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(BROOKFIELD LOGO)   BROOKFIELD PROPERTIES CORPORATION RENEWAL ANNUAL INFORMATION FORM  MARCH 21, 2005




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BROOKFIELD PROPERTIES CORPORATION ANNUAL INFORMATION FORM  TABLE OF CONTENTS Note Regarding Financial Information
    
    
    iForward-Looking Statements
    
    
    iCorporate Structure
    
    
    1Name, Address and Incorporation
    
    
    1Intercorporate Relationships
    
    
    1History
    
    
    2General Development of the Business
    
    
    3Year Ended December 31, 2002
    
    
    3Year Ended December 31, 2003
    
    
    3Year Ended December 31, 2004
    
    
    4Recent Developments
    
    
    5Outlook for the Remainder of 2005
    
    
    5Business of Brookfield
    
    
    6Operating Strategy
    
    
    6Tenant Relationships
    
    
    6Tenant Installation Costs and Capital Expenditures
    
    
    7Development Operations
    
    
    8Asset Profile
    
    
    8Commercial Properties
    
    
    8Development Properties
    
    
    9Commercial Development and Infrastructure
    
    
    9Residential Development Land and Infrastructure
    
    
    10Commercial Property Debt
    
    
    10Primary Markets
    
    
    12Services Businesses
    
    
    14Employees
    
    
    14Company and Real Estate Industry Risks
    
    
    15Dividends and Dividend Policy
    
    
    19Description of Capital Structure
    
    
    19General Description of Capital Structure
    
    
    19Ratings
    
    
    36Market for Securities
    
    
    37Directors and Officers
    
    
    39Directors
    
    
    39Officers
    
    
    40Share Ownership
    
    
    41Cease Trade Orders, Bankruptcies, Penalties or Sanctions
    
    
    41Legal Proceedings
    
    
    41Interest of Management and Others in Material Transactions
    
    
    41Auditors, Transfer Agent and Registrars
    
    
    41Audit Committee Information
    
    
    42Additional Information
    
    
    43Appendix A  Subsidiaries
    
    
    44Appendix B  Commercial Properties By Region
    
    
    45Appendix C  Audit Committee Charter
    
    
    46




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Note Regarding Financial Information We prepare our annual audited consolidated financial statements in accordance with Canadian
generally accepted accounting principles (Canadian GAAP), which in some cases, differ in certain
respects from U.S. generally accepted accounting principles (US GAAP). For a discussion of these
differences, together with a reconciliation of net income and shareholders equity to US GAAP, see
Note 16 of the notes to our 2004 consolidated financial statements. We prepare our 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, 2004. Forward-Looking Statements This AIF 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 us with the securities regulators in Canada
and the United States. We undertake no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise. i




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CORPORATE STRUCTURE Name, Address and Incorporation Brookfield Properties Corporation was formed under the Canada Business Corporations Acton
September 5, 1978 to continue the business of Canadian Arena Corporation which was incorporated in
1923 under the Quebec Companies Act, 1920. Our articles have been amended from time to time to
change our 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). Our
articles were restated on September 5, 2002. Our registered office is P.O. Box 770, Suite 330, BCE Place, 181 Bay Street, Toronto, Ontario, M5J
2T3. We operate head offices at BCE Place in Toronto and One Liberty Plaza in New York. Intercorporate Relationships Our principal subsidiaries and their respective jurisdictions of formation are set out below.
All interests are 100 per cent ownership interests unless otherwise indicated. (LOCATION DIGRAM) We own our 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 BLJC Real Estate
Services Inc., a property management company; and (v) a 100% equity interest in Brookfield Homes
Holdings Ltd., a land development company. Our remaining principal subsidiaries are listed on
Appendix A hereto. Unless otherwise noted or the context otherwise indicates, references to Brookfield and us are
to Brookfield Properties Corporation and our consolidated subsidiaries. 1




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HISTORY Brookfield 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, we 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, we 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, we
acquired from an affiliate of the Canadian Imperial Bank of Commerce 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 Brookfield. Following the acquisition, we owned a 70%
interest in Brookfield Financial Properties. In June 1998, we increased our interest in Brookfield
Financial Properties to 89% by purchasing from an affiliate of Citicorp Real Estate Inc. a 19%
equity interest. The cost of the acquisition was $167 million. As partial consideration for the
acquisition, we issued a $50 million 6% unsecured debenture convertible into 2,622,100 of our
common shares. On September 30, 1997, we purchased 14,582,252 common shares of BPO Properties Ltd. (BPO
Properties, formerly Gentra, Inc.) for an aggregate purchase price of $190 million. The purchase
price was satisfied by payment of $127 million in cash and 4,610,773 of our common shares. On
completion of the transaction, we held approximately 43% of the outstanding common shares of BPO
Properties. On September 30, 1997, we 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 our ownership to 45%. On May 8, 1997, we completed an amalgamation transaction with Brookfield Homes Ltd. (Brookfield
Homes) in which shareholders of Brookfield Homes received one common share of Brookfield 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, we
issued 784,435 additional common shares. In addition to acquisitions of our own shares, we increased our interest in our subsidiaries
through capital repurchases undertaken by BPO Properties and Carma Corporation (Carma). During
1999, 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 our 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 our equity interest in BPO
Properties to 59%, 47% on a voting basis. On May 13, 1999, we also purchased 1,000,000 common
shares of Carma. This purchase increased our equity interest in Carma to 35,395,499 common shares
or approximately 82% of Carmas issued and outstanding common shares. In June 2000, we 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, we continued the consolidation of our subsidiaries through both normal course issuer
bids and tender offers for the shares of Carma and BPO Properties that we did not already own. 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. We subsequently acquired an additional 2% of BPO Properties through capital
repurchases, bringing our equity ownership interest in BPO Properties to 87% (47% on a voting
basis). On October 29, 2002, the board of directors approved the special distribution of our 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. 2




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GENERAL DEVELOPMENT OF THE BUSINESS The significant events and conditions affecting our 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 AIF. Year-ended December 31, 2002 On March 12, 2002, we 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, we 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 we 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, we announced that we 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. We have the exclusive right to occupy 1.2
million square feet of space in Three World Financial Center. We intend to finance this 51%
interest with non-recourse permanent financing upon securing tenants for the space. On September 25, 2002, we issued C$200 million in Class AAA, Series F preference shares 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% 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 Brookfield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 us to focus on our core business of owning and operating premier
office properties in select North American city centers, as well as enabling shareholders to
maximize the value of their interest in our U.S. residential home building operations by continuing
as a shareholder or monetizing their investment. Our 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 our common
equity of $323 million, as approved by our shareholders on December 16, 2002 Brookfield did not
retain any common share ownership of Brookfield Homes, however, we 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
Brookfield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, we acquired a further 3.5% of our New York and Boston assets owned through
Brookfield Financial Properties for $60 million. This transaction brought our interest in
Brookfield Financial Properties to approximately 98.5%. During 2002, we repurchased 1,385,900 of our own common shares at an average price of $18.49 per
share under our normal course issuer bid. Year-ended December 31, 2003 In March 2003, we 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. 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. 3




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In April 2003, we sold an interest in the retail and parking condominium at 100 Bloor Street West
for $40 million to a foreign real estate investor. In April 2003, we 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 our
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. These
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, subject to
certain adjustments. Thereafter, we extended an offer to acquire the balance of outstanding common
shares of BPO Properties which we did not own. In June 2003, we withdrew our proposal to enter
into a Going Private Transaction with BPO Properties due to the lack of support from enough
minority shareholders. The retractable preferred shares were subsequently purchased from the
holder thereof for C$22,952,781.60. On June 12, 2003, we issued $110 million Class AAA of Series G preference shares 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, we announced that we 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. We retain
a 51% interest in the property and will continue to manage and lease the property. On October 15, 2003, we issued C$200 million Class AAA of Series H preference shares 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, we 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. On December 31, 2003, we issued C$200 million Class AAA of Series I preference shares 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, we acquired a further 0.9% of our New York and Boston assets owned through Brookfield
Financial Properties. This brought our interest in Brookfield Financial Properties to
approximately 99.4%. During 2003, we repurchased 5,006,700 of our own common shares at an average price of $21.10 per
share under our normal course issuer bid. In December 2003, we completed the 300 Madison Avenue development at 42nd Street in midtown
Manhattan. On January 16, 2004 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. The
building rises 35 stories in the heart of Midtown Manhattan, one block west of Grand Central
Terminal. Year-ended December 31, 2004 On March 15, 2004, we 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, we completed 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, we 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, we issued C$200 million Class AAA of Series J preference shares 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. 4




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On September 24, 2004, we completed the acquisition of Potomac Tower, a 19-story office tower in
Rosslyn, Virginia, located on the Potomac River directly across from Washington, D.C. The building
was purchased from Deutsche Immobilien Fonds AG for $106 million. Potomac Tower measures 238,000
rentable square feet and has a 165,000 square foot eight-level parking garage with three
below-grade and five above-grade levels. On August 12, 2004, we financed 1625 Eye Street in Washington, D.C. with a $130 million ten-year
mortgage at a fixed interest rate of 6.0%. The financing is comprised of a two-stage funding, with
$74 million funded on the closing date and the remaining amount funded on December 20, 2004. On September 2, 2004, we, acquired a $27 million, seven-year, 11.2% fixed rate mezzanine debt
investment for the Bank of America Center, San Franciscos premiere office property, which
comprises the junior-most tier of a $750 million financing for the 1.78 million square foot tower On October 22, 2004, we issued C$150 million Class AAA of Series K preference shares at a price of
C$25.00 per share to yield 5.20% per annum. The Series K Preference Shares commenced trading on
the TSX on October 22, 2004 under the symbol BPO.PR.K. During 2004, we repurchased 1,409,900 of our own common shares at an average price of $30.54 per
share under our normal course issuer bid. Recent Developments On February 9, 2005, our board of directors approved a three-for-two stock split. The stock
split was in the form of a stock dividend. Shareholders will receive one Brookfield common share
for each two common shares held. Fractional shares will be paid in cash at the prevailing market
price. The stock dividend will be payable on March 31, 2005 to shareholders of record at the close
of business on March 15, 2005. Outlook For The Remainder of 2005 As we enter the new year and plan our affairs for 2005, we are encouraged by the positive
signs that we are seeing. In the supply-constrained markets in which we are primarily invested, we
see an increase in tenant demand, particularly for high quality office properties such as the ones
that we own. Most economic indicators such as corporate profits, investment and gross domestic product are
improving. Job growth data even suggests a modest recovery. Sustained job growth is, of course, the
key to a bright future and, for the first time in four years, the economy is moving in the right
direction. Internally, it is interesting to note that one quarter of our leasing activity during
2004, 855,000 square feet, was to our existing tenants looking to accommodate internal expansion.
In contrast, we leased 300,000 square feet of expansion space to tenants in each of 2003 and 2002,
a trend that may well indicate that businesses are again focusing on facilitating top-line growth. As we begin to emerge from four years of tough market fundamentals, we are heartened by the fact
that relative to past market cycles, the vacancy rates in our primary markets are significantly
lower than at the same point in past cycles. Using the Manhattan market as an example, a market
which represents 56% of Brookfields net operating income, the overall vacancy rate peaked at 18.5%
at the bottom of the last cycle. Although vacancy peaked at 12.5% thirteen months ago, today it
stands at 11.1%, 110 basis points from what most believe is the equilibrium point, where rental
rates spike and transaction costs narrow. We view this disparity as very meaningful and believe that as our primary markets continue to
improve, development will play an important role in facilitating business expansion. As such,
monetizing the six million square feet of office development inventory that we own and control will
be an important contributor to our future growth. Of course, we will continue to approach
development on a measured risk/reward basis. On the acquisition front, investor demand for well-leased, high quality office properties
strengthened as the year progressed. While this makes our properties even more valuable, it also
means that accretive acquisitions that meet our investment criteria are even harder to find. To
stay competitive, we are sourcing acquisitions with joint venture partners who are looking to team
up with experienced operators. This approach enhances our returns through fees earned in exchange
for our expertise. 5




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Although there is ample reason to be optimistic about the future, and we are, it would be imprudent
to depart from our disciplined, focused strategy to property management and investing. For 2005,
our strategic plan remains virtually the same as the objectives we shared with you last year with a
specific emphasis on four principle themes: sign leases in advance of maturities; aggressively and
prudently invest our ample liquidity; acquire our common shares which we believe remain
undervalued; and as our core markets rebound, capitalize on our development inventory and expand
our development capabilities. BUSINESS OF BROOKFIELD Overview Brookfield is a publicly-traded North American commercial real estate company listed on both
the New York and Toronto stock exchanges under the symbol BPO. At December 31, 2004, the book
value of our assets was $8.5 billion, 90% of which was invested in premier office properties.
Brookfield generated $501 million of funds from operations and gains or $2.93 per share in 2004. Operating Strategy Brookfields strategy is to own, develop and manage premier commercial properties in downtown
locations of select cities in North America. Our portfolio consists of 46 properties and
development sites, predominantly office buildings, comprising 46 million square feet of rentable
area and development capacity. The commercial property portfolio is focused in seven North
American cities, with New York, Boston, Washington, D.C., Toronto and Calgary comprising 86% of the
portfolio net operating income. We intend to continue our strategy of concentrating our operations
within a select number of supply constrained markets with attractive tenant bases in order to
maintain a meaningful presence and build on the strength of our tenant relationships within these
markets. Additionally, we operate 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. We currently manage directly and with a joint venture partner in excess of 150
million square feet of space across North America. This includes our own commercial properties,
properties managed for institutional investors and third party managed properties. This scale
provides us with the platform to deliver superior service to tenants across the portfolio. We also operate a development business including a number of low-cost commercial development sites
in Toronto and Manhattan. In addition, we own a land development and housing operation. Tenant Relationships An important characteristic of our 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 by leasable area in our portfolio and their respective lease
commitments: Year of
    
    
    000s Sq.
    
    
    % ofTenant
    
    Primary Location
    
    Expiry(1)
    
    
    Ft.(2)
    
    
    Sq. Ft.(2)
    
    
    Credit Rating(3)RatedMerrill Lynch
    
    New York/Toronto
    
    
    2013
    
    
    
    4,363
    
    
    
    12.5
    %
    
    A+CIBC/CIBC World Markets
    
    New York/Toronto/Calgary
    
    
    2028
    
    
    
    1,979
    
    
    
    5.7
    %
    
    A+JPMorgan Chase
    
    New York
    
    
    2021
    
    
    
    1,011
    
    
    
    2.9
    %
    
    A+RBC Financial Group
    
    Five major markets
    
    
    2019
    
    
    
    958
    
    
    
    2.7
    %
    
    AA-Petro-Canada
    
    Calgary
    
    
    2013
    
    
    
    848
    
    
    
    2.4
    %
    
    BBBTarget Corporation (Dayton Hudson Corporation)
    
    Minneapolis
    
    
    2013
    
    
    
    752
    
    
    
    2.1
    %
    
    A+Imperial Oil
    
    Calgary
    
    
    2011
    
    
    
    633
    
    
    
    1.8
    %
    
    AAATalisman Energy
    
    Calgary
    
    
    2015
    
    
    
    426
    
    
    
    1.2
    %
    
    BBB+Pepco Holdings Inc.
    
