##### 



Exhibit 99.2
  PART I  OBJECTIVES AND FINANCIAL HIGHLIGHTS
    
    
    17PART II  FINANCIAL STATEMENT ANALYSIS
    
    
    22PART III  RISKS AND UNCERTAINTIES
    
    
    43PART IV  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
    
    
    47PART V  BUSINESS ENVIRONMENT AND OUTLOOK
    
    
    51
 FORWARD-LOOKING STATEMENTS
  15




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##### 



PART I  OBJECTIVES AND FINANCIAL HIGHLIGHTS
 BASIS OF PRESENTATION
    FINANCIAL HIGHLIGHTS
 (Millions, except per share amounts)
    
    2005
    
    
    2004
    
    
    2003Results of operationsNet incomeExcluding lease termination income and gains(1)
    
    $
    164
    
    
    $
    102
    
    
    $
    162Including lease termination income and gains
    
    
    164
    
    
    
    138
    
    
    
    232Net income per share  dilutedExcluding lease termination income and gains(1)
    
    $
    0.69
    
    
    $
    0.43
    
    
    $
    0.67Including lease termination income and gains
    
    
    0.69
    
    
    
    0.58
    
    
    
    0.96Common share dividends paid per share
    
    
    0.65
    
    
    
    0.42
    
    
    
    0.34
    (2)Funds from operationsExcluding lease termination income and gains(1)
    
    $
    435
    
    
    $
    403
    
    
    $
    343Including lease termination income and gains
    
    
    435
    
    
    
    462
    
    
    
    442Funds from operations per share  dilutedExcluding lease termination income and gains(1)
    
    $
    1.85
    
    
    $
    1.70
    
    
    $
    1.43Including lease termination income and gains
    
    
    1.85
    
    
    
    1.95
    
    
    
    1.85Balance sheet dataTotal assets
    
    $
    9,513
    
    
    $
    8,800
    
    
    $
    8,382Commercial properties
    
    
    7,430
    
    
    
    6,555
    
    
    
    6,179Commercial property debt
    
    
    5,216
    
    
    
    4,754
    
    
    
    4,754Shareholders equity
    
    
    1,943
    
    
    
    1,992
    
    
    
    1,938
 (1)
    
    Exclusion of lease termination income and gains from these results is an additional
non-GAAP measure which we believe provides readers with a supplemental basis for
evaluating our on-going operations since lease terminations and gains are the result of
unpredictable and opportunistic events. The 2004 and 2003 results included $60 million and
$100 million, respectively, of lease termination income and gains ($36 million and $60
million, respectively, net of tax for purposes of net income). There was no lease
termination income or gains in 2005.(2)
    
    Excludes the distribution of Brookfield Homes Corporation (Brookfield Homes). On
January 6, 2003, we distributed all of the common shares of Brookfield Homes to common
shareholders of record on January 2, 2003. Common shareholders received one common share
of Brookfield Homes for each five common shares of Brookfield Properties held on the date
of record, and the transaction was recorded as a distribution to shareholders at the
carried value of our investment in Brookfield Homes. 16




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##### 



OVERVIEW OF THE BUSINESS
  COMMERCIAL PROPERTY OPERATIONS
   
    
    Surfacing value from our properties through pro-active leasing and select redevelopment
initiatives;
    
    Prudent capital management including the refinancing of mature properties and investing in
joint venture opportunities with institutional partners who seek to benefit from the depth of our
expertise;
    
    Monetizing development assets as the economy rebounds and continued supply constraints create
opportunities.
  BrookfieldLeasable
    
    
    Properties
    
    
    
    
    
    
    
    
    
    
    Net BookNumber of
    
    
    Area
    
    
    Owned Interest
    
    
    Book Value
    
    
    Debt
    
    
    EquityRegion
    
    Properties
    
    
    (000s Sq.Ft.)
    
    
    (000s Sq. Ft.)
    
    
    (Millions)
    
    
    (Millions)
    
    
    (Millions)New York, New York
    
    
    8
    
    
    
    12,453
    
    
    
    10,738
    
    
    $
    3,824
    
    
    $
    3,122
    
    
    $
    702Boston, Massachusetts
    
    
    2
    
    
    
    2,163
    
    
    
    1,103
    
    
    
    325
    
    
    
    159
    
    
    
    166Washington, D.C.
    
    
    3
    
    
    
    1,557
    
    
    
    1,557
    
    
    
    395
    
    
    
    357
    
    
    
    38Toronto, Ontario
    
    
    16
    
    
    
    12,278
    
    
    
    6,147
    
    
    
    1,399
    
    
    
    704
    
    
    
    695Calgary, Alberta
    
    
    15
    
    
    
    8,936
    
    
    
    3,816
    
    
    
    570
    
    
    
    409
    
    
    
    161Ottawa, Ontario
    
    
    8
    
    
    
    2,935
    
    
    
    734
    
    
    
    100
    
    
    
    50
    
    
    
    50Denver, Colorado(1)
    
    
    3
    
    
    
    2,605
    
    
    
    2,605
    
    
    
    344
    
    
    
    221
    
    
    
    123Minneapolis, Minnesota
    
    
    4
    
    
    
    3,008
    
    
    
    3,008
    
    
    
    429
    
    
    
    180
    
    
    
    249Other
    
    
    7
    
    
    
    2,095
    
    
    
    1,219
    
    
    
    119
    
    
    
    65
    
    
    
    5466
    
    
    
    48,030
    
    
    
    30,927
    
    
    $
    7,505
    
    
    $
    5,267
    
    
    $
    2,238Office development sites
    
    
    10
    
    
    
    8,100
    
    
    
    7,195
    
    
    
    224
    
    
    
    
    
    
    
    224Total
    
    
    76
    
    
    
    56,130
    
    
    
    38,122
    
    
    $
    7,729
    
    
    $
    5,267
    
    
    $
    2,462
 
 (1)
    
    Includes $75 million of assets and $51 million of liabilities related to
discontinued operations   17




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##### 



New York/Boston/
    
    
    
    Toronto/Calgary/
    
    
    
    Denver/Minneapolis/Total Portfolio
    
    
    
    Washington, D. C.
    
    
    
    Ottawa
    
    
    
    OtherNet
    
    
    
    
    
    
    
    
    
    
    
    Net
    
    
    
    
    
    
    
    
    
    
    
    Net
    
    
    
    
    
    
    
    
    
    
    
    NetRate
    
    
    
    
    
    
    
    
    
    
    
    Rate
    
    
    
    
    
    
    
    
    
    
    
    Rate
    
    
    
    
    
    
    
    
    
    
    
    Rate000s
    
    
    
    
    
    
    per Sq.
    
    
    
    000s
    
    
    
    
    
    
    per Sq.
    
    
    
    000s
    
    
    
    
    
    
    per Sq.
    
    
    
    000s
    
    
    
    
    
    
    per Sq.Year of Expiry
    
    Sq. Ft.
    
    
    %
    
    
    Ft.-$
    
    
    
    Sq. Ft.
    
    
    %
    
    
    Ft.-$
    
    
    
    Sq. Ft.
    
    
    %
    
    
    Ft.-$
    
    
    
    Sq. Ft.
    
    
    %
    
    
    Ft.-$Currently available
    
    
    2,242
    
    
    
    5.4
    
    
    
    
    
    
    
    
    784
    
    
    
    5.2
    
    
    
    
    
    
    
    
    763
    
    
    
    4.2
    
    
    
    
    
    
    
    
    695
    
    
    
    11.32006
    
    
    1,463
    
    
    
    3.6
    
    
    $
    14
    
    
    
    
    382
    
    
    
    2.5
    
    
    $
    15
    
    
    
    
    772
    
    
    
    3.6
    
    
    $
    13
    
    
    
    
    309
    
    
    
    5.0
    
    
    $
    102007
    
    
    1,402
    
    
    
    3.4
    
    
    
    19
    
    
    
    
    103
    
    
    
    0.7
    
    
    
    26
    
    
    
    
    959
    
    
    
    4.9
    
    
    
    17
    
    
    
    
    340
    
    
    
    5.5
    
    
    
    132008
    
    
    3,427
    
    
    
    8.3
    
    
    
    17
    
    
    
    
    717
    
    
    
    4.8
    
    
    
    27
    
    
    
    
    2,110
    
    
    
    6.1
    
    
    
    13
    
    
    
    
    600
    
    
    
    9.7
    
    
    
    122009
    
    
    1,868
    
    
    
    4.5
    
    
    
    16
    
    
    
    
    127
    
    
    
    0.8
    
    
    
    31
    
    
    
    
    1,282
    
    
    
    6.3
    
    
    
    14
    
    
    
    
    459
    
    
    
    7.4
    
    
    
    82010
    
    
    3,457
    
    
    
    8.3
    
    
    
    25
    
    
    
    
    689
    
    
    
    4.6
    
    
    
    38
    
    
    
    
    2,254
    
    
    
    12.5
    
    
    
    21
    
    
    
    
    514
    
    
    
    8.3
    
    
    
    102011
    
    
    3,097
    
    
    
    7.5
    
    
    
    25
    
    
    
    
    616
    
    
    
    4.1
    
    
    
    42
    
    
    
    
    2,228
    
    
    
    12.3
    
    
    
    18
    
    
    
    
    253
    
    
    
    4.1
    
    
    
    122012
    
    
    2,378
    
    
    
    5.8
    
    
    
    20
    
    
    
    
    664
    
    
    
    4.4
    
    
    
    20
    
    
    
    
    1,370
    
    
    
    7.6
    
    
    
    19
    
    
    
    
    344
    
    
    
    5.6
    
    
    
    172013 & beyond
    
    
    28,696
    
    
    
    53.2
    
    
    
    25
    
    
    
    
    12,091
    
    
    
    72.9
    
    
    
    33
    
    
    
    
    12,411
    
    
    
    42.5
    
    
    
    17
    
    
    
    
    4,194
    
    
    
    43.1
    
    
    
    1248,030
    
    
    
    100.0
    
    
    $
    25
    
    
    
    
    16,173
    
    
    
    100.0
    
    
    $
    33
    
    
    
    
    24,149
    
    
    
    100.0
    
    
    $
    17
    
    
    
    
    7,708
    
    
    
