##### 



(BROOKFIELD LOGO) BROOKFIELD PROPERTIES CORPORATION(incorporated under the laws of Canada) NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS NOTICE IS HEREBY GIVEN that an Annual and Special Meeting of Shareholders of
Brookfield Properties Corporation(the Corporation) will be held Wednesday,
April 28, 2004 in New York City at the American Express Auditorium, Three World
Financial Center, 200 Vesey Street, 26th Floor at 11:30 a.m. (E.S.T.) for the
following purposes:  1.
    
    to receive the annual report to shareholders, including the consolidated
financial statements of the Corporation for the fiscal year ended December
31, 2003, together with the report of the auditors thereon;2.
    
    to elect directors for the ensuing year;3.
    
    to consider and, if thought advisable, to pass a resolution authorizing
an amendment to the Corporations share option plan increasing the number
of common shares which may be issued under the share option plan;4.
    
    to appoint auditors and to authorize the directors to fix the
remuneration to be paid to the auditors; and5.
    
    to transact such other business as may properly come before the meeting
or any adjournment thereof. The attached management proxy circular provides additional information relating
to the matters to be dealt with at the meeting and is incorporated into and
forms part of this Notice. If you are unable to be present at the meeting, please exercise your right to
vote by signing and returning the enclosed form of proxy in the envelope
provided for that purpose to CIBC Mellon Trust Company, P.O. Box 12005, Station
BRM B, Toronto, Ontario M7Y 2K5 (courier address Attention: Proxy Department,
200 Queens Quay East, Unit 6, Toronto, Ontario M5A 4K9, or if delivered by
facsimile at 416-368-2502), so as to arrive not later than the close of
business on Monday, April 26, 2004 or, if the meeting is adjourned, 48 hours
(excluding Saturdays and holidays) before any adjournment of the meeting. By Order of the Board of DirectorsToronto, Canada
    
    Kathleen G. KaneMarch 4, 2004
    
    Senior Vice President andGeneral Counsel and Secretary




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##### 



MANAGEMENT PROXY CIRCULAR TABLE OF CONTENTS PART ONE:
    
    Voting Information
    
    
    1PART TWO:
    
    Business of the Meeting
    
    
    31. Annual Financial Statements
    
    
    32. Election of Directors
    
    
    33. Amendment to the Share Option Plan
    
    
    84. Appointment of Auditors
    
    
    9PART THREE:
    
    Executive Compensation Report
    
    
    10PART FOUR:
    
    Statement of Corporate Governance Practices
    
    
    15PART FIVE:
    
    Other Information
    
    
    21SCHEDULE A:
    
    Resolution Relating to an Amendment to the
Share Option Plan
    
    
    22




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##### 



MANAGEMENT PROXY CIRCULAR PART ONE  VOTING INFORMATION SOLICITATION OF PROXIES The information contained in this Management Proxy Circular (the Circular) is
furnished in connection with the solicitation of proxies to be used at the
Annual and Special Meeting of Shareholders of Brookfield Properties Corporation
(the Corporation or Brookfield) to be held on Wednesday, April 28, 2004 at
11:30 a.m. (E.S.T.) at the American Express Auditorium, Three World Financial
Center, 200 Vesey Street, 26th Floor, New York, New York and at any
adjournments thereof, for the purposes set forth in the accompanying Notice of
Meeting. All amounts in the Circular are expressed in U.S. dollars unless
otherwise noted. It is expected that the solicitation will be made primarily by
mail, but proxies may also be solicited personally by officers or regular
employees of the Corporation. The solicitation of proxies by this Circular is
being made by or on behalf of the management of the Corporationand the total
cost of solicitation will be borne by the Corporation. The information
contained herein is given at March 4, 2004. APPOINTMENT OF PROXIES The persons named in the accompanying form of proxy are representatives of
management and are directors and officers of the Corporation. Each shareholder
has the right to appoint a person other than the persons named in the enclosed
form of proxy, who need not be a shareholder of the Corporation, to represent
the shareholder at the meeting or any adjournment thereof.Such right may be
exercised by inserting such persons name in the blank space provided in the
form of proxy. To be valid, proxies must be executed legibly by a registered shareholder and
deposited with CIBC Mellon Trust Company, P.O. Box 12005, Station BRM B,
Toronto, Ontario M7Y 2K5 (courier address: 200 Queens Quay East, Unit 6,
Toronto, Ontario M5A 4K9; or if delivered by facsimile at 416-368-2502), not
later than the close of business on Monday, April 26, 2004 or, if the meeting
is adjourned, 48 hours (excluding Saturdays and holidays) before any
adjournment of the meeting. NON-REGISTERED HOLDERS Only registered holders of common shares and Class A Redeemable Voting
preferred shares of the Corporation, or the persons they appoint as their
proxies, are permitted to attend and vote at the meeting. However, in many
cases, common shares and Class A Redeemable Voting preferred shares of the
Corporation beneficially owned by a holder (a Non-Registered Holder) are
registered either:  a)
    
    in the name of an intermediary (an Intermediary) that the Non-Registered
Holder deals with in respect of the shares, such as, among others, banks, trust
companies, securities dealers or brokers and trustees or administrators of
self-administered RRSPs, RRIFs, RESPs and similar plans; orb)
    
    in the name of a depositary (such as The Canadian Depository for Securities
Limited) of which the Intermediary is a participant. In accordance with the requirements of National Instrument 54-101, the
Corporation has distributed copies of the accompanying Notice, this Circular,
the enclosed form of proxy and the Corporations 2003 annual report (which
includes managements discussion and analysis and consolidated financial
statements for the fiscal year ended December 31, 2003) (collectively, the
meeting materials) to the depositary and Intermediaries for onward
distribution to Non-Registered Holders. Non-Registered Holders who have not waived the right to receive meeting
materials will receive either a voting instruction form or, less frequently, a
form of proxy. The purpose of these forms is to permit Non-Registered Holders
to direct the voting of the shares they beneficially own. Non-Registered
Holders should follow the procedures set out below, depending on which type of
form they receive.  a)
    
    Voting Instruction Form. In most cases, a Non-Registered Holder will
receive, as part of the meeting materials, a voting instruction form. If the
Non-Registered Holder does not wish to attend and vote
at the meeting in person (or have another person attend and vote on their
behalf), the voting instruction form must be completed, signed and returned in
accordance with the directions on the form. Voting instruction forms in some
cases permit the completion of the voting instruction form by telephone or
through the Internet. If a Non-Registered Holder wishes to attend and vote at
the meeting in person (or have another person attend and vote on their behalf),
the Non-Registered Holder must complete, sign and return the voting instruction
form in accordance with the directions provided and a form of proxy giving the
right to attend and vote will be forwarded to the Non-Registered Holder. 1




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b)
    
