Brookfield Property Partners L.P - Investor Meeting September 29, 2016
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Brookfield Property Partners L.P. Investor Meeting September 29, 2016
Table of Contents
Our Business 3
Brian Kingston, Senior Managing Partner, Chief Executive Officer
Core Office 17
Ric Clark, Senior Managing Partner, Chairman
Urban Multifamily 35
Lowell Baron, Managing Partner, Head of Multifamily
Retail Business 47
Ashley Lawrence, Senior Vice President, Asset Management – Retail
Opportunistic Investment Strategy 64
Brian Kingston, Senior Managing Partner, Chief Executive Officer
Financial Update 75
Bryan Davis, Managing Partner, Chief Financial Officer
Wrap-up / Q&A 89
Brian Kingston, Senior Managing Partner, Chief Executive Officer
2
Our Business – Brian Kingston
3
Brookfield Property Partners is Brookfield’s primary vehicle to
make investments across all strategies in real estate
Brookfield Property Partners L.P.
(BPY)
Through Participation in
Direct
Brookfield Private Funds
Core Core-Plus Value-Add Opportunistic
4
Our goal is to be the leading global owner & operator
of high-quality real estate, generating an attractive total return
for our unitholders comprised of:
Current yield backed by stable cash flow from a diversified portfolio
of assets
5-8% annual distribution growth
Capital appreciation of our asset base
5
Stable, predictable cash flows from our
Core Office and Retail units are enhanced by our
higher-yielding Opportunistic strategies
Core Office & Retail Opportunistic
10% to 12% Total Returns 20% Total Returns
• Currently 80% of BPY’s balance sheet • 20% of BPY’s balance sheet
• Investing in high-quality, trophy assets • Investing in mispriced portfolios,
• Provides stable cash flow with growth and capital properties with significant value-add
appreciation • Provides capital appreciation
6
Proven approach to investing
• We are value-oriented, counter-cyclical investors
• We specialize in executing multi-faceted transactions that allow us to
acquire high-quality assets at a discount to replacement cost
• We leverage our business units to enhance the value of our investments
• We have the flexibility to allocate capital to the sectors and geographies
with the best risk-adjusted returns
• We continually recycle capital from stabilized assets to higher-yielding
assets in order to build long-term value for unitholders
7
Brookfield Property Partners has undergone
significant, transformative growth
in the three years since spin-out
8
Progress since spin-out…
• Completed $5 billion acquisition of Brookfield Office Properties and
reduced balance sheet concentration in public securities from 80% to 30%
• Invested $1 billion in General Growth Properties to increase interest to 34%1
• Invested $1.8 billion alongside our joint venture partner to privatize
Canary Wharf and increase our interest to 50%
• Issued $6 billion of perpetual equity
• Recycled $5 billion of capital out of mature office and retail assets
• Invested $3 billion in new Brookfield-sponsored funds
1) Represents BPY’ s fully diluted interest in GGP
9
Through organic growth in existing markets…
2013
UK & Europe
$4B
Canada
$8B
Australia
$9B
United States
$70B
Brazil
$4B
10…and expansion into new markets we have grown
AUM to over $146 Billion1
Today
UK & Europe
$23B
Canada
$7B China - $0.5B
Middle East - $0.1B Australia
United States $7B
$105B
India - $1.2B
Brazil
$3B
1) Figure represents AUM of Brookfield Property Group. BPY’ s proportionate total assets have grown to approximately $66 billion
11We have also expanded into a number of new asset classes…
2013 TODAY
PRIMARY Traditional real estate sectors that Core Office Core Office
have deep public and private Core Retail Core Retail
institutional capital markets Multifamily Multifamily
Logistics
ESTABLISHED Alternative real estate sectors that Suburban Office Suburban Office
have deep public and private capital Alternate Retail Alternate Retail
markets Hotels
Net Leases
NON-TRADITIONAL Some public market presence and Self-Storage
analyst coverage but highly Manufactured
fragmented and largely privately held Housing
Student Housing
12…and built a diversified portfolio of premier properties
• 149 premier office properties totaling 101 million square feet (“msf”) in
gateway markets around the world
• 10 msf of office and multifamily development projects currently underway
• Interest in 128 best-in-class retail properties totaling 125 msf throughout the
United States
• High-quality assets with operational upside including:
• 35,000 multifamily units in the United States
• 54 msf of industrial in modern logistics properties in North America and Europe
• 18,400 hotel rooms throughout the United States, Europe and Australia
• Over 300 triple net lease properties throughout the United States
• Over 150 self-storage assets in the United States
• 13 student housing properties in the United Kingdom
13...Which has led to significant growth of business
2013 TODAY
Total Assets ($ billions) 31 113% 66
Total Equity ($ billions) 13 69% 22
Company FFO ($ millions) 570 67% 950+
Value per Unit ($) 25 20% 30
Distribution per Unit ($) 1.00 12% 1.12
14Continue to be focused on key objectives
Enhance the flexibility of our balance sheet
In 2016:
• Refinanced corporate credit facility, upsizing capacity from $2.0 to $2.5 billion, reducing
interest costs by 55bps and extending maturity to 2019
• BBB credit rating from S&P
• Issued C$200 million of perpetual preferred shares, using proceeds to repay on-demand
capital securities
