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                                [BROOKFIELD LOGO]

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                        BROOKFIELD PROPERTIES CORPORATION
                         RENEWAL ANNUAL INFORMATION FORM

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                                  MAY 10, 2004

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                        BROOKFIELD PROPERTIES CORPORATION

                   ANNUAL INFORMATION FORM - TABLE OF CONTENTS

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<S>                                                                                <C>
Note Regarding Financial Information ...........................................    i
Forward-Looking Statements .....................................................    i
Corporate Structure ............................................................    1
   Name, Address and Incorporation .............................................    1
   Intercorporate Relationships ................................................    1
History ........................................................................    2
General Development of the Business ............................................    3
   Year Ended December 31, 2001 ................................................    3
   Year Ended December 31, 2002 ................................................    4
   Year Ended December 31, 2003 ................................................    5
   Recent Developments .........................................................    6
   Outlook for the Remainder of 2004 ...........................................    6
Business of Brookfield .........................................................    7
   Asset Profile ...............................................................    7
   Commercial Properties .......................................................    7
   Tenant Relationships ........................................................    8
   Tenant Installation Costs and Capital Expenditures ..........................    9
   Primary Markets .............................................................   10
   Development Properties ......................................................   12
   Services Businesses .........................................................   13
   Employees ...................................................................   13
   Company and Real Estate Industry Risks ......................................   14
Management's Discussion and Analysis ...........................................   18
Selected Financial Information .................................................   18
Dividends and Dividend Policy ..................................................   18
Description of Capital Structure ...............................................   19
   General Description of Capital Structure ....................................   19
   Ratings .....................................................................   35
Market for Securities ..........................................................   36
Directors and Officers .........................................................   38
   Directors ...................................................................   38
   Officers ....................................................................   39
   Share Ownership .............................................................   40
   Cease Trade Orders, Bankruptcies, Penalties or Sanctions ....................   40
Legal Proceedings ..............................................................   40
Interest of Management and Others in Material Transactions .....................   40
Auditors, Transfer Agent and Registrars ........................................   40
Audit Committee Information ....................................................   41
Additional Information .........................................................   42

Appendix A - Subsidiaries ......................................................   43
Appendix B - Commercial Properties By Region ...................................   44
Appendix C - Selected Consolidated Financial Information .......................   45
Appendix D - Audit Committee Charter ...........................................   47
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NOTE REGARDING FINANCIAL INFORMATION

Brookfield prepares its annual audited consolidated financial statements in
accordance with Canadian generally accepted accounting principles ("Canadian
GAAP"), which in some case, differ in certain respects from U.S. generally
accepted accounting principles ("US GAAP"). For a discussion of these
differences, together with a reconciliation of the Corporation's net income and
shareholders' equity to US GAAP, see Note 15 of the notes to the 2003
consolidated financial statements of the Corporation. The Corporation prepares
its consolidated financial statements in U.S. dollars, and unless otherwise
indicated, all financial data set forth in this Annual Information Form ("AIF")
have been prepared in accordance with Canadian GAAP. In this AIF, all references
to "US$" are to U.S. dollars and "C$" are to Canadian dollars and all references
to "$" are in U.S. dollars unless otherwise stated. Unless otherwise indicated,
the statistical and financial data contained in this AIF are presented as at
December 31, 2003.

FORWARD-LOOKING STATEMENTS

The company's annual information statement contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended,
Section 21E of the Securities Exchange Act of 1934, as amended, and as defined
under Canadian securities laws and regulations. The words "believe," "expect,"
"anticipate," "intend," "estimate" and other expressions which are predictions
of or indicate future events and trends, and which do not relate to historical
matter, identify forward-looking statements. Reliance should not be placed on
forward-looking statements because they involve known and unknown risks,
uncertainties and other factors, which may cause the actual results, performance
or achievements of the company to differ materially from anticipated future
results, performance or achievement expressed or implied by such forward-looking
statements. Factors that could cause actual results to differ materially from
those set forth in the forward-looking statements include general economic
conditions, local real estate conditions, timely re-leasing of occupied square
footage upon expiration, interest rates, availability of equity and debt
financing and other risks detailed from time to time in the documents filed by
the company with the securities regulators in Canada and the United States. The
company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events
or otherwise.

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                               CORPORATE STRUCTURE

NAME, ADDRESS AND INCORPORATION

Brookfield Properties Corporation ("Brookfield" or the "Corporation") was formed
under the Canada Business Corporations Act on September 5, 1978 to continue the
business of Canadian Arena Corporation which was incorporated in 1923 under the
Quebec Companies Act, 1920. The articles of the Corporation have been amended
from time to time to change its capital structure and, to make the following
name changes: Carena-Bancorp Holdings Inc. - Le Holding Carena-Bancorp Inc.
(November 1978), Carena-Bancorp Inc. (January 1985), Carena Developments Limited
(March 1989) and finally to Brookfield Properties Corporation (May 1996). The
articles of the Corporation were restated on September 5, 2002.

The Corporation's registered office is P.O. Box 770, Suite 330, BCE Place, 181
Bay Street, Toronto, Ontario, M5J 2T3. The Corporation operates head offices at
BCE Place in Toronto and One Liberty Plaza in New York.

INTERCORPORATE RELATIONSHIPS

The principal subsidiaries of the Corporation and their respective jurisdictions
of formation are set out below. All interests are 100 per cent ownership
interests unless otherwise indicated.

                          [CORPORATE STRUCTURE CHART]

Brookfield owns its assets directly and indirectly through partnerships and
equity investments, including: (i) a 100% common share interest in Brookfield
Properties Ltd., an Ontario corporation, which primarily owns large Class A
office properties located in Toronto; (ii) a 100% equity interest in Brookfield
Properties (US) Inc. a Delaware corporation that in turn owns a 99.4% interest
in Brookfield Financial Properties, L.P., a New York-based Delaware limited
partnership which owns large Class A office properties, primarily in Lower and
Midtown Manhattan, Boston and Washington, D.C. and a 100% equity interest in
Brookfield Commercial Properties Inc., a Minnesota-based Delaware corporation
that owns primarily office properties in Denver and Minneapolis; (iii) an 89%
equity interest (representing 54.3% of the voting securities and 100% of the
non-voting securities) in BPO Properties Ltd., a Canadian corporation that owns
predominantly office properties in Toronto, Calgary and Vancouver; (vi) a 100%
equity interest in Brookfield FMS Ltd., an Alberta corporation which holds a 40%
equity investment in Brookfield Lepage Johnson Controls, a property management
company; and (v) a 100% equity interest in Brookfield Homes Holdings Ltd., a
land development company. The remaining principal subsidiaries of the
Corporation are listed on "Appendix A" hereto.

Unless otherwise noted or the context otherwise indicates, references to
"Brookfield" and the "Corporation" are to Brookfield Properties Corporation and
its consolidated subsidiaries.

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                                     HISTORY

Brookfield Properties Corporation was incorporated in the early 1920's and has
been active in various facets of the real estate business since the 1960's. In
1990, a strategic decision was made to invest capital into the premier office
property business in select, high-growth, supply-constrained markets in North
America. This led to the acquisition of 47 million square feet of high-quality
office properties and office development sites predominantly in New York,
Toronto and Boston. The accumulation of these assets was completed through
various corporate and property purchases since 1990, including three major
portfolio acquisitions of approximately 10 million square feet respectively.

In 1990, Brookfield acquired 50% of a portfolio of office properties from BCE
Inc. containing approximately 10 million square feet in Toronto, Denver and
Minneapolis. In 1994, the interest in this portfolio was increased to 100%.

On November 21, 1996, Brookfield completed the acquisition of a 46% interest in
Brookfield Financial Properties, L.P. ("Brookfield Financial Properties";
formerly World Financial Properties, L.P.). World Financial Properties, L.P.
owned 10 million square feet of Class A office space in New York and Boston,
including interests in three of the four towers of the World Financial Center,
One Liberty Plaza, and 245 Park Avenue in Manhattan and 53 State Street in
Boston. In April 1997, Brookfield acquired from an affiliate of the Canadian
Imperial Bank of Commerce ("CIBC") and Dragon Holdings Limited a further 24%
interest in Brookfield Financial Properties for approximately $145 million in
cash and the issuance of 2.9 million warrants of the Corporation. Following the
acquisition, Brookfield owned a 70% interest in Brookfield Financial Properties.
In June 1998, Brookfield increased its interest in Brookfield Financial
Properties to 89% by purchasing from an affiliate of Citicorp Real Estate Inc.
("Citibank") a 19% equity interest. The cost of the acquisition was $167
million. As partial consideration for the acquisition, Brookfield issued a $50
million 6% unsecured debenture convertible into 2,622,100 common shares of the
Corporation.

On September 30, 1997, Brookfield purchased 14,582,252 common shares of BPO
Properties Ltd. ("BPO Properties"; formerly Gentra) for an aggregate purchase
price of $190 million. The purchase price was satisfied by payment of $127
million in cash and 4,610,773 common shares of the Corporation. On completion of
the transaction, Brookfield held approximately 43% of the outstanding common
shares of BPO Properties. On September 30, 1997, Brookfield also entered into an
agreement to purchase $36 million of Series R preferred shares of BPO
Properties. On October 15, 1997, the Series R preferred shares were converted
into common shares of BPO Properties, increasing Brookfield's ownership to 45%.

On May 8, 1997, Brookfield completed an amalgamation transaction with Brookfield
Homes Limited ("Brookfield Homes") in which shareholders of Brookfield Homes
received one common share of the Corporation for each 1.5 common shares of
Brookfield Homes held. Prior to the amalgamation, public shareholders owned
approximately 4% of the total shares outstanding in Brookfield Homes. On the
amalgamation, the Corporation issued 784,435 additional common shares of the
Corporation.

In addition to acquisitions of the Corporation's own shares, Brookfield
increased its interest in its subsidiaries through capital repurchases
undertaken by BPO Properties and Carma Corporation ("Carma"). During 1999,
Brookfield's subsidiary, BPO Properties, acquired 5.8 million of its own common
shares at a price below net asset value for a total of $57 million, thereby
increasing Brookfield's equity interest to 52%. Subsequent to December 31, 1999,
an additional 4 million common shares of BPO Properties were repurchased by BPO
Properties for a total cost of $40 million, thereby increasing Brookfield's
equity interest in BPO Properties to 59%, 47% on a voting basis. On May 13,
1999, the Corporation also purchased 1,000,000 common shares of Carma. This
purchase increased Brookfield's equity interest in Carma to 35,395,499 common
shares or approximately 82% of Carma's issued and outstanding common shares. In
June 2000, Brookfield acquired, through BPO Properties, a western Canadian
office portfolio, consisting of four office towers in Calgary and Vancouver.
These properties, formerly part of the TrizecHahn portfolio, comprise a total of
3.5 million square feet of prime office, retail and parking space. The two
projects include the flagship Bankers Hall East and West Towers and the Royal
Bank Building in downtown Calgary as well as the Royal Centre in downtown
Vancouver.

During 2000, Brookfield continued the consolidation of its subsidiaries through
both normal course issuer bids and tender offers for the shares of Carma and BPO
Properties not already owned by Brookfield. In September 2000, Carma was
privatized through the issuance of 1.9 million common shares and the payment of
$1 million in cash. Also in September 2000, the effective ownership of BPO
Properties was increased to 85% through the issuance of 5.3 million common
shares and the payment of $5 million in cash. Brookfield subsequently acquired
an additional 2% of BPO Properties through capital repurchases, bringing its
equity ownership interest in BPO Properties to 87% (47% on a voting basis).

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On October 29, 2002, the Board of Directors approved the special distribution of
the Corporation's U.S. residential home building business, Brookfield Homes. As
described in greater detail below, Brookfield Homes changed its name to
Brookfield Homes Corporation and commenced trading on the NYSE under the symbol
"BHS" on January 7, 2003.

                       GENERAL DEVELOPMENT OF THE BUSINESS

The significant events and conditions affecting Brookfield's business during the
last three financial years are summarized below. A number of these events and
conditions are discussed in greater detail under the heading "Business of
Brookfield" in this Annual Information Form.

YEAR-ENDED DECEMBER 31, 2001

On April 26, 2000, Brookfield announced that its New York-based subsidiary,
Brookfield Financial Properties, formed a strategic office property alliance
with Deutsche Grundbesitz Management GmbH, a 100% indirectly owned subsidiary of
Deutsche Bank AG, a multi-national financial services company. Deutsche
Grundbesitz Management GmbH agreed to acquire a 49% interest in Brookfield's two
landmark office properties in Boston. Upon closing on April 2, 2001, the total
proceeds of the transaction were $337 million, $168 million of cash for the
equity component and the assumption of $169 million of property level debt by
the purchaser.

In June 2000, Brookfield acquired a development site in Midtown Manhattan at 300
Madison Avenue for $150 million. Brookfield announced in March 2001 that it had
signed a 30-year lease with CIBC World Markets for 100% of the 1.2 million
square foot office tower for its U.S. headquarters.

On January 31, 2001, Brookfield announced that it completed a $432 million
refinancing of its 2.2 million square foot One Liberty Plaza property in Lower
Manhattan. The investment-grade financing, recourse only to the property, has a
term of 10 years and a fixed rate coupon of 6.75%.

On February 5, 2001, Brookfield announced that it completed a $500 million
refinancing of its 245 Park Avenue property in New York. The investment-grade
financing, recourse only to the property, had a term of 10 years and a fixed
rate coupon of 6.65%.

On February 13, 2001, Brookfield acquired a 50% joint venture interest in the
Bay-Adelaide development site in downtown Toronto for an investment of $40
million or $37 per buildable square foot. Canapen (Bay-Adelaide) Limited, a
subsidiary of the CN Pension Trust Funds, holds the other 50% interest in the
project. The Corporation, in addition to its 50% investment interest, is
responsible for the development, leasing and ongoing management of the project.
The Bay-Adelaide site consists of two blocks of land in Toronto's downtown
financial core, bounded by Richmond, Bay, Adelaide and Yonge Streets. The
project includes a 1,100 car below-grade parking garage, construction completed
to grade including all foundation work, and plans and permits for at least a one
million square foot premier office tower.

In March 2001, Brookfield completed a secondary offering of 4,610,773 million
shares held by Brascan Financial Corporation ("Brascan Financial"; formerly
Trilon Financial Corporation) at $17 per share.

On May 30, 2001, Brookfield acquired a further 5.4% of its New York and Boston
assets owned through Brookfield Financial Properties from an affiliate of
Citibank for a total cost of $202 million, $60 million of cash and the
assumption of $142 million of long-term non-recourse property debt. This
transaction brought the Corporation's interest in Brookfield Financial
Properties to approximately 95%.

On July 23, 2001, Brookfield completed a refinancing of Fifth Avenue Place in
Calgary and also sold a 50% interest in this property. A non-recourse first
mortgage for $106 million was placed on the property and a 50% interest was sold
to a Canadian institutional investor based on a gross value of $178 million.

In August 2001, the holder of $50 million of convertible debentures issued by
the Corporation tendered its securities for conversion into 2.6 million common
shares of the Corporation. Warrants to purchase 2.5 million common shares of the
Corporation were also exercised in August 2001 for $25 million.

On September 11, 2001, Brookfield owned eight million square feet of space in
four office towers surrounding the World Trade Center site - One Liberty Plaza
and One, Two and Four World Financial Center. The physical damage sustained

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by these properties was mainly cosmetic as a result of the attack on and
subsequent collapse of the World Trade Center and consisted primarily of
replacement of broken windows and some repair to the granite facade on the World
Financial Center. While there was no structural damage to these four office
towers, the glass-enclosed Winter Garden atrium at the center of the World
Financial Center suffered more significant damage from falling debris than other
areas of the complex. This component of the World Financial Center was fully
restored and opened in September 2002. To date, approximately $216 million has
been received for property and business interruption claims relating to One
Liberty Plaza, One World Financial Center, the Winter Garden and common areas of
the World Financial Center. Two and Four World Financial Center are covered by
insurance in place under the tenant triple-net leases with Merrill Lynch.
Brookfield's insurance claim adjustment process is ongoing due to the complexity
of the issues involved. However, Brookfield anticipates recovery of all material
amounts relating to the restoration and business interruption costs of its
properties.

One Liberty Plaza and Four World Financial Center reopened in October 2001, and
One and Two World Financial Center were reopened in the first quarter of 2002.
No material lease cancellations in the New York portfolio occurred as a result
of the events of September 11.

On October 11, 2001, Brookfield completed the sale of Bramalea City Centre, a
1.2 million square foot regional shopping center complex in Toronto to
institutional investors. This transaction, together with the sales of the
Sevenoaks and West Oaks Malls in Vancouver, generated approximately $200 million
in proceeds to Brookfield.

On October 19, 2001, Brookfield completed a $240 million refinancing of its 2.6
million square foot Bankers Hall property in Calgary. The non-recourse property
financing has a term of 12 years and a fixed rate of 7.2%.

During 2001, Brookfield repurchased 2,402,700 of its own common shares at an
average price of $17.30 per share under its normal course issuer bid.

YEAR-ENDED DECEMBER 31, 2002

On March 12, 2002, Brookfield sold an undivided 50% interest in the Exchange
Tower, a 1.1 million square foot office complex in downtown Toronto, to two
Canadian pension funds. This transaction generated proceeds of approximately $55
million, net of non-recourse debt on the property.

On April 24, 2002, Brookfield completed a financing of the 300 Madison Avenue
project which provided refinancing of the existing $300 million mortgage and
additional funds to complete the development of the property. The financing was
comprised of two series of pass-through certificates: the $400 million Series
2002 A-1 certificate with an average life of 20 years and a coupon of 7.262%,
and the $160 million Series 2002 A-2 certificate funded through a commercial
paper conduit facility and amortized over 10 years.

On August 1, 2002 Brookfield sold a 50% interest in the 2.7 million square foot
Bankers Hall Complex in Calgary to British Columbia Investment Management
Corporation. This transaction generated net proceeds of approximately $72
million, net of non-recourse debt on the property, based on a sale price of $193
million.

On September 6, 2002, Brookfield announced that it had acquired a 51% interest
in Three World Financial Center in Lower Manhattan from Lehman Brothers Holdings
for $158 million. The remaining 49% interest continues to be owned by American
Express. Brookfield has the exclusive right to occupy 1.2 million square feet of
space in Three World Financial Center. While Brookfield has guaranteed the
acquisition financing, Brookfield intends to refinance this 51% interest with
non-recourse permanent financing upon securing tenants for the space.

On September 25, 2002, Brookfield announced the completion of a C$200 million
Class AAA, Series F preference share issue. Brookfield issued 8 million Class
AAA Preference Shares, Series F at a price of C$25.00 per share to yield 6% per
annum, including 2 million shares issued on the exercise of an option granted to
the underwriting syndicate. The net proceeds were used to redeem C$200 million
of Class AAA preference shares then outstanding with an average coupon of 8.75%
and held by Brascan Corporation. The Series F Preference Shares commenced
trading on the TSX on September 25, 2002 under the symbol BPO.PR.F.

On October 29, 2002, the Board of Directors approved the special distribution of
the Corporation's U.S. residential home building business, Brookfield Homes.
Brookfield Homes changed its name to Brookfield Homes Corporation and commenced
trading on the NYSE under the symbol "BHS" on January 7, 2003. This transaction
allowed Brookfield to focus on its core business of owning and operating premier
office properties in select North American city centers, as well as

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enabling shareholders to maximize the value of their interest in Brookfield's
U.S. residential home building operations by continuing as a shareholder or
monetizing their investment. Common shareholders of record on January 2, 2003,
received a special distribution equivalent to one-fifth of each Brookfield share
that they owned. The value of the special dividend, based on a book value of
$323 million of equity, was $2.00 per Brookfield common share and resulted in a
reduction in the stated value of the Corporation's common equity of $323
million, as approved by the Corporation's shareholders on December 16, 2002. The
Corporation did not retain any common share ownership of Brookfield Homes,
however, it retained a $98 million subordinated note receivable maturing on
December 31, 2005 which bears interest at 10% and which was repaid in full in
2003. At December 31, 2002, total assets of Brookfield Homes included in the
Corporation's assets were $879 million, an increase of $7 million over 2001 and
$117 million over 2000. These assets were financed at the asset level by $556
million in construction debt facilities, payables and subordinated debt at
December 31, 2002.

On December 31, 2002, Brookfield acquired a further 3.5% of its New York and
Boston assets owned through Brookfield Financial Properties for $60 million.
This transaction brought the Corporation's interest in Brookfield Financial
Properties to approximately 98.5%.

During 2002, Brookfield repurchased 1,385,900 of its own common shares at an
average price of $18.49 per share under its normal course issuer bid.

YEAR-ENDED DECEMBER 31, 2003

In March 2003, Brookfield refinanced One World Financial Center with a $300
million, three-year first mortgage credit facility provided by Deutsche Bank
Securities which is recourse to Brookfield Properties Corporation. An additional
$102 million of financing was obtained by Brookfield upon closing. The previous
$402 million mortgage carried an interest rate of 7.51% and a maturity of
November 2003. The new floating rate financing is set at LIBOR plus 2%, which
translates to an initial coupon of approximately 3.34% based on then current
rates.

In April 2003, Brookfield sold an interest in the retail and parking condominium
at 100 Bloor Street West for $40 million to a foreign real estate investor.
Brookfield continues to own 50% of the recently-completed 57,500 square foot
premier retail and condominium project in Toronto's most upscale retail
neighborhood.

In April 2003, Brookfield acquired an additional 574,900 voting common shares of
BPO Properties in a private transaction at a cost of C$27.00 per BPO Properties
share. The transaction increased Brookfield's equity interest in BPO Properties
from 87% to 89%. A wholly-owned subsidiary of Brookfield acquired these
additional shares by issuing C$15.5 million of retractable preferred shares (the
"Purchase Price Shares"). The Purchase Price Shares were retractable until April
25, 2005 for either cash or, at the option of the holder, 474,466 common shares
of Brookfield and 94,893 common shares of Brookfield Homes Corporation, subject
to certain adjustments. Thereafter, the Corporation extended an offer to acquire
the balance of outstanding common shares of BPO Properties not owned by
Brookfield. In June 2003, Brookfield withdrew its proposal to enter into a Going
Private Transaction with BPO Properties Ltd. due to the lack of support from
enough minority shareholders. The Purchase Price Shares were subsequently
purchased from the holder thereof for C$22,952,781.60.

On June 12, 2003, Brookfield announced the completion of a $110 million Class
AAA, Series G preference share issue. Brookfield issued 4.4 million Class AAA
Preference Shares, Series G at a price of $25.00 per share to yield 5.25% per
annum. The Series G Preference Shares commenced trading on the TSX on June 12,
2003 under the symbol BPO.PR.U.

On September 4, 2003, the Corporation announced that it had agreed to sell a 49%
interest in 245 Park Avenue, New York, New York to the New York State Teachers'
Retirement Program for approximately $438 million, including approximately $195
million in cash and the assumption by the purchaser of approximately $243
million in property-level debt. The sale closed on October 3, 2003. The
Corporation retains a 51% interest in the property and will continue to manage
and lease the property.

On October 15, 2003, Brookfield announced the completion of a C$200 million
Class AAA, Series H preference share issue. Brookfield issued 8 million Class
AAA Preference Shares, Series H at a price of C$25.00 per share to yield 5.75%
per annum, including 2 million shares issued on the exercise of an option
granted to the underwriting syndicate. The Series H Preference Shares commenced
trading on the TSX on October 15, 2003 under the symbol BPO.PR.H.

On December 23, 2003, the Corporation announced the completion of the purchase
of 1625 Eye Street, N.W. in Washington, D.C. from the Union Labor Life Insurance
Company for $157.5 million.

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On December 31, 2003, Brookfield announced the completion of a C$200 million
Class AAA, Series I preference share issue. Brookfield issued 8 million Class
AAA Preference Shares, Series I at a price of C$25.00 per share to yield 5.20%
per annum, including 2 million shares issued on the exercise of an option
granted to the underwriting syndicate. The Series I Preference Shares commenced
trading on the TSX on December 31, 2003 under the symbol BPO.PR.I.

