October 7, 2015 Brookfield Property Partners

Transcription

1 October 7, 2015 Brookfield Property Partners Investor Meeting 2015

2 Agenda Topic Speaker Page 1. About Brookfield Property Partners Ric Clark Chief Executive Officer 3 2. Core Office Platform Ric Clark Chief Executive Officer Development Ric Clark Chief Executive Officer Core Retail Platform Brian Kingston President & Chief Investment Officer Opportunistic Investments Brian Kingston President & Chief Investment Officer Financial Review Bryan Davis Chief Financial Officer Our Value Potential Bryan Davis Chief Financial Officer Q&A All - 2

3 About Brookfield Property Partners RIC CLARK 3 Brookfield Property Partners LP

4 Brookfield Property Partners provides a unique opportunity to own some of the most iconic assets in the world s most dynamic markets, and to invest with one of the most successful investors in real estate through the public equity markets 4

5 Brookfield Property Partners ( BPY ) Brookfield s primary vehicle to make investments across all strategies in real estate One of the largest commercial property companies globally Owns irreplaceable assets across every sector Fully integrated owner, operator, developer and asset manager 5

6 Portfolio of Premier Properties 138 premier office properties totaling 98 million square feet ( msf ) in gateway markets including New York City, London, Toronto, Los Angeles and Sydney 172 best-in-class retail properties totaling 154 msf throughout the United States and in select Brazilian markets High-quality assets with operational upside across multifamily, industrial, hospitality and triple net lease sectors 11 msf of office development projects currently underway 6

7 Diversified by Property Type and Geography $62.4 billion of Total Assets 1 PROPERTY TYPE GEOGRAPHY Opportunistic & Development, 15% Australia, 7% Brazil, 2% India & China, 1% Canada, 7% Core Retail, 27% Core Office, 58% Europe, 17% U.S., 66% Please see endnotes. 7

8 Stable Returns on Core Portfolios Enhanced by Investment in Opportunistic Strategies CORE OFFICE & RETAIL OPPORTUNISTIC & DEVELOPMENT Targeting 10% to 12% Total Returns 1 Targeting 20% Total Returns 1 Currently ~85% of BPY s balance sheet Investing in high-quality, trophy assets Provides stable cash flow with growth and capital appreciation Currently ~15% of BPY s balance sheet Investing in mispriced portfolios and/or properties with significant value-add Provides capital appreciation Please see endnotes. 8

9 Global Investor with Local Expertise 1 30 Offices 281 Real Estate Professionals 13,900 Operating Employees 2 CANADA $7.7 billion RE AUM 19 RE Professionals 1,350 RE Employees UK & EUROPE $16.8 billion RE AUM 35 RE Professionals 3,600 RE Employees UNITED STATES $97.8 billion RE AUM 185 RE Professionals 3,750 RE Employees AUSTRALIA, CHINA & INDIA $8.9 billion RE AUM 14 RE Professionals 1,600 RE Employees BRAZIL $1.9 billion RE AUM 28 RE Professionals 3,600 RE Employees Please see endnotes. 9

10 Proven Investment Approach 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 operating platforms 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 10

11 Significant Progress Since Spin-Off Completed $5 billion privatization of Brookfield Office Properties Invested $1 billion increasing ownership of General Growth Properties to 33% Increased interest in Canary Wharf from 22% to 50% -- gaining 7 msf of premier office property and 11 msf of future mixed-used development in east London Signed over 3 msf of tenants in Brookfield Place New York, increasing occupancy to 95% Signed tenants to launch 4.4 msf of new office and residential developments 11

12 Track Record of Superior Returns 1,2 O&Y Properties/ O&Y REIT (Canada) $894 million Multiplex (Australia) $3.1 billion Gazeley Limited (Europe) $387 million Industrial Developments International (U.S.) $869 million Trizec Properties (U.S.) $2.2 billion General Growth Properties (U.S.) $4.0 billion Canary Wharf Group (UK) $3.4 billion Please see endnotes. 12 Since 1987 Brookfield has invested over $33 billion of equity in property, generating an estimated annual gross IRR of 16% 3

13 Core Office Platform RIC CLARK 13 Brookfield Property Partners LP

14 Iconic Assets.in Gateway Markets Darling Park, Sydney Canary Wharf, London Bay Adelaide Centre, Toronto Brookfield Place, New York Brookfield Place, Toronto 14

15 Core Office Portfolio 138 premier office properties in gateway cities around the globe, including: New York, London, Toronto, Los Angeles, Calgary, Houston, Sydney, Washington, DC 92.6% leased; average lease term of nine years Imbedded 20% mark-to-market opportunity on expiring leases Properties financed with non-recourse, asset-level debt 15

16 With Exposure to the Most Dynamic Markets 56% 1 of our assets in operation and 67% 2 of our development projects are in high-demand New York and London markets New York 11 operating assets totaling 20 msf 93% leased 7 msf Manhattan West development in Hudson Yards district Brookfield Place, New York London 26 operating assets totaling 11 msf 96% leased 6 active development projects with significant pre-let agreements in place Canary Wharf, London Please see endnotes. 16