    Form of Proxy. Less frequently, a Non-Registered Holder will receive, as
part of the meeting materials, a form of proxy that has already been signed by
the Intermediary (typically by a facsimile, stamped signature) which is
restricted as to the number of shares beneficially owned by the Non-Registered
Holder but which is otherwise not complete. If the Non-Registered Holder does
not wish to attend and vote at the meeting in person (or have another person
attend and vote on their behalf), the Non-Registered Holder must complete the
form of proxy and deposit it with the Secretary of the Corporation c/o CIBC
Mellon Trust Company, P.O. Box 12005, Station BRM B, Toronto, Ontario M7Y 2K5
(courier address Attention: Proxy Department, 200 Queens Quay East, Unit 6,
Toronto, Ontario M5A 4K9, or if delivered by facsimile at 416-368-2502); as
described above. If a Non-Registered Holder wishes to attend and vote at the
meeting in person (or have another person attend and vote on their behalf), the
Non-Registered Holder must strike out the names of the persons named in the
proxy and insert the Non-Registered Holders (or such other persons) name in
the blank space provided. Non-Registered Holders should follow the instructions on the forms they receive
and contact their Intermediaries promptly if they need assistance. REVOCATION A registered shareholder who has given a proxy may revoke the proxy (a) by
completing and signing a proxy bearing a later date and depositing it as
described above; (b) by depositing an instrument in writing executed by the
shareholder or by the shareholders attorney authorized in writing (i) at the
registered office of the Corporation at any time up to and including the last
business day preceding the day of the meeting at which the proxy is to be used,
or any adjournment thereof; or (ii) with the chairman of the meeting prior to
the commencement of the meeting on the day of the meeting or any adjournment
thereof; or (c) in any other manner permitted by law. A Non-Registered Holder may revoke a voting instruction form or a waiver of the
right to receive meeting materials and to vote given to an Intermediary at any
time by written notice to the Intermediary, except that an Intermediary is not
required to act on a revocation of a voting instruction form or of a waiver of
the right to receive materials and to vote that is not received by the
Intermediary at least seven days prior to the meeting. VOTING OF SHARES REPRESENTED BY MANAGEMENT PROXIES The management representatives designated in the enclosed form of proxy will
vote or withhold from voting the shares in respect of which they are appointed
by proxy on any ballot that may be called for in accordance with the direction
of the shareholder as indicated on the proxy and, if the shareholder specifies
a choice with respect to any matter to be acted upon, the shares will be voted
accordingly. The enclosed form of proxy confers discretionary authority upon the management
representatives designated therein with respect to amendments to or variations
of matters identified in the Notice of Meeting and with respect to other
matters which may properly come before the meeting. At the date hereof, the
management of the Corporation knows of no such amendments, variations or other
matters. VOTING SHARES At March 4, 2004, the Corporation had outstanding 156,150,182 common shares and
6,312,000 Class A Redeemable Voting preferred shares. Each holder of common
shares and each holder of Class A Redeemable Voting preferred shares of record
at the close of business on March 17, 2004, the record date established for the
Notice of Meeting and for voting in respect to the Meeting, will be entitled to
one vote in respect of each such share held by the shareholder on all matters
to come before the meeting. For a description of the procedures to be followed
by Non-Registered Holders to direct the voting of shares beneficially owned,
see Non-Registered Holders on page 1 of this Circular. PRINCIPAL HOLDERS OF VOTING SHARES To the knowledge of the directors and officers of the Corporation, the only
person or corporation beneficially owning, directly or indirectly, or
exercising control or direction over, voting securities of the Corporation
carrying more than 10% of the votes attached to any class of outstanding voting
securities of the
Corporation is Brascan Corporation (Brascan), which, directly and indirectly,
owns 78,088,013 common shares and 6,126,957 Class A Redeemable Voting preferred
shares, being 50% and 97%, respectively, of the outstanding shares of each such
class. Brascan is an asset management company. Brascan is listed on the New
York and Toronto stock exchanges. Messrs. Jack Cockwell and Bruce Flatt,
directors of the Corporation, are also senior officers and directors of
Brascan. The Corporation is advised that Brascans major shareholder is Partners Limited
(Partners). Partners and its shareholders collectively own, directly and
indirectly, exercise control over, or have options and warrants to acquire
approximately 30 million Class A Limited Voting shares, representing
approximately 17% of the Class A Limited Voting shares of Brascan on a fully
diluted basis, and 85,120 Class B Limited Voting shares representing 100% of
the Class B Limited Voting shares of Brascan. These shareholdings include
shares held through BNN Investments Ltd., a Toronto Stock Exchange listed 2




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##### 



investment company that owns 9.6 million Class A Limited Voting shares of
Brascan. Messrs. Richard Clark and J.Bruce Flatt, who are directors and/or
officers of the Corporation, together with 12 other shareholders of Partners,
own common shares of BNN Investments Ltd. Partners is an investment holding
company owned by 37 investors with no one shareholder holding more than a 15%
effective interest. Messrs. Gordon Arnell, Richard Clark, Jack Cockwell, Bruce
Flatt and John Zuccotti, who are directors and/or officers of the Corporation,
are also shareholders of Partners. PART TWO  BUSINESS OF THE MEETING 1. ANNUAL FINANCIAL STATEMENTS The annual financial statements of the Corporation for the fiscal year ended
December 31, 2003 are included in the Corporations 2003 Annual Report, which
is being mailed to shareholders with this Circular. The annual report will be
placed before the shareholders at the meeting. 2. ELECTION OF DIRECTORS The articles of the Corporation provide that each shareholder entitled to vote
in the election of directors has the right to cast a number of votes equal to
the number of votes attached to the shares held by the shareholder multiplied
by the number of directors to be elected. The shareholder may cast all such
votes in favour of one candidate or distribute such votes among the candidates
in any manner the shareholder sees fit. Where the shareholder has voted for
more than one candidate without specifying the distribution of the
shareholders votes among such candidates, the shareholder will be deemed to
have distributed the shareholders votes equally among the candidates for whom
the shareholder voted. On any ballot that may be called for in the election of directors, the
management representatives designated in the enclosed form of proxy intend to
cast the votes to which the shares represented by such proxy are entitled
equally among the proposed nominees whose names are set forth below, unless the
shareholder who has given such proxy has directed that the shares be otherwise
voted or withheld from voting in the election of directors. If a shareholder wishes to distribute the shareholders votes other than
equally among the proposed nominees for whom the shareholder has directed the
management representatives designated in the enclosed form of proxy to vote,
the shareholder must do so personally at the meeting or by another proper form
of proxy. Management anticipates that all of the proposed nominees will be able
to serve as a director. If a proposed nominee is unable to serve as a director
for any reason prior to the meeting, the management representatives designated
in the enclosed form of proxy, unless directed to withhold from voting in the
election of directors, reserve the right to vote for other nominees at their
discretion. 3




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##### 



NOMINEES FOR DIRECTORS The following table sets out the names of the persons proposed by management to
be nominated for election as directors to hold office until the next annual
meeting or until their successors are elected or appointed, all major positions
and offices in the Corporation, the principal occupation or employment of each
nominee, the year in which each nominee was first elected a director of the
Corporation and the approximate number of shares of each class of shares (and
other derivative securities) of the Corporation and its subsidiaries that each
nominee has advised the Corporation, are beneficially owned, directly or
indirectly, or subject to control or direction by that person at March 4, 2004. GORDON E. ARNELL Gordon E. Arnell has served as a
director of the Corporation since
January 1989. A resident of New York,
New York, he has been Chairman of the
Corporation and Chairman of the Board
of Directors of the Corporation since
October 1995. Mr. Arnell was President
of the Corporation 1990-1995 and CEO
1990-2000. He has also previously held
senior executive roles at Oxford
Development Group Ltd. and Trizec
Corporation Ltd. 45,125
    
    Common Shares(1)200,000
    
    Options
 WILLIAM T. CAHILL William T. Cahill has served as a
director of the Corporation since
January 2000. A resident of Ridgefield,
Connecticut, Mr. Cahill is Senior
Credit Officer, Citibank Community
Development and a director of
Brookfield Financial Properties, Inc.
He has held various positions including
Managing Director at Citicorp Real
Estate, Inc.; OREO 1996-2002 and Senior
Asset Manager 1991-1996; Vice President
and Senior Asset Manager, Mellon Real
Estate Investment Advisors Inc.
1983-1991. Member of the Audit Committee 3,000
622
    
    Options
Deferred Share Units
 RICHARD B. CLARK Richard B. Clark has served as a
director of the Corporation since April
2002. A resident of New York, New York,
Mr. Clark has been President and Chief
Executive Officer of the Corporation
since 2002. He was President and CEO of
the Corporations U.S. operations
2000-2002; held senior management
positions in U.S. operations for the
Corporation and its predecessor
companies including Chief Operating
Officer, Executive Vice President and
Director of Leasing. 149,212   Common Shares(1)780,000   Options161,245   Deferred Share Units
 Notes:  (1)
    
    Includes proportionate interest in shares held indirectly through Partners
and BNN Investments Ltd. (see Principal Holders of Voting Shares on page 2 of
this Circular). 4




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##### 



JACK L. COCKWELL Jack L. Cockwell has served as a
director of the Corporation since
February 1999. A resident of Toronto,
Ontario, Mr. Cockwell is a director
and Group Chairman of Brascan and a
director of several of Brascans
operating subsidiaries. Mr. Cockwell
is also Chairman and CEO of Partners
Limited, a director of Astral Media
Inc., Chairman of the Board of
Trustees of the Royal Ontario Museum
and a director of the C.D. Howe
Institute. Chairman of the Human Resources and Compensation Committee 2,352,786   Common Shares(1) J. BRUCE FLATT J. Bruce Flatt has served as a
director of the Corporation since
February 1996. A resident of Toronto,
Ontario, Mr. Flatt is President and
Chief Executive Officer and a director
of Brascan and a director of several
of Brascans operating subsidiaries.
Mr. Flatt was previously President and
CEO of the Corporation 2000-2001;
President and Chief Operating Officer
1995-2000; and held other senior
management positions at the
Corporation since 1992. 1,745,320
    
    Common Shares(1)250,000
    
    Options31,582
    
    Deferred Share Units
 LANCE LIEBMAN Lance Liebman has served as a director of the
Corporation since April 2003. A
resident of New York, New York, Mr.
Liebman has been a Professor of Law at
Columbia University since 1991,
Director of the American Law Institute
since 1999 and a director of Brookfield
Financial Properties, Inc. since 1997.
He was Dean, Columbia Law School
1991-1996; Professor, Harvard Law
School 1970-1991; Assistant to NYC
Mayor John V. Lindsay 1968-1970; Law
Clerk to U.S. Supreme Court Justice
Byron White 1967-1968. Chairman of the
Governance and
Nominating Committee and
Member of the Human
Resources and
Compensation Committee 200
622
    
    Common Shares
Deferred Share Units
 Notes:  (1)
    
    Includes proportionate interest in shares held indirectly through Partners
and BNN Investments Ltd. (see Principal Holders of Voting Shares on page 2 of
this Circular). 5




