Funds from operations ("FFO") was $148 million or $0.38 per diluted share for the three months ended June 30, 2009 compared with $157 million or $0.40 per diluted share during the same period in 2008.

Commercial property net operating income for the second quarter of 2009 was $338 million, compared with $341 million during the second quarter of 2008 as a result of the impact of a weaker Canadian dollar and a lower contribution from non-managed properties. Absent these items, commercial property net operating income increased 3% over the same period in the prior year.

During the second quarter, Brookfield Properties leased 725,000 square feet of space in its managed portfolio at an average net rent of $25 per square foot, which represents a 32% improvement versus the average expiring net rent of $19 on this space in the quarter. Additionally, the company has improved its five-year lease rollover exposure by 240 basis points since the start of the year. Year-to-date leasing totals 2.5 million square feet. Brookfield's managed portfolio occupancy rate finished the quarter at 95%.

HIGHLIGHTS OF THE SECOND QUARTER

Leased 725,000 square feet of space. Renewals represent 70% of the total with new leases representing the remainder. Second quarter leasing highlights include:

Calgary -- 163,000 square feet

A five-year, 161,000-square-foot lease with Bennett Jones at Bankers Hall

Toronto -- 150,000 square feet

An 11-year, 58,000-square-foot lease with Globalive Wireless Management at Queen's Quay Terminal

A five-year, 58,000-square-foot lease with Minister of Public Works at 151 Yonge St.

Washington, DC -- 113,000 square feet

A 10-year, 36,000-square-foot lease with Boston Consulting Group at One Bethesda Center

New York -- 92,000 square feet

An eight-year, 14,000-square-foot lease with Jane Street Capital at One New York Plaza

Los Angeles -- 89,000 square feet

A five-year, 38,000-square-foot lease with Perkowitz & Ruth at Landmark Square

Refinanced or extended over $450 million of debt including Petro-Canada Centre, Calgary; Silver Springs Metro Plaza, 2401 Pennsylvania Ave., 1250 Connecticut Ave. and 2000 L St., Washington, DC; RBC Plaza, Minneapolis; and Enbridge Tower, Edmonton. These financings carry a current weighted average interest rate of 5.5%. The company has completed approximately 80% of $1 billion of financings due in 2009.

Achieved substantial completion of Bay Adelaide Centre West. The construction of the 51-story, 1.2-million-square-foot office development in Toronto's financial core was completed ahead of schedule, under budget and 73% pre-leased. The project is seeking a LEED Gold certification.

Renamed Calgary building Suncor Energy Centre. The merged Petro-Canada and Suncor Energy Inc are consolidating operations in the renamed Brookfield building, with all employees at the combined entity expected to be moved in by the end of 2010. The building is 100% leased.

OUTLOOK

"Our industry-leading low vacancy rate and lease rollover profile have helped mitigate risk exposure in this economic downturn," stated Ric Clark, CEO of Brookfield Properties Corporation. "Our positive results this quarter were further influenced by strengthening residential demand in Alberta."

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Net Operating Income and FFO

This press release and accompanying financial information make reference to net operating income and funds from operations 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. Brookfield Properties defines FFO as net income prior to extraordinary items, one-time transaction costs, income taxes, depreciation and amortization, and certain other non-cash items. 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 information accompanying this press release. The company reconciles FFO to net income as opposed to cash flow from operating activities as it believes net income is the most comparable measure. 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.