##### 



March 7, 2007
 PART I  OBJECTIVES AND FINANCIAL HIGHLIGHTS
 BASIS OF PRESENTATION
    OVERVIEW OF THE BUSINESS
   FINANCIAL HIGHLIGHTS
 (Millions, except per share amounts)
    
    2006
    
    
    2005
    
    
    2004Results of operationsNet income
    
    $
    135
    
    
    $
    164
    
    
    $
    138Net income per share  diluted
    
    
    0.56
    
    
    
    0.69
    
    
    
    0.58Common share dividends paid per share
    
    
    0.75
    
    
    
    0.65
    
    
    
    0.42Funds from operations
    
    $
    443
    
    
    $
    435
    
    
    $
    403Funds from operations per share  diluted
    
    
    1.87
    
    
    
    1.85
    
    
    
    1.70Balance sheet dataTotal assets
    
    $
    19,314
    
    
    $
    9,513
    
    
    $
    8,800Commercial properties
    
    
    15,287
    
    
    
    7,430
    
    
    
    6,555Commercial property debt
    
    
    11,185
    
    
    
    5,216
    
    
    
    4,754Shareholders equity
    
    
    3,112
    
    
    
    1,943
    
    
    
    1,992
 18




---



##### 



COMMERCIAL PROPERTY OPERATIONS
   
    
    Surfacing value from our properties through proactive leasing and select
redevelopment initiatives;
    
    Prudent capital management including the refinancing of mature properties and
investing in joint venture opportunities through the expansion of our asset-management
platform;
    
    Monetizing development assets as the economy rebounds and continued supply
constraints create opportunities; and
    
    Expanding our asset management platform through the growth of our existing Office
Funds or through the establishment of new funds.
  Brookfield Properties
    
    
    
    
    
    
    
    
    
    
    Net BookNumber of
    
    
    Leasable Area
    
    
    Owned Interest
    
    
    Book Value
    
    
    Debt
    
    
    EquityRegion
    
    Properties
    
    
    (000s Sq. Ft.)
    
    
    (000s Sq. Ft.)(1)
    
    
    (Millions)
    
    
    (Millions)
    
    
    (Millions)DirectNew York, New York(2)
    
    
    7
    
    
    
    12,447
    
    
    
    10,735
    
    
    $
    3,914
    
    
    $
    2,886
    
    
    $
    1,028Boston, Massachusetts
    
    
    2
    
    
    
    2,163
    
    
    
    1,103
    
    
    
    350
    
    
    
    228
    
    
    
    122Washington, D.C.
    
    
    6
    
    
    
    2,266
    
    
    
    2,266
    
    
    
    693
    
    
    
    503
    
    
    
    190Toronto, Ontario
    
    
    9
    
    
    
    6,646
    
    
    
    5,253
    
    
    
    1,179
    
    
    
    625
    
    
    
    554Calgary, Alberta
    
    
    7
    
    
    
    6,326
    
    
    
    3,164
    
    
    
    438
    
    
    
    324
    
    
    
    114Denver, Colorado
    
    
    1
    
    
    
    1,795
    
    
    
    1,795
    
    
    
    264
    
    
    
    169
    
    
    
    95Minneapolis, Minnesota
    
    
    4
    
    
    
    3,008
    
    
    
    3,008
    
    
    
    423
    
    
    
    177
    
    
    
    246Other
    
    
    2
    
    
    
    926
    
    
    
    926
    
    
    
    92
    
    
    
    42
    
    
    
    5038
    
    
    
    35,577
    
    
    
    28,250
    
    
    
    7,353
    
    
    
    4,954
    
    
    
    2,399U.S. FundNew York, New York
    
    
    6
    
    
    
    7,069
    
    
    
    5,617
    
    
    
    2,581
    
    
    
    715
    
    
    
    1,866Washington, D.C.
    
    
    23
    
    
    
    4,505
    
    
    
    4,328
    
    
    
    1,287
    
    
    
    208
    
    
    
    1,079Houston, Texas
    
    
    7
    
    
    
    6,958
    
    
    
    6,307
    
    
    
    941
    
    
    
    
    
    
    
    941Los Angeles, California
    
    
    22
    
    
    
    10,672
    
    
    
    10,438
    
    
    
    2,689
    
    
    
    431
    
    
    
    2,258Corporate U.S. Fund debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,175
    
    
    
    (4,175
    )58
    
    
    
    29,204
    
    
    
    26,690
    
    
    
    7,498
    
    
    
    5,529
    
    
    
    1,969Canadian FundToronto, Ontario
    
    
    6
    
    
    
    4,396
    
    
    
    1,099
    
    
    
    255
    
    
    
    95
    
    
    
    160Calgary, Alberta
    
    
    2
    
    
    
    1,519
    
    
    
    380
    
    
    
    75
    
    
    
    48
    
    
    
    27Ottawa, Ontario
    
    
    6
    
    
    
    2,780
    
    
    
    695
    
    
    
    88
    
    
    
    46
    
    
    
    42Other
    
    
    3
    
    
    
    919
    
    
    
    229
    
    
    
    18
    
    
    
    9
    
    
    
    917
    
    
    
    9,614
    
    
    
    2,403
    
    
    
    436
    
    
    
    198
    
    
    
    238Continuing operations
    
    
    113
    
    
    
    74,395
    
    
    
    57,343
    
    
    
    15,287
    
    
    
    10,681
    
    
    
    4,606Discontinued operations(3)
    
    
    3
    
    
    
    1,400
    
    
    
    661
    
    
    
    61
    
    
    
    34
    
    
    
    27116
    
    
    
    75,795
    
    
    
    58,004
    
    
    
    15,348
    
    
    
    10,715
    
    
    
    4,633Office development sites
    
    
    15
    
    
    
    17,219
    
    
    
    15,456
    
    
    
    735
    
    
    
    504
    
    
    
    231Total
    
    
    131
    
    
    
    93,014
    
    
    
    73,460
    
    
    $
    16,083
    
    
    $
    11,219
    
    
    $
    4,864
 (1)
    
    Represents consolidated
interest before non-controlling interests(2)
    
    Includes $300 million of corporate
debt(3)
    
    Atrium on Bay in Toronto and 2200 Walkley and 2204 Walkley in Ottawa are
currently classified as discontinued operations
  19




---



##### 



 Asset Management
    
    Stable base fee for providing regular, on-going services. Transaction
    
    Development, redevelopment and leasing activities conducted on behalf of these funds. Performance
    
    Earned when certain pre-determined 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.
    Total Portfolio
    
    
    
    New York
    
    
    
    Boston
    
    
    
    Washington, D.C.Net Rate
    
    
    
    
    
    
    
    
    
    
    
    Net Rate
    
    
    
    
    
    
    
    
    
    
    
    Net Rate
    
    
    
    
    
    
    
    
    
    
    
    Net 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
    
    
    3,215
    
    
    
    4.9
    
    
    
    
    
    
    
    
    665
    
    
    
    3.5
    
    
    
    
    
    
    
    
    142
    
    
    
    7.5
    
    
    
    
    
    
    
    
    139
    
    
    
    2.42007
    
    
    3,150
    
    
    
    4.8
    
    
    $
    19
    
    
    
    
    288
    
    
    
    1.5
    
    
    $
    28
    
    
    
    
    61
    
    
    
    3.2
    
    
    $
    22
    
    
    
    
    719
    
    
    
    12.5
    
    
    $
    232008
    
    
    3,669
    
    
    
    5.6
    
    
    
    22
    
    
    
    
    541
    
    
    
    2.8
    
    
    
    28
    
    
    
    
    399
    
    
    
    21.1
    
    
    
    24
    
    
    
    
    458
    
    
    
    8.0
    
    
    
    262009
    
    
    4,077
    
    
    
    6.2
    
    
    
    19
    
    
    
    
    1,023
    
    
    
    5.3
    
    
    
    20
    
    
    
    
    40
    
    
    
    2.1
    
    
    
    31
    
    
    
    
    582
    
    
    
    10.1
    
    
    
    262010
    
    
    5,670
    
    
    
    8.6
    
    
    
    23
    
    
    
    
    1,038
    
    
    
    5.4
    
    
    
    34
    
    
    
    
    172
    
    
    
    9.1
    
    
    
    33
    
    
    
    
    268
    
    
    
    4.7
    
    
    
    262011
    
    
    5,150
    
    
    
    7.8
    
    
    
    23
    
    
    
    
    360
    
    
    
    1.9
    
    
    
    38
    
    
    
    
    394
    
    
    
    20.9
    
    
    
    45
    
    
    
    
    199
    
    
    
    3.5
    
    
    
    302012
    
    
    5,446
    
    
    
    8.3
    
    
    
    24
    
    
    
    
    860
    
    
    
    4.5
    
    
    
    24
    
    
    
    
    31
    
    
    
    1.6
    
    
    
    23
    
    
    
    
    531
    
    
    
    9.2
    
    
    
    312013
    
    
    11,156
    
    
    
    16.9
    
    
    
    28
    
    
    
    
    5,128
    
    
    
    26.7
    
    
    
    38
    
    
    
    
    30
    
    
    
    1.6
    
    
    
    29
    
    
    
    
    189
    
    
    
    3.3
    
    
    
    292014 & beyond
    
    
    24,347
    
    
    
    36.9
    
    
    
    28
    
    
    
    
    9,296
    
    
    
    48.4
    
    
    
    36
    
    
    
    
    618
    
    
    
    32.9
    
    
    
    28
    
    
    
    
    2,664
    
    
    
    46.3
    
    
    
    37Parking
    
    
    9,915
    
    
    
    
    
    
    
    
    
    
    
    
    317
    
    
    
    
    
    
    
    
    
    
    
    
    276
    
    
    
    
    
    
    
    
    
    
    
    
    1,022
    
    
    
    
    
    
    
    75,795
    
    
    
    100.0
    
    
    $
    26
    
    
    
    
    19,516
    
    
    
    100.0
    
    
    $
    35
    
    
    
    
    2,163
    
    
    
    100.0
    
    
    $
    31
    
    
    
    
    6,771
    
    
    
    100.0
    
    
    $
    31Weighted average
market net rent
    
    
    
    
    
    
    
    
    
    $
    29
    
    
    
    
    
    
    
    
    
    
    
    $
    43
    
    
    
    
    
    
    
    
    
    
    
    $
    32
    
    
    
    
    
    
    
    
    
    
    
    $
    35
 20




---



##### 



Houston
    
    
    
    Los Angeles
    
    
    
    Denver
    
    
    
    MinneapolisNet Rate
    
    
    
    
    
    
    
    
    
    
    
    Net Rate
    
    
    
    
    
    
    
    
    
    
    
    Net Rate
    
    
    
    
    
    
    
    
    
    
    
    Net 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
    
    
    336
    
    
    
    5.4
    
    
    
    
    
    
    
    
    1,075
    
    
    
    12.6
    
    
    
    
    
    
    
    
    56
    
    
    
    4.3
    
    
    
    
    
    
    
    
    267
    
    
    
    10.72007
    
    
    575
    
    
    
    9.3
    
    
    $
    13
    
    
    
    
    668
    
    
    
    7.8
    
    
    $
    19
    
    
    
    
    55
    
    
    
    4.3
    
    
    $
    17
    
    
    
    
    36
    
    
    
    1.4
    
    
    $
    92008
    
    
    454
    
    
    
    7.4
    
    
    
    16
    
    
    
    
    766
    
    
    
    9.0
    
    
    
    25
    
    
    
    
    48
    
    
    
    3.7
    
    
    
    18
    
    
    
    
    32
    
    
    
    1.3
    
    
    
    142009
    
    
    155
    
    
    
    2.5
    
    
    
    20
    
    
    
    
    558
    
    
    
    6.5
    
    
    
    21
    
    
    
    
    9
    
    
    
    0.7
    
    
    
    20
    
    
    
    
    221
    
    
    
    8.9
    
    
    
    52010
    
    
    941
    
    
    
    15.3
    
    
    
    14
    
    
    
    
    981
    
    
    
    11.5
    
    
    
    24
    
    
    
    
    100
    
    
    
    7.7
    
    
    
    22
    
    
    
    
    55
    
    
    
    2.2
    
    
    
    102011
    
    
    581
    
    
    
    9.4
    
    
    
    16
    
    
    
    
    1,004
    
    
    
    11.8
    
    
    
    22
    
    
    
    
    89
    
    
    
    6.9
    
    
    
    20
    
    
    
    
    35
    
    
    
    1.4
    
    
    
    112012
    
    
    1,232
    
    
    
    20.0
    
    
    
    16
    
    
    
    
    1,125
    
    
    
    13.2
    
    
    
    31
    
    
    
    
    77
    
    
    
    6.0
    
    
    
    20
    
    
    
    
    126
    
    
    
    5.1
    
    
    
    172013
    
    
    522
    
    
    
    8.5
    
    
    
    16
    
    
    
    
    587
    
    
    
    6.9
    
    
    
    25
    
    
    
    
    152
    
    
    
    11.8
    
    
    
    22
    
    
    
    
    647
    
    
    
    26.0
    
    
    
    92014 & beyond
    
    
    1,372
    
    
    
    22.2
    
    
    
    19
    
    
    
    
    1,769
    
    
    
    20.7
    
    
    
    33
    
    
    
    
    706
    
    
    
    54.6
    
    
    
    22
    
    
    
    
    1,068
    
    
    
    43.0
    
    
    
    13Parking
    
    
    790
    
    
    
    
    
    
    
    
    
    
    
    
    2,139
    
    
    
    
    
    
    
    
    
    
    
    
    503
    
    
    
    
    
    
    
    
    
    
    
    
    521
    
    
    
    
    
    
    
    6,958
    
    
    
    100.0
    
    
    $
    16
    
    
    
    
    10,672
    
    
    
    100.0
    
    
    $
    27
    
    
    
    
    1,795
    
    
    
    100.0
    
    
    $
    21
    
    
    
    
    3,008
    
    
    
    100.0
    
    
    $
    11Weighted average
market net rent
    
    
    
    
    
    
    
    
    
    $
    17
    
    
    
    
    
    
    
    
    
    
    
    $
    24
    
    
    
    
    
    
    
    
    
    
    
    $
    17
    
    
    
    
    
    
    
    
    
    
    
    $
    15
 Toronto
    
    
    
    Calgary
    
    
    
    Ottawa
    
    
    
    OtherNet Rate
    
    
    
    
    
    
    
    
    
    
    
    Net Rate
    
    
    
    
    
    
    
    
    
    
    
    Net Rate
    
    
    
    
    
    
    
    
    
    
    
    Net 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
    
    
    443
    
    
    
    4.2
    
    
    
    
    
    
    
    
    15
    
    
    
    0.2
    
    
    
    
    
    
    
    
    15
    
    
    
    0.8
    
    
    
    
    
    
    
    
    62
    
    
    
    4.42007
    
    
    413
    
    
    
    4.0
    
    
    $
    19
    
    
    
    
    48
    
    
    
    0.7
    
    
    $
    19
    
    
    
    
    142
    
    
    
    7.4
    
    
    $
    12
    
    
    
    
    145
    
    
    
    10.4
    
    
    $
    112008
    
    
    554
    
    
    
    5.3
    
    
    
    19
    
    
    
    
    287
    
    
    
    4.2
    
    
    
    19
    
    
    
    
    78
    
    
    
    4.1
    
    
    
    11
    
    
    
    
    52
    
    
    
    3.7
    
    
    
    102009
    
    
    946
    
    
    
    9.0
    
    
    
    17
    
    
    
    
    322
    
    
    
    4.7
    
    
    
    18
    
    
    
    
    138
    
    
    
    7.2
    
    
    
    11
    
    
    
    
    83
    
    
    
    5.9
    
    
    
    92010
    
    
    1,026
    
    
    
    9.8
    
    
    
    23
    
    
    
    
    915
    
    
    
    13.5
    
    
    
    21
    
    
    
    
    2
    
    
    
    0.1
    
    
    
    33
    
    
    
    
    172
    
    
    
    12.3
    
    
    
    92011
    
    
    714
    
    
    
    6.8
    
    
    
    23
    
    
    
    
    1,602
    
    
    
    23.6
    
    
    
    17
    
    
    
    
    29
    
    
    
    1.5
    
    
    
    9
    
    
    