    Washington
    
    
    2028
    
    
    
    364
    
    
    
    1.0
    %
    
    BBB+Teachers Insurance Annuity Association
    
    Denver
    
    
    2008
    
    
    
    323
    
    
    
    0.9
    %
    
    AAADow Jones & Company
    
    New York
    
    
    2014
    
    
    
    323
    
    
    
    0.9
    %
    
    A-Canadian Natural Resources
    
    Calgary
    
    
    2011
    
    
    
    277
    
    
    
    0.8
    %
    
    BBB+Goldman Sachs
    
    New York
    
    
    2015
    
    
    
    274
    
    
    
    0.8
    %
    
    A+Lehman Brothers
    
    New York
    
    
    2010
    
    
    
    253
    
    
    
    0.7
    %
    
    A+Anadarko Canada Corporation
    
    Calgary
    
    
    2011
    
    
    
    235
    
    
    
    0.7
    %
    
    Baa1EnCana Corporation
    
    Calgary
    
    
    2013
    
    
    
    232
    
    
    
    0.7
    %
    
    A-Bank of Nova Scotia
    
    New York
    
    
    2014
    
    
    
    230
    
    
    
    0.7
    %
    
    AA-Bell West/Bell Canada
    
    Calgary/Toronto
    
    
    2011
    
    
    
    226
    
    
    
    0.6
    %
    
    ASovereign Bank/Fleet National Bank
    
    Boston
    
    
    2008
    
    
    
    213
    
    
    
    0.6
    %
    
    AA-TD Canada Trust
    
    Toronto/Calgary
    
    
    2009
    
    
    
    211
    
    
    
    0.6
    %
    
    A+Other investment grade
    
    Various
    
    Various
    
    
    3,938
    
    
    
    11.3
    %
    
    BBB- or higher18,069
    
    
    
    51.6
    %
 6




---



##### 



UnratedCadwalader, Wickersham & Taft LLP
    
    New York
    
    
    2024
    
    
    
    456
    
    
    
    1.3
    %
    
    Cleary, Gottlieb, Steen & Hamilton
    
    New York
    
    
    2012
    
    
    
    446
    
    
    
    1.3
    %
    
    Goodwin Procter
    
    Boston
    
    
    2016
    
    
    
    360
    
    
    
    1.0
    %
    
    Wellington Management
    
    Boston
    
    
    2011
    
    
    
    344
    
    
    
    1.0
    %
    
    National Assoc. of Securities Dealers
    
    New York/Denver
    
    
    2021
    
    
    
    277
    
    
    
    0.8
    %
    
    Major League Baseball
    
    New York
    
    
    2012
    
    
    
    109
    
    
    
    0.3
    %
    
    Total
    
    
    
    
    
    
    
    
    20,061
    
    
    
    57.3
    %
   (1)
    
    Weighted average based on square feet(2)
    
    Prior to considering partnership interests in partially-owned properties(3)
    
    From Standard & Poors, Moodys or Dominion Bond Rating Service (DBRS) Our strategy is to sign long-term leases in order to mitigate risk and reduce overall
retenanting costs in the portfolio. We typically commence discussions with tenants regarding their
space requirements well in advance of the contractual expiration, and while each market is
different, the majority of our leases, when signed, extend between 10 to 20-year terms. As a result
of this strategy, approximately 5% of our leases mature annually. Following is the breakdown of lease maturities by market with associated in-place rental rates: New York/Boston/Total Portfolio
    
    Washington D. C.
    
    Toronto/Calgary

    Denver/Minneapolis/OtherNet
    
    
    
    
    
    
    
    
    
    
    
    Net
    
    
    
    
    
    
    
    
    
    
    
    Net
    
    
    
    
    
    
    
    
    
    
    
    NetRate
    
    
    
    
    
    
    
    
    
    
    
    Rate
    
    
    
    
    
    
    
    
    
    
    
    Rate
    
    
    
    
    
    
    
    
    
    
    
    Rate000s
    
    
    
    
    
    
    per Sq.
    
    
    
    000s
    
    
    
    
    
    
    per Sq.
    
    
    
    000s
    
    
    
    
    
    
    per Sq.
    
    
    
    000s
    
    
    
    
    
    
    per Sq.Year of Expiry
    
    Sq. Ft.
    
    
    %
    
    
    Ft.-$
    
    
    
    Sq. Ft.
    
    
    %
    
    
    Ft.-$
    
    
    
    Sq. Ft..
    
    
    %
    
    
    Ft.-$
    
    
    
    Sq. Ft.
    
    
    %
    
    
    Ft.-$Currently available
    
    
    1,452
    
    
    
    4.8
    
    
    
    
    
    
    
    
    323
    
    
    
    2.3
    
    
    
    
    
    
    
    
    352
    
    
    
    3.2
    
    
    
    
    
    
    
    
    777
    
    
    
    13.82005
    
    
    1,387
    
    
    
    4.5
    
    
    $
    24
    
    
    
    
    471
    
    
    
    3.4
    
    
    $
    37
    
    
    
    
    609
    
    
    
    5.5
    
    
    $
    18
    
    
    
    
    307
    
    
    
    5.5
    
    
    $
    142006
    
    
    1,391
    
    
    
    4.5
    
    
    
    16
    
    
    
    
    495
    
    
    
    3.6
    
    
    
    21
    
    
    
    
    492
    
    
    
    4.4
    
    
    
    16
    
    
    
    
    404
    
    
    
    7.2
    
    
    
    112007
    
    
    951
    
    
    
    3.1
    
    
    
    19
    
    
    
    
    171
    
    
    
    1.2
    
    
    
    31
    
    
    
    
    445
    
    
    
    4.0
    
    
    
    19
    
    
    
    
    335
    
    
    
    6.0
    
    
    
    142008
    
    
    1,904
    
    
    
    6.2
    
    
    
    22
    
    
    
    
    646
    
    
    
    4.7
    
    
    
    31
    
    
    
    
    594
    
    
    
    5.4
    
    
    
    21
    
    
    
    
    664
    
    
    
    11.8
    
    
    
    142009
    
    
    985
    
    
    
    3.2
    
    
    
    19
    
    
    
    
    100
    
    
    
    0.7
    
    
    
    31
    
    
    
    
    557
    
    
    
    5.0
    
    
    
    21
    
    
    
    
    328
    
    
    
    5.8
    
    
    
    122010
    
    
    2,017
    
    
    
    6.6
    
    
    
    28
    
    
    
    
    674
    
    
    
    4.9
    
    
    
    39
    
    
    
    
    1,031
    
    
    
    9.3
    
    
    
    24
    
    
    
    
    312
    
    
    
    5.5
    
    
    
    172011
    
    
    2,708
    
    
    
    8.9
    
    
    
    23
    
    
    
    
    607
    
    
    
    4.4
    
    
    
    43
    
    
    
    
    1,910
    
    
    
    17.2
    
    
    
    18
    
    
    
    
    191
    
    
    
    3.4
    
    
    
    162012 & beyond
    
    
    22,219
    
    
    
    58.2
    
    
    
    26
    
    
    
    
    11,454
    
    
    
    74.8
    
    
    
    35
    
    
    
    
    7,131
    
    
    
    46.0
    
    
    
    18
    
    
    
    
    3,634
    
    
    
    41.0
    
    
    
    1135,014
    
    
    
    100.0
    
    
    $
    23
    
    
    
    
    14,941
    
    
    
    100.0
    
    
    $
    35
    
    
    
    
    13,121
    
    
    
    100.0
    
    
    $
    18
    
    
    
    
    6,952
    
    
    
    100.0
    
    
    $
    11Weighted average
market net rent
    
    
    
    
    
    
    
    
    
    $
    25
    
    
    
    
    
    
    
    
    
    
    
    $
    32
    
    
    
    
    
    
    
    
    
    
    
    $
    20
    
    
    
    
    
    
    
    
    
    
    
    $
    14
 Tenant Installation Costs And Capital Expenditures Upon the signing of the majority of our leases, we provide 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 and leasing commissions are capitalized in the year
incurred, amortized over the term of the lease and recovered through rental payments. Expenditures
for tenant improvements in 2004 totaled $82 million, compared with the $26 million expended in 2003
and $49 million in 2002 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 $16 per square foot. Tenant installation costs are
summarized as follows: (Millions)
    
    2004
    
    
    2003
    
    
    2002Commercial property tenant improvementsLeasing commissions
    
    $
    15
    
    
    $
    8
    
    
    $
    9Tenant improvements  first generation space
    
    
    3
    
    
    
    
    
    
    
    2Tenant improvements  second generation space
    
    
    64
    
    
    
    18
    
    
    
    38Total
    
    $
    82
    
    
    $
    26
    
    
    $
    49
 We also invest in on-going maintenance and capital improvement projects to sustain the high
quality of the infrastructure and tenant service amenities in our properties. Due to the
relatively recent construction and major renovation of our core properties as well as high-quality
construction standards, recurring capital maintenance expenditures are lower than industry norms.
Capital maintenance expenditures totaled $26 million in 2004, compared with $16 million in 2003 and
$16 million in 2002. These expenditures exclude repairs and maintenance costs which are recovered
through contractual tenant cost recovery payments. 7




---



##### 



Capital expenditures include revenue-enhancing capital expenditures which represent improvements to
an asset or reconfiguration of space to increase rentable area or increase current rental rates,
and non-revenue enhancing expenditures, which are those required to maintain the service life of an
asset. The details of our capital expenditures are summarized as follows: (Millions)
    
    2004
    
    
    2003
    
    
    2002Capital expendituresRevenue enhancing
    
    $
    14
    
    
    $
    9
    
    
    $
    10Non-revenue enhancing
    
    
    12
    
    
    
    7
    
    
    
    6Total
    
    $
    26
    
    
    $
    16
    
    
    $
    16
 Development Operations Our residential land development operations are focused in five markets: Calgary, Alberta;
Edmonton, Alberta; Toronto, Ontario; Denver, Colorado and Austin, Texas. Most of the land holdings
were purchased in the mid-1990s, and as a result have an embedded cost advantage over many
companies which are acquiring land today at much higher prices. In addition, our development and
residential operations continued to benefit from the low interest rate environment and strong
demand in the North American housing market. Development and residential operations contributed $42 million of income in 2004, an increase of
$11 million over 2003 and $20 million over 2002. (Millions)
    
    2004
    
    
    2003
    
    
    2002Sales revenue
    
    $
    261
    
    
    $
    225
    
    
    $
    321Operating costs
    
    
    219
    
    
    
    194
    
    
    
    299Total
    
    $
    42
    
    
    $
    31
    
    
    $
    22
 Lot and home sales for the past two years, including lots sold to third-party homebuilders are
as follows: Home sales
    
    
    Lot sales(Units)
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Alberta
    
    
    496
    
    
    
    479
    
    
    
    1,937
    
    
    
    1,712Ontario
    
    
    339
    
    
    
    318
    
    
    
    
    
    
    
    Colorado
    
    
    
    
    
    
    
    
    
    
    468
    
    
    
    448Total
    
    
    835
    
    
    
    797
    
    
    
    2,405
    
    
    
    2,160
 Asset Profile Total assets increased by approximately $394 million to $8.5 billion at December 31, 2004.
The increase in total assets is primarily attributable to the acquisition of 701 9th Street, N.W.
and Potomac Tower in Washington, D.C., and the impact of the higher Canadian dollar on Canadian
assets. The following is a summary of our assets over the past three years: (Millions)
    
    2004
    
    
    2003
    
    
    2002*AssetsCommercial properties
    
    $
    6,693
    
    
    $
    6,297
    
    
    $
    5,661Development properties
    
    
    716
    
    
    
    684
    
    
    
    944Receivables and other
    
    
    685
    
    
    
    717
    
    
    
    769Marketable securities
    
    
    285
    
    
    
    267
    
    
    
    Cash and cash equivalents
    
    
    112
    
    
    
    132
    
    
    
    76Total
    
    $
    8,491
    
    
    $
    8,097
    
    
    $
    7,450
   *
    
    Excludes Brookfield Homes Corporation which was distributed to common shareholders on January 6,
2003. Commercial Properties The acquisition of two premier assets in Washington, D.C. accounts for most of the increase in
book value of commercial properties from December 31, 2003. 701 9th Street, N.W. was purchased for
$167 million in the first quarter of 2004 and Potomac Tower was purchased for $106 million in the
third quarter of 2004. These two assets, and 1625 Eye Street, N.W., which was acquired in December
2003, comprise 1.6 million square feet in the Washington, D.C. market. These additions were offset
by the sale of our non core retail asset, Chicago Place, for proceeds totaling $39 million. The
consolidated carrying value of our North American properties is approximately $250 per square foot,
significantly less than the estimated replacement cost of these assets. 8




---



##### 



Our core properties are on average 1.4 million square feet in size. A breakdown of our commercial
properties by region is as follows: Brookfield Owned
    
    
    2004
    
    
    2003Leasable Area
    
    
    Interest
    
    
    Book Value
    
    
    Book ValueRegion
    
    (000s Sq. Ft.)
    
    
    (000s Sq. Ft.)
    
    
    (Millions)
    
    
    (Millions)New York, New York
    
    
    11,221
    
    
    
    9,506
    
    
    $
    3,542
    
    
    $
    3,531Boston, Massachusetts
    
    
    2,163
    
    
    
    1,103
    
    
    
    328
    
    
    
    333Washington, D.C.
    
