.75    26.08    103,468 
March   26.97    26.00    103,289 
February   27.02    26.26    133,274 
January   27.05    26.20    163,063 

 

| Brookfield Office Properties | 2013 Annual Information Form48
 

 

The following table sets forth the reported high and low trading prices and trading volumes of our Class AAA preference shares, Series N (BPO.PR.N) as reported by the TSX from January 2012 to December 2012:

 

   Price Per Share (C$)     
Month  High   Low   Volume 
December   26.52    25.91    126,513 
November   26.68    26.10    165,453 
October   26.58    26.20    105,333 
September   26.50    25.83    112,842 
August   26.52    26.21    68,800 
July   26.60    26.00    113,238 
June   26.24    25.35    107,272 
May   26.37    25.65    136,060 
April   26.44    25.77    165,032 
March   26.84    26.00    102,737 
February   26.97    26.10    117,793 
January   26.63    25.82    284,571 

 

The following table sets forth the reported high and low trading prices and trading volumes of our Class AAA preference shares, Series P (BPO.PR.P) as reported by the TSX from January 2012 to December 2012:

 

   Price Per Share (C$)     
Month  High   Low   Volume 
December   26.07    25.52    79,249 
November   25.99    25.50    67,284 
October   26.10    25.62    97,957 
September   25.85    25.02    116,531 
August   25.95    25.32    172,560 
July   26.03    25.20    183,255 
June   25.43    25.08    160,559 
May   25.65    25.10    178,690 
April   25.50    25.00    144,938 
March   25.80    24.88    136,870 
February   26.13    25.00    161,454 
January   26.54    24.91    391,621 

 

The following table sets forth the reported high and low trading prices and trading volumes of our Class AAA preference shares, Series R (BPO.PR.R) as reported by the TSX from January 2012 to December 2012:

 

   Price Per Share (C$)     
Month  High   Low   Volume 
December   26.75    25.50    162,166 
November   26.13    25.56    131,623 
October   25.94    25.60    292,732 
September   26.24    25.25    250,668 
August   26.63    26.00    179,308 
July   26.25    25.42    130,425 
June   25.90    25.26    79,103 
May   25.99    25.13    136,686 
April   26.00    24.95    133,682 
March   25.74    24.95    162,800 
February   25.94    25.25    139,367 
January   26.24    25.05    271,846 

 

The following table sets forth the reported high and low trading prices and trading volumes of our Class AAA preference shares, Series T (BPO.PR.T) as reported by the TSX from their issuance on September 13, 2012 to December 2012:

 

   Price Per Share (C$)     
Month  High   Low   Volume 
December   25.45    25.01    138,177 
November   25.95    25.40    183,096 
October   25.90    25.41    731,886 
September (September 13-September 30)   25.74    25.00    1,255,263 

 

| Brookfield Office Properties | 2013 Annual Information Form49
 

DIRECTORS AND OFFICERS

 

The names, principal occupations and municipalities of residence of our directors and officers, as well as the year each director first became a director are set out below. Each director is appointed to serve until the next annual meeting of shareholders or until his or her successor is elected or appointed.

 

Directors

 

Name, municipality of residence  

Director

since

  Principal Occupation and Five-year Occupation History
         
GORDON E. ARNELL
Calgary, Alberta, Canada
  1989   Mr. Arnell is a corporate director.  He was Chairman of BPO from 1995 to 2012.  
         
WILLIAM T. CAHILL (1)(2)
Ridgefield, Connecticut, U.S.A.
  2000   Mr. Cahill has been Managing Director Independent Risk at Citi Community Capital since 2002.  
         
CHRISTIE J.B. CLARK (2)(3)
Toronto, Ontario, Canada
  2012   Mr. Clark is a corporate director. He retired from his position as the Chief Executive Officer of PricewaterhouseCoopers LLP in Canada in 2011, a position he had held since 2005.
         
RICHARD B. CLARK (4)
Larchmont, New York, U.S.A.
  2002   Mr. Clark has been Chairman of our Board of Directors since July 1, 2012. He was Chief Executive Officer of BPO from 2002 to 2012. Mr. Clark is currently also Senior Managing Partner and Chief Executive Officer of BAM’s global real estate group.
         
JACK L. COCKWELL
Toronto, Ontario, Canada
  1999   Mr. Cockwell has been Group Chairman of BAM since 2002.  
         
Dennis H. Friedrich
Muttontown, New York, U.S.A
  2012   Mr. Friedrich was appointed Chief Executive Officer of BPO effective July 1, 2012 following a year as President and Global Chief Investment Officer, prior to which he was President and Chief Executive Officer, U.S. Commercial Operations since January 2009 and President and Chief Operating Officer, U.S. Commercial Operations since 2003.
         