During 2003, Brookfield acquired a further 0.9% of its New York and Boston
assets owned through Brookfield Financial Properties. This brought the
Corporation's interest in Brookfield Financial Properties to approximately
99.4%.

During 2003, Brookfield repurchased 5,006,700 of its own common shares at an
average price of $21.10 per share under its normal course issuer bid.

RECENT DEVELOPMENTS

In December 2003, Brookfield completed the 300 Madison Avenue development at
42nd Street in midtown Manhattan. Subsequent to year-end, PricewaterhouseCoopers
LLP entered into a sublease for 800,000 square feet of space from CIBC World
Markets, which will occupy the balance of the building. Expected to be named the
"PricewaterhouseCoopers Center," the building rises 35 stories in the heart of
Midtown Manhattan, one block west of Grand Central Terminal.

Subsequent to the end of 2003, Brookfield acquired an additional 160,100 of its
own common shares. This brought the total number of shares repurchased since the
inception of the company's normal course issuer bid in 1999 to 10.9 million at
an average of $18.41.

On March 15, 2004, Brookfield completed a transaction with Cadwalader,
Wickersham & Taft LLP to occupy 460,000 square feet at One World Financial
Center in New York. The leasing transaction is one of the largest in Lower
Manhattan since September 11, 2001.

On March 24, 2004, Brookfield completed of the purchase of Edison Place, 701 9TH
Street, N.W. in Washington, D.C. from Wachovia Development Corporation for
$167.1 million, including the assumption of $151.6 million of long-term
non-recourse mortgage debt.

On March 31, 2004, Brookfield refinanced Republic Plaza in Denver with a $170
million ten-year mortgage at a fixed interest rate of 5.1%, representing a
reduction of approximately 400 basis points from the prior fixed-rate mortgage.

On April 30, 2004, Brookfield completed a C$200 million Class AAA, Series J
preference share issue. Brookfield issued 8 million Class AAA Preference Shares,
Series I at a price of C$25.00 per share to yield 5.00% per annum, including 2
million shares issued on the exercise of an option granted to the underwriting
syndicate. The Series J Preference Shares commenced trading on the TSX on April
30, 2004 under the symbol BPO.PR.J.

OUTLOOK FOR THE REMAINDER OF 2004

Although Brookfield is still awaiting evidence of a sustained recovery, the
Corporation is seeing signs of the beginning of a rebound in the economy.
Brookfield's markets are improving slightly with absorption of sublease space
and modestly declining vacancy rates. When the economy does improve, most
believe that the office market will rebound in a slower fashion than the overall
economy, as past cycles have shown that office markets lag in economic recovery.
In keeping with this, Brookfield is planning its affairs with the expectation
that its markets will continue to bounce along the bottom in 2004 with a
sustained recovery kicking in during 2005.

Investor demand for well-leased, high-quality office properties remains strong,
not only from foreign investors and pension funds, but also from private
investors using high leverage and betting on a continuation of the current low
interest rate environment. This presents opportunities and challenges for
Brookfield. Brookfield's well-leased properties are more valuable, providing
significant opportunities for strong capital returns when it sells partial
interests. On the other hand, Brookfield is challenged by limited acquisition
opportunities and strong competition that pushes prices beyond valuations that
meet its investment return criteria.

Brookfield looks forward to 2004 with optimism as the economy slowly recovers
but is conscious of the fact that it will not be immune to soft market
conditions forever. As a result, Brookfield's top priority remains further
reducing its current vacancy levels.

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                             BUSINESS OF BROOKFIELD

Brookfield owns, develops and manages premier North American office properties.
In the commercial property business, Brookfield's portfolio spans 47 properties
and development sites, primarily office buildings, totaling 45 million square
feet of rentable area in which Brookfield has a net effective ownership interest
in 35 million square feet.

Brookfield operates ancillary real estate service businesses which focus on
enhancing the value and returns from the core commercial property business
through high-quality tenant service and amenities. Brookfield currently manages
in excess of 140 million square feet of space across North America, including
its own assets. This scale provides Brookfield with the platform to deliver
superior service offerings to tenants across the portfolio.

Brookfield also operates a development business including a number of low-cost
commercial development sites in Toronto and Manhattan. In addition, the company
owns a land development and housing operation.

Brookfield's goal is to earn a 20% total return on equity with moderate risk of
capital.

ASSET PROFILE

Assets totaled $8.1 billion at December 31, 2003. The book value of assets
increased during the year with the acquisition of 1625 Eye Street, N.W. in
Washington D.C., the completion of construction of the 300 Madison Avenue
development in Midtown Manhattan, and the impact of the higher Canadian dollar
on Canadian assets, which in total more than offset the sale of a 49% interest
in 245 Park Avenue in New York. The book value of the company's assets,
segmented by areas of operation, are as follows:

<TABLE>
<CAPTION>
                                                  Pro Forma
    Book Value (Millions)               2003        2002*        2002      2003    2002
    ---------------------             --------    ---------    ---------   ----    ----
<S>                                   <C>         <C>          <C>         <C>     <C>
OPERATING ASSETS
Commercial properties                 $  6,297    $   5,661    $   5,661    90%     86%
Development properties                     684          944          944    10%     14%
                                      --------    ---------    ---------   ---     ---
                                         6,981        6,605        6,605   100%    100%
OTHER ASSETS
Receivables and other                      717          769          769
Cash and marketable securities             399           76           76
Assets of Brookfield Homes                  --           --          879
                                      --------    ---------    ---------
                                      $  8,097    $   7,450    $   8,329
                                      --------    ---------    ---------
</TABLE>

*Excludes Brookfield Homes which was distributed to common shareholders on
January 6, 2003

COMMERCIAL PROPERTIES

The commercial property portfolio is focused in six North American cities, with
New York, Boston, Toronto and Calgary comprising 85% of the portfolio on a net
asset value basis, as follows:

<TABLE>
<CAPTION>
                                                             Brookfield         2003            2002
                                          Leasable Area    Owned Interest    BOOK VALUE      Book Value
       Region                            (000's Sq. Ft.)   (000's Sq. Ft.)   (MILLIONS)      (Millions)
       ------                            ---------------   ---------------   ----------      ----------
<S>                                      <C>               <C>               <C>             <C>
New York, New York                           11,262             9,549        $    3,531      $    3,295
Boston, Massachusetts                         2,163             1,103               333             332
Toronto, Ontario                              6,884             4,850               928             778
Calgary, Alberta                              7,454             3,391               450             380
Denver, Colorado                              3,017             2,811               372             354
Minneapolis, Minnesota                        3,008             3,008               400             393
Other                                         1,851             1,851               283             129
                                             ------            ------        ----------      ----------
Total*                                       35,639            26,563        $    6,297      $    5,661
                                             ======            ======        ==========      ==========
</TABLE>

* Excludes developments

The consolidated carrying value of Brookfield's interest in 35.6 million square
feet of rentable area is approximately $235 per square foot, significantly less
than the estimated replacement cost of these assets. Brookfield's core
properties average 1.4 million square feet in size.

In December 2003, the company completed the purchase of 1625 Eye Street, N.W. in
Washington, D.C for $157.5 million. Located two blocks from the White House,
construction of this 386,000 square-foot, 12-story office building with a
five-level underground parking garage was completed in April 2003.

At year-end, upon its completion, the 300 Madison Avenue development with a book
value of $558 million was reclassified from development property to
income-producing commercial property.

                                       7
<PAGE>

During 2003, Brookfield continued to dispose of partial interests in mature
properties and dispose of non-core assets, generating gross proceeds of $467
million and $221 million of net capital. The following table details the assets
sold during 2003 and proceeds from these sales:

<TABLE>
<CAPTION>
(Millions)                                              Percentage    Gross     Net Proceeds to
Assets                                    Sale Date        Sold      Proceeds     Brookfield*
------                                   ------------   ----------   --------   ---------------
<S>                                      <C>            <C>          <C>        <C>
245 Park Avenue                          October 2003       49%      $    438   $           195
Other non-core properties                     Various      100%            29                26
                                         ------------      ---       --------   ---------------
                                                                          467               221
                                                                     ========   ===============
</TABLE>

* Net of non-recourse commercial property debt

The disposition of partial interests reflects Brookfield's strategy to acquire
undervalued assets in its core markets, enhance the value through re-leasing and
financing initiatives, and sell partial interests in stable, long-term leased
properties to institutional investors seeking consistent yields. Capital
generated through the sale of these interests is targeted for reinvestment in
office properties, share repurchases or repayment of debt.

TENANT RELATIONSHIPS

An important characteristic of Brookfield's portfolio is the strong credit
quality of its tenants. Special attention is directed at credit quality in order
to ensure the long-term sustainability of rental revenues through economic
cycles. The tenant profile on average represents an "A" credit rating. Major
tenants with over 400,000 square feet of space in the portfolio include Merrill
Lynch, CIBC, RBC Financial Group, Petro-Canada, Imperial Oil and JPMorgan Chase.
The following list shows the largest tenants as of March 31, 2004 by leasable
area in Brookfield's portfolio and their respective lease commitments:

<TABLE>
<CAPTION>
                                            Primary                Year of    000's Sq.     % of           Credit
            Tenant                          Location              Expiry(1)    Ft.(2)     Sq. Ft.(2)      Rating(3)
---------------------------------    ------------------------     ---------   ---------   ----------   --------------
<S>                                  <C>                          <C>         <C>         <C>          <C>
RATED
Merrill Lynch                        New York/Toronto                 2013       4,363     12.4%                   A+
CIBC/CIBC World Markets              New York/Toronto/Calgary         2027       1,983      5.6%                   A+
RBC Financial Group                  Five major markets            Various         976      2.8%                  AA-
Petro-Canada                         Calgary                          2013         848      2.4%                  BBB
JP Morgan Chase                      New York                         2022         802      2.3%                   A+
Imperial Oil                         Calgary                          2011         565      1.6%                  AAA
Target Corporation (Dayton Hudson
Corporation)                         Minneapolis                      2013         559      1.6%                   A+
Talisman Energy                      Calgary                          2015         446      1.3%                 BBB+
Pepco Holdings Inc.                  Washington                       2028         364      1.0%                 BBB+
Goldman Sachs                        New York                         2012         362      1.0%                   A+
Teachers Insurance Annuity
Association                          Denver                           2008         323      0.9%                  AAA
Dow Jones & Company                  New York                         2012         323      0.9%                    A
Bell West/Bell Canada                Calgary/Toronto                  2009         313      0.9%                    A
TD Canada Trust                      Toronto/Calgary                  2008         278      0.8%                   A+
Anadarko Canada Corporation          Calgary                          2011         269      0.8%                 Baa1
Lehman Brothers                      New York                         2010         267      0.8%                    A
Canadian Natural Resources           Calgary                          2011         257      0.7%                 BBB+
Bank of Nova Scotia                  New York                         2014         230      0.7%                   A+
EnCana Corporation                   Calgary                          2013         229      0.7%                   A-
Sovereign Bank/Fleet National Bank   Boston                           2008         213      0.6%                  AA-
Zurich Insurance                     New York                         2017         208      0.6%                   A+
Other investment grade               Various                       Various       3,905     11.0%       BBB- or higher
                                                                  --------    --------     ----        --------------
                                                                                18,083     51.4%
UNRATED
Cadwalader, Wickersham & Taft LLP    New York                         2024         456      1.3%                   --
Cleary, Gottlieb, Steen & Hamilton   New York                         2011         402      1.2%                   --
Goodwin Procter                      Boston                           2015         359      1.0%                   --
Wellington Management                Boston                           2011         336      1.0%                   --
National Association of Securities
Dealers (NASD)                       New York, Denver                 2021         277      0.8%                   --
Major League Baseball                New York                         2012         109      0.3%                   --
                                                                  --------    --------     ----        --------------
                                                                                20,022     57.0%
                                                                  ========    ========     ====        ==============
</TABLE>

(1) Weighted average based on square feet

(2) Prior to considering partnership interests in partially-owned properties

(3) From Standard and Poor's, Moody's or DBRS

                                       8
<PAGE>

Brookfield's strategy is to sign long-term leases in order to mitigate risk and
reduce overall retenanting costs in the portfolio. The company typically
commences discussions with tenants regarding their space requirements well in
advance of the contractual expiration, and while each market is different, the
majority of the company's leases, when signed, extend between 10 to 20-year
terms. As a result, approximately 5% of Brookfield's leases mature annually. The
following is the breakdown of lease maturities by market with associated
in-place rental rates:

<TABLE>
<CAPTION>
                           Total Portfolio               New York/Boston             Toronto/Calgary       Denver/Minneapolis/Other
                     ----------------------------  --------------------------  --------------------------  -------------------------
                                          Net                         Net                         Net                         Net
                     000's Sq.          Rate per    000's           Rate per    000's           Rate per    000's           Rate per
  Year of Expiry        Ft.       %     Sq. Ft.-$  Sq. Ft.    %     Sq. Ft.-$  Sq. Ft.    %     Sq. Ft.-$   Sq.Ft.    %     Sq. Ft.$
-------------------  ---------  -----   ---------  -------  -----   ---------  -------  -----   ---------  -------  -----   --------
<S>                  <C>        <C>     <C>        <C>      <C>     <C>        <C>      <C>     <C>        <C>      <C>     <C>
Currently available    1,845      5.9%                292     2.2%                 388    2.7%               1,165   14.8%
2004                   1,080      3.4%  $      15     227     1.7%  $      30      501    3.5%  $      12      352    4.5%  $      9
2005                   2,295      7.2%         24     615     4.6%         41    1,298    9.1%         20      382    4.9%        14
2006                   1,496      4.7%         16     491     3.7%         25      539    3.8%         13      466    5.9%        11
2007                   1,192      3.8%         17     111     0.8%         35      656    4.6%         15      425    5.4%        15
2008                   1,903      6.0%         21     615     4.6%         32      644    4.5%         18      644    8.2%        14
2009                     766      2.4%         19      89     0.7%         37      448    3.1%         20      229    2.9%        12
2010                   1,904      6.0%         23     577     4.3%         42    1,115    7.8%         14      212    2.7%        20
2011 & beyond         23,158     60.6%         22  10,408    77.4%         34    8,749   60.9%         14    4,001   50.7%        11
                      ------    -----   ---------  ------   -----   ---------  -------  -----   ---------    -----  -----   --------
                      35,639    100.0%  $      22  13,425   100.0%  $      34   14,338  100.0%  $      16    7,876  100.0%  $     11
                      ======    =====   =========  ======   =====   =========  =======  =====   =========    =====  =====   ========
Weighted average market net rent        $      24                   $      32                   $      18                   $     16
                                        =========  ======   =====   =========  =======  =====   =========    =====  =====   ========
</TABLE>

TENANT INSTALLATION COSTS AND CAPITAL EXPENDITURES

Upon the signing of the majority of its leases, Brookfield provides tenant
improvements for leased space in order to accommodate the specific space
requirements of the tenant. In addition to this capital, leasing commissions are
paid to third-party brokers representing tenants in lease negotiations. Tenant
improvement costs are capitalized in the year incurred, amortized over the term
of the lease and recovered through rental payments. Expenditures for tenant
improvements in 2003 totaled $26 million, compared with the $49 million expended
in 2002 and $50 million in 2001 due to fewer lease expiries or leases being
renegotiated in advance of their contractual maturity.

On an annual basis, one to two million square feet of leases expire on average
with a cost to replace these tenancies approximating $15 to $20 per square foot,
with each region of operation varying in actual cost per square foot. The
average expenditure on tenant inducements across the portfolio over the last
three years was $15 per square foot. Tenant installation costs are summarized as
follows:

<TABLE>
<CAPTION>
                    (Millions)                               2003           2002           2001
                    ----------                            ----------     ----------     ----------
<S>                                                       <C>            <C>            <C>
COMMERCIAL PROPERTY TENANT IMPROVEMENTS
Leasing commissions                                       $        8     $        9     $       15
Tenant improvements - first generation space                      --              2             --
Tenant improvements - second generation space                     18             38             35
                                                          ----------     ----------     ----------
Total                                                     $       26     $       49     $       50
                                                          ==========     ==========     ==========
</TABLE>

Brookfield also invests in on-going maintenance and capital improvement projects
to sustain the high quality of the infrastructure and tenant service amenities
in its properties. Due to the relatively recent construction and major
renovation of Brookfield's core properties as well as high-quality construction
standards, recurring capital maintenance expenditures are lower than industry
norms. Capital maintenance expenditures totaled $16 million in 2003, consistent
with 2002. These expenditures exclude repairs and maintenance costs which are
recovered through contractual tenant cost recovery payments. It is expected that
annualized non-revenue enhancing capital expenditures will remain approximately
$6 to $10 million annually.

Revenue-enhancing capital expenditures, represent improvements to an asset,
reconfiguration of space to increase rentable area or increase current rental
rates, non-revenue enhancing expenditures, and those required to maintain the
service life of an asset, are summarized as follows:

<TABLE>
<CAPTION>
                    (Millions)                               2003           2002           2001
                    ----------                            ----------     ----------     ----------
<S>                                                       <C>            <C>            <C>
CAPITAL EXPENDITURES
Revenue enhancing                                         $        9     $       10     $        8
Non-revenue enhancing                                              7              6              6
                                                          ----------     ----------     ----------
Total                                                     $       16     $       16     $       14
                                                          ----------     ----------     ----------
</TABLE>

                                       9
<PAGE>

PRIMARY MARKETS

The following is a brief overview of the commercial property markets in which
Brookfield operates:

MANHATTAN, NEW YORK

The New York market contains the largest area of office space in North America.
The greater New York area has approximately 390 million square feet of office
space with Manhattan containing approximately two-thirds of this space.
Manhattan in turn is broken into three sub-markets: Midtown with 230 million
square feet; Midtown south with 65 million square feet; and Lower Manhattan with
92 million square feet. Brookfield's 245 Park Avenue and 300 Madison Avenue
properties are located in Midtown, the Corporation's Penn Station development
property is centrally located within the designated West Side redevelopment area
in Midtown, and the World Financial Center properties and One Liberty Plaza are
located in Lower Manhattan.

The Midtown overall vacancy rate (including sublease space) at December 31, 2003
was 11.9%, up 0.8% from December 31, 2002. Continuing the trend witnessed
throughout 2002, absorption of available lease space was negative 4 million sq.
ft. for 2003. The Midtown market has a low vacancy level relative to most
national markets; however, the presence of substantial blocks of "shadow" space
remains a troubling sign and brings uncertainty to the market. Sublease
availabilities, which dropped by 1 million sq. ft. during the year, still
account for 30% of the available space in the market. Midtown overall leasing
activity for 2003 was 12.7 million sq. ft. which is slightly higher than last
year's 12 million sq. ft. but still well below the historical annual average of
18 million sq. ft. Notwithstanding the softening Midtown leasing market
fundamentals, building sales remained strong throughout 2003 with a volume of
transactions totaling over $8 billion during the year.

The Lower Manhattan commercial office market, the third largest business
district in the United States, consists of 92 million square feet of Class A, B
and C space after taking into account the events of September 11, 2001 which
eliminated approximately 13 million square feet of space in Lower Manhattan. The
Lower Manhattan overall vacancy rate at December 31, 2003 was 13.5%, up from
December 31, 2002 of 13.2%. Brookfield's Lower Manhattan portfolio is currently
97% leased to high-quality tenants with lease terms that average 11 years, and
virtually no leases roll over until 2005.

In Lower Manhattan, overall absorption was negative 1.5 million square feet in
2003 compared to negative 4 million square feet in 2002. Leasing activity in
Lower Manhattan for 2003 of 3.9 million sq. ft. fell short of the historical
annual average of 6 million sq. ft. While 2003 was a difficult year for the
Lower Manhattan market, the outlook is encouraging. Overall vacancy has remained
relatively flat for the 2003 and first quarter of 2004. Leasing activity in this
market has picked up slightly, due in part to government incentives being
offered to companies that renew within or relocate to Lower Manhattan, as well
as in part to ongoing Lower Manhattan redevelopment efforts. Construction has
been completed on the temporary bridge on Vesey Street over West Street and the
temporary PATH station opened which makes Lower Manhattan more accessible to
commuters from New Jersey. World-renowned architect Santiago Calatrava announced
his design plans for the permanent PATH station and Lower Manhattan Commuter
Rail Station. With the support of the Mayor and Governor, the long-term
fundamentals of the Lower Manhattan area should improve.

BOSTON, MASSACHUSETTS

The Boston downtown office market consists of 49 million square feet in nine
sub-markets. The central business district ("CBD") sub-market, where
Brookfield's 53 and 75 State Street properties are located, is the largest with
33 million square feet. The overall vacancy rate in Boston's financial district
was 13.5% at year end 2003 compared with 10.1% at year end 2002. Sublease space
in the Boston CBD represents 21% of overall vacancy. The trend of sublease space
being added to the market is expected to continue throughout 2004. The Class A
segment of the market ended the year with a 14.0% vacancy compared to 9.4% the
year before. Class A rental rates have decreased due to pressure from the
sublease market and corporate downsizing. As a result, there is a continuation
of landlord concessions including free rent, assumptions of existing leases and
increased tenant allowances.

Despite the increase in vacancy rates, the long-term fundamentals of the Boston
market remain positive. The Boston CBD market continues to be supply constrained
due to the small number of developable sites, lack of capital and the difficult
permitting process. The Boston CBD is not expected to deliver any new
construction after 33 Arch Street until a 2008-

                                       10
<PAGE>

2010 timeframe. Construction of 33 Arch Street is expected to be completed this
year. This 600,000 sq. ft. office tower has leased approximately 50% of the
space to date.

WASHINGTON, D.C.

Washington D.C. has emerged as one of the most coveted real estate investment
markets in the world. The region's economy has evolved and diversified from a
traditional government base into a robust, multi-dimensional commercial center.
Economic drivers for the area include a significant government presence, law
firms, industry and trade group associations, technology, and bio-tech firms.
Despite a recession nationally, this diverse economic base has enabled the
Washington area to remain relatively healthy. This economic health has resulted
in a stable tenant base, especially in the downtown office market.

The overall vacancy rate in Washington, D.C. remains stable at 7.2% as of
December 31, 2003 and the Washington CBD submarket held at 8.4%. In comparing
the District's vacancy rate with other major metropolitan areas around the
country, the District has one of the lowest overall vacancy rates.

An even balance of supply and demand has resulted in positive net absorption for
fourth quarter 2003 of 220,000 square feet, pushing the year-to-date 2003 net
absorption to 1,798,000 square feet. New space comprises 12% of D.C.'s 6.6
million square feet of available space. The available inventory consists of 79%
direct space and 21% sublet space.

With few exceptions, many of the largest transactions in 2003 were government
and law firm leases. Two of the largest leases signed were the law firms of
Wilmer, Cutler & Pickering (525,000 square feet) and Dickstein, Shapiro, Morin &
Oshinsky (417,029 square feet).

TORONTO, ONTARIO

Brookfield's principal Toronto office properties are located in the financial
core and are connected to other major downtown office buildings, the Toronto
subway system and other amenities. Toronto is Canada's largest office market and
the financial core has a total office space inventory of over 33 million square
feet. The overall office vacancy at year end 2003 was 9.6% for all classes, a
decrease of 1.5% over 2002. However, the Class AAA sector, in which most of
Brookfield's assets compete, had a vacancy rate of 6.4% at December 31, 2003
versus a vacancy rate of 5.8% at December 31, 2002. Supply of new projects has
remained low and space available has declined from mid-2003 which should
contribute to stabilizing the vacancy rate. In the near term, rental rates will
remain under pressure until demand increases; however, any significant
consolidation in the financial services sector may negatively impact this
outlook.

CALGARY, ALBERTA

The downtown Calgary market is largely still driven by the oil and natural gas
industries; however, the economy is diversifying, with Calgary boasting the
second highest number of head offices in Canada, outranked only by Toronto.
Brookfield's office properties, located centrally in downtown Calgary, account
for over 6.5 million square feet of a total downtown office market inventory of
over 31 million square feet.