    
    1,557
    
    
    
    1,557
    
    
    
    439
    
    
    
    161Toronto, Ontario
    
    
    6,790
    
    
    
    4,777
    
    
    
    1,068
    
    
    
    928Calgary, Alberta
    
    
    6,331
    
    
    
    3,166
    
    
    
    448
    
    
    
    450Denver, Colorado
    
    
    3,017
    
    
    
    2,811
    
    
    
    370
    
    
    
    372Minneapolis, Minnesota
    
    
    3,008
    
    
    
    3,008
    
    
    
    414
    
    
    
    400Other
    
    
    927
    
    
    
    927
    
    
    
    84
    
    
    
    122Total*
    
    
    35,014
    
    
    
    26,855
    
    
    $
    6,693
    
    
    $
    6,297
   *
    
    Excludes developments Development properties Development properties consist of commercial property development sites, density rights and
related infrastructure, as well as residential land and infrastructure in the companys land
development business. The total book value of this development land and infrastructure was $716
million at December 31, 2004, an increase of $32 million from $684 million in 2003. The increase
is primarily attributable to additional capitalized costs on our commercial development properties,
offset by a reduction in residential development inventory. In 2004, we capitalized approximately
$36 million related to the Three World Financial Center project. The details of the development property portfolio are as follows: Buildable
    
    
    2004
    
    
    2003(Millions)
    
    Sq. Ft.
    
    
    Book Value
    
    
    Book Value
    
    
    ChangeCommercial developments and infrastructureThree World Financial Center, New York
    
    
    1,200,000
    
    
    $
    248
    
    
    $
    212
    
    
    $
    36Bay-Adelaide Centre, Toronto
    
    
    1,800,000
    
    
    
    101
    
    
    
    90
    

    
    
    11Hudsons Bay Centre, Toronto
    
    
    1,092,000
    
    
    
    29
    
    
    
    26
    
    
    
    3Other:401 West 31st Street, New York
    
    
    2,500,000BCE Place III, Toronto
    
    
    800,000Bankers Hall, Calgary
    
    
    500,000Republic Plaza, Denver
    
    
    400,0004,200,000
    
    
    
    21
    
    
    
    21
    
    
    
    8,292,000
    *
    
    $
    399
    
    
    $
    349
    
    
    $
    50Residential development land and infrastructureUnder development
    
    
    
    
    
    
    132
    
    
    
    210
    
    
    
    (78
    )Held for development
    
    
    
    
    
    
    185
    
    
    
    125
    
    
    
    60Total
    
    
    
    
    
    $
    716
    
    
    $
    684
    
    
    $
    32
   *
    
    Excludes rights which Brookfield holds on Site 26 at the World Financial Center in New York Commercial developments and infrastructure Although we are not a speculative developer, we are a full-service real estate company with
in-house development expertise. With approximately eight million square feet of high-quality,
centrally-located development properties in New York, Toronto, Calgary and Denver, we generally
undertake 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, we 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. We have exclusive rights to lease 1.2 million square feet of space and is not entitled to
rents attributable to the space owned by American Express. We acquired this property vacant at a
substantial discount to replacement value and are currently in the process of securing tenants for
the portion we own. As at December 31, 2004, this property was classified as a property under
development, and all direct costs of the building, including interest costs and property taxes,
were capitalized to the asset. In February 2001, we acquired a 50% interest in the Bay-Adelaide Centre office and residential
development project, located at the corner of Bay and Adelaide Streets in downtown Toronto, for an
initial investment of $40 million. We subsequently acquired two small buildings adjacent to the
site fronting Bay Street to further enhance the value of the project. This project included full
below-grade infrastructure for 1.8 million square feet of office and residential space and a fully
operational underground revenue-generating parking facility. We also own expansion rights for a
third office tower at BCE Place, our flagship Toronto office complex, which included approximately
800,000 square feet of density. We have 9




---



##### 



similar rights to develop 2.5 million square feet at 401 West 31st Street in Midtown Manhattan, New
York, 500,000 square feet of office space at Bankers Hall in Calgary, and 400,000 square feet for
Republic Plaza in Denver. The status of each development project is as follows: Location
    
    Ownership
    
    
    Sq. Ft.
    
    
    StatusNew York, New YorkThree World Financial Center
    
    200 Vesey Street at West Street
    
    
    100
    %
    
    
    1,200,000
    
    
    
    
    
    
    Under redevelopment401 West 31st Street
    
    West 31st Street at Ninth Avenue
    
    
    100
    %
    
    
    2,500,000
    
    
    
    
    
    
    Being zoned for potentially 2.5 million square feet of officeToronto, OntarioBay-Adelaide Centre
    
    Bay and Adelaide Streets
    
    
    50
    %
    
    
    1,800,000
    
    
    
    
    
    
    PlanningBCE Place III
    
    Third tower of current BCE Place project
    
    
    65
    %
    
    
    800,000
    
    
    
    
    
    
    PlanningHudsons Bay Centre
    
    Yonge and Bloor Streets
    
    
    25
    %
    
    
    1,092,000
    
    
    
    
    
    
    Office and retail projects under redevelopmentCalgary, AlbertaBankers Hall
    
    East and West Parkades
    
    
    50
    %
    
    
    500,000
    
    
    
    
    
    
    PlanningDenver, ColoradoRepublic Plaza
    
    Downtown Denver
    
    
    100
    %
    
    
    400,000
    
    
    
    
    
    
    Planning8,292,000
    *
   *
    
    Excludes rights which Brookfield holds on Site 26 at the World Financial Center in New York Residential development land and infrastructure Our land development operations are focused in five markets: Calgary, Alberta; Toronto,
Ontario; Edmonton, Alberta; and Denver, Colorado and Austin, Texas. The book value of these
investments at December 31, 2004 was $317 million, compared with $335 million at the end of 2003.
The decrease was primarily attributable to residential development inventory sold, offset by
acquisitions. The details of the residential development land under development and held for
development are as follows: Under Development
    
    
    Held for DevelopmentNumber of
    
    
    Book Value
    
    
    Number of
    
    
    Book ValueLots
    
    
    (Millions)
    
    
    Lots
    
    
    (Millions)Alberta
    
    
    2,585
    
    
    $
    90
    
    
    
    22,795
    
    
    $
    125Ontario
    
    
    1,593
    
    
    
    16
    
    
    
    4,893
    
    
    
    28Colorado
    
    
    818
    
    
    
    22
    
    
    
    3,222
    
    
    
    24Texas and other
    
    
    30
    
    
    
    4
    
    
    
    2,080
    
    
    
    8Total
    
    
    5,026
    
    
    $
    132
    
    
    
    32,990
    
    
    $
    185
 Commercial property debt Commercial property debt totaled $4.6 billion at December 31, 2004, compared with $4.5 billion
at December 31, 2003 and $4.6 billion at December 31, 2002. The increase during the year is
primarily related to the financings of 1625 Eye Street and Potomac Tower in Washington, D.C. and
the impact of the higher Canadian dollar on Canadian-denominated commercial property debt, offset
by the repayment of corporate debt with the proceeds received from the issuance of C$350 million
preferred shares in April 2004, and amortization. Commercial property debt at December 31, 2004
had an average interest rate of 6.5% and an average term to maturity of 12 years. Predominantly
all of our commercial property debt is recourse only to specific properties, thereby reducing the
overall financial risk. 10




---



##### 



Commercial property debt, in order of maturity, is as follows: BrookfieldProportionateInterest
    
    
    Maturity
    
    
    ShareCommercial Property
    
    Location
    
    Rate %
    
    
    Date
    
    
    (Millions)
    
    
    Mortgage DetailsOne World Financial Center
    
    New York
    
    3.71
    
    
    2007
    
    
    $ 300
    
    
    Recourse, floating rateTD Canada Trust Tower
    
    Toronto
    
    
    6.53
    
    
    
    2007
    
    
    
    108
    
    
    Non-recourse, fixed rateTrade Center Denver
    
    Denver
    
    
    7.00
    
    
    
    2007
    
    
    
    52
    
    
    Non-recourse, fixed ratePetro-Canada Centre
    
    Calgary
    
    
    6.43
    
    
    
    2008
    
    
    
    111
    
    
    Non-recourse, fixed rate245 Park Avenue
    
    New York
    
    
    6.65
    
    
    
    2011
    
    
    
    248
    
    
    Non-recourse, fixed rateOne Liberty Plaza
    
    New York
    
    
    6.75
    
    
    
    2011
    
    
    
    413
    
    
    Non-recourse, fixed rateFifth Avenue Place
    
    Calgary
    
    
    7.59
    
    
    
    2011
    
    
    
    65
    
    
    Non-recourse, fixed ratePotomac Tower
    
    Washington
    
    
    4.72
    
    
    
    2011
    
    
    
    75
    
    
    Non-recourse, fixed rateExchange Tower
    
    Toronto
    
    
    6.83
    
    
    
    2012
    
    
    
    56
    
    
    Non-recourse, fixed rateTwo World Financial Center
    
    New York
    
    
    6.91
    
    
    
    2013
    
    
    
    707
    
    
    Non-recourse, fixed rateFour World Financial Center
    
    New York
    
    
    6.95
    
    
    
    2013
    
    
    
    373
    
    
    Non-recourse, fixed rateBay Wellington Tower
    
    Toronto
    
    
    6.49
    
    
    
    2013
    
    
    
    299
    
    
    Non-recourse, fixed rateBankers Hall
    
    Calgary
    
    
    7.20
    
    
    
    2013
    
    
    
    152
    
    
    Non-recourse, fixed rateRepublic Plaza
    
    Denver
    
    
    5.15
    
    
    
    2014
    
    
    
    170
    
    
    Non-recourse, fixed rate1625 Eye Street
    
    Washington
    
    
    6.00
    
    
    
    2014
    
    
    
    130
    
    
    Non-recourse, fixed rateRoyal Centre
    
    Vancouver
    
    
    7.50
    
    
    
    2022
    
    
    
    44
    
    
    Non-recourse, fixed rate53 State Street
    
    Boston
    
    
    6.91
    
    
    
    2023
    
    
    
    74
    
    
    Non-recourse, fixed rate33 South Sixth Street
    
    Minneapolis
    
    
    6.72
    
    
    
    2027
    
    
    
    99
    
    
    Non-recourse, fixed rateDain Plaza
    
    Minneapolis
    
    
    7.37
    
    
    
    2027
    
    
    
    84
    
    
    Non-recourse, fixed rate701 9th Street
    
    Washington
    
    
    6.73
    
    
    
    2028
    
    
    
    152
    
    
    Non-recourse, fixed rate75 State Street
    
    Boston
    
    
    7.00
    
    
    
    2028
    
    
    
    88
    
    
    Non-recourse, fixed rate300 Madison Avenue
    
    New York
    
    
    7.26
    
    
    
    2032
    
    
    
    526
    
    
    Non-recourse, fixed rateDevelopment and other debt
    
    
    
    
    
    
    
    
    
    
    
    
    204
    
    
    Various termsCorporate credit facility
    
    
    
    
    
    
    
    
    
    
    
    
    20
    
    
    Recourse, floating rateTotal
    
    
    
    
    6.50
    %
    
    
    
    
    
    $
    4,550
 During 2004, we financed or refinanced $375 million of commercial property debt. The details
are as follows: Financed / RefinancedMortgage
    
    
    Interest(Millions)
    
    (Millions)
    
    
    Rate %Republic Plaza, Denver
    
    $
    170
    
    
    
    5.15
    %1625 Eye Street, Washington, D.C.
    
    
    130
    
    
    
    6.00
    %Potomac Tower, Washington, D.C.
    
    
    75
    
    
    
    4.72
    %Total
    
    $
    375
    
    
    
    5.36
    %
 Commercial property debt maturities for the next five years and thereafter are as follows: Weighted Average(Millions)
    
    Scheduled
    
    
    
    
    
    
    
    
    
    
    Interest Rate atYear
    
    Amortization
    
    
    Maturities
    
    
    Total
    
    
    Dec. 31, 20042005
    
    $
    142
    
    
    $
    135
    
    
    $
    277
    
    
    
    7.2
    %2006
    
    
    155
    
    
    
    20
    
    
    
    175
    
    
    
    7.3
    %2007
    
    
    157
    
    
    
    475
    
    
    
    632
    
    
    
    5.2
    %2008
    
    
    168
    
    
    
    110
    
    
    
    278
    
    
    
    6.7
    %2009
    
    
    181
    
    
    
    12
    
    
    
    193
    
    
    
    6.8
    %2010 and thereafter
    
    
    
    
    
    
    2,995
    
    
    
    2,995
    
    
    
    6.5
    %Total
    
    $
    803
    
    
    $
    3,747
    
    
    $
    4,550
    
    
    
    6.5
    %
 During 2004, we refinanced Republic Plaza in Denver with a $170 million, ten-year, fixed-rate
mortgage at 5.15% interest. This refinancing represents a reduction of approximately 400 basis
points from the prior fixed-rate mortgage. We also financed 1625 Eye Street in Washington, D.C.
with a $130 million, ten-year, 6% fixed rate mortgage. The financing was comprised of two-stage
funding, with $74 million funded in September 2004 and $56 million funded in December 2004. We
also financed Potomac Tower which was acquired in the third quarter of 2004 with a $75 million,
seven-year, 4.72% fixed rate mortgage. 11




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The only significant maturity in the next five years is the floating-rate recourse mortgage which
was placed on One World Financial Center in 2003 in order to facilitate flexibility in tenant
discussions on this project and to minimize borrowing costs. It is expected this facility will be
refinanced in the future with long-term, fixed-rate debt. Our bank credit facility is in the form of a three-year revolving facility totaling $150 million as
at December 31, 2004. This facility had a floating interest rate of approximately 3.7% and was
drawn in the amount of $20 million as at December 31, 2004. 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 391 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 235 million square feet; Midtown South with 65 million square feet; and Lower
Manhattan with 91 million square feet. Brookfields 245 Park Avenue and 300 Madison Avenue
properties are located in Midtown, our 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, 2004 was 10.1%, down
from 11.9% at year end 2003. Unlike the previous two years, absorption was positive 4 million
square feet during 2004, with almost 90% of the absorption in the Class A sector. Midtown overall
leasing activity for 2004 was 19.5 million sq. ft. which is 53% higher than last years 12.7
million sq. ft. and above the historical annual average of 18 million sq. ft. The market has
rebounded and landlords have begun to increase rent while lowering tenant concessions. The Lower Manhattan commercial office market, the third largest business district in the United
States, consists of 91 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, 2004 was 14.2%, up from
13.5% at year end 2003. Our Lower Manhattan portfolio is currently 98.1% leased to high-quality
tenants with lease terms that average 9.1 years. In Lower Manhattan, overall absorption was negative 1.7 million square feet in 2004 compared to
negative 1.5 million square feet in 2003. Leasing activity in Lower Manhattan for 2004 totaled 4.4
million sq. ft. falling short of the historical annual average of 6 million sq. ft. While 2004 was
a difficult year for the Lower Manhattan market, the outlook is encouraging. Leasing activity
increased during the second half of the year and the continued strengthening of the Midtown
submarket should have a positive impact on Lower Manhattan, as large blocks of quality space in
Midtown dwindle. The redevelopment of the World Trade Center site is moving forward as public and
private groups spearheading the work have accomplished several significant milestones in 2004
including: the laying of the cornerstone of the Freedom Tower (July 4, 2004), commencement of the
deconstruction of the Deutsche Bank Tower which was damaged by the attacks, selecting the memorial
design and forming of the World Trade Center Foundation Board of Directors to oversee the
fundraising of the approximately $500 million needed to build the memorial. 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 Bostons largest with 33 million square feet. The overall vacancy rate in Bostons
financial district was 14.5% at year end 2004 compared with 13.5% at year end 2003. Sublease space
in the Boston CBD represents 21% of overall vacancy, of which approximately 90% of the sublease
availabilities is in Class A buildings. The Class A segment of the market ended the year with a
13.5% vacancy compared to 14.0% the year before. Class A rental rates have decreased due to
pressure from the sublease market caused by 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 the 2008-2010 timeframe. Construction of 33 Arch
Street was completed this year adding 600,000 sq. ft. to the Boston CBD inventory, with
approximately 50% of the space committed to date. 12