17 And Limited Exposure to Commodity Based Markets 12% 1 of our assets are in commodity-based markets; however, we mitigate our exposure to the volatility of these markets with long-term leases to high-credit-quality tenants Calgary Operating portfolio 98% leased 11-year average lease term Active development 71% pre-leased with 22 months to delivery Houston Operating portfolio 92% leased 5-year average lease term Significant diversification of tenant base No development exposure Calgary skyline Houston skyline Perth Operating portfolio 93% leased 10-year average lease term 17

18 Robust Leasing Activity Supporting Strong Portfolio Occupancy 4.3 msf leased in 1H 2015; 5-year average of 8.3 msf 1 leased annually Portfolio Occupancy 5-year average: 92.3% Leasing Activity in msf Portfolio Occupancy % YTD Please see endnotes. 18

19 Competitive Advantage: Deep Tenant Relationships in a Worldwide Marketplace Our diversified global structure gives us a competitive advantage in the marketplace as we are able to leverage relationships across geographies and business lines We offer an integrated, multi-faceted real estate platform with comprehensive capabilities: Development Leasing Operations Finance Design Marketing Asset Management Of our top 20 office tenants, 14 are tenants in Brookfield buildings in more than one city; 9 are tenants in at least three cities 19

20 Leveraging Our Leasing Capability: Moor Place Q BPY purchases brand-new property in Central London at 93% vacancy Q Property Leased to 92% Q Property Fully Leased 20

21 Net Operating Income by Market 66% of our Office NOI is derived from New York, London, Sydney, Washington, D.C. and Toronto These are among the largest and most resilient markets in the world s strongest economies that are in the highest demand from private real estate investors % of TOTAL NOI 34% 23% 17% 8% 9% 9% New York London Sydney Washington D.C. Toronto Other 21

22 Imbedded Mark-to-Market Upside And we have significant imbedded upside in these markets by marking-to-market leases as they are re-leased or renewed At proportionate Market Leasable SF 000 s In-Place Net Rent (USD) Market Net Rent (USD) MTM Opportunity Midtown New York 4, % Downtown New York 12, % Washington, D.C. 4, % Toronto 5, % Sydney 2, % London 4, % Other 18, % Total Portfolio 52, % 22

23 Historical Mark-to-Market Uplift $ % Overall M-T-M Opportunity 40% $ % $ % 10% $20.00 Q Q Q Q Q Expiring Net Rent Avg. Net Rent on New Leases 0% 23

24 Redevelopment Strategy Our integrated capabilities provide the opportunity to redevelop high-quality, well-located assets that have leasing challenges or capital expenditure needs We leverage our Design, Construction, Operations, Leasing and Asset Management teams to perform a 360-degree assessment of a property s refurbishment and repositioning potential We time our initial 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 repositioning effort 24

25 Redevelopment: 5 Manhattan West With 100,000+ sf floor plates and 16-foot ceilings, property is ideally suited for tech and media tenants Investing $312 million to upgrade building, incorporating it into Manhattan West project New glass façade New lobby Replaced elevators/hvac Anticipated connection to High Line Recently executed leases with tech- and media-sector tenants totaling more than 400,000 sf Currently negotiating leases with asking rates starting at $80/psf Expect to generate incremental NOI of $56 million or an 18% yield on cost 25

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31 Redevelopment: Brookfield Place New York Retail 25-year-old WFC built for different era $315M redevelopment of common and retail areas Transformational program including: New entry pavilion, lobbies and entry façades Hudson Eats dining terrace Le District French marketplace 25+ luxury retailers Saks Fifth Avenue opening new high-end restaurants Rebranding Brookfield Place Retail occupancy fully committed Expect to generate $30M of NOI, versus $1 million under previous retail offering, or a 11% yield on cost 31

32 Redevelopment: 1801 California We acquired building in 2011 knowing anchor tenant was vacating, leaving building 37% occupied Recently completed a $56 million renovation and repositioning project, including: Main entrance & façade Lobby Public Plaza Conference Center Signature Restaurant Signed two leases in Q totaling more than 100,000 square feet, bringing occupancy to 95% Projected total return of 20% and 2.1 MOC 32

33 Office platform positioned to generate FFO growth of between 15 and 20% annually over the next 2 years 1 We have $180 million of NOI on signed leases that are not currently producing NOI 75% of which is at Brookfield Place New York to come online over the next several quarters and will be fully in place by Q We have a blended 20% mark-to-market opportunity on rental increases as inplace leases expire and are re-leased or renewed Certain of our near-term development and redevelopment initiatives are expected to begin contributing approximately $135 million of NOI over the course of Please see endnotes. 33

34 Development RIC CLARK 34 Brookfield Property Partners LP

35 Development Strategy Over time, BPY has assembled a portfolio of developable land in high-value, supply-constrained markets We opportunistically pursue developments to: Earn premium risk-adjusted returns compared to acquisitions Upgrade our portfolio with new, trophy assets in key strategic markets Development strategy seeks to limit risk: Typically we seek to execute 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 our invested capital 35

36 Development Approach Place-Making is deeply ingrained in Brookfield s development philosophy Work / Life / Play balance helps employees attract and retain top talent Brookfield Place, our premium brand concept, was devised to address the changing demands of how the next generation prefers to work, and to help companies be more productive 36

