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Brookfield Property Partners
CORPORATE PROFILE
NOVEMBER 2018
Table of Contents
2
Overview of Brookfield Property Partners (“BPY”) Page 4
Organic Growth Page 11
Operating Segments Page 20
Developments and Redevelopments Page 32
Appendix – Structure and Governance Page 39
3
BPY is Brookfield Asset Management’s (“Brookfield”) primary vehicle
to make investments across all strategies in real estate
Our goal is to be the leading global owner and operator of
high-quality real estate, generating an
attractive total return for our unitholders comprised of:
1Current yield supported
by stable cash flow from
a diversified portfolio
of assets
25% ‒ 8% annual
distribution growth
3Capital appreciation
of our asset base
4
Overview of Brookfield Property Partners
51) As of September 30, 2018 and on a proportionate basis.
2) Based on BPY’s 9/28/18 closing price of $20.89 on the Nasdaq Stock Market.
Global Owner, Developer and Operator of Diversified,
High-Quality Real Estate
Core Office
• 150 premier office properties totaling 99 million
square feet (msf) in gateway markets around the world
as well as 11 msf of core office and multifamily
development projects currently underway
Core Retail
• 125 best-in-class retail properties totaling 122 msf
throughout the United States
LP Investments
• High-quality assets with operational upside across
office, retail, multifamily, industrial, hospitality, triple net
lease, self storage, student housing and manufactured
housing sectors
$86B TOTAL ASSETS
Investment Portfolio Characteristics
$28BUNITHOLDER EQUITY
1
$0.315QUARTERLY DISTRIBUTION / UNIT
6.0%DISTRIBUTION YIELD
2
1
6
Core Office and Core Retail
Investment Segments
Stable cash flows on core portfolios enhanced by investment in opportunistic
strategies
LP Investments
Brookfield Place, New York Fashion Show Mall, Las Vegas Conrad Hotel, Seoul
Targeting 10% to 12% Total Returns
• Approximately 80% of BPY’s balance sheet
• Invested in high-quality, well-located trophy assets and development projects
Targeting 20% Total Returns
• Approximately 20% of BPY’s balance sheet
• Invested in mispriced portfolios and/or properties with significant value-add
7
Global Investor with Local Expertise
UNITED STATES3
$119.3B
ASIA PACIFIC
$12.5B
BRAZIL
$2.4B
EUROPE & MIDDLE EAST
$28.4B CANADA
$8.2B
1) At the Brookfield Property Group level which includes assets of BPY and Brookfield-managed funds.
2) Employee figures are as of December 31, 2017.
3) AUM in the Bahamas are included within our US AUM figure.
~$171B Total RE AUM1 | 30 Offices | ~17K Operating Employees2
8
Value-oriented, counter-cyclical investors
Specialize in executing multi-faceted transactions that allow us to acquire high-quality assets at a discount to replacement cost
Leverage our business units and operational expertise to enhance the value of our investments
Flexibility to allocate capital to the sectors and geographies with the best risk-adjusted returns at various points in the real estate cycle
Continually recycle capital from stabilized assets to higher-yielding opportunities in order to build long-term value for unitholders
Proven Investment Approach
9
Conservative Financing Strategy
The quality and diversification of our assets support our target of achieving long-term
proportionate debt-to-capital of up to 50%
• We finance our investments predominantly with asset-level, non-recourse debt
• We raise debt in local currency with primarily fixed interest rates
• We source the lowest-cost capital to fund growth
‒ Recycle capital from stabilized assets
‒ Consider issuing equity if expected returns exceed our cost of capital
• We target a distribution payout ratio of 80% of Company Funds From Operations (“CFFO”)
which combined with realized gains from our LP investments allows us to retain sufficient cash
flow for tenant improvements, leasing costs and organic growth
• Our investment-grade corporate credit rating provides financing flexibility
10
Brookfield Property REIT (BPR)
BPR Shares & BPY Units Share an Identical Economic Interest
BPR BPY Details
Distributions are identical in amount and timing
N/AClass A BPR shares are exchangeable for a
BPY unit or the equivalent value in cash
Liquidations values are equalized
N/AVoting control for both BPR and BPY is aligned
as BPR’s majority shareholder is BPY
Delaware
Corp.;
1099 Issuer
Bermuda-
based LP;
K1 Issuer
As a U.S.-domiciled REIT, BPR is eligible for
many equity indexes that exclude LPs
BPY BAMBPY owns ~75% of the outstanding shares of
BPR and BAM owns ~53% of BPY
Brookfield Property REIT is a publicly traded U.S. REIT (Nasdaq: BPR) externally managed by BAM. It is a subsidiary of
Brookfield Property Partners (BPY) and was created to offer economic equivalence to BPY in the form of a U.S. REIT security.