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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 7.5% as of December 31, 2004 and the
Washington CBD submarket dipped to 7.9% from 8.4% at the end of 2003. 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
2004 of 152,385 square feet, pushing the year-to-date 2004 net absorption to 2,154,026 square feet.
Total delivered space in 2004 was 2.5 million square feet, 1.5 million square feet was leased and
904,000 square feet remains available. 2005 projections indicate 3.3 million square feet will be
delivered with 1.7 million square feet anticipated being leased in 2005. The 1.5 million square
feet represents 50% of that space being available at year end 2005. With few exceptions, many of the largest transactions in 2004 were government and law firm leases.
Two of the largest leases signed were Pension Benefit Guarantee (336,081 square feet) at 1200 K
Street and Corporate Executive Board (621,000 square feet) at Waterview Tower. Toronto, Ontario Our principal Toronto office properties totaling 5.2 million square feet 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 2004 was 9.6% for all classes, a decrease of 0.9% over 2003. However, the Class AA sector, in which most of Brookfields assets compete, had a vacancy rate of
7.0% at December 31, 2004 versus a vacancy rate of 6.4% at December 31, 2003. Supply of new
projects has remained low. Rental rates have stabilized and we expect they will remain unchanged
for at least 9 months into 2005; however, any significant consolidation in the financial services
sector may negatively impact this outlook. Calgary, Alberta Our office properties, located centrally in downtown Calgary, account for over 5.0 million square
feet of a total downtown office market inventory of over 32 million square feet. The downtown
Calgary market is still largely driven by the oil and natural gas industries; however the economy
is diversifying. Though Calgary is the fourth largest city in Canada, it has the second highest
number of head offices in the country, second to Toronto. In the third quarter 2004 Calgary became
the home of yet another head office as Imperial Oil announced the move of its head office to the
city. Vacancy in the Class AA and A markets at the end of the fourth quarter 2004 was 1.2 million
square feet or 6.2%. With over 1.2 million square feet of absorption in the last quarter of 2004,
Calgary experienced its largest year of growth since 1996. Total vacancy in the downtown core
across all classes stands at 7.7% compared to 11.7% at the end of 2003 and 10.9% at the end of the
first quarter. Calgarys healthy economy and the continued demand for office space in the downtown core have
resulted in the announcement of one new office development. Construction of the 440,000 square foot
tower will commence early in 2005 and is expected to be fully leased by the spring of 2007. 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 remained high at 20.6% at the
end of 2004. The overall Downtown vacancy rate has improved from 20.4% at the end of 2003 to 18.7%
at the end of 2004. All classes of the Denver CBD inventory have seen a mild decrease in vacancy rates driven down by a
number of sizable lease transactions including: Colorado Department of Labor (172,000 square feet),
Forest Oil (116,000 square feet) and Department of Personnel and Training (63,000 square feet) and
virtually no new development space and sublease space entering the market. The CBD experienced a
minimal negative absorption of 82,148 square feet and ended 2004 with 2,266,727 square feet of
leasing. Other items effecting the CBD are the completion of the $367 million, 2.2 million square 13




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foot convention center expansion project, the T-Rex, $1.7 billion expansion of highway and transit
along the I-25 and FasTracks, a $4.7 billion light commuter rail and bus expansion 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 18.1%, up slightly from 17.9%, at year end 2003. 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 21.6%. Unemployment in the Twin Cities has held
fairly steady at 4.2%, significantly less than the national rate, and slightly less than the 4.6%
level from one year ago. Over the past year nearly 2,000,000 square feet of leasing was completed
with the majority of activity from the following companies: Target, Siemens, Residential Economic
Development, US Barncorp and General Mills. Total net absorption ended the year with a negative
256,000 square feet. Consolidations, downsizing, the soft economy and lack of demand continue to
challenge the Twin Cities. Service Businesses Brookfield LePage Facilities Management Brookfield LePage Facilities Management, one of the largest facilities management operations in
Canada is owned 40% by us 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 trend towards outsourcing of
facilities management worldwide. Brookfield Residential Management Services We own 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, 2004, our ongoing businesses had approximately 1,300 employees. 14




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Company And Real Estate Industry Risks Our 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, we remain exposed to certain risks inherent in
the commercial property business. In evaluating Brookfield and our business, the following challenges and risk factors should be
considered in addition to the other information contained in this AIF. Our economic performance and the value of our real estate assets are subject to the risks
incidental to the ownership and operation of real estate properties. Our economic performance, the value of our real estate assets and, therefore, the value of
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 our 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 our ability to rent space on favorable terms; the
bankruptcy, insolvency, credit deterioration or other default of our tenants; the need to
periodically renovate, repair and re-lease space and the costs thereof; increases in maintenance,
insurance and operating costs; civil disturbances, earthquakes and other natural disasters, or
terrorist acts or acts of war which may result in uninsured or underinsured losses; the
attractiveness of our 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. We are dependent upon the economic climates of our primary markets New York, Boston, Washington,
D.C., Toronto, Calgary, and our secondary marketsDenver and Minneapolis. Substantially all of our revenues are derived from properties located in our primary markets New
York, Boston, Washington, D.C., Toronto, Calgary, and our 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 our 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 our results from operations. Additionally, there
are submarkets within our primary and secondary markets that are dependent upon a limited number of
industries and a significant downturn in one or more of these industries could also adversely
affect our results from operations. Because real estate investments are illiquid, we may not be able to sell properties when
appropriate. Large and high quality office properties like the ones that we own can be hard to sell, especially
if local market conditions are poor. Such illiquidity will tend to limit our ability to vary our
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 we operate in times of illiquidity. These restrictions reduce our
ability to respond to changes in the performance of our investments and could adversely affect our
financial condition and results of operations. We face risks associated with the use of debt to finance our business, including refinancing risk. We incur debt in the ordinary course of our business and therefore are subject to the risks
normally associated with debt financing. These risks, including the following, may adversely
affect our financial condition and results of operations: our cash flow may be insufficient to meet
required payments of principal and interest; payments of principal and interest on borrowings may
leave us with insufficient cash resources to pay operating expenses; we may not be able to
refinance indebtedness on our properties at maturity due to company and market factors including:
the estimated cash flow of our properties; the value of our properties; liquidity in the debt
markets; financial, competitive, business and other factors, including factors beyond our control;
and if refinanced, the terms of a refinancing may not be as favorable as the original terms of the
related indebtedness. If we are unable to refinance our indebtedness on acceptable terms, or at all, we may need to
dispose of one or more of our properties upon disadvantageous terms; prevailing interest rates or
other factors at the time of refinancing could increase our interest expense; and if we mortgage
property to secure payment of indebtedness and are unable to make mortgage payments, the mortgagee
could foreclose upon such property or appoint a receiver to receive an assignment of our rents and
leases. This may adversely affect our ability to make distributions or payments to our investors. 15




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If we are unable to manage our interest rate risk effectively, our cash flows and operating results
may suffer. Advances under unsecured credit facilities and certain property-level mortgage debt bear interest
at a variable rate. Approximately 13% of our total outstanding indebtedness of $4.6 billion at
December 31, 2004 was variable rate indebtedness. We may incur indebtedness in the future that
also bears interest at a variable rate or may be required to refinance our debt at higher rates.
Accordingly, increases in interest rates above that which we anticipated based upon historical
trends could adversely affect our cash flow. We have no corporate limitation on the amount of debt we can incur. Our management and board of directors have discretion under our articles of incorporation and
bylaws to increase the amount of our outstanding debt. Our decisions with regard to the incurrence
and maintenance of debt are based on available investment opportunities for which capital is
required, the cost of debt in relation to such investment opportunities, whether secured or
unsecured debt is available, the effect of additional debt on existing financial ratios and the
maturity of the proposed new debt relative to maturities of existing debt. We could become more
highly leveraged, resulting in increased debt service costs that could adversely affect our cash
flows and operating results. Our inability to enter into renewal or new leases on favorable terms for all or a substantial
portion of space that is subject to expiring leases would adversely affect our cash flows and
operating results. Our income-producing properties generate revenue through rental payments made by tenants of the
properties. Upon the expiry of any lease, there can be no assurance that the lease will be renewed
or the tenant replaced. The terms of any subsequent lease may be less favorable to us than the
existing lease. We 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 our
portfolio over the next five years average approximately 4.3% annually. We are 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. We face potential adverse effects from tenant defaults, bankruptcies or insolvencies. A tenant may experience a downturn in its business, which could cause the loss of that tenant or
weaken its financial condition and result in the tenants inability to make rental payments when
due or, for retail tenants, a reduction in percentage rent payable. If a tenant defaults, we may
experience delays and incur costs in enforcing our rights as landlord and protecting our
investments. In addition, a tenant may seek the protection of bankruptcy, insolvency or similar
laws. We cannot evict a tenant solely because of its bankruptcy. A court, however, may authorize a
tenant to reject and terminate its lease with us. In such a case, our claim against the tenant for
unpaid, future rent would be subject to a statutory cap that might be substantially less than the
remaining rent owed under the lease. In any event, it is unlikely that a bankrupt tenant will pay
in full amounts it owes us under a lease. The loss of rental payments from tenants and costs of
re-leasing could adversely affect our cash flows and operating results. Although we have not
experienced material losses from tenant bankruptcies, we cannot assure our shareholders that
tenants will not file for bankruptcy or similar protection in the future resulting in material
losses. Reliance on major tenants could adversely affect our results of operations. As of December 31, 2004, the five largest tenants, based on percentage of square feet leased,
accounted for approximately 26.2% of our 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 12.5% of our leaseable space) accounted for more than 5.7% of that total. Our
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. Our competitors may adversely affect our ability to lease our properties, which may cause our 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 us in seeking tenants, management revenues and prospective
purchasers. Although it is our strategy to own premier office properties in each market in which
we operate, some of the office properties of our competitors may be newer, better located or better
capitalized. These competing properties may have vacancy rates higher than our properties, which
may result in their owners being willing to make space available at lower prices than the space in 16




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our properties, particularly if there is an oversupply of space available in the market.
Competition for tenants could have an adverse effect on our ability to lease our properties and on
the rents that we may charge or concessions that it must grant. If our competitors adversely
impact our ability to lease our properties, our cash flows and operating results may suffer. Our insurance may not cover some potential losses or may not be obtainable at commercially
reasonable rates, which could adversely affect our financial condition and results of operations. We carry various insurance coverages that provide comprehensive protection for first party and
third party losses to our properties. These coverages contain policy specifications, limits and
deductibles customarily carried for similar properties. We also self insure a portion of certain
of these risks. We believe all of our properties are adequately insured. The Terrorism Risk
Insurance Act (TRIA) was enacted in November 2002 in response to the uncertainty surrounding the
insurance market in the aftermath of the terrorist attacks of September 11, 2001 and provides
protection for certified acts as defined by the statute. TRIA was extended through December 31,
2005. We are unable to anticipate further extension as it is the subject of Congressional debate.
Our current property insurance includes coverage for certified acts up to $600 million per
occurrence and in the aggregate. We also purchase standalone terrorism insurance which covers
non-certified acts up to $500 million per occurrence and in the aggregate. In addition, our
property insurance provides us with an additional $100 million of coverage for non-certified acts
above the $500 million in the stand-alone policy, for a total of $600 million in coverage for
non-certified acts. We consider this amount to be commercially reasonable, considering the
availability and cost of such coverage. As our policies renew throughout the year, we will
continue to monitor the insurance market so as to avail our self of the most comprehensive coverage
on the most economically reasonable basis There are 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 any uninsured or underinsured loss occur, we could lose our investment in, and anticipated
profits and cashflows from, one or more of our 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 our 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 our primary
and secondary markets. Our 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 our
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 our ability to lease office space in our portfolio.
Furthermore, the implementation of increased security measures at our properties increases
property costs, which we may not be able to fully pass on to tenants. Each of these factors could
have an adverse impact on our operating results and cash flow. We do not have sole control over the properties that we hold with co-venturers, partners or
co-tenants or over the revenues and certain decisions associated with those properties, which may
limit our flexibility with respect to these investments. We participate in 14 joint ventures, partnerships and co-tenancies. The properties that we own
through joint ventures, partnerships and co-tenancies total approximately 11 million square feet,
out of our total portfolio of approximately 46 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 our partners, co-tenants or co-venturers might become
bankrupt or otherwise fail to fund their share of required capital contributions. Additionally,
our partners, co-venturers or co-tenants might at any time have economic or other business
interests or goals which are inconsistent with our business interests or goals. In addition, we do
not have sole control of certain major decisions relating to these properties, including decisions
relating to: the sale of the properties; refinancing; timing and amount of distributions of cash
from such properties to Brookfield; and capital improvements. In some instances, although we are the property manager for a joint venture, the other joint
venturer retains approval rights over specific leases or our leasing plan. In addition, the sale
or transfer of interests in some of our joint ventures and partnerships is subject to rights of
first refusal or first offer and some joint venture and partnership agreements provide for buy-sell
or similar arrangements. Such rights may be triggered at a time when we may not want to sell but
may be forced to do so because we may not have the financial resources at that time to purchase the
other partys interest. Such rights may also inhibit our ability to sell our interest in a
property or a joint venture or partnership within our desired time frame or on any other desired
basis. 17