    
    143
    
    
    
    10.2
    
    
    
    122012
    
    
    883
    
    
    
    8.4
    
    
    
    21
    
    
    
    
    499
    
    
    
    7.3
    
    
    
    25
    
    
    
    
    4
    
    
    
    0.2
    
    
    
    29
    
    
    
    
    78
    
    
    
    5.6
    
    
    
    122013
    
    
    1,589
    
    
    
    15.2
    
    
    
    23
    
    
    
    
    1,286
    
    
    
    18.9
    
    
    
    20
    
    
    
    
    952
    
    
    
    49.9
    
    
    
    16
    
    
    
    
    74
    
    
    
    5.3
    
    
    
    162014 & beyond
    
    
    3,887
    
    
    
    37.3
    
    
    
    21
    
    
    
    
    1,827
    
    
    
    26.9
    
    
    
    20
    
    
    
    
    549
    
    
    
    28.8
    
    
    
    12
    
    
    
    
    591
    
    
    
    42.2
    
    
    
    10Parking
    
    
    1,828
    
    
    
    
    
    
    
    
    
    
    
    
    1,044
    
    
    
    
    
    
    
    
    
    
    
    
    1,030
    
    
    
    
    
    
    
    
    
    
    
    
    445
    
    
    
    
    
    
    
    12,283
    
    
    
    100.0
    
    
    $
    21
    
    
    
    
    7,845
    
    
    
    100.0
    
    
    $
    20
    
    
    
    
    2,939
    
    
    
    100.0
    
    
    $
    14
    
    
    
    
    1,845
    
    
    
    100.0
    
    
    $
    11Weighted average
market net rent
    
    
    
    
    
    
    
    
    
    $
    23
    
    
    
    
    
    
    
    
    
    
    
    $
    29
    
    
    
    
    
    
    
    
    
    
    
    $
    14
    
    
    
    
    
    
    
    
    
    
    
    $
    15
 COMMERCIAL DEVELOPMENT
  21




---



##### 



NumberDescription
    
    of Sites
    
    
    Ownership(1)
    
    Sq. Ft.New York, New YorkNinth Avenue
    
    Between 31stand 33rdStreets across from the Farley Post Office
    
    
    1
    
    
    
    100
    %
    
    
    4,700,000Washington, D.C77 K Street
    
    Adjacent to Union Station
    
    
    1
    
    
    
    50
    %
    
    
    322,000Reston Crescent
    
    3.6 acre landscaped campus adjacent to Reston, Virginia
    
    
    1
    
    
    
    100
    %
    
    
    1,000,000Waterview
    
    Located at the foot of the Key Bridge in Rosslyn, Virginia
    
    
    1
    
    
    
    25
    %
    
    
    930,000Houston, TexasFour Allen Center(2)
    
    1400 Smith Street
    
    
    1
    
    
    
    100
    %
    
    
    1,267,0001500 Smith Street
    
    Between Continental Center I and Four Allen Center
    
    
    1
    
    
    
    100
    %
    
    
    800,000Allen Center Garage
    
    Located in the heart of the Allen Center / Cullen Center complex
    
    
    1
    
    
    
    100
    %
    
    
    700,000Allen Center Gateway
    
    Adjacent to the Allen Center
    
    
    1
    
    
    
    100
    %
    
    
    700,000Toronto, OntarioBay Adelaide Centre
    
    Bay and Adelaide Streets
    
    
    1
    
    
    
    100
    %
    
    
    2,600,000BCE Place III
    
    Third phase of BCE Place project
    
    
    1
    
    
    
    65
    %
    
    
    800,000Calgary, AlbertaBankers Court
    
    East and West Parkades adjacent to Bankers Hall
    
    
    1
    
    
    
    50
    %
    
    
    500,000Herald Site
    
    Within one block from our existing Calgary assets
    
    
    1
    
    
    
    100
    %
    
    
    1,100,000Ottawa, Ontario300 Queen Street
    
    Third phase of Place de Ville project
    
    
    1
    
    
    
    25
    %
    
    
    500,000Denver, Colorado425 15th St.
    
    One block from Republic Plaza
    
    
    1
    
    
    
    100
    %
    
    
    800,000Tremont Garage
    
    One block from Republic Plaza
    
    
    1
    
    
    
    100
    %
    
    
    500,000Total
    
    
    
    
    15
    
    
    
    
    
    
    
    17,219,000
 (1)
    
    Represents the companys consolidated interest before non-controlling
interests(2)
    
    Property is currently under redevelopment. 100% of the building has been leased to
Chevron, who will move into the building once redevelopment is complete
 Residential Development
    22




---



##### 



Under Development
    
    
    
    Housing Inventory
    
    
    
    Held for DevelopmentBook Value
    
    
    
    
    
    
    
    Book Value
    
    
    
    Estimated
    
    
    Book ValueNumber of Lots
    
    
    (Millions)
    
    
    
    Number of Units
    
    
    (Millions)
    
    
    
    Number of Lots
    
    
    (Millions)Alberta
    
    
    3,753
    
    
    $
    212
    
    
    
    
    566
    
    
    $
    35
    
    
    
    
    32,007
    
    
    $
    223Ontario
    
    
    350
    
    
    
    4
    
    
    
    
    186
    
    
    
    23
    
    
    
    
    8,185
    
    
    
    52Colorado
    
    
    806
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,686
    
    
    
    79Texas
    
    
    102
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,178
    
    
    
    40Kansas City
    
    
    64
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    498
    
    
    
    5Total
    
    
    5,075
    
    
    $
    249
    
    
    
    
    752
    
    
    $
    58
    
    
    
    
    55,554
    
    
    $
    399
 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
  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.
 23




---



##### 




    
    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
 Trizec Acquisition
        24




---



##### 



Brookfield Properties
    
    
    Purchase PriceNumber of
    
    
    Leasable Area
    
    
    Owned Interest
    
    
    Book ValueRegion
    
    Properties
    
    
    (000s Sq. Ft.)
    
    
    (000s Sq. Ft.)
    
    
    (Millions)New York, New York
    
    
    6
    
    
    
    7,069
    
    
    
    5,617
    
    
    $
    2,594Washington, D.C.
    
    
    23
    
    
    
    4,505
    
    
    
    4,328
    
    
    
    1,289Houston, Texas
    
    
    7
    
    
    
    6,958
    
    
    
    6,307
    
    
    
    943Los Angeles, California
    
    
    22
    
    
    
    10,672
    
    
    
    10,438
    
    
    
    2,69858
    
    
    
    29,204
    
    
    
    26,690
    
    
    
    7,524Office development sites
    
    
    5
    
    
    
    4,130
    
    
    
    3,433
    
    
    
    67Total commercial and development properties
    
    
    63
    
    
    
    33,334
    
    
    
    30,123
    
    
    $
    7,591Cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    325Restricted cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88Accounts receivable and other assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62Intangible assets(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    739Accounts payable and other liabilities assumed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (218
    )Intangible liabilities(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (816
    )Future income tax liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (182
    )Non-controlling interests assumed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )Preferred shares assumed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65
    )Commercial property debt assumed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,854
    )Total purchase price
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,666
 (1)
    
    All intangibles are subject to amortizationThe total purchase price was financed as follows:
 (Millions)Investment by Fund partners and joint venture partner
    
    $
    1,042Acquisition financing
    
    
    3,702Brookfield Properties equity investment
    
    
    857Cash on hand utilized
    
    
    167Excess funding for working capital
    
    
    (102
    )Total purchase price
    
    $
    5,666
   (Millions)
    
    Capitalization
    
    
    %Institutional Investors
    
    $
    535
    
    
    
    28Brookfield Properties Equity
    
    
    857
    
    
    
    45U.S. Office Fund Equity
    
    
    1,392
    
    
    
    73The Blackstone Group
    
    
    507
    
    
    
    27Total Equity
    
    $
    1,899
    
    
    
    100
  25




---



##### 



PART II  FINANCIAL STATEMENT ANALYSIS
 ASSET PROFILE
  (Millions)
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005Commercial properties
    
    $
    15,287
    
    
    $
    7,430Commercial developments
    
    
    735
    
    
    
    224Residential developments
    
    
    706
    
    
    
    391Receivables and other
    
    
    974
    
    
    
    830Intangible assets
    
    
    853
    
    
    
    125Restricted cash and deposits
    
    
    507
    
    
    
    316Marketable securities
    
    
    
    
    
    
    58Cash and cash equivalents
    
    
    188
    
    
    
    64Assets held for sale(1)
    
    
    64
    
    
    
    75Total
    
    $
    19,314
    
    
    $
    9,513
 (1)
    
    Includes $61 million of commercial properties and $3 million of other assets
related to assets held for sale at December 31, 2006 (December 31, 2005  $75 million and
nil, respectively)
 COMMERCIAL PROPERTIES
  th
  Brookfield Properties
    
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005Leasable Area
    
    
    Owned Interest
    
    
    Book Value
    
    
    Book ValueRegion
    
    (000s Sq. Ft.)
    
    
    (000s Sq. Ft.)(1)
    
    
    (Millions)
    
    
    (Millions)New York, New York
    
    
    19,516
    
    
    
    16,352
    
    
    $
    6,495
    
    
    $
    3,824Boston, Massachusetts
    
    
    2,163
    
    
    
    1,103
    
    
    
    350
    
    
    
    325Washington, D.C.
    
    
    6,771
    
    
    
    6,594
    
    
    
    1,980
    
    
    
    395Houston, Texas
    
    
    6,958
    
    
    
    6,307
    
    
    
    941
    
    
    
    Los Angeles, California
    
    
    10,672
    
    
    
    10,438
    
    
    
    2,689
    
    
    
    Toronto, Ontario
    
    
    11,042
    
    
    
    6,352
    
    
    
    1,434
    
    
    
    1,399Calgary, Alberta
    
    
    7,845
    
    
    
    3,544
    
    
    
    513
    
    
    
    570Ottawa, Ontario
    
    
    2,780
    
    
    
    695
    
    
    
    88
    
    
    
    100Denver, Colorado
    
    
    1,795
    
    
    
    1,795
    
    
    
    264
    
    
    
    269Minneapolis, Minnesota
    
    
    3,008
    
    
    
    3,008
    
    
    
    423
    
    
    
    429Other
    
    
    1,845
    
    
    
    1,155
    
    
    
    110
    
    
    
    119Continuing operations
    
    
    74,395
    
    
    
    57,343
    
    
    
    15,287
    
    
    
    7,430Discontinued operations
    
    
    1,400
    
    
    
    661
    
    
    
    61
    
    
    
    75Total
    
    
    75,795
    
    
    
    58,004
    
    
    $
    15,348
    
    
    $
    7,505
 (1)
    
    Represents the companys consolidated interest before non-controlling
interests
 TENANT INSTALLATION COSTS AND CAPITAL EXPENDITURES
  26




---



##### 



(Millions)
    
    2006
    
    
    2005Leasing commissions
    
    $
    27
    
    
    $
    15Tenant improvements
    
    
    55
    
    
    
    108Total
    
    $
    82
    
    
    $
    123
    (Millions)
    
    2006
    
    
    2005Revenue enhancing
    
    $
    14
    
    
    $
    15Non-revenue enhancing
    
    
    11
    
    
    
    6Total
    
    $
    25
    
    
    $
    21
   COMMERCIAL DEVELOPMENTS
 rd st st rd
 27




---



##### 



Sq. Ft. Currently(Millions, except square feet)
    
    Buildable Sq. Ft.
    
    
    Under Construction
    
    
    Dec. 31, 2006
    
    
    Dec. 31,2005Active developments and properties
under redevelopmentBay Adelaide Centre, Toronto
    
    
    2,600,000
    
    
    
    1,100,000
    
    
    $
    251
    
    
    $
    191Four Allen Center, Houston
    
    
    1,267,000
    
    
    
    1,267,000
    
    
    
    139
    
    
    
    Reston Crescent, Washington, D.C.
    
    
    1,000,000
    
    
    
    185,000
    
    
    
    6
    
    
    
    Waterview, Washington, D.C.
    
    
    930,000
    
    
    
    930,000
    
    
    
    44
    
    
    
    77 K Street, Washington, D.C.
    
    
    322,000
    
    
    
    322,000
    
    
    
    16
    
    
    
    Bankers Court, Calgary
    
    
    500,000
    
    
    
    265,000
    
    
    
    7
    
    
    
    4PlanningNinth Avenue, New York
    
    
    4,700,000
    
    
    
    
    
    
    
    184
    
    
    
    10Herald Site, Calgary
    
    
    1,100,000
    
    
    
    
    
    
    
    38
    
    
    
    Others:1500 Smith Street, Houston
    
    
    800,000Allen Center Gateway, Houston
    
    
    700,000Allen Center Garage, Houston
    
    
    700,000425 15th Street, Denver
    
    
    800,000Tremont Garage, Denver
    
    
    500,000BCE Place III, Toronto
    
    
    800,000300 Queen Street, Ottawa
    
    
    500,0004,800,000
    
    
    
    
    
    
    
    50
    
    
    
    19Total
    
    
    17,219,000
    
    
    
    4,069,000
    
    
    $
    735
    
    
    $
    224
  
    
    In July, 2006, we acquired 50% of a Capitol Hill development site, 77 K Street in
Washington, D.C., for $15 million in a 50-50 joint venture with ING Clarion. We will be
acting as general partner and developer. Construction on the 322,000 square foot building
commenced in November, 2006 and upon completion, expected in 2008, we will manage the
building.
    
    In July, 2006, we began development on Phase I of our Bay Adelaide Centre project in
Toronto. We signed a long-term lease with KPMG, a global professional services firm, for
approximately 250,000 square feet in Bay Adelaide Centre West, the first tower of the
three-phase project.
    
    In July, 2006, we began development on our Bankers Court project in Calgary. The
project is 500,000 square feet, of which 265,000 square feet is currently being developed
as a 15-storey building adjacent to the 2.7 million square foot Bankers Hall complex in
the heart of downtown Calgary. The project is fully leased and completion is expected in
2008.
    
    In September, 2006, we acquired Four Allen Center, a 1,267,000 square foot building
located at 1400 Smith Street in downtown Houston for $120 million. Re-development
commenced during the fourth quarter of 2006. On closing, the building was 100% leased to
Chevron U.S.A., Inc. (Chevron), a subsidiary of Chevron Corporation. Chevron is expected
to move into the building once construction is complete sometime in late 2007. We raised
$240 million of mortgage financing to fund the acquisition and refurbishment costs.
    
    In October, 2006, we acquired five development sites along with the acquisition of
the Trizec portfolio: Reston Crescent and Waterview in Washington, D.C. and 1500 Smith
Street, Allen Center Garage and Allen Center Gateway in Houston. Reston Crescent and
Waterview are currently under development and both are expected to be complete in 2007.
    
    In November, 2006, we purchased a site at 400 West 33rdStreet in New
York with 2.2 million buildable square feet. This site is adjacent to our existing site at
401 West 31stStreet. The combined site on Ninth Avenue can accommodate up to
4,700,000 square feet of development.
    