Michael Hegarty (1)(2)(3)
Briarcliff Manor, New York, U.S.A.
  2010   Mr. Hegarty is a corporate director.  He retired from AXA Equitable Life Insurance Company in 2001 after three years as President and Chief Operating Officer.
         
PAUL J. MASSEY JR. (2)(4)
Larchmont, New York, U.S.A.
  2012   Mr. Massey has been the Chief Executive Officer of Massey Knakal Realty Services since 1988 when he co-founded that firm.
         

F. ALLAN MCDONALD (2)(3)(4)

Elizabeth Bay, New South Wales, Australia

  2011   Mr. McDonald is a corporate director. He retired in 1989 as Director International Services, ANZ Bank. Previously, Mr. McDonald was Chairman and Managing Director of Development Finance Corporation Limited.
         
Robert L. Stelzl (1)(2)(3)
Hamilton, Montana, U.S.A.
  2005   Mr. Stelzl is a private real estate investor and investment manager.  In 2003, he retired from Colony Capital, LLC, a global real estate private equity investor, after 14 years as a principal and member of the Investment Committee.  
         
JOHN E. ZUCCOTTI
New York, New York, U.S.A.
  1998   Mr. Zuccotti has been Co-Chairman of our Board of Directors since 2002, Chairman of the Board of Directors of Brookfield Financial Properties, Inc. since 1996 and Senior Counsel, Weil, Gotshal and Manages LLP since 1998.  
(1)Member of the Governance and Nominating Committee
(2)Independent director
(3)Member of the Audit Committee
(4)Member of the Human Resources and Compensation Committee

 

| Brookfield Office Properties | 2013 Annual Information Form50
 

 

Officers

 

See above for descriptions of Richard B. Clark, Chairman and Dennis H. Friedrich, Chief Executive Officer.

 

Name, municipality of

residence

  Position Held   Five-year Occupation History
         
THOMAS F. FARLEY
Calgary, Alberta, Canada
  President and Global Chief Operating Officer   Mr. Farley has held his present principal occupation since June 2011, prior to which he was Chief Executive Officer, Canadian Commercial Operations since January 2009 and President and Chief Operating Officer, Canadian Commercial Operations since 2002.
         
BRYAN K. DAVIS
Rye, New York, U.S.A.
  Chief Financial Officer   Mr. Davis has held his present principal occupation since 2007.  
         
G. MARK BROWN
Dobbs Ferry, New York, U.S.A.
  Global Chief Investment Officer  

Mr. Brown was appointed Global Chief Investment Officer in July 2012. Previously he was Head of Global Strategic Initiatives and Finance, prior to which he was Senior Vice President, Strategic Initiatives and Finance since 2005.

 

MITCHELL E. RUDIN

Scarsdale, New York, U.S.A.

  President and Chief Executive Officer, U.S. Commercial Operations   Mr. Rudin has held his present principal occupation since June 2011, prior to which he was President and Chief Executive Officer of CB Richard Ellis’ New York Tri-State Region since 2004.
         

T. JAN SUCHARDA

Toronto, Ontario, Canada

  President and Chief Executive Officer, Canadian Commercial Operations   Mr. Sucharda has held his present principal occupation since June 2011, prior to which he was President and Chief Operating Officer, Canadian Commercial Operations since August 2010, Chief Operating Officer, Canadian Commercial Operations since 2009, and Senior Vice President, Strategic Initiatives since 2006.
         

KURT WILKINSON

Sydney, New South Wales, Australia

  President and Chief Operating Officer, Australian Commercial Operations   Mr.  Wilkinson has held his present principal occupation since 2012, prior to which he was Chief Operating Officer of Australian Commercial Operations since 2011 and Head of Asset Management of Australian Commercial Operations since 2009.  Prior to that Mr. Wilkinson held the position of Head of Property and Chief Operating Officer at an Australian REIT from 2004 to 2009.
         

MARTIN JEPSON

London, United Kingdom

  President and Chief Operating Officer, European Commercial Operations   Mr. Jepson has held his present principal occupation since 2013, prior to which he was Senior Vice President, Developments and Investments, Europe for BPO since 2011.  Prior to that he was Managing Director of the London Group for Hammerson, a leading European commercial real estate company from 2008 to 2011. Prior to joining Hammerson, Mr. Jepson served as London Regional Director at Taylor Woodrow Property Company from 2005 to 2008.
         
BRETT M. FOX
Old Bethpage, New York, U.S.A.
  General Counsel and Chief Compliance and Administrative Officer   Mr. Fox has held his present principal occupation since 2003.  
         