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48 Development Portfolio $8.3 billion active development portfolio Prominent, large-scale projects primarily in the high-growth markets of London and New York City Development projects significantly de-risked; currently 42% pre-let Projects expected to produce $450 million of incremental NOI upon stabilization from Please see endnotes. 48

49 Active Development Projects Office (US$ Millions) SF 000 s % Leased Cost 1 Own % Yield on Cost Date of Stabilization Brookfield Place Perth Tower % % 8% Q Bay Adelaide East, Toronto % % 7% Q L Oreal Brazil HQ, Rio de Janeiro % 63 70% 11% Q Brookfield Place Calgary East Tower 1,400 71% % 7% Q London Wall Place % % 7% Q Principal Place, London % % 8% Q One Manhattan West, New York 2,117 25% 1, % 6% Q Bishopsgate, London 962 1, % 7% Q Wood Wharf, London % 7% Q Bank Street % % 7% Q Bank Street % 8% Q Total 8,836 42% $6,244 7% Please see endnotes. 49

50 Active Development Projects Multifamily (US$ Millions) SF 000 s Cost 1 Own % Yield on Cost Date of Stabilization Three Manhattan West Apartments 879 units $ % 5% Q Newfoundland, London Apartments 560 units % 6% Q Wood Wharf, London Apartments 200 units % 5% Q Wood Wharf, London Condos units % Principal Place, London Condos units % Total $2,023 5% Please see endnotes. 50

51 Future Development Pipeline City Sector Total SF New York City Mixed-Use 3,000,000 London Mixed-Use 7,900,000 Los Angeles Residential 800,000 Houston Office 2,200,000 Denver Office 1,300,000 Washington, DC Office 700,000 Toronto Office 1,600,000 Calgary Office 1,000,000 Ottawa Office 600,000 Total 19,100,000 51

52 One Manhattan West, New York City First of two, 2 msf office towers Anchor Tenant: Skadden Delivery: Q3 19; Stabilization: Q4 19 NOI: $121 million Yield on Cost: 6% 52

53 100 Bishopsgate, London 1 msf premier office tower in City of London Anchor Tenant: Financial Services Firm Delivery: Q3 18; Stabilization: Q4 19 NOI: 56 million Yield-on-Cost: 7% 53

54 London Wall Place, London Two-phase, 500,000 sf office development in City of London Anchor Tenants: Phase 1 Schroders Phase 2 Cleary Gottlieb Delivery: Q2 17; Stabilization: Q3 19 NOI: 29 million Yield-on-Cost: 7% 54

55 Principal Place, London Two-phase, mixed-use development on border of City of London and Shoreditch 625,000 sf office building; 344-unit condominium tower Anchor Tenant: Amazon Delivery: Q4 16; Stabilization: Q3 19 NOI: 29 million Yield-on-Cost: 8% 55

56 One Bank Street, London 713,000-square-foot office building at Canary Wharf Anchor Tenant: Societe Generale Delivery: Q1 19; Stabilization: Q3 22 NOI: 35 million Yield-on-Cost: 8% 56

57 Brookfield Place Calgary East Tower 1.4 msf office tower in Calgary s CBD Anchor: Cenovus Delivery: Q3 17; Stabilization: Q3 18 NOI: C$56 million Yield-on-Cost: 7% 57

58 Bay Adelaide Centre East, Toronto 1 msf office tower in Toronto s CBD Anchor Tenant: Deloitte Additional Tenants: Borden Ladner Gervais Bell Canada Gardiner Roberts Delivery: Q4 15; Stabilization: Q2 17 NOI: C$32 million Yield-on-Cost: 7% 58

59 Brookfield Place Perth Tower 2 360,000 sf office building in Perth; second phase of Brookfield Place Perth precinct Anchor Tenant: Deloitte Additional Tenants: Westfarmers Corrs Chambers Westgarth Delivery: Q3 15; Stabilization: Q2 16 NOI: $27 million Yield-on-Cost: 8% 59

60 Core Retail Platform BRIAN KINGSTON 60 Brookfield Property Partners LP

61 Trophy Retail Assets.that Mirror our Office Portfolio Darling Park, Sydney Oakbrook Center, Chicago Canary Wharf, London 730 Fifth Avenue, New York City Bay Adelaide Centre, Toronto Miami Design District Jordan Creek, Des Moines Brookfield Place, New York Brookfield Place, Toronto 61

62 Core Retail Portfolio 131 highly productive, best-in-market malls and urban retail properties throughout the United States 96% leased portfolio $595 avg. tenant sales/sf Investment through 33% fully-diluted interest in General Growth Properties (GGP) 62

63 Consistently High Occupancy and Strong Tenant Sales/PSF 100.0% Tenant Sales/PSF $ Same Store Leased % 95.0% 90.0% $ Tenant Sales/PSF 85.0% 80.0% Q Q Q Q Q Q $

64 Retail Trends Mall fundamentals are on secure footing Near peak occupancy Limited new supply Strong tenant sales Quality of mall tenancy is improving as well-positioned stores are taking space vacated by bankrupt or otherwise struggling retailers Value appreciation of A malls outpacing that of B and C malls Leveraging omni-channel, digital engagement and consumer experience strategies key to keeping malls viable vs. online shopping 64