    In December, 2006, we purchased the Herald Site in downtown Calgary with 1.1 million
buildable square feet for C$45 million. The site is within one block of each of our core
office assets: Fifth Avenue Place, Bankers Hall and Petro-Canada Centre.
 28




---



##### 



(Millions)
    
    2006
    
    
    2005Construction costs
    
    $
    38
    
    
    $
    30Interest capitalized
    
    
    24
    
    
    
    15Property taxes and other
    
    
    17
    
    
    
    5Total
    
    $
    79
    
    
    $
    50
 RESIDENTIAL DEVELOPMENT
   (Millions)
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005Under development
    
    $
    249
    
    
    $
    120Housing inventory
    
    
    58
    
    
    
    46Held for development
    
    
    399
    
    
    
    225Total
    
    $
    706
    
    
    $
    391
  Number of Lots
    
    
    
    Book Value (Millions)Under Development
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005
    
    
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005Alberta
    
    
    3,753
    
    
    
    2,348
    
    
    
    $
    212
    
    
    $
    90Ontario
    
    
    350
    
    
    
    269
    
    
    
    
    4
    
    
    
    9Colorado
    
    
    806
    
    
    
    729
    
    
    
    
    29
    
    
    
    19Texas
    
    
    102
    
    
    
    158
    
    
    
    
    3
    
    
    
    2Kansas City
    
    
    64
    
    
    
    
    
    
    
    
    1
    
    
    
    Total
    
    
    5,075
    
    
    
    3,504
    
    
    
    $
    249
    
    
    $
    120
 Number of Units
    
    
    
    Book Value (Millions)Housing Inventory
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005
    
    
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005Alberta
    
    
    566
    
    
    
    365
    
    
    
    $
    35
    
    
    $
    23Ontario
    
    
    186
    
    
    
    228
    
    
    
    
    23
    
    
    
    23Total
    
    
    752
    
    
    
    593
    
    
    
    $
    58
    
    
    $
    46
 Estimated Number of Lots
    
    
    
    Number of Acres
    
    
    
    Book Value (Millions)Held for Development
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005
    
    
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005
    
    
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005Alberta
    
    
    32,007
    
    
    
    24,943
    
    
    
    
    4,913
    
    
    
    4,428
    
    
    
    $
    223
    
    
    $
    156Ontario
    
    
    8,185
    
    
    
    6,983
    
    
    
    
    1,637
    
    
    
    1,364
    
    
    
    
    52
    
    
    
    39Colorado
    
    
    7,686
    
    
    
    2,931
    
    
    
    
    1,531
    
    
    
    548
    
    
    
    
    79
    
    
    
    23Texas
    
    
    7,178
    
    
    
    1,859
    
    
    
    
    1,860
    
    
    
    541
    
    
    
    
    40
    
    
    
    7Kansas City
    
    
    498
    
    
    
    
    
    
    
    
    83
    
    
    
    
    
    
    
    
    5
    
    
    
    Total
    
    
    55,554
    
    
    
    36,716
    
    
    
    
    10,024
    
    
    
    6,881
    
    
    
    $
    399
    
    
    $
    225
 29




---



##### 



RECEIVABLES AND OTHER ASSETS
   (Millions)
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005Receivables
    
    $
    432
    
    
    $
    371Real estate mortgages
    
    
    86
    
    
    
    86Residential receivables and other assets
    
    
    245
    
    
    
    219Prepaid expenses and other assets
    
    
    211
    
    
    
    154Total
    
    $
    974
    
    
    $
    830
 INTANGIBLE ASSETS
 
  (Millions)
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005Intangible assetsLease origination costs
    
    $
    263
    
    
    $
    52Tenant relationships
    
    
    573
    
    
    
    80Above-market leases and below-market ground leases
    
    
    79
    
    
    
    3915
    
    
    
    135Less accumulated amortizationLease origination costs
    
    
    (32
    )
    
    
    (2
    )Tenant relationships
    
    
    (26
    )
    
    
    (8
    )Above-market leases and below-market ground leases
    
    
    (4
    )
    
    
    Total net
    
    $
    853
    
    
    $
    125
 RESTRICTED CASH AND DEPOSITS
 th
 CASH AND MARKETABLE SECURITIES
   30




---



##### 



UTILIZATION OF CASH RESOURCES
  (Millions)
    
    2006
    
    
    2005
    
    
    
    TotalCashflow provided by operating activities
    
    $
    66
    
    
    $
    230
    
    
    
    $
    296FinancingBorrowings, net of repayments
    
    
    1,365
    
    
    
    283
    
    
    
    
    1,648Trizec acquisition financing arranged
    
    
    3,702
    
    
    
    
    
    
    
    
    3,702Distributions to non-controlling interests
    
    
    (12
    )
    
    
    (13
    )
    
    
    
    (25
    )Net issuance (repurchase) of common shares
    
    
    1,234
    
    
    
    (66
    )
    
    
    
    1,168Shareholder distributions
    
    
    (176
    )
    
    
    (152
    )
    
    
    
    (328
    )6,113
    
    
    
    52
    
    
    
    
    6,165InvestingMarketable securities
    
    
    58
    
    
    
    227
    
    
    
    
    285Loans receivable and other
    
    
    (24
    )
    
    
    
    
    
    
    
    (24
    )Acquisition of Trizec, net of cash and cash equivalents acquired
    
    
    (5,341
    )
    
    
    
    
    
    
    
    (5,341
    )Acquisitions of real estate, net
    
    
    (487
    )
    
    
    (359
    )
    
    
    
    (846
    )Development and redevelopment
    
    
    (79
    )
    
    
    (50
    )
    
    
    
    (129
    )Commercial property tenant improvements
    
    
    (55
    )
    
    
    (108
    )
    
    
    
    (163
    )Restricted cash and deposits
    
    
    (102
    )
    
    
    (19
    )
    
    
    
    (121
    )Capital expenditures
    
    
    (25
    )
    
    
    (21
    )
    
    
    
    (46
    )(6,055
    )
    
    
    (330
    )
    
    
    
    (6,385
    )Increase / (decrease) in cash
    
    $
    124
    
    
    $
    (48
    )
    
    
    $
    76
  LIABILITIES AND SHAREHOLDERS EQUITY
  (Millions)
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005LiabilitiesCommercial property debt
    
    $
    11,185
    
    
    $
    5,216Accounts payable and other liabilities
    
    
    923
    
    
    
    500Intangible liabilities
    
    
    919
    
    
    
    126Future income tax liability
    
    
    584
    
    
    
    188Liabilities related to assets held for sale(1)
    
    
    36
    
    
    
    51Capital
securities  corporate
    
    
    1,093
    
    
    
    1,101Capital securities  fund subsidiaries
    
    
    803
    
    
    
    Non-controlling interests  fund subsidiaries
    
    
    266
    
    
    
    Non-controlling interests  other subsidiaries
    
    
    67
    
    
    
    59Preferred
equity  subsidiaries
    
    
    326
    
    
    
    329Shareholders equityPreferred
equity  corporate
    
    
    45
    
    
    
    45Common equity
    
    
    3,067
    
    
    
    1,898Total
    
    $
    19,314
    
    
    $
    9,513
 (1)
    
    Includes $34 million of commercial property debt and $2 million of other
liabilities associated with liabilities related to assets held for sale at December 31,
2006 (December 31, 2005  $51 million and nil, respectively)
 COMMERCIAL PROPERTY DEBT
 th
 31




---



##### 



Three-Year
    
    
    Annual ResultsObjective
    
    Average
    
    
    2006
    
    
    2005
    
    
    2004Maintain debt-to-total-market-capitalization of 50% or less
    
    
    37
    %
    
    
    41
    %
    
    
    34
    %
    
    
    37
    %Move toward long-term goal of 95% non-recourse debt(1)
    
    
    92
    %
    
    
    94
    %
    
    
    88
    %
    
    
    93
    %Maintain interest expense coverage of 2.2x or greater(2)
    
    
    2.4
    x
    
    
    2.1
    x
    
    
    2.6
    x
    
    
    2.6
    x
 (1)
    
    Non-recourse to Brookfield Properties Corporation(2)
    
    2006 is lower than our target due to corporate debt used to fund the acquisition of
Trizec. In December 2006, this debt was repaid with proceeds from the common share equity offering
   Financed / Refinanced(Millions)
    
    Mortgage
    
    
    Interest Rate %Hudsons Bay Centre
    
    $
    85
    
    
    CDOR + 150bps601 & 701 South 12th Street
    
    
    95
    
    
    
    
    5.42%53 State Street
    
    
    143
    
    
    
    
    5.96%One Bethesda
    
    
    53
    
    
    
    
    5.66%Atrium on Bay
    
    
    34
    
    
    CDOR + 115bpsTotal Commercial Property
    
    
    410Term Loan Facility
    
    
    300
    
    
    LIBOR + 150bpsTotal
    
    $
    710
 th
   (Millions)
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005Corporate credit facility
    
    $
    
    
    
    $
    50Property specific debt
    
    
    174
    
    
    
    175Class AAA series E capital securities
    
    
    171
    
    
    
    172Total
    
    $
    345
    
    
    $
    397
  32




---



##### 



Brookfield PropertiesInterest Rate
    
    
    Maturity
    
    
    Consolidated ShareCommercial Property
    
    Location
    
    %
    
    
    Date
    
    
    (Millions)
    
    
    Mortgage DetailsDirectAtrium on Bay
    
    Toronto
    
    
    5.49
    
    
    
    2007
    
    
    $
    34
    
    
    Non-recourse, floating rateOne Liberty Plaza(1)
    
    New York
    
    
    6.98
    
    
    
    2007
    
    
    
    241
    
    
    Non-recourse, fixed rateTD Canada Trust Tower
    
    Toronto
    
    
    6.86
    
    
    
    2007
    
    
    
    103
    
    
    Non-recourse, fixed rateHudsons Bay Centre
    
    Toronto
    
    
    5.84
    
    
    
    2008
    
    
    
    85
    
    
    Non-recourse, floating ratePetro-Canada Centre
    
    Calgary
    
    
    6.43
    
    
    
    2008
    
    
    
    108
    
    
    Non-recourse, fixed rateOne World Financial Center
    
    New York
    
    
    6.32
    
    
    
    2009
    
    
    
    300
    
    
    Recourse, floating rate245 Park Avenue
    
    New York
    
    
    6.65
    
    
    
    2011
    
    
    
    239
    
    
    Non-recourse, fixed rateOne Liberty Plaza
    
    New York
    
    
    6.75
    
    
    
    2011
    
    
    
    401
    
    
    Non-recourse, fixed rateFifth Avenue Place
    
    Calgary
    
    
    7.59
    
    
    
    2011
    
    
    
    64
    
    
    Non-recourse, fixed ratePotomac Tower
    
    Washington
    
    
    4.72
    
    
    
    2011
    
    
    
    75
    
    
    Non-recourse, fixed rateExchange Tower
    
    Toronto
    
    
    6.83
    
    
    
    2012
    
    
    
    55
    
    
    Non-recourse, fixed rateTwo World Financial Center
    
    New York
    
    
    6.91
    
    
    
    2013
    
    
    
    607
    
    
    Non-recourse, fixed rateFour World Financial Center
    
    New York
    
    
    6.95
    
    
    
    2013
    
    
    
    306
    
    
    Non-recourse, fixed rateBay Wellington Tower
    
    Toronto
    
    
    6.49
    
    
    
    2013
    
    
    
    298
    
    
    Non-recourse, fixed rateBankers Hall
    
    Calgary
    
    
    7.20
    
    
    
    2013
    
    
    
    152
    
    
    Non-recourse, fixed rate601 South 12th Street
    
    Washington
    
    
    5.42
    
    
    
    2013
    
    
    
    52
    
    
    Non-recourse, fixed rate701 South 12th Street
    
    Washington
    
    
    5.42
    
    
    
    2013
    
    
    
    43
    
    
    Non-recourse, fixed rateRepublic Plaza
    
    Denver
    
    
    5.13
    
    
    
    2014
    
    
    
    168
    
    
    Non-recourse, fixed rate1625 Eye Street
    
    Washington
    
    
    6.00
    
    
    
    2014
    
    
    
    127
    
    
    Non-recourse, fixed rate53 State Street
    
    Boston
    
    
    5.96
    
    
    
    2016
    
    
    
    143
    
    
    Non-recourse, fixed rateOne Bethesda
    
    Washington
    
    
    5.66
    
    
    
    2016
    
    
    
    53
    
    
    Non-recourse, fixed rateRoyal Centre
    
    Vancouver
    
    
    7.50
    
    
    
    2022
    
    
    
    42
    
    
    Non-recourse, fixed rate33 South Sixth Street
    
    Minneapolis
    
    
    6.72
    
    
    
    2027
    
    
    
    95
    
    
    Non-recourse, fixed rateDain Plaza
    
    Minneapolis
    
    
    7.37
    
    
    
    2027
    
    
    
    82
    
    
    Non-recourse, fixed rate701 9th Street
    
    Washington
    
    
    6.73
    
    
    
    2028
    
    
    
    153
    
    
    Non-recourse, fixed rate75 State Street
    
    Boston
    
    
    7.00
    
    
    
    2028
    
    
    
    85
    
    
    Non-recourse, fixed rate300 Madison Avenue
    
    New York
    
    
    7.26
    
    
    
    2032
    
    
    
    400
    
    
    Non-recourse, fixed rate300 Madison Avenue
    
    New York
    
    
    5.57
    
    
    
    2012
    
    
    
    92
    
    
    Non-recourse, floating rate4,603U.S. Fund2000 L Street
    
    Washington
    
    
    6.26
    
    
    
    2007
    
    
    
    56
    
    
    Non-recourse, fixed rateBethesda Crescent
    
    Washington
    
    
    7.07
    
    
    
    2008
    
    
    
    34
    
    
    Non-recourse, fixed rateTwo Ballston Plaza
    
    Washington
    
    
    6.91
    
    
    
    2008
    
    
    
    26
    
    
    Non-recourse, fixed rate5670 Wilshire
    
    Los Angeles
    
    
    6.47
    
    
    
    2008
    
    
    
    59
    
    
    Non-recourse, floating rateWaterview
    
    Washington
    
    
    6.98
    
    
    
    2009
    
    
    
    30
    
    
    Non-recourse, floating rate1460 Broadway
    
    New York
    
    
    5.11
    
    
    
    2012
    
    
    
    12
    
    
    Non-recourse, floating rateFour Allen Center
    
    Houston
    
    
    5.77
    
    
    
    2013
    
    
    
    240
    
    
    Non-recourse, fixed rateGrace Building
    
    New York
    
    
    5.54
    
    
    
    2014
    
    
    
    195
    
    
    Non-recourse, fixed rate1411 Broadway
    
    New York
    
    
    5.50
    
    
    
    2014
    
    
    
    112
    
    
    Non-recourse, fixed rate2001 M Street
    
    Washington
    
    
    5.25
    
    
    
    2014
    
    
    
    45
    
    
    Non-recourse, fixed rateBank of America Building
    
    Los Angeles
    
    
    5.31
    
    
    
    2014
    
    
    
    237
    
    
    Non-recourse, fixed rateErnst & Young Plaza
    
    Los Angeles
    
    
    5.07
    
    
    
    2014
    
    
    
    114
    
    
    Non-recourse, fixed rateOne New York Plaza
    
    New York
    
    
    5.50
    
    
    
    2016
    
    
    
    396
    
    
    Non-recourse, fixed rateVictor Building
    
    Washington
    
    
    5.39
    
    
    
    2016
    
    
    
    47
    
    
    Non-recourse, fixed rateMarina Towers
    
    Los Angeles
    
    
    5.84
    
    
    
    2016
    
    
    
    21
    
    
    Non-recourse, fixed rateMezzanine debt
    
    
    
    
    7.85
    
    
    
    2011
    
    
    
    3,102
    
    
    Non-recourse, floating rateCMBS Pool debt
    
    
    
    
    6.10
    
    
    
    2011
    
    
    
    600
    
    
    Non-recourse, floating rateCMBS Pool debt
    
    
    
    
    6.83
    
    
    
    2008/2011
    
    
    
    473
    
    
    Non-recourse, fixed rate5,799Canadian FundFirst Canadian Place
    
    Toronto
    
    
    8.06
    
    
    
    2009
    
    
    
    60
    
    
    Non-recourse, fixed rateO&Y portfolio debt
    
    
    
    
    Various
    
    
    
    2007
    
    
    
    139
    
    
    Various terms199Corporate and OtherTerm facility
    
    
    
    
    6.82
    
    
    
    2008
    
    
    
    300
    
    
    Recourse, floating rateDevelopment and other debt
    
    
    
    
Various

    
    
    Various
    
    
    
    318
    
    
    Various termsTotal(2)
    
    
    
    
    6.80
    %
    
    
    
    $
    11,219
 (1)
    
    Included in restricted cash and deposits is $249 of securities to match interest and
principal payments on this commercial property debt(2)
    
    Includes $34 million of commercial property debt associated with liabilities related
to assets held for sale
 33




---



##### 



Weighted-Average(Millions)
    
    Scheduled
    
    
    
    
    
    
    
    
    
    
    Interest Rate atYear
    
    Amortization
    
    
    Maturities
    
    
    Total
    
    
    Dec. 31, 20062007(1)
    
    $
    171
    
    
    $
    635
    
    
    $
    806
    
    
    
    6.5
    %2008
    
    
    187
    
    
    
    773
    
    
    
    960
    
    
    
    6.6
    %2009
    
    
    138
    
    
    