Distributions
Exchangeable
Liquidation Value
Voting Rights
Majority Owner
Structure/Index
Eligibility
11
Organic Growth
12
BPY’s Unique Growth Drivers
Strong global operating capabilities enable us to acquire real estate in need
of leasing, capital or repositioning, to generate core-plus returns
Extensive development pipeline assembled over time in dynamic,
supply-constrained markets
Access to opportunistic real estate returns through ability to invest in
Brookfield-sponsored property funds
13
Track Record of Earnings and Distribution Growth
Earnings and distribution growth for
five consecutive years since launch
Annual CFFO growth of 9%
Annual distribution growth of 6%
Reduced payout ratio from 90%
of CFFO to our target of 80%
2014 2015 2016 2017
$1.06
$1.12
$1.00
$1.18
$1.11
$1.18
$1.36
$1.44
$1.26
$1.50+
9%CAGR
2018
6%CAGR
CFFO Distribution (per unit)
14
Growth in LP Investment Gains
2014 2015 2016 2017
$0.14
$0.37
$0.08
$0.66
We have earned realized gains from our
LP investments in private funds
In the early years, these gains were from
the sale of individual assets or smaller
portfolios
As these funds mature, and investment-
level business plans are executed, the
pace and size of realizations will
increase
Realized Gains on LP Investments (per unit)
$0.67
LTM
15
Future Earnings Growth
$2.15+
$1.70+
$1.26
$1.45+
Achieve annual CFFO growth for the next 5 years with target of 7%-9%
Realize significant earnings from our LP investments including, on average, $500
million in annual realized gains
Earnings provide ample coverage for distributions
Earnings growth will support distribution growth in line with target of 5%-8%
annually
16
Main Drivers of Earnings Growth
Annual CFFO growth between 2017 and 2022 continues to be driven by:
• Achieving same property growth of 2-3%
• Completion of active developments on time and budget:
$1.18In US$ millions
$0
$100
$200
$300
$400
$500
$600
2017 2018 2019 2020 2021 2022
Office Retail Urban multifamily Condo sales
Cumulative Development NOI
17
Payout Ratio
Target payout ratio leaves sufficient retained cash to protect distribution levels, sustain
properties and fund future growth in support of our five-year business plan:
In US$ millions2022
Forecasted CFFO $ 2,300
Annual realized gains from LP investments 600
Annual earnings $ 2,900
Distributions at target payout (1,800)
Available to maintain properties and fund growth $ 1,100
Looking forward, we are positioned to
increase earnings from
leasing and development activities in our
core office and retail businesses...