    100.0
    
    
    $
    12Weighted average market net rent
    
    $
    25
    
    
    
    
    
    
    
    
    
    
    
    $
    33
    
    
    
    
    
    
    
    
    
    
    
    $
    20
    
    
    
    
    
    
    
    
    
    
    
    $
    14
 Commercial Development
   NumberLocation
    
    of Sites
    
    
    Ownership
    
    
    Sq. Ft.New York, New York401 West 31st Street
    
    Ninth Avenue across from Moynihan Train Station
    
    
    1
    
    
    
    100
    %
    
    
    2,500,000Toronto, OntarioBay Adelaide Centre
    
    Bay and Adelaide Streets
    
    
    3
    
    
    
    100
    %
    
    
    2,500,000BCE Place III
    
    Third phase of BCE Place project
    
    
    1
    
    
    
    65
    %
    
    
    800,000Calgary, AlbertaBankers Court
    
    East and West Parkades adjacent to Bankers Hall
    
    
    2
    
    
    
    50
    %
    
    
    500,000Ottawa, OntarioPlace de Ville III
    
    Third phase of Place de Ville project located at 300 Queen Street
    
    
    1
    
    
    
    25
    %
    
    
    500,000Denver, Colorado425 15th Street
    
    One block from Republic Plaza
    
    
    1
    
    
    
    100
    %
    
    
    800,000Tremont Garage
    
    One block from Republic Plaza
    
    
    1
    
    
    
    100
    %
    
    
    500,000Total
    
    
    
    
    10
    
    
    
    
    
    
    
    8,100,000
 Residential Development
  18




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##### 



Under Development
    
    
    
    Held for DevelopmentBook Value
    
    
    
    Estimated
    
    
    Book ValueNumber of Lots
    
    
    (Millions)
    
    
    
    Number of Lots
    
    
    (Millions)Alberta
    
    
    2,713
    
    
    $
    113
    
    
    
    
    24,943
    
    
    $
    156Ontario
    
    
    497
    
    
    
    32
    
    
    
    
    6,983
    
    
    
    39Colorado
    
    
    729
    
    
    
    19
    
    
    
    
    2,931
    
    
    
    23Texas and other
    
    
    158
    
    
    
    2
    
    
    
    
    1,859
    
    
    
    7Total
    
    
    4,097
    
    
    $
    166
    
    
    
    
    36,716
    
    
    $
    225
 PERFORMANCE MEASUREMENT
  
    
    Net income per share;
    
    Net operating income;
    
    Funds from operations per share;
    
    Overall indebtedness level;
    
    Weighted average cost of debt; and
    
    Occupancy levels.
  Net Income
  Net Operating Income
  Funds from Operations
  19




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##### 



KEY PERFORMANCE DRIVERS
  
    
    Increases in occupancies by leasing up vacant space;
    
    Increases in rental rates as market conditions permit; and
    
    Reduction in occupancy costs through achieving economies of scale and diligently managing
contracts.
  
    
    The availability of new property acquisitions which fit into our strategic plan;
    
    The availability of equity capital at a reasonable cost; and
    
    The availability of debt capital at a cost and on terms conducive to our goals.
 SIGNIFICANT EVENTS
   Brookfield Properties
    
    
    Purchase PriceNumber of
    
    
    Leasable Area
    
    
    Owned Interest
    
    
    Book ValueRegion
    
    Properties
    
    
    (000s Sq. Ft.)
    
    
    (000s Sq. Ft.)
    
    
    (Millions)Toronto, Ontario
    
    
    6
    
    
    
    4,397
    
    
    
    1,099
    
    
    $
    266Calgary, Alberta
    
    
    8
    
    
    
    2,608
    
    
    
    651
    
    
    
    110Ottawa, Ontario
    
    
    8
    
    
    
    2,935
    
    
    
    734
    
    
    
    97Edmonton, Alberta
    
    
    2
    
    
    
    708
    
    
    
    177
    
    
    
    14Winnipeg, Manitoba
    
    
    2
    
    
    
    252
    
    
    
    63
    
    
    
    3Niagara Falls, Ontario
    
    
    1
    
    
    
    209
    
    
    
    52
    
    
    
    227
    
    
    
    11,109
    
    
    
    2,776
    
    
    $
    492Office development site
    
    
    1
    
    
    
    500
    
    
    
    125
    
    
    
    3Total commercial and development properties
    
    
    28
    
    
    
    11,609
    
    
    
    2,901
    
    
    $
    495Accounts receivable and other assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14Intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56Accounts payable and other liabilities assumed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14
    )Intangible liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97
    )Future income tax liabilities assumed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26
    )Commercial property debt assumed(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (246
    )Total purchase price
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    182
 (1)
    
    Includes acquisition financing of $110 million 20




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##### 



PART II  FINANCIAL STATEMENT ANALYSIS
 ASSET PROFILE
  (Millions)
    
    2005
    
    
    2004Commercial properties
    
    $
    7,430
    
    
    $
    6,555Development properties
    
    
    615
    
    
    
    716Receivables and other
    
    
    955
    
    
    
    739Restricted cash and deposits
    
    
    316
    
    
    
    297Marketable securities
    
    
    58
    
    
    
    285Cash and cash equivalents
    
    
    64
    
    
    
    112Assets related to discontinued operations
    
    
    75
    
    
    
    96Total
    
    $
    9,513
    
    
    $
    8,800
 COMMERCIAL PROPERTIES
    Brookfield Properties
    
    
    2005
    
    
    2004Leasable Area
    
    
    Owned Interest
    
    
    Book Value
    
    
    Book ValueRegion
    
    (000s Sq. Ft.)
    
    
    (000s Sq. Ft.)
    
    
    (Millions)
    
    
    (Millions)New York, New York
    
    
    12,453
    
    
    
    10,738
    
    
    $
    3,824
    
    
    $
    3,542Boston, Massachusetts
    
    
    2,163
    
    
    
    1,103
    
    
    
    325
    
    
    
    328Washington, D.C.
    
    
    1,557
    
    
    
    1,557
    
    
    
    395
    
    
    
    397Toronto, Ontario
    
    
    12,278
    
    
    
    6,147
    
    
    
    1,399
    
    
    
    1,068Calgary, Alberta
    
    
    8,936
    
    
    
    3,816
    
    
    
    570
    
    
    
    448Ottawa, Ontario
    
    
    2,935
    
    
    
    734
    
    
    
    100
    
    
    
    Denver, Colorado(1)
    
    
    2,605
    
    
    
    2,605
    
    
    
    344
    
    
    
    370Minneapolis, Minnesota
    
    
    3,008
    
    
    
    3,008
    
    
    
    429
    
    
    
    414Other
    
    
    2,095
    
    
    
    1,219
    
    
    
    119
    
    
    
    84Total
    
    
    48,030
    
    
    
    30,927
    
    
    $
    7,505
    
    
    $
    6,651
 
 (1)
    
    Includes $75 million and $96 million of discontinued operations at December 31, 2005
and 2004, respectively TENANT INSTALLATION COSTS AND CAPITAL EXPENDITURES
   21




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##### 



(Millions)
    
    2005
    
    
    2004Leasing commissions
    
    $
    15
    
    
    $
    15Tenant improvements
    
    
    108
    
    
    
    67Total
    
    $
    123
    
    
    $
    82
    (Millions)
    
    2005
    
    
    2004Revenue enhancing
    
    $
    15
    
    
    $
    14Non-revenue enhancing
    
    
    6
    
    
    
    12Total
    
    $
    21
    
    
    $
    26
 ASSETS RELATED TO DISCONTINUED OPERATIONS
 
 DEVELOPMENT PROPERTIES
   (Millions)
    
    2005
    
    
    2004Commercial developments
    
    $
    224
    
    
    $
    399Residential development
    
    
    391
    
    
    
    317Total
    
    $
    615
    
    
    $
    716
 22




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##### 



Commercial developments
  Buildable(Millions)
    
    Sq. Ft.
    
    
    2005
    
    
    2004Bay Adelaide Centre, Toronto
    
    
    2,500,000
    
    
    $
    191
    
    
    $
    101Three World Financial Center, New York(1)
    
    
    
    
    
    
    
    
    
    
    248Hudsons Bay Centre, Toronto(1)
    
    
    
    
    
    
    
    
    
    
    29Other:401 West 31st Street, New York
    
    
    2,500,000BCE Place III, Toronto
    
    
    800,000Bankers Court, Calgary
    
    
    500,000Place de Ville III, Ottawa
    
    
    500,000425 15th Street, Denver
    
    
    800,000Tremont Garage, Denver
    
    
    500,0005,600,000
    
    
    
    33
    
    
    
    21Total
    
    
    8,100,000
    
    
    $
    224
    
    
    $
    399
 
 (1)
    
    Reclassified to commercial properties in 2005     (Millions)
    
    2005
    
    
    2004Construction costs
    
    $
    30
    
    
    $
    21Interest capitalized
    
    
    15
    
    
    
    14Property taxes and other
    
    
    5
    
    
    
    20Total
    
    $
    50
    
    
    $
    55
 Residential development
   (Millions)
    
    2005
    
    
    2004Under development
    
    $
    166
    
    
    $
    132Held for development
    
    
    225
    
    
    
    185Total
    
    $
    391
    
    
    $
    317
 23




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##### 



Number of Lots
    
    
    
    Book Value (Millions)Under Development
    
    2005
    
    
    2004
    
    
    
    2005
    
    
    2004Alberta
    
    
    2,713
    
    
    
    2,585
    
    
    
    $
    113
    
    
    $
    90Ontario
    
    
    497
    
    
    
    748
    
    
    
    
    32
    
    
    
    16Colorado
    
    
    729
    
    
    
    818
    
    
    
    
    19
    
    
    
    22Texas and other
    
    
    158
    
    
    
    30
    
    
    
    
    2
    
    
    
    4Total
    
    
    4,097
    
    
    
    4,181
    
    
    
    $
    166
    
    
    $
    132
 EstimatedNumber of Lots
    
    
    
    Number of Acres
    
    
    
    Book Value (Millions)Held for Development
    
    2005
    
    
    2004
    
    
    
    2005
    
    
    2004
    
    
    
    2005
    
    
    2004Alberta
    
    
    24,943
    
    
    