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##### 



JOHN R. McCAIG John R. McCaig has served as a director
of the Corporation since February 1995.
A resident of Calgary, Alberta, Mr.
McCaig has been Chairman of Trimac
Corporation, a provider of services in
highway transportation of bulk
commodities, since 1994. He is a
director of Bantrel Inc. and Western
Lakota Energy Services Inc. and
Chairman Emeritus, Calgary Health
Trust. Mr. McCaig was Chairman and CEO
of Trimac Limited 1980-1994; President
1970-1980; President, Trimac
Transportation Ltd. 1961-1969. Lead Independent
Director, Member of the
Human Resources and
Compensation Committee
and Governance and
Nominating Committee 5,335
9,000
834
    
    Common Shares
Options
Deferred Share Units
 PAUL D. MCFARLANE Paul D. McFarlane has served as a
director of the Corporation since
April 1998. A resident of Mississauga,
Ontario, 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. Member of the Audit
Committee and Human
Resources and
Compensation Committee 3,000
    
    Options627
    
    Deferred Share Units
 ALLAN S. OLSON Allan S. Olson has served as a director of the
Corporation since August 1995. A
resident of Spruce Grove, Alberta, Mr.
Olson has been President and CEO of
First Industries Corporation, an
investment and management company,
since 1991. He is also a director of
Ipsco Steel and Summit REIT and an
Advisory Director to Carma Corporation.
He was President and CEO of Churchill
Corp. 1989-1990 and Banister
Construction Group 1990-1991 and held
various positions at Stuart Olson
Construction including President and
CEO 1965-1989. Chairman of the Audit
Committee and Member of
the Governance and
Nominating Committee 13,908
9,000
643
    
    Common Shares
Options
Deferred Share Units
 Notes:  (1)
    
    Includes proportionate interest in shares held indirectly through Partners
and BNN Investments Ltd. (see Principal Holders of the Corporations Voting
Shares on page 2 of this Circular). 6




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##### 



SAM POLLOCK, O.C. Sam Pollock has served as a director of
the Corporation since November 1978. A
resident of
Toronto, Ontario, Mr. Pollock is
President of a Canadian investment
company. He was Chairman of the
Toronto Blue Jays 1995-2000; Chairman,
John Labatt Ltd. 1991-1995; President,
Carena Investments 1978-1991; Vice
President and General Manager,
Montreal Canadiens 1964-1978.
Mr. Pollock is also a Member, Order of
Canada and Order of Quebec, was
inducted to the Hockey Hall of Fame
and the Canadian Sports Hall of Fame
and was named Great Montrealer in
1978. Member of the
Governance and
Nominating
Committee 414,543
9,000
802
    
    Common Shares
Options
Deferred Share Units
 WILLIAM
C. WHEATON, PH.D.(2) William C. Wheaton is a professor in
MITs Department of Economics, and the
current director of the MIT Center for
Real Estate. A resident of Hamilton,
Massachusetts, Mr. Wheaton is founder
of MIT Center for Real Estate, 1992;
founder and principal of Torto Wheaton
Research and Co-author, Urban
Economics and the Real Estate Markets. JOHN E. ZUCCOTTI John E. Zuccotti has served as a director
of the Corporation since August 1998. A
resident of New York, New York, Mr.
Zuccotti has been Co-Chairman of the
Corporation and Co-Chairman of the Board
of Directors of the Corporation since
2002, Chairman of the Board of Directors
of Brookfield Financial Properties, Inc.
since 1996 and Senior Counsel, Weil,
Gotshal and Manges since 1998. He is also
President of the Real Estate Board of New
York. Mr. Zuccotti was Deputy Chairman of
the Corporation 1999-2002; President and
CEO, Olympia & York Companies U.S.A.
1990-1997; Partner, Brown & Wood
1986-1990 and Tufo & Zuccotti 1978-1986;
First Deputy Mayor of the City of New
York 1975-1977; Chairman, New York City
Planning Commission 1973-1975. 1,974
    
    Common Shares(1)170,000
    
    Options
 Notes:  (1)
    
    Includes proportionate interest in shares held indirectly through
Partners and BNN Investments Ltd. (see Principal Holders of the
Corporations Voting Shares on page 2 of this Circular).(2)
    
    Mr. Wheaton is a director-elect. 7




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COMPENSATION OF DIRECTORS In 2004, the corporation adopted a new compensation arrangement for directors. Directors who are resident in Canada receive their compensation in Canadian
dollars, while U.S. resident directors receive their compensation in U.S.
dollars. Directors of the Corporation who are not officers of the Corporation
or its affiliates (the outside directors) are entitled to receive an annual
fee of $40,000 in U.S. funds (or $55,000 in Canadian funds) (the Annual Fee).
The Boards lead independent director and the chairman of the Audit Committee,
are also entitled to receive a supplemental annual retainer of $3,750 in U.S.
funds (or $5,000 in Canadian funds) (the Annual Retainer). One half of the Annual Fee payable to an outside director will be paid in
Deferred Share Units of the Corporation until the number of Deferred Share
Units accumulated and common shares owned by the director have an aggregate
investment cost equal to five times the then current Annual Fee, thereafter he
or she may elect to take all of the Annual Fee in cash or Deferred Share Units.
This is equivalent to $200,000 in U.S. funds, or $275,000 in Canadian funds,
based on the current Annual Fee. An outside director may elect to receive all
or part of the other half of the Annual Fee in cash or Deferred Shares Units.
The lead independent director and the chairman of the Audit Committee may elect
to receive all or part of their supplemental Annual Retainers in cash or
Deferred Shares Units. In 2003, nine directors of the Corporation received a total of $261,763 in
directors fees, including from subsidiaries of the Corporation. Directors are
also reimbursed for travel and other out-of-pocket expenses incurred in
attending board or committee meetings. 3. AMENDMENT TO THE SHARE OPTION PLAN On February 5, 2004, the board of directors approved, subject to shareholder
and regulatory approval, an amendment to the Corporations Share Option Plan.
The amendment, which requires shareholder approval, increases the number of
common shares which may be issued under the Share Option Plan from 4,500,000
(the Reserve) to 9,000,000. The new number represents approximately 6% of the
Corporations issued and outstanding common shares at March 4, 2004. As of this
date, options to acquire 4,030,285 common shares remain outstanding and
unexercised under the Share Option Plan and 2,445,612 share options remain
outstanding and unexercised under the Reserve. The board of directors recommends shareholders approve this resolution, as, in
its opinion, the selective and prudent use of options to provide alignment of
executives interests with shareholders interests is beneficial to the
Corporation. The purpose of the amendment is to ensure that there remains a
sufficient number of common shares reserved for issuance under the Share Option
Plan to enable the Corporation to continue its current practice of granting
options as an alternative to cash compensation to its employees and officers
and to ratify all prior grants under the Share Option Plan. The Plan was established by the board of directors in November of 1990. The
purpose of the Share Option Plan is to advance the interests of the Corporation
by (i) providing officers, employees and other eligible persons with additional
incentive; (ii) encouraging stock ownership by eligible persons; (iii)
increasing the proprietary interests of eligible persons in the success of the
Corporation; (iv) encouraging eligible persons to remain with the Corporation
or its subsidiaries; and (v) attracting new officers and employees. The Plan is
administered by the board of directors in accordance with the Corporations
compensation policies and the policies of the Toronto Stock Exchange (the
TSX). The TSX requires shareholder approval of the amendment to the Share Option Plan
to increase the number of common shares which may be issued under the Share
Option Plan. Accordingly, shareholders will be asked at the meeting to consider
and, if thought advisable, to approve a resolution, the form of which is
attached as Schedule A to this Circular, approving the amendment to the Share
Option Plan (the Plan Resolution). The Plan Resolution must be approved by a
majority of the votes cast at the meeting by holders of common shares,
excluding votes attached to common shares beneficially owned by insiders to
whom options have been or may be granted under the Share Option Plan, and by
the associates of such insiders. To the knowledge of the Corporation,
approximately 764,900 votes, being the votes attaching to common shares
beneficially owned by insiders and their associates, will be excluded from the
vote on the Share Option Plan Resolution. Unless directed otherwise, on any ballot that may be called for in respect of
the Share Option Plan Resolution, the management representatives designated in
the enclosed form of proxy intend to vote such shares in favour of the Share
Option Plan Resolution approving the amendment to the Corporations Share
Option Plan. 8




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##### 



4. APPOINTMENT OF AUDITORS Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their
respective affiliates (collectively Deloitte & Touche) are the principal
external auditors of the Corporation. Deloitte & Touche and its predecessors
have served as external auditors of the Corporation since 1978. From time to
time, Deloitte & Touche also provides consulting and other non-audit services
to the Corporation and its subsidiaries. In February 2004, the Audit Committee
of the Corporations board of directors adopted a revised policy regarding the
provision of non-audit services by the Corporations external auditors. This
policy encourages consideration of whether the provision of services other than
audit services is compatible with maintaining the auditors independence and
requires Audit Committee pre-approval of permitted audit and audit-related
services and specifies a number of services the provision of which is not
permitted by the Corporations external auditors, including the use of its
external auditors for financial information system design and implementation
assignments. The following table sets forth further information on the fees billed by
Deloitte & Touche to the Corporation for the fiscal years ended December 31: Service Preformed
    