Michelle L. Campbell
New York, New York, U.S.A.
  Vice President, Compliance and Assistant General Counsel   Ms. Campbell has held her present principal occupation since 2007.
         
MELISSA J. COLEY
Madison, New Jersey, U.S.A.
  Vice President, Investor Relations and Communications   Ms. Coley has held her present principal occupation since 2002.  
         
P. KEITH HYDE
Toronto, Ontario, Canada
  Vice President, Taxation   Mr. Hyde has held his present principal occupation since 1988.
         
DANA PETITTO
New York, New York, U.S.A.
  Vice President, Finance   Ms. Petitto has held her present principal occupation since 2012. Prior to which she was Vice President and Controller of BPO since 2007.
         

 

| Brookfield Office Properties | 2013 Annual Information Form51
 

 

Share Ownership

 

As of the date hereof, the directors and executive officers of BPO own, directly or indirectly, or exercise control or direction over approximately 10,243,073 common shares, representing 2.0% of the outstanding voting shares. See the information on page 1 of our Management Proxy Circular dated March 15, 2013 under the heading “Principal Holders of Voting Shares”, which is incorporated by reference herein and available on SEDAR at www.sedar.com and on our Web site at www.brookfieldofficeproperties.com for further information regarding our share ownership.

 

LEGAL PROCEEDINGS

 

We are occasionally named as a party in various claims and legal proceedings which arise during the normal course of our business. We review each of these claims, including the nature of the claim, the amount in dispute or claimed and the availability of insurance coverage. Although there can be no assurance as to the resolution of any particular claim, we do not believe that the outcome of any claims or potential claims of which we are currently aware will have a material adverse effect on us.

 

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

 

As of the date hereof, no director, senior officer or associate of a director or senior officer nor, to the knowledge of our directors or senior officers after having made reasonable inquiry, any person or company who beneficially owns, directly or indirectly, voting securities of BPO carrying more than 10% of the voting rights attached to any class of voting securities of BPO outstanding at the date hereof, or any associate or affiliate thereof, had any material interest, direct or indirect, in any material transaction of BPO or its affiliates nor do any such persons have a material interest, direct or indirect, in any proposed transaction of BPO or its affiliates.

 

In the normal course of our operations, we enter into various transactions on market terms with related parties, including intercompany loans, putting amounts on deposit with affiliates, acquiring insurance and leasing office space. BAM also reimburses us for a portion of the annual compensation paid to certain members of our senior management team to the extent that they devote a portion of their time to BAM’s global real estate group.

 

CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS

 

Mr. Cockwell was a director of Fraser Papers Inc. (“Fraser”) until April 29, 2009. On June 18, 2009, Fraser announced that it, together with its subsidiaries, initiated a court-supervised restructuring under the Companies’ Creditors Arrangement Act in the Ontario Superior Court of Justice and that they would be seeking similar relief pursuant to chapter 15 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the district of Delaware. On February 10, 2011, the Ontario Superior Court of Justice sanctioned an amended plan of compromise and arrangement under the Companies’ Creditors Arrangement Act that provided for, among other things, the sale of most of Fraser’s remaining property and the making of distributions to Fraser’s creditors.

 

In 2010, the New York Department of State alleged that Mr. Massey violated the New York Real Property Law for failing to ensure that three brokers working for Massey Knakal Realty Services were properly licensed as real estate brokers. In 2011, Mr. Massey paid a fine of $2,000 and the New York Department of State terminated and withdrew the matter.

 

AUDITORS, TRANSFER AGENT AND REGISTRAR

 

Deloitte LLP (“Deloitte”) are the principal external auditors of BPO. Deloitte are Independent Registered Chartered Accountants, having an address at Suite 1400, Brookfield Place Toronto, 181 Bay Street, Toronto, Ontario M5J 2V1. Deloitte is independent of BPO within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of Ontario and the rules and standards of the Public Company Accounting Oversight Board and the securities laws and regulations administered by the United States Securities and Exchange Commission (“SEC”).

 

The transfer agent and registrar for BPO’s preference shares and common shares in Canada is CIBC Mellon Trust Company at its principal office in Toronto, Ontario. The transfer agent and registrar for BPO’s common shares in the United States is Computershare Inc. at its principal office in Ridgefield Park, New Jersey.

 

| Brookfield Office Properties | 2013 Annual Information Form52
 

 

AUDIT COMMITTEE INFORMATION

 

The Audit Committee is responsible for monitoring BPO’s systems and procedures for financial reporting, risk management and internal controls, reviewing certain public disclosure documents and monitoring the performance and independence of our internal and external auditors. The Audit Committee is also responsible for reviewing BPO’s annual audited financial statements, unaudited quarterly financial statements and management’s discussion and analysis of financial condition and results of operations prior to their approval by the full Board of Directors.

