Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions - Filer previously obtained exemption to allow it to prepare its financial statements in accordance with IFRS-IASB for financial periods beginning on or after January 1, 2010 - Filer now is proposing to effect a transaction (the Transaction) that involves the reorganization of its directly owned office assets under a new Canadian REIT - Filer wishes for REIT to be able to prepare its financial statements in accordance with IFRS-IASB for financial periods beginning on or after January 1, 2010 - Filer in its MD&A for the year ended December 31, 2009 has disclosed relevant information about its conversion to IFRS-IASB, including the impact of the adoption of IFRS-IASB on the Filer's financial statements - In connection with the Transaction, the Filer will prepare and mail to its shareholders a management proxy circular (the Circular) describing the Transaction prepared in accordance with Form 51-102F5 - Relief granted subject to conditions including that the Circular will incorporate the Filer's MD&A by reference and include similar disclosure, with reference to CSA Staff Notice 52-320 Disclosure of Expected Changes in Accounting Policies Relating to Changeover to International Financial Reporting Standards, about the impact of the adoption of IFRS-IASB on the REIT's financial statements.

Applicable Legislative Provisions

National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency, ss. 3.1, 9.1.

March 19, 2010

IN THE MATTER OF

THE SECURITIES LEGISLATION

OF ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

BPO PROPERTIES LTD.

(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) exempting the REIT (as defined below), which will acquire the Filer's directly owned office assets, from the requirement in section 3.1 of National Instrument 52-107 -- Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107) that financial statements be prepared in accordance with Canadian GAAP for financial periods beginning on or after January 1, 2010 (the Exemption Sought), for so long as the REIT prepares its financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS-IASB).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Northwest Territories, Yukon and Nunavut (the Passport Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 -- Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation incorporated under the Canada Business Corporations Act (CBCA) pursuant to articles of incorporation dated February 23, 1996. The head office of the Filer is located at Brookfield Place, 181 Bay Street, Suite 330, P.O. Box 762, Toronto, Ontario M5J 2T3.

2. The Filer is a reporting issuer or equivalent in the Jurisdiction and each of the Passport Jurisdictions. The Filer is not, to its knowledge, in default of its reporting issuer obligations under the Legislation or the securities legislation of the Passport Jurisdictions. The Filer's securities are listed on the Toronto Stock Exchange.

3. The Filer 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 28 commercial properties totaling 18.3 million square feet.

4. The Filer is proposing to effect a transaction (the Transaction) that involves the reorganization of its directly owned office assets under a new Canadian real estate investment trust to be named "Brookfield Office Properties Canada" (the REIT) and the acquisition by the REIT of an interest in additional office property.

5. The Filer has received an exemption from the requirement in section 3.1 of NI 52-107 that financial statements be prepared in accordance with Canadian GAAP for financial periods beginning on or after January 1, 2010, for so long as the Filer prepares its financial statements in accordance with IFRS-IASB.

6. As of December 31, 2009, the Filer's parent company, Brookfield Properties Corporation (BPC), indirectly beneficially owned 11,200,965 common shares and 65,035,596 non-voting equity shares of the Filer, representing approximately 56.1% and 100%, respectively, of the outstanding shares of each such class, which represents, in the aggregate, approximately 90% of the Filer's common equity. BPC is a reporting issuer or equivalent in the Jurisdiction and each of the Passport Jurisdictions other than the Northwest Territories, Yukon and Nunavut. BPC's securities are listed on the Toronto Stock Exchange and the New York Stock Exchange. BPC is also a registrant with the United States Securities and Exchange Commission (SEC) and a foreign private issuer in the United States.

7. BPC has received an exemption from the requirement in section 3.1 of NI 52-107 that financial statements be prepared in accordance with Canadian GAAP for financial periods beginning on or after January 1, 2010, for so long as BPC prepares its financial statements in accordance with IFRS-IASB. BPC intends to begin preparing its financial statements in accordance with IFRS-IASB for periods beginning on or after January 1, 2010.