Recycle capital
• $1.5 billion of net equity year to date; on target for $2.0 billion in 2016
• Proceeds redeployed:
• Repayment of BPO acquisition facility
• Private fund capital calls
• Development funding
• Repurchase of units
15Continue to be focused on key objectives
Stabilize occupancy in Core Office and Retail portfolios
• Flat occupancy in existing office portfolio at 92%
• Development pre-leasing increased at One Manhattan West, Principal Place and
Brookfield Place Calgary
• Stable occupancy in Core Retail portfolio at 95%
Share price to reflect value of business
• Active investor relations program
• Index inclusion
• Buying back units
16Core Office – Ric Clark
17Brookfield’s Core Office business features an
iconic, irreplaceable portfolio
of the world’s most sought-after
commercial properties
18Iconic Properties
Premier locations, high-quality properties
in the most dynamic, resilient cities around the globe
Brookfield Place, New York City Canary Wharf, London Potsdamer Platz, Berlin
Brookfield Place, Toronto Darling Park, Sydney Brookfield Place, Perth
19Comprehensive Capabilities
We offer a full suite of real estate services for our tenants, assuring them
of best-in-class quality and service throughout the lifecycle of our properties
“…Of our top 20 office
tenants, 75% are in
Brookfield buildings in
more than one city and
50% are in buildings in
more than three cities,
which speaks to the
consistency and quality
of our properties.”
20Scale of Operations
We have $15 billion of capital invested in Core Office
149 18
PROPERTIES CITIES
101msf 6
PORTFOLIO SIZE COUNTRIES
92% 1,600
OCCUPANCY EMPLOYEES
8.3yrs 9msf
AVERAGE AVERAGE ANNUAL
LEASE TERM LEASING VOLUME
21Stable Income
Long average lease life, market diversification and
high-quality tenants produce very stable income
NET OPERATING INCOME
(US$ in millions)
$ 2,000 Other
Canada 14%
$ 1,500
Australia 16%
50% U.S.
$ 1,000
18%
UK
$ 500
2013 2014 2015 2016 1
1) Forecast to reflect incremental NOI at Brookfield Place New York
22Organic Growth
Significant income growth driven by recently signed leases at
Brookfield Place New York and increasing occupancy
SAME PROPERTY NOI GROWTH
(in natural currency)
14%
12%
10%
8%
6%
4%
2%
0%
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
23We have been taking advantage of
strong pricing and demand
for stabilized office assets in select core markets
to extract equity capital and
reinvest in higher yielding opportunities
24Asset Sales
On track to achieve goal of raising $2 billion of equity
from asset sales in 2016
Interest Net Proceeds Cap
Property City Sold (US$ Millions) Rate
World Square Retail Sydney 100% $ 200 4.2%
Royal Centre Vancouver 100% 220 3.3%
Principal Place London 50% 360 4.0%
Two Ballston Plaza Greater Washington, DC 100% 60 5.6%
Potsdamer Platz Berlin 25% 170 3.4%
One New York Plaza New York City 33% 550 4.6%
King Street Wharf Sydney 100% 30 4.9%
One Shelley Street Sydney 100% 250 5.1%
Total $ 1,840 4.2%
25Case Study
Acquisition of Potsdamer Platz, Berlin’s premier mixed-use
property estate
• Capitalizing on Brookfield’s unique capability to underwrite, acquire
and asset manage a large-scale mixed-use trophy estate that spans
office, retail, multifamily, hospitality, leisure and gaming
COMPETITIVE
ADVANTAGE • Motivated seller divested asset as part of mandatory liquidation of a
maturing closed-end fund and required transaction assurance of a
well-capitalized buyer with strong lending and JV equity
relationships
• Market vacancy at 10-year low in 2016
• Rental growth in Berlin has consistently outpaced other major
STRONG
German cities
MARKET
FUNDAMENTALS • Demand driven by growing technology, media and
telecommunications (TMT) sector tenants particularly strong with
40% of total leases executed
• Brookfield expertise in lease-ups of significant vacancy – increased
VALUE office occupancy from 53% to 75% in first 9 months of control
ENHANCEMENT • 85 residential units had been held vacant by previous owner in
MEASURES condo conversion exercise; Brookfield’s plan is to aggressively re-
lease as rentals to tap into existing apartment demand on the estate
26Development Strategy
• Earn premium risk-adjusted returns
compared to acquisitions
• Upgrade our portfolio with new, trophy assets
in strategic markets
• Mitigate risk by typically securing:
– Anchor leases for 40-50% prior to launch
– Maximum price construction contracts
– Construction financing with term extensions
– JV equity partners once project is substantially
de-risked
– Limit development capital toDevelopment Activity
7.3msf
UNDER DEVELOPMENT
56%
PRE-LEASED
7%
AVERAGE YIELD-ON-COST
$300M
INCREMENTAL NOI
28Active Development Projects
Building best-in-class regional headquarters premises for a
diversified high-credit-quality tenant roster
Sq. Ft. Pre- Date of Cost1
Project City (000’s) Leased Completion (US$ millions) Yield
Principal Place London 621 84% Q4 2016 $ 510 8%
L’Oreal Brazil HQ Rio de Janeiro 197 100% Q1 2017 40 12%
London Wall Place London 505 73% Q2 2017 270 7%
Brookfield Place East Calgary 1,400 81% Q3 2017 620 7%
655 New York Avenue Washington, DC 766 70% Q3 2018 290 7%
100 Bishopsgate London 938 38% Q4 2018 1,140 7%
1 Bank Street London 715 40% Q2 2019 330 7%
One Manhattan West New York 2,117 30% Q4 2019 1,060 6%
Total 7,259 56% $ 4,260 7%
1) At BPY’ s proportionate share
29Development Income
At current capitalization rates this income stream is
worth ~$7 billion
(US$ in millions)
$ 300
$ 200
$ 100
$0
2017 2018 2019 2020 2021
Brazil UK Canada U.S.