 

The Audit Committee charter sets out its responsibilities and duties, qualifications for membership, procedures for committee member removal and appointment and reporting to our Board of Directors. A copy of the charter is attached hereto as Appendix D.

 

The Audit Committee is comprised of four directors all of whom are independent directors: Christie J.B. Clark (Chairman), Michael Hegarty, F. Allan McDonald and Robert L. Stelzl. In addition to being independent directors under our Audit Committee charter, all members of the Audit Committee must meet an additional “independence” test under the Sarbanes-Oxley Act and National Instrument 52-110, “Audit Committees” in that their directors’ fees are the only compensation they, or their firms, receive from BPO and that they are not affiliated with and do not have a material relationship with BPO. Each member of the Audit Committee is Financially Literate and Mr. Clark is considered to be an Audit Committee Financial Expert, as these terms are defined under the applicable regulations.

 

Relevant Education and Experience

 

All of the members of the Audit Committee have acquired significant financial experience and exposure to accounting and financial issues through service as senior executive officers and directors of various public and private companies in different sectors, including the professional services and financial services industries. In these roles, the members of the Audit Committee have been involved in the supervision of a company’s accounting function, the preparation of financial statements, the assessment and oversight of the external auditors, the oversight of regulatory filings and compliance and the evaluation of internal controls over financial reporting. Messrs. Clark, Hegarty and McDonald have also served on the audit committees of various public and private companies. In addition, Messrs. Clark, Stelzl and McDonald have business-related university degrees, Mr. Clark is a chartered accountant and a fellow of the Institute of Chartered Accountants of Ontario and Mr. McDonald is a fellow of the Australian Society of Certified Practicing Accountants. Details of the experience of Messrs. Clark, Hegarty, McDonald and Stelzl are contained in our Management Proxy Circular dated March 15, 2013 under the heading “Business of the Meeting – Election of Directors – Director Nominees.” The collective experience and depth of knowledge represented by the members of the Audit Committee provide the committee with an understanding of the accounting principles used by BPO, including the application of estimates, accruals and provisions, that is sufficient to allow the committee to carry out its mandate.

 

Pre-Approval Policies and Procedures

 

From time to time, Deloitte also provides us with tax and other non-audit services and we maintain a policy regarding the provision of non-audit services by our external auditors. This policy, which is periodically reviewed and updated, requires consideration of whether the provision of services other than audit services is compatible with maintaining the external auditors’ independence and requires Audit Committee pre-approval of permitted audit, audit-related and non-audit services. It also specifies a number of services that are not permitted to be provided by our external auditors, including services related to financial information systems design and implementation.

 

| Brookfield Office Properties | 2013 Annual Information Form53
 

 

External Auditor Service Fees (By Category)

 

The following table sets forth further information on the fees billed or expected to be billed by Deloitte to BPO relating to the fiscal years ended December 31, 2012 and 2011:

 

Service Performed   2012(1)   2011(2)
Audit fees (3)  $3,719,008   $3,595,000 
Audit related fees (4)  $3,719,008   $4,140,000 
All other fees  $15,118   $15,000 
Tax fees   -   $50,000 
Total fees  $7,453,134   $7,800,000 
(1)All amounts are billed in Canadian dollars and have been converted to U.S. dollars at the exchange rate on December 31, 2012 of C$0.9922 for each US$1.00.
(2)All amounts are billed in Canadian dollars and have been converted to U.S. dollars at the exchange rate on December 31, 2011 of C$1.00 for each US$1.00.
(3)Included in this amount is $589,599 and $105,825 (2011 – $535,000 and $215,000) relating to the audits of BOX and BPP, respectively.
(4)Included in this amount is $3,381,375 (2011 - $3,600,000) related to the audit of various BPO subsidiaries and $335,000 (2011 - $540,000) of non-recurring fees.

 

Audit fees were for professional services rendered for the audit of our consolidated financial statements as of and for the years ended December 31, 2012 and 2011 and the audit of internal control over financial reporting as of December 31, 2012 and 2011, quarterly review of the financial statements included in our quarterly reports, consents and comfort letters issued and review of filings with securities commissions.

 

Audit-related fees consisted of fees for assurance and related services that are reasonably related to the performance of the audit and are not reported under “Audit fees.” Audit-related fees include fees relating to employee benefit plans, operating cost and escalation, joint venture and lender audits, as well as consultations concerning financial accounting and reporting standards.