    23,795
    
    
    
    
    4,428
    
    
    
    4,215
    
    
    
    $
    156
    
    
    $
    125Ontario
    
    
    6,983
    
    
    
    5,738
    
    
    
    
    1,364
    
    
    
    1,164
    
    
    
    
    39
    
    
    
    28Colorado
    
    
    2,931
    
    
    
    3,222
    
    
    
    
    548
    
    
    
    666
    
    
    
    
    23
    
    
    
    24Texas and other
    
    
    1,859
    
    
    
    2,080
    
    
    
    
    541
    
    
    
    575
    
    
    
    
    7
    
    
    
    8Total
    
    
    36,716
    
    
    
    34,835
    
    
    
    
    6,881
    
    
    
    6,620
    
    
    
    $
    225
    
    
    $
    185
 RECEIVABLES AND OTHER ASSETS
   (Millions)
    
    2005
    
    
    2004Receivables and real estate mortgages
    
    $
    551
    
    
    $
    435Prepaid expenses and other assets
    
    
    279
    
    
    
    234Intangible assets
    
    
    125
    
    
    
    70Total
    
    $
    955
    
    
    $
    739
 RESTRICTED CASH AND DEPOSITS
  CASH AND MARKETABLE SECURITIES
  24




---



##### 



UTILIZATION OF CASH RESOURCES
  (Millions)
    
    2005
    
    
    2004
    
    
    TotalCashflow from operating activities
    
    $
    106
    
    
    $
    459
    
    
    $
    565FinancingBorrowings, net of repayments
    
    
    283
    
    
    
    (182
    )
    
    
    101Net issuance of preferred shares
    
    
    
    
    
    
    261
    
    
    
    261Net repurchase of common shares
    
    
    (66
    )
    
    
    (33
    )
    
    
    (99
    )Shareholder distributions
    
    
    (149
    )
    
    
    (261
    )
    
    
    (410
    )68
    
    
    
    (215
    )
    
    
    (147
    )InvestingMarketable securities
    
    
    227
    
    
    
    (18
    )
    
    
    209Acquisitions of real estate, net
    
    
    (359
    )
    
    
    (144
    )
    
    
    (503
    )Development and redevelopment
    
    
    (50
    )
    
    
    (55
    )
    
    
    (105
    )Restricted cash and deposits
    
    
    (19
    )
    
    
    (21
    )
    
    
    (40
    )Capital expenditures
    
    
    (21
    )
    
    
    (26
    )
    
    
    (47
    )(222
    )
    
    
    (264
    )
    
    
    (486
    )Decrease in cash
    
    $
    (48
    )
    
    $
    (20
    )
    
    $
    (68
    )
  25




---



##### 



LIABILITIES AND SHAREHOLDERS EQUITY
  (Millions)
    
    2005
    
    
    2004LiabilitiesCommercial property debt
    
    $
    5,216
    
    
    $
    4,754Accounts payable and other liabilities
    
    
    626
    
    
    
    452Future income tax liability
    
    
    188
    
    
    
    96Liabilities related to discontinued operations
    
    
    51
    
    
    
    64Capital securities
    
    
    1,101
    
    
    
    1,069Non-controlling interests
    
    
    59
    
    
    
    53Preferred equity  subsidiaries
    
    
    329
    
    
    
    320Shareholders equityPreferred equity  corporate
    
    
    45
    
    
    
    45Common equity
    
    
    1,898
    
    
    
    1,947Total
    
    $
    9,513
    
    
    $
    8,800
 COMMERCIAL PROPERTY DEBT
 
  Three year
    
    
    Annual ResultsObjective
    
    average
    
    
    2005
    
    
    2004
    
    
    2003Maintain debt to total market capitalization of 50% or less
    
    
    38
    %
    
    
    34
    %
    
    
    37
    %
    
    
    42
    %Move toward long-term goal of 95% non-recourse debt
    
    
    89
    %
    
    
    88
    %
    
    
    93
    %
    
    
    86
    %Maintain interest expense coverage of 2.3x or greater
    
    
    2.5
    x
    
    
    2.6
    x
    
    
    2.6
    x
    
    
    2.3
    x
   Financed / Refinanced(Millions)
    
    Mortgage
    
    
    Interest Rate %Corporate revolver facility
    
    $
    350
    
    
    LIBOR + 110bpsOne World Financial Center, New York
    
    
    300
    
    
    LIBOR + 100bpsAtrium on Bay, Toronto
    
    
    34
    
    
    CDOR + (95bps-115bps)Total
    
    $
    684
   26




---



##### 



BrookfieldPropertiesInterest
    
    Maturity
    
    ProportionateCommercial Property
    
    Location
    
    Rate %
    
    Date
    
    Share (Millions)
    
    
    Mortgage DetailsAtrium on Bay
    
    Toronto
    
    4.30
    
    2006
    
    $
    34
    
    
    Non-recourse, floating rateOne Liberty Plaza(1)
    
    New York
    
    6.98
    
    2007
    
    
    246
    
    
    Non-recourse, fixed rateTD Canada Trust Tower
    
    Toronto
    
    6.60
    
    2007
    
    
    108
    
    
    Non-recourse, fixed ratePetro-Canada Centre
    
    Calgary
    
    6.43
    
    2008
    
    
    112
    
    
    Non-recourse, fixed rateOne World Financial Center
    
    New York
    
    5.39
    
    2009
    
    
    300
    
    
    Recourse, floating rateFirst Canadian Place
    
    Toronto
    
    8.06
    
    2009
    
    
    64
    
    
    Non-recourse, fixed rate245 Park Avenue
    
    New York
    
    6.65
    
    2011
    
    
    243
    
    
    Non-recourse, fixed rateOne Liberty Plaza
    
    New York
    
    6.75
    
    2011
    
    
    407
    
    
    Non-recourse, fixed rateFifth Avenue Place
    
    Calgary
    
    7.59
    
    2011
    
    
    67
    
    
    Non-recourse, fixed ratePotomac Tower
    
    Washington
    
    4.72
    
    2011
    
    
    75
    
    
    Non-recourse, fixed rateExchange Tower
    
    Toronto
    
    6.83
    
    2012
    
    
    57
    
    
    Non-recourse, fixed rateTwo World Financial Center
    
    New York
    
    6.91
    
    2013
    
    
    659
    
    
    Non-recourse, fixed rateFour World Financial Center
    
    New York
    
    6.95
    
    2013
    
    
    341
    
    
    Non-recourse, fixed rateBay Wellington Tower
    
    Toronto
    
    6.49
    
    2013
    
    
    306
    
    
    Non-recourse, fixed rateBankers Hall
    
    Calgary
    
    7.20
    
    2013
    
    
    155
    
    
    Non-recourse, fixed rateRepublic Plaza
    
    Denver
    
    5.13
    
    2014
    
    
    170
    
    
    Non-recourse, fixed rate1625 Eye Street
    
    Washington
    
    6.00
    
    2014
    
    
    129
    
    
    Non-recourse, fixed rateRoyal Centre
    
    Vancouver
    
    7.50
    
    2022
    
    
    44
    
    
    Non-recourse, fixed rate53 State Street
    
    Boston
    
    6.91
    
    2023
    
    
    72
    
    
    Non-recourse, fixed rate33 South Sixth Street
    
    Minneapolis
    
    6.72
    
    2027
    
    
    97
    
    
    Non-recourse, fixed rateDain Plaza
    
    Minneapolis
    
    7.37
    
    2027
    
    
    83
    
    
    Non-recourse, fixed rate701 9th Street
    
    Washington
    
    6.73
    
    2028
    
    
    153
    
    
    Non-recourse, fixed rate75 State Street
    
    Boston
    
    7.00
    
    2028
    
    
    87
    
    
    Non-recourse, fixed rate300 Madison Avenue
    
    New York
    
    7.26
    
    2032
    
    
    400
    
    
    Non-recourse, fixed rate300 Madison Avenue
    
    New York
    
    3.55
    
    2012
    
    
    109
    
    
    Non-recourse, floating rateCorporate credit facilities
    
    
    
    
    
    
    
    
    324
    
    
    Recourse, floating rateO&Y acquisition financing and
other assumed debt
    
    
    
    
    
    
    
    
    187
    
    
    Various termsDevelopment and other debt
    
    
    
    
    
    
    
    
    187
    
    
    Various termsTotal
    
    
    
    6.50%
    
    
    
    $
    5,216
 (1)
    
    Included in restricted cash and deposits is $256 of securities to match interest and
principal payments on this commercial property debt
  Weighted Average(Millions)
    
    Scheduled
    
    
    
    
    
    
    
    
    
    
    Interest Rate atYear
    
    Amortization
    
    
    Maturities
    
    
    Total
    
    
    Dec. 31, 20052006
    
    $
    60
    
    
    $
    210
    
    
    $
    270
    
    
    
    5.2
    %2007
    
    
    263
    
    
    
    371
    
    
    
    634
    
    
    
    6.5
    %2008
    
    
    197
    
    
    
    180
    
    
    
    377
    
    
    
    5.8
    %2009
    
    
    174
    
    
    
    663
    
    
    
    837
    
    
    
    5.4
    %2010
    
    
    185
    
    
    
    4
    
    
    
    189
    
    
    
    6.4
    %2011 and thereafter
    
    
    
    
    
    
    2,909
    
    
    
    2,909
    
    
    
    6.5
    %Total
    
    $
    879
    
    
    $
    4,337
    
    
    $
    5,216
    
    
    
    6.5
    %
  27




---



##### 



CONTRACTUAL OBLIGATIONS
  Payments Due By Period(Millions)
    
    Total
    
    
    1 - 3 Years
    
    
    4 - 5 Years
    
    
    After 5 YearsCommercial property debt
    
    $
    5,216
    
    
    $
    1,281
    
    
    $
    1,026
    
    
    $
    2,909Residential development debt
    
    
    158
    
    
    
    155
    
    
    
    3
    
    
    
    Capital securities(1)
    
    
    929
    
    
    
    
    
    
    
    172
    
    
    
    757Interest expense(2)Commercial property debt
    
    
    2,463
    
    
    
    848
    
    
    
    445
    
    
    
    1,170Capital securities(1)
    