Vacancy in the in Class "AA" and "A" markets as of the end of the fourth quarter
2003 was 1.9 million square feet or 9.9%. Availability of contiguous floors
remains low in Class "AA" premises. Total vacancy in the downtown core across
all classes stands at 11.65%, down 2.4% from the beginning of the year.

Strong commodity prices throughout 2003 resulted in a record number of wells
drilled in the Western Canadian Basin during the year. This activity is a 37%
increase over 2002 and well above historic averages. This record activity within
the oil patch has resulted in increased leasing activity and absorption. Over
the year, the number of sublet options for tenants requiring less than 5,000
square feet fell by 46%, a strong indication of widespread growth in the oil and
gas sector.

                                       11
<PAGE>

DENVER, COLORADO

The CBD office market in Denver has an inventory of approximately 23 million
square feet. The telecommunications and high-tech industries continue to
negatively impact job growth and office demand, and it is apparent that this
fallout has also affected industries that service these sectors. As a result,
the overall metro area vacancy rate in Denver is at the highest it has been in a
decade. The overall vacancy rate in the Denver CBD increased to 20.9% at year
end 2003, compared with 20.1% at year end 2002.

As a result of increased vacancy, average rental rates have continued to fall in
all classes since the end of 2002. This has resulted in large concession
packages to be considered the norm including tenant allowances in downtown
submarkets and tenant improvement on a turn-key basis. However, in order to
simulate economic growth, the Denver City Council is considering "fast-tracking"
several projects to spur economic growth, including the expansion of the Denver
Art Museum, currently scheduled for completion in 2006, extension of the light
rail to additional cities and redevelopment of the Gates Rubber Factory at
Broadway and I-25 into a mixed use project.

MINNEAPOLIS, MINNESOTA

Minneapolis is a diverse market distinguished by its large population of company
head offices, including 3M and Target. Brookfield's properties, totaling over
three million square feet, are well-positioned at the center of the financial
and retail district in downtown Minneapolis and are all connected to the city's
above-ground, enclosed walkway system and its pedestrian malls.

The Minneapolis CBD office market has a total inventory of 25 million square
feet and has direct office space availability of 17.9%, up from 16.7%, at
December 31, 2002. The increase in vacancy rates is a result of increased
sublease space on the market, consolidations, downsizing and lack of demand
which brings overall vacancy up to 20.0%. Unemployment in the Twin Cities has
held fairly steady at 4.6%, significantly less than the national rate, and
slightly over the 4.3% level from one year ago. Over 14,300 skilled jobs have
been lost in 2003. Consolidations, downsizing, the soft economy, unemployment
and lack of demand continue to burden the Twin Cities. As such, existing tenants
are continuing to aggressively seek early renewals with rent rollbacks, lower
net rents and greater expansion, contraction and termination options.

DEVELOPMENT PROPERTIES

Development properties consist of both commercial property development sites,
density rights and related infrastructure, as well as residential land and
infrastructure in the company's land development business and to be sold to
builders for residential resale. The total book value of this development land
and infrastructure was $684 million at December 31, 2003, a reduction of $260
million from $944 million in 2002. The majority of the decrease is due to the
reclassification of the company's 300 Madison Avenue project as a commercial
property in the fourth quarter of 2003 upon its substantial completion. The
aggregate book value of Brookfield's residential land under development is $335
million. The details of the development property portfolio are as follows:

<TABLE>
<CAPTION>
                                                         Buildable
                  (Millions)                              Sq. Ft.      2003        2002      Change
                  ----------                             ---------   --------   ---------  ---------
<S>                                                      <C>         <C>        <C>        <C>
COMMERCIAL DEVELOPMENTS AND INFRASTRUCTURE
Three World Financial Center                             1,200,000   $    212   $     170  $      42
Bay-Adelaide Centre                                      1,800,000         90          72         18
Hudson's Bay Centre                                      1,092,000         26          20          6
300 Madison Avenue                                              --         --         437       (437)
Other
    Penn Station                                         2,500,000
    BCE Place, III                                         800,000
    Republic Plaza                                         400,000
                                                         3,700,000         21          21         --
                                                         ---------   --------   ---------  ---------
                                                         7,792,000*       349         720       (371)
RESIDENTIAL DEVELOPMENT LAND AND INFRASTRUCTURE
Under development                                                         210         112         98
Held for development                                                      125         112         13
                                                                     --------   ---------  ---------
Total                                                                $    684   $     944  $    (260)
                                                                     ========   =========  =========
</TABLE>

* Excludes rights which Brookfield holds on Site 26 at the World Financial
Center in New York

Although Brookfield is not a speculative developer, the company is a
full-service real estate company with in-house development expertise. With
approximately 8 million square feet of high-quality, centrally-located
development properties

                                       12
<PAGE>

in New York and Toronto, the company generally undertakes developments only when
the risk-adjusted returns are adequate and significant pre-leasing for at least
50% to 60% of the space has been achieved.

In September 2002, Brookfield acquired 1.2 million square feet of space in the
2.1 million square foot Three World Financial Center tower which is home to the
world headquarters of co-owner American Express. Brookfield has exclusive rights
to lease 1.2 million square feet of space and is not entitled to rents
attributable to the space occupied by American Express. Three World Financial
Center was acquired with all repairs completed to damage sustained as a result
of the collapse of the World Trade Center. However, substantial construction
remains to be completed prior to occupancy and will not proceed until a lead
tenant is secured. As such, this property has been classified as a property
under development, and all direct costs of the tower, including interest costs
and property taxes, will be capitalized to the asset.

In addition to Three World Financial Center in New York and the Bay-Adelaide
Centre in Toronto, Brookfield has additional commercial development sites which
provide internal growth opportunities.

The status of each development project is as follows:

<TABLE>
<CAPTION>
                                          Location              Ownership    Sq. Ft.                    Status
                              --------------------------------  ---------   ---------     ----------------------------------
<S>                           <C>                               <C>         <C>           <C>
NEW YORK
Three World Financial Center  200 Vesey Street at West Street      100%     1,200,000     - Under redevelopment
Penn Station                  West 31st Street at Ninth Avenue     100%     2,500,000     - Being zoned for potentially 2.5
                                                                                            million square feet of office
TORONTO

Bay-Adelaide Centre           Bay and Adelaide Streets              50%     1,000,000     - Office tower planning
                                                                              800,000     - Sale or joint venture for
                                                                                            residential project
BCE Place III                 Third tower of current                65%       800,000     - Planning
                                BCE Place project

Hudson's Bay Centre           Yonge and Bloor Streets               25%     1,092,000     - Office and retail projects under
                                                                                            redevelopment
DENVER

Republic Plaza                Downtown Denver                      100%       400,000     - Planning
                                                                            ---------
                                                                            7,792,000*
                                                                            ---------
</TABLE>

* Excludes rights which Brookfield holds on Site 26 at the World Financial
Center in New York

Brookfield's land development operations are focused in four markets: Calgary,
Alberta; Toronto, Ontario; Edmonton, Alberta; and Denver, Colorado. The book
value of these investments at December 31, 2003 was $335 million, compared with
$224 million at the end of 2002.

SERVICE BUSINESSES

BROOKFIELD LEPAGE FACILITIES MANAGEMENT

Brookfield owns 40% of the largest facilities management operation in Canada in
partnership with Johnson Controls, the largest facilities management operator in
the world. This joint venture manages close to 100 million square feet of
premises for major corporations and governments, and continues to benefit from
the outsourcing of facilities worldwide. During 2003, new contracts included the
management of 20 million square feet of premises for British Columbia Buildings
Corporation.

BROOKFIELD RESIDENTIAL MANAGEMENT SERVICES

Brookfield owns 100% of one of the premier condominium and apartment management
operations in Toronto, Canada, and provides upscale management services to its
approximately 35,000 residential units.

EMPLOYEES

As of December 31, 2003, Brookfield's ongoing businesses had approximately 1400
employees.

                                       13
<PAGE>

COMPANY AND REAL ESTATE INDUSTRY RISKS

Brookfield's strategy is to invest in high-quality commercial properties defined
by the physical characteristics of the asset, but more importantly, the
certainty of receiving rental payments generated by the tenants of those assets.
However, Brookfield remains exposed to certain risks inherent in the commercial
property business.

In evaluating Brookfield and its business, the following challenges and risk
factors should be considered in addition to the other information contained in
this annual report.

BROOKFIELD'S ECONOMIC PERFORMANCE AND THE VALUE OF ITS REAL ESTATE ASSETS ARE
SUBJECT TO THE RISKS INCIDENTAL TO THE OWNERSHIP AND OPERATION OF REAL ESTATE
PROPERTIES.

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

BROOKFIELD IS DEPENDENT UPON THE ECONOMIC CLIMATES OF ITS PRIMARY MARKETS -NEW
YORK, BOSTON, WASHINGTON, D.C., TORONTO, CALGARY, AND ITS SECONDARY
MARKETS--DENVER AND MINNEAPOLIS.

Substantially all of Brookfield's revenues are derived from properties located
in its primary markets -New York, Boston, Washington, D.C., Toronto, Calgary,
and its secondary markets--Denver and Minneapolis. A prolonged downturn in the
economies of these markets, or the impact that a downturn in the overall
national economies of the United States or Canada may have upon these markets,
could result in further reduced demand for office space. Because Brookfield's
portfolio consists primarily of office buildings (as compared to a more
diversified real estate portfolio), a decrease in demand for office space in
turn could adversely affect Brookfield's results from operations. Additionally,
there are submarkets within Brookfield's primary and secondary markets that are
dependent upon a limited number of industries and a significant downturn in one
or more of these industries could also adversely affect Brookfield's results
from operations.

BECAUSE REAL ESTATE INVESTMENTS ARE ILLIQUID, BROOKFIELD MAY NOT BE ABLE TO SELL
PROPERTIES WHEN APPROPRIATE.

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

BROOKFIELD FACES RISKS ASSOCIATED WITH THE USE OF DEBT TO FINANCE ITS BUSINESS,
INCLUDING REFINANCING RISK.

Brookfield incurs debt in the ordinary course of its business and therefore is
subject to the risks normally associated with debt financing. These risks,
including the following, may adversely affect Brookfield's financial condition
and results of operations: Brookfield's cash flow may be insufficient to meet
required payments of principal and interest; payments of principal and interest
on borrowings may leave Brookfield with insufficient cash resources to pay
operating expenses; Brookfield may not be able to refinance indebtedness on
Brookfield's properties at maturity due to company and market factors including:
the estimated cash flow of its properties; the value of Brookfield's properties;
liquidity in the debt markets; financial, competitive, business and other
factors, including factors beyond its control; and if refinanced, the terms of a
refinancing may not be as favorable as the original terms of the related
indebtedness.

                                       14
<PAGE>

If Brookfield is unable to refinance its indebtedness on acceptable terms, or at
all, it may need to dispose of one or more of its properties upon
disadvantageous terms; prevailing interest rates or other factors at the time of
refinancing could increase Brookfield's interest expense; and if Brookfield
mortgages property to secure payment of indebtedness and is unable to make
mortgage payments, the mortgagee could foreclose upon such property or appoint a
receiver to receive an assignment of Brookfield's rents and leases. This may
adversely affect Brookfield's ability to make distributions or payments to its
investors.

IF BROOKFIELD IS UNABLE TO MANAGE ITS INTEREST RATE RISK EFFECTIVELY, ITS CASH
FLOWS AND OPERATING RESULTS MAY SUFFER.

Advances under unsecured credit facilities and certain property-level mortgage
debt will bear interest at a variable rate. Approximately 20% of Brookfield's
total outstanding indebtedness of $4.6 billion at December 31, 2003 was variable
rate indebtedness. Brookfield may incur indebtedness in the future that also
bears interest at a variable rate or may be required to refinance its debt at
higher rates. Accordingly, increases in interest rates above that which
Brookfield anticipated based upon historical trends could adversely affect its
cash flow.

BROOKFIELD HAS NO CORPORATE LIMITATION ON THE AMOUNT OF DEBT IT CAN INCUR.

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

BROOKFIELD'S INABILITY TO ENTER INTO RENEWAL OR NEW LEASES ON FAVORABLE TERMS
FOR ALL OR A SUBSTANTIAL PORTION OF SPACE THAT IS SUBJECT TO EXPIRING LEASES
WOULD ADVERSELY AFFECT ITS CASH FLOWS AND OPERATING RESULTS.

Brookfield's income-producing properties generate revenue through rental
payments made by tenants of the properties. Upon the expiry of any lease, there
can be no assurance that the lease will be renewed or the tenant replaced. The
terms of any subsequent lease may be less favorable to Brookfield than the
existing lease. Brookfield could be adversely affected, in particular, if any
major tenant ceases to be a tenant and cannot be replaced on similar or better
terms. Scheduled lease expirations in Brookfield's portfolio over the next five
years average approximately 5% annually.

Brookfield is dependent on leasing market conditions to ensure that vacant
commercial space is leased, expiring leases are renewed and new tenants are
found to fill vacancies. While it is not expected that markets will
significantly change in the near future, a disruption in the economy could have
a significant impact on how much space tenants will lease and the rental rates
paid by tenants.

BROOKFIELD FACES POTENTIAL ADVERSE EFFECTS FROM TENANT DEFAULTS, BANKRUPTCIES OR
INSOLVENCIES.

A tenant may experience a downturn in its business, which could cause the loss
of that tenant or weaken its financial condition and result in the tenant's
inability to make rental payments when due or, for retail tenants, a reduction
in percentage rent payable. If a tenant defaults, Brookfield may experience
delays and incur costs in enforcing its rights as landlord and protecting its
investments. In addition, a tenant may seek the protection of bankruptcy,
insolvency or similar laws.

Brookfield cannot evict a tenant solely because of its bankruptcy. A court,
however, may authorize a tenant to reject and terminate its lease with
Brookfield. In such a case, Brookfield's claim against the tenant for unpaid,
future rent would be subject to a statutory cap that might be substantially less
than the remaining rent owed under the lease. In any event, it is unlikely that
a bankrupt tenant will pay in full amounts it owes Brookfield under a lease. The
loss of rental payments from tenants and costs of re-leasing could adversely
affect Brookfield's cash flows and operating results. Although Brookfield has
not experienced material losses from tenant bankruptcies, Brookfield cannot
assure its shareholders that tenants will not file for bankruptcy or similar
protection in the future resulting in material losses.

                                       15
<PAGE>

RELIANCE ON MAJOR TENANTS COULD ADVERSELY AFFECT BROOKFIELD'S RESULTS OF
OPERATIONS.

As of December 31, 2003, the five largest tenants, based on percentage of square
feet leased, accounted for approximately 25% of Brookfield's total leaseable
space and no one tenant (other than Merrill Lynch, which is rated Aa3 by Moody's
and A+ by Standard & Poor's and accounted for approximately 12.2% of
Brookfield's leaseable space) accounted for more than 6.0% of that total.
Brookfield's business would be adversely affected if any of these tenants became
insolvent, declared bankruptcy or otherwise refused to pay rent in a timely
fashion or at all.

BROOKFIELD'S COMPETITORS MAY ADVERSELY AFFECT ITS ABILITY TO LEASE ITS
PROPERTIES, WHICH MAY CAUSE ITS CASH FLOWS AND OPERATING RESULTS TO SUFFER.

Each segment of the real estate business is competitive. Numerous other
developers, managers and owners of office properties compete with Brookfield in
seeking tenants, management revenues and prospective purchasers. Although it is
Brookfield's strategy to own premier office properties in each market in which
it operates, some of the office properties of Brookfield's competitors may be
newer, better located or better capitalized. These competing properties may have
vacancy rates higher than Brookfield's properties, which may result in their
owners being willing to make space available at lower prices than the space in
Brookfield's properties, particularly if there is an oversupply of space
available in the market. Competition for tenants could have an adverse effect on
Brookfield's ability to lease its properties and on the rents that it may charge
or concessions that it must grant. If Brookfield's competitors adversely impact
its ability to lease its properties, Brookfield's cash flows and operating
results may suffer.

BROOKFIELD'S INSURANCE MAY NOT COVER SOME POTENTIAL LOSSES OR MAY NOT BE
OBTAINABLE AT COMMERCIALLY REASONABLE RATES, WHICH COULD ADVERSELY AFFECT
BROOKFIELD'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Brookfield carries comprehensive general liability, fire, flood, extended
coverage and rental loss insurance with policy specifications, limits and
deductibles customarily carried for similar properties. Brookfield also self
insures a portion of certain of these risks. Brookfield believes all of its
properties are adequately insured. The property insurance that Brookfield
maintains is on an "all risk" basis, which until October 2001 included losses
caused by acts of terrorism. Following the terrorist activity of September 11,
2001 and the resulting uncertainty in the insurance market, insurance companies
generally excluded insurance against acts of terrorism from their "all risk"
policies. As a result, Brookfield's "all risk" insurance coverage currently
contains specific exclusions for losses attributable to acts of terrorism but
includes coverage for "certified acts of terrorism" as defined by the U.S.
federal Terrorism Risk Insurance Act ("TRIA") which was enacted in November
2002. To provide coverage for acts of terrorism other than those "certified"
under TRIA, Brookfield has purchased stand-alone terrorism insurance on a
portfolio-wide basis with annual aggregate limits of $500 million. Brookfield
considers this amount to be commercially reasonable, considering the
availability and cost of such coverage. Brookfield will continue to monitor the
state of the insurance market, to seek additional coverage equal to the full
replacement cost of its assets; however, until this type of coverage becomes
commercially available on an economically reasonable basis, any damage or
business interruption costs as a result of uninsured acts of terrorism could
result in a material cost to the company.

There are, however, certain types of risks (generally of a catastrophic nature
such as war or environmental contamination such as toxic mold) which are either
uninsurable or not economically insurable. Should an uninsured or underinsured
loss occur, Brookfield could lose its investment in, and anticipated profits and
cashflows from, one or more of its properties, and would continue to be
obligated to repay any recourse mortgage indebtedness on such properties.

IMPACT OF TERRORISM MAY CONTINUE TO HAVE A NEGATIVE IMPACT ON BROOKFIELD'S
RESULTS OF OPERATIONS.

The September 2001 terrorist attacks and the ongoing threat of terrorism have
had an adverse affect on the U.S. economy and, in particular, the economies of
the U.S. cities that comprise Brookfield's primary and secondary markets.
Brookfield's portfolio is concentrated in large metropolitan areas, some of
which have been or may be perceived to be subject to terrorist attacks.
Furthermore, many of Brookfield's properties consist of high-rise buildings,
which may also be subject to this actual or perceived threat, which could be
heightened in the event that the United States continues to engage in armed
conflict. This could have an adverse affect on Brookfield's ability to lease
office space in its portfolio. Furthermore, the implementation of increased
security measures at Brookfield's properties increases property costs, which
Brookfield may not be able to fully pass on to tenants. Each of these factors
could have an adverse impact on Brookfield's operating results and cash flow.

                                       16
<PAGE>

BROOKFIELD DOES NOT HAVE SOLE CONTROL OVER THE PROPERTIES THAT IT HOLDS WITH
CO-VENTURERS, PARTNERS OR CO-TENANTS OR OVER THE REVENUES AND CERTAIN DECISIONS
ASSOCIATED WITH THOSE PROPERTIES, WHICH MAY LIMIT BROOKFIELD'S FLEXIBILITY WITH
RESPECT TO THESE INVESTMENTS.

Brookfield participates in 15 joint ventures, partnerships and co-tenancies. The
properties that Brookfield owns through joint ventures, partnerships and
co-tenancies total approximately 10 million square feet, with its ownership
interest totaling approximately 35 million square feet. Investments in
partnerships, joint ventures, co-tenancies or other entities may involve risks
not present were a third party not involved, including the possibility that
Brookfield's partners, co-tenants or co-venturers might become bankrupt or
otherwise fail to fund their share of required capital contributions.
Additionally, Brookfield's partners, co-venturers or co-tenants might at any
time have economic or other business interests or goals which are inconsistent
with Brookfield's business interests or goals. In addition, Brookfield does not
have sole control of certain major decisions relating to these properties,
including decisions relating to: the sale of the properties; refinancing; timing
and amount of distributions of cash from such properties to Brookfield; and
capital improvements.

In some instances, although Brookfield is the property manager for a joint
venture, the other joint venturer retains approval rights over specific leases
or Brookfield's leasing plan. In addition, the sale or transfer of interests in
some of Brookfield's joint ventures and partnerships is subject to rights of
first refusal or first offer and some joint venture and partnership agreements
provide for buy-sell or similar arrangements. Such rights may be triggered at a
time when Brookfield may not want to sell but may be forced to do so because
Brookfield may not have the financial resources at that time to purchase the
other party's interest. Such rights may also inhibit Brookfield's ability to
sell its interest in a property or a joint venture or partnership within its
desired time frame or on any other desired basis.

BROOKFIELD FACES RISKS ASSOCIATED WITH PROPERTY ACQUISITIONS.

Assuming Brookfield is able to obtain capital on commercially reasonable terms,
and that market conditions warrant it, Brookfield may acquire new office
properties. Competition from other well-capitalized real estate investors,
including both publicly traded real estate investment trusts and institutional
investment funds, may significantly increase the purchase price or prevent
Brookfield from acquiring a desired property. Brookfield may be unable to
finance acquisitions on favorable terms, or newly acquired properties may fail
to perform as expected. Brookfield may underestimate the costs necessary to
bring an acquired property up to standards established for its intended market
position or may be unable to quickly and efficiently integrate new acquisitions
into Brookfield's existing operations. Brookfield may also acquire properties
subject to liabilities and without any recourse, or with only limited recourse,
with respect to unknown liabilities. Each of these factors could have an adverse
affect on Brookfield's results of operations and financial condition.

BROOKFIELD IS SUBJECT TO POSSIBLE ENVIRONMENTAL LIABILITIES AND OTHER POSSIBLE
LIABILITIES.

As an owner and manager of real property, Brookfield is subject to various
United States and Canadian federal, provincial, state and municipal laws
relating to environmental matters. These laws could hold Brookfield liable for
the costs of removal and remediation of certain hazardous substances or wastes
released or deposited on or in its properties or disposed of at other locations.
The failure to remove or remediate such substances, if any, could adversely
affect Brookfield's ability to sell its real estate or to borrow using real
estate as collateral, and could potentially also result in claims or other
proceedings against Brookfield. Brookfield is not aware of any material
non-compliance with environmental laws at any of its properties. Brookfield is
also not aware of any pending or threatened investigations or actions by
environmental regulatory authorities in connection with any of its properties or
any material pending or threatened claims relating to environmental conditions
at its properties. Brookfield has formal policies and procedures to review and
monitor environmental exposure. Brookfield has made and will continue to make
the necessary capital expenditures for compliance with environmental laws and
regulations. Environmental laws and regulations can change rapidly and
Brookfield may become subject to more stringent environmental laws and
regulations in the future. Compliance with more stringent environmental laws and
regulations could have an adverse effect on its business, financial condition or
results of operation.

The Americans with Disabilities Act and Canadian regulations under building
codes and provincial human rights codes generally require that public buildings,
including office buildings, be made accessible to disabled persons.
Noncompliance could result in imposition of fines by the federal government or
the award of damages to private litigants. If, pursuant to the Americans with
Disabilities Act or the applicable Canadian codes, Brookfield is required to
make substantial alterations and capital expenditures in one or more of its
properties, including the removal of access barriers, it could adversely affect
its financial condition and results of operations

                                       17
<PAGE>

Brookfield may also incur significant costs complying with other regulations.
Brookfield's properties are subject to various federal, state and local
regulatory requirements, such as state and local fire and life safety
requirements. If Brookfield fails to comply with these requirements, Brookfield
could incur fines or private damage awards. Brookfield believes that its
properties are currently in material compliance with all of these regulatory
requirements. However, Brookfield does not know whether existing requirements
will change or whether compliance with future requirements will require
significant unanticipated expenditures that will affect its cash flow and
results from operations.