65 Even with the rise of e-commerce, brick and mortar stores remain paramount in the retail landscape 95% 1 of all retail sales are from retailers with a physical store platform Traditional online retailers (e.g. Amazon, Bonobos, Fabletics) have begun opening brick-and-mortar stores to enhance brand recognition The majority of online purchases that are subsequently returned are done so in a physical store, a source of natural traffic for subsequent in-store purchases Opening a physical location is about marketing the Amazon brand. Same-day delivery, ordering online and picking up in store are ideas that are really catching on. Amazon needs to be at the center of that. Matt Nemer, Wells Fargo in The Wall Street Journal, October 9, 2014 Please see endnotes. 65

66 Urban Retail Properties Retailers place a premium on flagship stores in high-volume urban retail corridors. This strategy enhances: Overall brand value Consumer reach Sales volume Through GGP, we have been acquiring some of the best located assets in New York, San Francisco, Chicago and Miami cities that contain significant growth drivers Since 2013, we have acquired 9 urban assets for approximately $370 million at our share Similar to our office portfolio, the urban retail properties we have acquired contain imbedded upside through marking-to-market rents, leasing unoccupied space and converting real estate to its highest profitability 66

67 Please see endnotes. 67 Redevelopment Program Strategy of redeveloping premier retail properties at significantly higher yields than acquiring equivalent stabilized assets aligns with our office strategy Status Property Cost 1 Yield on Cost Completion Date Under Construction In Planning Ala Moana Center $ % Q Ridgedale Center % Q Baybrook Mall % Q Southwest Plaza % Q Mayfair Mall % Q Other % Various Total $ 302 9% Norwalk New Mall $ % TBD Staten Island Mall % TBD Ala Moana Center % TBD Other % TBD Total $ 189 9% Total $ 491 9%

68 Redevelopment: Ala Moana Center Phase I: Demolish Sears box, expand mall, reconfigure center court $573 million total projected cost 9-10% expected return on investment 1 Phase II: Nordstrom box repositioning $85 million total projected cost 9-10% expected return on investment 1 Please see endnotes. Value Creation: Phase I (US millions) Total At BPY s share Total Projected Cost $573 $103 Expected ROI 9-10% 9-10% First Year Stabilized NOI $55 $10 Capitalization Rate 4% 4% Total Value of Phase I $1,375 $250 Less Total Projected Cost $(573) $(103) Value Creation $802 $147 68

69 GGP has been one of Brookfield s most successful real estate investments, but we believe further upside still exists To date, Brookfield has earned a 2.5x return on its original GGP investment, which is worth $8 billion at current trading price 1,2 FFO per share has grown 13% and dividends have grown 13% on average annually since 2010 However, we believe significant upside remains through annual EBITDA growth of 4-5%, driven by: Contracted fixed increases in rents Positive releasing spreads Expense containment Acquisitions Developments Please see endnotes. 69

70 Opportunistic Investments BRIAN KINGSTON 70 Brookfield Property Partners LP

71 Target Mispriced Assets With Upside Potential To Earn Outsized Returns The Diplomat Resort, Hollywood, FL Darling Park, Sydney 730 Canary Fifth Wharf, Avenue, Xintiandi, London New York Shanghai City Bay Adelaide Centre, Toronto Wynyard Place, Sydney Eastpointe Logistics Facility, Brookfield Miami Place, Design New District York New Jersey Brookfield Place, Toronto 71

72 Investment Strategy Invest on a Value Basis Acquire high-quality assets at discount to replacement cost or intrinsic value Execute multi-faceted 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 properties Achieve opportunistic returns through NOI growth 72

73 Targeting Investments Where We Possess Competitive Advantages Platform / Corporate Acquisitions Public to Private Risk Management Recapitalizations Cross-Border Special Situations 73

74 Our Integrated Real Estate Platform Provides a Competitive Advantage Exits/ Dispositions Sourcing Acquisitions Due Diligence Construction & Development PLATFORM EXPERTISE Risk Management Property & Asset Management Leasing & Brokerage Capital Sourcing 74

75 Track Record of Fund Performance Brookfield has a 25-year track record of opportunistic real estate investing, generating gross returns of 20% and a 2.5x gross MOC 1 Fund Date Sector Invested Capital (US$ Millions) Gross IRR Gross MOC Brookfield Residential 1987 Residential $ 1, % 3.8x Brookfield Office Properties U.S Commercial % 15.6x Brookfield Office Properties Canada 1997 Commercial % 6.2x Brookfield Incorporações S.A Residential/Commercial 1, % 1.2x Brazil Retail Portfolio 2000 Retail/Commercial % 2.4x Canary Wharf 2003 Commercial 2, % 1.7x Brazil Retail Fund 2006 Retail/Commercial 884 (6.0%) 0.7x Real Estate Opportunity Fund I 2006 Multi-sector % 1.7x Real Estate Opportunity Fund II 2007 Multi-sector % 2.1x Real Estate Turnaround 2009 Multi-sector 3, % 2.3x Strategic Real Estate Partners 2012 Multi-sector 4, % 1.3x India Real Estate Opportunity Fund 2014 Multi-sector 70 n/m n/m Thayer Fund VI 2014 Hospitality % 1.3x Strategic Real Estate Partners II 2015 Multi-sector 57 n/m n/m Total $ 16, % 2.5x Please see endnotes. 75