and to realize value from the
capital we have invested in our LP investments
18
19
BPY = Compelling Investment Opportunity
$ 20
Narrowing
Discount1,2,3Today
$ 55
$ 48
$ 35
Current
Discount1,2
$ 20 $ 20
$ 6 $ 6
2022
$ 22
$ 9
1) Using forecasted 2022 CFFO
2) Distributions assumed at 80% of forecasted 2022 CFFO
3) Using consensus NAV implied multiple
An investment today has the potential
to offer a very attractive return to
shareholders
Yield backed by cash flow from a
portfolio of high-quality assets
Entry point at discount to average
analyst NAV of $27.49 per unit
Potential for significant appreciation
Opportunity to further enhance return if
discount to NAV erodes
15%CAGR
25%CAGR
Investment Current Yield Appreciation
20
Operating Segments
21
Iconic assets in gateway markets
Brookfield Place, New YorkDarling Park, Sydney
Canary Wharf, LondonBrookfield Place, Toronto
Core Office Portfolio
22
Core Office Portfolio
Of our top 20 office tenants, 11 are tenants in Brookfield buildings
in more than one city; 7 are tenants in at least three cities
• 150 premier office properties totaling approximately 99 msf in gateway cities around the
globe, including: New York, London, Toronto, Los Angeles, Houston, Sydney, Washington, DC
and Berlin
• Portfolio is 92.9% leased with an average remaining lease term of 8.3 years
• Embedded 8.2% mark-to-market opportunity on expiring leases
• Properties generally financed with non-recourse, asset-level debt
• We offer an integrated, multifaceted real estate business with comprehensive operating
and real estate management capabilities
• Our diversified global structure gives us a competitive advantage in the marketplace as we
are able to leverage relationships across geographies and business lines
23
Trophy retail assets that mirror the quality of our office properties
The Woodlands Mall, Houston Ala Moana, Honolulu
Jordan Creek, Des Moines Miami Design District
Core Retail Portfolio
24
Core Retail Portfolio
125 best-in-class malls and urban retail properties totaling over 122 msf throughout the United States
95.6% NOI-weighted occupancy
Initial rent spreads of 11.6% for leases commencing in the trailing 12 months
Highly productive stores with $744 NOI-weighted tenant sales/sf
25
Class A+ Shopping Centers
Inserting new technology into our malls has been a major driver to elevate the
shopping experience – from retail and dining to entertainment and leisure
• Our class A+ mall portfolio represents approximately 8% of the high-quality retail
space in the United States, including 3 of the top 5 assets.1 Although total retail
space in the U.S. is likely to contract in the coming years, high-quality malls continue to
demonstrate meaningful outperformance and serve as the centerpiece of all retail
activity in the U.S.
• The declining performance of traditional department stores has created opportunities to
recapture square footage within our existing centers and improve their productivity by
introducing more dining, entertainment and fitness venues as well as e-retailer ‘pop-up’
and permanent stores.
• Development and redevelopment initiatives in our core retail portfolio total
$1.7 billion of which $1.2 billion is currently under construction with a further $500 million
in the pipeline. The projects have expected ROIs of between 6-8%.
1) Source: CNBC.com article from 1/29/18.
26
E-commerce vs Brick-and-Mortar? NOT a Zero-Sum Game…
93% of all retail sales are owed all or in part to brick-and-mortar presence1
Amazon Bonobos Rent the Runway
Online-to-offline examples
E-Commerce Brick-and-Mortar ONE Channel
1) Source: U.S. Census Bureau
27
Acquiring mispriced assets with upside to earn outsized returns
Center Parcs, UK
The Diplomat Resort & Spa, Florida
Roosevelt Landing, New York
LP Investments
BR7 Office Portfolio, Sao Paulo
28
LP Investments
Invest on a Value Basis
• Acquire high-quality assets at a discount to replacement cost or
intrinsic value