    
    415
    
    
    
    193
    
    
    
    96
    
    
    
    126
 (1)
    
    Excludes Class AAA Series E, as these are retractable at the holders option or
redeemable at our option at any time(2)
    
    Represents aggregate interest expense expected to be paid over the term of the debt,
on an undiscounted basis, based on current interest and foreign exchange rates
  Credit Ratings
   DBRS
    
    S&PCorporate rating
    
    BBB(high)
    
    BBBPreferred shares
    
    Pfd-3(high)
    
    P3(high)
  Corporate Guarantees and Contingent Obligations
   ACCOUNTS PAYABLE AND OTHER LIABILITIES
  28




---



##### 



(Millions)
    
    2005
    
    
    2004Accounts payable
    
    $
    342
    
    
    $
    289Residential development debt
    
    
    158
    
    
    
    135Intangible liabilities
    
    
    126
    
    
    
    28Total
    
    $
    626
    
    
    $
    452
 FUTURE INCOME TAXES
  (Millions)
    
    2005
    
    
    2004Future income tax liabilities related to difference in tax and book basis, net
    
    $
    541
    
    
    $
    568Future income tax assets related to non-capital losses and capital losses
    
    
    (353
    )
    
    
    (472
    )Total
    
    $
    188
    
    
    $
    96
 CAPITAL SECURITIES
   Shares
    
    
    Cumulative(Millions, except share information)
    
    Outstanding
    
    
    Dividend Rate
    
    
    2005
    
    
    2004Class AAA Series E
    
    
    8,000,000
    
    
    70% of bank prime
    
    $
    172
    
    
    $
    167Class AAA Series F
    
    
    8,000,000
    
    
    
    6.00
    %
    
    
    172
    
    
    
    167Class AAA Series G
    
    
    4,400,000
    
    
    
    5.25
    %
    
    
    110
    
    
    
    110Class AAA Series H
    
    
    8,000,000
    
    
    
    5.75
    %
    
    
    173
    
    
    
    167Class AAA Series I
    
    
    8,000,000
    
    
    
    5.20
    %
    
    
    172
    
    
    
    167Class AAA Series J
    
    
    8,000,000
    
    
    
    5.00
    %
    
    
    172
    
    
    
    167Class AAA Series K
    
    
    6,000,000
    
    
    
    5.20
    %
    
    
    130
    
    
    
    124Total
    
    
    
    
    
    
    
    
    
    $
    1,101
    
    
    $
    1,069
 For redemption dates, refer to Note 14 of the consolidated financial statements
 NON-CONTROLLING INTERESTS
   (Millions)
    
    Others Equity Ownership
    
    
    2005
    
    
    2004Common shares of BPO Properties
    
    
    11.0
    %
    
    $
    47
    
    
    $
    42Limited partnership units of Brookfield Financial Properties
    
    
    0.6
    %
    
    
    12
    
    
    
    11Total
    
    
    
    
    
    $
    59
    
    
    $
    53
  29




---



##### 



PREFERRED EQUITY  SUBSIDIARIES
   Shares
    
    
    Preferred
    
    
    Cumulative(Millions, except share information)
    
    Outstanding
    
    
    Shares Series
    
    
    Dividend Rate
    
    2005
    
    
    2004BPO Properties1,805,489
    
    
    Series G
    
    70% of bank prime
    
    $
    39
    
    
    $
    383,816,527
    
    
    Series J
    
    70% of bank prime
    
    
    82
    
    
    
    80300
    
    
    Series K
    
    30-day BA + 0.4%
    
    
    129
    
    
    
    1242,847,711
    
    
    Series M
    
    70% of bank prime
    
    
    62
    
    
    
    59800,000
    
    
    Series N
    
    30-day BA + 0.4%
    
    
    17
    
    
    
    17$
    329
    
    
    $
    318100%-owned subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    329
    
    
    $
    320
  PREFERRED EQUITY  CORPORATE
   Shares
    
    
    Cumulative(Millions, except share information)
    
    Outstanding
    
    
    Dividend Rate
    
    
    2005
    
    
    2004Class A redeemable voting
    
    
    6,312,000
    
    
    
    7.50
    %
    
    $
    11
    
    
    $
    11Class AA Series E
    
    
    2,000,000
    
    
    70% of bank prime
    
    
    34
    
    
    
    34Total
    
    
    
    
    
    
    
    
    
    $
    45
    
    
    $
    45
 For detailed terms on our preferred shares, refer to our Annual Information Form.
  COMMON EQUITY
   2005
    
    
    2004(1)Common shares outstanding
    
    
    231,209,625
    
    
    
    233,387,780Unexercised options
    
    
    4,641,961
    
    
    
    4,692,869Common shares outstanding  diluted(2)
    
    
    235,851,586
    
    
    
    238,080,649Common shares repurchased
    
    
    2,693,500
    
    
    
    2,114,850
 (1)
    
    Adjusted for the three-for-two common
stock-split on March 31, 2005(2)
    
    Includes all
potential common shares at December 31, 2005
  30




---



##### 



CAPITAL RESOURCES AND LIQUIDITY
    COST OF CAPITAL
    Cost of Capital(1)
    
    
    Underlying Value(2)(Millions)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004LiabilitiesCommercial property debt
    
    
    6.5
    %
    
    
    6.5
    %
    
    $
    5,267
    
    
    $
    4,818Residential debt
    
    
    3.2
    %
    
    
    2.7
    %
    
    
    158
    
    
    
    135Capital securities
    
    
    5.1
    %
    
    
    5.0
    %
    
    
    1,101
    
    
    
    1,069Non-controlling interests
    
    
    12.0
    %
    
    
    12.0
    %
    
    
    59
    
    
    
    53Preferred equity  subsidiaries
    
    
    3.6
    %
    
    
    3.0
    %
    
    
    329
    
    
    
    320Shareholders equityPreferred equity  corporate
    
    
    4.5
    %
    
    
    4.5
    %
    
    
    45
    
    
    
    45Common equity
    
    
    12.0
    %
    
    
    12.0
    %
    
    
    6,802
    
    
    
    5,818Total(3)
    
    
    8.1
    %
    
    
    8.0
    %
    
    $
    13,761
    
    
    $
    12,258
 (1)
    
    As a percentage of average book value(2)
    
    Underlying value of liabilities represents the cost to retire on maturity.
Underlying value of common equity is based on the closing stock price of Brookfield Properties
common shares(3)
    
    In calculating the weighted average cost of capital, the cost of debt
has been tax-effected
 31




---



##### 



OPERATING RESULTS
 NET INCOME
  
    
    $64 million of growth ($0.18 per diluted share) from our residential development
operations which continues to benefit from the low interest rate environment and strong demand
in the North American housing market;
    
    the retroactive adoption of CICA Handbook section 3861, Financial Instruments 
Disclosure and Presentation, resulted in the recognition of a $63 million ($0.18 per diluted
share) unrealized foreign exchange loss in 2004 (refer to Note 2 of the consolidated financial
statements);
    
    a $30 million fee received from Goldman Sachs in 2005 pursuant to a cooperation agreement
permitting the commencement of construction on Site 26 in New York, as compared to $60 million
in lease termination income realized in the second quarter of 2004 ($0.09 per diluted share)
and a leasing fee of $16 million ($0.04 per diluted share) realized upon the successful
completion of a sublease at 300 Madison Avenue in the first quarter of 2004; and
    
    an increase in interest expense of $26 million ($0.07 per diluted share) related to
additional corporate borrowings, a full year of interest carry and amortization on the
Washington, D.C. properties acquired in 2004, interest and amortization related to the O&Y
acquisition, and the cessation of interest capitalization on Three World Financial Center in
the first quarter of 2005.
  (Millions)
    
    2005
    
    
    2004
    
    
    2003Total revenue and gains
    
    $
    1,549
    
    
    $
    1,442
    
    
    $
    1,363Net operating incomeCommercial property operationsOperating income from commercial properties
    
    $
    680
    
    
    $
    671
    
    
    $
    586Operating income from properties sold(1)
    
    
    11
    
    
    
    12
    
    
    
    11Lease termination income and gains
    
    
    
    
    
    
    60
    
    
    
    100Total commercial property operations
    
    
    691
    
    
    
    743
    
    
    
    697Residential development operations
    
    
    106
    
    
    
    42
    
    
    
    31Interest and other income
    
    
    37
    
    
    
    47
    
    
    
    62834
    
    
    
    832
    
    
    
    790ExpensesInterest
    
    
    330
    
    
    
    304
    
    
    
    279Interest related to discontinued operations(1)
    
    
    5
    
    
    
    5
    
    
    
    4General and administrative
    
    
    48
    
    
    
    41
    
    
    
    44Non-controlling interests expense
    
    
    16
    
    
    
    20
    
    
    
    21Funds from operations and gains
    
    
    435
    
    
    
    462
    
    
    
    442Depreciation and amortization
    
    
    163
    
    
    
    140
    
    
    
    76Depreciation and amortization related to discontinued operations(1)
    
    
    5
    
    
    
    5
    
    
    
    3Unrealized foreign exchange on preferred share restatement
    
    
    
    
    
    
    63
    
    
    
    29Future income taxes and other provisions
    
    
    103
    
    
    
    116
    
    
    
    102Net income
    
    $
    164
    
    
    $
    138
    
    
    $
    232Net income per share  dilutedPrior to discontinued operations and lease termination income and gains
    
    $
    0.69
    
    
    $
    0.42
    
    
    $
    0.65Discontinued operations
    
    
    
    
    
    
    0.01
    
    
    
    0.02Lease termination income and gains
    
    
    
    
    
    
    0.15
    
    
    
    0.29$
    0.69
    
    
    $
    0.58
    
    
    $
    0.96Funds from operations per share  dilutedPrior to discontinued operations and lease termination income and gains
    
    $
    1.82
    
    
    $
    1.67
    
    
    $
    1.40Discontinued operations
    
    
    0.03
    
    
    
    0.03
    
    
    
    0.03Lease termination income and gains
    
    
    
    
    
    
    0.25
    
    
    
    0.42$
    1.85
    
    
    $
    1.95
    
    
    $
    1.85
 (1)
    
    Refer to page 40 for further details on discontinued operations
 32




---



##### 



(Millions, except per share amounts)
    