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We face risks associated with property acquisitions. Assuming we are able to obtain capital on commercially reasonable terms, and that market conditions
warrant it, we 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 us from acquiring a
desired property. We may be unable to finance acquisitions on favorable terms, or newly acquired
properties may fail to perform as expected. We may underestimate the costs necessary to bring an
acquired property up to standards established for its intended market position or may be unable to
quickly and efficiently integrate new acquisitions into our existing operations. We may also
acquire properties subject to liabilities and without any recourse, or with only limited recourse,
with respect to unknown liabilities. Each of these factors could have an adverse affect on our
results of operations and financial condition. We are subject to possible environmental liabilities and other possible liabilities. As an owner and manager of real property, we are subject to various United States and Canadian
federal, provincial, state and municipal laws relating to environmental matters. These laws could
hold us liable for the costs of removal and remediation of certain hazardous substances or wastes
released or deposited on or in our properties or disposed of at other locations. The failure to
remove or remediate such substances, if any, could adversely affect our ability to sell our real
estate or to borrow using real estate as collateral, and could potentially also result in claims or
other proceedings against us. We are not aware of any material non-compliance with environmental
laws at any of our properties. We are also not aware of any pending or threatened investigations
or actions by environmental regulatory authorities in connection with any of our properties or any
material pending or threatened claims relating to environmental conditions at our properties. We
have formal policies and procedures to review and monitor environmental exposure. We have 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 we may become subject to
more stringent environmental laws and regulations in the future. Compliance with more stringent
environmental laws and regulations could have an adverse effect on our business, financial
condition or results of 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. Non-compliance could result in imposition of fines by the
government or the award of damages to private litigants. If we are required to make substantial
alterations and capital expenditures in one or more of our properties, including the removal of
access barriers, it could adversely affect our financial condition and results of operations We may also incur significant costs complying with other regulations. Our properties are subject
to various federal, state and local regulatory requirements, such as state and local fire and life
safety requirements. If we fail to comply with these requirements, we could incur fines or private
damage awards. We believe that our properties are currently in material compliance with all of
these regulatory requirements. However, we do not know whether existing requirements will change
or whether compliance with future requirements will require significant unanticipated expenditures
that will affect our cash flow and results from operations. The expiration of long-term ground leases could adversely affect our results of operations. Twelve of our 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 us and any co-venturers or
partners. Under the terms of a typical ground lease, we and any co-venturers or partners pay rent
for the use of the land and are generally responsible for all costs and expenses associated with
the building and improvements. Unless the lease term is extended, the land together with all
improvements will revert to the owner of the land upon the expiration of the lease term. Four
properties in New York are subject to ground leases held by the Battery Park City Authority in New
York. These four ground leases expire in 2069. If possible, we will attempt to purchase these
leases as they become available, but cannot be assured of this. The fifth U.S. ground lease is on
the land under 53 State Street in Boston. This ground lease expires in 2039. We have a purchase
option to acquire this ground lease exercisable in 2029. Seven of our Canadian properties are
subject to ground leases: 70 York Street (HSBC Building), Toronto, Hudsons Bay Centre, Toronto,
105 Adelaide Street West, Toronto, Exchange Tower, Toronto, Royal Centre, Vancouver (subject to a
ground sub-lease (air rights)), Bankers Hall, Calgary (we own a 50% interest in the ground lessor)
and Royal Bank Building, Calgary (we own a 50% interest in the ground lessor). Their leases expire
in 2083, 2070, 2013, 2881, 2033, 2101 and 2101, respectively. An event of default by us under the
terms of a ground lease could also result in a loss of the property subject to such ground lease
should the default not be rectified in a reasonable period of time. 18




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The impact of foreign exchange fluctuations may have a negative impact on our future revenues and
net income. Our financial results will be affected by fluctuations in the U.S. dollar and the foreign currency
markets as a majority of our revenue and net income is expected to be denominated in U.S. currency.
Consequently, due to the substantial volatility of currency exchange rates, we cannot predict the
effect of exchange rate fluctuations upon our future revenue and net income. As of the date of
this AIF, we have entered into certain transactions to hedge against gains or losses from foreign
exchange fluctuations. As a result, we are generally not materially impacted by the movement in
the Canadian to U.S. dollar exchange rate. DIVIDENDS AND DIVIDEND POLICY The declaration and payment of dividends on our common shares are at the discretion of the board of
directors, which supports a stable and consistent dividend policy. In early 2001, we changed our
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
our common share dividend and introduced quarterly payments rather than the previous semi-annual
dividend. It is our intention 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 February 9, 2005, our board of directors declared a quarterly dividend payment of $0.16 per
share on the issued and outstanding common shares, to be paid on March 31, 2005 to shareholders of
record at the close of business on March 1, 2005. The board of directors also announced a 70%
increase to our June 30, 2005 common share dividend. Based upon this increase, on a post-split
basis, the June 30, 2005 dividend will be $0.18 per share. We continue to pay dividends on our common shares quarterly. A complete record of dividends paid
on the common shares for the past three years is as follows: 2004
    
    
    2003
    
    
    2002Per common share
    
    $
    0.62
    
    
    $
    0.50
    
    
    $
    0.40Total
    
    $
    96,422,829
    
    
    $
    79,060,263
    
    
    $
    64,002,946
 We continue to pay dividends on our 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 preferred shares for the past three years is as follows: (US$, except share information)Authorized
    
    Outstanding
    
    
    
    
    2004
    
    
    2003
    
    
    20026,312,000
    
    
    6,312,000
    
    
    Class A redeemable voting
    
    $
    910,373
    
    
    $
    845,343
    
    
    $
    753,7272,000,000
    
    
    2,000,000
    
    
    Class AA Series E
    
    
    1,086,354
    
    
    
    1,171,671
    
    
    
    926,4593,000,000
    
    
    
    
    
    Class AAA Series A
    
    
    
    
    
    
    
    
    
    
    3,884,1513,000,000
    
    
    
    
    
    Class AAA Series B
    
    
    
    
    
    
    
    
    
    
    3,884,1516,000,000
    
    
    
    
    
    Class AAA Series C and D
    
    
    
    
    
    
    3,530,333
    
    
    
    7,397,2608,000,000
    
    
    8,000,000
    
    
    Class AAA Series F
    
    
    9,230,769
    
    
    
    8,571,429
    
    
    
    2,031,0826,000,000
    
    
    4,400,000
    
    
    Class AAA Series G
    
    
    5,775,000
    
    
    
    3,184,170
    
    
    
    8,000,000
    
    
    8,000,000
    
    
    Class AAA Series H
    
    
    8,846,154
    
    
    
    1,732,857
    
    
    
    8,000,000
    
    
    8,000,000
    
    
    Class AAA Series I
    
    
    8,000,000
    
    
    
    
    
    
    
    8,000,000
    
    
    8,000,000
    
    
    Class AAA Series J
    
    
    5,128,185
    
    
    
    
    
    
    
    6,000,000
    
    
    6,000,000
    
    
    Class AAA Series K
    
    
    1,147,523
    
    
    
    
    
    
    
    4,012,4358
    
    
    $
    19,035,803
    
    
    $
    18,876,830
 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 Brookfield, which are available on our Web site, www.brookfieldproperties.com. There are currently three authorized classes of preference shares of Brookfield, as follows: 19




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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; 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; and 6,000,000 Class AAA preference shares, Series K authorized, of which 6,000,000 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 are no longer issuable. There are an unlimited
number of Common Shares authorized, of which 155,078,706 Common Shares were issued and outstanding
as of March 15, 2005. 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 Brookfield, 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 Brookfield 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 Brookfield 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. 20




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Liquidation, Dissolution and Winding Up In the event of the liquidation, dissolution or winding up of Brookfield 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 Brookfield. 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. 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 71/2% 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 71/2% 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 Brookfield 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 Brookfield or any other distribution of the assets of Brookfield 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, Brookfield 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 Brookfield 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, Brookfield 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. 21




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Liquidation, Dissolution and Winding Up In the event of the liquidation, dissolution or winding up of Brookfield or any other distribution
of assets of Brookfield 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 Brookfield. Dividends The holders of Class AA preference shares are each entitled to receive, as and when declared by the
directors of Brookfield, 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 Brookfield, unless and
until Brookfield 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 Brookfield 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 Brookfield, 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 Brookfield. 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 Brookfield 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 Brookfield or in the event of any
other distribution of assets of Brookfield 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 Brookfield distributed to the holders of any
other shares of Brookfield 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 Brookfield. 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 Brookfield. 22




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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 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 Brookfield. 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 Brookfield. 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
Brookfield 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 Brookfield, 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 Brookfield ranking prior to the Class AAA, Series E Shares,
Brookfield 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 Brookfield 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 Brookfield 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 Brookfield or any other distribution
of assets of Brookfield 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 23




---



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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 Brookfield. 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 Brookfield, 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 Brookfield),
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 Brookfield 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,
Brookfield 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 Brookfield). Conversion at the Option of Brookfield The Class AAA, Series F Shares are not convertible at the option of Brookfield prior to September
30, 2009. On and after this date, Brookfield 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 Brookfield will make cash
payments. Conversion at the Option of the Holder Subject to applicable law and the rights of Brookfield 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 Brookfield 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, Brookfield
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 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 24




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##### 



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,
Brookfield 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
Brookfield such shares are obtainable. Liquidation, Dissolution and Winding Up In the event of the liquidation, dissolution or winding up of Brookfield or any other distribution
of assets of Brookfield 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
Brookfield), before any amount is paid or any assets of Brookfield 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 Brookfield. Restriction on Dividends and Retirement and Issue of Shares So long as any of the Class AAA, Series F Shares are outstanding, Brookfield 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 Brookfield ranking as to capital and dividends junior
to the Class AAA, Series F Shares) on shares of Brookfield ranking as to dividends
junior to the Class AAA, Series F Shares;(ii)
    except out of the net cash proceeds of a substantially concurrent issue of shares of Brookfield 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 Brookfield ranking as
to capital junior to the Class AAA, Series F 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 F
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 F Shares; or(v)
    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 Brookfield 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. 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 Brookfield unless and until Brookfield 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 Brookfield
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 25




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each meeting of Brookfield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 Brookfield, 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 Brookfield),
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 Brookfield 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,
Brookfield 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 Brookfield). Conversion at the Option of Brookfield The Class AAA, Series G Shares are not convertible at the option of Brookfield prior to June 30,
2011. On or after this date, Brookfield 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 Brookfield will make cash payments. Conversion at the Option of the Holder Subject to applicable law and the rights of Brookfield 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 Brookfield will make cash payments. 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, Brookfield
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. 26




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##### 



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,
Brookfield 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
Brookfield such shares are obtainable. Liquidation, Dissolution and Winding Up In the event of the liquidation, dissolution or winding up of Brookfield or any other distribution
of assets of Brookfield 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
Brookfield), before any amount is paid or any assets of Brookfield 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 Brookfield. Restriction on Dividends and Retirement and Issue of Shares So long as any of the Class AAA, Series G Shares are outstanding, Brookfield 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 Brookfield ranking as to capital and dividends junior
to the Class AAA, Series G Shares) on shares of Brookfield ranking as to dividends
junior to the Class AAA, Series G Shares;(ii)
    except out of the net cash proceeds of a substantially concurrent issue of shares of Brookfield 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 Brookfield ranking as
to capital junior to the Class AAA, Series G 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 G
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 G Shares; or(v)
    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 Brookfield 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. 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 Brookfield unless and until Brookfield 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 Brookfield
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 Brookfield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. 27




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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 Brookfield, 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 Brookfield),
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 Brookfield 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,
Brookfield 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 Brookfield). Conversion at the Option of Brookfield The Class AAA, Series H Shares are not convertible at the option of Brookfield prior to December
31, 2011. On or after this date, Brookfield 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 Brookfield will make cash
payments. Conversion at the Option of the Holder Subject to applicable law and the rights of Brookfield 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 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 Brookfield 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, Brookfield
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,
Brookfield may at any time purchase for 28




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##### 



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 Brookfield such shares are obtainable. Liquidation, Dissolution and Winding Up In the event of the liquidation, dissolution or winding up of Brookfield or any other distribution
of assets of Brookfield 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
Brookfield), before any amount is paid or any assets of Brookfield 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 Brookfield. Restriction on Dividends and Retirement and Issue of Shares So long as any of the Class AAA, Series H Shares are outstanding, Brookfield 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 Brookfield ranking as to capital and dividends junior
to the Class AAA, Series H Shares) on shares of Brookfield 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 Brookfield 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 Brookfield 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(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 Brookfield 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 Brookfield unless and until Brookfield 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 Brookfield
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 Brookfield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. 29




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##### 



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 Brookfield, 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 Brookfield),
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 Brookfield 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,
Brookfield 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 Brookfield). Conversion at the Option of Brookfield The Class AAA, Series I Shares are not convertible at the option of Brookfield prior to December
31, 2008. On or after this date, Brookfield 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 not be issued on any conversion of Class
AAA, Series I Shares, but in lieu thereof Brookfield will make cash payments. Conversion at the Option of the Holder Subject to applicable law and the rights of Brookfield 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 Brookfield 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, Brookfield
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,
Brookfield 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
Brookfield such shares are obtainable. 30




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##### 



Liquidation, Dissolution and Winding Up In the event of the liquidation, dissolution or winding up of Brookfield or any other distribution
of assets of Brookfield 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
Brookfield), before any amount is paid or any assets of Brookfield 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 Brookfield. Restriction on Dividends and Retirement and Issue of Shares So long as any of the Class AAA, Series I Shares are outstanding, Brookfield 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 Brookfield ranking as to capital and dividends junior
to the Class AAA, Series I Shares) on shares of Brookfield ranking as to dividends
junior to the Class AAA, Series I Shares;(ii)
    except out of the net cash proceeds of a substantially concurrent issue of shares of Brookfield 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 Brookfield ranking as
to capital junior to the Class AAA, Series I 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 I
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 I Shares; or(v)
    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 Brookfield 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 Brookfield unless and until Brookfield 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 Brookfield
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 Brookfield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 Brookfield, 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 Brookfield),
payable quarterly on the last day of March, June, September and December in each year. 31




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##### 



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 Brookfield 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,
Brookfield 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 Brookfield). Conversion at the Option of Brookfield The Class AAA, Series J Shares are not convertible at the option of Brookfield prior to June 30,
2010. On or after this date, Brookfield 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,
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 Brookfield will make cash
payments. Conversion at the Option of the Holder Subject to applicable law and the rights of Brookfield 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 Brookfield 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, Brookfield
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,
Brookfield 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
Brookfield such shares are obtainable. Liquidation, Dissolution and Winding Up In the event of the liquidation, dissolution or winding up of Brookfield or any other distribution
of assets of Brookfield 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 32