    471
    
    
    
    609
    
    
    
    6.6
    %2010
    
    
    208
    
    
    
    4
    
    
    
    212
    
    
    
    6.5
    %2011
    
    
    198
    
    
    
    4,770
    
    
    
    4,968
    
    
    
    7.2
    %2012 and thereafter
    
    
    
    
    
    
    3,664
    
    
    
    3,664
    
    
    
    6.2
    %Total
    
    $
    902
    
    
    $
    10,317
    
    
    $
    11,219
    
    
    
    6.8
    %
 (1)
    
    Includes $34 million of commercial property debt associated with assets held
for sale CONTRACTUAL OBLIGATIONS
  Payments Due By Period(Millions)
    
    Total
    
    
    1 Year
    
    
    2 - 3 Years
    
    
    4 - 5 Years
    
    
    After 5 YearsCommercial property debt
    
    $
    11,219
    
    
    $
    806
    
    
    $
    1,569
    
    
    $
    5,180
    
    
    $
    3,664Residential development debt
    
    
    236
    
    
    
    200
    
    
    
    29
    
    
    
    7
    
    
    
    Capital securities(1)
    
    
    922
    
    
    
    
    
    
    
    
    
    
    
    171
    
    
    
    751Interest expense(2)Commercial property debt
    
    
    3,475
    
    
    
    690
    
    
    
    946
    
    
    
    606
    
    
    
    1,233Capital securities  corporate(1)
    
    
    376
    
    
    
    50
    
    
    
    100
    
    
    
    91
    
    
    
    135Capital securities  fund subsidiaries(3)
    
    
    191
    
    
    
    28
    
    
    
    56
    
    
    
    56
    
    
    
    51
 
 (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(3)
    
    Excludes redeemable equity interests  Credit Ratings
   DBRS
    
    
    S&PCorporate rating
    
    BBB (high)
    
    BBBPreferred shares
    
    Pfd-3 (high)
    
    P3 (high)
   Corporate Guarantees and Contingent Obligations
   34




---



##### 



ACCOUNTS PAYABLE AND OTHER LIABILITIES
   (Millions)
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005Accounts payable and accrued liabilities
    
    $
    549
    
    
    $
    227Residential payables and accrued liabilities
    
    
    138
    
    
    
    115Land development debt
    
    
    236
    
    
    
    158Total
    
    $
    923
    
    
    $
    500
 INTANGIBLE LIABILITIES
   (Millions)
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005Intangible liabilitiesBelow-market leases
    
    $
    902
    
    
    $
    56Above-market ground leases
    
    
    70
    
    
    
    74972
    
    
    
    130Less accumulated depreciationBelow-market leases
    
    
    (46
    )
    
    
    (1
    )Above-market ground leases
    
    
    (7
    )
    
    
    (3
    )Total net
    
    $
    919
    
    
    $
    126
 FUTURE INCOME TAXES
  (Millions)
    
    Dec. 31, 2006
    
    
    2005Future income tax liabilities related to difference in tax and book basis, net
    
    $
    (935
    )
    
    $
    (541
    )Future income tax assets related to non-capital losses and capital losses
    
    
    351
    
    
    
    353Total
    
    $
    (584
    )
    
    $
    (188
    )
 CAPITAL SECURITIES  CORPORATE
   Shares
    
    
    Cumulative(Millions, except share information)
    
    Outstanding
    
    
    Dividend Rate
    
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005Class AAA Series E
    
    
    8,000,000
    
    
    70% of bank prime
    
    
    $
    171
    
    
    $
    172Class AAA Series F
    
    
    8,000,000
    
    
    
    6.00
    %
    
    
    171
    
    
    
    172Class AAA Series G
    
    
    4,400,000
    
    
    
    5.25
    %
    
    
    110
    
    
    
    110Class AAA Series H
    
    
    8,000,000
    
    
    
    5.75
    %
    
    
    171
    
    
    
    173Class AAA Series I
    
    
    8,000,000
    
    
    
    5.20
    %
    
    
    171
    
    
    
    172Class AAA Series J
    
    
    8,000,000
    
    
    
    5.00
    %
    
    
    171
    
    
    
    172Class AAA Series K
    
    
    6,000,000
    
    
    
    5.20
    %
    
    
    128
    
    
    
    130Total
    
    
    
    
    
    
    
    
    
    $
    1,093
    
    
    $
    1,101
 For redemption dates, refer to Note 16 of the consolidated financial statements
 35




---



##### 



CAPITAL SECURITIES  FUND SUBSIDIARIES
  (Millions)
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005Debt securities
    
    $
    257
    
    
    
    Redeemable equity interests
    
    
    546
    
    
    
    Total
    
    $
    803
    
    
    
    
 
   NON-CONTROLLING INTERESTS  FUND SUBSIDIARIES
  NON-CONTROLLING INTERESTS  OTHER SUBSIDIARIES
   (Millions)
    
    Others Equity Ownership
    
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005Common shares of BPO Properties
    
    
    11.0
    %
    
    $
    55
    
    
    $
    47Limited partnership units of Brookfield Financial Properties
    
    
    0.6
    %
    
    
    12
    
    
    
    12Total
    
    
    
    
    
    $
    67
    
    
    $
    59
  PREFERRED EQUITY  SUBSIDIARIES
   Shares
    
    
    Preferred

    
    Cumulative(Millions, except share information)
    
    Outstanding
    
    
    Shares Series

    
    Dividend Rate

    
    Dec. 31, 2006
    
    
    Dec. 31, 2005BPO Properties1,805,489
    
    
    Series G
    
    70% of bank prime
    
    $
    39
    
    
    $
    393,816,527
    
    
    Series J
    
    70% of bank prime
    
    
    82
    
    
    
    82300
    
    
    Series K
    
    30-day BA + 0.4%
    
    
    127
    
    
    
    1292,847,711
    
    
    Series M
    
    70% of bank prime
    
    
    61
    
    
    
    62800,000
    
    
    Series N
    
    30-day BA + 0.4%
    
    
    17
    
    
    
    17Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    326
    
    
    $
    329
  36




---



##### 



PREFERRED EQUITY  CORPORATE
   Shares
    
    
    Cumulative(Millions, except share information)
    
    Outstanding
    
    
    Dividend Rate
    
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005Class 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 details regarding the terms on our preferred shares, refer to our Annual Information
Form.
  COMMON EQUITY
  Dec. 31, 2006
    
    
    Dec. 31, 2005Common shares outstanding
    
    
    264,578,971
    
    
    
    231,209,625Unexercised options
    
    
    4,786,305
    
    
    
    4,641,961Common shares outstanding  diluted(1)
    
    
    269,365,276
    
    
    
    235,851,586Common shares repurchased
    
    
    
    
    
    
    2,693,500
 (1)
    
    Includes all potential common shares at December 31, 2006 and December 31,
2005   Equity offering
    CAPITAL RESOURCES AND LIQUIDITY
   37




---



##### 



COST OF CAPITAL
    Cost of Capital(1)
    
    
    Underlying Value(2)(Millions)
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005
    
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005LiabilitiesCommercial property debt
    
    
    6.8
    %
    
    
    6.5
    %
    
    $
    11,219
    
    
    $
    5,267Residential debt
    
    
    6.2
    %
    
    
    5.0
    %
    
    
    236
    
    
    
    158Capital securities  corporate
    
    
    5.2
    %
    
    
    5.1
    %
    
    
    1,093
    
    
    
    1,101Capital securities  fund subsidiaries(3)
    
    
    10.0
    %
    
    
    
    
    
    
    803
    
    
    
    Non-controlling interests  fund subsidiaries(3)
    
    
    10.0
    %
    
    
    
    
    
    
    266
    
    
    
    Non-controlling interests  other subsidiaries
    
    
    12.0
    %
    
    
    12.0
    %
    
    
    67
    
    
    
    59Preferred equity  subsidiaries
    
    
    4.3
    %
    
    
    3.6
    %
    
    
    326
    
    
    
    329Shareholders equityPreferred equity  corporate
    
    
    5.0
    %
    
    
    4.5
    %
    
    
    45
    
    
    
    45Common equity
    
    
    12.0
    %
    
    
    12.0
    %
    
    
    10,406
    
    
    
    6,802Total(4)
    
    
    7.9
    %
    
    
    8.1
    %
    
    $
    24,461
    
    
    $
    13,761
 (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)
    
    Assuming 10% return on co-invested capital(4)
    
    In calculating the weighted average cost of capital, the cost of debt has been
tax-effected 38




---



##### 



OPERATING RESULTS
 NET INCOME
  
    
    an increase in interest expense of $156 million ($0.66 per diluted share) related to
interest carry on the Trizec portfolio, the recent acquisitions of One Bethesda and 601 & 701 South
12th Street in Washington, D.C. and new debt on Hudsons Bay Centre;
    
    an increase in general and administrative expense of $19 million ($0.08 per diluted
share) primarily due to the expansion of our portfolio and asset management platform;
    
    an increase in depreciation and amortization expense of $120 million ($0.51 per
diluted share) related to the Trizec acquisition as well as the acquisitions of One Bethesda and
601 & 701 South 12th Street in Washington, D.C., and a full year of depreciation and
amortization from the O&Y portfolio offset by:
    
    $38 million of growth ($0.16 per diluted share) from our residential development operations
which continues to benefit from the low interest rate environment and strong demand in the
Alberta housing market;
    
    $166 million of growth ($0.71 per diluted share) from commercial property operating income,
primarily as a result of the Trizec acquisition, the acquisitions of One Bethesda and 601 & 701
South 12th Street in the first and second quarters of 2006, respectively, the purchase
of the remaining 75% interest in Hudsons Bay Centre in the second quarter of 2006 and a full year
of net operating income from the O&Y portfolio;
    
    an $11 million gain ($0.05 per diluted share), net of tax, on the sale of eight
properties from the O&Y portfolio during the second quarter of 2006 and an $18 million gain ($0.08
per diluted share), net of tax, on the sale of the Trade Center Denver in the first quarter of
2006;
 39




---



##### 



(Millions)
    
    2006
    
    
    2005
    
    
    2004Total revenue
    
    $
    1,923
    
    
    $
    1,529
    
    
    $
    1,408Net operating incomeCommercial property operationsOperating income from commercial properties
    
    $
    840
    
    
    $
    674
    
    
    $
    666Lease termination income
    
    
    
    
    
    
    
    
    
    
    60Total commercial property operations
    
    
    840
    
    
    
    674
    
    
    
    726Residential development operations
    
    
    144
    
    
    
    106
    
    
    
    42Interest and other income
    
    
    44
    
    
    
    37
    
    
    
    471,028
    
    
    
    817
    
    
    
    815ExpensesInterestCommercial property debt
    
    
    424
    
    
    
    273
    
    
    
    258Capital securities  corporate
    
    
    59
    
    
    
    54
    
    
    
    44Capital securities  fund subsidiaries
    
    
    (19
    )
    
    
    
    
    
    
    General and administrative
    
    
    67
    
    
    
    48
    
    
    
    41Transaction costs
    
    
    15
    
    
    
    
    
    
    
    Non-controlling interestsFund subsidiaries
    
    
    (14
    )
    
    
    
    
    
    
    Other subsidiaries
    
    
    21
    
    
    
    16
    
    
    
    20Depreciation and amortization
    
    
    281
    
    
    
    161
    
    
    
    138Unrealized foreign exchange on preferred share restatement
    
    
    
    
    
    
    
    
    
    
    63Future income taxes
    
    
    91
    
    
    
    103
    
    
    
    116Net income from continuing operations
    
    
    103
    
    
    
    162
    
    
    
    135Discontinued operations(1)
    
    
    32
    
    
    
    2
    
    
    
    3Net income
    
    $
    135
    
    
    $
    164
    
    
    $
    138Net income per share  dilutedContinuing operations
    
    $
    0.42
    
    
    $
    0.68
    
    
    $
    0.42Discontinued operations
    
    
    0.14
    
    
    
    0.01
    
    
    
    0.01Lease termination income
    
    
    
    
    
    
    
    
    
    
    0.15$
    0.56
    
    
    $
    0.69
    
    
    $
    0.58Funds from operations and gains per share  dilutedContinuing operations
    
    $
    1.84
    
    
    $
    1.81
    
    
    $
    1.66Discontinued operations
    
    
    0.03
    
    
    
    0.04
    
    
    
    0.04Lease termination income and disposition gains
    
    
    0.19
    
    
    
    
    
    
    
    0.25$
    2.06
    
    
    $
    1.85
    
    
    $
    1.95
 (1)
    
    Refer to page 47 for further details on discontinued operations  40




---



##### 



(Millions, except per share amounts)
    
    2006
    
    
    2005
    
    
    2004Net income
    
    $
    135
    
    
    $
    164
    
    
    $
    138Preferred share dividends
    
    
    (3
    )
    
    
    (2
    )
    
    
    (2
    )Net income available to common shareholders
    
    $
    132
    
    
    $
    162
    
    
    $
    136Weighted average shares outstanding  basic
    
    
    232.4
    
    
    
    232.1
    
    
    
    234.0Net income per share  basic
    
    $
    0.57
    
    
    $
    0.70
    
    
    $
    0.58Weighted average shares outstanding  diluted
    
    
    235.3
    
    
    
    234.2
    
    
    
    235.7Net income per share  diluted
    
    $
    0.56
    
    
    $
    0.69
    
    
    $
    0.58Weighted average shares outstanding  basic
    
    
    232.4
    
    
    
    232.1
    
    
    
    234.0Unexercised options
    
    
    2.9
    
    
    
    2.1
    
    
    
    1.7Weighted average shares outstanding  diluted
    
    
    235.3
    
    
    
    234.2
    
    
    
    235.7
 RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
 (Millions)
    
    2006
    
    
    2005
    
    
    2004Net income
    
    $
    135
    
    
    $
    164
    
    
    $
    138Depreciation and amortization(1)
    
    
    284
    
    
    
    168
    
    
    
    145Unrealized foreign exchange on preferred share restatement
    
    
    
    
    
    
    
    
    
    
    63Future income taxes(2)
    
    
    107
    
    
    
    103
    
    
    
    116Non-cash items included in capital securities  fund subsidiaries and 
non-controlling interests  fund subsidiaries
    
    
    (45
    )
    
    
    
    
    
    
    Funds from operations and gains
    
    $
    481
    
    
    $
    435
    
    
    $
    462Transaction costs
    
    
    15
    
    
    
    
    
    
    
    Non-controlling interests in transaction costs(3)
    
    
    (9
    )
    
    
    
    
    
    
    Property disposition gain
    
    
    (44
    )
    
    
    
    
    
    
    Lease termination income
    
    
    
    
    
    
    
    
    
    
    (59
    )Funds from operations
    
    $
    443
    
    
    $
    435
    
    
    $
    403
 (1)
    
    Includes depreciation and amortization from discontinued operations of $3
million, $7 million and $7 million for the years ended December 31, 2006, 2005 and 2004,
respectively(2)
    
    Includes future income taxes from discontinued operations of $16 million, nil and
nil for the years ended December 31, 2006, 2005 and 2004, respectively(3)
    
    Represents non-controlling interests in transaction costs, which have been added
back to net income. These costs included merger integration costs and employee transition costs.
Net of non-controlling interests, our share of these costs was $6 million.  (Millions, except per share amounts)
    
    2006
    
    
    2005
    
    
    2004Funds from operations
    
    $
    443
    
    
    $
    435
    
    
    $
    403Preferred share dividends
    
    
    (3
    )
    
    
    (2
    )
    
    
    (2
    )$
    440
    
    
    $
    433
    
    
    $
    401Weighted average shares outstanding  diluted
    
    
    235.3
    
    
    
    234.2
    
    
    
    235.7Funds from operations per share  diluted
    
    $
    1.87
    
    
    $
    1.85
    
    
    $
    1.70
  41




---



##### 



REVENUE
  (Millions)
    
    2006
    
    
    2005
    
    
    2004Commercial property revenueRevenue from continuing operations
    
    $
    1,382
    
    
    $
    1,051
    
    
    $
    993Recurring fee income
    
    
    32
    
    
    
    22
    
    
    
    20Non-recurring fee and other income
    
    
    5
    
    
    
    30
    
    
    
    27Total commercial property revenue
    
    
    1,419
    
    
    