    2003
    
    2002AuditThe Corporations consolidated financial statements
    
    $
    477,200
    
    
    $
    529,100Property level financial statements
    
    
    609,800
    
    
    
    570,200Prospectuses
    
    
    116,600
    
    
    
    100,000Audit-related services
    
    
    9,500
    
    
    
    9,000Tax compliance services
    
    
    340,000
    
    
    
    460,000Total fees
    
    $
    1,553,100
    
    
    $
    1,668,300
 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 assurance and related services, such as due diligence
services, that traditionally are performed by the external auditor. More
specifically, these services include, among others: employee benefit plan
audits, due diligence related to mergers and acquisitions, accounting
consultations and audits in connection with acquisitions, internal control
reviews, attest services that are not required by statute or regulation and
consultation concerning financial accounting and reporting standards. Unless directed otherwise, on any ballot that may be called for in the
appointment of auditors, the management representatives designated in the
enclosed form of proxy intend to vote such shares in favour of reappointing
Deloitte & Touche LLP, Chartered Accountants, as auditors of the Corporation to
hold office until the next annual meeting of shareholders, and authorizing the
directors to fix the remuneration to be paid to the auditors. 9




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##### 



PART THREE  EXECUTIVE COMPENSATION REPORT The following information is provided pursuant to the executive compensation
disclosure requirements contained in the Regulations to the Securities Act
(Ontario). REPORT OF THE HUMAN RESOURCES AND COMPENSATION COMMITTEE The Human Resources and Compensation Committee (the Committee) is comprised
of four directors: Messrs. Jack Cockwell (Chair), Lance Liebman, John McCaig
and Paul McFarlane. The Committee meets as required, and at least quarterly,
to monitor and review management compensation policies and benefits, management
succession planning and to review the overall composition and quality of the
Corporations management resources. The Committee met on three occasions in
2003. The Committee has a specific mandate to, among other things, review and
approve executive compensation. This includes an annual evaluation of the
performance of the Corporations Chief Executive Officer, and a review of
performance reports for other executive officers of the Corporation. The
Committee makes recommendations to the board of directors with respect to the
compensation of the executive officers, and the board of directors gives final
approval on compensation matters. Executive compensation is based on the relative role and responsibility of the
executive officers as compared to other executive officers within the
Corporation, as well as on the executive officers individual performance. This
applies equally to all executive officers, including the Chief Executive
Officer of the Corporation. The compensation arrangements of the Corporation
are focused on rewarding performance, taking into account length of service,
level of responsibility and experience of the individual. A specific objective
of the Corporation is to attract and retain highly qualified and motivated
individuals. Accordingly, compensation levels are monitored to ensure that they
are competitive within the relevant market place. The key components of executive officers compensation are base salary,
short-term incentives and long-term incentives. The short and long-term
incentive plans are designed to provide a significant amount of variable
compensation which is linked to individual performance and increases in
shareholder value. BASE SALARIES Base salaries of executive officers are reviewed annually and are based on
individual performance, responsibility and experience to ensure that they
reflect the contribution of each executive officer. The Corporation believes
that base salaries for executive officers should be lower than average for the
industry with compensation weighted to share performance in order to align
these executive officers interests with shareholders. SHORT-TERM INCENTIVES Short-term incentives are represented by cash bonus awards. Awards are
determined based on both the performance of the Corporation and the individual
executive officers. The performance of the Corporation is measured by the
achievement of financial and other objectives of the Corporation, also taking
into consideration the performance of industry competitors and macro-economic
factors, as well as the efforts and achievements of the executive team. The
performance of the individual executive officer is based on the degree to which
that executive officer has met specific predetermined objectives. In order to
further align management objectives with those of the Corporations
shareholders, certain senior executive officers may elect to receive all or a
portion of their annual bonus awards in Deferred Share Units of the
Corporation, as described below under Long-Term Incentives. LONG-TERM INCENTIVES Long-term incentives are intended to reward management based on increases in
the value of the Corporations common shares. The purpose of these arrangements
is to achieve a commonality of interest between shareholders and management and
to motivate executives to improve the Corporations financial success, measured
in terms of enhanced shareholder wealth over the longer term. The allocation of
long-term incentives to officers is based on criteria similar to those for
short-term incentives. The Corporations long-term incentive plans consist of two elements:  a)
    
    a Share Option Plan under which the Corporation grants options to employees
and officers to purchase common shares at a fixed price, being the closing
price of the common shares on the TSX for Canadian participants and on the New
York Stock Exchange (NYSE) for U.S. participants, on the last trading day
preceding the date of the grant. The number of options granted each year is
determined based on a multiple of the officers base salary for that year. The
options vest as to 20% at the end of each year on a cumulative basis and are
exercisable over a 10-year period. Commencing in February 2003, in order to
minimize any appearance of certain senior executive officers opportunistically
exercising options for personal gains, the Corporations board of directors
adopted a policy requiring the named executive officers to hold, for at least
one year, common shares or Deferred Share Units of the Corporation 10




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##### 



equal to the net after-tax cash realized from the exercise of option grants,
starting with options granted in 2003; andb)
    
    a Deferred Share Unit Plan (DSUP) under which certain senior executive
officers may, at their option, receive all or a portion of their annual bonus
awards in the form of deferred share units (Deferred Share Units). The annual
bonus awards are converted to Deferred Share Units based on a rate set at the
discretion of the Corporations board on the award date. The portion of the
annual bonus award elected to be received in Deferred Share Units by the senior
executive officer may, at the discretion of the board of directors, be
increased by a factor of up to two times for purposes of calculating the number
of Deferred Share Units to be allocated. A senior executive officer who holds
Deferred Share Units will receive additional Deferred Share Units as dividends
are paid on the common shares of the Corporation, on the same basis as if the
dividends were re-invested. The Deferred Share Units vest over a five-year
period and participants are only allowed to redeem them during the year
following cessation of employment through retirement, resignation, termination
or death, for cash or an actuarially equivalent pension annuity. The cash value
of the Deferred Share Units when redeemed will be equivalent to the market
value of an equivalent number of common shares of the Corporation. CHIEF EXECUTIVE OFFICER Mr. Richard B. Clark, the President and Chief Executive Officer of the
Corporation, has been charged by the board of directors to develop and
implement a business strategy focused on building shareholder value by
investing in commercial property assets and pro-actively managing these assets
to maximize cashflow and return on capital throughout economic cycles. Mr. Clarks overall compensation as an officer of the Corporation is linked
largely to the performance of the Corporation as reflected by the growth in the
Corporations earnings and operating cashflow and the translation of these
attributes over time into a higher common share price. Mr. Clarks performance is rated each year by the board of directors in
relation to the achievement of predetermined objections. These objectives in
2003 and their achievement included:  
    
    increasing Funds from Operations (FFO) per share, prior to gains, by
15% to $2.15 per share, which met the expectations of the Corporations
business plan;
    
    reporting $100 million of gains and total FFO per share of $2.78, which
exceeded plan;
    
    experiencing an 18% return on equity, which fell short of the
Corporations 20% target;
    
    separating the U.S. home building assets into its own publicly traded
company called Brookfield Homes Corporation in accordance with the
business plan;
    
    shareholders benefited from an approximately 58% increase in common share
price prior to factoring in the results of the spin-out of Brookfield
Homes Corporation, which substantially outperformed market indices and
plan;
    
    completing preferred share issues for Cnd$400 million and $110 million at
an average rate of 5.4% and other refinancings which lowered the
companys overall cost of capital by 20 basis points, which exceeded
plan;
    
    repurchasing five million common shares at an average price of $21.10,
which exceeded plan;
    
    sold a 49% interest in 245 Park Avenue, New York to an institutional
investor for $438 million, meeting plan;
    
    fulfilling the Corporations commitment to enter the Washington, D.C.
market with the acquisition of 1625 Eye Street, meeting plan;
    
    leasing 3.5 million square feet of space versus 1.3 million square feet
of expiries, exceeding plan and in the process lowered the Corporations
rollover expiries in 2005 from 8.7% to 7.2% and in 2006 from 8.2% to
4.7%; and
    
    completing the 300 Madison Avenue, New York development project on time,
under budget and fully leased, meeting plan. Objectives which were not fully achieved in 2003 were as follows:  
    
    although occupancy levels in the Corporations primary markets of New
York, Toronto, Boston and Calgary improved by 10 basis points during
2003, overall portfolio occupancy actually decreased by 140 basis points
during the 11




