BPO Properties' net income for the year ended December 31, 2006 was $72.7 million ($1.99 per share) compared to $68.2 million ($1.98 per share) during the same period in 2005. Net income for the three months ended December 31, 2006 was $17.3 million ($0.46 per share) compared to $11.8 million ($0.31 per share) during the same period in 2005.

Funds from operations was $155.0 million ($4.88 per share) for the year ended December 31, 2006 compared to $104.4 million ($3.25 per share) during the same period in 2005. Funds from operations for the three months ended December 31, 2006, was $42.4 million ($1.34 per share) compared to $28.8 million ($0.91 per share) during the same period in 2005.

MAJOR TRANSACTIONS

Acquired a 100% interest in the Herald block in downtown Calgary for $45.0 million. One of Calgary's premier downtown development sites, the property is nearly 66,000 square feet in area with development density for approximately 1.1 million square feet of office space. The Herald site is the center of Calgary's downtown core and is within one block of each of BPO Properties' core office assets, Fifth Avenue Place, Petro-Canada Centre and Bankers Hall. The site currently contains four small buildings totaling 130,000 square feet of rentable area as well as underground parking and a small surface parking lot with excellent access to public transportation via the adjacent LRT line.

Signed early renewal with the Public Works (Federal Government of Canada) for 926,000 square feet at Place de Ville I and II in Ottawa for a five-year term.

Fully pre-leased Bankers Court development. Subsequent to the year-end, Compton Petroleum Corporation, an Alberta-based public oil and gas company, leased an additional 22,000 square feet at Bankers Court development project for a ten-year term, bringing occupancy in Bankers Court office to 100%. Compton will occupy a total of 152,000 square feet on floors 3 through 9, and Fraser Milner Casgrain, a national Canadian law firm, will occupy 101,000 square feet on floors 10 through 15 when the building opens in 2008.

OPERATIONS REVIEW

BPO Properties continued its pro-active leasing strategy in 2006, capitalizing on positive market conditions to increase occupancy and rental rates throughout the portfolio. The BPO Properties portfolio was 97.2% leased at the end of 2006, compared to 96.1% in 2005 and a Canadian national average of 93.5%. During the quarter, BPO Properties pro-actively leased 1.2 million square feet of space, bringing total year-to-date leasing to 2.8 million square feet, approximately six times the amount contractually expiring. In addition, BPO Properties leased 482,000 square feet of space during the year in our Bay Adelaide and Bankers Court developments.

In addition to the Public Works lease in Ottawa, other transactional highlights from the fourth quarter include:

128,000 square feet in Calgary

-- a five-year renewal and expansion with Enterra Energy Corp for 31,000 square feet at Altius Centre

-- a new five-year lease with Cyries Energy Inc. for 21,000 square feet at Altius Centre

-- a five-year renewal with Hewlett Packard for 10,000 square feet at Petro-Canada Centre

122,000 square feet in Toronto

-- a new four and a half-year lease with Bank of Montreal for 16,000 square feet at First Canadian Place

-- a new 10-year lease with ITG Canada Corp for 15,000 square feet at Exchange Tower

-- a new 10-year lease with Saatchi & Saatchi Advertising for 10,000 square feet at Hudson's Bay Centre

36,000 square feet in other markets

-- a new 12-year lease with Growth Works Capital for 14,000 square feet at Royal Centre, Vancouver.

OUTLOOK

"Our focus for 2007 is to work on monetizing our 5.5 million square foot development pipeline, taking advantage of positive market conditions, including low vacancies, high occupancies and rising rents," said Tom Farley, President & CEO of BPO Properties Ltd.

Net Operating Income and FFO

This press release and accompanying financial information make reference to net operating income and funds from operations ("FFO") on a total and per share basis. Net operating income is defined as income from property operations after operating expenses have been deducted, but prior to deducting financing, administrative and income tax expenses. FFO is defined as net income prior to extraordinary items, non-cash items and depreciation and amortization. The company uses net operating income and FFO to assess its operating results. Net operating income is important in assessing operating performance and FFO is a relevant measure to analyze real estate, as commercial properties generally appreciate rather than depreciate. The company provides the components of net operating income and a full reconciliation from net income to FFO with the financial statements accompanying this press release. Net operating income and FFO are both non-GAAP measures which do not have any standard meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other companies.