    1,103
    
    
    
    1,040Revenue from residential development operations
    
    
    460
    
    
    
    389
    
    
    
    261Revenue from commercial property and residential development operations
    
    
    1,879
    
    
    
    1,492
    
    
    
    1,301Lease termination income
    
    
    
    
    
    
    
    
    
    
    60Interest and other
    
    
    44
    
    
    
    37
    
    
    
    47Total
    
    $
    1,923
    
    
    $
    1,529
    
    
    $
    1,408
 COMMERCIAL PROPERTY OPERATIONS
   (Millions)
    
    2006
    
    
    2005
    
    
    2004Commercial property revenueRevenue from current properties
    
    $
    1,365
    
    
    $
    1,030
    
    
    $
    971Straight-line rental income
    
    
    17
    
    
    
    21
    
    
    
    22Revenue from continuing operations
    
    
    1,382
    
    
    
    1,051
    
    
    
    993Recurring fee income
    
    
    32
    
    
    
    22
    
    
    
    20Non-recurring fee and other income
    
    
    5
    
    
    
    30
    
    
    
    27Total commercial property revenue
    
    
    1,419
    
    
    
    1,103
    
    
    
    1,040Property operating costs
    
    
    (579
    )
    
    
    (429
    )
    
    
    (374
    )Commercial property net operating income
    
    $
    840
    
    
    $
    674
    
    
    $
    666
 (Millions)
    
    2006
    
    
    2005
    
    
    2004Commercial property operationsNet operating income  same property
    
    $
    615
    
    
    $
    616
    
    
    $
    619Net operating income  properties acquired
    
    
    53
    
    
    
    6
    
    
    
    Net operating income  properties acquired  Trizec
    
    
    135
    
    
    
    
    
    
    
    Recurring fee income
    
    
    32
    
    
    
    22
    
    
    
    20Non-recurring fee and other income
    
    
    5
    
    
    
    30
    
    
    
    27Commercial property net operating income
    
    $
    840
    
    
    $
    674
    
    
    $
    666
  (Millions)
    
    2006
    
    
    2005
    
    
    2004Discontinued operationsRevenue from discontinued operations
    
    $
    20
    
    
    $
    34
    
    
    $
    34Property operating expenses
    
    
    (10
    )
    
    
    (17
    )
    
    
    (17
    )Net operating income from discontinued operations
    
    $
    10
    
    
    $
    17
    
    
    $
    17
  42




---



##### 



th
   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
    
    
    6,334
    
    
    
    11.5
    
    
    $
    34
    
    
    $
    65Lower Manhattan
    
    
    13,182
    
    
    
    8.6
    
    
    
    26
    
    
    
    32Boston, Massachusetts
    
    
    2,163
    
    
    
    5.5
    
    
    
    28
    
    
    
    32Washington, D.C.
    
    
    6,771
    
    
    
    6.7
    
    
    
    24
    
    
    
    35Houston, Texas
    
    
    6,958
    
    
    
    5.4
    
    
    
    11
    
    
    
    17Los Angeles, California
    
    
    10,672
    
    
    
    5.1
    
    
    
    19
    
    
    
    24Toronto, Ontario
    
    
    12,283
    
    
    
    6.8
    
    
    
    20
    
    
    
    23Calgary, Alberta
    
    
    7,845
    
    
    
    6.4
    
    
    
    19
    
    
    
    29Ottawa, Ontario
    
    
    2,939
    
    
    
    6.1
    
    
    
    12
    
    
    
    14Denver, Colorado
    
    
    1,795
    
    
    
    8.1
    
    
    
    17
    
    
    
    17Minneapolis, Minnesota
    
    
    3,008
    
    
    
    7.1
    
    
    
    9
    
    
    
    15Other
    
    
    1,845
    
    
    
    8.1
    
    
    
    10
    
    
    
    15Total(1)
    
    
    75,795
    
    
    
    7.3
    
    
    $
    21
    
    
    $
    29
 (1)
    
    Excludes developments th
 43




---



##### 



Dec. 31, 2006
    
    
    Dec. 31, 2005Total
    
    
    
    
    
    
    TotalSquare
    
    
    %
    
    
    Square
    
    
    %(Thousands of square feet)
    
    Feet
    
    
    Leased
    
    
    Feet
    
    
    LeasedNew York, New YorkMidtown
    
    
    6,334
    
    
    
    98.3
    
    
    
    2,786
    
    
    
    99.7Lower Manhattan
    
    
    13,182
    
    
    
    95.7
    
    
    
    9,667
    
    
    
    93.5Total New York, New York
    
    
    19,516
    
    
    
    96.5
    
    
    
    12,453
    
    
    
    94.9Boston, Massachusetts
    
    
    2,163
    
    
    
    92.5
    
    
    
    2,163
    
    
    
    92.1Washington, D.C.
    
    
    6,771
    
    
    
    97.6
    
    
    
    1,557
    
    
    
    98.5Houston, Texas
    
    
    6,958
    
    
    
    94.6
    
    
    
    
    
    
    
    Los Angeles, California
    
    
    10,672
    
    
    
    87.4
    
    
    
    
    
    
    
    Toronto, Ontario
    
    
    12,283
    
    
    
    95.8
    
    
    
    12,278
    
    
    
    93.4Calgary, Alberta
    
    
    7,845
    
    
    
    99.8
    
    
    
    8,936
    
    
    
    99.1Ottawa, Ontario
    
    
    2,939
    
    
    
    99.2
    
    
    
    2,935
    
    
    
    99.7Denver, Colorado
    
    
    1,795
    
    
    
    95.7
    
    
    
    2,605
    
    
    
    86.9Minneapolis, Minnesota
    
    
    3,008
    
    
    
    89.3
    
    
    
    3,008
    
    
    
    87.9Other
    
    
    1,845
    
    
    
    95.6
    
    
    
    2,095
    
    
    
    92.3Total(1)
    
    
    75,795
    
    
    
    95.1
    
    
    
    48,030
    
    
    
    94.6
 (1)
    
    Excludes developments   Dec. 31, 2005
    
    
    
    Activities During the Year Ended Dec. 31, 2006
    
    
    
    Dec. 31, 2006Average
    
    
    
    
    
    
    AverageAccelerated
    
    
    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
    
    
    
    2,777
    
    
    
    
    (12
    )
    
    
    (235
    )
    
    $
    40
    
    
    
    239
    
    
    $
    69
    
    
    
    3,459
    
    
    
    
    6,334
    
    
    
    6,228Lower Manhattan
    
    
    9,667
    
    
    
    9,057
    
    
    
    
    (364
    )
    
    
    (54
    )
    
    
    15
    
    
    
    877
    
    
    
    23
    
    
    
    3,107
    
    
    
    
    13,182
    
    
    
    12,623Boston, Massachusetts
    
    
    2,163
    
    
    
    2,013
    
    
    
    
    (39
    )
    
    
    (99
    )
    
    
    29
    
    
    
    146
    
    
    
    26
    
    
    
    
    
    
    
    
    2,163
    
    
    
    2,021Washington, D.C.
    
    
    1,557
    
    
    
    1,542
    
    
    
    
    (31
    )
    
    
    (95
    )
    
    
    23
    
    
    
    180
    
    
    
    25
    
    
    
    5,036
    
    
    
    
    6,771
    
    
    
    6,632Houston, Texas
    
    
    
    
    
    
    
    
    
    
    
    (58
    )
    
    
    (230
    )
    
    
    14
    
    
    
    614
    
    
    
    14
    
    
    
    6,296
    
    
    
    
    6,958
    
    
    
    6,622Los Angeles, California
    
    
    
    
    
    
    
    
    
    
    
    (159
    )
    
    
    (147
    )
    
    
    19
    
    
    
    328
    
    
    
    23
    
    
    
    9,575
    
    
    
    
    10,672
    
    
    
    9,597Toronto, Ontario
    
    
    12,278
    
    
    
    11,591
    
    
    
    
    (356
    )
    
    
    (595
    )
    
    
    21
    
    
    
    1,198
    
    
    
    22
    
    
    
    2
    
    
    
    
    12,283
    
    
    
    11,840Calgary, Alberta
    
    
    8,936
    
    
    
    8,865
    
    
    
    
    (67
    )
    
    
    (702
    )
    
    
    16
    
    
    
    798
    
    
    
    26
    
    
    
    (1,064
    )
    
    
    
    7,845
    
    
    
    7,830Ottawa, Ontario
    
    
    2,935
    
    
    
    2,930
    
    
    
    
    (37
    )
    
    
    (928
    )
    
    
    9
    
    
    
    957
    
    
    
    16
    
    
    
    2
    
    
    
    
    2,939
    
    
    
    2,924Denver, Colorado
    
    
    2,605
    
    
    
    2,334
    
    
    
    
    (414
    )
    
    
    (34
    )
    
    
    15
    
    
    
    571
    
    
    
    18
    
    
    
    (718
    )
    
    
    
    1,795
    
    
    
    1,739Minneapolis, Minnesota
    
    
    3,008
    
    
    
    2,708
    
    
    
    
    (133
    )
    
    
    (1
    )
    
    
    11
    
    
    
    167
    
    
    
    15
    
    
    
    
    
    
    
    
    3,008
    
    
    
    2,741Other
    
    
    2,095
    
    
    
    1,971
    
    
    
    
    (34
    )
    
    
    (118
    )
    
    
    12
    
    
    
    174
    
    
    
    16
    
    
    
    (210
    )
    
    
    
    1,845
    
    
    
    1,783Total
    
    
    48,030
    
    
    
    45,788
    
    
    
    
    (1,704
    )
    
    
    (3,238
    )
    
    $
    18
    
    
    
    6,249
    
    
    $
    22
    
    
    
    25,485
    
    
    
    
    75,795
    
    
    
    72,580
 (1)
    
    Excludes developments Acquisitions
 th
 44




---



##### 



Recurring fee income
 
 (Millions)
    
    2006
    
    
    2005
    
    
    2004Property management, leasing, project management and other fees
    
    $
    16
    
    
    $
    7
    
    
    $
    6Brookfield Residential Services Ltd. fees
    
    
    13
    
    
    
    9
    
    
    
    8Brookfield LePage Johnson Controls
    
    
    3
    
    
    
    6
    
    
    
    6Total
    
    $
    32
    
    
    $
    22
    
    
    $
    20
  Lease termination income
  RESIDENTIAL DEVELOPMENT OPERATIONS
    (Millions)
    
    2006
    
    
    2005
    
    
    2004Sales revenue
    
    $
    460
    
    
    $
    389
    
    
    $
    261Operating costs
    
    
    (316
    )
    
    
    (283
    )
    
    
    (219
    )Total
    
    $
    144
    
    
    $
    106
    
    
    $
    42
  Lot Sales
    
    
    
    Lot Sales Revenue
    
    
    
    Average Lot Sales Revenue(Units)
    
    
    (Millions)
    
    
    
    (Thousands)2006
    
    
    2005
    
    
    2004
    
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    
    2006
    
    
    2005
    
    
    2004Alberta
    
    
    2,347
    
    
    
    2,617
    
    
    
    2,078
    
    
    
    $
    277
    
    
    $
    184
    
    
    $
    107
    
    
    
    $
    118
    
    
    $
    70
    
    
    $
    51Colorado
    
    
    96
    
    
    
    369
    
    
    
    468
    
    
    
    
    6
    
    
    
    22
    
    
    
    19
    
    
    
    
    63
    
    
    
    60
    
    
    
    41Texas
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    
    
    
    
    Kansas City
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    31
    
    
    
    
    
    
    
    Other(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    2,562
    
    
    
    2,986
    
    
    
    2,546
    
    
    
    $
    287
    
    
    $
    211
    
    
    $
    126
    
    
    
    $
    112
    
    
    $
    71
    
    
    $
    49
 (1)
    
    Represents $5 million earned on the completion of all outstanding commitments related to a previous development in Florida 45




---



##### 



Home Sales
    
    
    
    Home Sales Revenue
    
    
    
    Average Home Sales Revenue(Units)
    
    
    
    (Millions)
    
    
    
    (Thousands)2006
    
    
    2005
    
    
    2004
    
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    
    2006
    
    
    2005
    
    
    2004Alberta
    
    
    538
    
    
    
    556
    
    
    
    496
    
    
    
    $
    100
    
    
    $
    84
    
    
    $
    61
    
    
    
    $
    186
    
    
    $
    151
    
    
    $
    123Ontario
    
    
    280
    
    
    
    391
    
    
    
    339
    
    
    
    
    73
    
    
    
    94
    
    
    
    74
    
    
    
    
    261
    
    
    
    240
    
    
    
    218Total
    
    
    818
    
    
    
    947
    
    
    
    835
    
    
    
    $
    173
    
    
    $
    178
    
    
    $
    135
    
    
    
    $
    211
    
    
    $
    188
    
    
    $
    162
  INTEREST AND OTHER INCOME
  INTEREST EXPENSE
 Commercial property debt
  Capital securities  corporate
  Capital securities  fund subsidiaries
  (Millions)
    
    2006
    
    
    2005Interest on debt securities
    
    $
    7
    
    
    
    Interest on redeemable equity interests
    
    
    4
    
    
    
    11
    
    
    
    Non-cash component(1)
    
    
    (30
    )
    
    
    Total
    
    $
    (19
    )
    
    
    
 (1)
    
    Represents co-investors share of non-cash items, such as depreciation and amortization GENERAL AND ADMINISTRATIVE EXPENSES
  TRANSACTION COSTS
  46




---



##### 



NON-CONTROLLING INTERESTS
 Fund subsidiaries
  (Millions)
    
    2006
    
    
    2005Non-controlling interests
    
    $
    1
    
    
    
    Non-cash component(1)
    
    
    (15
    )
    
    
    Total
    
    $
    (14
    )
    
    
    
 (1)
    
    Represents co-investors share of non-cash items, such as depreciation and amortization Other subsidiaries
     (Millions)
    
    Type
    
    
    2006
    
    
    2005
    
    
    2004BPO Properties
    
    Redeemable preferred shares(1)
    
    $
    13
    
    
    $
    10
    
    
    $
    8BPO Properties
    
    Common shares
    
    
    1
    
    
    
    1
    
    
    
    37100%-owned subsidiaries
    
    Redeemable preferred shares(1)
    
    
    
    
    
    
    
    
    
    
    3Dividends  shares of subsidiaries
    
    
    
    
    
    $
    14
    
    
    $
    11
    
    
    $
    48BPO Properties
    
    Participating interests
    
    $
    6
    
    
    $
    4
    
    
    $
    (30
    )Brookfield Financial Properties
    
    Participating interests
    
    
    1
    
    
    
    1
    
    
    
    2Non-controlling interests expense in subsidiary
earnings
    
    
    
    
    
    $
    7
    
    
    $
    5
    
    
    $
    (28
    )Total
    
    
    
    
    
    $
    21
    
    
    $
    16
    
    
    $
    20
 (1)
    
    Non-participating DEPRECIATION AND AMORTIZATION EXPENSE
  DISCONTINUED OPERATIONS
  47




---



##### 



(Millions)
    
    2006
    
    
    2005
    
    
    2004Revenue from discontinued operations
    
    $
    20
    
    
    $
    34
    
    
    $
    34Operating expenses
    
    
    (10
    )
    
    
    (17
    )
    
    
    (17
    )10
    
    
    
    17
    
    
    
    17Interest expense
    
    
    (3
    )
    
    
    (8
    )
    
    
    (7
    )Funds from operations  discontinued operations
    
    
    7
    
    
    
    9
    
    
    
    10Depreciation and amortization
    
    
    (3
    )
    
    
    (7
    )
    
    
    (7
    )Income from discontinued operations(1)
    
    $
    4
    
    
    $
    2
    
    
    $
    3
 (1)
    
    Excludes gains SEGMENTED INFORMATION
  Commercial
    
    
    
    ResidentialUnited States
    
    
    
    Canada
    
    
    
    Development
    
    
    
    Total(Millions)
    
    2006
    
    
    2005
    
    
    
    2006
    
    
    2005
    
    
    
    2006
    
    
    2005
    
    
    
    2006
    
    
    2005AssetsCommercial properties
    
    $
    13,136
    
    
    $
    5,289
    
    
    
    $
    2,151
    
    
    $
    2,141
    
    
    