30Next Phase of Developments
Over 8 million square foot pipeline will fuel growth post-2021
Project City Sq. Ft. (000’s)
Manhattan West New York 2,296
ICD Brookfield Place Dubai 1,079
10 Bank Street London 857
Shell Centre London 317
North Quay London 2,400
One Park Place London 680
Wood Wharf – Phase 1 London 338
Bay Adelaide Centre North Toronto 825
Total 8,792
31Insulated from ‘Brexit Effect’…
We maintain our view that the UK will remain a
very important center of commerce in the world, and that an
acceptable deal with the EU will be negotiated
• 98% leased to high-credit-quality tenant roster
• Average remaining lease term of 12 years
• Current developments 55% pre-leased ahead of delivery in
2017-19 timeframe
• Completed £515 million construction facility on 100 Bishopsgate
following Brexit outcome
• Only 5% of total BPY equity exposed to British pound
32….and Energy Market Downturn
Energy markets1 are seeing increasing demand from tenants
seeking “flight to quality” opportunities which align
with Brookfield’s portfolio attributes
• 91% leased to high-credit-quality tenant roster
• Average remaining lease-term of 7.4 years
• Manageable lease expiry through year-end 2019
• Current development 81% pre-leased
• Executed 1.2 msf of leases in the last 18 months
• Only 6% of total BPY’s total assets exposed to these markets
1) Data on this slide attributable to BPY’ s Core Office business in Houston, Calgary and Perth
33Brookfield has built its real estate business
by capitalizing on
distressed assets and businesses
in capital-deprived markets
and will continue to monitor the current investment
landscape for such opportunities
34Urban Multifamily – Lowell Baron
35Brookfield is building a core investment platform of
premier Urban Multifamily rental assets
Creating a long-term, best-in-class urban multifamily business complementary
and with similar characteristics to Brookfield’s established, highly regarded global
office portfolio
Initial strategy includes a build-to-core model, leveraging urban infill parcels owned
within the office business as well as newly sourced transactions
Acquiring single assets or portfolios will become a major avenue of growth for the
right opportunities and at the right time
36Brookfield’s History of Multifamily Investment
2010/11 2012 2013 2014 2015
Recapitalizes Acquires 4,900 unit Acquires 4,275 unit Acquires 3,962 unit Privatizes AEC for
Fairfield portfolio for portfolio for portfolio in $2.5 billion -
$500 million $290 million Manhattan for 14,200 unit
$1 billion portfolio
Commits $50 Commits $300 Construction
million to first million to second begins on
Value-Add fund Value-Add fund Manhattan West
residential tower
(879 units)
Acquires four
development
projects in US
representing
2,350 units
Properties 4 23 70 90 150
Units 1,270 6,680 19,010 26,700 42,060
GAV (US millions) $140 $715 $1,980 $4,030 $7,400
37Scale of Operations1
~ 38,000
Detroit Cleveland/
UNITS Columbus
Seattle
Boston Metro
New York City
Sacramento
129 San Francisco
San Jose
Denver
Indianapolis
Washington, DC
Metro
PROPERTIES
Virginia Beach
Los Angeles Las Vegas Charlotte
Inland Empire Charlottesville
Phoenix Atlanta
Raleigh/Durham
94% San Antonio
Dallas Metro
Tampa
OCCUPANCY Houston
Miami / Ft. Lauderdale
/ West Palm Beach
1,600
~
EMPLOYEES
1) Only includes U.S. assets 38Why Urban Multifamily?