    2005
    
    
    2004
    
    
    2003Net income
    
    $
    164
    
    
    $
    138
    
    
    $
    232Preferred share dividends
    
    
    (2
    )
    
    
    (2
    )
    
    
    (2
    )Net income available to common shareholders
    
    $
    162
    
    
    $
    136
    
    
    $
    230Weighted average shares outstanding  basic
    
    
    232.1
    
    
    
    234.0
    
    
    
    236.1Net income per share  basic
    
    $
    0.70
    
    
    $
    0.58
    
    
    $
    0.96Weighted average shares outstanding  diluted
    
    
    234.2
    
    
    
    235.7
    
    
    
    237.9Net income per share  diluted
    
    $
    0.69
    
    
    $
    0.58
    
    
    $
    0.96Weighted average shares outstanding  basic
    
    
    232.1
    
    
    
    234.0
    
    
    
    236.1Unexercised options
    
    
    2.1
    
    
    
    1.7
    
    
    
    1.8Weighted average shares outstanding  diluted
    
    
    234.2
    
    
    
    235.7
    
    
    
    237.9
 RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
 (Millions)
    
    2005
    
    
    2004
    
    
    2003Net income
    
    $
    164
    
    
    $
    138
    
    
    $
    232Add:Depreciation and amortization(1)
    
    
    168
    
    
    
    145
    
    
    
    79Unrealized foreign exchange on preferred share restatement
    
    
    
    
    
    
    63
    
    
    
    29Future income taxes and other provisions
    
    
    103
    
    
    
    116
    
    
    
    102Funds from operations and gains
    
    $
    435
    
    
    $
    462
    
    
    $
    442Less:Lease termination income and gains(2)
    
    
    
    
    
    
    (59
    )
    
    
    (99
    )Funds from operations
    
    $
    435
    
    
    $
    403
    
    
    $
    343
 (1)
    
    Includes depreciation and amortization from the consolidated income statements of
$163 million, $140 million and $76 million and depreciation and amortization from discontinued
operations of $5 million, $5 million and $3 million for the years ended December 31, 2005, 2004 and
2003, respectively(2)
    
    Net of non-controlling interests expense
  (Millions, except per share amounts)
    
    2005
    
    
    2004
    
    
    2003Funds from continuing operations
    
    $
    435
    
    
    $
    403
    
    
    $
    343Preferred share dividends
    
    
    (2
    )
    
    
    (2
    )
    
    
    (2
    )$
    433
    
    
    $
    401
    
    
    $
    341Weighted average shares outstanding
    
    
    234.2
    
    
    
    235.7
    
    
    
    237.9Funds from operations per share
    
    $
    1.85
    
    
    $
    1.70
    
    
    $
    1.43
   33




---



##### 



(Millions)
    
    2005
    
    
    2004
    
    
    2003Commercial property operationsRevenue from current properties, including fee income
    
    $
    1,051
    
    
    $
    1,006
    
    
    $
    921Recurring fee income
    
    
    22
    
    
    
    20
    
    
    
    20Non-recurring fee and other income
    
    
    30
    
    
    
    27
    
    
    
    15Revenue from discontinued operations
    
    
    20
    
    
    
    21
    
    
    
    20Lease termination income and gains
    
    
    
    
    
    
    60
    
    
    
    100Total commercial property revenue
    
    
    1,123
    
    
    
    1,134
    
    
    
    1,076Revenue from residential development operations
    
    
    389
    
    
    
    261
    
    
    
    225Revenue from commercial property and residential development operations
    
    
    1,512
    
    
    
    1,395
    
    
    
    1,301Interest and other
    
    
    37
    
    
    
    47
    
    
    
    62Total
    
    $
    1,549
    
    
    $
    1,442
    
    
    $
    1,363
 COMMERCIAL PROPERTY OPERATIONS
   (Millions)
    
    2005
    
    
    2004
    
    
    2003Rental revenue
    
    $
    1,051
    
    
    $
    1,006
    
    
    $
    921Recurring fee income
    
    
    22
    
    
    
    20
    
    
    
    20Property operating costs
    
    
    (423
    )
    
    
    (382
    )
    
    
    (370
    )Net operating income
    
    
    650
    
    
    
    644
    
    
    
    571Non-recurring fee and other income
    
    
    30
    
    
    
    27
    
    
    
    15Lease termination income and gains
    
    
    
    
    
    
    60
    
    
    
    100Net operating income including lease termination income and gains
    
    $
    680
    
    
    $
    731
    
    
    $
    686
  (Millions)
    
    2005
    
    
    2004Net operating income, prior year(1)
    
    $
    644
    
    
    $
    571(a) Contractual rent increases and straight-line rental income, net
    
    
    (3
    )
    
    
    27(b) Leasing activity
    
    
    (1
    )
    
    
    4(c) Acquisitions, net of dispositions
    
    
    8
    
    
    
    42(d) Recurring fee income
    
    
    2
    
    
    
    Net operating income, end of year
    
    $
    650
    
    
    $
    644(e) Non-recurring fee and other income
    
    
    30
    
    
    
    27(f) Lease termination income
    
    
    
    
    
    
    60Net operating income including lease termination income, end of year
    
    $
    680
    
    
    $
    731
 (1)
    
    Prior year net operating income has been restated for discontinued operations
 (a) Contractual rent increases and straight-line rental income, net
  34




---



##### 



(b) Leasing activity
   Gross
    
    
    Avg.
    
    
    Avg. In-place
    
    
    Avg. MarketLeasable Area
    
    
    Lease Term
    
    
    Net Rent
    
    
    Net Rent(000s Sq. Ft.)
    
    
    (Years)
    
    
    ($ per Sq. Ft.)
    
    
    ($ per Sq. Ft.)New York, New YorkMidtown
    
    
    2,786
    
    
    
    19
    
    
    $
    39
    
    
    $
    55Lower Manhattan
    
    
    9,667
    
    
    
    9
    
    
    
    31
    
    
    
    25Boston,
Massachusetts
    
    
    2,163
    
    
    
    6
    
    
    
    29
    
    
    
    30Washington, D.C.
    
    
    1,557
    
    
    
    15
    
    
    
    30
    
    
    
    38Toronto, Ontario
    
    
    12,278
    
    
    
    7
    
    
    
    22
    
    
    
    22Calgary, Alberta
    
    
    8,936
    
    
    
    8
    
    
    
    16
    
    
    
    24Ottawa, Ontario
    
    
    2,935
    
    
    
    5
    
    
    
    10
    
    
    
    14Denver, Colorado
    
    
    2,605
    
    
    
    4
    
    
    
    14
    
    
    
    15Minneapolis,
Minnesota
    
    
    3,008
    
    
    
    8
    
    
    
    8
    
    
    
    13Other
    
    
    2,095
    
    
    
    11
    
    
    
    9
    
    
    
    14Total(1)
    
    
    48,030
    
    
    
    10
    
    
    $
    23
    
    
    $
    25
 (1)
    
    Excludes developments   Dec. 31, 2005
    
    
    Dec. 31, 2004Total
    
    
    
    
    
    
    TotalSquare
    
    
    %
    
    
    Square
    
    
    %(Thousands of square feet)
    
    Feet
    
    
    Leased
    
    
    Feet
    
    
    LeasedNew York, New York
    
    
    12,453
    
    
    
    94.9
    
    
    
    12,453
    
    
    
    92.1Boston, Massachusetts
    
    
    2,163
    
    
    
    92.1
    
    
    
    2,163
    
    
    
    96.8Washington, D.C.
    
    
    1,557
    
    
    
    98.5
    
    
    
    1,557
    
    
    
    93.2Toronto, Ontario
    
    
    12,278
    
    
    
    93.4
    
    
    
    7,882
    
    
    
    93.3Calgary, Alberta
    
    
    8,936
    
    
    
    99.1
    
    
    
    6,331
    
    
    
    98.4Ottawa, Ontario
    
    
    2,935
    
    
    
    99.7
    
    
    
    
    
    
    
    Denver, Colorado
    
    
    2,605
    
    
    
    86.9
    
    
    
    3,017
    
    
    
    85.4Minneapolis, Minnesota
    
    
    3,008
    
    
    
    87.9
    
    
    
    3,008
    
    
    
    85.8Other
    
    
    2,095
    
    
    
    92.3
    
    
    
    926
    
    
    
    90.5Total(1)
    
    
    48,030
    
    
    
    94.6
    
    
    
    37,337
    
    
    
    92.7New
York/Boston/Washington/
Toronto/Calgary/Ottawa
    
    
    40,322
    
    
    
    95.6
    
    
    
    30,386
    
    
    
    94.0Denver/Minneapolis/Other
    
    
    7,708
    
    
    
    88.7
    
    
    
    6,951
    
    
    
    86.2Total(1)
    
    
    48,030
    
    
    
    94.6
    
    
    
    37,337
    
    
    
    92.7
 (1)
    
    Excludes developments




---



##### 



December 31, 2004
    
    
    
    2005 Activities
    
    
    
    December 31, 2005Accelerated
    
    
    Expiring
    
    
    
    
    
    
    Leasing
    
    
    Acq.(Thousands of sq. ft.)
    
    GLA(1)
    
    
    Leased
    
    
    
    Expiries
    
    
    Expiries
    
    
    Net Rent
    
    
    Leasing
    
    
    Net Rent
    
    
    (Disp.)
    
    
    
    GLA(1)
    
    
    LeasedNew York, New YorkMidtown
    
    
    2,786
    
    
    
    2,749
    
    
    
    
    
    
    
    
    (75
    )
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    1
    
    
    
    
    2,786
    
    
    
    2,777Lower Manhattan
    
    
    9,667
    
    
    
    8,744
    
    
    
    
    (277
    )
    
    
    (107
    )
    
    
    
    
    
    
    698
    
    
    
    
    
    
    
    (1
    )
    
    
    
    9,667
    
    
    
    9,057Boston, Massachusetts
    
    
    2,163
    
    
    
    2,103
    
    
    
    
    (158
    )
    
    
    (342
    )
    
    
    
    
    
    
    411
    
    
    
    
    
    
    
    (1
    )
    
    
    
    2,163
    
    
    
    2,013Washington, D.C.
    