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##### 



same period due to the continuation of challenging leasing environments
in the Denver and Minneapolis central business districts. Adjustments to
the Corporations management teams in these markets have been made to
position the Corporation for better operating results going forward. Mr. Clark received a salary of $500,000 during 2003, compared to $400,000 in
2002. In addition, taking into account Mr. Clarks accomplishments as described
above, the Human Resources and Compensation Committee, at its meeting in
February 2004, awarded Mr. Clark 8,498 units in the Corporations Deferred
Share Unit Plan, 275,000 share options and a cash bonus of $250,000. As a
result, the majority of Mr. Clarks variable compensation was linked to the
future performance of the Corporation. Signed by the members of the Human Resources and Compensation Committee, Jack Cockwell, Chairman
    
    Lance Liebman
    
    John McCaig
    
    Paul McFarlane
 PERFORMANCE GRAPH The following shows the cumulative total S&P/TSX shareholder return (assuming
re-investment of dividends) over the last five fiscal years, in comparison with
the S&P/TSX Composite Index and the S&P/TSX Canadian Real Estate Index. The
Composite Index reflects the cumulative return of the TSX Canadian Real Estate
Index, including dividend re-investment. Five-Year Cumulative Total Return on $100 Investment
Assuming Dividends Are Reinvested
December 31, 1998  December 31, 2003 (PERFORMANCE GRAPH) December 311998
    
    1999
    
    2000
    
    2001
    
    2002
    
    2003Brookfield Properties Corporation
    
    
    100.0
    
    
    
    79
    
    
    
    152
    
    
    
    163
    
    
    
    191
    
    
    
    269S&P/TSX Canadian Real Estate Index
    
    
    100.0
    
    
    
    84
    
    
    
    97
    
    
    
    112
    
    
    
    111
    
    
    
    166S&P/TSX Composite Index
    
    
    100.0
    
    
    
    132
    
    
    
    141
    
    

    
    124
    
    
    
    108
    
    
    
    137
 12




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##### 



SUMMARY COMPENSATION OF NAMED EXECUTIVE OFFICERS The following table sets out the compensation paid to the Corporations Chief
Executive Officer, Chief Financial Officer and other named executive officers. Annual Compensation
    
    Long-term Compensation AwardsSalary
    
    Bonus
    
    Other
    
    Share Options
    
    Deferred SharePaid
    
    Paid
    
    Compensation
    
    Granted
    
    Units Issued(2)Name and Principal Position
    
    Year
    
    ($)
    
    ($)
    
    ($)
    
    (#)
    
    Value ($)
    
    (#)Richard B. Clark (US $)
    
    
    2003
    
    
    
    500,000
    
    
    
    250,000
    
    
    
    129,000
    (1)
    
    
    275,000
    (2)
    
    
    250,000
    
    
    
    8,498President and CEO
    
    
    2002
    
    
    
    400,000
    
    
    
    94,230
    
    
    
    298,500
    (1)
    
    
    75,000
    
    
    
    400,000
    
    
    
    21,932of the Corporation
    
    
    2001
    
    
    
    400,000
    
    
    
    
    
    
    
    
    
    
    
    175,000
    
    
    
    800,000
    
    
    
    45,877Craig J. Laurie (US$)
    
    
    2003
    
    
    
    175,000
    
    
    
    37,500
    
    
    
    20,000
    (4)
    
    
    37,000
    (2)
    
    
    75,000
    
    
    
    2,549Senior Vice President and
    
    
    2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Chief Financial Officer(3)
    
    
    2001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    John E. Zuccotti (US$)
    
    
    2003
    
    
    
    500,000
    
    
    
    1,200,000
    
    
    
    
    
    
    
    20,000
    (2)
    
    
    
    
    
    
    Co-Chairman of
    
    
    2002
    
    
    
    500,000
    
    
    
    505,000
    
    
    
    195,000
    (1)
    
    
    20,000
    
    
    
    
    
    
    
    the Corporation
    
    
    2001
    
    
    
    500,000
    
    
    
    500,000
    
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    Dennis H. Friedrich (US$)
    
    
    2003
    
    
    
    325,000
    
    
    
    164,000
    
    
    
    
    
    
    
    133,141
    (2)
    
    
    325,000
    
    
    
    11,047President and COO,
    
    
    2002
    
    
    
    300,000
    
    
    
    
    
    
    
    135,000
    (1)
    
    
    75,000
    
    
    
    300,000
    
    
    
    16,449US Commercial Operations
    
    
    2001
    
    
    
    240,000
    
    
    
    320,000
    
    
    
    
    
    
    
    45,000
    
    
    
    
    
    
    
    Thomas F. Farley (Cdn$)
    
    
    2003
    
    
    
    250,000
    
    
    
    126,618
    
    
    
    79,711
    (1)
    
    
    80,000
    (2)
    
    
    200,000
    
    
    
    5,089President and COO,
    
    
    2002
    
    
    
    217,500
    
    
    
    77,256
    
    
    
    155,734
    (1)
    
    
    19,454
    
    
    
    
    
    
    
    Cdn Commercial Operations
    
    
    2001
    
    
    
    210,000
    
    
    
    67,544
    
    
    
    
    
    
    
    18,305
    
    
    
    
    
    
    
    
 Notes:  (1)
    
    Includes cash payments of US$1.50 (Cdn$2.36) per option held at December
31, 2002 to adjust for the impact of the spin-off of Brookfield Homes
Corporation.(2)
    
    The Share Option and Deferred Share Unit awards shown for 2003 were granted
on February 5, 2004. The options and units are exercisable at a price of
US$29.42 (Cdn$39.30).(3)
    
    Craig J. Laurie was appointed as Senior Vice President and Chief Financial
Officer on October 28, 2003(4)
    
    Moving allowance allocated to Craig J. Laurie to compensate for expenses
incurred in relocating to New York City. SHARE OPTIONS OPTION REPRICING PURSUANT TO DISTRIBUTION OF BROOKFIELD HOMES CORPORATION In recognition of the capital reduction due to the distribution of Brookfield
Homes Corporation to shareholders, the TSX permitted the options, issued at the
time of the distribution, to have their strike price reduced to reflect this
event. The reduction was equal to the weighted average reduction in market
value of the shares of the Corporation for 10 days subsequent to the record
date for the distribution. This resulted in a reduction of US$1.00 or Cdn$1.58
to the strike price of options held at the time of the distribution. The impact
on the options held by the named executive officers is as follows: Market Price of
    
    
    
    
    
    WeightedSecurities
    
    Securities Prior
    
    Weighted Average
    
    Average New
    
    Length ofUnder Option
    
    to Event
    
    Exercise Price
    
    Exercise Price
    
    Original OptionName
    
    Date
    
    (#)
    
    ($/Security)
    
    ($/Security)
    
    ($/Security)
    
    Term RemainingRichard B. Clark (US$)
    
    Jan. 7, 2003
    
    
    430,000
    
    
    
    18.23
    
    
    
    14.19
    
    
    
    13.19
    
    
    
    3 to 9 yearsJohn E. Zuccotti (US$)
    
    Jan. 7, 2003
    
    
    130,000
    
    
    
    18.23
    
    
    
    14.81
    
    
    
    13.81
    
    
    
    3 to 9 yearsDennis H. Friedrich (US$)
    
    Jan. 7, 2003
    
    
    90,000
    
    
    
    18.23
    
    
    
    17.11
    
    
    
    16.11
    
    
    
    3 to 9 yearsThomas F. Farley (Cdn$)
    
    Jan. 7, 2003
    
    
    84,940
    
    
    
    28.52
    
    
    
    22.90
    
    
    
    21.32
    
    
    
    3 to 9 years
 13




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##### 



OPTIONS GRANTED ON FEBRUARY 5, 2004 Options are granted each year at the discretion of the Corporations board of
directors to officers of the Corporation to purchase common shares of the
Corporation under the terms of the Share Option Plan. The following table shows
the most recent grant of options to purchase common shares to named executive
officers, granted on February 5, 2004. Common
    
    
    
    
    
    
    
    
    
    Market Value ofShare
    
    % of Total Options
    
    
    
    
    
    Securities UnderlyingOptions
    
    Granted to Employees
    
    Exercise Price
    
    Options on the Date ofGranted
    
    of the
    
    per Option
    
    GrantNamed Executive Officer
    
    (#)
    
    Corporation for 2003
    
    ($)
    
    ($/Security)
    
    Expiration DateRichard B. Clark (US$)
    
    
    275,000
    
    
    
    28
    %
    
    $
    29.42
    
    
    $
    29.42
    
    
    December 31, 2013Craig J. Laurie (US$)
    
    
    37,000
    
    
    
    4
    %
    
    $
    29.42
    
    
    $
    29.42
    
    
    December 31, 2013John E. Zuccotti (US$)
    
    
    20,000
    
    
    
    2
    %
    
    $
    29.42
    
    
    $
    29.42
    
    
    December 31, 2013Dennis H. Friedrich (US$)
    
    
    133,141
    
    
    
    14
    %
    
    $
    29.42
    
    
    $
    29.42
    
    
    December 31, 2013Thomas F. Farley (Cdn$)
    
    
    80,000
    
    
    