Cities are places of collaboration, innovation and opportunity -
The urbanization trend exists because cities make
people smarter, healthier and happier
• 50% of the world’s population lives in cities; figure expected to rise
Urbanization to 75% by 2050
Global • Cities generate 80% of today’s total GDP; figure expected to rise
Growth to 90% by 2050
Concentrated • More urbanized countries have incomes on average 5x those of
Wealth less urbanized countries
• People of all ages choose urban living for: (1) Social possibilities
Social and networking; (2) Attractions, entertainment, shopping and
Connectivity restaurants; (3) Public transit and walkability; (4) Access to
medical care and services for seniors
Sources: McKinsey & Company, MIT and Edward Glaeser (Harvard Economics Professor)
39Historical Returns
Multifamily has been one of the top performing asset types
over the long term with a favorable risk-to-return profile
Sector Compounded Annual Returns Since 1994 Returns/Risk (Sharpe Ratio) Since 1994
Source: NAREIT (data through 2015)
40U.S. Multifamily Rent Growth
Expected rent growth of 3.7% in 2016 with select markets
experiencing double-digit increases
Apartment Rent Growth
Source: Axiometrics
41U.S. Multifamily Occupancy Rates
Historically strong and stable occupancy rates
Apartment Occupancy Rates
Source: Axiometrics
42U.S. Homeownership Rate
Declining homeownership creating incremental demand
for apartments
U.S. Homeownership Rate
69.0% 68.9% 68.8%
68.2%
67.8%
67.4%
66.9%
Long Term Average – 66.2%
64% 65.5%
65.1% 64.5%
63.8%
63.0% 62.8% 62.7%
62.3% 62.5%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Sources: U.S. Census Bureau, Green Street Advisors
43Target Markets
• “Coastal core” markets of New York City, Boston, Washington DC, Los Angeles,
San Francisco and Seattle
• Also targeting markets that offer a great lifestyle, affordable cost of living, are business
friendly and have a diversified economy
Seattle
Portland Boston
New York City
San Francisco
Washington, DC
Denver
San Jose
Los Angeles
San Diego
Atlanta
Dallas
Austin
Houston Miami
44Active Development Projects
Active development pipeline with value
in excess of $2 billion
Date of Cost1
Project City # of Units Completion (US$ millions) Yield
For Rent
Three Manhattan West Manhattan 473 Q1 2018 $ 414 5%
Greenpoint Landing - G Brooklyn 341 Q1 2019 273 6%
Camarillo Ventura County 446 Q3 2019 128 7%
Newfoundland London 636 Q4 2019 322 4%
For Sale
Principal Place London 329 Q1 2019 249 N/A
Shell Centre London 597 Q3 2019 219 N/A
Total 2,822 $ 1,605 5%
1) At BPY’ s proportionate share
45Future Development Projects
… and value in excess of $1 billion
from our future development pipeline
Date of Cost1
Project City # of Units Completion (US$ millions) Yield
For Rent
Wood Wharf Phase I London 677 Q4 2019 $ 245 5%
Greenpoint Landing - F Brooklyn 400 Q3 2020 364 6%
1810 Main Houston 286 Q2 2019 81 7%
Westcreek Houston 409 Q4 2020 166 7%
Dallas Hi-Line Dallas 426 Q4 2020 164 7%
Studio Plaza Silver Spring 343 Q1 2019 106 7%
Total 2,541 $1,126 6%
1) At BPY’ s proportionate share
46Retail Business – Ashley Lawrence
47The premier quality assets and operations
in our Core Retail business
mirrors that of the Core Office portfolio
These class A malls are
long-term investments that provide stable cash flow
48Through our 34% fully diluted interest in
General Growth Properties (“GGP”)
we are invested in
100 of the top 500 malls in the United States
49Scale of Operations
We have $9 billion of capital invested in Core Retail
128
PROPERTIES
125msf
PORTFOLIO SIZE
95%
OCCUPANCY
$583psf
AVG. TENANT SALES
50Although there is much publicity about the decline
of brick-and-mortar shopping in the face of
increased online retail,
the statistics do not support this
51Regional Mall Visitation by Generation
For one, millennials are shopping in malls
more than any other living generation
PROPENSITY TO SHOP AT LEAST ONCE EVERY 3 MONTHS
(100 = Average Shopper)
150
100
50
Millenials (18-34) Gen Xers (35-49) Baby Boomers (50-65) Silents (Over 65)
Sources: GGP Strategy & Analytics, Nielsen Local, 2014-2015. 400,489 respondents
52Same-Property Occupancy
…and our mall occupancy has stayed consistently
in the 95% range for several years
SAME-PROPERTY OCCUPANCY
100%
98%
96%
94%
92%
90%
88%
86%
84%
82%
80%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Source: GGP
53Tenant Sales
At the same time our tenants’ sales continue to increase…
TENANT SALES/PSF
(Core Retail Mall Sales and NOI Percentage by Rank
Top Properties 2016 Sales/psf % of NOI1
Top 10 $792 23%
Top 30 $727 48%
Top 50 $677 67%
Top 100 $598 96%
Total $583 100%
Source: GGP
1) Percentage of GGP’ s reported Company NOI
55Redeveloping Obsolete Big-Box Stores
Since 2011, GGP has redeveloped 82 vacant department stores
for a total cost of $1.4 billion, generating an 11% annual return
“The decline of certain big-box
retailers has unlocked the
opportunity to convert these
spaces into more productive
uses, including full-service
restaurants, chef-driven food
halls, high-end grocers, fitness
centers and movie theaters.”