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##### 



Brookfield), before any amount is paid or any assets of Brookfield 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 Brookfield. Restriction on Dividends and Retirement and Issue of Shares So long as any of the Class AAA, Series J Shares are outstanding, Brookfield will not, without the
approval of the holders of the Class AAA, Series J Shares:  (i)
    declare, pay or set apart for payment any dividends (other than stock
dividends payable in shares of Brookfield ranking as to capital and dividends junior
to the Class AAA, Series J Shares) on shares of Brookfield ranking as to dividends
junior to the Class AAA, Series J Shares;(ii)
    except out of the net cash proceeds of a substantially concurrent issue of shares of Brookfield 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 Brookfield ranking as
to capital junior to the Class AAA, Series J 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 J
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 J Shares; or(v)
    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 Brookfield 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 Brookfield unless and until Brookfield 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 Brookfield
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 Brookfield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. Specific Provisions of the Class AAA Preference Shares, Series K Dividends The holders of the Class AAA Preference Shares, Series K (the Class AAA, Series K Shares) are
entitled to receive fixed cumulative preferential cash dividends, if, as and when declared by the
board of directors of Brookfield, in an amount equal to $1.30 per share per annum, accruing daily
from the date of issue (less any tax required to be deducted and withheld by Brookfield), payable
quarterly on the last day of March, June, September and December in each year. Redemption The Class AAA, Series K Shares are not redeemable before December 31, 2012. On or after that date,
subject to the terms of any shares of Brookfield ranking prior to the Class AAA, Series K Shares,
to applicable law and to the provisions described under Specific Provisions of the Class AAA
Preference Shares, Series K  Restrictions on Dividends and 33




---



##### 



Retirement and Issue of Shares, Brookfield may, at its option, at any time redeem all, or from
time to time any part, of the outstanding Class AAA, Series K Shares, by the payment of an amount
in cash for each such share so redeemed of $26.00 if redeemed before December 31, 2013, of $25.67
if redeemed on or after December 31, 2013 but before December 31, 2014, at $25.33 if redeemed on or
after December 31, 2014, but before December 31, 2015, 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 Brookfield). Conversion at the Option of Brookfield The Class AAA, Series K Shares are not convertible at the option of Brookfield prior to December
31, 2012. On or after this date, Brookfield may, 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 K Shares into that number of freely tradeable Common Shares determined (per Series K
Preference 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 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 K Shares, the
Current Market Price). Fractional Common Shares will not be issued on any conversion of Class
AAA, Series K Shares, but in lieu thereof Brookfield will make cash payments. Conversion at the Option of the Holder Subject to applicable law and the rights of Brookfield described below, on and after December 31,
2016, each Series K Preference 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 K Shares, but in
lieu thereof Brookfield will make cash payments. Subject to the provisions described under Specific Provisions of the Class AAA Preference Shares,
Series K  Restrictions on Dividends and Retirement and Issue of Shares as applicable, Brookfield
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 K Shares forming the subject matter of the applicable conversion notice,
or (ii) cause the holder of such Class AAA, Series K Shares to sell on the date fixed for
conversion all or any part of such Class AAA, Series K 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 K 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 K 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 K  Restrictions on Dividends and Retirement and Issue of Shares,
Brookfield may at any time purchase for cancellation the whole or any part of the Class AAA, Series
K Shares at the lowest price or prices at which in the opinion of the board of directors of
Brookfield such shares are obtainable. Liquidation, Dissolution and Winding Up In the event of the liquidation, dissolution or winding up of Brookfield or any other distribution
of assets of Brookfield among its shareholders for the purpose of winding up its affairs, the
holders of the Class AAA, Series K 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
Brookfield), before any amount is paid or any assets of Brookfield are distributed to the holders
of any shares ranking junior as to capital to the Class AAA, Series K Shares. The holders of the
Class AAA, Series K Shares will not be entitled to share in any further distribution of the assets
of Brookfield. 34




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##### 



Restriction on Dividends and Retirement and Issue of Shares So long as any of the Class AAA, Series K Shares are outstanding, Brookfield will not, without the
approval of the holders of the Class AAA, Series K Shares:  (i)
    declare, pay or set apart for payment any dividends (other than stock
dividends payable in shares of Brookfield ranking as to capital and dividends junior
to the Class AAA, Series K Shares) on shares of Brookfield ranking as to dividends
junior to the Class AAA, Series K Shares;(ii)
    except out of the net cash proceeds of a substantially concurrent issue of shares of Brookfield ranking as to return of capital and dividends junior to the Class
AAA, Series K Shares, redeem or call for redemption, purchase or otherwise pay off,
retire or make any return of capital in respect of any shares of Brookfield ranking as
to capital junior to the Class AAA, Series K 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 K
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 K Shares; or(v)
    issue any additional Class AAA, Series K Shares or any shares ranking as to
dividends or return of capital prior to or on a parity with the Class AAA, Series K
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 K
Shares and on all other shares of Brookfield ranking prior to or on a parity with the Class AAA,
Series K 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 K Shares may be amended, but only with the prior approval
of the holders of the Class AAA, Series K Shares by special resolution, given in accordance with
the share provisions of the Class AAA, Series K Shares, in addition to any vote or authorization
required by law. Voting The holders of the Class AAA, Series K 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 K Shares as a series) to receive notice of, attend, or vote at,
any meeting of shareholders of Brookfield unless and until Brookfield shall have failed to pay
eight quarterly dividends on the Class AAA, Series K Shares, whether or not consecutive and whether
or not such dividends have been declared and whether or not there are any moneys of Brookfield
properly applicable to the payment of dividends on Series K Preferred Shares. In that event, and
for only so long as any such dividends remain in arrears, the holders of the Class AAA, Series K
Shares will be entitled to receive notice of and to attend each meeting of Brookfield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 Series K Preference 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 Brookfield. 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 Brookfield or any other distribution
of assets of Brookfield among its shareholders by way of return of capital, the holders of Common
Shares will be entitled to receive, after 35




---



##### 



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 Brookfield.  RATINGS We are currently rated by two agencies. The following table shows the ratings issued by the rating
agencies noted therein as of December 31, 2004 and as of the date of this information statement
were as follows: Dominion BondStandard & Poors (S&P)
    
    Rating Service Inc. (DBRS)Corporate rating
    
    BBB
    
    BBB(high)Preferred shares
    
    P-3(high)
    
    Pfd-3(high)
 S&Ps corporate credit ratings are on a rating scale that ranges from AAA to D, which
represents the range from highest to lowest quality of such securities rated. According to the S&P
rating system, an entity rated BBB has adequate capacity to meet its financial commitments.
However, adverse economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the entity to meet its financial commitments. The ratings from AA to CCC may
be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the
major rating categories. S&Ps Canadian preferred share ratings are on a rating scale that ranges from P-1 to D, which
represents the range from highest to lowest quality of such securities rated. According to the S&P
rating system, a preferred share rated P-3 is less vulnerable in the near term than other
lower-rated securities. However, it faces 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 entity 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 our outstanding securities by S&P and DBRS
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. 36




---



##### 



MARKET FOR SECURITIES Our common shares are listed on the New York and Toronto Stock Exchanges under the symbol
BPO. The Class A Preferred Shares, Series A and B, and Class AA Preferred Shares, Series E are
not listed on an exchange. The 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, BPO.PR.J and BPO.PR.K The following table sets forth the reported high and low trading prices and trading volumes of our
common shares as reported by the TSX1 and NYSE2 from January 2004: TSX
    
    
    NYSEPrice (C$)
    
    
    
    
    
    
    Price (US$)Month
    
    High
    
    
    Low
    
    
    Volume
    
    
    High
    
    
    Low
    
    
    VolumeJanuary
    
    
    39.25
    
    
    
    35.90
    
    
    
    1,796,888
    
    
    
    29.62
    
    
    
    27.87
    
    
    
    1,783,500February
    
    
    40.65
    
    
    
    38.55
    
    
    
    1,695,379
    
    
    
    30.55
    
    
    
    28.88
    
    
    
    1,423,100March
    
    
    42.05
    
    
    
    40.05
    
    
    
    2,543,699
    
    
    
    31.84
    
    
    
    30.00
    
    
    
    2,428,300April
    
    
    41.40
    
    
    
    38.00
    
    
    
    1,741,921
    
    
    
    31.54
    
    
    
    27.73
    
    
    
    3,301,100May
    
    
    40.83
    
    
    
    37.25
    
    
    
    1,412,080
    
    
    
    29.95
    
    
    
    26.80
    
    
    
    3,904,500June
    
    
    40.97
    
    
    
    37.59
    
    
    
    885,247
    
    
    
    29.86
    
    
    
    27.75
    
    
    
    2,353,200July
    
    
    41.55
    
    
    
    37.55
    
    
    
    919,309
    
    
    
    30.96
    
    
    
    28.57
    
    
    
    2,872,000August
    
    
    41.65
    
    
    
    39.10
    
    
    
    906,116
    
    
    
    31.63
    
    
    
    30.00
    
    
    
    2,692,700September
    
    
    42.10
    
    
    
    40.54
    
    
    
    1,094,342
    
    
    
    32.86
    
    
    
    31.54
    
    
    
    2,282,900October
    
    
    42.50
    
    
    
    40.09
    
    
    
    701,718
    
    
    
    33.97
    
    
    
    31.99
    
    
    
    2,930,900November
    
    
    43.99
    
    
    
    40.54
    
    
    
    827,836
    
    
    
    36.77
    
    
    
    33.15
    
    
    
    2,177,300December
    
    
    47.40
    
    
    
    42.70
    
    
    
    1,005,303
    
    
    
    38.33
    
    
    
    36.12
    
    
    
    2,305,800
 The following table sets forth the reported high and low trading prices and trading volumes of
our Class AAA Preferred Shares, Series F (BPO.PR.F) as reported by the TSX from January 2004: Price (C$)Month
    
    High
    
    
    Low
    
    
    VolumeJanuary
    
    
    27.00
    
    
    
    26.26
    
    
    
    1,059,202February
    
    
    27.40
    
    
    
    26.60
    
    
    
    812,284March
    
    
    27.97
    
    
    
    26.52
    
    
    
    85,107April
    
    
    27.35
    
    
    
    24.75
    
    
    
    215,131May
    
    
    26.20
    
    
    
    25.35
    
    
    
    85,860June
    
    
    26.25
    
    
    
    25.35
    
    
    
    42,421July
    
    
    26.40
    
    
    
    25.85
    
    
    
    81,268August
    
    
    26.98
    
    
    
    26.12
    
    
    
    86,254September
    
    
    27.25
    
    
    
    26.04
    
    
    
    136,356October
    
    
    27.25
    
    
    
    26.17
    
    
    
    533,404November
    
    
    27.45
    
    
    
    26.43
    
    
    
    381,712December
    
    
    27.98
    
    
    
    27.00
    
    
    
    1,025,702
 The following table sets forth the reported high and low trading prices and trading volumes of
our Class AAA Preferred Shares, Series G (BPO.PR.U) as reported by the TSX from January 2004: Price ($)Month
    
    High
    
    
    Low
    
    
    VolumeJanuary
    
    
    25.75
    
    
    
    24.90
    
    
    
    381,819February
    
    
    26.20
    
    
    
    25.30
    
    
    
    407,205March
    
    
    26.50
    
    
    
    25.65
    
    
    
    51,205April
    
    
    26.15
    
    
    
    24.85
    
    
    
    313,243May
    
    
    25.90
    
    
    
    24.95
    
    
    
    192,870June
    
    
    26.00
    
    
    
    25.05
    
    
    
    95,875July
    
    
    25.75
    
    
    
    25.16
    
    
    
    94,630August
    
    
    26.60
    
    
    
    25.30
    
    
    
    61,453September
    
    
    26.24
    
    
    
    25.72
    
    
    
    65,201October
    
    
    26.15
    
    
    
    25.56
    
    
    
    112,112November
    
    
    26.05
    
    
    
    25.71
    
    
    
    144,545December
    
    
    26.95
    
    
    
    25.20
    
    
    
    514,326
   1
    
    Source, Bloomberg2
    
    Source, NYSEnet 37




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##### 



The following table sets forth the reported high and low trading prices and trading volumes of
our Class AAA Preferred Shares, Series H (BPO.PR.H) as reported by the TSX from January 2004: Price (C$)Month
    
    High
    
    
    Low
    
    
    VolumeJanuary
    
    
    25.94
    
    
    
    25.26
    
    
    
    223,631February
    
    
    26.05
    
    
    
    25.50
    
    
    
    1,075,517March
    
    
    26.50
    
    
    
    25.75
    
    
    
    983,665April
    
    
    26.35
    
    
    
    24.80
    
    
    
    391,685May
    
    
    25.20
    
    
    
    24.50
    
    
    
    241,748June
    
    
    25.10
    
    
    
    24.70
    
    
    
    121,437July
    
    
    26.10
    
    
    
    25.00
    
    
    
    119,920August
    
    
    25.90
    
    
    
    25.25
    
    
    
    141,355September
    
    
    26.40
    
    
    
    25.44
    
    
    
    1,426,428October
    
    
    25.95
    
    
    
    25.35
    
    
    
    235,722November
    
    
    26.75
    
    
    
    25.50
    
    
    
    322,850December
    
    
    26.99
    
    
    
    26.00
    
    
    
    477,905
 The following table sets forth the reported high and low trading prices and trading volumes of
our Class AAA Preferred Shares, Series I (BPO.PR.I) as reported by the TSX from January 2004: Price (C$)Month
    
    High
    
    
    Low
    
    
    VolumeJanuary
    
    
    25.95
    
    
    
    25.05
    
    
    
    1,739,810February
    
    
    26.30
    
    
    
    25.50
    
    
    
    1,405,916March
    
    
    26.60
    
    
    
    25.90
    
    
    
    1,481,328April
    
    
    26.30
    
    
    
    25.00
    
    
    
    356,249May
    
    
    25.59
    
    
    
    24.70
    
    
    
    160,769June
    
    
    25.95
    
    
    
    24.71
    
    
    
    154,480July
    
    
    25.93
    
    
    
    25.30
    
    
    
    96,525August
    
    
    26.30
    
    
    
    25.12
    
    
    
    120,792September
    
    
    26.15
    
    
    
    25.35
    
    
    
    456,559October
    
    
    26.00
    
    
    
    25.10
    
    
    
    268,258November
    
    
    26.25
    
    
    
    25.50
    
    
    
    725,721December
    
    
    27.00
    
    
    
    25.85
    
    
    
    929,395
 The following table sets forth the reported high and low trading prices and trading volumes of
our Class AAA Preferred Shares, Series J (BPO.PR.J) as reported by the TSX from the date of listing
on April 30, 2004: Price (C$)Month
    