THE EXPIRATION OF LONG-TERM GROUND LEASES COULD ADVERSELY AFFECT BROOKFIELD'S
RESULTS OF OPERATIONS.

Five of Brookfield's major properties are subject to long-term ground leases and
similar arrangements in which the underlying land is owned by a third party and
leased to Brookfield and any co-venturers or partners. Under the terms of a
typical ground lease, Brookfield and any co-venturers or partners pay rent for
the use of the land and are generally responsible for all costs and expenses
associated with the building and improvements. Unless the lease term is
extended, the land together with all improvements will revert to the owner of
the land upon the expiration of the lease term. Four properties in New York are
subject to land leases held by the Battery Park City Authority in New York.
These four ground leases expire in 2069. If possible, Brookfield will attempt to
purchase these leases as they become available, but cannot be assured of this.
The fifth ground lease is on the land under 53 State Street in Boston. This
ground lease expires in 2039. The company has a purchase option to acquire this
ground lease exercisable in 2029. An event of default by Brookfield under the
terms of a ground lease could also result in a loss of the property subject to
such ground lease should the default not be rectified in a reasonable period of
time.

THE IMPACT OF FOREIGN EXCHANGE FLUCTUATIONS MAY HAVE A NEGATIVE IMPACT ON
BROOKFIELD'S FUTURE REVENUES AND NET INCOME.

The Company's financial results will be affected by fluctuations in the U.S.
dollar and the foreign currency markets as a majority of Brookfield's revenue
and net income is expected to be denominated in U.S. currency. Consequently, due
to the substantial volatility of currency exchange rates, the Company cannot
predict the effect of exchange rate fluctuations upon its future revenue and net
income. As of the date of this Annual Information Form, the Company has entered
into certain transactions to hedge against gains or losses from foreign exchange
fluctuations. As a result, Brookfield is generally not materially impacted by
the movement in the Canadian to U.S. dollar exchange rate.

                       MANAGEMENT'S DISCUSSION & ANALYSIS

Reference is made to the section entitled "Management's Discussion & Analysis"
set out at pages 17 to 36 of Brookfield's 2003 Annual Report, which is
specifically incorporated by reference in this Annual Information Form.

                         SELECTED FINANCIAL INFORMATION

Brookfield's selected financial information is included in "Appendix C" to this
Circular.

                          DIVIDENDS AND DIVIDEND POLICY

The declaration and payment of dividends on Brookfield's common shares are at
the discretion of the Board of Directors, which supports a stable and consistent
dividend policy. In early 2001, Brookfield changed its policy to declare
dividends in U.S. dollars and to remit payment to shareholders in accordance
with the country of the registered address of shareholders. Shareholders with
registered addresses in Canada will receive payment in Canadian dollars (based
on the exchange rate on the record date) unless they elect otherwise. On July
25, 2001, the Board of Directors announced a 50% increase in the Corporation's
common share dividend and introduced quarterly payments rather than the previous
semi-annual dividend. It is the intention of the Corporation to continue to
review the pay-out of dividends quarterly on March 31, June 30, September 30 and
December 31 of each year and to increase the amount in accordance with increases
in reported cashflow.

On April 28, 2004, Brookfield's Board of Directors declared a quarterly dividend
payment of $0.15 per share on the issued and outstanding common shares of the
Corporation, to be paid on June 30, 2004 to shareholders of record at the close
of business on June 1, 2004.

                                       18
<PAGE>

Brookfield continues to pay dividends on its common shares quarterly. A complete
record of dividends paid on the common shares for the past three years is as
follows:

<TABLE>
<CAPTION>
                                                              2003             2002             2001
                                                          ------------     ------------     ------------
<S>                                                       <C>              <C>              <C>
Per common share                                          $       0.50     $       0.40     $       0.33

Total                                                     $ 79,060,263     $ 64,002,946     $ 53,030,000
                                                          ------------     ------------     ------------
</TABLE>

Brookfield continues to pay dividends on its Class A preferred shares
semi-annually and dividends on the Class AA and Class AAA preferred shares
quarterly. A complete record of dividends paid on all classes of preference
shares for the past three years is as follows:

<TABLE>
<CAPTION>
(US$, except share information)
     Authorized                   Outstanding                                           2003         2002          2001
-------------------        -------------------------                                ------------  -----------  ------------
<S>                        <C>                         <C>                         <C>           <C>          <C>
6,312,000                         6,312,000            Class A redeemable voting   $    845,343  $   753,727  $    763,514
2,000,000                         2,000,000            Class AA Series E              1,171,671      926,459     1,420,464
3,000,000                                --            Class AAA Series A                    --    3,884,151     4,354,839
3,000,000                                --            Class AAA Series B                    --    3,884,151     4,354,839
6,000,000                                --            Class AAA Series C and D       3,530,333    7,397,260     7,741,935
8,000,000                         8,000,000            Class AAA Series F             8,571,429    2,031,082
6,000,000                         4,400,000            Class AAA Series G             3,184,170           --            --
8,000,000                         8,000,000            Class AAA Series H             1,732,857           --            --
8,000,000                         8,000,000            Class AAA Series I                    --           --            --
                                                                                   ------------  -----------  ------------
                                                                                   $ 19,035,803  $18,876,830  $ 18,635,591
                                                                                   ============  ===========  ============
</TABLE>

                        DESCRIPTION OF CAPITAL STRUCTURE

GENERAL DESCRIPTION OF CAPITAL STRUCTURE

The following is a summary of the material rights, privileges, restrictions and
conditions attached to the Class A preference shares, the Class AA preference
shares and the Class AAA preference shares, in each case as a class, and
attached to the various issued and outstanding series thereof, as well as the
material rights, privileges, restrictions and conditions attached to the Common
Shares. The summary is qualified in its entirety by the full text of such
attributes contained in the articles of the Corporation, which are available on
the Corporation's Web site, www.brookfieldproperties.com.

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

      Class A Preference Shares -- 6,312,000 authorized

2,050,000 Class A preference shares, Series A authorized, of which 2,050,000 are
issued and outstanding; and

4,262,000 Class A preference shares, Series B authorized, of which 4,262,000 are
issued and outstanding.

      Class AA Preference Shares -- 3,600,000 authorized (formerly 6,000,000
      authorized, of which 2,400,000 shares have been issued and redeemed)

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

      Class AAA Preference Shares-- unlimited authorized

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

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

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

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

8,000,000 Class AAA preference shares, Series I authorized, of which 8,000,000
are issued and outstanding.

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

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

                                       19
<PAGE>

are no longer issuable. There are an unlimited number of Common Shares
authorized, of which 155,935,105 Common Shares were issued and outstanding as of
May 10, 2004.

CLASS A PREFERENCE SHARES

PROVISIONS OF CLASS A PREFERENCE SHARES

      Issuance in Series

The Class A preference shares consist of two series only, Series A and Series B,
and no other series may be designated. Each of the series of the Class A
preference shares are subject to the Class provisions of the Class A preference
shares. Pursuant to the Canada Business Corporations Act, each series of Class A
preference shares participates rateably with every other series of Class A
preference shares in respect of accumulated dividends and return of capital.

      Dividends

The holders of Class A preference shares are entitled to receive, as and when
declared by the directors of the Corporation, cumulative preferential dividends
payable in half-yearly installments on March 15 and September 15 in each year to
shareholders of record on March 1 and September 1, respectively. Accrued and
unpaid dividends shall be paid in priority to dividends on any other shares of
the Corporation and no dividends shall be declared or paid or set apart for any
such other shares unless all accrued cumulative dividends on all Class A
preference shares then issued and outstanding shall have been declared and paid
or provided for at the date of such declaration or payment or setting apart.

      Redemption

The Corporation may redeem all, or from time to time any part, of the
outstanding Class A preference shares on payment to the holders thereof, for
each share to be redeemed of an amount equal to C$2.50 per share together with
all accrued and unpaid cumulative dividends thereon. Notice of redemption must
be given by the Corporation at least 30 days before the date specified for
redemption.

      Repurchase

The Corporation may at any time and from time to time purchase the whole or any
part of the Class A preference shares outstanding in the open market or by
invitation for tenders to all holders of record of the Class A preference shares
outstanding, in accordance with the procedures set out in the share conditions
for the Class A preference shares as a class. The Corporation has undertaken to
purchase or cause to be purchased (if obtainable) in the open market 40,000
Class A preference shares in each fiscal year at a price of C$2.50 per share,
together with costs of purchase and all accrued and unpaid cumulative dividends.

      Liquidation, Dissolution and Winding Up

In the event of the liquidation, dissolution or winding up of the Corporation or
other distribution of its assets among shareholders by way of return of capital,
the holders of the Class A preference shares will be entitled to receive an
amount equal to C$2.50 per share, together with all accrued and unpaid
cumulative dividends in priority to any distribution to the holders of Common
Shares or any shares of any other class ranking junior to the Class A preference
shares, including the Class AA and Class AAA preference shares and such holders
will not be entitled to share any further in the distribution of the property or
assets of the Corporation.

      Voting

The holders of Class A preference shares are entitled to receive notice of and
to attend all shareholders' meetings and for all purposes shall be entitled to
one vote for each Class A preference share held, except in respect of the
election of directors, where cumulative voting will apply in the same manner as
for the Common Shares.

                                       20
<PAGE>

SPECIFIC PROVISIONS OF CLASS A PREFERENCE SHARES, SERIES A

      Dividends

The holders of Class A preference shares, Series A are each entitled to receive
fixed preferential cumulative cash dividends at the rate of 7 1/2% per annum on
the amount paid thereon.

SPECIFIC PROVISIONS OF CLASS A PREFERENCE SHARES, SERIES B

      Dividends

The holders of Class A preference shares, Series B are each entitled to receive
fixed preferential cumulative cash dividends at the rate of 7 1/2% per annum on
the amount paid thereon.

CLASS AA PREFERENCE SHARES

PROVISIONS OF CLASS AA PREFERENCE SHARES

      Issuance in Series

The Class AA preference shares may be issued at any time or from time to time in
one or more series. The board of directors of the Corporation will fix the
provisions attached to each series from time to time before issuance. Each of
the series of the Class AA preference shares are subject to the provisions of
the Class AA preference shares.

      Priority

The preferences, priorities and rights attaching to the Class AA preference
shares are subject and subordinate to those attaching to the Class A preference
shares. The Class AA preference shares of each series rank on a parity with the
Class AA preference shares of every other series with respect to priority in
payment of dividends and in the distribution of assets in the event of
liquidation, dissolution or winding up of the Corporation or any other
distribution of the assets of the Corporation among its shareholders for the
purpose of winding up its affairs. Furthermore, pursuant to the Canada Business
Corporations Act, each series of Class AA preference shares participates ratably
with every other series of Class AA preference shares in respect of accumulated
dividends and return of capital.

      Redemption

Subject to the terms of the Class A preference shares and to the provisions
relating to any particular series of Class AA preference shares, the Corporation
may redeem outstanding Class AA preference shares, at a redemption price for
each of the Class AA preference shares so redeemed as may have been fixed for
that purpose in respect of each series prior to the sale and allotment of any
Class AA preference shares of that series, plus an amount equal to all accrued
but unpaid preferential dividends. Notice of redemption must be given by the
Corporation at least 30 days before the date specified for redemption.

      Repurchase

Subject to the terms of the Class A preference shares and to the provisions
relating to any particular series of Class AA preference shares, the Corporation
may at any time and from time to time purchase the whole or any part of the
Class AA preference shares outstanding in the open market or by invitation for
tenders to all holders of record of the Class AA preference shares outstanding,
in accordance with the procedures set out in the share conditions for the Class
AA preference shares as a class.

      Liquidation, Dissolution and Winding Up

In the event of the liquidation, dissolution or winding up of the Corporation or
any other distribution of assets of the Corporation among shareholders for the
purpose of winding up its affairs, the holders of the Class AA preference shares
shall, subject to the terms of the Class A preference shares, be entitled to
receive the amount paid on such shares, together with all accrued and unpaid
dividends in priority to any distribution to the holders of Common Shares or any
shares of any other Class ranking junior to the Class AA preference shares,
including the Class AAA preference shares, and such holder will not be entitled
to share any further in the distribution of the property and assets of the
Corporation.

                                       21
<PAGE>

      Dividends

The holders of Class AA preference shares are each entitled to receive, as and
when declared by the directors of the Corporation, fixed cumulative preferential
cash dividends.

      Voting

Subject to applicable corporate law, the holders of the Class AA preference
shares are not entitled to receive notice of, to attend or to vote at any
meeting of shareholders of the Corporation, unless and until the Corporation
from time to time has failed to pay in the aggregate, eight quarterly dividends
on any one series of Class AA preference shares and then only as long as such
dividends remain in arrears, in which case the holders of Class AA preference
shares will be entitled to receive notice of and to attend all meetings of
shareholders of the Corporation and are entitled to one vote for every Class AA
preference share held.

SPECIFIC PROVISIONS OF THE CLASS AA PREFERENCE SHARES, SERIES E

      Dividends

Subject to the prior rights of holders of the Class A preference shares and any
other shares ranking senior to the Class AA preference shares, the holders of
the Class AA preference shares, Series E (the "Class AA, Series E Shares") are
each entitled to receive, as and when declared by the directors of the
Corporation, cumulative preferential cash dividends in an amount per share per
annum equal to 70% of the "Average Prime Rate" (as defined in the share
conditions for the Class AA, Series E Shares), payable quarterly on the last day
of each of the months of March, June, September and December, as and when
declared by the board of directors of the Corporation.

      Redemption

The Corporation may redeem at any time all, or from time to time any part, of
the then outstanding Class AA, Series E Shares, on payment for each share to be
redeemed of an amount equal to C$25.00 per share, together with all accrued and
unpaid dividends thereon up to the date fixed for redemption. Notice of
redemption must be given by the Corporation not less than 30 days and not more
than 60 days before the date specified for redemption.

      Purchase for Cancellation

The Corporation may at any time or from time to time purchase for cancellation
all or any part of the outstanding Class AA, Series E Shares in the open market
or by invitation for tenders to all holders of record of the Class AA, Series E
Shares in accordance with the procedures set out in the share conditions for the
Class AA, Series E Shares.

      Liquidation, Dissolution and Winding Up

In the event of the liquidation, dissolution or winding up of the Corporation or
in the event of any other distribution of assets of the Corporation among its
shareholders for the purpose of winding up its affairs, the holders of Class AA,
Series E Shares will be entitled to receive an amount equal to C$$25.00 per
share, plus an amount equal to all accrued and unpaid dividends thereon up to
the date of payment, before any amount can be paid or assets of the Corporation
distributed to the holders of any other shares of the Corporation ranking as to
capital junior to the Class AA, Series E Shares. After such payment, the holders
of the Class AA, Series E Shares will not be entitled to share in any further
distribution of the assets of the Corporation.

      Voting

Subject to applicable corporate law and the provisions attaching to the Class AA
preference shares as a class, the holders of Class AA, Series E Shares are not
entitled to receive notice of, to attend or to vote at, any meetings of
shareholders of the Corporation.

CLASS AAA PREFERENCE SHARES

PROVISIONS OF CLASS AAA PREFERENCE SHARES

      Issuance in Series

The directors may from time to time issue Class AAA preference shares in one or
more series, each series to consist of such number of shares as will before
issuance thereof be fixed by the directors who will at the same time determine
the

                                       22
<PAGE>

designation, rights, privileges, restrictions and conditions attaching to that
series of Class AAA preference shares. Each of the series of the Class AAA
preference shares are subject to the provisions of the Class AAA preference
shares.

      Priority

The Class AAA preference shares rank junior to the Class A preference shares and
the Class AA preference shares as to the payment of dividends and return of
capital in the event of liquidation, dissolution or winding up of the
Corporation. The Class AAA preference shares rank senior to the Common Shares
and all other shares ranking junior to the Class AAA preference shares. The
Class AAA preference shares are subject to the provisions of the Class A
preference shares and to the Class AA preference shares. Pursuant to the Canada
Business Corporations Act, each series of Class AAA preference shares
participates rateably with every other series of Class AAA preference shares in
respect of accumulated dividends and return of capital.

      Voting

Subject to applicable corporate law, the holders of the Class AAA preference
shares or of a series thereof are not entitled as holders of that Class or
series to receive notice of, to attend or to vote at any meeting of the
shareholders of the Corporation. Notwithstanding the foregoing, votes may be
granted to a series of Class AAA preference shares when dividends are in arrears
on any one or more series, in accordance with the applicable series provisions.

      Approval

The approval of the holders of the Class AAA preference shares of any matters to
be approved by a separate vote of the holders of the Class AAA preference shares
may be given by special resolution in accordance with the share conditions for
the Class AAA preference shares.

SPECIFIC PROVISIONS OF CLASS AAA PREFERENCE SHARES, SERIES E

The Class AAA Preference Shares, Series E (the "Class AAA, Series E Shares") are
accounted for by the Corporation as debt, in accordance with Canadian generally
accepted accounting principles.

      Dividends

The holders of the Class AAA, Series E Shares are entitled to receive, as and
when declared by the directors of the Corporation, cumulative preferential cash
dividends in an amount per share per annum equal to the product of C$25.00 and
70% of the "Average Prime Rate" (as defined in the share conditions for the
Class AAA, Series E Shares), payable quarterly on the last day of March, June,
September and December in each year.

      Redemption

Subject to the terms of any shares of the Corporation ranking prior to the Class
AAA, Series E Shares, the Corporation may redeem at any time all, or from time
to time any part, of the then outstanding Class AAA, Series E Shares on payment
for each share to be redeemed of an amount equal to C$$25.00, together with an
amount equal to all dividends accrued and unpaid thereon up to the redemption
date. Notice of redemption must be given by the Corporation at least 30 days
before the date specified for redemption.

      Retraction

Subject to the restrictions imposed by applicable law, the Class AAA, Series E
Shares may be tendered at any time for retraction at a price equal to C$25.00
per share, together with an amount equal to all dividends accrued and unpaid
thereon up to the date of retraction. Written notice of retraction must be given
by the holder to the Corporation at least 10 days prior to the date specified
for retraction.

      Liquidation, Dissolution and Winding Up

In the event of the liquidation, dissolution or winding up of the Corporation or
any other distribution of assets of the Corporation among its shareholders for
the purpose of winding up its affairs, the holders of the Class AAA, Series E
Shares will be entitled to payment of an amount equal to C$25.00 per share, plus
an amount equal to all dividends accrued and unpaid thereon up to the date of
payment. After such payment, the holders of Class AAA, Series E Shares will not
be entitled to share in any further distribution of the assets of the
Corporation.

                                       23
<PAGE>

      Amendment

The provisions of the Class AAA, Series E Shares may be amended, but only with
the prior approval of the holders of the Class AAA, Series E Shares by special
resolution, given in accordance with the share provisions for the Class AAA,
Series E Shares, in addition to any vote or authorization required by law.

SPECIFIC PROVISIONS OF THE CLASS AAA PREFERENCE SHARES, SERIES F

      Dividends

The holders of the Class AAA Preference Shares, Series F (the "Class AAA, Series
F Shares") are each entitled to receive fixed cumulative preferential cash
dividends, if, as and when declared by the board of directors of the
Corporation, in an amount equal to C$1.50 per share per annum, accruing daily
from the date of issue (less any tax required to be deducted and withheld by the
Corporation), payable quarterly on the last day of March, June, September and
December in each year.

      Redemption

The Class AAA, Series F Shares are not redeemable before September 30, 2009. On
or after this date, subject to the terms of any shares of the Corporation
ranking prior to the Class AAA, Series F Shares, to applicable law and to the
provisions described under "Specific Provisions of the Class AAA Preference
Shares, Series F -- Restriction on Dividends and Retirement and Issue of
Shares", the Corporation may, at its option, at any time redeem all, or from
time to time any part, of the outstanding Class AAA, Series F Shares, by the
payment of an amount in cash for each such share so redeemed of C$25.75 if
redeemed before September 30, 2010, of C$25.50 if redeemed on or after September
30, 2010 but before September 30, 2011, of C$25.25 if redeemed on or after
September 30, 2011 but before September 30, 2012, and of C$25.00 thereafter
plus, in each case, all accrued and unpaid dividends (for greater certainty
excluding declared dividends with a record date prior to the date fixed for
redemption) up to but excluding the date fixed for redemption (less any tax
required to be deducted and withheld by the Corporation).

      Conversion at the Option of the Corporation

The Class AAA, Series F Shares are not convertible at the option of the
Corporation prior to September 30, 2009. On and after this date, the Corporation
may at its option, subject to applicable law and, if required, to stock exchange
approval, convert all, or from time to time any part, of the outstanding Class
AAA, Series F Shares into that number of freely tradeable Common Shares
determined (per Class AAA, Series F Share) by dividing the then applicable
redemption price, together with all accrued and unpaid dividends (for greater
certainty excluding declared dividends with a record date prior to the date
fixed for conversion) up to but excluding the date fixed for conversion, by the
greater of C$2.00 and 95% of the weighted average trading price of the Common
Shares on the TSX (or, if the Common Shares do not trade on the TSX on the date
specified for conversion, on the exchange or trading system with the highest
volume of Common Shares traded during the 20 trading day period referred to
below) for the 20 consecutive trading days ending on: (i) the fourth day prior
to the date specified for conversion, or (ii) if such fourth day is not a
trading day, the immediately preceding trading day (for the purpose of the
description of the Class AAA, Series F Shares, the "Current Market Price").
Fractional Common Shares will not be issued on any conversion of Class AAA,
Series F Shares, but in lieu thereof the Corporation will make cash payments.

      Conversion at the Option of the Holder

Subject to applicable law and the rights of the Corporation described below, on
and after March 31, 2013, each Class AAA, Series F Share will be convertible at
the option of the holder on the last day of each of March, June, September and
December in each year on at least 30 days notice (which notice shall be
irrevocable) into that number of freely tradeable Common Shares determined by
dividing C$25.00, together with all accrued and unpaid dividends (for greater
certainty excluding declared dividends with a record date prior to the date
fixed for conversion) up to but excluding the date fixed for conversion, by the
greater of C$2.00 and 95% of the Current Market Price. Fractional Common Shares
will not be issued on any conversion of Class AAA, Series F Shares, but in lieu
thereof the Corporation will make cash payments.

Subject to the provisions described under "Specific Provisions of the Class AAA
Preference Shares, Series F -- Restrictions on Dividends and Retirement and
Issue of Shares" as applicable, the Corporation may, by notice given not later
than 20 days before the date fixed for conversion to all holders who have given
a conversion notice, either (i) redeem on the date fixed for conversion all or
any part of the Class AAA, Series F Shares forming the subject matter of the
applicable conversion notice, or (ii) cause the holder of such Class AAA, Series
F Shares to sell on the date fixed for conversion all or

                                       24
<PAGE>

any part of such Class AAA, Series F Shares to another purchaser or purchasers
in the event that a purchaser or purchasers willing to purchase all or any part
of such Series F Shares is or are found. Any such redemption or purchase shall
be made by the payment of an amount in cash of C$25.00 per share, together with
all accrued and unpaid dividends (for greater certainty excluding declared
dividends with a record date prior to the date fixed for conversion) up to but
excluding the date fixed for conversion. The Class AAA, Series F Shares to be so
redeemed or purchased shall not be converted on the date set forth in the
conversion notice.

      Purchase for Cancellation

Subject to applicable law and the provisions described under "Specific
Provisions of the Class AAA Preference Shares, Series F -- Restrictions on
Dividends and Retirement and Issue of Shares", the Corporation may at any time
purchase for cancellation the whole or any part of the Class AAA, Series F
Shares at the lowest price or prices at which in the opinion of the board of
directors of the Corporation such shares are obtainable.