76 BSREP I Profile BSREP I Key Highlights Closed July 2013 Fully invested in a diverse portfolio of 24 investments Investor Commitments $4.4B BPY Commitment Projected Gross IRR 2,3,4 $1.3B 21.0% Projected Net IRR 2,3,4 18.0% Portfolio is well-diversified by geography and size across a range of real estate platform and direct property investments Committed Capital 1 Number of Investments 1 Projected Gross MOC 2,3,4 Projected Net MOC 2,3,4 $4.1B x 1.9x Capital Invested and Committed By Size By Country By Sector 23% 5% 9% 7% 8% 7% 8% 24% 7% 55% 21% 14% 72% 14% 14% 12% Platform Acquisitions Direct Asset Uncommitted US Europe Australia China India Uncommitted Industrial Office Multifamily Hospitality Retail / NNN Debt Uncommitted Please see endnotes. 76

77 BSREP I Portfolio Overview Industrial Multifamily Office Park Heudebouville France Gazeley Marina Shores Waterfront Cornelius, NC Ginkgo Multifamily Corporate Pointe at West Hills West Hills, CA Corporate Pointe 199 operating and development properties, 44 msf 47 msf developable land bank 41 properties 12,813 units 59 suburban U.S. office properties and 5 Class-A Indian office parks 3.7 msf of U.S. suburban office space and 15.5 msf of office space at Brookfield India Office Parks 1 Hotels Retail NNN Retail Wynyard Place Australia Wynyard Xintiandi North Block Shanghai Xintiandi Porsche of Herb Gordan Auto Mall Silver Springs, MD CARS 11 hotels with 4,376 rooms 2 o 8 North American hotels with 3,078 rooms o 3 Australian hotels with 1,298 rooms msf of premium office and retail assets in Shanghai with 4.0 msf of operating assets 3 Please see endnotes. 311 triple net leased properties; consisting of 45 auto brands

78 London Office City Gate House Recent Acquisitions U.S. Multifamily REIT - AEC UK Lodging Center Parcs Marina Shores Waterfront Cornelius, NC Ginkgo Multifamily Corporate Pointe at West Hills West Hills, CA Corporate Pointe Acquired 100% of City Gate House with a 10.9% cash-on-cash yield High-quality portfolio; 2 nd highest percentage of class A among public U.S. multifamily REITs Occupancy rates at parks ~97% with 2 million visitors per year. U.S. Redevelopment - Wellmont Brazil Office Assets BR Properties U.S. Self Storage Company Wynyard Place Australia Wynyard Porsche of Herb Gordan Auto Mall Silver Springs, MD CARS Committed to develop a mixed-use project in downtown Montclair, NJ Stabilized cap rate of 10.2% after 24- month lease-up period Committed to acquire owner and operator of self-storage assets located across the U.S. 78

79 BPY s Investments in Opportunistic Funds to Date Since 2012, Brookfield funds have acquired ~$17 billion of assets through an initial equity investment by these funds of $7.4 billion BPY s share of that equity investment is only $2.2 billion, or 30%, and has committed a further $1 billion which it expects will be invested over the next four years and funded in part by realizations from predecessor funds 79

80 Funding Our Opportunistic Strategy Seek to commit approximately 30% of the total capital in Brookfield-sponsored opportunistic funds These funds have finite lives with five-year average holds and are targeting 20%+ returns and 2.0x MOCs 1 As these funds mature and begin to return capital, proceeds will be redeployed in future funds BPY s opportunistic investment strategy will largely be self-funding once we begin to harvest BSREP I Please see endnotes. 80

81 Financial Review BRYAN DAVIS 81 Brookfield Property Partners LP

82 Agenda Positioning our Balance Sheet Realizing Value 82

83 Selling Core Office Assets We are continuing to monetize positions in mature, fully valued assets in high-demand markets to raise capital to repay debt and recycle capital (US$ millions) Status Proceeds 151 Yonge Street, Toronto Closed $ 40 Met Park East & West, Seattle Closed State Street, Boston Closed 260 Washington DC portfolio Closed Bishopsgate, London Q Other Office Assets Q4 15/Q1 16 1,000 $ 2,015 Overall cap rate we expect to achieve on these asset sales averages 4.8% 1 Please see endnotes. 83

84 Pursuing Development Joint Ventures And we are also selling interests in select de-risked development projects to raise capital to fund future developments and allocate to opportunistic investments (US$ millions) Status Proceeds US & UK Developments Q4 15-1H 16 $ 1,100 84

85 Funding our Capital Requirements With a target of $2.4 billion in capital being raised through asset sales and joint ventures we are well underway to funding our near term capital plan, including: $600 million to build out our active development pipeline over the next three years $400 million invested in new fund initiatives, after considering capital realized from existing funds $600 million to repay our acquisition facility, and The balance to repay our corporate credit facilities or pursue other investment opportunities 85