    $
    3⁄4
    
    
    $
    3⁄4
    
    
    
    $
    15,287
    
    
    $
    7,430Development properties
    
    
    433
    
    
    
    29
    
    
    
    
    302
    
    
    
    195
    
    
    
    
    706
    
    
    
    391
    
    
    
    
    1,441
    
    
    
    615Receivables and other
    
    
    516
    
    
    
    337
    
    
    
    
    213
    
    
    
    320
    
    
    
    
    245
    
    
    
    173
    
    
    
    
    974
    
    
    
    830Intangible assets
    
    
    799
    
    
    
    70
    
    
    
    
    54
    
    
    
    55
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    853
    
    
    
    125Restricted cash and deposits
    
    
    497
    
    
    
    314
    
    
    
    
    10
    
    
    
    2
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    507
    
    
    
    316Marketable securities
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    3⁄4
    
    
    
    58
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    3⁄4
    
    
    
    58Cash and cash equivalents
    
    
    166
    
    
    
    33
    
    
    
    
    21
    
    
    
    25
    
    
    
    
    1
    
    
    
    6
    
    
    
    
    188
    
    
    
    64Assets held for sale
    
    
    3⁄4
    
    
    
    75
    
    
    
    
    64
    
    
    
    3⁄4
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    64
    
    
    
    75Total
    
    $
    15,547
    
    
    $
    6,147
    
    
    
    $
    2,815
    
    
    $
    2,796
    
    
    
    $
    952
    
    
    $
    570
    
    
    
    $
    19,314
    
    
    $
    9,513
 Commercial
    
    
    
    ResidentialUnited States
    
    
    
    Canada
    
    
    
    Development
    
    
    
    Total(Millions)
    
    2006
    
    
    2005
    
    
    
    2006
    
    
    2005
    
    
    
    2006
    
    
    2005
    
    
    
    2006
    
    
    2005Revenues
    
    $
    994
    
    
    $
    787
    
    
    
    $
    425
    
    
    $
    316
    
    
    
    $
    460
    
    
    $
    389
    
    
    
    $
    1,879
    
    
    $
    1,492Expenses
    
    
    400
    
    
    
    297
    
    
    
    
    179
    
    
    
    132
    
    
    
    
    316
    
    
    
    283
    
    
    
    
    895
    
    
    
    712594
    
    
    
    490
    
    
    
    
    246
    
    
    
    184
    
    
    
    
    144
    
    
    
    106
    
    
    
    
    984
    
    
    
    780Other revenues
    
    
    19
    
    
    
    5
    
    
    
    
    16
    
    
    
    28
    
    
    
    
    9
    
    
    
    4
    
    
    
    
    44
    
    
    
    37Net operating income from continuing
operations
    
    
    613
    
    
    
    495
    
    
    
    
    262
    
    
    
    212
    
    
    
    
    153
    
    
    
    110
    
    
    
    
    1,028
    
    
    
    817Interest expenseCommercial property debt
    
    
    317
    
    
    
    178
    
    
    
    
    107
    
    
    
    95
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    424
    
    
    
    273Capital securities  corporate
    
    
    59
    
    
    
    54
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    59
    
    
    
    54Capital securities  fund subsidiaries
    
    
    (19
    )
    
    
    3⁄4
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    (19
    )
    
    
    3⁄4General and administrative
    
    
    34
    
    
    
    28
    
    
    
    
    33
    
    
    
    20
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    67
    
    
    
    48Transaction costs
    
    
    15
    
    
    
    3⁄4
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    15
    
    
    
    3⁄4Non-controlling interestsFund subsidiaries
    
    
    (14
    )
    
    
    3⁄4
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    (14
    )
    
    
    3⁄4Other subsidiaries
    
    
    1
    
    
    
    3⁄4
    
    
    
    
    20
    
    
    
    16
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    21
    
    
    
    16Depreciation and amortization
    
    
    202
    
    
    
    124
    
    
    
    
    78
    
    
    
    37
    
    
    
    
    1
    
    
    
    3⁄4
    
    
    
    
    281
    
    
    
    161Income before unallocated costs
    
    
    18
    
    
    
    111
    
    
    
    
    24
    
    
    
    44
    
    
    
    
    152
    
    
    
    110
    
    
    
    
    194
    
    
    
    265Future income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    103Net income from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    103
    
    
    $
    162Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32
    
    
    
    2Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    135
    
    
    $
    164
 48




---



##### 



QUARTERLY RESULTS
 2006
    
    
    
    
    
    
    
    
    
    
    2005(Millions, except per share amounts)
    
    Q4
    
    Q3
    
    Q2
    
    Q1
    
    
    Q4
    
    Q3
    
    Q2
    
    Q1Total revenue
    
    $
    680
    
    
    $
    428
    
    
    $
    421
    
    
    $
    394
    
    
    
    $
    469
    
    
    $
    373
    
    
    $
    357
    
    
    $
    330Commercial property operations
    
    
    313
    
    
    
    180
    
    
    
    177
    
    
    
    170
    
    
    
    
    190
    
    
    
    158
    
    
    
    161
    
    
    
    165Residential development operations
    
    
    51
    
    
    
    37
    
    
    
    31
    
    
    
    25
    
    
    
    
    45
    
    
    
    24
    
    
    
    24
    
    
    
    13Interest and other
    
    
    14
    
    
    
    9
    
    
    
    8
    
    
    
    13
    
    
    
    
    6
    
    
    
    10
    
    
    
    10
    
    
    
    11378
    
    
    
    226
    
    
    
    216
    
    
    
    208
    
    
    
    
    241
    
    
    
    192
    
    
    
    195
    
    
    
    189ExpensesInterest(1)
    
    
    207
    
    
    
    96
    
    
    
    93
    
    
    
    87
    
    
    
    
    85
    
    
    
    83
    
    
    
    80
    
    
    
    79Interest  capital securities  fund
subsidiaries
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    General and administrative
    
    
    23
    
    
    
    15
    
    
    
    14
    
    
    
    15
    
    
    
    
    15
    
    
    
    11
    
    
    
    11
    
    
    
    11Transaction costs
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-controlling interests  fund subsidiaries
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-controlling interests  other subsidiaries
    
    
    4
    
    
    
    7
    
    
    
    6
    
    
    
    4
    
    
    
    
    4
    
    
    
    4
    
    
    
    5
    
    
    
    3Depreciation and amortization
    
    
    136
    
    
    
    50
    
    
    
    51
    
    
    
    44
    
    
    
    
    46
    
    
    
    40
    
    
    
    40
    
    
    
    35Future income taxes and other provisions
    
    
    4
    
    
    
    23
    
    
    
    37
    
    
    
    27
    
    
    
    
    42
    
    
    
    22
    
    
    
    19
    
    
    
    20Net income from continuing operations
    
    $
    22
    
    
    $
    35
    
    
    $
    15
    
    
    $
    31
    
    
    
    $
    49
    
    
    $
    32
    
    
    $
    40
    
    
    $
    41Discontinued operations
    
    
    (1
    )
    
    
    
    

    
    
    15
    
    
    
    18
    
    
    
    
    (2
    )
    
    
    1
    
    
    
    1
    
    
    
    2Net income
    
    $
    21
    
    
    $
    35
    
    
    $
    30
    
    
    $
    49
    
    
    
    $
    47
    
    
    $
    33
    
    
    $
    41
    
    
    $
    43Net income per share  basicContinuing operations
    
    $
    0.08
    
    
    $
    0.14
    
    
    $
    0.08
    
    
    $
    0.13
    
    
    
    $
    0.21
    
    
    $
    0.14
    
    
    $
    0.17
    
    
    $
    0.18Discontinued operations
    
    
    
    
    

    
    
    
    
    
    0.06
    
    
    
    0.08
    
    
    
    
    (0.01
    )
    
    
    
    
    
    
    0.01
    
    
    
    $
    0.08
    
    
    $
    0.14
    
    
    $
    0.14
    
    
    $
    0.21
    
    
    
    $
    0.20
    
    
    $
    0.14
    
    
    $
    0.18
    
    
    $
    0.18Net income per share  dilutedContinuing operations
    
    $
    0.08
    
    
    $
    0.14
    
    
    $
    0.07
    
    
    $
    0.13
    
    
    
    $
    0.21
    
    
    $
    0.14
    
    
    $
    0.16
    
    
    $
    0.17Discontinued operations
    
    
    
    
    
    
    
    
    
    
    0.06
    
    
    
    0.08
    
    
    
    
    (0.01
    )
    
    
    
    
    
    
    0.01
    
    
    
    0.01$
    0.08
    
    
    $
    0.14
    
    
    $
    0.13
    
    
    $
    0.21
    
    
    
    $
    0.20
    
    
    $
    0.14
    
    
    $
    0.17
    
    
    $
    0.18Funds from operations per share  dilutedContinuing operations
    
    $
    0.51
    
    
    $
    0.46
    
    
    $
    0.43
    
    
    $
    0.44
    
    
    
    $
    0.59
    
    
    $
    0.39
    
    
    $
    0.42
    
    
    $
    0.41Discontinued operations
    
    
    0.01
    
    
    
    
    
    
    
    0.02
    
    
    
    
    
    
    
    
    
    
    
    
    0.02
    
    
    
    0.01
    
    
    
    0.01Property disposition gains
    
    
    
    
    
    
    
    
    
    
    0.06
    
    
    
    0.13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.52
    
    
    $
    0.46
    
    
    $
    0.51
    
    
    $
    0.57
    
    
    
    $
    0.59
    
    
    $
    0.41
    
    
    $
    0.43
    
    
    $
    0.42
 (1)
    
    Includes interest on capital securities  corporate    49




---



##### 



PART III  U.S. OFFICE FUND SUPPLEMENTAL INFORMATION
   BrookfieldProperties'Number
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Leasable
    
    
    Owned
    
    
    Ownedof
    
    
    Leased
    
    
    Office
    
    
    Retail
    
    
    Parking
    
    
    Area
    
    
    Interest
    
    
    InterestProperties
    
    
    %
    
    
    000s Sq.Ft.
    
    
    000s Sq.Ft.
    
    
    000S Sq.Ft.
    
    
    000s Sq. Ft.
    
    
    %(1)
    
    
    000s Sq. Ft.(1)COMMERCIAL PROPERTIESNew YorkThe Grace Building
    
    
    1
    
    
    
    99.7
    
    
    
    1,499
    
    
    
    20
    
    
    
    
    
    
    
    1,519
    
    
    
    49.9
    
    
    
    758One New York Plaza
    
    
    1
    
    
    
    98.7
    
    
    
    2,426
    
    
    
    33
    
    
    
    
    
    
    
    2,459
    
    
    
    100
    
    
    
    2,459Newport Tower
    
    
    1
    
    
    
    63.2
    
    
    
    1,028
    
    
    
    34
    
    
    
    
    
    
    
    1,062
    
    
    
    100
    
    
    
    1,0621065 Avenue of the Americas
    
    
    1
    
    
    
    92.7
    
    
    
    625
    
    
    
    40
    
    
    
    
    
    
    
    665
    
    
    
    99
    
    
    
    6581411 Broadway
    
    
    1
    
    
    
    95.7
    
    
    
    1,074
    
    
    
    39
    
    
    
    36
    
    
    
    1,149
    
    
    
    49.9
    
    
    
    5731460 Broadway
    
    
    1
    
    
    
    100.0
    
    
    
    206
    
    
    
    9
    
    
    
    
    
    
    
    215
    
    
    
    49.9
    
    
    
    1076
    
    
    
    92.6
    
    
    
    6,858
    
    
    
    175
    
    
    
    36
    
    
    
    7,069
    
    
    
    
    
    
    
    5,617Washington, D.C.1225 Connecticut Avenue
    
    
    1
    
    
    
    98.0
    
    
    
    195
    
    
    
    22
    
    
    
    52
    
    
    
    269
    
    
    
    100
    
    
    
    2691200 K Street
    
    
    1
    
    
    
    100.0
    
    
    
    366
    
    
    
    24
    
    
    
    44
    
    
    
    434
    
    
    
    100
    
    
    
    4341250 23 Street
    
    
    1
    
    
    
    100.0
    
    
    
    116
    
    
    
    
    
    
    
    16
    
    
    
    132
    
    
    
    100
    
    
    
    1321250 Connecticut Avenue
    
    
    1
    
    
    
    99.6
    
    
    
    152
    
    
    
    20
    
    
    
    26
    
    
    
    198
    
    
    
    100
    
    
    
    1981400 K Street
    
    
    1
    
    
    
    97.7
    
    
    
    178
    
    
    
    12
    
    
    
    34
    
    
    
    224
    
    
    
    100
    
    
    
    2242000 L Street
    
    
    1
    
    
    
    99.9
    
    
    
    308
    
    
    
    75
    
    
    
    
    
    
    
    383
    
    
    
    100
    
    
    
    3832001 M Street
    
    
    1
    
    
    
    100.0
    
    
    
    190
    
    
    
    39
    
    
    
    35
    
    
    
    264
    
    
    
    98
    
    
    
    2592401 Pennsylvania Avenue
    
    
    1
    
    
    
    93.6
    
    
    
    58
    
    
    
    19
    
    
    
    16
    
    
    
    93
    
    
    
    100
    
    
    
    93Bethesda Crescent
    
    
    3
    
    
    
    98.0
    
    
    
    241
    
    
    
    27
    
    
    
    68
    
    
    
    336
    
    
    
    100
    
    
    
    336One Reston Crescent
    
    
    1
    
    
    
    100.0
    
    
    
    185
    
    
    
    
    
    
    
    
    
    
    
    185
    
    
    
    100
    
    
    
    185Silver Springs Metro Plaza
    
    
    3
    
    
    
    96.1
    
    
    
    640
    
    
    
    47
    
    
    
    84
    
    
    
    771
    
    
    
    100
    
    
    
    771Sunrise Tech Park
    
    
    4
    
    
    
    97.3
    
    
    
    315
    
    
    
    1
    
    
    
    
    
    
    
    316
    
    
    
    100
    
    
    
    316Two Ballston Plaza
    
    
    1
    
    
    
    96.3
    
    
    
    204
    
    
    
    19
    
    
    
    
    
    
    
    223
    
    
    
    100
    
    
    
    223Victor Building
    
    
    1
    
    
    
    99.8
    
    
    
    298
    
    
    
    45
    
    
    
    
    
    
    
    343
    
    
    
    49.9
    
    
    
    1711550 & 1560 Wilson Blvd
    
    
    2
    
    
    
    76.8
    
    
    
    226
    
    
    
    32
    
    
    
    76
    
    
    
    334
    
    
    
    100
    
    
    
    33423
    
    
    
    96.9
    
    
    
    3,672
    
    
    
    382
    
    
    
    451
    
    
    
    4,505
    
    
    
    
    
    
    
    4,328HoustonAllen CenterOne Allen Center
    
    
    1
    
    
    
    98.1
    
    
    
    913
    
    
    
    79
    
    
    
    
    
    
    
    992
    
    
    
    100
    
    
    
    992Two Allen Center
    
    
    1
    
    
    
    96.8
    
    
    
    987
    
    
    
    9
    
    
    
    
    
    
    
    996
    
    
    
    100
    
    
    
    996Three Allen Center
    
    
    1
    
    
    
    92.8
    
    
    
    1,173
    
    
    
    22
    
    
    
    
    
    
    
    1,195
    
    
    
    100
    
    
    
    1,195Cullen CenterContinental Center 1
    
    
    1
    
    
    
    97.0
    
    
    
    1,048
    
    
    
    50
    
    
    
    411
    
    
    
    1,509
    
    
    
    100
    
    
    
    1,509Continental Center II
    
    
    1
    
    
    
    82.1
    
    
    
    428
    
    
    
    21
    
    
    
    81
    
    
    
    530
    
    
    
    100
    
    
    
    530KBR Tower
    
    
    1
    
    
    
    94.2
    
    
    
    985
    
    
    
    63
    
    
    
    254
    
    
    
    1,302
    
    
    
    50
    
    
    
    651500 Jefferson Street
    
    
    1
    
    
    
    93.5
    
    
    
    351
    
    
    
    39
    
    
    
    44
    
    
    
    434
    
    
    
    100
    
    
    
    4347
    
    
    
    94.6
    
    
    
    5,885
    
    
    