    8
    %
    
    $
    39.30
    
    
    $
    39.30
    
    
    December 31, 2013
 AGGREGATE OPTIONS EXERCISED DURING THE MOST RECENTLY COMPLETED FINANCIAL
YEAR AND OPTION VALUES AT FEBRUARY 5, 2004 The following table sets forth options exercised during the fiscal year ended
December 31, 2003 and the number and value of the unexercised options at
February 5, 2004 for the named executive officers. In-the-Money Value ofSecurities
    
    Aggregate
    
    Unexercised Options at
    
    Unexercised
Options(1) atAcquired
    
    Value
    
    February 5, 2004
    
    February 5, 2004on Exercise
    
    Realized
    
    (#)
    
    ($)Name
    
    (#)
    
    ($)
    
    Exercisable
    
    Unexercisable
    
    Exercisable
    
    UnexercisableRichard B. Clark (US$)
    
    
    147,682
    (2)
    
    
    3,899,396
    
    
    
    300,000
    
    
    
    480,000
    
    
    
    5,131,500
    
    
    
    2,676,375Craig J. Laurie (US$)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,000
    
    
    
    
    
    
    
    John E. Zuccotti (US$)
    
    
    100,000
    (2)
    
    
    2,180,817
    
    
    
    90,000
    
    
    
    80,000
    
    
    
    1,448,400
    
    
    
    801,850Dennis H. Friedrich (US$)
    
    
    
    
    
    
    
    
    
    
    60,000
    
    
    
    238,141
    
    
    
    770,220
    
    
    
    1,256,130Thomas F. Farley (Cdn$)
    
    
    36,777
    
    
    
    570,782
    
    
    
    28,142
    
    
    
    119,475
    
    
    
    425,749
    
    
    
    540,749
 Notes:  (1)
    
    In-the-Money means the market value of the common shares under option
exceed the exercise price of the options prior to related income taxes. The
closing price of the Corporations common shares on February 5, 2004 on the
NYSE was US$29.42 per share and on the TSX was Cdn$39.30.  (2)
    
    A portion acquired through the exercise of partnership units in Brookfield
Financial Properties, L.P. DEFERRED SHARE UNIT PLAN Deferred share units may be granted each year at the discretion of the
Corporations board of directors to certain senior executives in lieu of all or
part of their annual cash bonus awards as described above under
Report of the Human Resources and Compensation Committee  Long-Term
Incentives. on page 10 of this Circular. The number of units owned by the named executive officers and the value of the
Deferred Share Units as of February 5, 2004 were as follows: Units Allocated
    
    
    
    
    
    
    
    
    
    Value of Unitsas of
    
    Units Owned in
    
    as ofFebruary 5, 2004
    
    Deferred Share Unit Plan
    
    February 5, 2004Name
    
    (#)
    
    ($)
    
    Vested (#)
    
    Unvested (#)
    
    Vested ($)
    
    Unvested ($)Richard B. Clark (US$)
    
    
    8,498
    
    
    
    250,000
    
    
    
    84,255
    
    
    
    76,990
    
    
    
    2,478,779
    
    
    
    2,265,041Craig J. Laurie (US$)
    
    
    2,549
    
    
    
    75,000
    
    
    
    
    
    
    
    2,549
    
    
    
    
    
    
    
    75,000Dennis H. Friedrich (US$)
    
    
    11,047
    
    
    
    325,000
    
    
    
    3,645
    
    
    
    24,206
    
    
    
    107,228
    
    
    
    712,148Thomas F. Farley (Cdn$)
    
    
    5,089
    
    
    
    200,000
    
    
    
    
    
    
    
    5,089
    
    
    
    
    
    
    
    200,000
 14




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##### 



INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND
SENIOR OFFICERS UNDER SECURITIES PURCHASE PROGRAMS In response to changing U.S. guidelines on executive loans, the board of
directors discontinued granting any further executive loans under the
Corporations Share Purchase Plan. At March 4, 2004, the aggregate indebtedness
(other than routine indebtedness under applicable Canadian securities laws)
to the Corporation or its subsidiaries of all officers, directors, proposed
directors and employees and former officers, directors and employees of the
Corporation and its subsidiaries made in connection with the purchase of common
shares of the Corporation, publicly traded securities of subsidiary and
associated companies, or securities of Partners (See Principal Holders of
Voting Securities on page 2 of this Circular) (Designated Shares) was
$5,001,241. No additional loans have been extended subsequent to July 30, 2002
to directors, executives or senior officers of the Corporation. At March 4, 2004, Mr. Richard Clark, President and CEO of the Corporation, had
an outstanding loan from the Corporation of $537,482. The largest amount
outstanding of such loan during 12 months ended December 31, 2003 was
$2,754,946. Designated Shares are held as security for the loan. INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND
SENIOR OFFICERS OTHER THAN UNDER SECURITIES PURCHASE PROGRAMS At March 4, 2004, there were no loans to officers, directors and employees and
former officers, directors and employees of the Corporation or its
subsidiaries, for purposes other than in connection with purchases of
securities of the Corporation or subsidiaries of the Corporation (other than
routine indebtedness under applicable Canadian securities laws). No loans
have been made to officers, directors or employees for any purpose in 2003. DIRECTORS AND OFFICERS LIABILITY INSURANCE The Corporation maintains directors and officers insurance with an annual
policy limit of Cdn$50,000,000 subject to a corporate deductible of Cdn$250,000
(Cdn$500,000 for certain of the Corporations U.S. subsidiaries) per loss at a
cost of $360,492 for 2004. Under this insurance coverage, the Corporation and
certain of its associated companies is reimbursed for indemnity payments made
to directors or officers as required or permitted by law or under provisions of
its by-laws as indemnity for losses, including legal costs, arising from acts,
errors or omissions committed by directors and officers during the course of
their duties as such. This insurance also provides coverage to individual
directors and officers without any deductible if they are not indemnified by
the Corporation. The insurance coverage for directors and officers has certain
exclusions including, but not limited to, those acts determined to be
deliberately fraudulent or dishonest or have resulted in personal profit or
advantage. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS As of March 4, 2004, no director, senior officer or associate of a director or
senior officer nor, to the knowledge of the directors or senior officers of the
Corporation after having made reasonable inquiry, any person or company who
beneficially owns, directly or indirectly, voting securities of the Corporation
carrying more than 10% of the voting rights attached to any class of voting
securities of the Corporation outstanding at the date hereof, or any associate
or affiliate thereof, had any material interest, direct or indirect, in any
material transaction of the Corporation or its affiliates nor do any such
persons have a material interest, direct or indirect, in any proposed
transaction of the Corporation or its affiliates. At December 31, 2003, Brookfield had approximately $562 million of unsecured
indebtedness outstanding to Brascan and its affiliates. During 2003, borrowings
in the normal course from these related parties totaled $351 million and
repayments totaled $290 million. PART FOUR  STATEMENT OF CORPORATE GOVERNANCE PRACTICES CORPORATE GOVERNANCE Corporate governance relates to the activities of the board of directors who
are elected by and are accountable to the shareholders, and takes into account
the role of management who are appointed by the board of directors and who are
charged with the ongoing management of the Corporation. The board of directors
of Brookfield encourages sound corporate governance practices designed to
promote the well being and ongoing development of the Corporation, having
always as its ultimate objective the best long-term interests of the
Corporation and the enhancement of value for all shareholders. In January 2004, the Corporation undertook a review of its corporate governance
practices. As a result of this review, the board of directors revised the
composition of its committees, appointed a new lead independent director and
adopted new charters for the board of directors and each of the Corporations
standing committees. These charters are in compliance with the New York Stock
Exchange rules on corporate governance (the NYSE Rules), the provisions of
the Sarbanes-Oxley 15