    High
    
    
    Low
    
    
    VolumeApril
    
    
    24.40
    
    
    
    23.50
    
    
    
    120,300May
    
    
    24.20
    
    
    
    22.25
    
    
    
    502,861June
    
    
    23.98
    
    
    
    22.91
    
    
    
    402,364July
    
    
    24.23
    
    
    
    23.40
    
    
    
    277,470August
    
    
    24.75
    
    
    
    24.11
    
    
    
    326,280September
    
    
    24.90
    
    
    
    24.00
    
    
    
    1,007,336October
    
    
    24.50
    
    
    
    23.51
    
    
    
    267,112November
    
    
    24.60
    
    
    
    23.88
    
    
    
    725,013December
    
    
    25.20
    
    
    
    24.55
    
    
    
    1,358,247
 The following table sets forth the reported high and low trading prices and trading volumes of
our Class AAA Preferred Shares, Series K (BPO.PR.K) as reported by the TSX from the date of listing
on October 22, 2004: Price (C$)Month
    
    High
    
    
    Low
    
    
    VolumeOctober
    
    
    24.40
    
    
    
    23.76
    
    
    
    263,425November
    
    
    24.70
    
    
    
    24.10
    
    
    
    1,206,179December
    
    
    25.50
    
    
    
    24.58
    
    
    
    1,478,070
 38




---



##### 



DIRECTORS AND OFFICERS The names, principal occupations and municipalities of residence of our directors and officers, as
well as the year each director first became a director are set out below. Each director is
appointed to serve until the next annual meeting or until his successor is elected or appointed. Directors Year firstbecame aName, municipality of residence
    
    director
    
    Principal Occupation and Five-year Occupation HistoryGORDON E. ARNELL
London, England
    
    
    1989
    
    
    Mr. Arnell has been Chairman of Brookfield and its
board of directors of Brookfield since 1995.WILLIAM T. CAHILL(1)
Ridgefield, Connecticut
    
    
    2000
    
    
    Mr. Cahill has been a Senior Credit Officer,
Citibank Community Development since 2002. He has
held various positions including Managing Director
at Citicorp Real Estate, Inc.; OREO 1996-2002.RICHARD B. CLARK
New York, New York
    
    
    2002
    
    
    Mr. Clark has been President and Chief Executive
Officer of Brookfield since 2002. He was President
and CEO of Brookfields U.S. operations 2000-2002;
held senior management positions in U.S. operations
for Brookfield and its predecessor companies
including Chief Operating Officer, Executive Vice
President and Director of Leasing.JACK L. COCKWELL(2)
Toronto, Ontario
    
    
    1999
    
    
    Mr. Cockwell has been Group Chairman of Brascan
Corporation since 2003. Prior thereto he was
Co-Chairman, Brascan Corporation from 2002 and
President and Chief Executive Officer of Brascan
Corporation from 1995-2002.J. BRUCE FLATT
Toronto, Ontario
    
    
    1996
    
    
    Mr. Flatt is President and Chief Executive Officer
of Brascan Corporation since 2002. He was
previously President and CEO of Brookfield from 2000
and President and Chief Operating Officer of
Brookfield from 1995-2000.LANCE LIEBMAN(2)(3)
New York, New York
    
    
    2003
    
    
    Professor Liebman has been a Professor of Law at
Columbia University since 1991 and Director of the
American Law Institute since 1999.PAUL D. MCFARLANE(1)(2)
Mississauga, Ontario
    
    
    1998
    
    
    Mr. McFarlane is a corporate director. He retired
from CIBC in 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)
Spruce Grove, Alberta
    
    
    1995
    
    
    Mr. Olson has been President and CEO of First
Industries Corporation, an investment and management
company, since 1991.SAM POLLOCK, O.C.(3)
Toronto, Ontario
    
    
    1978
    
    
    Mr. Pollock is President of 96345 Canada Inc., a
Canadian investment company. He was Chairman of the
Toronto Blue Jays from 1995-2000.WILLIAM C. WHEATON, PH.D.
Hamilton, Massachusetts
    
    
    2004
    
    
    Professor Wheaton has been a Professor in MITs
Department of Economics since 1972, is the current
director of the MIT Center for Real Estate and is is
principal and co-founder of Torto Wheaton Research,
a Boston real estate consulting company.JOHN E. ZUCCOTTI
New York, New York
    
    
    1998
    
    
    Mr. Zuccotti has been Co-Chairman of Brookfield and
its board of directors of Brookfield 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 Brookfield from
1999-2002.
   (1)
    
    Member of the Audit Committee(2)
    
    Member of the Human Resources and Compensation Committee(3)
    
    Member of the Governance and Nominating Committee 39




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##### 



Officers See above for descriptions of Gordon E. Arnell, Chairman, John E. Zuccotti, Co-Chairman, and
Richard B. Clark,President and Chief Executive Officer. Name, municipalityof residence
    
    Position Held
    
    Five-year Occupation HistoryDENNIS H. FRIEDRICH
New York, New York
    
    President and Chief
Operating Officer, U.S.
Commercial Operations
    
    Mr. Friedrich has held his present principal
occupation since 2003, prior to which he was
Executive Vice President and Chief Operating Officer
of Brookfields New York-based affiliate, Brookfield
Financial Properties, since 2002, prior thereto he
was Senior Vice President of Strategic Initiatives
from 2000, and prior to 2000 he was with Jones Lang
LaSalle, a real estate services firm.THOMAS F. FARLEY
Calgary, Alberta
    
    President and Chief
Operating Officer,
Canadian Commercial
Operations
    
    Mr. Farley has held his present principal occupation
since 2002, prior to which he was 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.LAWRENCE F. GRAHAM
New York, New York
    
    Executive Vice
President, Development
    
    Mr. Graham has been Executive Vice President,
Development of Brookfield since 2004. Prior thereto,
he held senior management positions in U.S.
operations for Brookfield and its predecessor
companies including Executive Vice President,
Development and Senior Vice President, Operations and
Development.KATHLEEN G. KANE
New York, New York
    
    Senior Vice President
and General Counsel
Secretary
    
    Ms. Kane has held her present principal occupation
since 2003, prior to which she was Senior Vice
President and General Counsel of Brookfields New
York-based affiliate, Brookfield Financial
Properties, and prior to 1997, she was with the law
firm of Cahill Gordon & Reindel.FREDERICK T. KELLY
New York, New York
    
    Senior Vice President and
Chief Investment Officer
    
    Mr. Kelly has held his present principal occupation
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
New York, New York
    
    Senior Vice President and
Chief Financial Officer
    
    Mr. Laurie has held his present principal 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
New York, New York
    
    Vice President, Investor
Relations and
Communications
    
    Ms. Coley has held her present principal occupation
since 2002, prior to which she was Vice President,
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
Toronto, Ontario
    
    Vice President, Taxation
    
    Mr. Hyde has held his principal occupation since 1988.MICHAEL P. SULLIVAN
New York, New York
    
    Vice President, Risk
Management
    
    Mr. Sullivan has held his principal occupation since
2004, prior to which he was Vice President, Casualty
Underwriting at Alea North America and prior to 2000
he held various positions with American Re
Corporation.STEPHANIE A.
SCHEMBARI
New York, New York
    
    Vice President, Human
Resources
    
    Ms. Schembari has held her present principal
occupation since 2005, prior to which she was Vice
President, Human Resources for Bovis Lend Lease.
Prior to that, she held the position of Managing
director of Human Resources at Insignia Financial
Group, Inc.T. NGA TRINH
New York, New York
    
    Vice President and
Controller
    
    Ms. Trinh has held her present principal occupation
since 2002, prior to which she was Vice President,
Financial Management for Brookfields Canadian
operations and prior to 2000, she was with the
Taxation Services Group of Deloitte & Touche LLP.GORDON E. WIDDES
Toronto, Ontario
    
    Vice President,
Information Technologies
    
    Mr. Widdes has held his present principal occupation
since 2002, prior to which he was Vice President,
Information Systems for Brookfields Canadian

operations, and prior to 1998, he was with Spar
Aerospace and Unicorp.BRETT M. FOX
New York, New York
    
    Assistant Secretary
    
    Mr. Fox has held his present principal occupation
since 2003, prior to which he was Vice President and
Associate Counsel of Brookfields New York-based
affiliate, Brookfield Financial Properties, and prior
to 2002, he was with the law firm of Cahill Gordon &
Reindel.
 40




---



##### 



Share Ownership As of March 15, 2005, the directors and executive officers of Brookfield own, directly or
indirectly, or exercise control or direction over approximately 0.6 million common shares,
representing 0.4% of the outstanding voting shares (see the information on page 2 of the Management
Proxy Circular under the heading Principal Holders of Brookfield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 Brookfield, 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 We are occasionally named as a party in various claims and legal proceedings which arise
during the normal course of our business. We review each of these claims, including the nature of
the claim, the amount in dispute or claimed and the availability of insurance coverage. Although
there can be no assurance that any particular claim will be resolved in our favor, we do not
believe that the outcome of any claims or potential claims of which we are currently aware will
have a material adverse effect on us, taken as a whole. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS As of March 21, 2005, no director, senior officer or associate of a director or senior officer
nor, to the knowledge of the directors or senior officers of Brookfield after having made
reasonable inquiry, any person or company who beneficially owns, directly or indirectly, voting
securities of Brookfield carrying more than 10% of the voting rights attached to any class of
voting securities of Brookfield outstanding at the date hereof, or any associate or affiliate
thereof, had any material interest, direct or indirect, in any material transaction of Brookfield
or its affiliates nor do any such persons have a material interest, direct or indirect, in any
proposed transaction of Brookfield or its affiliates. At December 31, 2004, Brookfield had approximately $114 million of unsecured indebtedness and $102
of secured indebtedness outstanding to Brascan Corporation and its affiliates. During 2004,
borrowings in the normal course from these related parties repayments totaled $346 million. In March 2004, we exercised an option granted in our 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 Brookfield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 Brookfield.
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 Brookfields
outstanding securities. The transfer agent and registrar for Brookfields Preference Shares and Common Shares in Canada is
CIBC Mellon Trust Company at its principal office in Toronto, Ontario. The transfer agent and
registrar for Brookfield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. 41




---



##### 



AUDIT COMMITTEE INFORMATION The Audit Committee is responsible for monitoring our systems and procedures for financial
reporting and internal control, reviewing certain public disclosure documents and monitoring the
performance and independence of our external auditors. The committee is also responsible for
reviewing our 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 of
directors. A copy of the charter is attached hereto as Appendix C. 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 Brookfields Audit Committee must meet an additional
independence test under the Sarbanes-Oxley Act and National Instrument 51-110, in that their
directors fees are the only compensation they, or their firms, receive from Brookfield and that
they are not affiliated with Brookfield. 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 responsibility for large corporate and
commercial credits. Pre-Approval Policies and Procedures In February 2004, the Audit Committee adopted a revised policy regarding the provision of non-audit
services by our external auditors. This policy, which is periodically reviewed and updated,
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, audit-related and non-audit services. It also specifies a number of services the
provision of which is not permitted by our external auditors, including the use of our external
auditors for financial information system design and implementation assignments. External Auditor Service Fees (By Category) Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their respective affiliates
(collectively Deloitte & Touche) are our principal external auditors. Deloitte & Touche and its
predecessors have served as external auditors of Brookfield since 1978. From time to time,
Deloitte & Touche also provides us with consulting and other non-audit services. 42




---



##### 



The following table sets forth further information on the fees billed by Deloitte & Touche to
Brookfield for the fiscal years ended December 31, 2004 and 2003: Service Performed
    
    2004
    
    
    2003Audit and Audit-related servicesConsolidated, subsidiary and property level financial statements(1)
    
    $
    1,020,000
    
    
    $
    1,087,000Quarterly reviews(2)
    
    
    140,000
    
    
    
    Prospectuses
    
    
    97,000
    
    
    
    116,600S-OX 404 Readiness
    
    
    20,000
    
    
    
    Other
    
    
    10,000
    
    
    
    9,500TaxTax compliance
    
    
    240,000
    
    
    
    275,000Advisory
    
    
    70,000
    
    
    
    65,000Total fees
    
    $
    1,597,000
    
    
    $
    1,553,100
 Notes:   (1)
    
    Included in the 2004 and 2003 audit fees are $80,000 and
$85,000, respectively, relating to the audits of BPO Properties
Ltd., which is listed on the Toronto Stock Exchange.(2)
    
    Included in the 2004 quarterly review fees is
$45,000 relating to the review of BPO Properties Ltd. Audit fees include fees 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 paid 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: audits required by lenders, joint venture agreements, tenants and employee
benefit plan requirements, accounting consultations and audits in connection with potential
transactions, internal control reviews and consultation concerning financial accounting and
reporting standards. The Audit Committee of the board of directors has received representations from Deloitte & Touche
regarding their independence and has considered the relations described above in arriving at its
determination that Deloitte & Touche are independent of Brookfield. ADDITIONAL INFORMATION Additional information relating to directors and executive officers remuneration and
indebtedness, the principal holders of our securities, securities authorized for issuance under
equity compensation plans and interests of management and others in material transactions, is set
out in pages 2 through 22 of our Management Proxy Circular dated March 15, 2005. Additional
financial information is also provided in the consolidated financial statements for the year ended
December 31, 2004 in our Annual Report for the year ended December 31, 2004. Our 2004 Annual
Report also contains, in pages 13 through 36, the Managements Discussion and Analysis of our
financial condition and results of operations for the year ended December 31, 2004, which is
incorporated herein by reference. You may access other information about us, including our disclosure documents, reports, statements
or other information that we file with the Canadian securities regulatory authorities through SEDAR
at www.sedar.comand in the United States with the SEC at www.sec.govand on Brookfields Web site
at www.brookfieldproperties.com. 43




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##### 



APPENDIX A  SUBSIDIARIES As of March 21, 2005, 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 21, 2005, have been omitted. Indentation indicates the voting securities
are directly or indirectly owned by the subsidiary listed above. Percentage
    
    
    
    
    Property (including Percentage Interest if less than 100%)Subsidiary
    
    Interest
    
    
    
    
    /Line of BusinessBrookfield Properties Ltd.
    
    
    100
    %
    
    
    
    Property Management,  BCE Place, Bay-Wellington Tower, Toronto and TD Canada Trust Tower, Toronto (50%)BCE Place (Wellington) Limited
    
    
    100
    %
    
    
    
    Head Lease, BCE Place, Bay-Wellington Tower, TorontoGalleria Concourse Operations Inc
    
    
    75
    %
    
    
    
    Head Lease, BCE Place, Retail and Parking, TorontoCT Tower Investments Inc.
    