    283
    
    
    
    790
    
    
    
    6,958
    
    
    
    
    
    
    
    6,307Los Angeles601 Figueroa
    
    
    1
    
    
    
    58.0
    
    
    
    1,037
    
    
    
    2
    
    
    
    123
    
    
    
    1,162
    
    
    
    100
    
    
    
    1,162Bank of America Plaza
    
    
    1
    
    
    
    94.8
    
    
    
    1,383
    
    
    
    39
    
    
    
    343
    
    
    
    1,765
    
    
    
    100
    
    
    
    1,765Ernst & Young Tower
    
    
    1
    
    
    
    86.9
    
    
    
    910
    
    
    
    335
    
    
    
    391
    
    
    
    1,636
    
    
    
    100
    
    
    
    1,636Landmark Square
    
    
    1
    
    
    
    91.9
    
    
    
    420
    
    
    
    23
    
    
    
    212
    
    
    
    655
    
    
    
    100
    
    
    
    655Marina Towers
    
    
    2
    
    
    
    95.2
    
    
    
    356
    
    
    
    25
    
    
    
    87
    
    
    
    468
    
    
    
    50
    
    
    
    2345670 Wilshire Center
    
    
    1
    
    
    
    90.0
    
    
    
    390
    
    
    
    19
    
    
    
    
    
    
    
    409
    
    
    
    100
    
    
    
    4096060 Center Drive
    
    
    1
    
    
    
    98.3
    
    
    
    242
    
    
    
    15
    
    
    
    113
    
    
    
    370
    
    
    
    100
    
    
    
    3706080 Center Drive
    
    
    1
    
    
    
    86.7
    
    
    
    288
    
    
    
    
    
    
    
    163
    
    
    
    451
    
    
    
    100
    
    
    
    4516100 Center Drive
    
    
    1
    
    
    
    96.5
    
    
    
    286
    
    
    
    
    
    
    
    168
    
    
    
    454
    
    
    
    100
    
    
    
    454701 B Street
    
    
    1
    
    
    
    81.7
    
    
    
    529
    
    
    
    37
    
    
    
    
    
    
    
    566
    
    
    
    100
    
    
    
    566707 Broadway
    
    
    1
    
    
    
    80.7
    
    
    
    181
    
    
    
    
    
    
    
    128
    
    
    
    309
    
    
    
    100
    
    
    
    3099665 Wilshire Blvd
    
    
    1
    
    
    
    100.0
    
    
    
    162
    
    
    
    
    
    
    
    64
    
    
    
    226
    
    
    
    100
    
    
    
    226Howard Hughes Spectrum
    
    
    1
    
    
    
    100.0
    
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    37
    
    
    
    100
    
    
    
    37Howard Hughes Tower
    
    
    1
    
    
    
    99.4
    
    
    
    316
    
    
    
    2
    
    
    
    141
    
    
    
    459
    
    
    
    100
    
    
    
    459Northpoint
    
    
    1
    
    
    
    99.6
    
    
    
    103
    
    
    
    
    
    
    
    45
    
    
    
    148
    
    
    
    100
    
    
    
    148Arden Towers at Sorrento
    
    
    4
    
    
    
    82.1
    
    
    
    548
    
    
    
    54
    
    
    
    
    
    
    
    602
    
    
    
    100
    
    
    
    602Westwood Center
    
    
    1
    
    
    
    100.0
    
    
    
    291
    
    
    
    25
    
    
    
    
    
    
    
    316
    
    
    
    100
    
    
    
    316World Savings Center
    
    
    1
    
    
    
    99.1
    
    
    
    464
    
    
    
    14
    
    
    
    161
    
    
    
    639
    
    
    
    100
    
    
    
    63922
    
    
    
    87.4
    
    
    
    7,943
    
    
    
    590
    
    
    
    2,139
    
    
    
    10,672
    
    
    
    
    
    
    
    10,438TOTAL COMMERCIAL PROPERTIES
    
    
    58
    
    
    
    92.0
    
    
    
    24,358
    
    
    
    1,430
    
    
    
    3,416
    
    
    
    29,204
    
    
    
    
    
    
    
    26,690
 (1)
    
    Represents the companys consolidated interest before non-controlling interests 50




---



##### 



BrookfieldProperties'Number
    
    
    Leasable
    
    
    Owned
    
    
    Ownedof
    
    
    Area
    
    
    Interest
    
    
    InterestSites
    
    
    000s Sq. Ft.
    
    
    %(1)
    
    
    000s Sq. Ft.(1)DEVELOPMENT PROPERTIESWashington, D.C.Reston Crescent
    
    
    1
    
    
    
    1,000
    
    
    
    100
    
    
    
    1,000Waterview
    
    
    1
    
    
    
    930
    
    
    
    25
    
    
    
    2332
    
    
    
    1,930
    
    
    
    
    
    
    
    1,233HoustonFour Allen Center
    
    
    1
    
    
    
    1,267
    
    
    
    100
    
    
    
    1,2671500 Smith Street
    
    
    1
    
    
    
    800
    
    
    
    100
    
    
    
    800Allen Center Gateway
    
    
    1
    
    
    
    700
    
    
    
    100
    
    
    
    700Allen Center Garage
    
    
    1
    
    
    
    700
    
    
    
    100
    
    
    
    7004
    
    
    
    3,467
    
    
    
    
    
    
    
    3,467TOTAL DEVELOPMENT
PROPERTIES
    
    
    6
    
    
    
    5,397
    
    
    
    
    
    
    
    4,700
 (1)
    
    Represents the companys consolidated interest before non-controlling interests   Balance Sheet
    
    
    Income Statement(Millions)
    
    Effect
    
    
    EffectNew York, New York
    
    $
    2,581
    
    
    $
    45Washington, D.C.
    
    
    1,287
    
    
    
    26Houston, Texas
    
    
    941
    
    
    
    22Los Angeles, California
    
    
    2,689
    
    
    
    427,498
    
    
    
    135Development properties
    
    
    214
    
    
    
    Total book value / Net operating income
    
    
    7,712
    
    
    
    135Property specific and subsidiary debt / Interest expense
    
    
    (5,799
    )
    
    
    (96
    )Partner capital (debt and equity) / Interest expense and non-controlling interests
    
    
    (1,069
    )
    
    
    (24
    )Total
    
    
    844
    
    
    
    15Other assets, net
    
    
    (43
    )
    
    
    Net investment / Funds from operations prior to fees eliminated against non-controlling interest
    
    
    801
    
    
    
    15Fees eliminated against non-controlling interest
    
    
    
    
    
    
    3Invested capital / Funds from operations
    
    $
    801
    
    
    $
    18
  BrookfieldPropertiesConsolidatedShareCommercial Property
    
    Location
    
    
    Interest Rate %
    
    
    Maturity Date
    
    
    (Millions)
    
    
    Mortgage Details2000 L Street
    
    Washington
    
    
    6.26
    
    
    
    2007
    
    
    $
    56
    
    
    Non-recourse, fixed rateBethesda Crescent
    
    Washington
    
    
    7.07
    
    
    
    2008
    
    
    
    34
    
    
    Non-recourse, fixed rateTwo Ballston Plaza
    
    Washington
    
    
    6.91
    
    
    
    2008
    
    
    
    26
    
    
    Non-recourse, fixed rate5670 Wilshire
    
    Los Angeles
    
    
    6.47
    
    
    
    2008
    
    
    
    59
    
    
    Non-recourse, floating rateWaterview
    
    Washington
    
    
    6.98
    
    
    
    2009
    
    
    
    30
    
    
    Non-recourse, floating rate1460 Broadway
    
    New York
    
    
    5.11
    
    
    
    2012
    
    
    
    12
    
    
    Non-recourse, fixed rateFour Allen Center
    
    Houston
    
    
    5.77
    
    
    
    2013
    
    
    
    240
    
    
    Non-recourse, fixed rateGrace Building
    
    New York
    
    
    5.54
    
    
    
    2014
    
    
    
    195
    
    
    Non-recourse, fixed rate1411 Broadway
    
    New York
    
    
    5.50
    
    
    
    2014
    
    
    
    112
    
    
    Non-recourse, fixed rate2001 M Street
    
    Washington
    
    
    5.25
    
    
    
    2014
    
    
    
    45
    
    
    Non-recourse, fixed rateBank of America Building
    
    Los Angeles
    
    
    5.31
    
    
    
    2014
    
    
    
    237
    
    
    Non-recourse, fixed rateErnst & Young Plaza
    
    Los Angeles
    
    
    5.07
    
    
    
    2014
    
    
    
    114
    
    
    Non-recourse, fixed rateOne New York Plaza
    
    New York
    
    
    5.50
    
    
    
    2016
    
    
    
    396
    
    
    Non-recourse, fixed rateVictor Building
    
    Washington
    
    
    5.39
    
    
    
    2016
    
    
    
    47
    
    
    Non-recourse, fixed rateMarina Towers
    
    Los Angeles
    
    
    5.84
    
    
    
    2016
    
    
    
    21
    
    
    Non-recourse, fixed rateMezzanine debt
    
    
    
    
    
    
    7.85
    
    
    
    2011
    
    
    
    3,102
    
    
    Non-recourse, floating rateCMBS Pool debt
    
    
    
    
    
    
    6.10
    
    
    
    2011
    
    
    
    600
    
    
    Non-recourse, floating rateCMBS Pool debt
    
    
    
    
    
    
    6.83
    
    
    
    2008/2011
    
    
    
    473
    
    
    Non-recourse, fixed rateTotal
    
    
    
    
    
    
    5.90
    %
    
    
    
    
    
    $
    5,799
 51




---



##### 



PART IV  CANADIAN OFFICE FUND SUPPLEMENTAL INFORMATION
    BrookfieldProperties'Number
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Leasable
    
    
    Owned
    
    
    Ownedof
    
    
    Leased
    
    
    Office
    
    
    Retail
    
    
    Parking
    
    
    Area
    
    
    Interest
    
    
    InterestProperties
    
    
    %
    
    
    000s Sq. Ft.
    
    
    000s Sq. Ft.
    
    
    000s Sq. Ft.
    
    
    000s Sq. Ft.
    
    
    %(1)
    
    
    000s Sq. Ft.(1)COMMERCIAL PROPERTIESTorontoFirst Canadian Place
    
    
    1
    
    
    
    95.5
    
    
    
    2,379
    
    
    
    232
    
    
    
    170
    
    
    
    2,781
    
    
    
    25
    
    
    
    6952 Queen St. E
    
    
    1
    
    
    
    98.6
    
    
    
    448
    
    
    
    16
    
    
    
    81
    
    
    
    545
    
    
    
    25
    
    
    
    136151 Yonge St.
    
    
    1
    
    
    
    96.8
    
    
    
    289
    
    
    
    10
    
    
    
    72
    
    
    
    371
    
    
    
    25
    
    
    
    9318 King St. E
    
    
    1
    
    
    
    98.4
    
    
    
    219
    
    
    
    9
    
    
    
    23
    
    
    
    251
    
    
    
    25
    
    
    
    632 St. Clair Ave. W
    
    
    1
    
    
    
    96.0
    
    
    
    219
    
    
    
    12
    
    
    
    68
    
    
    
    299
    
    
    
    25
    
    
    
    7540 St. Clair Ave. W
    
    
    1
    
    
    
    96.5
    
    
    
    117
    
    
    
    4
    
    
    
    28
    
    
    
    149
    
    
    
    25
    
    
    
    376
    
    
    
    96.2
    
    
    
    3,671
    
    
    
    283
    
    
    
    442
    
    
    
    4,396
    
    
    
    
    
    
    
    1,099CalgaryGulf Canada Square
    
    
    1
    
    
    
    99.5
    
    
    
    1,047
    
    
    
    73
    
    
    
    21
    
    
    
    1,141
    
    
    
    25
    
    
    
    285Altius Centre
    
    
    1
    
    
    
    100.0
    
    
    
    303
    
    
    
    3
    
    
    
    72
    
    
    
    378
    
    
    
    25
    
    
    
    952
    
    
    
    99.6
    
    
    
    1,350
    
    
    
    76
    
    
    
    93
    
    
    
    1,519
    
    
    
    
    
    
    
    380OttawaPlace de
Ville I
    
    
    2
    
    
    
    99.0
    
    
    
    569
    
    
    
    18
    
    
    
    502
    
    
    
    1,089
    
    
    
    25
    
    
    
    272Place de Ville II
    
    
    2
    
    
    
    98.5
    
    
    
    591
    
    
    
    19
    
    
    
    433
    
    
    
    1,043
    
    
    
    25
    
    
    
    261Jean Edmonds Towers
    
    
    2
    
    
    
    100.0
    
    
    
    540
    
    
    
    13
    
    
    
    95
    
    
    
    648
    
    
    
    25
    
    
    
    1622204 Walkley
    
    
    1
    
    
    
    99.9
    
    
    
    104
    
    
    
    
    
    
    
    
    
    
    
    104
    
    
    
    25
    
    
    
    262200 Walkley
    
    
    1
    
    
    
    100.0
    
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    25
    
    
    
    148
    
    
    
    99.2
    
    
    
    1,859
    
    
    
    50
    
    
    
    1,030
    
    
    
    2,939
    
    
    
    
    
    
    
    735Other CommercialCanadian Western Bank, Edmonton
    
    
    1
    
    
    
    97.7
    
    
    
    375
    
    
    
    31
    
    
    
    91
    
    
    
    497
    
    
    
    25
    
    
    
    124Enbridge Tower, Edmonton
    
    
    1
    
    
    
    100.0
    
    
    
    179
    
    
    
    4
    
    
    
    30
    
    
    
    213
    
    
    
    25
    
    
    
    534342 Queen Street, Niagara Falls
    
    
    1
    
    
    
    84.9
    
    
    
    149
    
    
    
    
    
    
    
    60
    
    
    
    209
    
    
    
    25
    
    
    
    523
    
    
    
    95.7
    
    
    
    703
    
    
    
    35
    
    
    
    181
    
    
    
    919
    
    
    
    
    
    
    
    229TOTAL COMMERCIAL PROPERTIES
    
    
    19
    
    
    
    97.5
    
    
    
    7,583
    
    
    
    444
    
    
    
    1,746
    
    
    
    9,773
    
    
    
    
    
    
    
    2,443
 (1)
    
    Represents the companys consolidated interest before non-controlling interests BrookfieldPropertiesNumber
    
    
    Leasable
    
    
    Owned
    
    
    Ownedof
    
    
    Area
    
    
    Interest
    
    
    InterestSites
    
    
    000s Sq. Ft.
    
