Funds from operations ("FFO") was $151 million or $0.34 per diluted share for the three months ended September 30, 2009, compared with $152 million or $0.38 per diluted share during the same period in 2008.

Commercial property net operating income for the third quarter of 2009 was $330 million, compared with $320 million during the third quarter of 2008.

During the third quarter, Brookfield Properties leased 693,000 square feet of space in its managed portfolio at an average net rent of $25 per square foot, which represents a 25% improvement versus the average expiring net rent of $20 on this space in the quarter. Additionally, the company has improved its five-year lease rollover exposure by 330 basis points since the start of the year. Year-to-date leasing totals 3.2 million square feet. Brookfield's managed portfolio occupancy rate finished the quarter at 95.0%, unchanged from the previous quarter.

HIGHLIGHTS OF THE THIRD QUARTER

Leased 693,000 square feet of space and completed 63,000 square feet of development leasing. Renewals represent 74% of the total with new leases representing the remainder. Third quarter leasing highlights include:

Toronto -- 211,000 square feet

A 144,000-square-foot lease extension with the Department of Justice at Exchange Tower

Washington, DC -- 154,000 square feet

A five-year, 98,000-square-foot lease renewal with the General Services Administration at Two Ballston Plaza

A new 11-year, 63,000-square-foot lease with LaFarge North America at Two Reston Crescent

A new five-year, 45,000-square-foot lease with the General Services Administration at 1550 Wilson Blvd

Edmonton -- 102,000 square feet

A five-year, 57,000-square-foot lease renewal with CGI at Canadian Western Bank Place

A ten-year renewal and expansion for 39,000 square feet with Witten Management at Canadian Western Bank Place

New York -- 63,000 square feet

A new 15-year lease for 31,000 square feet with Advent Software at the Grace building

A new 14-year lease for 26,000 square feet with Zolfo Cooper at the Grace building

Launched $5 billion real estate turnaround consortium with Brookfield Asset Management. Dedicated to investing in under-performing real estate, the consortium will invest in equity and debt in under-valued real estate companies or real estate portfolios where value can be created in a variety of ways, including financial and operational restructuring, strategic direction or sponsorship, portfolio repositioning, redevelopment or other active asset management. Brookfield Properties has the right, but not the obligation, to participate in investments in the office sector.

Raised $1.3 billion in common share equity offering and preferred share issuance. Gross proceeds from the equity offering totaled $1.0 billion and proceeds from the preferred share issuance totaled $288 million. A portion of the proceeds were used to pay down the committed revolving lines of credit at the company level and within the residential operations. Liquidity currently stands at $1.7 billion including cash, deposits and available credit.

Refinanced or extended $205 million of debt, including $105 million on the West 31st Street development site in New York and the $100 million corporate term loan. The company has completed 95% of $1 billion of financings due in 2009.

Opened Bay Adelaide Centre, the first development built to achieve a Leadership in Energy and Environmental Design (LEED) Gold Standard and the first major development in Toronto's financial district in 17 years. Standing 51 stories tall, the 1.2-million-square-foot office tower adheres to strict building efficiency guidelines, including optimization of energy, light and water, and the use of local and recycled building materials. The tower is 73 percent leased.

Commenced the recladding of First Canadian Place, Toronto. Along with ownership partners, the company will thoroughly renovate Canada's tallest office tower including a total recladding of the building's exterior with laminated glass spandrel panels replacing the existing white marble. The project is seeking LEED Gold certification and is expected to be complete by the end of 2011.

Earned LEED Platinum certification at 1225 Connecticut Ave., Washington, D.C., the industry's highest rating for environmental sustainability. It is the first redeveloped office building in the Eastern United States to achieve LEED Platinum certification. The building is 100% leased.

Announced early adoption of IFRS. One year ahead of the mandatory conversion date for Canadian public companies, Brookfield Properties intends to adopt International Financial Reporting Standards commencing with its interim financial statements for the three months ended March 31, 2010; those financial statements will also include comparative results for the periods commencing January 1, 2009.

OUTLOOK

"During the third quarter we have noticed a sense of optimism that the economy may be at the early stages of a recovery which has positively impacted leasing activity," stated Ric Clark, CEO of Brookfield Properties Corporation. "As real estate markets work toward recovery, we have taken additional steps to enhance Brookfield Properties' liquidity position in order to strengthen our balance sheet and to be poised to capitalize on opportunities that may arise."

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.