    
    1,557
    
    
    
    1,490
    
    
    
    
    (6
    )
    
    
    (36
    )
    
    
    
    
    
    
    94
    
    
    
    
    
    
    
    
    
    
    
    
    1,557
    
    
    
    1,542Toronto, Ontario
    
    
    7,882
    
    
    
    7,449
    
    
    
    
    (413
    )
    
    
    (667
    )
    
    
    
    
    
    
    1,027
    
    
    
    
    
    
    
    4,195
    
    
    
    
    12,278
    
    
    
    11,591Calgary, Alberta
    
    
    6,331
    
    
    
    6,247
    
    
    
    
    (40
    )
    
    
    (480
    )
    
    
    
    
    
    
    600
    
    
    
    
    
    
    
    2,538
    
    
    
    
    8,936
    
    
    
    8,865Ottawa, Ontario
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,930
    
    
    
    
    2,935
    
    
    
    2,930Denver, Colorado
    
    
    3,017
    
    
    
    2,657
    
    
    
    
    (242
    )
    
    
    (238
    )
    
    
    
    
    
    
    430
    
    
    
    
    
    
    
    (273
    )
    
    
    
    2,605
    
    
    
    2,334Minneapolis, Minnesota
    
    
    3,008
    
    
    
    2,655
    
    
    
    
    (47
    )
    
    
    (243
    )
    
    
    
    
    
    
    344
    
    
    
    
    
    
    
    (1
    )
    
    
    
    3,008
    
    
    
    2,708Other
    
    
    926
    
    
    
    863
    
    
    
    
    (4
    )
    
    
    (82
    )
    
    
    
    
    
    
    107
    
    
    
    
    
    
    
    1,087
    
    
    
    
    2,095
    
    
    
    1,971Total
    
    
    37,337
    
    
    
    34,957
    
    
    
    
    (1,187
    )
    
    
    (2,270
    )
    
    $
    20
    
    
    
    3,813
    
    
    $
    19
    
    
    
    10,475
    
    
    
    
    48,030
    
    
    
    45,788
 (1)
    
    Excludes developments (c) Acquisitions, net of dispositions
  (d) Recurring fee income
   (Millions)
    
    2005
    
    
    2004
    
    
    2003Property management, leasing and project management fees
    
    $
    7
    
    
    $
    6
    
    
    $
    6Brookfield Residential fees
    
    
    9
    
    
    
    8
    
    
    
    8Brookfield LePage Johnson Controls
    
    
    6
    
    
    
    6
    
    
    
    6Total
    
    $
    22
    
    
    $
    20
    
    
    $
    20
  (e) Non-recurring fee and other income




---



##### 



(f) Lease termination income and gains
  Commercial Property Operating Costs
  RESIDENTIAL DEVELOPMENT OPERATIONS
    (Millions)
    
    2005
    
    
    2004
    
    
    2003Sales revenue
    
    $
    389
    
    
    $
    261
    
    
    $
    225Operating costs
    
    
    283
    
    
    
    219
    
    
    
    194Total
    
    $
    106
    
    
    $
    42
    
    
    $
    31
  Lot sales
    
    
    
    Lot Sales Revenue
    
    
    
    Average Lot Sales Revenue(Units)
    
    
    
    (Millions)
    
    
    
    (Thousands)2005
    
    
    2004
    
    
    2003
    
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    
    2005
    
    
    2004
    
    
    2003Alberta
    
    
    2,617
    
    
    
    2,078
    
    
    
    1,768
    
    
    
    $
    182
    
    
    $
    107
    
    
    $
    83
    
    
    
    $
    70
    
    
    $
    51
    
    
    $
    47Colorado
    
    
    369
    
    
    
    468
    
    
    
    448
    
    
    
    
    24
    
    
    
    19
    
    
    
    24
    
    
    
    
    65
    
    
    
    41
    
    
    
    54Total
    
    
    2,986
    
    
    
    2,546
    
    
    
    2,216
    
    
    
    $
    206
    
    
    $
    126
    
    
    $
    107
    
    
    
    $
    69
    
    
    $
    49
    
    
    $
    48
  Home sales
    
    
    
    Home Sales Revenue
    
    
    
    Average Home Sales Revenue(Units)
    
    
    
    (Millions)
    
    
    
    (Thousands)2005
    
    
    2004
    
    
    2003
    
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    
    2005
    
    
    2004
    
    
    2003Alberta
    
    
    556
    
    
    
    496
    
    
    
    479
    
    
    
    $
    86
    
    
    $
    61
    
    
    $
    55
    
    
    
    $
    155
    
    
    $
    123
    
    
    $
    115Ontario
    
    
    391
    
    
    
    339
    
    
    
    318
    
    
    
    
    97
    
    
    
    74
    
    
    
    63
    
    
    
    
    248
    
    
    
    218
    
    
    
    198Total
    
    
    947
    
    
    
    835
    
    
    
    797
    
    
    
    $
    183
    
    
    $
    135
    
    
    $
    118
    
    
    
    $
    193
    
    
    $
    162
    
    
    $
    148




---



##### 



INTEREST AND OTHER INCOME
  INTEREST EXPENSE
  GENERAL AND ADMINISTRATIVE EXPENSES
  NON-CONTROLLING INTERESTS EXPENSE
     (Millions)
    
    Type
    
    2005
    
    
    2004
    
    
    2003BPO Properties
    
    Redeemable preferred shares(1)
    
    $
    10
    
    
    $
    8
    
    
    $
    9BPO Properties
    
    Common shares
    
    
    1
    
    
    
    37
    
    
    
    1100%-owned subsidiaries
    
    Redeemable preferred shares(1)
    
    
    
    
    
    
    3
    
    
    
    4Dividends  shares of subsidiaries
    
    
    
    $
    11
    
    
    $
    48
    
    
    $
    14BPO Properties
    
    Participating interests
    
    $
    4
    
    
    $
    (30
    )
    
    $
    5Brookfield Financial Properties
    
    Participating interests
    
    
    1
    
    
    
    2
    
    
    
    2Non-controlling interests expense in subsidiary
earnings
    
    
    
    $
    5
    
    
    $
    (28
    )
    
    $
    7Total
    
    
    
    $
    16
    
    
    $
    20
    
    
    $
    21
 (1)
    
    Non-participating DEPRECIATION AND AMORTIZATION EXPENSE




---



##### 



DISCONTINUED OPERATIONS
  (Millions)
    
    2005
    
    
    2004
    
    
    2003Revenue from properties sold
    
    $
    20
    
    
    $
    21
    
    
    $
    20Operating expenses
    
    
    9
    
    
    
    9
    
    
    
    9$
    11
    
    
    $
    12
    
    
    $
    11Interest expense
    
    
    (5
    )
    
    
    (5
    )
    
    
    (4
    )Funds from operations  discontinued operations
    
    $
    6
    
    
    $
    7
    
    
    $
    7Depreciation and amortization
    
    
    (5
    )
    
    
    (5
    )
    
    
    (3
    )Income from discontinued operations
    
    $
    1
    
    
    $
    2
    
    
    $
    4
 SEGMENTED INFORMATION
  Commercial
    
    
    
    ResidentialUnited States
    
    
    
    Canada
    
    
    
    Development
    
    
    
    Total(Millions)
    
    2005
    
    
    2004
    
    
    
    2005
    
    
    2004
    
    
    
    2005
    
    
    2004
    
    
    
    2005
    
    
    2004AssetsProperties
    
    $
    5,318
    
    
    $
    5,224
    
    
    
    $
    2,336
    
    
    $
    1,730
    
    
    
    $
    391
    
    
    $
    317
    
    
    
    $
    8,045
    
    
    $
    7,271Receivables and other
    
    
    407
    
    
    
    339
    
    
    
    
    375
    
    
    
    316
    
    
    
    
    173
    
    
    
    84
    
    
    
    
    955
    
    
    
    739Restricted cash and deposits
    
    
    314
    
    
    
    297
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    316
    
    
    
    297Marketable securities
    
    
    
    
    
    
    285
    
    
    
    
    58
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58
    
    
    
    285Cash and cash equivalents
    
    
    33
    
    
    
    49
    
    
    
    
    25
    
    
    
    59
    
    
    
    
    6
    
    
    
    4
    
    
    
    
    64
    
    
    
    112Assets related to discontinued operations
    
    
    75
    
    
    
    96
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    96Total
    
    $
    6,147
    
    
    $
    6,290
    
    
    
    $
    2,796
    
    
    $
    2,105
    
    
    
    $
    570
    
    
    $
    405
    
    
    
    $
    9,513
    
    
    $
    8,800
 Commercial
    
    
    
    ResidentialUnited States
    
    
    
    Canada
    
    
    
    Development
    
    
    
    Total(Millions)
    
    2005
    
    
    2004
    
    
    
    2005
    
    
    2004
    
    
    
    2005
    
    
    2004
    
    
    
    2005
    
    
    2004Revenue
    
    $
    787
    
    
    $
    752
    
    
    
    $
    316
    
    
    $
    301
    
    
    
    $
    389
    
    
    $
    261
    
    
    
    $
    1,492
    
    
    $
    1,314Lease termination income
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60Expenses
    
    
    292
    
    
    
    253
    
    
    
    
    131
    
    
    
    129
    
    
    
    
    283
    
    
    
    219
    
    
    
    
    706
    
    
    
    601495
    
    
    
    559
    
    
    
    
    185
    
    
    
    172
    
    
    
    
    106
    
    
    
    42
    
    
    
    
    786
    
    
    
    773Other revenues
    
    
    6
    
    
    
    14
    
    
    
    
    27
    
    
    
    33
    
    
    
    
    4
    
    
    
    
    
    
    
    
    37
    
    
    
    47Net operating income from continuing
operations
    
    
    501
    
    
    
    573
    
    
    
    
    212
    
    
    
    205
    
    
    
    
    110
    
    
    
    42
    
    
    
    
    823
    
    
    
    820Interest expense
    
    
    231
    
    
    
    243
    
    
    
    
    99
    
    
    
    61
    
    
    
    
    
    
    
    
    
    
    
    
    
    330
    
    
    
    304General and administrative
    
    
    26
    
    
    
    20
    
    
    