56Core Retail – 2016 Asset Sales
Similar to Core Office, we have been raising equity capital by
selling interests in premier quality U.S. malls
at near or peak valuations (~4% cap rates)…
Interest Net Proceeds
Property City Sold (US$ Millions)1
Fashion Show Las Vegas, NV 50% $ 282
Eastridge Mall San Jose, CA 100% 74
Pioneer Place (office) Portland, OR 100% 40
One Stockton San Francisco, CA 49.8% 11
522 Fifth Avenue New York, NY 10% 6
Owings Mills Mall Owings Mills, MD 50% 4
Newgate Mall Salt Lake City, UT 100% 3
Total $ 420
1) At BPY’ s fully-diluted interest
57Core Retail – Development Sites
…and reinvesting proceeds into higher-yielding development
and redevelopment initiatives
Stabilized Cost1
Project City Description Year (US$ millions) Return
Ala Moana Center Honolulu Anchor Repositioning 2018 $ 15 9-10%
Staten Island Mall New York Expansion 2019 60 8-9%
Other Various Redevelopment 2017-18 70 6-8%
Under construction $ 145 7-9%
The SoNo Collection Norwalk Ground-up development 2020 80 8-10%
Other Various Redevelopment TBD 75 8-9%
Total under construction and in planning $ 300 8-9%
1) At BPY’ s proportionate cost
58We made an incremental investment in the
class B mall sector through the
recent privatization of Rouse Properties…
Not all B malls are created equal!
59Rouse Properties
35
PROPERTIES
24msf
PORTFOLIO SIZE
91%
IN-LINE OCCUPANCY
$2.9billion
GROSS ASSET VALUE
60Rouse Properties – Mall Portfolio
In many instances these malls represent the ‘only game in town’ –
limited competition and appealing demographics
61We have identified $200 million of non-strategic
assets in lower-tier markets for disposition
in the near-term
And expect to recycle this capital into new
acquisitions and redevelopment of existing assets
62Rouse Properties – Value Creation and Growth
• We have 17 redevelopment projects requiring $155 million to complete at expected
returns of 9-11%
Shoppes at Carlsbad Redevelopment
Completion Q2 2018
• We are targeting acquisitions in retail locations along the coasts and in select markets
with high population densities and significant value creation opportunities
63Opportunistic Investments – Brian Kingston
64Brookfield Property Partners participates in
Opportunistic real estate strategies to
diversify the investment portfolio
and bolster returns
65The assets acquired in this strategy are of high-quality,
but have operational upside through
efficiencies and synergies
with Brookfield’s global operating footprint
66Investment Approach
Counter- • Sectors or markets that are out-of-favor
Cyclical / and where capital is scarce
Contrarian • Distressed assets, activist investors /
Investments public-to-private, socioeconomic
headwinds
Multi-faceted /
• Fragmented industries with outsized
Structured returns
Transactions
• Avoid auctions
Proprietary • Identify operational improvements and
Investments synergies
67Case Study
Acquisition of Simply Self Storage, the largest privately held
self-storage owner/operator in the U.S. and 7th largest overall
• Transaction sourced through Brookfield relationship with Brighton,
Massachusetts
previous owners/operator
TRANSACTION • Forward cap rate of 6.6% represents a significant discount
MERITS to recent portfolio transactions in the sector Grand Rapids
Michigan
• Sector is attractive due to limited new supply and growing
demand
Farmington Hills,
Michigan
• Lack of available capital by previous owners provides
opportunity to redevelop and add density to existing asset
GROWTH
base
OPPORTUNITY • Acquire individual, small/medium portfolios in secondary
markets where public REITs are not active
Grand Rapids,
• Develop new assets in primary and secondary markets Michigan
• Existing management team was retained and expanded
EXPERIENCED
MANAGEMENT • CEO is a 20 year veteran of the storage sector and is the
operating member of a joint venture with Brookfield
68Case Study
Acquisition of a portfolio of seven high-quality assets located in
prime regions of São Paulo and Rio de Janeiro
• Flight of capital / lack of competition in region due to geo-
political instability and uncertain near-term economic landscape
• Off-market opportunity sourced through long-standing
CONTRARIAN
THESIS
relationships with both portfolio owner and owner’s majority
shareholder Alfa Laval
São Paulo
• Successful history of investing in market with strong underlying
economic indicators in medium- to long-term
• Acquisition, at ~40% discount to replacement cost, of newly
HIGH-QUALITY delivered, high-quality assets
ASSETS
• Portfolio of primarily AAA assets in prime regions of São Paulo Cidade Jardim
and Rio de Janeiro São Paulo
• Long-term leases in place with inflation-protected income
STABILITY + streams to investment-grade multinational tenants
GROWTH
• Vacancy concentrated in 2 of the 7 properties
• Ability to fill vacancy by offering competitive rents due to low
JK Complex – Towers D & E
investment basis São Paulo
69BPY Fund Commitments
…We now have $4 billion of capital invested in
Opportunistic strategies
Size BPY Target BPY’s Equity2
Fund Strategy/Sector(s) Year(s) ($US Millions) (%) Return1 ($US Millions)