 

Tax fees consist of fees for services related to tax compliance, including the preparation of tax returns and refund claims and tax planning and advice, including assistance with property tax assessment and appeals and technical advice related to income tax matters.

 

Other fees consist of fees for assistance with corporate and social responsibility reporting.

 

The Audit Committee of the Board of Directors has determined that the provision of these services is compatible with the maintenance of the independence of Deloitte.

 

ADDITIONAL INFORMATION

 

Additional information including directors’ and executive officers’ remuneration and indebtedness, the principal holders of our securities and securities authorized for issuance under equity compensation plans is set out in our Management Proxy Circular dated March 15, 2013. Additional financial information is also provided in the consolidated financial statements in our Annual Report for the year ended December 31, 2012. Our 2012 Annual Report also contains, in pages 14 through 61, the Management’s Discussion and Analysis of our financial condition and results of operations for the year ended December 31, 2012.

 

You may access other information about us, including our disclosure documents, reports, statements or other information that we file with the Canadian securities regulatory authorities through SEDAR at www.sedar.com and in the United States with the SEC at www.sec.gov and on our Web site at www.brookfieldofficeproperties.com.

 

| Brookfield Office Properties | 2013 Annual Information Form54
 

 

APPENDIX A – SUBSIDIARIES

 

As of the date hereof, Brookfield Office Properties Inc. (“BPO”) beneficially owned, directly or indirectly, the percentage interest of the voting and non-voting securities of the subsidiaries listed below. Certain subsidiaries, each of which represent not more than 10% of the consolidated assets and not more than 10% of the consolidated revenues of BPO, and all of which, in the aggregate, represent not more than 20% of the total consolidated assets and the total consolidated revenues of BPO at the date hereof, have been omitted. Indentation indicates the voting securities are directly or indirectly owned by the subsidiary listed above. 

 

Subsidiary   Jurisdiction
of Formation
  Percentage Interest         Property (including Percentage Interest if less than
100%) /Line of Business
Brookfield Properties, Inc.   Delaware     100 %       REIT
Brookfield Properties 711 Polk LLC   Delaware     100 %       711 Polk, Houston
1201 Louisiana Co. L.P.   Delaware     100 %       1201 Louisiana St., Houston
Brookfield Market LLC   Minnesota     100 %       Gaviidae Common Phase I, Minneapolis
Brookfield Properties 601 South 12th Co. LLC   Delaware     100 %       601 South 12th Street, Virginia
Brookfield Properties 701 South 12th Co. LLC   Delaware     100 %       701 South 12th Street, Virginia
Brookfield Properties Secaucus Co. LLC   Delaware     100 %       Allied Junction, NY
Brookfield Properties W 33rd Co. L.P.   Delaware     100 %       West 33rd 9th Avenue, NY
BOP West 31st Street LLC   Delaware     100 %       West 31st 9th Avenue, NY
Brookfield Properties 75 State Co. LLC   Delaware     99 %       75 State Street, Boston
450 Partners LLC   Delaware     75 %       450 West 33rd Street, NY
Brookfield Properties Investor Corporation   Delaware     100 %       REIT
BOP 650 Mass LLC   Delaware     100 %       650 Massachusetts Ave. NW, Washington, D.C.
BOP 799 9th LLC   Delaware     100 %       799 9th Street, NW, Washington, D.C.
BOP Bethesda Metro Center LLC   Delaware     100 %       Three Bethesda Metro Center, Bethesda, MD
BOP Heritage LLC   Delaware     51 %       Heritage Plaza, Houston
BOP Met Park LLC   Delaware     100 %       Metropolitan Park, Seattle
Brookfield Mountain LLC   Delaware     100 %       Capital Federal Parcel, Block 196 & 197, Lombardi Parcel and adjacent building, Denver
Brookfield Properties 173 Co. LLC   Delaware     100 %       Block 173, Denver
BOP Republic Plaza I Llc   Delaware     100 %   }   Republic Plaza & Tremont Garage, Denver
BOP Republic Plaza II LLC   Delaware     100 %      
TRZ Holdings LLC   Delaware     84.29 %       Holding Company
1200 K Street I Co. LLC   Delaware     84.29 %       1200 K Street N.W., Washington, D.C.
1200 K Street II Co. LLC   Delaware     84.29 %   }    
H,B-H Associates GP LLC   California     84.29 %        
1250C Co. LLC   Delaware     84.29 %       1250 Connecticut Avenue, Washington, D.C.
1400 K Co. LLC   District of Columbia     84.29 %   }   1400 K Street N.W., Washington, D.C.
1400 K Fee LLC   District of Columbia     84.29 %      
2000 L Co. LLC   District of Columbia     84.29 %       2000 L Street, N.W., Washington, D.C.
2401P Co. LLC   Delaware     84.29 %       2401 Pennsylvania Avenue, Washington, D.C.
1550 and 1560 Wilson Co. LLC   Delaware     84.29 %       1550 & 1560 Wilson Blvd., Rosslyn, VA
One Reston Co. LLC   Delaware     84.29 %       One Reston Crescent, Reston, VA
Sunrise Tech Park Co. LLC   Delaware     84.29 %       Sunrise Technology Park, VA
Two Reston Co. LLC   Delaware     84.29 %       Two Reston Crescent, Reston, VA
Two Ballston Plaza Co. LLC   Delaware     84.29 %       Two Ballston Plaza, Arlington, VA
Bethesda Crescent (4600) Co. L.P.   Delaware     84.29 %       Bethesda Crescent 4600 East-West Highway,
Bethesda, MD
Bethesda Crescent (Wisconsin) Co. L.P.   Delaware     84.29 %       Bethesda Crescent 7401 & 7475 Wisconsin Avenue, Bethesda, MD
Silver SM Co. LLC   Maryland     84.29 %       Silver Spring Metro Plaza, Montgomery, MD
BOP Landmark Square Co. LLC   Delaware     84.29 %       Landmark Square, Long Beach, CA
601 Figueroa Co. LLC   Delaware     84.29 %       Figueroa at Wilshire, 601 South Figueroa, Los Angeles
1600 Smith Co. LLC   Delaware     84.29 %       Continental Center I, 1600 Smith Street, Houston
Cullen 500 Jefferson Co. L.P.   Delaware     84.29 %       500 Jefferson, Houston