86 86 Which Positions Our Balance Sheet on a deconsolidated basis, with a limited amount of corporate debt and supports our target of achieving proportionate debt to capital of < 50% 1 30 Offices 255 Real Estate Professionals 15,200 Operating Employees (1) Please see endnotes. (US$ millions, except per unit amount) Assets Q2 Impact of Capital Plan Pro Forma 4 Office $ 13,700 $ (1,300) $ 12,400 Retail 8,350 8,350 Development 3,300 (500) 2,800 Opportunistic 3, ,400 28,350 (1,400) 26,950 Corporate credit facilities 2,300 (1,400) 900 Capital securities 1,250 1,250 Other liabilities 1,700 1,700 Equity $ 23,100 $ $ 23,100 Units outstanding Value per unit 3 $29.50 $29.50

87 and maintains our FFO With minimal impact to current FFO, we are well positioned to benefit from expected growth of 15-20% in the next two years 1 30 Offices 255 Real Estate Professionals 15,200 Operating Employees (1) (US$ millions) Q2 Company FFO $ 227 Annualized 910 Adjusted for: Impact of asset sales (60) Development joint ventures, net of return on incremental capital (20) Return on capital invested in new funds 30 Lower interest expense 45 Company FFO $ 905 Units outstanding Company FFO per unit 1.16 Please see endnotes. 87

88 Our Goal is to Add Value Since BPY s launch in April of 2013, we have increased IFRS 1 per unit by 15% 2 $35.00 $ % $29.46 $27.78 $25.00 $25.64 $25.23 $20.00 Launch Today 3 Please see endnotes. 88

89 89 Multiple of Earnings or NAV? Two platforms: (1) Core operating that is typically valued on a multiple of earnings 30 Offices 255 (2) Real Opportunistic Estate Professionals that is valued on 15,200 a NAV Operating basis Employees (1) Please see endnotes. (US$ millions) Assets Pro Forma 1 Office $ 12,400 Retail 8,350 Development 2,800 Opportunistic 3,400 26,950 Corporate credit facilities 900 Capital securities 1,250 Other liabilities 1,700 Equity $ 23,100 Value per unit 2 $ Company FFO per unit $ 1.16 Multiple of Earnings 25x Core $ 12,400 8,350 20, ,250 1,700 $ 16,900 $ $ x Opportunistic $ 2,800 3,400 6,200 $ 6,200 $ 7.90 $ x

90 90 Leases Signed But Not Producing NOI Adjusting our FFO for leases we have signed but do not yet qualify for earnings recognition; the $22 per unit attributed to Core is inline with valuation metrics 30 Offices 255 Real Estate Professionals 15,200 Operating Employees (1) Please see endnotes. (US$ millions) Assets Pro Forma 1 Office $ 12,400 Retail 8,350 Development 2,800 Opportunistic 3,400 26,950 Corporate credit facilities 900 Capital securities 1,250 Other liabilities 1,700 Equity $ 23,100 Value per unit 2 $ Company FFO per unit $ 1.37 Multiple of Earnings 22x Core $ 12,400 8,350 20, ,250 1,700 $ 16,900 $ $ x Opportunistic $ 2,800 3,400 6,200 $ 6,200 $ 7.90 $ x

91 which means at a $22 share price, an investment in BPY offers: (1) A core operating platform with an IFRS value of $22.00 per unit, and (2) An opportunistic platform with an IFRS value of $8.00 per unit for free 91

92 Our Value Potential BRYAN DAVIS 92 Brookfield Property Partners LP

93 Looking forward, we are positioned to increase earnings from our leasing and redevelopment activities in our core Office and Retail operating platforms. And in addition realize value from the $6 billion of capital we have invested in our opportunistic platforms 93

94 Net Operating Income Growth 1 Underpinning our IFRS value are a number of organic drivers within our business which will increase net operating income in the short-, medium- and long-term (US$ millions) Years 1 to 2 Years 3 to 4 Year 5 Year 6+ Signed leases not producing NOI $ 180 Occupancy gains Mark to market of expiring leases Development and redevelopment Investment in new funds 90 Planned asset sales (100) $ 560 $ 260 $ 180 $ % CAGR Please see endnotes. 94

95 Leads to Earnings Growth 1 Organic NOI gains will translate to Company FFO per unit growth of 8-11% per annum $3.00 $ % $2.60 $2.00 $2.00 $1.50 $1.16 $1.00 Q2 Annualized Leases Signed Not Currently Producing NOI Same store growth Development / Redevelopment Future Annual Gains from Opportunistic Platform Not in FFO2 Please see endnotes. 95

96 Leads to Continued Growth in IFRS Value to $46 in the next 5+ years which translates to a 9% CAGR since inception of BPY 1 $ % $46 $45.00 $ 3 $ 5 $35.00 $ 9 $29 $26 $25.00 Launch Current Same store growth Development / Redevelopment Opportunistic Investments Future Please see endnotes. 96

97 BPY s Earnings Power Earnings growth and value creation will help us achieve, on a long-term basis, our goal of earning between 12%-15% return on our equity 1 BPY s Earnings Power (US$ millions) Low High Targeted return for core office and core retail assets 10% 12% Targeted return for developments and opportunistic assets 20%+ 20%+ BPY targeted long-term return on equity 12% 15% BPY s IFRS equity value at June 30, 2015 $ 21,523 $ 21,523 BPY s annual earnings power $ 2,583 $ 3,228 Components of BPY s Earnings Power (US$ millions) 2014 Company FFO $ 758 Annual fair value gains $ 3,979 Annual return recorded in financial statements $ 4,737 Return on equity 21% Please see endnotes. 97