      Liquidation, Dissolution and Winding Up

In the event of the liquidation, dissolution or winding up of the Corporation or
any other distribution of assets of the Corporation among its shareholders for
the purpose of winding up its affairs, the holders of the Class AAA, Series F
Shares will be entitled to payment of an amount equal to C$25.00 per share, plus
an amount equal to all accrued and unpaid dividends up to but excluding the date
fixed for payment or distribution (less any tax required to be deducted and
withheld by the Corporation), before any amount is paid or any assets of the
Corporation are distributed to the holders of any shares ranking junior as to
capital to the Class AAA, Series F Shares. The holders of the Class AAA, Series
F Shares will not be entitled to share in any further distribution of the assets
of the Corporation.

      Restriction on Dividends and Retirement and Issue of Shares

So long as any of the Class AAA, Series F Shares are outstanding, the
Corporation will not, without the approval of the holders of the Class AAA,
Series F Shares:

            (i)   declare, pay or set apart for payment any dividends (other
                  than stock dividends payable in shares of the Corporation
                  ranking as to capital and dividends junior to the Class AAA,
                  Series F Shares) on shares of the Corporation ranking as to
                  dividends junior to the Class AAA, Series F Shares;

except out of the net cash proceeds of a substantially concurrent issue of
shares of the Corporation ranking as to return of capital and dividends junior
to the Class AAA, Series F Shares, redeem or call for redemption, purchase or
otherwise pay off, retire or make any return of capital in respect of any shares
of the Corporation ranking as to capital junior to the Class AAA, Series F
Shares;

redeem or call for redemption, purchase or otherwise retire for value or make
any return of capital in respect of less than all of the Class AAA, Series F
Shares then outstanding;

except pursuant to any purchase obligation, sinking fund, retraction privilege
or mandatory redemption provisions attaching thereto, redeem or call for
redemption, purchase or otherwise pay off, retire or make any return of capital
in respect of any Class AAA Preference Shares, ranking as to the payment of
dividends or return of capital on a parity with the Class AAA, Series F Shares;
or

issue any additional Class AAA, Series F Shares or any shares ranking as to
dividends or return of capital prior to or on a parity with the Class AAA,
Series F Shares,

unless, in each such case, all accrued and unpaid dividends up to and including
the dividend payable for the last completed period for which dividends were
payable on the Class AAA, Series F Shares and on all other shares of the
Corporation ranking prior to or on a parity with the Class AAA, Series F Shares
with respect to the payment of dividends have been declared, paid or set apart
for payment.

      Amendment

The provisions of the Class AAA, Series F Shares may be amended, but only with
the prior approval of the holders of the Class AAA, Series F Shares by special
resolution, given in accordance with the share provisions for the Class AAA,
Series F Shares, in addition to any vote or authorization required by law.

                                       25
<PAGE>

      Voting

The holders of the Class AAA, Series F Shares will not be entitled (except as
otherwise provided by law and except for meetings of the holders of Class AAA
preference shares as a class and meetings of the holders of Class AAA, Series F
Shares as a series) to receive notice of, attend, or vote at, any meeting of
shareholders of the Corporation unless and until the Corporation shall have
failed to pay eight quarterly dividends on the Class AAA, Series F Shares,
whether or not consecutive and whether or not such dividends have been declared
and whether or not there are any moneys of the Corporation properly applicable
to the payment of dividends on Class AAA, Series F Shares. In that event, and
for only so long as any such dividends remain in arrears, the holders of the
Class AAA, Series F Shares will be entitled to receive notice of and to attend
each meeting of the Corporation's shareholders other than any meetings at which
only holders of another specified class or series are entitled to vote, and to
one vote for each Class AAA, Series F Share held.

SPECIFIC PROVISIONS OF THE CLASS AAA PREFERENCE SHARES, SERIES G

      Dividends

The holders of the Class AAA Preference Shares, Series G (the "Class AAA, Series
G Shares") are each entitled to receive fixed cumulative preferential cash
dividends, if, as and when declared by the board of directors of the
Corporation, in an amount equal to $1.3125 per share per annum, accruing daily
from the date of issue (less any tax required to be deducted and withheld by the
Corporation), payable quarterly on the last day of March, June, September and
December in each year.

      Redemption

The Class AAA, Series G Shares are not redeemable before June 30, 2011. On or
after that date, subject to the terms of any shares of the Corporation ranking
prior to the Class AAA, Series G Shares, to applicable law and to the provisions
described under "Specific Provisions of the Class AAA Preference Shares, Series
G -- Restrictions on Dividends and Retirement and Issue of Shares", the
Corporation may, at its option, at any time redeem all, or from time to time any
part, of the outstanding Class AAA, Series G Shares, by the payment of an amount
in cash for each such share so redeemed of $26.00 if redeemed before June 30,
2012, of $25.67 if redeemed on or after June 30, 2012 but before June 30, 2013,
of $25.33 if redeemed on or after June 30, 2013 but before June 30, 2014, and of
$25.00 thereafter, plus, in each case, all accrued and unpaid dividends (for
greater certainty excluding declared dividends with a record date prior to the
date fixed for redemption) up to but excluding the date fixed for redemption
(less any tax required to be deducted and withheld by the Corporation).

      Conversion at the Option of the Corporation

The Class AAA, Series G Shares are not convertible at the option of the
Corporation prior to June 30, 2011. On or after this date, the Corporation may
at its option, subject to applicable law and, if required, to stock exchange
approval, convert all, or from time to time any part, of the outstanding Class
AAA, Series G Shares into that number of freely tradeable Common Shares
determined (per Class AAA, Series G Share) by dividing the then applicable
redemption price, together with all accrued and unpaid dividends (for greater
certainty excluding declared dividends with a record date prior to the date
fixed for conversion) up to but excluding the date fixed for conversion, by the
greater of $2.00 or 95% of the weighted average trading price of the Common
Shares on the New York Stock Exchange ("the "NYSE") (or, if the Common Shares do
not trade on the NYSE on the date specified for conversion, on the exchange or
trading system with the highest volume of Common Shares traded during the 20
trading day period referred to below) for the 20 consecutive trading days ending
on: (i) the fourth day prior to the date specified for conversion, or (ii) if
such fourth day is not a trading day, the immediately preceding trading day (for
the purpose of the description of the Class AAA, Series G Shares, the "Current
Market Price"). Fractional Common Shares will not be issued on any conversion of
Class AAA, Series G Shares, but in lieu thereof the Corporation will make cash
payments.

      Conversion at the Option of the Holder

Subject to applicable law and the rights of the Corporation described below, on
and after September 30, 2015, each Class AAA, Series G Share will be convertible
at the option of the holder on the last day of each of March, June, September
and December in each year on at least 30 days notice (which notice shall be
irrevocable) into that number of freely tradeable Common Shares determined by
dividing $25.00, together with all accrued and unpaid dividends (for greater
certainty excluding declared dividends with a record date prior to the date
fixed for conversion) up to but excluding the date fixed for conversion, by the
greater of $2.00 or 95% of the then Current Market Price. Fractional Common
Shares will not be issued on any conversion of Class AAA, Series G Shares, but
in lieu thereof the Corporation will make cash payments.

                                       26
<PAGE>

Subject to the provisions described under "Specific Provisions of the Class AAA
Preference Shares, Series G -- Restrictions on Dividends and Retirement and
Issue of Shares" as applicable, the Corporation may, by notice given not later
than 20 days before the date fixed for conversion to all holders who have given
a conversion notice, either (i) redeem on the date fixed for conversion all or
any part of the Class AAA, Series G Shares forming the subject matter of the
applicable conversion notice, or (ii) cause the holder of such Class AAA, Series
G Shares to sell on the date fixed for conversion all or any part of such Class
AAA, Series G Shares to another purchaser or purchasers in the event that a
purchaser or purchasers willing to purchase all or any part of such Class AAA,
Series G Shares is or are found. Any such redemption or purchase shall be made
by the payment of an amount in cash of $25.00 per share, together with all
accrued and unpaid dividends (for greater certainty excluding declared dividends
with a record date prior to the date fixed for conversion) up to but excluding
the date fixed for conversion. The Class AAA, Series G Shares to be so redeemed
or purchased shall not be converted on the date set forth in the conversion
notice.

      Purchase for Cancellation

Subject to applicable law and the provisions described under "Specific
Provisions of the Class AAA Preference Shares, Series G -- Restrictions on
Dividends and Retirement and Issue of Shares", the Corporation may at any time
purchase for cancellation the whole or any part of the Class AAA, Series G
Shares at the lowest price or prices at which in the opinion of the board of
directors of the Corporation such shares are obtainable.

      Liquidation, Dissolution and Winding Up

In the event of the liquidation, dissolution or winding up of the Corporation or
any other distribution of assets of the Corporation among its shareholders for
the purpose of winding up its affairs, the holders of the Class AAA, Series G
Shares will be entitled to payment of an amount equal to $25.00 per share, plus
an amount equal to all accrued and unpaid dividends up to but excluding the date
fixed for payment or distribution (less any tax required to be deducted and
withheld by the Corporation), before any amount is paid or any assets of the
Corporation are distributed to the holders of any shares ranking junior as to
capital to the Class AAA, Series G Shares. The holders of the Class AAA, Series
G Shares will not be entitled to share in any further distribution of the assets
of the Corporation.

      Restriction on Dividends and Retirement and Issue of Shares

So long as any of the Class AAA, Series G Shares are outstanding, the
Corporation will not, without the approval of the holders of the Class AAA,
Series G Shares:

            (i)   declare, pay or set apart for payment any dividends (other
                  than stock dividends payable in shares of the Corporation
                  ranking as to capital and dividends junior to the Class AAA,
                  Series G Shares) on shares of the Corporation ranking as to
                  dividends junior to the Class AAA, Series G Shares;

except out of the net cash proceeds of a substantially concurrent issue of
shares of the Corporation ranking as to return of capital and dividends junior
to the Class AAA, Series G Shares, redeem or call for redemption, purchase or
otherwise pay off, retire or make any return of capital in respect of any shares
of the Corporation ranking as to capital junior to the Class AAA, Series G
Shares;

redeem or call for redemption, purchase or otherwise retire for value or make
any return of capital in respect of less than all of the Class AAA, Series G
Shares then outstanding;

except pursuant to any purchase obligation, sinking fund, retraction privilege
or mandatory redemption provisions attaching thereto, redeem or call for
redemption, purchase or otherwise pay off, retire or make any return of capital
in respect of any Class AAA preference shares, ranking as to the payment of
dividends or return of capital on a parity with the Class AAA, Series G Shares;
or

issue any additional Class AAA, Series G Shares or any shares ranking as to
dividends or return of capital prior to or on a parity with the Class AAA,
Series G Shares,

unless, in each such case, all accrued and unpaid dividends up to and including
the dividend payable for the last completed period for which dividends were
payable on the Class AAA, Series G Shares and on all other shares of the
Corporation ranking prior to or on a parity with the Class AAA, Series G Shares
with respect to the payment of dividends have been declared, paid or set apart
for payment.

                                       27
<PAGE>

      Amendment

The provisions of the Class AAA, Series G Shares may be amended, but only with
the prior approval of the holders of the Class AAA, Series G Shares by special
resolution, given in accordance with the share provisions of the Class AAA,
Series G Shares, in addition to any vote or authorization required by law.

      Voting

The holders of the Class AAA, Series G Shares will not be entitled (except as
otherwise provided by law and except for meetings of the holders of Class AAA
preference shares as a class and meetings of the holders of Class AAA, Series G
Shares as a series) to receive notice of, attend, or vote at, any meeting of
shareholders of the Corporation unless and until the Corporation shall have
failed to pay eight quarterly dividends on the Class AAA, Series G Shares,
whether or not consecutive and whether or not such dividends have been declared
and whether or not there are any moneys of the Corporation properly applicable
to the payment of dividends on Class AAA, Series G Shares. In that event, and
for only so long as any such dividends remain in arrears, the holders of the
Class AAA, Series G Shares will be entitled to receive notice of and to attend
each meeting of the Corporation's shareholders other than any meetings at which
only holders of another specified class or series are entitled to vote, and to
one vote for each Class AAA, Series G Share held.

SPECIFIC PROVISIONS OF THE CLASS AAA PREFERENCE SHARES, SERIES H

      Dividends

The holders of the Class AAA Preference Shares, Series H (the "Class AAA, Series
H Shares") are each entitled to receive fixed cumulative preferential cash
dividends, if, as and when declared by the board of directors of the
Corporation, in an amount equal to C$1.4375 per share per annum, accruing daily
from the date of issue (less any tax required to be deducted and withheld by the
Corporation), payable quarterly on the last day of March, June, September and
December in each year.

      Redemption

The Class AAA, Series H Shares are not redeemable before December 31, 2011. On
or after that date, subject to the terms of any shares of the Corporation
ranking prior to the Class AAA, Series H Shares, to applicable law and to the
provisions described under "Specific Provisions of the Class AAA Preference
Shares, Series H -- Restrictions on Dividends and Retirement and Issue of
Shares", the Corporation may, at its option, at any time redeem all, or from
time to time any part, of the outstanding Class AAA, Series H Shares, by the
payment of an amount in cash for each such share so redeemed of C$26.00 if
redeemed before December 31, 2012, of C$25.67 if redeemed on or after December
31, 2012 but before December 31, 2013, of C$25.33 if redeemed on or after
December 31, 2013 but before December 31, 2014, and of C$25.00 thereafter, plus,
in each case, all accrued and unpaid dividends (for greater certainty excluding
declared dividends with a record date prior to the date fixed for redemption) up
to but excluding the date fixed for redemption (less any tax required to be
deducted and withheld by the Corporation).

      Conversion at the Option of the Corporation

The Class AAA, Series H Shares are not convertible at the option of the
Corporation prior to December 31, 2011. On or after this date, the Corporation
may at its option, subject to applicable law and, if required, to stock exchange
approval, convert all, or from time to time any part, of the outstanding Class
AAA, Series H Shares into that number of freely tradeable Common Shares
determined (per Class AAA, Series H Share) by dividing the then applicable
redemption price, together with all accrued and unpaid dividends (for greater
certainty excluding declared dividends with a record date prior to the date
fixed for conversion) up to but excluding the date fixed for conversion, by the
greater of C$2.00 or 95% of the weighted average trading price of the Common
Shares on the TSX (or, if the Common Shares do not trade on the TSX on the date
specified for conversion, on the exchange or trading system with the highest
volume of Common Shares traded during the 20 trading day period referred to
below) for the 20 consecutive trading days ending on: (i) the fourth day prior
to the date specified for conversion, or (ii) if such fourth day is not a
trading day, the immediately preceding trading day (for the purpose of the
description of the Class AAA, Series H Shares, the "Current Market Price").
Fractional Common Shares will not be issued on any conversion of Class AAA,
Series H Shares, but in lieu thereof the Corporation will make cash payments.

      Conversion at the Option of the Holder

Subject to applicable law and the rights of the Corporation described below, on
and after December 31, 2015, each Class AAA, Series H Share will be convertible
at the option of the holder on the last day of each of March, June, September
and

                                       28
<PAGE>

December in each year on at least 30 days notice (which notice shall be
irrevocable) into that number of freely tradeable Common Shares determined by
dividing C$25.00, together with all accrued and unpaid dividends (for greater
certainty excluding declared dividends with a record date prior to the date
fixed for conversion) up to but excluding the date fixed for conversion, by the
greater of C$2.00 or 95% of the then Current Market Price. Fractional Common
Shares will not be issued on any conversion of Class AAA, Series H Shares, but
in lieu thereof the Corporation will make cash payments.

Subject to the provisions described under "Specific Provisions of the Class AAA
Preference Shares, Series H -- Restrictions on Dividends and Retirement and
Issue of Shares" as applicable, the Corporation may, by notice given not later
than 20 days before the date fixed for conversion to all holders who have given
a conversion notice, either (i) redeem on the date fixed for conversion all or
any part of the Class AAA, Series H Shares forming the subject matter of the
applicable conversion notice, or (ii) cause the holder of such Class AAA, Series
H Shares to sell on the date fixed for conversion all or any part of such Class
AAA, Series H Shares to another purchaser or purchasers in the event that a
purchaser or purchasers willing to purchase all or any part of such Class AAA,
Series H Shares is or are found. Any such redemption or purchase shall be made
by the payment of an amount in cash of C$25.00 per share, together with all
accrued and unpaid dividends (for greater certainty excluding declared dividends
with a record date prior to the date fixed for conversion) up to but excluding
the date fixed for conversion. The Class AAA, Series H Shares to be so redeemed
or purchased shall not be converted on the date set forth in the conversion
notice.

      Purchase for Cancellation

Subject to applicable law and the provisions described under "Specific
Provisions of the Class AAA Preference Shares, Series H -- Restrictions on
Dividends and Retirement and Issue of Shares", the Corporation may at any time
purchase for cancellation the whole or any part of the Class AAA, Series H
Shares at the lowest price or prices at which in the opinion of the board of
directors of the Corporation such shares are obtainable.

      Liquidation, Dissolution and Winding Up

In the event of the liquidation, dissolution or winding up of the Corporation or
any other distribution of assets of the Corporation among its shareholders for
the purpose of winding up its affairs, the holders of the Class AAA, Series H
Shares will be entitled to payment of an amount equal to C$25.00 per share, plus
an amount equal to all accrued and unpaid dividends up to but excluding the date
fixed for payment or distribution (less any tax required to be deducted and
withheld by the Corporation), before any amount is paid or any assets of the
Corporation are distributed to the holders of any shares ranking junior as to
capital to the Class AAA, Series H Shares. The holders of the Class AAA, Series
H Shares will not be entitled to share in any further distribution of the assets
of the Corporation.

      Restriction on Dividends and Retirement and Issue of Shares

So long as any of the Class AAA, Series H Shares are outstanding, the
Corporation will not, without the approval of the holders of the Class AAA,
Series H Shares:

            (i)   declare, pay or set apart for payment any dividends (other
                  than stock dividends payable in shares of the Corporation
                  ranking as to capital and dividends junior to the Class AAA,
                  Series H Shares) on shares of the Corporation ranking as to
                  dividends junior to the Class AAA, Series H Shares;

            (ii)  except out of the net cash proceeds of a substantially
                  concurrent issue of shares of the Corporation ranking as to
                  return of capital and dividends junior to the Class AAA,
                  Series H Shares, redeem or call for redemption, purchase or
                  otherwise pay off, retire or make any return of capital in
                  respect of any shares of the Corporation ranking as to capital
                  junior to the Class AAA, Series H Shares;

            (iii) redeem or call for redemption, purchase or otherwise retire
                  for value or make any return of capital in respect of less
                  than all of the Class AAA, Series H Shares then outstanding;

            (iv)  except pursuant to any purchase obligation, sinking fund,
                  retraction privilege or mandatory redemption provisions
                  attaching thereto, redeem or call for redemption, purchase or
                  otherwise pay off, retire or make any return of capital in
                  respect of any Class AAA preference shares, ranking as to the
                  payment of dividends or return of capital on a parity with the
                  Class AAA, Series H Shares; or

                                       29
<PAGE>

            (v)   issue any additional Class AAA, Series H Shares or any shares
                  ranking as to dividends or return of capital prior to or on a
                  parity with the Class AAA, Series H Shares,

unless, in each such case, all accrued and unpaid dividends up to and including
the dividend payable for the last completed period for which dividends were
payable on the Class AAA, Series H Shares and on all other shares of the
Corporation ranking prior to or on a parity with the Class AAA, Series H Shares
with respect to the payment of dividends have been declared, paid or set apart
for payment.

      Amendment

The provisions of the Class AAA, Series H Shares may be amended, but only with
the prior approval of the holders of the Class AAA, Series H Shares by special
resolution, given in accordance with the share provisions of the Class AAA,
Series H Shares, in addition to any vote or authorization required by law.

      Voting

The holders of the Class AAA, Series H Shares will not be entitled (except as
otherwise provided by law and except for meetings of the holders of Class AAA
preference shares as a class and meetings of the holders of Class AAA, Series H
Shares as a series) to receive notice of, attend, or vote at, any meeting of
shareholders of the Corporation unless and until the Corporation shall have
failed to pay eight quarterly dividends on the Class AAA, Series H Shares,
whether or not consecutive and whether or not such dividends have been declared
and whether or not there are any moneys of the Corporation properly applicable
to the payment of dividends on Class AAA, Series H Shares. In that event, and
for only so long as any such dividends remain in arrears, the holders of the
Class AAA, Series H Shares will be entitled to receive notice of and to attend
each meeting of the Corporation's shareholders other than any meetings at which
only holders of another specified class or series are entitled to vote, and to
one vote for each Class AAA, Series H Share held.

SPECIFIC PROVISIONS OF THE CLASS AAA PREFERENCE SHARES, SERIES I

      Dividends

The holders of the Class AAA Preference Shares, Series I (the "Class AAA, Series
I Shares") are each entitled to receive fixed cumulative preferential cash
dividends, if, as and when declared by the board of directors of the
Corporation, in an amount equal to C$1.30 per share per annum, accruing daily
from the date of issue (less any tax required to be deducted and withheld by the
Corporation), payable quarterly on the last day of March, June, September and
December in each year.

      Redemption

The Class AAA, Series I Shares are not redeemable before December 31, 2008. On
or after that date, subject to the terms of any shares of the Corporation
ranking prior to the Class AAA, Series I Shares, to applicable law and to the
provisions described under "Specific Provisions of the Class AAA Preference
Shares, Series I -- Restrictions on Dividends and Retirement and Issue of
Shares", the Corporation may, at its option, at any time redeem all, or from
time to time any part, of the outstanding Class AAA, Series I Shares, by the
payment of an amount in cash for each such share so redeemed of C$25.75 if
redeemed before December 31, 2009, of C$25.50 if redeemed on or after December
31, 2009 but before December 31, 2010, and of C$25.00 thereafter, plus, in each
case, all accrued and unpaid dividends (for greater certainty excluding declared
dividends with a record date prior to the date fixed for redemption) up to but
excluding the date fixed for redemption (less any tax required to be deducted
and withheld by the Corporation).

      Conversion at the Option of the Corporation

The Class AAA, Series I Shares are not convertible at the option of the
Corporation prior to December 31, 2008. On or after this date, the Corporation
may at its option, subject to applicable law and, if required, to stock exchange
approval, convert all, or from time to time any part, of the outstanding Class
AAA, Series I Shares into that number of freely tradable Common Shares
determined (per Class AAA, Series I Share) by dividing the then applicable
redemption price, together with all accrued and unpaid dividends (for greater
certainty excluding declared dividends with a record date prior to the date
fixed for conversion) up to but excluding the date fixed for conversion, by the
greater of C$2.00 or 95% of the weighted average trading price of the Common
Shares on the TSX (or, if the Common Shares do not trade on the TSX on the date
specified for conversion, on the exchange or trading system with the highest
volume of Common Shares traded during the 20 trading day period referred to
below) for the 20 consecutive trading days ending on: (i) the fourth day prior
to the date specified for conversion, or (ii) if such fourth day is not a
trading day, the immediately preceding trading day (for the purpose of the
description of the Class AAA, Series I Shares, the "Current Market Price").
Fractional Common Shares will

                                       30
<PAGE>

not be issued on any conversion of Class AAA, Series I Shares, but in lieu
thereof the Corporation will make cash payments.

      Conversion at the Option of the Holder

Subject to applicable law and the rights of the Corporation described below, on
and after December 31, 2010, each Class AAA, Series I Share will be convertible
at the option of the holder on the last day of each of March, June, September
and December in each year on at least 30 days notice (which notice shall be
irrevocable) into that number of freely tradeable Common Shares determined by
dividing C$25.00, together with all accrued and unpaid dividends (for greater
certainty excluding declared dividends with a record date prior to the date
fixed for conversion) up to but excluding the date fixed for conversion, by the
greater of C$2.00 or 95% of the then Current Market Price. Fractional Common
Shares will not be issued on any conversion of Class AAA, Series I Shares, but
in lieu thereof the Corporation will make cash payments.