  

| Brookfield Office Properties | 2013 Annual Information Form55
 

 

Subsidiary  Jurisdiction
of Formation
  Percentage Interest   Property (including Percentage Interest if less than
100%) /Line of Business
Cullen Continental II Co. L.P.  Delaware   84.29%  Continental Center II, 600 Jefferson, Houston
One Allen Center Co. LLC  Delaware   84.29%  One Allen Center, Houston
Two Allen Center Co. LLC  Delaware   84.29%  Two Allen Center, Houston
Three Allen Center Co. LLC  Delaware   84.29%  Three Allen Center, Houston
One NY Plaza Co. LLC  Delaware   84.29%  One New York Plaza, NY
1114 6th Avenue Co. LLC  Delaware   84.29%  1114 Avenue of the Americas (Grace Building), NY (49.9%)
2001 M Co. LLC  Delaware   45.6%  2001 M Street, N.W., Washington, D.C.
750 Ninth Street, LLC  Delaware   36.92%  Victor Building, Washington, D.C.
333 South Hope Co. LLC  Delaware   84.29%  Bank of America Plaza, 333 S. Hope Street, Los Angeles
EYP Realty, LLC      84.29%  Ernst & Young Plaza and 7+FIG, Los Angeles
Marina Airport Building, Ltd.  California   84.29%  Marina Towers (North and South), Marina del Rey, CA (50%)
Brookfield Financial Properties, L.P.  Delaware   99.4%  Holding Company
Brookfield Properties One WFC Co. LLC  Delaware   99.4%  200 Liberty Street, NY
WFP Tower B Co. L.P.  New York   99.4%  250 Liberty Street, NY
BFP Tower C Co. LLC  Delaware   99.4%  200 Vesey Street, NY (51.47%)
WFP Tower D Co. L.P.  New York   99.4%  250 Vesey Street , NY
WFP Retail Co. L.P.  Delaware   99.4%  Retail space in Brookfield Place New York
BFP 300 Madison II LLC  Delaware   99.4%  300 Madison Avenue, NY
BOP 245 Park LLC  Delaware   50.7%  245 Park Avenue, NY
Brookfield Properties OLP Co. LLC  Delaware   99.4%  One Liberty Plaza, NY
BFP 1625 Eye Co. LLC  Delaware   9.94%  1625 Eye Street, Washington, D.C.
BFP 701 9th Co. LLC  Delaware   99.4%  701 9th Street, Washington, D.C.
77 K Street Tower, LLC  Delaware   49.7%  77 K Street, Washington. D.C.
BFP Potomac Tower Co. LLC  Delaware   99.4%  Potomac Tower, Arlington, VA
BOP 1801 California Street LLC  Delaware   99.4%  1801 California Street, Denver (51%)
Bpo Properties Ltd.  Canada   100%  Holding Company
Brookfield Canada Office Properties  Ontario   40.5%  REIT
Brookfield Office Properties Canada LP  Ontario   83.3%  105 Adelaide Street West, Toronto
20-22 Front Street W., Toronto
HSBC Building, 70 York Street, Toronto
Bay-Adelaide Centre (except North and East above ground parcels), Toronto
Exchange Tower & Lands, Toronto (50%)
Queen’s Quay Terminal & Lands, Toronto
Merivale Pad, Nepean
Bankers Court, Calgary (50%)
Royal Centre & Lands, Vancouver
BP LP  Ontario   83.3%  Bay Wellington Tower Lands and Ground Lease and Buffer Lands, Toronto
Brookfield Place (Wellington) Limited  Canada   83.3%  Bay-Wellington Tower Operating Lease, Toronto
Galleria Concourse Operations Inc.  Ontario   41.65%  Brookfield Place Toronto, Retail and Parking, Head Lease, Toronto
BOPC COF LP  Ontario   83.3%  Jean Edmonds Tower, Ottawa (25%)
Place de Ville I, Ottawa (25%)
Place de Ville II, Ottawa (25%)
2 Queen Street East, Toronto (25%)
Yonge/Richmond Centre, 151 Yonge Street, Toronto (25%)
BOPC FCP LP  Ontario   83.3%  First Canadian Place, Toronto (25%)
Leasehold (100%) and Freehold (50%)
BAC East Below Grade Sub LP  Ontario   83.3%  Bay Adelaide Centre East below grade parcel, Toronto
BAC North Below Grade Sub LP  Ontario   83.3%  Bay Adelaide Centre North below grade parcel, Toronto
BAC West Below Grade Sub LP  Ontario   83.3%  Bay Adelaide Centre West below grade parcel, Toronto
BAC Retail Concourse GP  Ontario   83.3%  Bay Adelaide Centre Retail, Toronto