Forward-Looking Statements

This press release, particularly the "Outlook" section, contains forward-looking statements and information within the meaning of applicable securities legislation. Although BPO Properties believes that the anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information 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 and information. Factors that could cause actual results to differ materially from those set forth in the forward-looking statements and information include general economic conditions; local real estate conditions, including the development of properties in close proximity to the company's properties; timely leasing of newly-developed properties and re-leasing of occupied square footage upon expiration; dependence on tenants' financial condition; the uncertainties of real estate development and acquisition activity; the ability to effectively integrate acquisitions; interest rates; availability of equity and debt financing; the impact of newly-adopted accounting principles on the company's accounting policies and on period-to-period comparisons of financial results; and other risks and factors described from time to time in the documents filed by the company with the securities regulators in Canada including in the Annual Information Form under the heading "Business of BPO Properties - Company and Real Estate Industry Risks." The company undertakes no obligation to publicly update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

Dividend Declaration

The Board of Directors of BPO Properties declared a quarterly common share dividend of $0.15 per share, payable on March 30, 2007 to shareholders of record at the close of business on March 1, 2007.

The Board of Directors also declared dividends on series G, J and M preferred shares, payable May 14, 2007 to shareholders of record at the close of business on April 30, 2007, for the period February 14, 2007 to May 13, 2007. The dividend per preferred share is to be computed in accordance with the terms of the shares.

Conference Call

BPO Properties' year end 2006 conference call can be accessed by teleconference on Tuesday, February 13, 2007 at 3:00 p.m. E.T. at 1-800-633-8406. The call will be archived through March 13, 2007 and can be accessed by dialing 1-800-558-5253, passcode # 21324804. The conference call can also be accessed by Web cast on the BPO Properties Web site at www.bpoproperties.com.

Supplemental Information

Investors, analysts and other interested parties can access BPO Properties' Supplemental Information Package on BPO Properties' Web site under the Investor Relations/Financial Reports section. This additional financial information should be read in conjunction with this press release.

BPO Properties Profile

BPO Properties Ltd., 89% owned by Brookfield Properties Corp., is a Canadian company that invests in real estate, focusing on the ownership and value enhancement of premier office properties. The current property portfolio is comprised of interests in 35 commercial properties totalling 21.6 million square feet and five development sites totalling 5.5 million square feet. Landmark properties include First Canadian Place in Toronto and Bankers Hall in Calgary. BPO Properties' common shares trade on the TSX under the symbol BPP. For more information, visit www.bpoproperties.com.

Contact

Investor relations and media inquiries should be directed to Melissa Coley, Vice President, Investor Relations and Communications at (416) 359-8593. Inquiries regarding financial results should be directed to Craig Laurie, Senior Vice President and Chief Financial Officer, at (416) 956-5170.

CONSOLIDATED BALANCE SHEET

(Millions) Dec. 31, 2006 Dec. 31, 2005(1)

----------------------------------------------------------------------

Assets

Commercial properties $ 1,462.1 $ 1,399.8

Commercial developments 312.8 189.7

Loans receivable 100.2 100.1

Intangible assets 62.5 59.5

Tenant receivables and other assets 58.6 54.5

Cash 27.7 21.5

Future income taxes -- 16.5

Marketable securities and other

investments -- 66.7

Assets related to discontinued

operations (2) 74.7 118.0

----------------------------------------------------------------------

$ 2,098.6 $ 2,026.3

----------------------------------------------------------------------

Liabilities and shareholders' equity

Commercial property debt $ 933.7 $ 867.7

Intangible liabilities 104.3 111.8

Accounts payable and other liabilities 69.8 64.5

Future income tax liability 10.2 --

Liabilities related to discontinued

operations (3) 41.6 82.9

Shareholders' equity 939.0 899.4

----------------------------------------------------------------------

$ 2,098.6 $ 2,026.3

----------------------------------------------------------------------

(1) Certain comparative information has been reclassified to conform

with current year presentation.

(2) Includes $71.2 million of commercial properties and $3.5 million

of other assets at December 31, 2006 (December 31, 2005 - $111.2

million and $6.8 million, respectively).

(3) Includes $40.0 million of commercial property debt and $1.6

million other liabilities at December 31, 2006 (December 31, 2005 -

$78.8 million and $4.1 million, respectively).