98 Drivers of Growth Are Unique to BPY Extensive development pipeline assembled over time in high-value, supply-constrained markets 8 msf of office and 3,100 urban residential units being constructed and expected to produce +/-15% levered returns over next 5+ years 1 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-sponsored real estate funds Strong global operating platform which enables us to acquire real estate in need of leasing, capital or re-positioning, to generate core-plus returns Please see endnotes. 98

99 Pulling This All Together We have the potential to offer very attractive returns to unitholders Current IFRS $29.50 Future IFRS $46 $ 22 Core office and retail platform at 22x multiple on stabilized FFO 1 $ 30 $ 4 $ 4 Development pipeline expected to contribute meaningfully to FFO between and future development pipeline positioned for the next development cycle Access to Brookfield-sponsored real estate funds with a potential to earn 20%+ returns on investments based on fund mandates and track record 5% distribution 12-15% long-term return on equity target 1,2 25% discount to current IFRS value $ 9 $ 7 Please see endnotes. 99

100 October 7, 2015 Q & A

101 Endnotes Page 7 (1) As of June 30, 2015 and excludes corporate. Page 8 (1) The target returns set forth herein are for illustrative and informational purposes only and have been presented based on various assumptions in relation to the investment strategy being pursued by us, any of which may prove to be incorrect. The target returns are based on historical performance for similar investment strategies within the sector. Due to various risks, uncertainties and changes (including changes in economic, operational, political or other circumstances) beyond our control, our actual performance could differ materially from the target returns set forth herein. In addition, industry experts may disagree with the assumptions used in presenting the target returns. No assurance, representation or warranty is made by any person that the target returns will be achieved and undue reliance should not be put on them. Additional information about the assumptions used in determining the target returns and the factors that could cause actual results to differ materially from the target returns are available upon request. Prior performance is not indicative of future results and there can be no guarantee that the Brookfield will achieve the target returns or be able to avoid losses. Page 9 (1) AUM amounts are as of June 30, (2) Employee figures are as of December 31, The figures include ~80 real estate professionals that are part of Brookfield Property Group and are employed by Brookfield Asset Management, as well as ~200 real estate professionals and ~13,900 operating employees employed by affiliated companies and/or portfolio companies of Brookfield or Brookfield-managed funds Page 12 (1) The transactions listed are not intended to be an exhaustive list or illustrative of the types of deals that we have invested in or may invest in, in the future. For a complete list of investments made by us, please contact Brookfield. (2) At BPY s share. (3) Prior performance is not indicative of future results. 101

102 Endnotes (Continued) Page 16 (1) Based on IFRS value. (2) Based on total SF. Page 17 (1) Based on IFRS value. Page 18 (1) Based on Brookfield Office Properties historical data from 2010 to Page 33 (1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns. Page 48 (1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns. Page 49 (1) Represents BPY s share of investment. Page 50 (1) Represents BPY s share of investment. (2) Condo units therefore not included in Total Cost/Stabilized NOI/Yield on Cost calculation. Page 65 (1) Source: GGP investor presentation September

103 Endnotes (Continued) Page 67 (1) Represents BPY s share of investment. Page 68 (1) The target returns set forth herein are for illustrative and informational purposes only and have been presented based on various assumptions made in relation to the investment strategy being pursued by us, any of which may prove to be incorrect. The target returns are based on historical performance for similar investment strategies within the sector. Due to various risks, uncertainties and changes (including changes in economic, operational, political or other circumstances) beyond our control, our actual performance could differ materially from the target returns set forth herein. In addition, industry experts may disagree with the assumptions used in presenting the target returns. No assurance, representation or warranty is made by any person that the target returns will be achieved and undue reliance should not be put on them. Additional information about the assumptions used in determining the target returns and the factors that could cause actual results to differ materially from the target returns are available upon request. Prior performance is not indicative of future results and there can be no guarantee that the Brookfield will achieve the target returns or be able to avoid losses. Page 69 (1) Based on 9/30/15 closing GGP price of $26.43 per share. (2) Prior performance is not indicative of future results. Page 75 (1) Prior performance is not indicative of future results. Page 76 (1) Represents capital committed and approved June 30, (2) Projected returns reflected herein have been prepared based on various estimations and assumptions, including estimations and assumptions about events that have not occurred, any of which may prove to be incorrect. Projected returns are based on equity invested to date and equity projected to be invested, all cash flows generated to date, projected to be generated during the remaining expected holding period and the terminal value determined based on projected operating performance and projected capitalization rates in the applicable market. Projected net returns take into account fund expenses, management fees and carried interest paid to date and projected to be paid within the fund. Due to various risks, uncertainties and changes (including changes in economic, operational, political or other circumstances) beyond the control of the Manager, the actual results of the referenced investments could differ materially from the results expressed or implied by the projected returns reflected herein in respect of such investments. In addition, industry experts may disagree with the estimations and assumptions used in preparing the projected returns. IMPORTANT: The projections or other information provided herein regarding the likelihood of various investment outcomes are hypothetical in nature and do not reflect actual investment results. No assurance, representation or warranty is made by any person that any of the projected returns are accurate or will be achieved and you should not place undue reliance on the projected returns. Additional information about the estimations and assumptions used in preparing the projected returns and the factors that could cause actual results to differ materially from the projected returns are available upon request. In addition, please contact Brookfield to see projected performance information based on different assumptions. Prior performance is not indicative of future results and there can be no guarantee that the Fund will achieve comparable returns or be able to avoid losses. (3) Gross IRR and Gross MOC reflect performance from before fund expenses, management fees, and carried interest. "Net IRR" and Net MOC reflect performance taking into account expenses and fees and carried interest. 103