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Act of 2002 and Canadian securities laws. As set out under Principal Holders
of Voting Shares, on page 2 of this Circular, Brascan owns approximately 50%
of the Corporations common shares and 97% of the Corporations Limited Class A
redeemable voting preferred shares. As such, the Corporation is a controlled
company as defined by the NYSE Rules and has chosen to rely on the NYSE Rules
controlled companies exemption with respect to certain independence
requirements. As set out in greater detail on page 17 of this Circular under
Composition of the Board and Representation of Shareholders Interests, upon
the election of Mr. William Wheaton to the board of directors, six of the
Corporations twelve directors will be independent of management and Brascan.
Brascan will have three representatives on the board and the remaining three
will be members of management. The board believes this is an appropriate mix of
directors and that the involvement of Brascan on the Corporations board and
board committees and of management on the Corporations board promotes
effective oversight of the business plan and assessing managements performance
on an ongoing basis. The Governance and Nominating Committee and the Human
Resource and Compensation Committee are comprised of a majority of independent
directors and each has one Brascan representative. The Audit Committee is
comprised solely of independent directors. The Corporation also continues to be subject to the TSX guidelines and the
board of directors believes that its policies and practices are in compliance
with those guidelines as described below. BOARD OF DIRECTORS MANDATE OF THE BOARD OF DIRECTORS Brookfields board of directors oversees the management of the Corporations
business and affairs which is conducted by its officers and employees under the
direction of the Chief Executive Officer. In doing so, the board of directors
acts at all times with a view to the best interests of the Corporation. The
board of directors endeavors to ensure that shareholder value is enhanced on a
sustainable basis and in a manner that
recognizes the interests of other stakeholders in the Corporation including its
employees, suppliers, customers and the communities in which it operates. In fulfilling its responsibilities, the board of directors, both directly and
through its various committees, is responsible for: STRATEGIC PLANNING  
    
    overseeing the strategic planning process including, on an annual basis,
reviewing and approving the business plan for the Corporation and
monitoring performance of the Corporation under the plan;  
    
    overseeing the financial and business strategies and objectives included
within the business plan; APPOINTING AND MONITORING SENIOR MANAGEMENT  
    
    developing a position description for the Chief Executive Officer
including the corporate objectives that the Chief Executive Officer is
responsible for meeting;  
    
    overseeing the selection, evaluation and compensation of the Chief
Executive Officer:  
    
    overseeing the selection, evaluation and compensation of other senior
management;
    
    monitoring succession planning of the Chief Executive Officer and other
members of senior management;
    
    to the extent feasible, satisfying itself as to the integrity of the
Chief Executive Officer and other members of senior management; RISK ASSESSMENT AND MANAGEMENT  
    
    assessing the major risks facing the Corporation and its businesses and
reviewing, approving, monitoring and overseeing the implementation of
appropriate systems to manage those risks; PUBLIC DISCLOSURE AND FINANCIAL REPORTING  
    
    overseeing the Corporations public disclosure and financial reporting,
reviewing and monitoring the Corporations management information systems
and disclosure controls and procedures, its internal controls and
procedures for financial reporting and compliance with the Corporations
code of business conduct and ethics (the Code of Business Conduct and
Ethics) to ensure that the Corporation maintains its integrity and
accountability; 16




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CORPORATE GOVERNANCE  
    
    ensuring an appropriate system of corporate governance is in place so the
board of directors and management can operate effectively, in the best
interests of the Corporation;  
    
    confirming that processes are in place for the Corporation and its
businesses to address and comply with applicable legal, regulatory,
corporate, securities and other compliance matters;  
    
    overseeing the creation of a culture of integrity throughout the
organization; APPROVAL OF CERTAIN MATTERS  
    
    approving all material transactions of the Corporation;
    
    approving all significant transactions involving related parties to the
Corporation; and
    
    approving matters which under corporate law may not be delegated by the
board of directors including, among others, the issuance of securities of
the Corporation, the declaration of dividends, the repurchase or
redemption of shares of the Corporation and the adoption, repeal or
amendment of the by-laws of the Corporation. COMPOSITION OF THE BOARD AND REPRESENTATION OF SHAREHOLDERS INTERESTS The board of directors will consist of twelve members, as follows:  
    
    Six independent directors: Messrs. William Cahill, Lance Liebman, John
McCaig, Paul McFarlane, Allan Olson and, upon his election, William
Wheaton;
    
    Three Brascan directors: Messrs. Jack Cockwell, Bruce Flatt and Sam
Pollock; and
    
    Three management representatives: Messrs. Gordon Arnell, Chairman, John
Zuccotti, Co-Chairman; and Richard Clark, President and Chief Executive
Officer. In addition, the board has appointed Mr. John McCaig as the lead independent
director. The board of directors, with the assistance of the Governance and Nominating
Committee, determines whether each director is an independent director. In
making these determinations, the board of directors examines each individual
directors circumstances and his or her relationship to the Corporation and its
affiliates and evaluates if he or she meets the definition of an independent
director as defined by NYSE Rules. The board of directors considers that its current size and composition is
appropriate given the diversity of the Corporations operations and the need
for a variety of experience and backgrounds. The board of directors believes
that a combination of independent directors, directors related to Brascan and
directors drawn from management leads to a constructive exchange in board
deliberations resulting in objective, well-balanced and informed discussion and
decision making. ORIENTATION AND CONTINUING EDUCATION The Chief Financial Officer and the Secretary of the Corporation, under the
oversight of the Governance and Nominating Committee, are responsible for
providing orientation and continuing education programs for new directors.
Generally, new directors are provided with materials describing the
Corporations business and governance policy and procedures and they also meet
individually with the Chief Executive Officer and the Chairman to learn about
the Corporation and its operations. BOARD MEETINGS Each director is expected to attend all meetings of the board of directors and
any committee of which he or she is a member. A director who is unable to
attend a meeting in person may participate by telephone or teleconference. The
board of directors may also take action from time to time by unanimous written
consent. The board of directors meets at least once in each quarter, with additional
meetings held when required. The board of directors met nine times in 2003.
There are four regular meetings and one planning meeting scheduled for 2004.
In addition, the independent directors meet separately from management
directors and directors related to Brascan at the end of each regularly
scheduled board meeting and whenever otherwise appropriate. These meetings are
conducted under the direction of the lead independent director. Meeting frequency and agendas may change from time to time depending on
opportunities or risks faced by the Corporation. Additional meetings may be
called by the Chairman, the Chief Executive Officer or any two directors on
proper notice. 17




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During 2003, the Corporations board of directors held five regular meetings
(including a planning meeting) and four special meetings. The following is a
record of directors attendance at these meetings. Regularly Scheduled Meetings
    
    Special MeetingsDirector
    
    Attended in 2003
    
    Attended in 2003Gordon E. Arnell
    
    5 of 5
    
    4 of 4William T. Cahill
    
    5 of 5
    
    3 of 4Richard B. Clark
    
    5 of 5
    
    4 of 4Jack L. Cockwell
    
    5 of 5
    
    3 of 4J. Bruce Flatt
    
    5 of 5
    
    2 of 4Lance Liebman
    
    5 of 5
    
    4 of 4John R. McCaig
    
    4 of 5
    
    3 of 4Paul D. McFarlane
    
    5 of 5
    
    4 of 4Allan S. Olson
    
    5 of 5
    
    2 of 4Sam Pollock
    
    5 of 5
    
    3 of 4John E. Zuccotti
    
    3 of 5
    
    1 of 4
 The Chairman is primarily responsible for the agenda. Prior to each board
meeting, the Chairman discusses agenda items for the meeting with the Chief
Executive Officer, other members of senior management and other members of the
board of directors. Any director may propose the inclusion of items on the
agenda, request the presence of or a report by any member of senior management,
or at any board meeting raise subjects that are not on the agenda for that
meeting. In advance of each board and committee meeting, members receive the proposed
agenda and other materials important to the directors understanding of the
matters considered. Directors are expected to spend the time needed to review
the materials in advance of such meetings and to actively participate in such
meetings. COMMITTEES OF THE BOARD Brookfield believes that board committees assist in the effective functioning
of the board of directors and that the appropriate composition of board
committees should enable the views of independent directors to be effectively
expressed. The board of directors of Brookfield has three standing committees: the Audit
Committee, the Human Resources and Compensation Committee, and the Governance
and Nominating Committee. Special committees may be formed from time to time as
required to review particular matters or transactions. While the board of
directors retains overall responsibility for corporate governance matters, the
Audit, Human Resources and Compensation, and Governance and Nominating
Committees have specific responsibilities for certain aspects of corporate
governance as described below. As part of the review of its corporate governance practices, the Corporation
has reformulated each of its standing committees so that the Audit Committee is
comprised solely of independent directors and each of the Human Resources and
Compensation Committee and the Governance and Nominating Committee are
comprised of a majority of independent members and one member related to
Brascan. The members of each committee are selected by the board of directors
on the recommendation of the Governance and Nominating Committee. The following is a brief description of the charters of each committee, its
composition and the meetings held during the past year. The full text of each
committees charter is available on Brookfields Web site,
www.brookfieldproperties.com. AUDIT COMMITTEE The Audit Committee is comprised of three directors, all of whom are
independent directors: Messrs. Allan Olson (Chairman), William Cahill and Paul
McFarlane. In addition to being independent directors as described above, all
members of the Corporations Audit Committee must meet an additional
independence test under the Sarbanes-Oxley Act, in that their directors fees
are the only compensation they, or their firms, receive from the Corporation
and that they are not affiliated with the Corporation. Each member of the
audit committee is financially literate and Mr. Allan Olson is considered to be
a financial expert as that term is defined under the NYSE Rules. The Audit Committee is responsible for monitoring the Corporations systems and
procedures for financial reporting and internal control, reviewing certain
public disclosure documents and monitoring the performance and independence of
the Corporations external auditors. The committee is also responsible for
reviewing the Corporations annual audited financial statements, unaudited
quarterly financial statements and managements discussion and analysis of
financial results of operations and review of related operations prior to their
approval by the full board of directors. 18