• Execute multifaceted transactions that utilize structuring
capabilities
• Seek contrarian investments via market dislocations and other
inefficiencies
Leverage Brookfield
Platform
• Focus on geographies and sectors where Brookfield has
informational, operational and other competitive advantages
• Utilize Brookfield’s relationships to originate proprietary
investments
• Target large-scale investments
Enhance Value through
Operating Capabilities
• Execute clearly defined strategies for operational improvement:
‒ Leasing: increasing occupancy and rental rates
‒ Development: expanding or redeveloping/repositioning
properties
• Achieve opportunistic returns through NOI growth
29
Case Study: IDI Gazeley projected to return 30% Gross IRR in 5 years
• Assembled a 42M SF global logistics business through the acquisition of 3 industrial
companies in North America and Europe
30M SFCOMPLETED
DEVELOPMENT
30%PROJECTED
GROSS IRR
3.1xPROJECTED
GROSS MOC
50M SFAREA LEASED
16%RENT INCREASED
88 – 95%CHANGE IN OPERATING
OCCUPANCY 2013-2017
30
Case Study: Simply Self Storage returned 46% Gross IRR in 2.5 years
• Acquired 90-asset, 6.8M SF portfolio and operating company in early 2016 and grew
business to over 200 assets totaling ~16M SF
$1.3BGROSS SALE PRICE1
$162MNET PROCEEDS TO BPY2
46%GROSS IRR
2.6xGROSS MOC
32%VALUE INCREASED PSF
1) Partial sale of business
2) Includes proceeds from portfolio refinancing following transaction
31
Opportunistic Real Estate Funds Track Record
GGP Acquisition
Closes
Fund Inception
Total
Equity
BPY
Stake
Projected
Gross IRR
Projected
Gross MOC
RE Opportunity Fund I 2006 11.0% 1.9x
RE Opportunity Fund II 2007 20.0% 2.1x
RE Turnaround Fund 2009 38.6% 2.3x
Strategic Real Estate
Partners I 2012 $4.5B 30% 25.0% 2.7x
Strategic Real Estate
Partners II2015 $9.0B 25% 19.0% 2.2x
Total 26.0% 2.2x
32
Developments and Redevelopments
33
Development Strategy
• We opportunistically pursue developments to:
‒ Earn premium risk-adjusted returns compared to acquisitions (~200-250 bps spread)
‒ Upgrade our portfolio with new, trophy assets in key strategic markets
• Development strategy seeks to limit risk:
‒ Typically secure anchor leases for 40% ‒ 50% of space before launching project
‒ Execute guaranteed maximum price contracts to reduce construction risk
‒ Bring in JV partners once project is substantially de-risked
‒ Limit developments to less than 10% of total assets
• Prominent, large-scale projects primarily in the high-growth markets of London and New York
City
• Active office and multifamily projects expected to produce approximately $320 million of
incremental NOI upon completion
34
Projects Delivered Over the Past 24 Months
34
London Wall Place
London
The Eugene
New York
Principal Place
London
5 Manhattan West
New York
One Blue Slip
Brooklyn
4.2M SFPREMIER
OFFICE SPACE
1,200APARTMENT
UNITS
35
Projects On Schedule for Delivery in 2019
35
1 Bank Street
London
1 Manhattan West
New York
Camarillo
Los Angeles
655 New York Ave
Washington DC
100 Bishopsgate
London
ICD Brookfield Place
Dubai
5.6M SFPREMIER
OFFICE SPACE
~3,500APARTMENT
UNITS
36
Office % Pre-Leased SF 000s
($M) Total
Cost1 Yield on Cost
Date of
Completion
Date of
Accounting
Stabilization
655 New York Avenue, Washington, DC 71% 766 285 7% Q2 2019 Q3 2020
One Manhattan West, New York 84% 2,117 778 6% Q4 2019 Q3 2020
1 Bank Street, London 40% 715 335 7% Q3 2019 Q4 2020
100 Bishopsgate, London 67% 938 1,140 7% Q2 2019 Q2 2020
ICD Brookfield Place, Dubai 6% 1,104 342 11% Q3 2019 Q1 2021
Bay Adelaide North, Toronto 64% 820 386 6% Q1 2022 Q4 2022
Wood Wharf – Office, London 42% 423 163 8% Q2 2021 Q2 2021
Subtotal 58% 6,883 $3,429 7%
Active Development Projects
1) In US$ Millions and represents BPY’s share of investment.
2) Represents condominium/market sale developments. Anticipated return on cost and date of completion are presented instead of yield on cost and date of accounting
stabilization, respectively, for these developments.