 

| Brookfield Office Properties | 2013 Annual Information Form56
 

 

Subsidiary   Jurisdiction
of Formation
  Percentage Interest         Property (including Percentage Interest if less than
100%) /Line of Business
BPO Properties Bloor Yonge LP   Ontario     83.3 %       Hudson’s Bay Centre, Toronto
Bankers Hall LP   Alberta     83.3 %       Bankers Hall, Calgary (50%)
4087844 Canada Inc.   Canada     41.65 %       Bankers Hall Leasehold, Calgary
Fifth Avenue LP   Alberta     83.3 %       Fifth Avenue Place, Calgary (50%)
RBB LP   Alberta     83.3 %       Royal Bank Building, Calgary (50%)
4087861 Canada Inc.   Canada     41.65 %       Royal Bank Building Leasehold, Calgary
SEC LP   Alberta     83.3 %       Suncor Energy Centre, Calgary (50%)
BPO Core Trust   Alberta     100 %       Place de Ville III, Ottawa (25%)
BPO Properties Trust   Alberta     100 %       Trust
BPO Properties Bay Adelaide LP   Ontario     100 %       Bay Adelaide Centre North above ground parcel, Toronto
BAC East Above Grade Sub LP   Ontario     100 %       Bay Adelaide Centre East above ground parcel and Yonge Adelaide parcel, Toronto
6440982 Canada Inc.   Canada     100 %   }   Herald Site, Calgary
BPO Properties CHS LP   Alberta     100 %      
1652371 Alberta Ltd.   Alberta     100 %   }   Bow Parkade, Calgary
1652427 Alberta Ltd.   Alberta     100 %      
718357 Ontario Limited   Ontario     100 %       Oak Ridges Farm, Co-tenancy, Richmond Hill Lands (25%) and Seaton lands (23.75%)
Brookfield Johnson Controls Canada LP   Ontario     33.1 %       Facilities Management Services
Brookfield Residential Services Ltd.   Ontario     80 %       Condominium Management Company
BOP (UK) Holdings Ltd.   Ontario     100 %       Holding Company
Indirect beneficial owner of London, U.K. Properties:
Shoreditch, London
Puddle Dock, London
99 Bishopsgate, London
100 Bishopsgate, London (87.5%)
65-68 Leadenhall Street & 98 Fenchurch
Street, London
London Wall Place Development Property, London (50%)
BOPA Holdings Ltd.   Ontario     100 %       Holding Company
BOPA Trust   Australia     100 %       Option to purchase interest in Australian office properties:
KPMG Tower, Sydney
American Express House, Sydney
World Square Retail, Sydney
King Street Wharf Retail, Sydney
NAB House, Sydney
IAG House, Sydney
E&Y Centre, Sydney
Darling Park Complex, Sydney
Southern Cross East Tower, Melbourne
Southern Cross West Tower, Melbourne
Bourke Place Trust, Melbourne
One Shelley Street, Sydney
52 Goulburn Street, Sydney
235 St. Georges Terrace, Perth
Bank West Tower, Perth
Brookfield Place Perth
108 St. Georges Terrace, Perth
BSREP THG AIV BPO LP   Australia     41.22 %       Wynyard Properties