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The Audit Committee met three times in 2003 (including meeting with the
Corporations auditors and independent of management twice).There are four
Audit Committee meetings scheduled for 2004. Meeting frequency and agendas may
change from time to time depending on opportunities or risks faced by the
Corporation. The charter for the Audit Committee is reviewed annually by the
Audit Committee, Governance and Nominating Committee and the board of
directors. HUMAN RESOURCES AND COMPENSATION COMMITTEE The Human Resources and Compensation Committee is comprised of four directors:
Messrs. Jack Cockwell (Chairman), Lance Liebman, John McCaig and Paul
McFarlane. Mr. Jack Cockwell is related to Brascan and Messrs. Lance Liebman,
John McCaig and Paul McFarlane are independent directors. The committee is
responsible for reviewing and reporting to the board of directors on human
resource planning, including senior management appointments, succession
planning, the levels and form of executive compensation in general, and the
specific compensation of senior executives. The committee also reviews the
position descriptions and annual objectives of the Corporations Chief
Executive Officer and his or her performance in relation to these objectives,
and reports to the board of directors. The Human Resources and Compensation Committee met three times in 2003. There
are four Human Resources and Compensation Committee meetings scheduled for
2004. Meeting frequency and agendas may change from time to time depending on
opportunities or risks faced by the Corporation. The charter for the Human
Resources and Compensation Committee is reviewed annually by the Governance and
Nominating Committee and the board of directors. GOVERNANCE AND NOMINATING COMMITTEE The Governance and Nominating Committee is comprised of four directors: Messrs.
Lance Liebman (Chairman), John McCaig, Allan Olson and Sam Pollock. Mr. Sam
Pollock is related to Brascan and Messrs. Lance Liebman, John McCaig and Allan
Olson are independent directors. It is the responsibility of the Governance
and Nominating Committee, in consultation with the Chairman, to periodically
assess the size and composition of the board of directors and its committees,
to assess the effectiveness of the performance of the board of directors and
its directors, to review the Corporations Code of Business Conduct and Ethics
and its Corporate Governance Guidelines, to monitor its relations with
management, and to review and recommend directors compensation. The Governance and Nominating Committee met four times in 2003. There are four
Governance and Nominating Committee meetings scheduled for 2004. Meeting
frequency and agendas may change from time to time depending on opportunities
or risks faced by the Corporation. The charter for the Governance and
Nominating Committee is reviewed annually by the Governance and Nominating
Committee and the board of directors. MANAGEMENT MANAGEMENTS ROLE The primary responsibility of management is to safeguard the Corporations
assets and to create wealth for shareholders. When performance is found to be
inadequate, the board of directors has the responsibility to bring about
appropriate change. Brookfields corporate governance practices are designed to encourage autonomy
and effective decision making on the part of management, while ensuring
appropriate oversight through its board of directors and its committees. MANAGEMENTS RELATIONSHIP TO THE BOARD OF DIRECTORS Senior management of the Corporation, primarily through the Chief Executive
Officer, reports to and is accountable to the board of directors. At its
meetings, the board of directors regularly engages in private sessions with the
Corporations Chairman and the Chief Executive Officer without other members of
senior management present. The board of directors also meets at each meeting
independently of any members of management. Business plans are developed to ensure the compatibility of shareholder, board
and management views on the Corporations strategic direction, performance
targets and utilization of shareholders equity. A special meeting of
Brookfields board is held each year to review the strategic initiatives and
the business plan submitted by senior management. The board of directors
approval of the annual business plan provides a mandate for senior management
to conduct the affairs of the Corporation knowing it has the necessary board
support. Material deviations from the plan are reported to and considered by
the board of directors. BOARD OF DIRECTORS ACCESS TO MANAGEMENT Information provided by management to directors is critical to their
effectiveness. In addition to the reports presented to the board of directors
at its regular and special meetings, the board of directors is kept informed on
a timely basis by management of corporate developments and key decisions taken
by management in pursuing the Corporations business plan. The directors
periodically assess the quality, completeness and timeliness of information
provided by management to 19




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the board of directors. Directors also have the opportunity to meet with
senior management and to participate in work sessions to obtain further insight
into the operations of the Corporation. BOARD OF DIRECTORS ACCESS TO OUTSIDE ADVISORS The board of directors and any committee may at any time retain outside
financial, legal or other advisors at the expense of the Corporation and have
the authority to determine the advisors fees and other retention terms. Any
director may, subject to the approval of the Chairman, retain an outside
advisor at the expense of the Corporation. MANAGEMENT PERFORMANCE REVIEW AND REWARDS The Human Resources and Compensation Committee annually reviews the position
description of the Chief Executive Officer and establishes objectives against
which his or her performance is reviewed, with his or her compensation or level
being assessed against these pre-agreed objectives. Similar reviews and
assessments are undertaken by the Chief Executive Officer of the position
descriptions of other members of senior management in consultation with the
Human Resources and Compensation Committee. MANAGEMENT SUCCESSION The board of directors in consultation with the Human Resources and
Compensation Committee maintains a succession plan for the Chief Executive
Officer and other members of senior management. The objective of the plan is to
ensure the orderly succession of senior management, including providing for any
required recruiting, training and development. COMMUNICATION AND DISCLOSURE POLICIES The Corporation has adopted a Disclosure and Insider Trading Policy which
summarizes its policies and practices regarding disclosure of material
information to investors, analysts and the media. The purpose of this policy is
to ensure that the Corporations communications with the investment community
are timely, consistent and in compliance with all applicable securities
legislation. This Disclosure and Insider Trading Policy is reviewed annually
by the board of directors and is available on the Corporations Web site,
www.brookfieldproperties.com. The Corporation endeavors to keep its shareholders informed of its progress
through a comprehensive annual report, annual information form, quarterly
interim reports and periodic press releases. It also maintains a Web site that
provides summary information about the Corporation and ready access to its
published reports, press releases, statutory filings and supplementary
information provided to analysts and
investors. Directors and management meet with the Corporations shareholders
at the annual meeting and are available to respond to questions at that time. The Corporation also maintains an investor relations program to respond to
inquiries in a timely manner. Management meets on a regular basis with
investment analysts, financial advisors and interested members of the public to
ensure that accurate information is available to investors, including quarterly
conference calls and webcasts to discuss the Corporations financial results.
The Corporation also endeavors to ensure that the media are kept informed of
developments as they occur, and have an opportunity to meet and discuss these
developments with the Corporations designated spokespersons. CODE OF BUSINESS CONDUCT AND ETHICS The board of directors expects all directors, officers and employees of the
Corporation to conduct themselves in accordance with the highest ethical
standards and to adhere to the Corporations Code of Business Conduct and
Ethics (which is available on the Corporations Web site,
www.brookfieldproperties.com). Any waiver of the Code of Business Conduct and
Ethics for officers and directors may only be made by the board of directors or
the Governance and Nominating Committee and will be disclosed by the
Corporation to the extent required by law, regulation or stock exchange
requirement. 20




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PART FIVE  OTHER INFORMATION SHAREHOLDER PROPOSALS The Canada Business Corporations Actpermits eligible shareholders of the
Corporation to submit shareholder proposals to the Corporation, which proposals
may be included in a management proxy circular relating to an annual meeting of
shareholders. The final date by which the Corporation must receive shareholder
proposals for the annual meeting of shareholders of the Corporation to be held
in 2005 is January 29, 2005. AVAILABILITY OF DISCLOSURE DOCUMENTS The Corporation will provide any person or Corporation, upon request to the
Secretary of the Corporation, with a copy of:  (a)
    
    the most recent annual information form of the Corporation, together with
a copy of any document or the pertinent pages of any document incorporated
therein by reference;(b)
    
    the comparative financial statements of the Corporation for the fiscal
year ended December 31, 2003, together with the report of the auditors
thereon;(c)
    
    the most recent annual report of the Corporation, which includes
managements discussion and analysis of financial conditions and results
of operations;(d)
    
    the interim financial statements of the Corporation for the periods
subsequent to the end of its fiscal year; and(e)
    
    the management proxy circular of the Corporation dated March 4, 2004, in
connection with the annual and special meeting of shareholders. OTHER BUSINESS The Corporation knows of no matter to come before the meeting other than the
matters referred to in the accompanying Notice of Meeting. DIRECTORS APPROVAL The contents and sending of this Circular have been approved by the directors
of the Corporation. Kathleen G. Kane
Senior Vice President and
General Counsel and Secretary Toronto, Canada
March 4, 2004 21




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SCHEDULE A RESOLUTION RELATING TO AN AMENDMENT TO THE SHARE OPTION PLAN RESOLVED THAT:  1.
    
    Section 1.4(a) of the Share Option Plan of the Corporation is hereby
amended to increase the number of common shares which may be issued under
the Share Option Plan from 4,500,000 to 9,000,000; and2.
    
    Any director or officer of the Corporation is hereby authorized for and
in the name of and on behalf of the Corporation to execute or cause to be
executed, and to deliver or cause to be delivered, all such documents and
instruments, and to do or cause to be done all such other acts and things,
as in the opinion of such director or officer may be necessary or
desirable to carry out the intent of this resolution. 22