Multifamily
Camarillo (California) 413 127 7% Q4 2018 Q2 2019
Greenpoint Landing Bldg. G, New York 250 199 6% Q4 2018 Q4 2019
Studio Plaza, Silver Spring (Maryland) 343 106 7% Q2 2019 Q1 2020
Wood Wharf – 8 Water St. & 2 George St., London 371 197 5% Q4 2019 Q4 2020
Newfoundland, London 545 324 4% Q1 2020 Q1 2021
Greenpoint Landing Bldg. F, New York 310 358 6% Q3 2020 Q2 2021
Principal Place – Residential, London2 303 248 17% Q1 2019 Q1 2019
Southbank Place, London2 669 302 20% Q4 2019 Q4 2019
Wood Wharf – 10 Park Drive, London2 269 133 31% Q4 2019 Q4 2019
Wood Wharf – One Park Drive, London2 430 288 30% Q2 2021 Q2 2021
Subtotal 3,903 $2,282
Total Active Developments 10,786 $5,711
37
Redevelopment Strategy
Our integrated capabilities provide the opportunity to redevelop high-quality,
well-located assets that have leasing challenges or CapEx needs
We leverage our affiliated design, construction, operations, leasing and
real estate management teams to perform a 360-degree assessment
of a property’s refurbishment and repositioning potential
We time our initial capital investment to maximize returns
(e.g. upon an anchor tenant’s relocation announcement)
We are able to charge higher rents and subsequently
earn higher returns on our investment following the repositioning effort
38
Case Study – 5 Manhattan West, New York
Skin in the
Game
Owned parcels of undeveloped land adjacent to 450 W. 33rd St. since the 1980s and
acquisition opportunity required quick response
A Submarket
on the Cusp
Tenants seeking alternatives to expensive, aging midtown buildings are migrating to
areas more proximate to their employee populations
An Attractive
Alternative
With over 25 million sf of traditional HQ office product being delivered to the
submarket, 5MW’s ‘warehouse’ layout and vibe attracted tech and new media tenants
A Stunning
Transformation
A unique ‘new’ building centered at the nexus of Chelsea, traditional Midtown, and the
Hudson Yards District – New York City’s next great mixed-use neighborhood
450 W. 33rd St. 5 Manhattan West
Acquisition
$700M
Capital
$350M
Levered IRR
34%
39
Appendix – Structure and Governance
40
Corporate Structure
30%
Brookfield
Infrastructure
Partners
(BIP)
68%
Brookfield Business
Partners
(BBU)
60%
Brookfield Renewable
Partners
(BEP)
53%
Brookfield Property
Partners
(BPY)
Core Office Core Retail
Brookfield Asset Management(BAM)
Core office assets
Canary Wharf
Core-plus funds
Class A
U.S. Mall
Portfolio
Real estate opportunity funds
Value-add multifamily funds
Real estate finance funds
Other direct investments
LP Investments
41
Governance
BPY/BPR’s governance is structured to provide alignment of interests with unitholders
• BPY and BPR have an established Master Services Agreement with Brookfield
− Brookfield provides executive oversight of BPY/BPR and services relating to the origination of
acquisitions, financings, business planning and supervision of day-to-day management and
administration activities
− Management fee, on an annualized basis, equal to 0.5% of the total capitalization of BPY/BPR, subject
to a minimum fee of $50 million
− Equity enhancement distributions, on an annualized basis, equal to 1.25% of the increase in
BPY/BPR’s market capitalization over the initial capitalization of approximately $11.5 billion
− Credit applied for management fees paid on investment in Brookfield-sponsored funds
• Incentive distributions based upon increases in distributions paid to unitholders over pre-defined thresholds
− 15% participation by Brookfield in distributions over $1.10 per unit
− 25% participation by Brookfield in distributions over $1.20 per unit
− Credit applied for incentive fees paid on investments in Brookfield-sponsored funds
• BPY/BPR’s general partner has a majority of independent directors
42
Favorable Structure
• As a global real estate investor, we have structured BPY to provide flexibility to pursue its strategy and
to limit negative tax consequences to our unitholders
• BPY is a Bermuda-based, publicly-traded partnership that owns or has interests in holding corporations
primarily in the U.S., Canada, Australia, Western Europe, Brazil, India and South Korea
• Structure is favorable relative to Master Limited Partnerships (MLPs), and we are committed to
structuring our activities to avoid generating UBTI and ECI1
1) BPY does not provide legal or tax advice to any third party and as such strongly recommends that each prospective investor review all documentation with their legal and
tax advisors.
BPY’s Structure
Type of Entity Bermuda-based, publicly-traded partnership
UBTI1 No
ECI1 No
U.S. Tax Slip Issued1 K1
Canadian Tax Slip Issued1 T5013
43
Contacts
Contact Title E-Mail Address Phone Number
Brian Kingston Chief Executive Officer [email protected] (212) 978-1646
Bryan Davis Chief Financial Officer [email protected] (212) 417-7166
Matt Cherry SVP, Investor Relations & Communications [email protected] (212) 417-7488
44
Important Cautionary Notes
All amounts are in U.S. dollars unless otherwisespecified. Unless otherwise indicated, the statistical andfinancial data in this document is presented as ofSeptember 30, 2018.