    
    22
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    41Non-controlling interests expense
    
    
    
    
    
    
    4
    
    
    
    
    16
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    20Income before undernoted
    
    
    244
    
    
    
    306
    
    
    
    
    75
    
    
    
    107
    
    
    
    
    110
    
    
    
    42
    
    
    
    
    429
    
    
    
    455Depreciation and amortization
    
    
    126
    
    
    
    98
    
    
    
    
    37
    
    
    
    42
    
    
    
    
    
    
    
    
    
    
    
    
    
    163
    
    
    
    140Income before unallocated costs
    
    
    118
    
    
    
    208
    
    
    
    
    38
    
    
    
    65
    
    
    
    
    110
    
    
    
    42
    
    
    
    
    266
    
    
    
    315Unrealized foreign exchange on preferred
share restatement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63Future income taxes and other provisions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103
    
    
    
    116Net income from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    163
    
    
    $
    136Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    2Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    164
    
    
    $
    138




---



##### 



QUARTERLY RESULTS
  2005
    
    
    
    2004(Millions, except per share amounts)
    
    Q4
    
    
    Q3
    
    
    
    
    
    
    Q2
    
    
    Q1
    
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1Total revenue
    
    $
    474
    
    
    $
    378
    
    
    
    
    
    
    $
    362
    
    
    $
    335
    
    
    
    $
    390
    
    
    $
    345
    
    
    $
    381
    
    
    $
    326Net operating incomeCommercial property operations
    
    
    192
    
    
    
    160
    
    
    
    
    
    
    
    162
    
    
    
    166
    
    
    
    
    167
    
    
    
    165
    
    
    
    163
    
    
    
    176Lease termination income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    Total commercial property operations
    
    
    192
    
    
    
    160
    
    
    
    
    
    
    
    162
    
    
    
    166
    
    
    
    
    167
    
    
    
    165
    
    
    
    223
    
    
    
    176Residential development operations
    
    
    45
    
    
    
    24
    
    
    
    
    
    
    
    24
    
    
    
    13
    
    
    
    
    13
    
    
    
    11
    
    
    
    10
    
    
    
    8Interest and other
    
    
    6
    
    
    
    10
    
    
    
    
    
    
    
    10
    
    
    
    11
    
    
    
    
    11
    
    
    
    11
    
    
    
    11
    
    
    
    14243
    
    
    
    194
    
    
    
    
    
    
    
    196
    
    
    
    190
    
    
    
    
    191
    
    
    
    187
    
    
    
    244
    
    
    
    198ExpensesInterest
    
    
    86
    
    
    
    84
    
    
    
    
    
    
    
    81
    
    
    
    79
    
    
    
    
    79
    
    
    
    76
    
    
    
    76
    
    
    
    73General and administrative
    
    
    15
    
    
    
    11
    
    
    
    
    
    
    
    11
    
    
    
    11
    
    
    
    
    10
    
    
    
    10
    
    
    
    11
    
    
    
    10Non-controlling interests expense
    
    
    4
    
    
    
    4
    
    
    
    
    
    
    
    5
    
    
    
    3
    
    
    
    
    4
    
    
    
    5
    
    
    
    6
    
    
    
    5138
    
    
    
    95
    
    
    
    
    
    
    
    99
    
    
    
    97
    
    
    
    
    98
    
    
    
    96
    
    
    
    151
    
    
    
    110Depreciation and amortization
    
    
    47
    
    
    
    41
    
    
    
    
    
    
    
    40
    
    
    
    35
    
    
    
    
    38
    
    
    
    35
    
    
    
    34
    
    
    
    33Unrealized foreign exchange on preferred share
restatement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    28
    
    
    
    (2
    )
    
    
    (4
    )Future income taxes and other provisions
    
    
    42
    
    
    
    22
    
    
    
    
    
    
    
    19
    
    
    
    20
    
    
    
    
    17
    
    
    
    22
    
    
    
    47
    
    
    
    30Net income from continuing operations
    
    $
    49
    
    
    $
    32
    
    
    
    
    
    
    $
    40
    
    
    $
    42
    
    
    
    $
    2
    
    
    $
    11
    
    
    $
    72
    
    
    $
    51Discontinued operations
    
    
    (2
    )
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Net income
    
    $
    47
    
    
    $
    33
    
    
    
    
    
    
    $
    41
    
    
    $
    43
    
    
    
    $
    2
    
    
    $
    11
    
    
    $
    73
    
    
    $
    52Net income per share  basicPrior to discontinued operations and lease
termination income
    
    $
    0.21
    
    
    $
    0.14
    
    
    
    
    
    
    $
    0.17
    
    
    $
    0.18
    
    
    
    $
    
    
    
    $
    0.05
    
    
    $
    0.15
    
    
    $
    0.22Discontinued operations
    
    
    (0.01
    )
    
    
    
    
    
    
    
    
    
    
    0.01
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01
    
    
    
    Lease termination income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.15
    
    
    
    $
    0.20
    
    
    $
    0.14
    
    
    
    
    
    
    $
    0.18
    
    
    $
    0.18
    
    
    
    $
    
    
    
    $
    0.05
    
    
    $
    0.31
    
    
    $
    0.22Net income per share  dilutedPrior to discontinued operations and lease
termination income
    
    $
    0.21
    
    
    $
    0.14
    
    
    
    
    
    
    $
    0.16
    
    
    $
    0.18
    
    
    
    $
    
    
    
    $
    0.05
    
    
    $
    0.15
    
    
    $
    0.22Discontinued operations
    
    
    (0.01
    )
    
    
    
    
    
    
    
    
    
    
    0.01
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01
    
    
    
    Lease termination income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.15
    
    
    
    $
    0.20
    
    
    $
    0.14
    
    
    
    
    
    
    $
    0.17
    
    
    $
    0.18
    
    
    
    $
    
    
    
    $
    0.05
    
    
    $
    0.31
    
    
    $
    0.22Funds from operations per share  dilutedPrior to discontinued operations and lease
termination income
    
    $
    0.59
    
    
    $
    0.40
    
    
    
    
    
    
    $
    0.42
    
    
    $
    0.41
    
    
    
    $
    0.42
    
    
    $
    0.40
    
    
    $
    0.39
    
    
    $
    0.46Discontinued operations
    
    
    
    
    
    
    0.01
    
    
    
    
    
    
    
    0.01
    
    
    
    0.01
    
    
    
    
    
    
    
    
    0.01
    
    
    
    0.01
    
    
    
    0.01Lease termination income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.25
    
    
    
    $
    0.59
    
    
    $
    0.41
    
    
    
    
    
    
    $
    0.43
    
    
    $
    0.42
    
    
    
    $
    0.42
    
    
    $
    0.41
    
    
    $
    0.65
    
    
    $
    0.47
 Notes:(1)
    
    The 2004 results have been restated to reflect the impact of the reclassification of
certain preferred share dividends to interest expense and foreign exchange on the
reclassification of certain preferred shares to liabilities(2)
    
    Per share amounts include the effect of the three-for-two common stock split on
March 31, 2005




---



##### 








---



##### 



PART
III  RISKS AND UNCERTAINTIES
  INTEREST RATE AND FINANCING RISK
     Approximate Change in Annual
    
    
    Approximate Change on InterestAs at
    
    Interest Rate Movement
    
    
    Interest Expense (Millions)
    
    
    Expense per Share per YearDecember 31, 2005
    
    + 100 bps
    
    
    $
    16
    
    
    $
    0.07December 31, 2004
    
    + 100 bps
    
    
    $
    8
    
    
    $
    0.04
  CREDIT RISK
    42




---



##### 



Year of
    
    
    000s
    
    
    
    % ofTenant
    
    Location
    
    Expiry(1)
    
    
    Sq. Ft.
    (2)
    
    
    Sq. Ft.
    (2)
    
    Credit Rating(3)RatedMerrill Lynch
    
    New York/Toronto
    
    2013
    
    
    4,363
    
    
    
    9.1
    %
    
    A+CIBC/CIBC World Markets
    
    New York/Toronto/Calgary
    
    2028
    
    
    2,066
    
    
    
    4.3
    %
    
    A+Government of Canada
    
    Toronto/Ottawa/Edmonton
    
    2010
    
    
    2,008
    
    
    
    4.2
    %
    
    AAABank of Montreal/Nesbitt Burns
    
    Toronto/Calgary
    
    2018
    
    
    1,092
    
    
    
    2.3
    %
    
    AA-JPMorgan Chase
    
    New York/Denver
    
    2018
    
    
    1,029
    
    
    
    2.1
    %
    
    A+RBC Financial Group
    
    Five major markets
    
    2018
    
    
    981
    
    
    
    2.0
    %
    
    AA-Petro-Canada
    
    Calgary
    
    2013
    
    
    871
    
    
    
    1.8
    %
    
    BBBTarget Corporation
    
    Minneapolis
    
    2013
    
    
    840
    
    
    
    1.8
    %
    
    A+Imperial Oil
    
    Calgary
    
    2011
    
    
    633
    
    
    
    1.3
    %
    
    AAATalisman Energy
    
    Calgary
    
    2015
    
    
    527
    
    
    
    1.1
    %
    
    BBB+CP Rail
    
    Calgary
    
    2014
    
    
    452
    
    
    
    0.9
    %
    
    BBBConoco Phillips
    
    Calgary
    
    2010
    
    
    445
    
    
    
    0.9
    %
    
    A-American Express
    
    New York
    
    2022
    
    
    408
    
    
    
    0.8
    %
    
    A+Fidelity Properties Inc.
    
    New York/Boston
    
    2009
    
    
    381
    
    
    
    0.8
    %
    
    BBB-Pepco Holdings Inc.
    
    Washington, D.C.
    
    2028
    
    
    364
    
    
    
    0.8
    %
    
    BBB+Enbridge Inc.
    