    
    %(1)
    
    
    000s Sq. Ft.(1)DEVELOPMENT PROPERTIESOttawa300 Queen Street
    
    
    1
    
    
    
    500
    
    
    
    25
    
    
    
    1251
    
    
    
    500
    
    
    
    
    
    
    
    125TOTAL DEVELOPMENT PROPERTIES
    
    
    1
    
    
    
    500
    
    
    
    
    
    
    
    125
 (1)
    
    Represents the companys consolidated interest before non-controlling interests  52




---



##### 



Balance Sheet
    
    
    Income Statement Effect(Millions)
    
    Effect
    
    
    2006
    
    
    2005Toronto, Ontario
    
    $
    255
    
    
    $
    22
    
    
    $
    4Calgary, Alberta
    
    
    75
    
    
    
    8
    
    
    
    1Ottawa, Ontario
    
    
    89
    
    
    
    7
    
    
    
    1Edmonton, Alberta and other
    
    
    18
    
    
    
    2
    
    
    
    437
    
    
    
    39
    
    
    
    6Development properties
    
    
    3
    
    
    
    
    
    
    
    Total book value / Net operating income
    
    
    440
    
    
    
    39
    
    
    
    6Property specific and subsidiary debt / Interest expense
    
    
    (199
    )
    
    
    (11
    )
    
    
    (1
    )Total
    
    
    241
    
    
    
    28
    
    
    
    5Properties held for sale(1)
    
    
    7
    
    
    
    16
    
    
    
    Other assets, net
    
    
    (32
    )
    
    
    
    
    
    
    Net investment / Funds from operations prior to fee income
    
    
    216
    
    
    
    44
    
    
    
    5Fee income
    
    
    
    
    
    
    11
    
    
    
    Invested capital / Funds from operations
    
    $
    216
    
    
    $
    55
    
    
    $
    5
 (1)
    
    Includes assets classified as discontinued operations  Brookfield PropertiesInterest
    
    
    Maturity
    
    
    Consolidated ShareCommercial Property
    
    Location
    
    
    Rate %
    
    
    Date
    
    
    (Millions)
    
    
    Mortgage DetailsCanadian FundFirst Canadian Place
    
    Toronto
    
    
    8.06
    
    
    
    2009
    
    
    $
    60
    
    
    Non-recourse, fixed rateO&Y portfolio debt
    
    
    
    
    
    Various
    
    
    2007
    
    
    
    139
    
    
    Various termsTotal
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    199
 53




---



##### 



PART V  RISKS AND UNCERTAINTIES
    PROPERTY
RELATED RISKS
 Commercial
properties
     Residential
developments
  INTEREST
RATE AND FINANCING RISK
    54




---



##### 



Approximate Change in Annual
    
    
    Approximate Change on InterestAs at
    
    Interest Rate Movement
    
    
    Interest Expense (Millions)
    
    
    Expense per Share per YearDecember 31, 2006
    
    + 100 bps
    
    
    $
    20
    
    
    $
    0.09December 31, 2005
    
    + 100 bps
    
    
    $
    16
    
    
    $
    0.07
  CREDIT
RISK
    55




---



##### 



Year of
    
    
    000s
    
    
    % ofTenant
    
    Location
    
    Expiry
    (1)
    
    Sq.Ft.
    (2)
    
    Sq. Ft.
    (2)
    
    Credit Rating (3)RatedMerrill Lynch
    
    New York/Toronto
    
    
    2013
    
    
    
    4,534
    
    
    
    6.9
    %
    
    AA-CIBC
    
    New York/Toronto/Calgary
    
    
    2028
    
    
    
    2,074
    
    
    
    3.2
    %
    
    A+Government of Canada
    
    Toronto/Ottawa/Edmonton
    
    
    2010
    
    
    
    2,003
    
    
    
    3.0
    %
    
    AAAChevron U.S.A.
    
    Houston
    
    
    2018
    
    
    
    1,725
    
    
    
    2.6
    %
    
    AAWachovia
    
    New York
    
    
    2015
    
    
    
    1,331
    
    
    
    2.0
    %
    
    A+RBC Financial Group
    
    Five major markets
    
    
    2018
    
    
    
    1,184
    
    
    
    1.8
    %
    
    AA-Bank of Montreal
    
    Toronto/Calgary
    
    
    2020
    
    
    
    1,128
    
    
    
    1.7
    %
    
    AA-JPMorgan Chase
    
    New York/Denver
    
    
    2018
    
    
    
    1,122
    
    
    
    1.7
    %
    
    A+Petro-Canada
    
    Calgary
    
    
    2013
    
    
    
    914
    
    
    
    1.4
    %
    
    BBBTarget Corporation
    
    Minneapolis
    
    
    2014
    
    
    
    865
    
    
    
    1.3
    %
    
    A+Goldman Sachs
    
    New York
    
    
    2011
    
    
    
    850
    
    
    
    1.3
    %
    
    AA-Continental Airlines
    
    Houston
    
    
    2009
    
    
    
    695
    
    
    
    1.1
    %
    
    BImperial Oil
    
    Calgary
    
    
    2011
    
    
    
    633
    
    
    
    1.0
    %
    
    AAADevon Energy Production Company
    
    Houston
    
    
    2012
    
    
    
    544
    
    
    
    0.8
    %
    
    BBBTransportation Security Administration
    
    Washington, D.C.
    
    
    2014
    
    
    
    540
    
    
    
    0.8
    %
    
    AAATalisman Energy
    
    Calgary
    
    
    2015
    
    
    
    527
    
    
    
    0.8
    %
    
    BBB+CP Rail
    
    Calgary
    
    
    2014
    
    
    
    455
    
    
    
    0.7
    %
    
    BBBConoco Phillips
    
    Calgary
    
    
    2010
    
    
    
    445
    
    
    
    0.7
    %
    
    A-American Express
    
    New York
    
    
    2022
    
    
    
    412
    
    
    
    0.6
    %
    
    A+Enbridge Inc.
    
    Calgary/Edmonton
    
    
    2015
    
    
    
    392
    
    
    
    0.6
    %
    
    A-Pension Benefit Guaranty Corporation
    
    Washington, D.C.
    
    
    2018
    
    
    
    386
    
    
    
    0.6
    %
    
    AAAFidelity Properties Inc.
    
    New York/Boston
    
    
    2009
    
    
    
    381
    
    
    
    0.6
    %
    
    AAAmerada Hess Corporation
    
    Houston
    
    
    2011
    
    
    
    371
    
    
    
    0.6
    %
    
    BBB-Pepco Holdings Inc.
    
    Washington, D.C.
    
    
    2028
    
    
    
    364
    
    
    
    0.6
    %
    
    BBBUnited States Government
    
    Washington, D.C./LA/Houston
    
    
    2010
    
    
    
    352
    
    
    
    0.5
    %
    
    AAAHome Box Office, Inc.
    
    New York
    
    
    2019
    
    
    
    328
    
    
    
    0.5
    %
    
    BBB+Smithsonian Institution
    
    Washington, D.C.
    
    
    2020
    
    
    
    326
    
    
    
    0.5
    %
    
    AAATeachers Insurance Annuity Association
    
    Denver
    
    
    2008
    
    
    
    323
    
    
    
    0.5
    %
    
    AAACanadian Natural Resources
    
    Calgary
    
    
    2011
    
    
    
    278
    
    
    
    0.4
    %
    
    BBB+EnCana Corporation
    
    Calgary
    
    
    2013
    
    
    
    258
    
    
    
    0.4
    %
    
    A-Bank of Nova Scotia
    
    New York
    
    
    2014
    
    
    
    255
    
    
    
    0.4
    %
    
    AA-Anadarko Canada Corporation
    
    Calgary
    
    
    2011
    
    
    
    235
    
    
    
    0.4
    %
    
    BBB-Kinder Morgan, Inc.
    
    Houston
    
    
    2020
    
    
    
    226
    
    
    
    0.3
    %
    
    BB-Exxon Mobil Corporation
    
    Houston
    
    
    2007
    
    
    
    225
    
    
    
    0.3
    %
    
    AAABank of America
    
    Boston
    
    
    2011
    
    
    
    222
    
    
    
    0.3
    %
    
    AAMarsh Mercer
    
    Toronto
    
    
    2015
    
    
    
    207
    
    
    
    0.3
    %
    
    BB+Willis of New York
    
    New York
    
    
    2026
    
    
    
    202
    
    
    
    0.3
    %
    
    BBBOther government and related services
    
    Various
    
    Various
    
    
    1,277
    
    
    
    1.9
    %
    
    BBB- or higherOther investment grade
    
    Various
    
    Various
    
    
    5,986
    
    
    
    9.1
    %
    
    BBB- or higher34,575
    
    
    
    52.5
    %UnratedKellogg, Brown & Root
    
    Washington, D.C./Houston
    
    
    2016
    
    
    
    964
    
    
    
    1.5
    %
    
    Cadwalader, Wickersham & Taft
    
    New York
    
    
    2024
    
    
    
    519
    
    
    
    0.8
    %
    
    Cleary, Gottlieb, Steen & Hamilton
    
    New York
    
    
    2012
    
    
    
    446
    
    
    
    0.7
    %
    
    Goodwin Procter
    
    Boston
    
    
    2016
    
    
    
    411
    
    
    
    0.6
    %
    
    Fried, Frank & Harris
    
    New York
    
    
    2024
    
    
    
    382
    
    
    
    0.6
    %
    
    Ernst & Young
    
    Washington, D.C./Los Angeles
    
    
    2010
    
    
    
    369
    
    
    
    0.6
    %
    
    Wellington Management Co.
    
    Boston
    
    
    2011
    
    
    
    358
    
    
    
    0.5
    %
    
    The Capital Group Companies
    
    Los Angeles
    
    
    2018
    
    
    
    326
    
    
    
    0.5
    %
    
    Osler Hoskin & Harcourt LLP
    
    Toronto
    
    
    2015
    
    
    
    285
    
    
    
    0.4
    %
    
    National Association of Securities Dealers
    
    New York
    
    
    2020
    
    
    
    277
    
    
    
    0.4
    %
    
    Bennett Jones
    
    Calgary/Toronto
    
    
    2010
    
    
    
    237
    
    
    
    0.4
    %
    
    CI Investments Inc.
    
    Toronto
    
    
    2011
    
    
    
    212
    
    
    
    0.3
    %
    
    KPMG
    
    Toronto
    
    
    2011
    
    
    
    210
    
    
    
    0.3
    %
    
    Total
    
    
    
    
    
    
    
    
    39,571
    
    
    
    60.1
    %
 
 (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 56




---



##### 



LEASE ROLL-OVER RISK
   Currently
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2014 &(000s Sq. Ft.)
    
    Available
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    Beyond
    
    
    Parking
    
    
    TotalNew York
    
    
    665
    
    
    
    288
    
    
    
    541
    
    
    
    1,023
    
    
    
    1,038
    
    
    
    360
    
    
    
    860
    
    
    
    5,128
    
    
    
    9,296
    
    
    
    317
    
    
    
    19,516Boston
    
    
    142
    
    
    
    61
    
    
    
    399
    
    
    
    40
    
    
    
    172
    
    
    
    394
    
    
    
    31
    
    
    
    30
    
    
    
    618
    
    
    
    276
    
    
    
    2,163Washington, D.C.
    
    
    139
    
    
    
    719
    
    
    
    458
    
    
    
    582
    
    
    
    268
    
    
    
    199
    
    
    
    531
    
    
    
    189
    
    
    
    2,664
    
    
    
    1,022
    
    
    
    6,771Houston
    
    
    336
    
    
    
    575
    
    
    
    454
    
    
    
    155
    
    
    
    941
    
    
    
    581
    
    
    
    1,232
    
    
    
    522
    
    
    
    1,372
    
    
    
    790
    
    
    
    6,958Los Angeles
    
    
    1,075
    
    
    
    668
    
    
    
    766
    
    
    
    558
    
    
    
    981
    
    
    
    1,004
    
    
    
    1,125
    
    
    
    587
    
    
    
    1,769
    
    
    
    2,139
    
    
    
    10,672Toronto
    
    
    443
    
    
    
    413
    
    
    
    554
    
    
    
    946
    
    
    
    1,026
    
    
    
    714
    
    
    
    883
    
    
    
    1,589
    
    
    
    3,887
    
    
    
    1,828
    
    
    
    12,283Calgary
    
    
    15
    
    
    
    48
    
    
    
    287
    
    
    
    322
    
    
    
    915
    
    
    
    1,602
    
    
    
    499
    
    
    
    1,286
    
    
    
    1,827
    
    
    
    1,044
    
    
    
    7,845Ottawa
    
    
    15
    
    
    
    142
    
    
    
    78
    
    
    
    138
    
    
    
    2
    
    
    
    29
    
    
    
    4
    
    
    
    952
    
    
    
    549
    
    
    
    1,030
    
    
    
    2,939Denver
    
    
    56
    
    
    
    55
    
    
    
    48
    
    
    
    9
    
    
    
    100
    
    
    
    89
    
    
    
    77
    
    
    
    152
    
    
    
    706
    
    
    
    503
    
    
    
    1,795Minneapolis
    
    
    267
    
    
    
    36
    
    
    
    32
    
    
    
    221
    
    
    
    55
    
    
    
    35
    
    
    
    126
    
    
    
    647
    
    
    
    1,068
    
    
    
    521
    
    
    
    3,008Other
    
    
    62
    
    
    
    145
    
    
    
    52
    
    
    
    83
    
    
    
    172
    
    
    
    143
    
    
    
    78
    
    
    
    74
    
    
    
    591
    
    
    
    445
    
    
    
    1,8453,215
    
    
    
    3,150
    
    
    
    3,669
    
    
    
    4,077
    
    
    
    5,670
    
    
    
    5,150
    
    
    
    5,446
    
    
    
    11,156
    
    
    
    24,347
    
    
    
    9,915
    
    
    
    75,7954.9
    %
    
    
    4.8
    %
    
    
    5.6
    %
    
    
    6.2
    %
    
    
    8.6
    %
    
    
    7.8
    %
    
    
    8.3
    %
    
    
    16.9
    %
    
    
    36.9
    %
    
    
    3⁄4
    
    
    
    100.0
    %
  ENVIRONMENTAL RISKS
   OTHER RISKS AND UNCERTAINTIES
     57




---



##### 



FOREIGN EXCHANGE FLUCTUATIONS
  DERIVATIVE FINANCIAL INSTRUMENTS
   st
   58




---



##### 



59




---



##### 



PART VI  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 CHANGES IN ACCOUNTING POLICIES
  (i) Effect of Contingently Convertible Instruments on the Computation of Diluted Earnings Per
Share, Emerging Issues Committee Abstract 155
  (ii) Implicit Variable Interests, Emerging Issues Committee Abstract 157
  (iii) Conditional Asset Retirement Obligations, Emerging Issues Committee Abstract 159
  (iv) Stock-Based Compensation for Employees Eligible to Retire Before the Vesting Date, Emerging
Issues Committee Abstract 162
  FUTURE ACCOUNTING POLICY CHANGES
 (i) Comprehensive Income, CICA Handbook Section 1530
  (ii) Financial Instruments  Recognition and Measurement, CICA Handbook Section 3855
  (iii) Hedges, CICA Handbook Section 3865
  60




---



##### 



Impact of adopting sections 1530, 3855 and 3865
    USE OF ESTIMATES
   Property Acquisitions
    61




---



##### 



Depreciation
  Impairment of Assets
    Revenue Recognition
   Fair Value of Financial Instruments
  Tax
     62




---



##### 



RELATED-PARTY TRANSACTIONS
   63




---



##### 



PART VII  BUSINESS ENVIRONMENT AND OUTLOOK
 COMMERCIAL OPERATIONS
    RESIDENTIAL DEVELOPMENT OPERATIONS
   DISCLOSURE CONTROLS AND PROCEDURES
  INTERNAL CONTROL OVER FINANCIAL REPORTING
  Managements Report on Internal Control over Financial
Reporting
 OUTLOOK
  
 Craig J. Laurie
Senior Vice President and Chief Financial Officer
March 7, 200
 64




---



##### 



DISTRIBUTIONS
  Currency
    
    
    Dec. 31, 2006
    
    
    Dec. 31, 2005
    
    
    Dec. 31, 2004
    
    
    Dec. 31, 2003Common shares(1)
    
    US$
    
    
    $
    0.7500
    
    
    $
    0.6500
    
    
    $
    0.4200
    
    
    $
    0.3400
    (2)Class A preferred shares
    
    
    C$
    
    
    
    0.1875
    
    
    
    0.1875
    
    
    
    0.1875
    
    
    
    0.1875Class AA Series E preferred shares
    
    
    C$
    
    
    
    0.9922
    
    
    
    0.7591
    
    
    
    0.7061
    
    
    
    0.8202Class AAA Series C preferred shares
    
    
    C$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.2356Class AAA Series D preferred shares
    
    
    C$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.2356Class AAA Series E preferred shares
    
    
    C$
    
    
    
    1.0082
    
    
    
    0.7695
    
    
    
    0.7027
    
    
    
    Class AAA Series F preferred shares
    
    
    C$
    
    
    
    1.5000
    
    
    
    1.5000
    
    
    
    1.5000
    
    
    
    1.5000Class AAA Series G preferred shares
    
    US$
    
    
    
    1.3125
    
    
    
    1.3125
    
    
    
    1.3125
    
    
    
    0.7237Class AAA Series H preferred shares
    
    
    C$
    
    
    
    1.4375
    
    
    
    1.4375
    
    
    
    1.4375
    
    
    
    0.3033Class AAA Series I preferred shares
    
    
    C$
    
    
    
    1.3000
    
    
    
    1.3000
    
    
    
    1.3000
    
    
    
    Class AAA Series J preferred shares
    
    
    C$
    
    
    
    1.2500
    
    
    
    1.2500
    
    
    
    0.8333
    
    
    
    Class AAA Series K preferred shares
    
    
    C$
    
    
    
    1.3000
    
    
    
    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 65