Subject to the provisions described under "Specific Provisions of the Class AAA
Preference Shares, Series I -- Restrictions on Dividends and Retirement and
Issue of Shares" as applicable, the Corporation may, by notice given not later
than 20 days before the date fixed for conversion to all holders who have given
a conversion notice, either (i) redeem on the date fixed for conversion all or
any part of the Class AAA, Series I Shares forming the subject matter of the
applicable conversion notice, or (ii) cause the holder of such Class AAA, Series
I Shares to sell on the date fixed for conversion all or any part of such Class
AAA, Series I Shares to another purchaser or purchasers in the event that a
purchaser or purchasers willing to purchase all or any part of such Class AAA,
Series I Shares is or are found. Any such redemption or purchase shall be made
by the payment of an amount in cash of C$25.00 per share, together with all
accrued and unpaid dividends (for greater certainty excluding declared dividends
with a record date prior to the date fixed for conversion) up to but excluding
the date fixed for conversion. The Class AAA, Series I Shares to be so redeemed
or purchased shall not be converted on the date set forth in the conversion
notice.

      Purchase for Cancellation

Subject to applicable law and the provisions described under "Specific
Provisions of the Class AAA Preference Shares, Series I -- Restrictions on
Dividends and Retirement and Issue of Shares", the Corporation may at any time
purchase for cancellation the whole or any part of the Class AAA, Series I
Shares at the lowest price or prices at which in the opinion of the board of
directors of the Corporation such shares are obtainable.

      Liquidation, Dissolution and Winding Up

In the event of the liquidation, dissolution or winding up of the Corporation or
any other distribution of assets of the Corporation among its shareholders for
the purpose of winding up its affairs, the holders of the Class AAA, Series I
Shares will be entitled to payment of an amount equal to C$25.00 per share, plus
an amount equal to all accrued and unpaid dividends up to but excluding the date
fixed for payment or distribution (less any tax required to be deducted and
withheld by the Corporation), before any amount is paid or any assets of the
Corporation are distributed to the holders of any shares ranking junior as to
capital to the Class AAA, Series I Shares. The holders of the Class AAA, Series
I Shares will not be entitled to share in any further distribution of the assets
of the Corporation.

      Restriction on Dividends and Retirement and Issue of Shares

So long as any of the Class AAA, Series I Shares are outstanding, the
Corporation will not, without the approval of the holders of the Class AAA,
Series I Shares:

            (i)   declare, pay or set apart for payment any dividends (other
                  than stock dividends payable in shares of the Corporation
                  ranking as to capital and dividends junior to the Class AAA,
                  Series I Shares) on shares of the Corporation ranking as to
                  dividends junior to the Class AAA, Series I Shares;

except out of the net cash proceeds of a substantially concurrent issue of
shares of the Corporation ranking as to return of capital and dividends junior
to the Class AAA, Series I Shares, redeem or call for redemption, purchase or
otherwise pay off, retire or make any return of capital in respect of any shares
of the Corporation ranking as to capital junior to the Class AAA, Series I
Shares;

redeem or call for redemption, purchase or otherwise retire for value or make
any return of capital in respect of less than all of the Class AAA, Series I
Shares then outstanding;

                                       31
<PAGE>

except pursuant to any purchase obligation, sinking fund, retraction privilege
or mandatory redemption provisions attaching thereto, redeem or call for
redemption, purchase or otherwise pay off, retire or make any return of capital
in respect of any Class AAA preference shares, ranking as to the payment of
dividends or return of capital on a parity with the Class AAA, Series I Shares;
or

issue any additional Class AAA, Series I Shares or any shares ranking as to
dividends or return of capital prior to or on a parity with the Class AAA,
Series I Shares,

unless, in each such case, all accrued and unpaid dividends up to and including
the dividend payable for the last completed period for which dividends were
payable on the Class AAA, Series I Shares and on all other shares of the
Corporation ranking prior to or on a parity with the Class AAA, Series I Shares
with respect to the payment of dividends have been declared, paid or set apart
for payment.

      Amendment

The provisions of the Class AAA, Series I Shares may be amended, but only with
the prior approval of the holders of the Class AAA, Series I Shares by special
resolution, given in accordance with the share provisions of the Class AAA,
Series I Shares, in addition to any vote or authorization required by law.

      Voting

The holders of the Class AAA, Series I Shares will not be entitled (except as
otherwise provided by law and except for meetings of the holders of Class AAA
preference shares as a class and meetings of the holders of Class AAA, Series I
Shares as a series) to receive notice of, attend, or vote at, any meeting of
shareholders of the Corporation unless and until the Corporation shall have
failed to pay eight quarterly dividends on the Class AAA, Series I Shares,
whether or not consecutive and whether or not such dividends have been declared
and whether or not there are any moneys of the Corporation properly applicable
to the payment of dividends on Class AAA, Series I Shares. In that event, and
for only so long as any such dividends remain in arrears, the holders of the
Class AAA, Series I Shares will be entitled to receive notice of and to attend
each meeting of the Corporation's shareholders other than any meetings at which
only holders of another specified class or series are entitled to vote, and to
one vote for each Class AAA, Series I Share held.

SPECIFIC PROVISIONS OF THE CLASS AAA PREFERENCE SHARES, SERIES J

      Dividends

      The holders of the Class AAA Preference Shares, Series J (the "Class AAA,
Series J Shares") are each entitled to receive fixed cumulative preferential
cash dividends, if, as and when declared by the board of directors of the
Corporation, in an amount equal to C$1.25 per share per annum, accruing daily
from the date of issue (less any tax required to be deducted and withheld by the
Corporation), payable quarterly on the last day of March, June, September and
December in each year.

      Redemption

      The Class AAA, Series J Shares are not redeemable before June 30, 2010. On
or after that date, subject to the terms of any shares of the Corporation
ranking prior to the Class AAA, Series J Shares, to applicable law and to the
provisions described under "Specific Provisions of the Class AAA Preference
Shares, Series J -- Restrictions on Dividends and Retirement and Issue of
Shares", the Corporation may, at its option, at any time redeem all, or from
time to time any part, of the outstanding Class AAA, Series J Shares, by the
payment of an amount in cash for each such share so redeemed of C$26.00 if
redeemed before June 30, 2011, of C$25.75 if redeemed on or after June 30, 2011
but before June 30, 2012, at C$25.50 if redeemed on or after June 30, 2012, but
before June 30, 2013, C$25.25 if redeemed on or after June 30, 2013, but before
June 30, 2014, and of C$25.00 thereafter, plus, in each case, all accrued and
unpaid dividends (for greater certainty excluding declared dividends with a
record date prior to the date fixed for redemption) up to but excluding the date
fixed for redemption (less any tax required to be deducted and withheld by the
Corporation).

      Conversion at the Option of the Corporation

      The Class AAA, Series J Shares are not convertible at the option of the
Corporation prior to June 30, 2010. On or after this date, the Corporation may
at its option, subject to applicable law and, if required, to stock exchange
approval, convert all, or from time to time any part, of the outstanding Class
AAA, Series J Shares into that number of freely tradeable Common Shares
determined (per Class AAA, Series J Share) by dividing the then applicable
redemption price,

                                       32
<PAGE>

together with all accrued and unpaid dividends (for greater certainty excluding
declared dividends with a record date prior to the date fixed for conversion) up
to but excluding the date fixed for conversion, by the greater of C$2.00 or 95%
of the weighted average trading price of the Common Shares on the TSX (or, if
the Common Shares do not trade on the TSX on the date specified for conversion,
on the exchange or trading system with the highest volume of Common Shares
traded during the 20 trading day period referred to below) for the 20
consecutive trading days ending on: (i) the fourth day prior to the date
specified for conversion, or (ii) if such fourth day is not a trading day, the
immediately preceding trading day (for the purpose of the description of the
Class AAA, Series J Shares, the "Current Market Price"). Fractional Common
Shares will not be issued on any conversion of Class AAA, Series J Shares, but
in lieu thereof the Corporation will make cash payments.

      Conversion at the Option of the Holder

      Subject to applicable law and the rights of the Corporation described
below, on and after December 31, 2014, each Class AAA, Series J Share will be
convertible at the option of the holder on the last day of each of March, June,
September and December in each year on at least 30 days notice (which notice
shall be irrevocable) into that number of freely tradeable Common Shares
determined by dividing C$25.00, together with all accrued and unpaid dividends
(for greater certainty excluding declared dividends with a record date prior to
the date fixed for conversion) up to but excluding the date fixed for
conversion, by the greater of C$2.00 or 95% of the then Current Market Price.
Fractional Common Shares will not be issued on any conversion of Class AAA,
Series J Shares, but in lieu thereof the Corporation will make cash payments.

      Subject to the provisions described under "Specific Provisions of the
Class AAA Preference Shares, Series J -- Restrictions on Dividends and
Retirement and Issue of Shares" as applicable, the Corporation may, by notice
given not later than 20 days before the date fixed for conversion to all holders
who have given a conversion notice, either (i) redeem on the date fixed for
conversion all or any part of the Class AAA, Series J Shares forming the subject
matter of the applicable conversion notice, or (ii) cause the holder of such
Class AAA, Series J Shares to sell on the date fixed for conversion all or any
part of such Class AAA, Series J Shares to another purchaser or purchasers in
the event that a purchaser or purchasers willing to purchase all or any part of
such Class AAA, Series J Shares is or are found. Any such redemption or purchase
shall be made by the payment of an amount in cash of C$25.00 per share, together
with all accrued and unpaid dividends (for greater certainty excluding declared
dividends with a record date prior to the date fixed for conversion) up to but
excluding the date fixed for conversion. The Class AAA, Series J Shares to be so
redeemed or purchased shall not be converted on the date set forth in the
conversion notice.

      Purchase for Cancellation

      Subject to applicable law and the provisions described under "Specific
Provisions of the Class AAA Preference Shares, Series J -- Restrictions on
Dividends and Retirement and Issue of Shares", the Corporation may at any time
purchase for cancellation the whole or any part of the Class AAA, Series J
Shares at the lowest price or prices at which in the opinion of the board of
directors of the Corporation such shares are obtainable.

      Liquidation, Dissolution and Winding Up

      In the event of the liquidation, dissolution or winding up of the
Corporation or any other distribution of assets of the Corporation among its
shareholders for the purpose of winding up its affairs, the holders of the Class
AAA, Series J Shares will be entitled to payment of an amount equal to C$25.00
per share, plus an amount equal to all accrued and unpaid dividends up to but
excluding the date fixed for payment or distribution (less any tax required to
be deducted and withheld by the Corporation), before any amount is paid or any
assets of the Corporation are distributed to the holders of any shares ranking
junior as to capital to the Class AAA, Series J Shares. The holders of the Class
AAA, Series J Shares will not be entitled to share in any further distribution
of the assets of the Corporation.

      Restriction on Dividends and Retirement and Issue of Shares

      So long as any of the Class AAA, Series J Shares are outstanding, the
Corporation will not, without the approval of the holders of the Class AAA,
Series J Shares:

      (a)   declare, pay or set apart for payment any dividends (other than
            stock dividends payable in shares of the Corporation ranking as to
            capital and dividends junior to the Class AAA, Series J Shares) on
            shares of the Corporation ranking as to dividends junior to the
            Class AAA, Series J Shares;

                                       33
<PAGE>

      (b)   except out of the net cash proceeds of a substantially concurrent
            issue of shares of the Corporation ranking as to return of capital
            and dividends junior to the Class AAA, Series J Shares, redeem or
            call for redemption, purchase or otherwise pay off, retire or make
            any return of capital in respect of any shares of the Corporation
            ranking as to capital junior to the Class AAA, Series J Shares;

      (c)   redeem or call for redemption, purchase or otherwise retire for
            value or make any return of capital in respect of less than all of
            the Class AAA, Series J Shares then outstanding;

      (d)   except pursuant to any purchase obligation, sinking fund, retraction
            privilege or mandatory redemption provisions attaching thereto,
            redeem or call for redemption, purchase or otherwise pay off, retire
            or make any return of capital in respect of any Class AAA preference
            shares, ranking as to the payment of dividends or return of capital
            on a parity with the Class AAA, Series J Shares; or

      (e)   issue any additional Class AAA, Series J Shares or any shares
            ranking as to dividends or return of capital prior to or on a parity
            with the Class AAA, Series J Shares,

unless, in each such case, all accrued and unpaid dividends up to and including
the dividend payable for the last completed period for which dividends were
payable on the Class AAA, Series J Shares and on all other shares of the
Corporation ranking prior to or on a parity with the Class AAA, Series J Shares
with respect to the payment of dividends have been declared, paid or set apart
for payment.

      Amendment

      The provisions of the Class AAA, Series J Shares may be amended, but only
with the prior approval of the holders of the Class AAA, Series J Shares by
special resolution, given in accordance with the share provisions of the Class
AAA, Series J Shares, in addition to any vote or authorization required by law.

      Voting

      The holders of the Class AAA, Series J Shares will not be entitled (except
as otherwise provided by law and except for meetings of the holders of Class AAA
preference shares as a class and meetings of the holders of Class AAA, Series J
Shares as a series) to receive notice of, attend, or vote at, any meeting of
shareholders of the Corporation unless and until the Corporation shall have
failed to pay eight quarterly dividends on the Class AAA, Series J Shares,
whether or not consecutive and whether or not such dividends have been declared
and whether or not there are any moneys of the Corporation properly applicable
to the payment of dividends on Class AAA, Series J Shares. In that event, and
for only so long as any such dividends remain in arrears, the holders of the
Class AAA, Series J Shares will be entitled to receive notice of and to attend
each meeting of the Corporation's shareholders other than any meetings at which
only holders of another specified class or series are entitled to vote, and to
one vote for each Class AAA, Series J Share held.

COMMON SHARES

PROVISIONS OF COMMON SHARES

      Dividends

The holders of the Common Shares are entitled to receive any dividends declared
thereon by the board of directors of the Corporation.

      Voting

The holders of the Common Shares are entitled to receive notice of and to attend
all shareholders' meetings and for all purposes will be entitled to one vote for
each Common Share held.

      Liquidation, Dissolution and Winding Up

In the event of the liquidation, dissolution or winding up of the Corporation or
any other distribution of assets of the Corporation among its shareholders by
way of return of capital, the holders of Common Shares will be entitled to
receive, after distribution to the holders of the Class A preference shares, the
Class AA preference shares, the Class AAA preference shares and any other shares
ranking prior to the Common Shares, the remaining property of the Corporation.

                                       34
<PAGE>

                                     RATINGS

Brookfield is currently rated by two agencies. The following table shows the
ratings issued by the rating agencies noted therein as of December 31, 2003 and
as of the date of this information statement were as follows:

<TABLE>
<CAPTION>
                                                              Dominion Bond
                           Standard & Poor's ("S&P")   Rating Service Inc. ("DBRS")
                           -------------------------   ----------------------------
                           <S>                         <C>
Corporate rating                     BBB                         BBB(high)
                           -------------------------   ----------------------------
Preferred shares                  P-3(high)                     Pfd-3(high)
                           -------------------------   ----------------------------
</TABLE>

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

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

DBRS' corporate credit ratings are on a rating scale that ranges from AAA to D,
which represents the range from highest to lowest quality of such securities
rated. According to the DBRS rating system, an obligor rated "BBB" is of
adequate credit quality. Protection of interest and principal is considered
adequate, but the entity is more susceptible to adverse changes in financial and
economic conditions, or there may be other adversities present which reduce the
strength of the entity. The ratings from AA to CCC may be modified by the
addition of a (high) or (low) modifier to show relative standing within the
major rating categories.

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

NOTE REGARDING CREDIT RATINGS

Credit ratings are intended to provide investors with an independent measure of
credit quality of an issue of securities. The credit ratings accorded to the
Corporation's outstanding securities by S&P and DBRS, as applicable, are not
recommendations to purchase, hold or sell such securities in as much as such
ratings do not comment as to market price or suitability for a particular
investor. There is no assurance that the ratings will remain in effect for any
given period or that a rating will not be revised or withdrawn entirely by S&P
or DBRS in the future if, in its judgment, circumstances so warrant.

                                       35
<PAGE>

                              MARKET FOR SECURITIES

The common shares of Brookfield are listed on the New York and Toronto Stock
Exchanges under the symbol "BPO." Brookfield's Class A Preferred Shares, Series
A and B, and Class AA Preferred Shares, Series E are not listed on an exchange.
Brookfield's Class AAA Preferred Shares are listed on the Toronto Stock Exchange
under the symbols "BPO.PR.F", "BPO.PR.U", "BPO.PR.H", "BPO.PR.I" and "BPO.PR.J"

The following table sets forth the reported high and low trading prices and
trading volumes of the Corporation's common shares as reported by the TSX(1) and
NYSE(2) from January 2003:

<TABLE>
<CAPTION>
                                        TSX                                        NYSE
                      --------------------------------------       -----------------------------------
                            PRICE(C$)                                  PRICE (US$)
                      -------------------
  MONTH               HIGH           LOW           VOLUME           HIGH         LOW          VOLUME
----------            -----         -----         ---------        -----        -----        ---------
<S>                   <C>           <C>           <C>              <C>          <C>          <C>
January               30.19         26.40         2,385,490        19.19        17.90        3,888,200
February              28.90         27.10         3,270,699        19.08        18.16        2,135,200
March                 29.74         26.90         2,351,970        19.70        18.23        1,972,700
April                 30.60         28.80         3,956,678        20.89        19.55        2,434,000
May                   30.47         28.97         2,371,263        22.20        20.29        2,052,600
June                  30.32         28.70         2,265,751        22.44        21.15        1,730,100
July                  32.00         29.21         2,544,015        22.76        21.14        2,547,100
August                32.98         31.20         1,522,341        23.48        22.45        1,794,100
September             33.00         31.60         1,635,913        24.24        23.25        1,984,100
October               35.00         31.80         1,481,208        26.22        23.56        1,771,000
November              35.68         34.00         1,124,225        26.97        25.56        1,431,500
December              37.56         34.65         1,967,751        29.03        26.70        1,698,700
</TABLE>

The following table sets forth the reported high and low trading prices and
trading volumes of the Corporation's Class AAA Preferred Shares, Series F
(BPO.PR.F) as reported by the TSX from January 2003:

<TABLE>
<CAPTION>
                                               PRICE (C$)
                                     ------------------------------
        MONTH                          HIGH                  LOW                         VOLUME
----------------------               ---------             --------                   ------------
<S>                                  <C>                   <C>                        <C>
January                                25.00                24.40                       217,610
February                               24.90                24.32                       442,148
March                                  24.80                24.20                       126,227
April                                  24.75                24.30                       607,515
May                                    25.50                23.95                     1,222,817
June                                   25.12                24.80                       573,510
July                                   25.90                24.83                       346,871
August                                 26.20                25.25                       873,912
September                              26.75                25.41                     1,053,604
October                                26.23                25.25                       764,490
November                               26.20                25.75                       452,934
December                               27.00                26.08                       914,686
</TABLE>

The following table sets forth the reported high and low trading prices and
trading volumes of the Corporation's Class AAA Preferred Shares, Series G
(BPO.PR.U) as reported by the TSX from the date of listing on June 12, 2003:

<TABLE>
<CAPTION>
                                                PRICE($)
                                      ---------------------------
  MONTH                                HIGH                  LOW                         VOLUME
----------                            -----                 -----                        -------
<S>                                   <C>                   <C>                          <C>
June                                  25.15                 24.50                        532,961
July                                  25.05                 24.80                        137,261
August                                25.26                 24.45                         71,230
September                             25.71                 24.90                         82,815
October                               25.10                 24.70                        125,554
November                              25.10                 24.86                         74,204
December                              25.95                 24.80                        104,600
</TABLE>

-----------------
(1) Source, Bloomberg

(2) Source, NYSEnet

                                       36
<PAGE>

The following table sets forth the reported high and low trading prices and
trading volumes of the Corporation's Class AAA Preferred Shares, Series H
(BPO.PR.H) as reported by the TSX from the date of listing on October 15, 2003:

<TABLE>
<CAPTION>
                                              PRICE (C$)
                                     --------------------------
  MONTH                               HIGH                LOW                 VOLUME
----------                           -------            -------             ----------
<S>                                  <C>                <C>                 <C>
October                               25.15              24.60                 896,135
November                              25.45              24.90                 334,777
December                              26.00              25.01               1,719,452
</TABLE>

The following table sets forth the reported high and low trading prices and
trading volumes of the Corporation's Class AAA Preferred Shares, Series I
(BPO.PR.I) as reported by the TSX from the date of listing on December 31, 2003:

<TABLE>
<CAPTION>
                                         PRICE (C$)
                               ---------------------------
   MONTH                        HIGH                 LOW               VOLUME
----------                     -------             -------           ---------
<S>                            <C>                 <C>               <C>
December                       25.17                24.95             468,700
</TABLE>

The Corporation's Class AAA Preferred Shares, Series J (BPO.PR.J) were listed on
the TSX on April 30, 2004.

                                       37
<PAGE>

                             DIRECTORS AND OFFICERS

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

DIRECTORS

<TABLE>
<CAPTION>
                                      Year first
                                       became a
Name, municipality of residence        director      Principal Occupation and Five-year Occupation History
-------------------------------       ----------     -------------------------------------------------------------------------
<S>                                   <C>            <C>
GORDON E. ARNELL                        1989         Mr. Arnell has been Chairman of the Corporation and Chairman of the Board
New York, New York                                   of Directors of the Corporation since 1995.

WILLIAM T. CAHILL (1)                   2000         Mr. Cahill has been a Senior Credit Officer, Citibank Community
Ridgefield, Connecticut                              Development since 2002. He has held various positions including Managing
                                                     Director at Citicorp Real Estate, Inc.; OREO 1996-2002.

RICHARD B. CLARK                        2002         Mr. Clark has been President and Chief Executive Officer of the
New York, New York                                   Corporation since 2002. He was President and CEO of the Corporation's
                                                     U.S. operations 2000-2002; held senior management positions in U.S.
                                                     operations for the Corporation and its predecessor companies including
                                                     Chief Operating Officer, Executive Vice President and Director of
                                                     Leasing.

JACK L. COCKWELL (2)                    1999         Mr. Cockwell has been Group Chairman of Brascan Corporation since 2003.
Toronto, Ontario                                     Prior thereto has was Co-Chairman, Brascan Corporation since 2002 and
                                                     President and Chief Executive Officer of Brascan Corporation from 1995-
                                                     2002.

J. BRUCE FLATT                          1996         Mr. Flatt is President and Chief Executive Officer of Brascan
Toronto, Ontario                                     Corporation since 2002. He was previously President and CEO of the
                                                     Corporation from 2000 and President and Chief Operating Officer 1995-2000.

LANCE LIEBMAN (2)(3)                    2003         Professor Liebman has been a Professor of Law at Columbia University
New York, New York                                   since 1991 and Director of the American Law Institute since 1999.

JOHN R. McCAIG (2)(3)                   1995         Mr. McCaig has been Chairman of Trimac Corporation, a provider of
Calgary, Alberta                                     services in highway transportation of bulk commodities since 1994.

PAUL D. MCFARLANE (1)(2)                1998         Mr. McFarlane is a corporate director. He retired from CIBC in
Mississauga, Ontario                                 December 2002 after more than 40 years of service in numerous branch,
                                                     regional and head office positions, most recently as Senior Vice
                                                     President, Special Loans, from 1994 until retirement.

ALLAN S. OLSON (1)(3)                   1995         Mr. Olson has been President and CEO of First Industries Corporation,
Spruce Grove, Alberta                                an investment and management company, since 1991.

SAM POLLOCK, O.C. (3)                   1978         Mr. Pollock is President of a Canadian investment company. He was
Toronto, Ontario                                     Chairman of the Toronto Blue Jays 1995-2000.

WILLIAM C. WHEATON, PH.D.               2004         Professor Wheaton has been a Professor in MIT's Department of
Hamilton, Massachusetts                              Economics since 1972 and is the current director of the MIT Center for
                                                     Real Estate.