    Calgary/Edmonton
    
    2016
    
    
    355
    
    
    
    0.7
    %
    
    A-Teachers Insurance Annuity Association
    
    Denver
    
    2008
    
    
    323
    
    
    
    0.7
    %
    
    AAACanadian Natural Resources
    
    Calgary
    
    2011
    
    
    277
    
    
    
    0.6
    %
    
    BBB+Goldman Sachs
    
    New York
    
    2015
    
    
    274
    
    
    
    0.6
    %
    
    A+EnCana Corporation
    
    Calgary
    
    2013
    
    
    256
    
    
    
    0.5
    %
    
    A-Lehman Brothers
    
    New York
    
    2010
    
    
    253
    
    
    
    0.5
    %
    
    AA-Anadarko Canada Corporation
    
    Calgary
    
    2011
    
    
    235
    
    
    
    0.5
    %
    
    BBB+Bank of Nova Scotia
    
    New York
    
    2014
    
    
    230
    
    
    
    0.5
    %
    
    AA-Amdocs Canada Inc.
    
    Toronto
    
    2010
    
    
    220
    
    
    
    0.5
    %
    
    BBB-Bank of America
    
    Boston
    
    2008
    
    
    213
    
    
    
    0.4
    %
    
    AAMarsh Mercer
    
    Toronto
    
    2015
    
    
    207
    
    
    
    0.4
    %
    
    BGovernment and related services
    
    Various
    
    Various
    
    
    1,285
    
    
    
    2.7
    %
    
    BBB- or higherOther investment grade
    
    Various
    
    Various
    
    
    3,479
    
    
    
    7.3
    %
    
    BBB- or higher24,067
    
    
    
    50.1
    %UnratedCadwalader, Wickersham & Taft LLP
    
    New York
    
    2024
    
    
    465
    
    
    
    1.0
    %
    
    Cleary, Gottlieb, Steen & Hamilton
    
    New York
    
    2012
    
    
    446
    
    
    
    1.0
    %
    
    Goodwin Procter LLP
    
    Boston
    
    2016
    
    
    397
    
    
    
    0.8
    %
    
    Wellington Management Co.
    
    Boston
    
    2011
    
    
    358
    
    
    
    0.7
    %
    
    National Association of Securities Dealers
    
    New York
    
    2020
    
    
    277
    
    
    
    0.6
    %
    
    Osler Hoskin & Harcourt LLP
    
    Toronto
    
    2015
    
    
    254
    
    
    
    0.5
    %
    
    CI Investments Inc.
    
    Toronto
    
    2011
    
    
    212
    
    
    
    0.4
    %
    
    Total
    
    
    
    
    
    
    26,476
    
    
    
    55.1
    %
 (1)
    
    Weighted average based on square feet(2)
    
    Prior to considering partnership
interests in partially-owned properties(3)
    
    From Standard & Poors, Moodys or Dominion Bond Rating
Service LEASE ROLL-OVER RISK
  43




---



##### 



December 31, 2005
    
    Currently
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2013 &(000s Sq. Ft.)
    
    Available
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Beyond
    
    
    TotalNew York
    
    
    619
    
    
    
    317
    
    
    
    18
    
    
    
    252
    
    
    
    102
    
    
    
    517
    
    
    
    216
    
    
    
    591
    
    
    
    9,821
    
    
    
    12,453Boston
    
    
    150
    
    
    
    65
    
    
    
    85
    
    
    
    447
    
    
    
    15
    
    
    
    172
    
    
    
    382
    
    
    
    26
    
    
    
    821
    
    
    
    2,163Washington, D.C.
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    10
    
    
    
    
    
    
    
    18
    
    
    
    47
    
    
    
    1,449
    
    
    
    1,557Toronto
    
    
    687
    
    
    
    454
    
    
    
    604
    
    
    
    697
    
    
    
    849
    
    
    
    1,122
    
    
    
    615
    
    
    
    735
    
    
    
    6,515
    
    
    
    12,278Calgary
    
    
    71
    
    
    
    201
    
    
    
    289
    
    
    
    407
    
    
    
    298
    
    
    
    1,130
    
    
    
    1,613
    
    
    
    633
    
    
    
    4,294
    
    
    
    8,936Ottawa
    
    
    5
    
    
    
    117
    
    
    
    66
    
    
    
    1,006
    
    
    
    135
    
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    1,602
    
    
    
    2,9351,547
    
    
    
    1,154
    
    
    
    1,062
    
    
    
    2,827
    
    
    
    1,409
    
    
    
    2,943
    
    
    
    2,844
    
    
    
    2,034
    
    
    
    24,502
    
    
    
    40,322% of total
    
    
    3.8
    %
    
    
    2.8
    %
    
    
    2.6
    %
    
    
    6.8
    %
    
    
    3.4
    %
    
    
    7.1
    %
    
    
    6.9
    %
    
    
    5.0
    %
    
    
    46.7
    %
    
    
    85.1
    %Denver
    
    
    271
    
    
    
    126
    
    
    
    154
    
    
    
    446
    
    
    
    92
    
    
    
    250
    
    
    
    101
    
    
    
    136
    
    
    
    1,029
    
    
    
    2,605Minneapolis
    
    
    300
    
    
    
    56
    
    
    
    31
    
    
    
    83
    
    
    
    212
    
    
    
    50
    
    
    
    32
    
    
    
    117
    
    
    
    2,127
    
    
    
    3,008Other
    
    
    124
    
    
    
    127
    
    
    
    155
    
    
    
    71
    
    
    
    155
    
    
    
    214
    
    
    
    120
    
    
    
    91
    
    
    
    1,038
    
    
    
    2,095695
    
    
    
    309
    
    
    
    340
    
    
    
    600
    
    
    
    459
    
    
    
    514
    
    
    
    253
    
    
    
    344
    
    
    
    4,194
    
    
    
    7,708% of total
    
    
    1.6
    %
    
    
    0.8
    %
    
    
    0.8
    %
    
    
    1.5
    %
    
    
    1.1
    %
    
    
    1.2
    %
    
    
    0.6
    %
    
    
    0.8
    %
    
    
    6.5
    %
    
    
    14.9
    %2,242
    
    
    
    1,463
    
    
    
    1,402
    
    
    
    3,427
    
    
    
    1,868
    
    
    
    3,457
    
    
    
    3,097
    
    
    
    2,378
    
    
    
    28,696
    
    
    
    48,0305.4
    %
    
    
    3.6
    %
    
    
    3.4
    %
    
    
    8.3
    %
    
    
    4.5
    %
    
    
    8.3
    %
    
    
    7.5
    %
    
    
    5.8
    %
    
    
    53.2
    %
    
    
    100.0
    %
  ENVIRONMENTAL RISKS
   OTHER RISKS AND UNCERTAINTIES
     44




---



##### 



FOREIGN EXCHANGE FLUCTUATIONS
  DERIVATIVE FINANCIAL INSTRUMENTS
       45




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##### 



PART IV  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 CHANGES IN ACCOUNTING POLICIES
  Liabilities and equity, CICA Handbook Section 3861
  Consolidation of variable interest entities, CICA AcG 15
  FUTURE ACCOUNTING POLICY CHANGES
  Comprehensive Income, CICA Handbook Section 1530
  Financial
Instruments  Recognition and Measurement, CICA Handbook Section 3855
  Hedges, CICA Handbook Section 3865
  46




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##### 



Effect of Contingently Convertible Instruments on the Computation of Diluted Earnings Per Share,
Emerging Issues Committee Abstract 155
  Implicit Variable Interests, Emerging Issues Committee Abstract 157
  Conditional Asset Retirement Obligations, Emerging Issues Committee Abstract 159
  USE OF ESTIMATES
   Property Acquisitions
  47




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##### 



Depreciation
  Impairment of Assets
    Revenue Recognition
   Fair Value of Financial Instruments
  Tax
   48




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##### 



RELATED-PARTY TRANSACTIONS
   49




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##### 



PART V  BUSINESS ENVIRONMENT AND OUTLOOK
 COMMERCIAL OPERATIONS
    RESIDENTIAL DEVELOPMENT OPERATIONS
   DISCLOSURE CONTROLS AND PROCEDURES
 Multilateral Instrument 52-109
 OUTLOOK
  
 February 8, 2006
 50




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##### 



DISTRIBUTIONS
  Currency
    
    
    Dec. 31, 2005
    
    
    Dec. 31, 2004
    
    
    Dec. 31, 2003
    
    
    Dec. 31, 2002Common shares(1)
    
    US$
    
    
    $
    0.6500
    
    
    $
    0.4200
    
    
    $
    0.3400
    (2)
    
    $
    0.2800Class A preferred shares
    
    
    C$
    
    
    
    0.1875
    
    
    
    0.1875
    
    
    
    0.1875
    
    
    
    0.1875Class AA Series E preferred shares
    
    
    C$
    
    
    
    0.7591
    
    
    
    0.7061
    
    
    
    0.8202
    
    
    
    0.7272Class AAA Series A preferred shares
    
    
    C$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.6521Class AAA Series B preferred shares
    
    
    C$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.6521Class AAA Series C preferred shares
    
    
    C$
    
    
    
    
    
    
    
    
    
    
    
    1.2356
    
    
    
    2.0000Class AAA Series D preferred shares
    
    
    C$
    
    
    
    
    
    
    
    
    
    
    
    1.2356
    
    
    
    2.0000Class AAA Series E preferred shares
    
    
    C$
    
    
    
    0.7695
    
    
    
    0.7027
    
    
    
    
    
    
    
    Class AAA Series F preferred shares
    
    
    C$
    
    
    
    1.5000
    
    
    
    1.5000
    
    
    
    1.5000
    
    
    
    0.3986Class AAA Series G preferred shares
    
    US$
    
    
    
    1.3125
    
    
    
    1.3125
    
    
    
    0.7237
    
    
    
    Class AAA Series H preferred shares
    
    
    C$
    
    
    
    1.4375
    
    
    
    1.4375
    
    
    
    0.3033
    
    
    
    Class AAA Series I preferred shares
    
    
    C$
    
    
    
    1.3000
    
    
    
    1.3000
    
    
    
    
    
    
    
    Class AAA Series J preferred shares
    
    
    C$
    
    
    
    1.2500
    
    
    
    0.8333
    
    
    
    
    
    
    
    Class AAA Series K preferred shares
    
    
    C$
    
    
    
    1.3000
    
    
    
    0.2486
    
    
    
    
    
    
    
    
 
 (1)

Per share amounts include the effect of the three-for-two
common stock-split on March 31, 2005(2)

    Excludes the distribution
of Brookfield Properties Homes Corporation 51