    
    50
    %
    
    
    
    Head Lease, BCE Place, TD Canada Trust Tower, TorontoBrookfield Properties (US) Inc.
    
    
    100
    %
    
    
    
    Holding CompanyBrookfield Commercial Properties Inc.
    
    
    100
    %
    
    
    
    Holding CompanyBrookfield Properties (US) LLC
    
    
    100
    %
    
    
    
    Property ManagementBrookfield Republic Plaza LLC
    
    
    100
    %
    
    
    
    Republic Plaza, DenverBrookfield Denver Inc.
    
    
    100
    %
    
    
    
    World Trade Center, DenverBrookfield CSBB Inc.
    
    
    100
    %
    
    
    
    Colorado State Bank Building, Denver (50%)MCC Mortgage L.P.
    
    
    98
    %
    
    
    
    33 South 6th Street Minneapolis City Center, MinneapolisBrookfield Market Inc.
    
    
    100
    %
    
    
    
    Gaviidae Common Phase I, MinneapolisDB Holdings, Inc./Brookfield DB Inc.
    
    
    100
    %
    
    
    
    Dain Rauscher Plaza, Minneapolis Gaviidae Common Phase II, MinneapolisBrookfield Financial Properties, L.P.
    
    
    99.4
    %
    
    
    
    Property Management and Holding CompanyWFP Tower A Co. L.P.
    
    
    99.4
    %
    
    
    
    One World Financial Center, New YorkWFP Tower B Co. L.P.
    
    
    99.4
    %
    
    
    
    Two World Financial Center, New YorkBFP 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 YorkBFP One Liberty Plaza Co. LLC
    
    
    99.4
    %
    
    
    
    One Liberty Plaza, New YorkBFP245 Park Co. LLC
    
    
    50.7
    %
    
    
    
    245 Park Avenue, New YorkBFP300 Madison II LLC
    
    
    99.4
    %
    
    
    
    300 Madison Avenue, New YorkWFP53 State Street Limited Partnership
    
    
    50.7
    %
    
    
    
    53 State Street, BostonWFP75 State Street Co. L.P.
    
    
    50.7
    %
    
    
    
    75 State Street, BostonBFP1625 Eye Co. LLC
    
    
    99.4
    %
    
    
    
    1625 Eye Street, Washington, D.C.BFP701 9th Co. LLC
    
    
    99.4
    %
    
    
    
    701 9th Street, Washington, D.C.BFP Potomac Tower Co. LLC
    
    
    99.4
    %
    
    
    
    Potomac Tower, Arlington, VirginiaWest 31st Inc.
    
    
    100
    %
    
    
    
    Penn Station SiteBPO Properties Ltd.
    
    
    89
    %
    
    
    
    Holding Company70 York Street Limited
    
    
    89
    %
    
    
    
    HSBC Building, TorontoGentra Canada Investments Inc.
    
    
    89
    %
    
    
    
    20-22 Front Street West, TorontoExchange Tower Limited
    
    
    89
    %
    
    
    
    335 & 347  Bay Street, Toronto (50%) Bay-Adelaide Centre, Toronto (50%) Exchange Tower, Toronto (50%)1452917 Ontario Limited/1262004 Ontario
Limited
    
    
    89
    %
    
    
    
    Queens Quay Terminal, Toronto1464255 Ontario Limited
    
    
    89
    %
    
    
    
    Hudsons Bay Centre, Toronto (25%)1523605 Ontario Limited
    
    
    89
    %
    
    
    
    105 Adelaide Street West, Toronto2012769 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 Canada Ltd./3843863 Canada
Ltd.
    
    
    89
    %
    
    
    
    Royal Centre, VancouverBrookfield 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 Centre, Calgary (50%)Fifth Avenue Place (Calgary) Ltd.
    
    
    89
    %
    
    
    
    Fifth Avenue Place, Calgary (50%)Brookfield FMS Ltd.
    
    
    100
    %
    
    
    
    Holding CompanyBrookfield Lepage Johnson Controls Facility
Management Services Limited Partnership
    
    
    40
    %
    
    
    
    Facilities ManagementBrookfield Homes Holdings Ltd
    
    
    100
    %
    
    
    
    Holding CompanyCarma Corporation
    
    
    100
    %
    
    
    
    Land Development and Housing CompanyBrookfield Homes (Ontario) Limited
    
    
    100
    %
    
    
    
    Land Development and Housing CompanyBrookfield Residential Services Ltd.
    
    
    100
    %
    
    
    
    Condominium Management
 44




---



##### 



APPENDIX B COMMERCIAL PROPERTIES BY REGION Effective
    
    
    BrookfieldsNumber of
    
    
    
    
    
    
    
    
    
    
    Retail /
    
    
    Leasable
    
    
    Ownership
    
    
    EffectiveAs at December 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.NEW YORKWorld Financial CenterOne
    
    
    1
    
    
    
    99.8
    %
    
    
    1,520
    
    
    
    108
    
    
    
    1,628
    
    
    
    100
    %
    
    
    1,628Two
    
    
    1
    
    
    
    100.0
    %
    
    
    2,455
    
    
    
    36
    
    
    
    2,491
    
    
    
    100
    %
    
    
    2,491Four
    
    
    1
    
    
    
    100.0
    %
    
    
    1,711
    
    
    
    89
    
    
    
    1,800
    
    
    
    51
    %
    
    
    917Retail
    
    
    
    
    
    
    65.0
    %
    
    
    
    
    
    
    295
    
    
    
    295
    
    
    
    100
    %
    
    
    295One Liberty Plaza
    
    
    1
    
    
    
    95.7
    %
    
    
    2,194
    
    
    
    20
    
    
    
    2,214
    
    
    
    100
    %
    
    
    2,214300 Madison Avenue
    
    
    1
    
    
    
    99.1
    %
    
    
    1,089
    
    
    
    5
    
    
    
    1,094
    
    
    
    100
    %
    
    
    1,094245 Park Avenue
    
    
    1
    
    
    
    98.4
    %
    
    
    1,630
    
    
    
    62
    
    
    
    1,692
    
    
    
    51
    %
    
    
    863DevelopmentsThree World Financial Center
    
    
    1
    
    
    
    
    
    
    
    1,200
    
    
    
    
    
    
    
    1,200
    
    
    
    100
    %
    
    
    1,200401 West 31st Street
    
    
    1
    
    
    
    
    
    
    
    2,500
    
    
    
    
    
    
    
    2,500
    
    
    
    100
    %
    
    
    2,500Other
    
    
    1
    
    
    
    100.0
    %
    
    
    
    
    
    
    7
    
    
    
    7
    
    
    
    50
    %
    
    
    49
    
    
    
    98.2
    %
    
    
    14,299
    
    
    
    622
    
    
    
    14,921
    
    
    
    
    
    
    
    13,206BOSTON53 State Street
    
    
    1
    
    
    
    95.2
    %
    
    
    1,091
    
    
    
    70
    
    
    
    1,161
    
    
    
    51
    %
    
    
    59275 State Street
    
    
    1
    
    
    
    99.0
    %
    
    
    742
    
    
    
    260
    
    
    
    1,002
    
    
    
    51
    %
    
    
    5112
    
    
    
    96.8
    %
    
    
    1,833
    
    
    
    330
    
    
    
    2,163
    
    
    
    
    
    
    
    1,103WASHINGTON1625 Eye Street, N.W.
    
    
    1
    
    
    
    82.6
    %
    
    
    374
    
    
    
    197
    
    
    
    571
    
    
    
    100
    %
    
    
    571701 9th Street, N.W.
    
    
    1
    
    
    
    100.0
    %
    
    
    340
    
    
    
    207
    
    
    
    547
    
    
    
    100
    %
    
    
    547Potomac Tower
    
    
    1
    
    
    
    100.0
    %
    
    
    236
    
    
    
    203
    
    
    
    439
    
    
    
    100
    %
    
    
    4393
    
    
    
    93.2
    %
    
    
    950
    
    
    
    607
    
    
    
    1,557
    
    
    
    
    
    
    
    1,557TORONTOBCE PlaceTD Canada Trust Tower
    
    
    1
    
    
    
    99.5
    %
    
    
    1,126
    
    
    
    17
    
    
    
    1,143
    
    
    
    50
    %
    
    
    572Bay Wellington Tower
    
    
    1
    
    
    
    95.7
    %
    
    
    1,297
    
    
    
    42
    
    
    
    1,339
    
    
    
    100
    %
    
    
    1,339Retail, parking and office
    
    
    2
    
    
    
    99.6
    %
    
    
    137
    
    
    
    809
    
    
    
    946
    
    
    
    75
    %
    
    
    705Exchange Tower Block
    
    
    2
    
    
    
    98.3
    %
    
    
    1,136
    
    
    
    257
    
    
    
    1,393
    
    
    
    58
    %
    
    
    812HSBC Building
    
    
    1
    
    
    
    100.0
    %
    
    
    188
    
    
    
    37
    
    
    
    225
    
    
    
    100
    %
    
    
    225Queens Quay Terminal
    
    
    1
    
    
    
    89.2
    %
    
    
    428
    
    
    
    75
    
    
    
    503
    
    
    
    100
    %
    
    
    503Atrium on Bay
    
    
    1
    
    
    
    87.7
    %
    
    
    914
    
    
    
    327
    
    
    
    1,241
    
    
    
    50
    %
    
    
    621DevelopmentsBay-Adelaide Centre
    
    
    1
    
    
    
    
    
    
    
    1,800
    
    
    
    
    
    
    
    1,800
    
    
    
    50
    %
    
    
    900Hudsons Bay Centre
    
    
    1
    
    
    
    
    
    
    
    535
    
    
    
    557
    
    
    
    1,092
    
    
    
    25
    %
    
    
    273BCE Place III
    
    
    1
    
    
    
    
    
    
    
    800
    
    
    
    
    
    
    
    800
    
    
    
    65
    %
    
    
    52012
    
    
    
    95.3
    %
    
    
    8,361
    
    
    
    2,121
    
    
    
    10,482
    
    
    
    
    
    
    
    6,470CALGARYBankers Hall
    
    
    4
    
    
    
    98.1
    %
    
    
    1,948
    
    
    
    1,250
    
    
    
    3,198
    
    
    
    50
    %
    
    
    1,599Fifth Avenue Place
    
    
    2
    
    
    
    99.5
    %
    
    
    1,428
    
    
    
    253
    
    
    
    1,681
    
    
    
    50
    %
    
    
    841Petro-Canada Centre
    
    
    2
    
    
    
    97.9
    %
    
    
    1,707
    
    
    
    245
    
    
    
    1,952
    
    
    
    50
    %
    
    
    9768
    
    
    
    98.4
    %
    
    
    5,083
    
    
    
    1,748
    
    
    
    6,831
    
    
    
    
    
    
    
    3,416DENVERRepublic PlazaOffice
    
    
    1
    
    
    
    82.3
    %
    
    
    1,247
    
    
    
    
    
    
    
    1,247
    
    
    
    100
    %
    
    
    1,247Development and other
    
    
    1
    
    
    
    
    
    
    
    400
    
    
    
    548
    
    
    
    948
    
    
    
    100
    %
    
    
    948Trade Center
    
    
    2
    
    
    
    87.4
    %
    
    
    767
    
    
    
    43
    
    
    
    810
    
    
    
    100
    %
    
    
    810Colorado State Bank Building
    
    
    1
    
    
    
    91.4
    %
    
    
    412
    
    
    
    
    
    
    
    412
    
    
    
    50
    %
    
    
    2065
    
    
    
    85.4
    %
    
    
    2,826
    
    
    
    591
    
    
    
    3,417
    
    
    
    
    
    
    
    3,211MINNEAPOLIS33 South Sixth Street
    
    
    2
    
    
    
    83.5
    %
    
    
    1,082
    
    

    
    695
    
    
    
    1,777
    
    
    
    100
    %
    
    
    1,777Dain Plaza
    
    
    2
    
    
    
    89.0
    %
    
    
    593
    
    
    
    638
    
    
    
    1,231
    
    
    
    100
    %
    
    
    1,2314
    
    
    
    85.8
    %
    
    
    1,675
    
    
    
    1,333
    
    
    
    3,008
    
    
    
    
    

    
    
    3,008OTHERRoyal Centre, Vancouver
    
    
    1
    
    
    
    89.8
    %
    
    
    493
    
    
    
    360
    
    
    
    853
    
    
    
    100
    %
    
    
    853Other
    
    
    2
    
    
    
    96.2
    %
    
    
    2,570
    
    
    
    4
    
    
    
    2,574
    
    
    
    100
    %
    
    
    2,5743
    
    
    
    90.5
    %
    
    
    3,063
    
    
    
    364
    
    
    
    3,427
    
    
    
    
    
    
    
    3,427Total portfolio
    
    
    46
    
    
    
    95.2
    %
    
    
    38,090
    
    
    
    7,716
    
    
    
    45,806
    
    
    
    
    
    
    
    35,398Less: other shareholders interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,125
    )Brookfields net effective ownership interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,273
 45




---



##### 



APPENDIX C  AUDIT COMMITTEE CHARTER A committee of the board of directors of Brookfield 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 Brookfield (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 Brookfield 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 Brookfield; 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:  
    planning and staffing of the audit; 46




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##### 




    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 Brookfield;
    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 Brookfield;
    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 Brookfields financial statements;(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
Brookfields internal control over financial reporting which are reasonably likely to
adversely affect Brookfields ability to record, process, summarize and report financial
information, and any fraud involving management or other employees; 47




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##### 



(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 Brookfield 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 Brookfield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 Brookfield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 Brookfield 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, Brookfield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 Brookfield;(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 Brookfield; 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 Brookfields internal controls and disclosure controls;
    its recommendations regarding the annual and interim financial statements of
Brookfield and any reconciliation of Brookfield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;
    Brookfield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 Brookfield regarding accounting, internal controls, disclosure controls or auditing
matters and a procedure for the confidential, anonymous submission of concerns by employees of
Brookfield regarding such matters. 48




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##### 



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 Brookfields web site and the annual report of Brookfield 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 Brookfield,
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 Brookfield 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 Brookfield. 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. 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 Brookfield, either directly or as a partner, shareholder or officer
of an organization that has a relationship with Brookfield. In addition, a director who:  (i)
    is an employee, or whose immediate family member is an executive officer of
Brookfield 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 Brookfield, 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 Brookfield is not independent until three years after the end of the
affiliation or employment of the auditing relationship; 49




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##### 



(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 Brookfield 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 Brookfield 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 Brookfield. 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 Brookfield 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 Brookfield 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 Brookfield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 Brookfield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(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. 50