JOHN E. ZUCCOTTI                        1998         Mr. Zuccotti has been Co-Chairman of the Corporation and Co-Chairman
New York, New York                                   of the Board of Directors of the Corporation since 2002, Chairman of
                                                     the Board of Directors of Brookfield Financial Properties, Inc. since
                                                     1996 and Senior Counsel, Weil, Gotshal and Manges since 1998. Mr.
                                                     Zuccotti was Deputy Chairman of the Corporation 1999-2002.
</TABLE>

---------------------------
(1) Member of the Audit Committee

(2) Member of the Human Resources and Compensation Committee

(3) Member of the Governance and Nominating Committee

                                       38
<PAGE>

OFFICERS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Name, municipality of
      residence         Position Held                Five-year Occupation History
----------------------  ----------------             ----------------------------
<S>                     <C>                          <C>
GORDON E. ARNELL        Chairman                               See above.
New York, New York

JOHN E. ZUCCOTTI        Co-Chairman                            See above.
New York, New York

RICHARD B. CLARK        President and                          See above.
New York, New York      Chief Executive Officer

DENNIS FRIEDRICH        President and Chief          Mr. Friedrich has held his present principal
New York, New York      Operating Officer, U.S.      occupation since 2003, prior to which he was
                        Commercial Operations        Executive Vice President and Chief Operating
                                                     Officer of the Corporation's New York-based
                                                     affiliate, Brookfield Financial Properties, since
                                                     2002, prior thereto he was Senior Vice President of
                                                     Strategic Initiatives since 2000, and prior to 2000
                                                     he was with Jones Lang LaSalle, a real estate
                                                     services firm.

THOMAS FARLEY           President and Chief          Mr. Farley has held his present principal
Calgary, Alberta        Operating Officer, Canadian  occupation since 2002, prior to which he was
                        Commercial Operations        Executive Vice President and Chief Operating
                                                     Officer of Brookfield's Canadian commercial
                                                     operations following four years as Senior Vice President,
                                                     Western Canada and six years in various senior
                                                     management positions at Brookfield and its
                                                     affiliates.

KATHLEEN G. KANE        Senior Vice President and    Ms. Kane has held her present principal occupation
New York, New York      General Counsel              since 2003, prior to which she was Senior Vice
                        Secretary                    President and General Counsel of the Corporation's
                                                     New York-based affiliate, Brookfield Financial
                                                     Properties, and prior to 1997, she was with the law
                                                     firm of Cahill Gordon & Reindel.

FREDERICK KELLY         Senior Vice President and    Mr. Kelly has held his present principal occupation
New York, New York      Chief Investment Officer     since 2003, prior to which he spent five years at
                                                     Merrill Lynch as a Director within the U.S.
                                                     Structured Finance and Origination Group, prior to
                                                     which he was a Vice President at The Chase
                                                     Manhattan Bank and its predecessor organizations
                                                     for nine years.

CRAIG J. LAURIE         Senior Vice President and    Mr. Laurie has held his present principal
New York, New York      Chief Financial Officer      occupation since 2003, prior to which he was Senior
                                                     Vice President, Finance for Brascan Corporation and
                                                     Senior Vice President and Chief Financial Officer
                                                     for Brascan Power Corporation. Prior to that, he
                                                     spent three years in various senior management
                                                     positions at Brascan and its affiliates. Prior to
                                                     1997, he was with Deloitte & Touche, LLP.

MELISSA J. COLEY        Vice President, Investor     Ms. Coley has held her present principal occupation
New York, New York      Relations and                since 2002, prior to which she was Vice President,
                        Communications               Artistic Director of Arts and Events/Marketing
                                                     since 1999, prior to which she was Manager, World
                                                     Financial Center Arts and Events since 1986.

P. KEITH HYDE           Vice President, Taxation     Mr. Hyde has held his principal occupation since 1988.
Toronto, Ontario

EMILEE SAMTANI          Vice President, Human        Ms. Samtani has held her present principal
New York, New York      Resources                    occupation since 2003, prior to which she was Human
                                                     Resources Director at Monster Worldwide since 2001,
                                                     and prior thereto she held various Human Resources
                                                     roles at Federated Department Stores.

T. NGA TRINH            Vice President and           Ms. Trinh has held her present principal occupation
New York, New York      Controller                   since 2002, prior to which she was Vice President,
                                                     Financial Management for the Corporation's Canadian
                                                     operations since 2000 and prior to 2000, she was
                                                     with the Taxation Services Group of Deloitte &
                                                     Touche LLP.

GORDON E. WIDDES        Vice President, Information  Mr. Widdes has held his present principal
Toronto, Ontario        Technologies                 occupation since 2002, prior to which he was Vice
                                                     President, Information Systems for the
                                                     Corporation's Canadian operations, and prior to
                                                     1998, he was with Spar Aerospace and Unicorp.

BRETT M. FOX            Assistant Secretary          Mr. Fox has held his present principal occupation
New York, New York                                   since 2003, prior to which he was Vice President
                                                     and Associate Counsel of the Corporation's New
                                                     York-based affiliate, Brookfield Financial
                                                     Properties, and prior to 2002, he was with the law
                                                     firm of Cahill Gordon & Reindel.
</TABLE>

                                       39
<PAGE>

SHARE OWNERSHIP

As at the date hereof, the directors and senior officers of Brookfield own,
directly or indirectly, or exercise control or direction over approximately 4.7
million common shares, representing 3% of the outstanding voting shares (see the
information on page 2 of the Management Proxy Circular under the heading
"Principal Holders of the Corporation's Voting Shares" which is incorporated by
reference herein).

CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS

Messrs. John Zuccotti, Co-Chairman, and Richard Clark, President and Chief
Executive Officer, and each a director of the Corporation, were officers of O&Y
(U.S.) Development Company, L.P. ("O&Y") and several of its subsidiaries and
affiliates at the time O&Y filed for bankruptcy protection. Pursuant to the
Third Amended Joint Plan of Reorganization of Olympia & York Realty Corp., et al
dated November 21, 1996, which plan was consummated, certain assets and
liabilities of O&Y were transferred to Brookfield Financial Properties, L.P.
(formerly known as World Financial Properties, L.P.).

                                LEGAL PROCEEDINGS

Brookfield is occasionally named as a party in various claims and legal
proceedings which arise during the normal course of its business. Brookfield
reviews each of these claims, including the nature of the claim, the amount in
dispute or claimed and the availability of insurance coverage. Although there
can be no assurance that any particular claim will be resolved in the
Corporation's favor, the Corporation does not believe that the outcome of any
claims or potential claims of which it is currently aware will have a material
adverse effect on the Corporation, taken as a whole.

           INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

As of March 4, 2004, no director, senior officer or associate of a director or
senior officer nor, to the knowledge of the directors or senior officers of the
Corporation after having made reasonable inquiry, any person or company who
beneficially owns, directly or indirectly, voting securities of the Corporation
carrying more than 10% of the voting rights attached to any class of voting
securities of the Corporation outstanding at the date hereof, or any associate
or affiliate thereof, had any material interest, direct or indirect, in any
material transaction of the Corporation or its affiliates nor do any such
persons have a material interest, direct or indirect, in any proposed
transaction of the Corporation or its affiliates.

At December 31, 2003, Brookfield had approximately $562 million of unsecured
indebtedness outstanding to Brascan Corporation and its affiliates. During 2003,
borrowings in the normal course from these related parties totaled $351 million
and repayments totaled $290 million.

In March 2004, the Corporation exercised an option granted in its favor in March
1997 to purchase certain lands which form part of BCE Place in Toronto from
Brascan Corporation for aggregate consideration of approximately C$105 million.
The purchase price consideration was paid in part through the issuance to
Brascan Corporation of preferred shares in one of the Corporation's
subsidiaries.

                     AUDITORS, TRANSFER AGENT AND REGISTRAR

Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their
respective affiliates (collectively "Deloitte & Touche") are the principal
external auditors of the Corporation. Deloitte & Touche are Chartered
Accountants, having an address at Suite 1400, BCE Place, 181 Bay Street,
Toronto, Ontario M5J 2V1. Deloitte & Touche has advised that it holds none of
the Corporation's outstanding securities.

The transfer agent and registrar for the Corporation's Preference Shares and the
Common Shares in Canada is CIBC Mellon Trust Company at its principal office in
Toronto, Ontario. The transfer agent and registrar for the Corporation's Common
Shares in the United States is Mellon Investor Services LLC at its principal
office in Mellon Investor Services, LLC, 85 Challenger Road Ridgefield Park, NJ
07087.

                                       40
<PAGE>

                           AUDIT COMMITTEE INFORMATION

The Audit Committee is responsible for monitoring the Corporation's systems and
procedures for financial reporting and internal control, reviewing certain
public disclosure documents and monitoring the performance and independence of
the Corporation's external auditors. The committee is also responsible for
reviewing the Corporation's annual audited financial statements, unaudited
quarterly financial statements and management's discussion and analysis of
financial results of operations and review of related operations prior to their
approval by the full board of directors.

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

The Audit Committee is comprised of three directors, all of whom are independent
directors: Messrs. Allan Olson (Chairman), William Cahill and Paul McFarlane. In
addition to being independent directors as described above, all members of the
Corporation's Audit Committee must meet an additional "independence" test under
the Sarbanes-Oxley Act, in that their director's fees are the only compensation
they, or their firms, receive from the Corporation and that they are not
affiliated with the Corporation. Each member of the audit committee is
financially literate and Mr. Allan Olson is considered to be an "audit committee
financial expert" within the meaning of Section 407 of the United States
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act").

RELEVANT EDUCATION AND EXPERIENCE

Mr. Olson acquired significant financial experience and exposure to accounting
and financial issues while serving in senior management positions, as a director
and as a member of the audit committees of several public and private companies.
Mr. Olson holds a Bachelor of Science degree in engineering from the University
of Alberta and a Master of Business Administration degree from the University of
Western Ontario.

Mr. Cahill acquired significant financial experience and exposure to accounting
and financial issues in his capacities during his 20 years in real estate
finance and asset and risk management, including as a senior credit officer at
Citibank, N.A. Mr. Cahill holds a Bachelor of Arts degree in Urban Studies from
Saint Peters College.

Mr. McFarlane acquired significant financial experience and exposure to
accounting and financial issues during his 43 year career in banking at Canadian
Imperial Bank of Commerce. During the 16 years prior to his retirement in 2002,
Mr. McFarlane was a senior credit officer at the vice president and senior vice
president levels with global responsibly for large corporate and commercial
credits.

PRE-APPROVAL POLICIES AND PROCEDURES

In February 2004, the Audit Committee of the Corporation's board of directors
adopted a revised policy regarding the provision of non-audit services by the
Corporation's external auditors. This policy encourages consideration of whether
the provision of services other than audit services is compatible with
maintaining the auditors' independence and requires Audit Committee pre-approval
of permitted audit and audit-related services. The policy specifies a number of
services which are not permitted to be preformed by the Corporation's external
auditors, including the use of its external auditors for financial information
system design and implementation assignments.

EXTERNAL AUDITOR SERVICE FEES (BY CATEGORY)

Deloitte & Touche and its predecessors have served as external auditors of the
Corporation since 1978. From time to time, Deloitte & Touche has provided
consulting and other non-audit services to the Corporation and its subsidiaries.

The following table sets forth further information on the fees billed by
Deloitte & Touche to the Corporation for the fiscal years ended December 31:

<TABLE>
<CAPTION>
                  Service Performed                                      2003              2002
---------------------------------------------------------------------------------------------------
<S>                                                                <C>                  <C>
Audit Fees
   The Corporation's consolidated financial statements             $      477,200       $   529,100
   Property level financial statements                                    609,800           570,200
   Prospectuses                                                           116,600           100,000
Audit-Related Fees                                                          9,500             9,000
Tax Fees                                                                  340,000           460,000
---------------------------------------------------------------------------------------------------
Total                                                              $    1,553,100       $ 1,668,300
===================================================================================================
</TABLE>

                                       41
<PAGE>

Audit fees include fees for services that would normally be provided by the
external auditor in connection with statutory and regulatory filings or
engagements, including fees for services necessary to perform an audit or review
in accordance with generally accepted auditing standards. This category also
includes services that generally only the external auditor reasonably can
provide, including comfort letters, statutory audits, attest services, consents
and assistance with and review of certain documents filed with securities
regulatory authorities.

Audit-related fees are for assurance and related services, such as due diligence
services, that traditionally are performed by the external auditor. More
specifically, these services include, among others: employee benefit plan
audits, due diligence related to mergers and acquisitions, accounting
consultations and audits in connection with acquisitions, internal control
reviews, attest services that are not required by statute or regulation and
consultation concerning financial accounting and reporting standards.

Tax fees are for professional services rendered for tax compliance, tax advice
and tax planning on certain transactions.

                             ADDITIONAL INFORMATION

Additional information relating to Brookfield Properties Corporation, including
information as to directors' and executive officers' remuneration and
indebtedness, the principal holders of Brookfield's securities, securities
authorized for issuance under equity compensation plans and interests of
management and others in material transactions, is set out in pages 8 through 15
of Brookfield's Management Proxy Circular dated March 4, 2004 (the "Management
Proxy Circular"). Additional financial information relating to Brookfield is
also provided in the consolidated financial statements for the year ended
December 31, 2003 in Brookfield's Annual Report for the year ended December 31,
2003 ("2003 Annual Report"). Brookfield's 2003 Annual Report also contains, in
pages 17 through 36, the Management's Discussion and Analysis of Brookfield's
financial condition and results of operations for the year ended December 31,
2003 (the "MD&A"), which is incorporated herein by reference.

You may access other information about Brookfield, including the Corporation's
disclosure documents, reports, statements or other information that Brookfield
files with the Canadian securities regulatory authorities through SEDAR at
www.sedar.com and in the United States with the SEC at www.sec.gov and on
Brookfield's Web site at www.brookfieldproperties.com.

Additional information relating to Brookfield will be provided to any person,
upon request to the Secretary of the Corporation as follows:


      1.    when securities of Brookfield are in the course of a distribution
            pursuant to a short form prospectus, or when a preliminary short
            form prospectus has been filed in respect of a distribution of
            Brookfield's securities,

            (a)   one copy of this AIF, together with one copy of any document,
                  or the pertinent pages of any document, incorporated by
                  reference in the AIF,

            (b)   one copy of Brookfield's consolidated financial statements for
                  the year ended December 31, 2003 together with the
                  accompanying report of the auditor and one copy of any interim
                  financial statements of Brookfield subsequent to the financial
                  statements for the year ended December 31, 2003,

            (c)   one copy of Brookfield's Management Proxy Circular dated March
                  4, 2004, and

            (d)   one copy of any other documents that are incorporated by
                  reference into the preliminary short form prospectus or the
                  short form prospectus and are not required to be provided
                  under (i) to (iii) above; or

      2.    at any other time, one copy of any document referred to in 1(a),
            (b), (c) and (d) above, provided that Brookfield may require the
            payment of a reasonable charge if the request is made by a person
            who is not a security holder of Brookfield.

                                       42
<PAGE>

                            APPENDIX A - SUBSIDIARIES

      As of March 31, 2004, Brookfield beneficially owned, directly or
indirectly, the percentage interest of the voting and non-voting securities of
the subsidiaries listed below. Certain subsidiaries, each of which represents
not more than 10% of the consolidated assets and not more than 10% of the
consolidated revenues of Brookfield, and all of which, in the aggregate,
represent not more than 20% of the total consolidated assets and the total
consolidated revenues of Brookfield at March 31, 2004, have been omitted.
Indentation indicates the voting securities are directly or indirectly owned by
the subsidiary listed above.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                       Percentage   Property (including Percentage Interest if less than 100%)
               Subsidiary                               Interest    /Line of Business
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>          <C>
Brookfield Properties Ltd.                                100%      Property Management and BCE Place, Bay-Wellington
                                                                    Tower and Canada Trust Tower (50%)
   BCE Place (Wellington) Limited                         100%      Head Lease, BCE Place, Bay Wellington Tower, Toronto
   Galleria Concourse Operations Inc                       75%      Head Lease, BCE Place, Retail and Parking, Toronto
   CT Tower Investments Inc.                               50%      Head Lease, BCE Place, Canada Trust Tower, Toronto
Brookfield Properties (US) Inc.                           100%      Holding Company
   Brookfield Commercial Properties Inc.                  100%      Holding Company
        Brookfield Properties (US) LLC                    100%      Property Management
        Brookfield Republic Plaza LLC                     100%      Republic Plaza, Denver
        Brookfield Denver Inc.                            100%      World Trade Center, Denver
        Brookfield CSBB Inc.                              100%      Colorado State Bank Building, Denver (50%)
        MCC Mortgage L.P.                                  98%      33 South 6th Street Minneapolis City Center, Minneapolis
        Brookfield Market Inc.                            100%      Gaviidae Common Phase I, Minneapolis
        DB Holdings, Inc./Brookfield DB Inc.              100%      Dain Rauscher Plaza, Minneapolis
                                                                    Gaviidae Common Phase II, Minneapolis
        Brookfield Retail Centers Inc.                    100%      Chicago Place, Chicago
   Brookfield Financial Properties, L.P.                 99.4%      Property Management and Holding Company
        WFP Tower A Co. L.P.                             99.4%      One World Financial Center, New York
        WFP Tower B Co. L.P.                             99.4%      Two World Financial Center, New York
        BFP Tower C Co. LLC                              99.4%      Three World Financial Center, New York (51%)
        WFP Tower D Co. L.P.                             50.7%      Four World Financial Center, New York
        BFP One Liberty Plaza Co. LLC                    99.4%      One Liberty Plaza, New York
        BFP 245 Park Co. LLC                             50.7%      245 Park Avenue, New York
        BFP 300 Madison II LLC                           99.4%      300 Madison Avenue, New York
        WFP 53 State Street Limited Partnership          50.7%      53 State Street, Boston
        WFP 75 State Street Co. L.P.                     50.7%      75 State Street, Boston
        BFP 1625 Eye Co. LLC                             99.4%      1625 Eye Street, Washington, D.C.
        BFP 701 9th Co. LLC                              99.4%      701 9th Street, Washington, D.C.
   West 31st Inc.                                         100%      Penn Station Site
BPO Properties Ltd.                                                 Holding Company
   70 York Street Limited                                  89%      HSBC Building, Toronto
   Exchange Tower Limited                                  89%      335 & 347 Bay Street, Toronto
                                                                    Bay Adelaide Centre, Toronto (50%)
        1452917 Ontario Limited/126 Ontario                89%      Queens Quay Terminal, Toronto
        Limited
        Brookfield Properties (ET) Ltd.                    89%      Exchange Tower Block, Toronto (50%)
        1464255 Ontario Limited                            89%      Hudson's Bay Centre, Toronto (25%)
        1450779 Ontario Limited                            89%      20-22 Front Street West, Toronto
        1523605 Ontario Limited                            89%      105 Adelaide Street West, Toronto
        2012769 Ontario Limited                            89%
             The Atrium On Bay Inc.                      44.5%      Atrium On Bay, Toronto (50%)
        Bay Street Canada Holdings Company               45.4%
        Brookfield Properties (Vancouver) Ltd./3744469     89%      Royal Centre, Vancouver
          Canada Ltd./3843863 Canada Ltd.
        Brookfield Properties (Bankers Hall) Ltd.          89%      Bankers Hall, Calgary (50%)
        Brookfield Properties (RBB) Ltd.                   89%      Royal Bank Building, Calgary (50%)
        PCC Properties (Calgary) Ltd.                      89%      Petro-Canada Center, Calgary (50%)
        Fifth Avenue Place (Calgary) Ltd.                  89%      Fifth Avenue Place, Calgary (50%)
Brookfield FMS Ltd.                                       100%      Holding Company
   Brookfield Lepage Johnson Controls Facility             40%      Facilities Management
     Management Services Limited Partnership
Brookfield Homes Holdings Ltd                             100%      Holding Company
   Carma Corporation                                      100%      Land Development and Housing Company
   Brookfield Homes (Ontario) Limited                     100%      Land Development and Housing Company
Brookfield Residential Services Ltd.                      100%      Condominium Management
</TABLE>

                                       43
<PAGE>
\
                  APPENDIX B-COMMERCIAL PROPERTIES BY REGION

<TABLE>
<CAPTION>
                                                                                            Effective  Brookfield's
                              Number of                            Retail/    Leasable      Ownership  Effective
As at March 31, 2004          Properties  Leased    Office         Other        Area        Interest   Interest
-------------------------------------------------------------------------------------------------------------------
                                               %  000's sq.ft.  000's sq.ft.  000's sq.ft.          %  000's sq.ft.
<S>                           <C>         <C>     <C>           <C>           <C>           <C>        <C>
NEW YORK
World Financial Center
   One                             1       99.8%     1,520          108         1,628          100%         1,628
   Two                             1      100.0%     2,455           36         2,491          100%         2,491
   Four                            1      100.0%     1,711           89         1,800          100%           917
   Retail                                  62.8%        --          295           295          100%           295
One Liberty Plaza                  1       95.3%     2,194           20         2,214          100%         2,214
300 Madison Avenue                 1       99.1%     1,089            5         1,094          100%         1,094
245 Park Avenue                    1       97.2%     1,630           62         1,692           51%           863
Developments
   Three World Financial           1         --      1,200           --         1,200           51%         1,200
   Center
   Penn Station                    1         --      2,500           --         2,500          100%         2,500
   Other                           1      100.0%        --            7             7           50%             4
=================================================================================================================
                                   9       97.9%    14,299          622        14,921                      13,206
BOSTON
53 State Street                    1       98.1%     1,091           70         1,161           51%           592
75 State Street                    1       97.0%       742          260         1,002           51%           511
=================================================================================================================
                                   2       97.7%     1,833          330         2,163                       1,103
WASHINGTON
1625 Eye Street, N.W.              1       52.9%       374          197           571          100%           571
701 9th Street, N.W.               1      100.0%       340          207           547          100%           547
=================================================================================================================
                                   2       75.8%       714          404         1,118                       1,118
TORONTO
BCE Place
   Canada Trust Tower              1      100.0%     1,126           17         1,143           50%           572
   Bay Wellington Tower            1       93.3%     1,297           42         1,339          100%         1,339
   Retail, parking and office      2       99.6%       137          809           946           75%           705
Exchange Tower Block               2       96.5%     1,136          257         1,393           58%           812
HSBC Building                      1       99.7%       188           37           225          100%           225
Queen's Quay Terminal              1       90.4%       428           75           503          100%           503
Atrium on Bay                      1       92.8%       914          327         1,241           50%           621
Other                              1      100.0%       231           --           231           50%           116
Developments
   Bay-Adelaide Centre             1         --      1,800           --         1,800           50%           900
   Hudson's Bay Centre             1         --        535          557         1,092           25%           273
   BCE Place III                   1         --        800           --           800           65%           520
=================================================================================================================
                                  13       95.7%     8,592        2,121        10,713                       6,586
CALGARY
Bankers Hall                       3       97.4%     1,948          750         2,698           50%         1,349
Fifth Avenue Place                 2       99.1%     1,428          253         1,681           50%           841
Petro-Canada Centre                2       97.8%     1,707          245         1,952           50%           976
=================================================================================================================
                                   7       98.0%     5,083        1,248         6,331                       3,166
DENVER
Republic Plaza
   Office                          1       79.9%     1,247           --         1,247          100%         1,247
   Development and other           1         --        400          548           948          100%           948
Trade Center                       2       84.6%       767           43           810          100%           810
Colorado State Bank Building       1       92.6%       412           --           412           50%           206
=================================================================================================================
                                   5       83.5%     2,826          591         3,417                       3,211
MINNEAPOLIS
33 South Sixth Street              2       71.0%     1,082          695         1,777          100%         1,777
Dain Plaza                         2       90.4%       593          638         1,231          100%         1,231
=================================================================================================================
                                   4       79.1%     1,675        1,333         3,008                       3,008
OTHER
Royal Centre, Vancouver            1       87.3%       493          360           853          100%           853
Other                              4       88.7%     2,607          315         2,922          100%         2,922
=================================================================================================================
                                   5       87.9%     3,100          675         3,775                       3,775
-----------------------------------------------------------------------------------------------------------------
Total portfolio                   47       93.9%    38,122        7,324        45,446                      35,173
Less: other shareholders'
   interests                                                                                               (1,068)
=================================================================================================================
Brookfield's net effective
   ownership interest                                                                                      34,105
=================================================================================================================
</TABLE>