Opportunistic/
BSREP II 2015 $ 9,000 26 20%+ $ 1,350
Diversified
Opportunistic/
BSREP I 2012 4,350 31 20%+ 1,850
Diversified
Value-Add/
VAMF Series 2011-15 1,900 34 14-16% 300
Multifamily
Debt/
BREF Series 2004-14 3,125 27 12-13% 200
Diversified
Other direct 500
Total $ 4,200
1) Targeted gross internal rate of return (“IRR”) – There can be no assurance that the funds will achieve returns within the target ed range or within a comparable range or will be able to avoid losses
2) Represents BPY’ s invested equity to-date
70…Which has given us exposure to new sectors and
new geographies with our capital invested alongside partners
71…A sizeable pipeline of investments will continue to broaden
our sector and geographic exposure
• In binding agreement to purchase second largest privately held
manufactured housing portfolio in North America
NEW SECTORS
• Highly-fragmented, recession-resistant sector has achieved positive
same-store NOI growth every quarter for last 20 years
• In advanced negotiations to acquire the premier, mixed-use 5.4msf
International Financial Center complex in Seoul, South Korea
• Tenant roster of large, multinational corporations – many ‘repeat
NEW MARKETS
customers’ in Brookfield’s global portfolio
• Discount to replacement cost with upside from active lease-up
strategy and repositioning of retail and hotel offerings
• Building on 2014 acquisition of Candor Office Park portfolio in Delhi,
India, in advanced negotiations to acquire a 4.2msf portfolio of
PLATFORM prime office and retail properties in Mumbai
EXPANSION
• Portfolio located in Powai submarket – the ‘Silicon Valley’ of India –
high-quality infrastructure and location
• Acquisition basis at discount to replacement cost with upside from
platform integration and repositioning to ‘Live-Work-Play’ community
72While our investment in Opportunistic strategies
will continue to grow, we intend to limit it to
25% of our balance sheet
73Self-“Fund”ing
BPY’s Opportunistic investment strategy will be largely
self-funding as we begin to harvest capital from legacy funds
CUMULATIVE RETURN OF CAPITAL ($ billions)
$4
$3 BSREP II
Other
$2
BSREP I
$1
2017 2018 2019 2020
74Financial Update – Bryan Davis
751. Positioning our Balance Sheet
2. Stable and growing cash flows
Office Office
Retail Multifamily Retail
Multifamily Multifamily
76Accomplished our Initial Objectives
2013 Launched BPY
Used BPY equity to acquire Brookfield Office Properties and
2014
converted our passive investment in Canary Wharf into a control
position
Raised capital through sales of interests in mature assets and
developments to fund our capital commitments to:
2015 1) Active developments
2) Funds
3) Repayment of corporate debt
2016 Continued to raise capital from high demand assets and markets
to redeploy into higher yielding opportunities
77Re-shaped our Balance Sheet…
BPO & Allocation Organic
(US$ millions, except per unit amount) 2013 Canary of Capital Growth Today
Assets
Office $ 6,200 $ 6,700 $ (6,000) $ 4,900 $ 11,800
Development 1,000 2,500 3,500
Retail 7,600 1,300 8,900
Opportunistic 1,200 2,000 1,000 4,200
16,000 6,700 (1,500) 7,200 28,400
Corporate debt 500 1,500 (1,500) 1,600 2,100
Capital securities 1,250 1,250
Other liabilities 600 1,000 1,600
Equity $ 13,650 $ 5,200 $ − $ 4,600 $ 23,450
Units outstanding 1 540 241 781
Value per unit2 $ 25 $ 30
1) Reflects mandatorily convertible preferred shares as equity ($1.8 billion, 70 million units)
2) Diluted IFRS value per unit
78Sourced the most effective capital…
• Issued 173 million limited partnership units in 2014 to acquire BPO
• Issued $1.8 billion of preferred units which are mandatorily convertible into 70 million BPY
units to fund the privatization of Canary Wharf
• In 2015 and 2016 accelerated recycling of capital to take advantage of strong market
demand:
Net Proceeds Cap
(US$ Millions) Rate
2016 2,000+ 4.0%
2015 2,000 4.5%
2014 1,000 5.5%
Total $ 5,000+ 4.5%
2017+ will start to realize significant amounts of capital
from ‘first generation’ fund investments
79…Advanced development pipeline
• Completed on time and budget $1.2 billion of development and redevelopment projects
and created $800+ million in value
• Added $3.6 billion in projects to the active development pipeline, including:
– Pipeline in Canary Wharf
– Development sites in London, New York, Washington, DC, Rio de Janeiro
• Invested $2 billion on advancing construction, on time and on budget
• Secured over $3 billion in committed construction financings
• Advanced pre-leasing by executing 3 million square feet of leases
80Increased capital invested in Opportunistic strategies…
• >$4 billion of capital invested compared to $1 billion in 2013
• Earned $110 million in FFO in Q2 2016, up 93% year over year
• Diversified our cash flows by exposing us to both new geographies and real estate sectors:
($ in millions) U.S. Europe Brazil India China Total
Hospitality $ 360 $ 740 $ 1,100
Multifamily 850 850
Retail 350 250 200 800
Office 200 40 240 250 730
Industrial 400 250 50 700
Triple net lease 400 400
Mezzanine 170 170
Self-storage 150 150