CONSOLIDATED STATEMENT OF INCOME

Three months ended Year ended

Dec. 31 Dec. 31

(Millions, except per share

amounts) 2006 2005 2006 2005

----------------------------------------------------------------------

Commercial Properties

Revenue $ 89.5 $ 63.5 $ 330.6 $ 214.5

Expenses 38.8 29.1 143.6 99.8

----------------------------------------------------------------------

Net operating income 50.7 34.4 187.0 114.7

Loans and investment income 4.2 6.0 21.3 34.6

----------------------------------------------------------------------

54.9 40.4 208.3 149.3

Expenses

Interest expense 10.7 10.0 44.3 40.1

Administrative expenses and large

corporation tax 3.4 3.1 16.7 8.8

----------------------------------------------------------------------

40.8 27.3 147.3 100.4

Depreciation and amortization 15.8 11.0 61.7 32.1

Future income taxes 8.5 4.9 29.1 1.0

----------------------------------------------------------------------

Net income from continuing

operations 16.5 11.4 56.5 67.3

Discontinued operations 0.8 0.4 16.2 0.9

----------------------------------------------------------------------

Net income $ 17.3 $ 11.8 $ 72.7 $ 68.2

----------------------------------------------------------------------

Net income per common share

Continuing operations $ 0.43 $ 0.30 $ 1.42 $ 1.95

Discontinued operations 0.03 0.01 0.57 0.03

----------------------------------------------------------------------

Total $ 0.46 $ 0.31 $ 1.99 $ 1.98

----------------------------------------------------------------------

RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS ("FFO")

Three months ended Year ended

Dec. 31 Dec. 31

(Millions) 2006 2005 2006 2005

----------------------------------------------------------------------

Net income $ 17.3 $ 11.8 $ 72.7 $ 68.2

Add:

Depreciation and amortization

(i) 16.1 11.9 64.8 34.7

Future income taxes (ii) 9.0 5.1 33.4 1.5

----------------------------------------------------------------------

FFO and gains 42.4 28.8 170.9 104.4

Property disposition gains -- -- (15.9) --

----------------------------------------------------------------------

FFO prior to property disposition

gains $ 42.4 $ 28.8 $ 155.0 $ 104.4

----------------------------------------------------------------------

(i) Includes depreciation and amortization from discontinued

operations of $0.3 million and $3.1 million for the three and twelve

months ended December 31, 2006, respectively ($0.9 million and $2.6

million for the three and twelve months ended December 31, 2005,

respectively).

(ii) Includes future income taxes from discontinued operations of $0.5

and $4.3 million for the three and twelve months ended December 31,

2006, respectively ($0.2 and $0.5 million for the three and twelve

months ended December 31, 2005, respectively).

FFO PER COMMON SHARE

Three months ended Year ended

Dec. 31 Dec. 31

(Millions, except per share

information) 2006 2005 2006 2005

----------------------------------------------------------------------

FFO and gains $ 42.4 $ 28.8 $ 170.9 $ 104.4

Property disposition gains -- -- (15.9) --

----------------------------------------------------------------------

FFO prior to property disposition

gains 42.4 28.8 155.0 104.4

Preferred share dividends (4.3) (3.1) (16.0) (11.8)

----------------------------------------------------------------------

Funds available to common

shareholders $ 38.1 $ 25.7 $ 139.0 $ 92.6

Weighted average shares

outstanding 28.5 28.5 28.5 28.5

----------------------------------------------------------------------

FFO prior to property disposition

gains per common share $ 1.34 $ 0.91 $ 4.88 $ 3.25

----------------------------------------------------------------------

COMMERCIAL PROPERTY NET OPERATING INCOME

Three months ended Year ended

Dec. 31 Dec. 31

(Millions) 2006 2005 2006 2005

----------------------------------------------------------------------

Commercial property operations and

fee income $ 89.5 $ 63.5 $ 330.6 $ 214.5

Operating expenses (38.8) (29.1) (143.6) (99.8)

----------------------------------------------------------------------

Commercial property net operating

income $ 50.7 $ 34.4 $ 187.0 $ 114.7

----------------------------------------------------------------------

DISCONTINUED OPERATIONS

Three months ended Year ended

Dec. 31 Dec. 31

(Millions, except per share

information) 2006 2005 2006 2005

----------------------------------------------------------------------

Property disposition gains $ -- $ -- $ 15.9 $ --

Revenue from discontinued

operations 4.8 5.3 22.4 17.5

Operating expenses (2.7) (3.0) (11.5) (10.4)

----------------------------------------------------------------------

2.1 2.3 26.8 7.1

Interest expense (0.5) (0.8) (3.2) (3.1)

----------------------------------------------------------------------

Funds from discontinued operations

and gains 1.6 1.5 23.6 4.0

Depreciation and amortization (0.3) (0.9) (3.1) (2.6)

Future income taxes (0.5) (0.2) (4.3) (0.5)

----------------------------------------------------------------------

Net income from discontinued

operations $ 0.8 $ 0.4 $ 16.2 $ 0.9

----------------------------------------------------------------------

Net income per share -

discontinued operations $ 0.03 $ 0.01 $ 0.57 $ 0.03

----------------------------------------------------------------------

For further information: BPO Properties Ltd. Investor relations and media inquiries: Melissa Coley, 416-359-8593 Vice President, Investor Relations and Communications or Inquiries regarding financial results: Craig Laurie, 416-956-5170 Senior Vice President and Chief Financial Officer

Source: newswire