                                       44
<PAGE>



     APPENDIX C-SELECTED CONSOLIDATED FINANCIAL INFORMATION


<TABLE>
<CAPTION>
FIVE YEAR SUMMARY
Years ended at December 31 (audited)
----------------------------------------------------------------------------------------------------------------
                                                              Pro Forma(1)
US Millions, except per share information              2003       2002        2002       2001     2000    1999
----------------------------------------------------------------------------------------------------------------
<S>                                                  <C>      <C>           <C>       <C>       <C>      <C>
ASSETS
Commercial properties                                $ 6,297    $  5,661    $  5,661  $  5,802  $ 6,368  $ 5,930
Development properties                                   684         944         944       575      537      363
Receivables and other                                    717         769         769       847    1,017     1028
Marketable Securities                                    267          --          --        --       --       --
Cash and cash equivalents                                132          76          76       195      201      214
Assets of Brookfield Homes Corporation                    --          --         879       872      762      756
----------------------------------------------------------------------------------------------------------------
                                                     $ 8,097    $  7,450    $  8,329  $  8,291  $ 8,885  $ 8,291
================================================================================================================
LIABILITIES
Commercial property debt                             $ 4,537    $  4,588    $  4,588  $  4,606  $ 4,702  $ 4,139
Accounts payable and other liabilities                   563         429         429       460    1,031    1,103
Liabilities of Brookfield Homes Corporation               --          --         556       583      549      482

SHAREHOLDERS' INTERESTS
Interests of others in properties                         81          84          84       113      159      326
Preferred shares - subsidiaries and corporate          1,001         579         579       585      607      607
Convertible debentures                                    --          --          --        --       50      251
Common shares                                          1,915       1,770       2,093     1,944    1,787    1,383
----------------------------------------------------------------------------------------------------------------
                                                     $ 8,097    $  7,450    $  8,329  $  8,291  $ 8,885  $ 8,291
================================================================================================================

REVENUE, FUNDS FROM OPERATIONS AND NET INCOME FROM CONTINUING OPERATIONS
Revenue                                              $ 1,363                $  1,372  $  1,428  $ 1,369  $ 1,267
Funds from operations (FFO) and gains                    460                     374       334      268      213
Net income                                               279                     236       202      140      125
FFO and gains per common share - diluted             $  2.78                $   2.18  $   1.92  $  1.56  $  1.23
FFO per common share prior to lease termination
   income and gains - diluted                        $  2.15                $   1.87  $   1.63  $  1.45  $  1.12
Net income per common share - basic                  $  1.64                $   1.35  $   1.12  $  0.77  $  0.67
                            - diluted                $  1.63                $   1.34  $   1.12  $  0.76  $  0.67
NET INCOME INCLUDING DISCONTINUED OPERATIONS             279                     280       241      170      153

DIVIDENDS PAID PER SHARE
Class A preferred shares (C$)                        $0.1875                $ 0.1875  $ 0.1875  $0.1875  $0.1875
Class AA, Series E preferred shares(C$)              $0.8202                $ 0.7272  $ 1.1009  $1.2549  $1.1282
Class AAA, Series A preferred shares (C$)                 --                $ 1.6521  $   2.25  $  2.25  $  2.25
Class AAA, Series B preferred shares (C$)                 --                $ 1.6521  $   2.25  $  2.25  $  2.25
Class AAA, Series C preferred shares (C$)            $1.2356                $   2.00  $   2.00  $  2.00  $  2.00
Class AAA, Series D preferred shares (C$)            $1.2356                $   2.00  $   2.00  $  2.00  $  2.00
Class AAA, Series F preferred shares (C$)            $  1.50                $ 0.3986        --       --       --
Class AAA, Series G preferred shares (US$)           $0.7237                      --        --       --       --
Class AAA, Series H preferred shares (C$)            $0.3033                      --        --       --       --
Common shares(2) (US$)                               $  0.50                $   0.40  $   0.33  $  0.25  $  0.21
================================================================================================================
</TABLE>

(1)   Reflects the distribution of Brookfield Homes Corporation, completed on
      January 6, 2003.

(2)   Effective September 1, 2001, dividends declared in US$. The 2003 common
      share dividend excludes the distribution of Brookfield Homes Corporation.

                                       45
<PAGE>

<TABLE>
<CAPTION>
QUARTERLY REVENUE AND NET INCOME FROM CONTINUING OPERATIONS
Three months ended (unaudited)
-----------------------------------------------------------------------------------------------------------------------------
                                                              2003                                   2002
                                              -------------------------------------   ---------------------------------------
US Millions, except per share information     DEC. 31   SEPT. 30   JUNE 30  MAR. 31   Dec. 31   Sept. 30  June 30     Mar. 31
-----------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>       <C>        <C>      <C>       <C>        <C>        <C>      <C>
Revenue and gains                             $   447   $   320    $   301  $   295   $   385    $  318     $   324  $    345
Funds from operations and gains                   193        91         90       86        81       100          81       112
Net income                                        126        50         53       50        50        64          50        72
Net income per common share - diluted         $  0.75   $  0.29    $  0.30  $  0.29   $  0.29    $ 0.35     $  0.28  $   0.42
=============================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
SEGMENTED INFORMATION
Years ended December 31 (audited)
--------------------------------------------------------------------------------------------------------------------------
                                           United States                    Canada                        Total
                                     -------------------------   ---------------------------   ---------------------------
(Millions)                            2003     2002      2001      2003       2002      2001     2003      2002       2001
--------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>     <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
Assets
Commercial properties                $4,842  $ 4,430   $ 4,392   $ 1,455   $ 1,231   $ 1,410   $ 6,297   $ 5,661   $ 5,802
Development properties                  373      711       374       311       233       201       684       944       575
Receivables and other                   334      301       428       383       468       419       717       769       847
Marketable securities                    --       --        --       267        --        --       267        --        --
Cash and cash equivalents               101       72       195        31         4        --       132        76       195
Assets of Brookfield Homes               --      879       872        --        --        --        --       879       872
--------------------------------------------------------------------------------------------------------------------------
                                     $5,650  $ 6,393   $ 6,261   $ 2,447   $ 1,936   $ 2,030   $ 8,097   $ 8,329   $ 8,291
==========================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                           United States                Canada                        Total
                                        --------------------   -------------------------   --------------------------
(Millions)                              2003    2002    2001    2003     2002      2001     2003     2002       2001
---------------------------------------------------------------------------------------------------------------------
<S>                                     <C>    <C>     <C>     <C>      <C>      <C>       <C>      <C>      <C>
Commercial property operations
Rental revenues                         $678   $  687  $ 688   $  298   $  256   $   319   $  976   $  943   $  1,007
Lease termination income and gains        97       --     25        3       60        30      100       60         55
Expenses                                 244      240    254      135      103       136      379      343        390
---------------------------------------------------------------------------------------------------------------------
                                         531      447    459      166      213       213      697      660        672
=====================================================================================================================
Land and housing
Revenues                                  30      157    181      195      164       143      225      321        324
Expenses                                  27      156    180      167      143       124      194      299        304
---------------------------------------------------------------------------------------------------------------------
                                           3        1      1       28       21        19       31       22         20
=====================================================================================================================
Other revenues                            25        9     17       37       39        25       62       48         42
---------------------------------------------------------------------------------------------------------------------
Net operating income                     559      457    477      231      273       257      790      730        734
Interest expense                         212      235    250       53       49        78      265      284        328
Administrative and development            20       18     22       24       24        22       44       42         44
Interests of others in properties          2        7      5       19       23        23       21       30         28
---------------------------------------------------------------------------------------------------------------------
Income before undernoted                 325      197    200      135      177       134      460      374        334
Depreciation and amortization             54       52     48       25       28        28       79       80         76
---------------------------------------------------------------------------------------------------------------------
Income before unallocated costs          271      145    152      110      149       106      381      294        258
Taxes and other non-cash items                                                                102       58         56
---------------------------------------------------------------------------------------------------------------------
Net income from continuing operations                                                         279      236        202
=====================================================================================================================
Income from discontinued operations                                                            --       44         39
---------------------------------------------------------------------------------------------------------------------
Net income                                                                                 $  279   $  280   $    241
---------------------------------------------------------------------------------------------------------------------
Acquisitions (dispositions) of real     $(24)  $    2  $ (97)  $  (26)  $ (116)  $   (40)  $  (50)  $ (114)  $   (137)
estate, net
Commercial property tenant                13       36     24       13       13        26       26       49         50
improvements
Development and redevelopment            167      195     75        7       11        26      174      206        101
investments
Capital expenditures                       7        7      6        9        9         8       16       16         14
=====================================================================================================================
</TABLE>

                                       46
<PAGE>

                      APPENDIX D - AUDIT COMMITTEE CHARTER

A committee of the board of directors of the Corporation to be known as the
Audit Committee (the "Committee") shall have the following terms of reference:

MEMBERSHIP AND CHAIRPERSON

Following each annual meeting of shareholders, the board of directors of the
Corporation (the "Board") shall appoint from its number three or more directors
(the "Members" and each a "Member") to serve on the Committee until the close of
the next annual meeting of shareholders of the Corporation or until the Member
ceases to be a director, resigns or is replaced, whichever occurs first.

The Members will be selected by the Board on the recommendation of the
Governance and Nominating Committee. Any Member may be removed from office or
replaced at any time by the Board. All of the Members will be Independent
Directors. In addition, every Member will be Financially Literate, or agree to
become Financially Literate within a reasonable period of time following
appointment, and at least one Member will be an Audit Committee Financial
Expert. Members may not serve on more than two other public company audit
committees, except with the prior approval of the Board.

The Board shall appoint one Member as the chairperson of the Committee. If the
chairperson is absent from a meeting, the Members shall select a chairperson
from those in attendance to act as chairperson of the meeting.

RESPONSIBILITIES

The Committee shall:

(a)   require the auditor to report directly to the Committee;

(b)   review and evaluate the auditor's independence, experience, qualifications
      and performance and determine whether the auditor should be appointed or
      re-appointed and nominate the auditor for appointment or re-appointment by
      the shareholders;

(c)   where appropriate, recommend to the Board that the shareholders terminate
      the auditor;

(d)   when a change of auditor is proposed, review all issues related to the
      change, including the information to be included in the notice of change
      of auditor required, and the orderly transition of such change;

(e)   review the terms of the auditor's engagement and the appropriateness and
      reasonableness of the proposed audit fees;

(f)   at least annually, obtain and review a report by the auditor describing:

          -     the auditor's internal quality-control procedures; and

          -     any material issues raised by the most recent internal quality
                control review, or peer review, of the auditor, or review by any
                independent oversight body such as the Canadian Public
                Accountability Board or the Public Company Accounting Oversight
                Board, or governmental or professional authorities within the
                preceding five years respecting one or more independent audits
                carried out by the auditor, and the steps taken to deal with any
                issues raised in any such review;

(g)   at least annually, confirm that the auditor has submitted a formal written
      statement describing all of its relationships with the Corporation;
      discuss with the auditor any disclosed relationships or services that may
      affect its objectivity and independence; obtain written confirmation from
      the auditor that it is objective within the meaning of the Rules of
      Professional Conduct/Code of Ethics adopted by the provincial institute or
      order of Chartered Accountants to which it belongs and is an independent
      public accountant within the meaning of the federal securities legislation
      administered by the United States Securities and Exchange Commission; and,
      confirm that it has complied with applicable laws with the rotation of
      certain members of the audit engagement team;

(h)   review and evaluate the lead partner of the auditor;

(i)   ensure the regular rotation of the audit engagement team members as
      required by law, and periodically consider whether there should be regular
      rotation of the auditor firm;

(j)   meet privately with the auditor as frequently as the Committee feels is
      appropriate to fulfill its responsibilities, which will not be less
      frequently than annually, to discuss any items of concern to the Committee
      or the auditor, including:

                                       47
<PAGE>

      -     planning and staffing of the audit;

      -     any material written communications between the auditor and
            management;

      -     whether or not the auditor is satisfied with the quality and
            effectiveness of financial recording procedures and systems;

      -     the extent to which the auditor is satisfied with the nature and
            scope of its examination;

      -     whether or not the auditor has received the full co-operation of
            management of the Corporation;

      -     the auditor's opinion of the competence and performance of the Chief
            Financial Officer and other key financial personnel;

      -     the items required to be communicated to the Committee in accordance
            with generally accepted auditing standards;

      -     all critical accounting policies and practices to be used by the
            Corporation;

      -     all alternative treatments of financial information within generally
            accepted accounting principles that have been discussed with
            management, ramifications of the use of such alternative disclosures
            and treatments, and the treatment preferred by the auditor;

      -     any difficulties encountered in the course of the audit work, any
            restrictions imposed on the scope of activities or access to
            requested information, any significant disagreements with management
            and management's response;

      -     and any illegal act that may have occurred and the discovery of
            which is required to be disclosed to the Committee pursuant to the
            United States Securities Exchange Act of 1934.

(k)   pre-approve or approve, if permitted by law, the appointment of the
      auditor to provide any audit service or non-prohibited non-audit service
      and, if desired, establish detailed policies and procedures for the
      pre-approval of audit services and non-prohibited non-audit services by
      the auditor. The Committee may delegate this ability to one or more
      Members to the extent permitted by applicable law provided that any
      pre-approvals granted pursuant to such delegation must be detailed as to
      the particular service to be provided, may not delegate Committee
      responsibilities to management and must be reported to the full Committee
      at its next scheduled meeting;

(l)   resolve any disagreements between management and the auditor regarding
      financial reporting;

(m)   review, and, where appropriate, recommend for approval by the Board, the
      following:

      (i)   audited annual financial statements, in conjunction with the report
            of the external auditor;

      (ii)  interim financial statements;

      (iii) annual and interim management's discussion and analysis of financial
            condition and results of operation;

      (iv)  reconciliations of the annual or interim financial statement; and

      (v)   all other audited or unaudited financial information contained in
            public disclosure documents (including without limitation, any
            prospectus, or other offering or public disclosure documents and
            financial statements required by regulatory authorities);

(n)   discuss earnings press releases and other press releases containing
      financial information (to ensure consistency of the disclosure to the
      financial statement), as well as financial information and earnings
      guidance provided to analysts and rating agencies including the use of
      "pro forma" or "adjusted" non-GAAP information in such press releases and
      financial information. Such review may consist of a general discussion of
      the types of information to be disclosed or the types of presentations to
      be made;

(o)   review the effect of regulatory and accounting initiatives as well as
      off-balance sheet structures on the Corporation's financial statements;

                                       48
<PAGE>

(p)   review disclosures made to the Committee by the Chief Executive Officer
      and Chief Financial Officer during their certification process for
      applicable securities law filings about any significant deficiencies and
      material weaknesses in the design or operation of the Corporation's
      internal control over financial reporting which are reasonably likely to
      adversely affect the Corporation's ability to record, process, summarize
      and report financial information, and any fraud involving management or
      other employees;

(q)   review the effectiveness of management's policies and practices concerning
      financial reporting, any proposed changes in major accounting policies,
      the appointment and replacement of management responsible for financial
      reporting and the internal audit function;

(r)   review the adequacy of the internal controls that have been adopted by the
      Corporation to safeguard assets from loss and unauthorized use and to
      verify the accuracy of the financial records and any special audit steps
      adopted in light of material control deficiencies;

(s)   meet privately with the person responsible for the Corporation's internal
      audit function as frequently as the Committee feels appropriate to fulfill
      its responsibilities, which will not be less frequently than annually, to
      discuss any items of concern;

(t)   review the mandate, budget, planned activities, staffing and
      organizational structure of the internal audit function (which may be
      outsourced to a firm other than the auditor) to confirm that it is
      independent of management and has sufficient resources to carry out its
      mandate. The Committee will discuss this mandate with the auditor; review
      the appointment and replacement of the person in charge of the
      Corporation's internal audit and review the significant reports to
      management prepared by the internal auditor and management's responses;

(u)   review the controls and procedures that have been adopted to confirm that
      material information about the Corporation and its subsidiaries that is
      required to be disclosed under applicable law or stock exchange rules is
      disclosed and to review the public disclosure of financial information
      extracted or derived from the issuer's financial statements and
      periodically assess the adequacy of these procedures;

(v)   review periodically, the Corporation's policies with respect to risk
      assessment and management, particularly financial risk exposure, including
      the steps taken to monitor and control risks;

(w)   review periodically, the status of taxation matters of the Corporation;

(x)   set clear policies for hiring partners and employees and former partners
      and employees of the external auditor;

(y)   review, with legal counsel where required, such litigation, claims, tax
      assessments, transactions, inquiries from regulators and material
      inquiries from governmental agencies or other contingencies which may have
      a material impact on financial results or which may otherwise adversely
      affect the financial well-being of the Corporation; and

(z)   consider other matters of a financial nature as directed by the Board.

REPORTING

The Committee will regularly report to the Board on:

      -     the auditor's independence;

      -     the performance of the auditor and the Committee's recommendations
            regarding its reappointment or termination;

      -     the performance of the internal audit function department;

      -     the adequacy of the Corporation's internal controls and disclosure
            controls;

      -     its recommendations regarding the annual and interim financial
            statements of the Corporation and any reconciliation of the
            Corporation's financial statements, including any issues with
            respect to the quality or integrity of the financial statements;

      -     its review of any other public disclosure document including the
            annual information form and the annual and interim management's
            discussion and analysis of financial condition and results of
            operations;

                                       49
<PAGE>


      -     the Corporation's compliance with legal and regulatory requirements,
            particularly those related to financial reporting; and

      -     all other significant matters it has addressed and with respect to
            such other matters that are within its responsibilities.

COMPLAINTS PROCEDURE

The Committee will establish a procedure for the receipt, retention and
follow-up of complaints received by the Corporation regarding accounting,
internal controls, disclosure controls or auditing matters and a procedure for
the confidential, anonymous submission of concerns by employees of the
Corporation regarding such matters.

REVIEW AND DISCLOSURE

The Committee will review this Charter at least annually and submit it to the
Governance and Nominating Committee together with any proposed amendments. The
Governance and Nominating Committee will review the Charter and submit it to the
Board for approval with such further amendments as it deems necessary and
appropriate.

This Charter will be posted on the Corporation's web site and the annual report
of the Corporation will state that this Charter is available on the web site or
is available in print to any shareholder who requests a copy.

ASSESSMENT

At least annually, the Governance and Nominating Committee will review the
effectiveness of this Committee in fulfilling its responsibilities and duties as
set out in this Charter and in a manner consistent with the corporate governance
guidelines adopted by the Board.

ACCESS TO OUTSIDE ADVISORS AND SENIOR MANAGEMENT

The Committee may retain any outside advisor including legal counsel, at the
expense of the Corporation, without the Board's approval at any time and has the
authority to determine any such advisor's fees.

The Corporation will provide for appropriate funding, for payment of
compensation to any auditor engaged to prepare or issue an audit report or
perform other audit, review or attest services, and ordinary administrative
expenses of the Committee.

Members will meet privately with senior management as frequently as they feel is
appropriate to fulfill the Committee's responsibilities, but not less than
annually.

MEETINGS

Meetings of the Committee may be called by any Member, the Chairman of the
Board, the Chief Executive Officer or Chief Financial Officer of the Corporation
or the auditor. Meetings will be held each quarter and at such additional times
as is necessary for the Committee to fulfill its responsibilities. The Committee
shall appoint a secretary to be the secretary of each meeting of the Committee
and to maintain minutes of the meeting and deliberations of the Committee.

The powers of the Committee shall be exercisable at a meeting at which a quorum
is present. A quorum shall be not less than a majority of the Members from time
to time. Matters decided by the Committee shall be decided by majority vote.
Subject to the foregoing, the Business Corporations Act (Canada) and the
by-laws, and unless otherwise determined by the Board, the Committee shall have
the power to regulate its procedure.

Notice of each meeting shall be given to the auditor, each Member, and to the
Chairman of the Board and the Chief Executive Officer of the Corporation. Notice
of meeting may be given verbally or by letter, by facsimile or telephone not
less than 24 hours before the time fixed for the meeting. Members may waive
notice of any meeting and attendance at a meeting is deemed waiver of notice.
The notice need not state the purpose or purposes for which the meeting is being
held.

The Committee may invite from time to time such persons as it may see fit to
attend its meetings and to take part in discussion and consideration of the
affairs of the Committee. The Committee may require the auditors to attend any
or all meetings.

                                       50
<PAGE>


DEFINITIONS

Capitalized terms used in this Charter and not otherwise defined have the
meaning attributed to them below:

"INDEPENDENT DIRECTOR" means a director who has been affirmatively determined by
the Board to have no material relationship with the Corporation, either directly
or as a partner, shareholder or officer of an organization that has a
relationship with the Corporation. In addition, a director who:

      (i)   is an employee, or whose immediate family member is an executive
            officer of the Corporation is not independent until three years
            after the end of such employment relationship;

      (ii)  is receiving, or whose immediate family member receives, more than
            US$50,000 per year in direct compensation from the Corporation,
            other than director and committee fees and pension or other forms of
            deferred compensation for prior service (provided such compensation
            is not contingent in any way on continued service) is not
            independent until three years after he or she ceases to receive more
            than US$50,000 per year in compensation;

      (iii) is affiliated with or employed by, or whose immediate family member
            is employed in a professional capacity by a present or former
            internal or external auditor of the Corporation is not independent
            until three years after the end of the affiliation or employment of
            the auditing relationship;

      (iv)  is employed as, or whose immediate family member is employed as, an
            executive officer of another company where any of the present (at
            the time of review) members of senior management of the Corporation
            serve on that company's compensation committee is not independent
            until three years after the end of such service or the employment
            relationship; and

      (v)   is an executive officer or an employee of, or whose immediate family
            member is an executive officer of, another company for which the
            Corporation accounts for at least 2% or US$1 million, whichever is
            greater, of such other company's consolidated gross revenues, in
            each case is not independent until three years after falling below
            such threshold.

For the purposes of the definition above, the term Corporation includes any
parent, subsidiary or other affiliated entity of the Corporation.

Additionally, an Independent Director for the purpose of the Audit Committee
specifically may not:

            (a)   accept, directly or indirectly, any consulting, advisory, or
                  other compensatory fee from the Corporation or any of its
                  subsidiaries, other than director and committee fees, and
                  pension or other forms of deferred compensation for prior
                  service (provided such compensation is not contingent in any
                  way on continued service); or

            (b)   be an affiliated person of the Corporation or any of its
                  subsidiaries (within the meaning of applicable rules and
                  regulations).

"FINANCIALLY LITERATE" means the ability to read and understand a set of
financial statements that present a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and complexity of
the issues that can reasonably be expected to be raised by the Corporation's
financial statements.

"AUDIT COMMITTEE FINANCIAL EXPERT" means a person who has the following
attributes:

      (a)   an understanding of generally accepted accounting principles and
            financial statements;

      (b)   the ability to assess the general application of such principles in
            connection with the accounting for estimates, accruals and reserves;

      (c)   experience preparing, auditing, analyzing or evaluating financial
            statements that present a breadth and level of complexity of
            accounting issues that are generally comparable to the breadth and
            complexity of issues that can reasonably be expected to be raised by
            the Corporation's financial statements, or experience actively
            supervising one or more persons engaged in such activities;

      (d)   an understanding of internal controls and procedures for financial
            reporting; and

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      (e)   an understanding of audit committee functions;

acquired through any one or more of the following:

            (i)   education and experience as a principal financial officer,
                  principal accounting officer, controller, public accountant or
                  auditor or experience in one or more positions that involve
                  the performance of similar functions;

            (ii)  experience actively supervising a principal financial officer,
                  principal accounting officer, controller, public accountant,
                  auditor or person performing similar functions; or

            (iii) experience overseeing or assessing the performance of
                  companies or public accountants with respect to the
                  preparation, auditing or evaluation of financial statements;
                  or other relevant experience.

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