This presentation contains “forward-looking information”within the meaning of applicable securities laws andregulations. Forward-looking statements includestatements that are predictive in nature, depend upon orrefer to future events or conditions, include statementsregarding our operations, business, financial condition,expected financial results, performance, prospects,opportunities, priorities, targets, goals, ongoingobjectives, strategies and outlook, as well as the outlookfor North American and international economies for thecurrent fiscal year and subsequent periods, and includewords such as “expects,” “anticipates,” “plans”, “believes,”“estimates”, “seeks,” “intends,” “targets,” “projects,”“forecasts,” “likely,” or negative versions thereof and othersimilar expressions, or future or conditional verbs such as“may,” “will,” “should,” “would” and “could”.
Forward-looking statements include, without limitation,statements about target earnings and distribution growth,the growth potential of our existing and new investments,return on invested capital, gains on mark-to-marketreleasing and occupancy, targeted same-store growthand returns on redevelopment and development projects,the availability of suitable investment opportunities, andthe availability of financing and our financing strategy.
Although we believe that our anticipated future results,performance or achievements expressed or implied bythe forward-looking statements and information are basedupon reasonable assumptions and expectations, thereader should not place undue reliance on forward-looking statements and information because they involveknown and unknown risks, uncertainties and otherfactors, many of which are beyond our control, which maycause our actual results, performance or achievements todiffer materially from anticipated future results,performance or achievement expressed or implied bysuch forward-looking statements and information.
Factors that could cause actual results to differ materiallyfrom those contemplated or implied by forward-lookingstatements include, but are not limited to: risks incidentalto the ownership and operation of real estate propertiesincluding local real estate conditions; the impact orunanticipated impact of general economic, political andmarket factors in the countries in which we do business;the ability to enter into new leases or renew leases onfavorable terms; business competition; dependence ontenants’ financial condition; the use of debt to finance ourbusiness; the behavior of financial markets, includingfluctuations in interest and foreign exchanges rates;uncertainties of real estate development orredevelopment; global equity and capital markets and theavailability of equity and debt financing and refinancingwithin these markets; risks relating to our insurancecoverage; the possible impact of international conflictsand other developments including terrorist acts; potentialenvironmental liabilities; changes in tax laws and othertax related risks; dependence on management personnel;illiquidity of investments; the ability to complete andeffectively integrate acquisitions into existing operationsand the ability to attain expected benefits therefrom;operational and reputational risks; catastrophic events,such as earthquakes and hurricanes; and other risks andfactors detailed from time to time in our documents filedwith the securities regulators in Canada and the UnitedStates.
We caution that the foregoing list of important factors thatmay affect future results is not exhaustive. When relyingon our forward-looking statements or information,investors and others should carefully consider theforegoing factors and other uncertainties and potentialevents. Except as required by law, we undertake noobligation to publicly update or revise any forward-lookingstatements or information, whether written or oral, thatmay be as a result of new information, future events orotherwise.
In considering investment performance informationcontained herein, prospective investors should bear inmind that past performance is not necessarily indicativeof future results and there can be no assurance thatcomparable results will be achieved, that an investment
will be similar to the historic investments presented herein(because of economic conditions, the availability ofinvestment opportunities or otherwise), that targetedreturns, diversification or asset allocations will be met orthat an investment strategy or investment objectives willbe achieved.
This presentation includes estimates regarding marketand industry data that is prepared based on itsmanagement's knowledge and experience in the marketsin which we operate, together with information obtainedfrom various sources, including publicly availableinformation and industry reports and publications. Whilewe believe such information is reliable, we cannotguarantee the accuracy or completeness of thisinformation and we have not independently verified anythird-party information.
This presentation makes reference to net operatingincome (“NOI”), funds from operations (“FFO”), andCompany funds from operations (“CFFO”). NOI, FFO andCFFO do not have any standardized meaning prescribedby International Financial Reporting Standards (“IFRS”)and therefore may not be comparable to similar measurespresented by other companies. The Partnership usesNOI, FFO and CFFO to assess its operating results.These measures should not be used as alternatives toNet Income and other operating measures determined inaccordance with IFRS but rather to provide supplementalinsights into performance. Further, these measures donot represent liquidity measures or cash flow fromoperations and are not intended to be representative ofthe funds available for distribution to unitholders either inaggregate or on a per unit basis, where presented.
For further reference, specific definitions of NOI, FFO,and CFFO are available in the Partnership’s pressreleases announcing its financial results each quarter.