Student housing 150 150
Total $ 2,880 $ 1,180 $ 490 $ 250 $ 250
81Now positioned to achieve earnings potential
• Target long-term return on equity of 12-15%:
($ in millions expect per unit amounts) Capital FFO Appreciation Total
Core Office and Retail $ 19,000 6% 4–6% 10–12%
Opportunistic 4,500 7% 11–13% 18–20%
$ 23,500 6% 6–9% 12–15%
Target Earnings per unit $1.90 $2.10 $4.00
Funds attractive distribution per unit of… $1.12
and distribution growth targets between… 5–8%
Provides capital to re-invest into
platforms for future growth
82Future drivers of earnings growth…
• To date, we have benefited from earnings growth driven by lease-up of Brookfield Place
New York and reallocation of capital to higher-returning Opportunistic strategies
• Over the next 5 years, growth will be driven by three things:
$2.00
Same store growth of 2-3% – $220m
9% Active developments – $160m
$1.80
Reinvestment of capital at higher
$1.32+ returns – $100m
$1.18
$1.11
2014 2015 2016 2021
83Conservative payout ratio + diversity of cash flows
provides support for current yield
$2.00
($ per unit)
$1.60 Funds from operations $ 2.00
7% Average annual realized gains 0.35
Second generation leasing costs (0.35)
$1.32
$1.12 Sustaining capital expenditures (0.15)
$1.18
$1.06 Annual non-cash rents (0.10)
90% 85% 80% Adjusted AFFO $1.75
2015 2016 2021
84Conservative Financing Strategy
• We finance predominantly with asset-level, non-recourse debt
• We raise asset-level debt in local currency with primarily fixed interest rates
• We source the lowest cost capital to fund growth
• Our investment-grade corporate credit rating provides financing flexibility
• We target a distribution pay-out ratio of 80% of Company FFO
85Our long-term goal is to maintain a
proportionate debt-to-capital ratio ofWe target to limit floating rate debt to 25% of total
• Although we may maintain higher floating rate exposure during certain periods where
economic conditions and investment strategy support it
($ in millions)
38%
Reduce corporate and subsidiary debt (4%)
25% Planned refinances (4%)
Swap to fixed in floating rate markets (3%)
Convert construction financing to permanent (2%)
(13%)
87We proactively manage foreign exchange exposures…
• Finance using local currency debt which reduces exposure by 45-50%
• Layer on currency hedges to reduce the exposure a further 30-40%
• Leaving only 10-20% of our equity exposed to foreign currencies at any given time
• Actively manage this exposure to protect equity – Brexit case study:
(£ in millions)
Total assets invested in U.K. £ 7,100
Local currency debt (3,400)
Reduces our capital at risk prior to hedging £ 3,700
Currency hedges (2,900)
Net exposure to the Pound £ 800
Reduced % of total equity exposed to Pound from 12% to …. 5%
88Wrap-up / Q&A – Brian Kingston
89Global reach to identify and acquire high-quality
real estate on a value basis
• Strong operating platforms which enables us to acquire real estate in need of leasing,
capital or re-positioning, to generate core-plus returns
• Extensive development pipeline assembled over time in high-value, supply-
constrained markets
– 10 msf of core office and multifamily developments and expected to produce +/-
15% levered returns over next 5+ years
– Significant shadow pipeline, with minimal invested capital that will be well-positioned
for the next development cycle
• Access to opportunistic real estate returns through ability to invest in Brookfield Asset
Management-sponsored real estate funds
90BPY offers a compelling, unique combination of
current yield and organic growth
• Yield backed by stable and secure cash flow from a portfolio of high-quality assets
• Attractive entry point at discount to IFRS value
• A $23 per unit investment today has the potential to offer a very attractive return to
shareholders:
$ 77
$ 16 Current Yield
(5-8% distribution growth)
13%
$ 42
$ 38
+
$7 Appreciation
(Multiple of 8-11% FFO growth)
$ 12
+
$ 23 $ 23 $ 23 Investment
(as of NYSE closing on 9/27/16)
Today Year 1 Year 2 Year 5 Year 10
91Q&A
92Special Note Regarding Forward-looking Statements
This presentation contains “forward-looking information” w ithin the meaning of Canadian provincial securities law s and applicable regulation and “forward looking statements” w ithin the
meaning of “safe harbor” provisions of the United States Private Security Litigation Reform Act of 1995. Forw ard-looking statements include statements that are predictive in nature,
depend upon or refer to future events or conditions, include statements regarding our operations, business, financial condition, expected financial results, performance, prospects,
opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook, as w ell as the outlook for North American and international economies for the current fiscal year and
subsequent periods, and include w ords such as “expects”, “anticipates”, “plans”, “believes”, “estimates”, “seeks”, “intends”, “targets”, “projects”, “forecasts”, “likely”, or negative versions
thereof and other similar expressions, or future or conditional verbs such as “may”, “will”, “should”, “would” and “could”.