8. As of December 31, 2009, BPC's parent company, Brookfield Asset Management Inc. (BAM), directly and indirectly, owned 255,847,050 common shares and 13,796,870 Class A Redeemable Voting preferred shares of BPC, representing approximately 51% and 97.1%, respectively, of the outstanding shares of each such class. BAM is a reporting issuer or equivalent in the Jurisdiction and each of the Passport Jurisdictions. BAM's securities are listed on the Toronto Stock Exchange, the New York Stock Exchange and the Euronext Amsterdam Exchange. BAM is also a registrant with the SEC and a foreign private issuer in the United States.

9. BAM has received an exemption from the requirement in section 3.1 of NI 52-107 that financial statements be prepared in accordance with Canadian GAAP for financial periods beginning on or after January 1, 2009, for so long as BAM prepares its financial statements in accordance with IFRS-IASB. BAM intends to begin preparing its financial statements in accordance with IFRS-IASB for periods beginning on or after January 1, 2010.

10. In connection with the Transaction, the Filer will prepare and mail to its shareholders a management proxy circular (the Circular) describing the Transaction prepared in accordance with Form 51-102F5 of National Instrument 51-102 -- Continuous Disclosure Obligations.

11. The Canadian Accounting Standards Board has confirmed that publicly accountable enterprises will be required to prepare their financial statements in accordance with IFRS-IASB for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011.

12. NI 52-107 sets out acceptable accounting principles for financial reporting under the Legislation by domestic issuers, foreign issuers, registrants and other market participants. Under NI 52-107, a domestic issuer must use Canadian GAAP with the exception that an SEC registrant may use US GAAP. Under NI 52-107, only foreign issuers may use IFRS-IASB.

13. The Filer has not previously prepared financial statements that contain an explicit and unreserved statement of compliance with IFRS-IASB. In CSA Staff Notice 52-321 -- Early Adoption of International Financial Reporting Standards, Use of US GAAP and Reference to IFRS-IASB, staff of the Canadian Securities Administrators recognized that some issuers may wish to prepare their financial statements in accordance with IFRS-IASB for periods beginning prior to January 1, 2011 and indicated that staff were prepared to recommend exemptive relief on a case by case basis to permit a domestic issuer to do so, despite section 3.1 of NI 52-107.

14. If the Transaction proceeds and the Exemption Sought is obtained, it is expected that the REIT will adopt IFRS-IASB effective January 1, 2010 for its financial statements for periods beginning on or after January 1, 2010.

15. The Filer is applying for the Exemption Sought so that the REIT, which will acquire the Filer's directly owned office assets, obtains the benefit of the exemption granted to the Filer.

16. In its management's discussion and analysis for the year ended December 31, 2009 (MD&A), the Filer disclosed relevant information about its conversion to IFRS-IASB as contemplated by CSA Staff Notice 52-320 Disclosure of Expected Changes in Accounting Policies Relating to Changeover to International Financial Reporting Standards (Staff Notice 52-320), including the impact of the adoption of IFRS-IASB on the Filer's financial statements.

17. The Circular will incorporate the MD&A by reference and include similar disclosure, with reference to Staff Notice 52-320, about the impact of the adoption of IFRS-IASB on the REIT's financial statements.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

(a) the REIT prepares its financial statements for financial periods beginning on or after January 1, 2010 in accordance with IFRS-IASB;

(b) the Filer provides the communication as described and in the manner set out in paragraph 17;

(c) if the REIT files interim financial statements prepared in accordance with Canadian GAAP for one or more interim periods in the year that the REIT adopts IFRS-IASB, the REIT will restate and refile those interim financial statements originally prepared in accordance with Canadian GAAP in accordance with IFRS-IASB, together with the restated interim management's discussion and analysis as well as the certificates required by National Instrument 52-109 -- Certification of Disclosure in Issuers' Annual and Interim Filings; and

(d) if the REIT files its first IFRS-IASB financial statements in an interim period, those interim financial statements will present all financial statements with equal prominence, including the opening statement of financial position at the date of transition to IFRS-IASB.

"Michael Brown"
Assistant Manager, Corporate Finance