 

| Brookfield Office Properties | 2013 Annual Information Form57
 

 

APPENDIX B - Commercial Properties by Region as of december 31, 2012

           Assets Under management   proportionate(1)  

proportionate net of Non-

Controlling Interests(2)

 
(square feet in 000’s)  number OF
PROPERTIES
   leased %   office   retail   leasable   parking   total   owned %   leasable   total   leasable   total 
U.S. PROPERTIES                                                            
New York Midtown                                                            
300 Madison Avenue   1    100.0    1,126    14    1,140        1,140    100    1,140    1,140    1,134    1,134 
245 Park Avenue(3)   1    95.9    1,719    68    1,787        1,787    51    911    911    906    906 
450 West 33rd Street(3)   1    77.5    1,684    108    1,792        1,792    75    1,344    1,344    1,344    1,344 
The Grace Building(3,4)   1    96.3    1,537    20    1,557        1,557    42    656    656    656    656 
    4    91.5    6,066    210    6,276        6,276    65    4,051    4,051    4,040    4,040 
New York downtown                                                            
Brookfield Place New York                                                            
200 Liberty Street   1    89.8    1,611    52    1,663    58    1,721    100    1,663    1,721    1,653    1,711 
225 Liberty Street   1    100.0    2,671    35    2,706        2,706    100    2,706    2,706    2,690    2,690 
200 Vesey Street   1    99.5    1,254        1,254    53    1,307    100    1,254    1,307    1,246    1,299 
250 Vesey Street   1    99.8    1,861    43    1,904    48    1,952    100    1,904    1,952    1,893    1,941 
Retail and Winter Garden        41.0        168    168    123    291    100    168    291    167    289 
One Liberty Plaza   1    99.4    2,326    20    2,346        2,346    100    2,346    2,346    2,332    2,332 
One New York Plaza(4)   1    82.5    2,556    31    2,587        2,587    84    2,181    2,181    2,181    2,181 
    6    94.1    12,279    349    12,628    282    12,910    97    12,222    12,504    12,162    12,443 
Boston                                                            
75 State Street   1    74.6    771    25    796    235    1,031    100    796    1,031    796    1,031 
    1    74.6    771    25    796    235    1,031    100    796    1,031    796    1,031 
Washington, D.C.                                                            
1625 Eye Street   1    96.4    370    16    386    185    571    10    39    57    39    57 
701 9th Street   1    100.0    340    24    364    183    547    100    364    547    362    544 
799 9th Street   1    76.0    191    11    202    63    265    100    202    265    202    265 
Potomac Tower   1    100.0    238        238    203    441    100    238    441    236    438 
601 South 12th Street   1    100.0    309        309        309    100    309    309    309    309 
701 South 12th Street   1    100.0    253        253        253    100    253    253    253    253 
77 K Street   1    93.0    308    19    327        327    100    327    327    325    325 
650 Massachusetts Avenue   1    97.4    230    82    312    75    387    100    312    387    312    387 
Three Bethesda Metro Center   1    89.4    348    20    368        368    100    368    368    368    368 
Victor Building(3,4)   1    92.8    294    53    347        347    42    146    146    146    146 
1200 K Street(4)   1    99.9    366    24    390    44    434    84    329    366    329    366 
1250 Connecticut Avenue(4)   1    99.1    163    21    184    26    210    84    155    177    155    177 
1400 K Street(4)   1    99.9    178    12    190    34    224    84    160    189    160    189 
2000 L Street(4)   1    96.4    308    75    383        383    84    323    323    323    323 
2001 M Street(4)   1    10.7    190    39    229    35    264    84    193    223    193    223 
2401 Pennsylvania Avenue(4)   1    83.5    58    19    77    16    93    84    65    78    65    78 
Bethesda Crescent(4)   3    89.6    241    27    268    68    336    84    226    283    226    283 
One Reston Crescent(4)   1    100.0    185        185        185    84    156    156    156    156 
Silver Spring Metro Plaza(4)   3    83.3    640    47    687    84    771    84    579    650    579    650 
Sunrise Tech Park(4)   4    90.2    316        316        316    84    266    266    266    266 
Two Ballston Plaza(4)   1    86.6    204    19    223&n