Forw ard-looking statements include, w ithout limitation, statements about the quality of our assets and the resiliency of the cas h flow they will generate, our target distribution grow th, the
performance of our assets and their potential for capital appreciation, our financial and operating objectives and strategies to achieve those objectives, our ability to recycle capital from
stabilized or non-strategic assets and realize capital from our fund investments, our ability to allocate capital and capitalize on investment opportunities, the potential grow th of our business
and related revenue streams, grow th to be achieved by increasing occupancy, the prospects for increasing our cash flow from c ontinued achievement of targeted returns on our
investments and development and re-development pipeline, the anticipated cost and value of our development and re-development pipeline, the impact of Brexit and the energy market
dow nturn on our business and the availability of financing and our financing strategy .
Although w e believe that our 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 forw ard-looking statements and information because they involve know n and unknow n risks,
uncertainties and other factors, many of w hich are beyond our control, w hich may cause our actual results, performance or achievements 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 contemplated or implied by forw ard-looking statements include, but are not limited to: risks incidental to the
ow nership and operation of real estate properties including local real estate conditions; the impact or unanticipated impact of general economic, political and market factors in the
countries in w hich we do business; the ability to enter into new leases or renew leases on favorable terms; business competition; dependence on tenants’ financial condition; the use of
debt to finance our business; the behavior of financial markets, including fluctuations in interest and foreign exchanges rates; uncertainties of real estate development or
redevelopment; global equity and capital markets and the availability of equity and debt financing and refinancing w ithin these markets; risks relating to our insurance coverage; the
possible impact of international conflicts and other developments including terrorist acts; potential environmental liabilities; changes in tax law s and other tax related risks; dependence
on management personnel; illiquidity of investments; the ability to complete and effectively integrate acquisitions into exis ting operations and the ability to attain expected benefits
therefrom; operational and reputational risks; catastrophic events, such as earthquakes and hurricanes; and other risks and f actors detailed from time to time in our documents filed
w ith the securities regulators in Canada and the United States.
We caution that the foregoing list of important factors that may affect future results is not exhaustive. The forward-looking statements represent our view s as of the date of this
presentation and should not be relied upon as representing our view s as of any date subsequent to the date of this presentation. When relying on our forward-looking statements or
information, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law , w e undertake no obligation to
publicly update or revise any forward-looking statements or information, w hether written or oral, that may be as a result of new information, future events or otherwise.
93Special Note Regarding Use of Non-IFRS Measures
This presentation contains references to net operating income (“NOI”) and funds from operations (“FFO”) w hich do not have any standardized meaning prescribed by International Financial
Reporting Standards (“IFRS”) and therefore may not be comparable to similar measures presented by other entities. We define FFO as income, including equity accounted income, before
realized gains (losses) from the sale of investment property (except gains (losses) related to properties developed for sale) , fair value gains (losses) (including equity accounted fair value
gains (losses)), depreciation and amortization of real estate assets, income tax expense (benefit), and less non-controlling interests of others in operating subsidiaries and properties. We
believe that these are useful supplemental measures that may assist investors in assessing the financial performance and the cash anticipated to be generated by our business. NOI and
FFO should not be considered as the sole measure of our performance and should not be considered in isolation from, or as a s ubstitute for, analysis of our financial statements prepared
in accordance with IFRS. See “Reconciliation of Non-IFRS Measures” in our most recent annual report on Form 20-F and our 6-K filed on August 11, 2016 for a more detailed discussion
including a reconciliation to the most directly comparable IFRS measures.
Additional Notes
All amounts are in U.S. dollars unless otherw ise specified.
Unless otherw ise indicated, the statistical and financial data in this document is presented as of June 30, 2016.
94Brookfield Property Partners L.P. 2016
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