104 Endnotes (Continued) (4) Projected returns reflected herein reflect existing and committed investments that had not closed as of June 30, There is no guarantee that the fund will be able to successfully execute on all or any of such future deals. Equity invested used in the calculation of projected returns reflect current estimates. Actual equity invested may change prior to closing of such investments. Page 77 (1) Includes 7.5 msf of CIP and entitled land held for future development. (2) North American Hotel count includes the Hilton Los Cabos which is expected to close in Q and Hilton Portland which closed subsequent to Q (3) Excludes pipeline assets. Page 80 (1) There can be no guarantee that the fund will be able to successfully execute on their strategy and achieve such returns. Page 83 (1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns. Page 86 (1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such ratios. (2) Reflects mandatory convertible preferred shares as equity. (3) Diluted IFRS value per unit. (4) Pro forma reflects capital plan for 2015/2016, the 2Q15 balance sheet in addition to annualized 2Q15 earnings. Page 87 (1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns. (2) Reflects mandatory convertible preferred shares as equity. Page 88 (1) Diluted IFRS value per unit. (2) Prior performance is not indicative of future results. 104

105 Endnotes (Continued) (3) As of June 30, Page 89 (1) Pro forma reflects capital plan for 2015/2016, the 2Q15 balance sheet in addition to annualized 2Q15 earnings. (2) Reflects mandatory convertible preferred shares as equity. Page 90 (1) Pro forma reflects capital plan for 2015/2016, the 2Q15 balance sheet in addition to annualized 2Q15 earnings. (2) Reflects mandatory convertible preferred shares as equity. Page 94 (1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns. Page 95 (1) Earnings is net of interest expense and G&A. There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns. (2) Estimated. Actual timing of realization gains may be different. Page 96 (1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns. Page 97 (1) The target returns set forth herein are for illustrative and informational purposes only and have been presented based on various assumptions made in relation to the investment strategy being pursued by us, any of which may prove to be incorrect. The target returns are based on historical performance for similar investment strategies within the sector. Due to various risks, uncertainties and changes (including changes in economic, operational, political or other circumstances) beyond our control, our actual performance could differ materially from the target returns set forth herein. In addition, industry experts may disagree with the assumptions used in presenting the target returns. No assurance, representation or warranty is made by any person that the target returns will be achieved and undue reliance should not be put on them. Additional information about the assumptions used in determining the target returns and the factors that could cause actual results to differ materially from the target returns are available upon request. Prior performance is not indicative of future results and there can be no guarantee that the Brookfield will achieve the target returns or be able to avoid losses. 105

106 Endnotes (Continued) Page 98 (1) The target returns set forth herein are for illustrative and informational purposes only and have been presented based on various assumptions made in relation to the investment strategy being pursued by us, any of which may prove to be incorrect. The target returns are based on historical performance for similar investment strategies within the sector. Due to various risks, uncertainties and changes (including changes in economic, operational, political or other circumstances) beyond our control, our actual performance could differ materially from the target returns set forth herein. In addition, industry experts may disagree with the assumptions used in presenting the target returns. No assurance, representation or warranty is made by any person that the target returns will be achieved and undue reliance should not be put on them. Additional information about the assumptions used in determining the target returns and the factors that could cause actual results to differ materially from the target returns are available upon request. Prior performance is not indicative of future results and there can be no guarantee that the Brookfield will achieve the target returns or be able to avoid losses. Page 99 (1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns. (2) The target returns set forth herein are for illustrative and informational purposes only and have been presented based on various assumptions in relation to the investment strategy being pursued by us, any of which may prove to be incorrect. The target returns are based on historical performance for similar investment strategies within the sector. Due to various risks, uncertainties and changes (including changes in economic, operational, political or other circumstances) beyond our control, our actual performance could differ materially from the target returns set forth herein. In addition, industry experts may disagree with the assumptions used in presenting the target returns. No assurance, representation or warranty is made by any person that the target returns will be achieved and undue reliance should not be put on them. Additional information about the assumptions used in determining the target returns and the factors that could cause actual results to differ materially from the target returns are available upon request. 106

107 Important Cautionary Notes All amounts are in U.S. dollars unless otherwise specified. Unless otherwise indicated, the statistical and financial data in this document is presented as of June 30, Special Note Regarding Forward-looking Statements This presentation contains forward-looking information within the meaning of Canadian provincial securities laws and applicable regulation and forward looking statements within the meaning of safe harbor provisions of the United States Private Security Litigation Reform Act of Forward-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 well as the outlook for North American and international economies for the current fiscal year and subsequent periods, and include words 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. Forward-looking statements in this presentation include, without limitation, target distribution growth, the growth potential of our existing and new investments, return on invested capital, gains on mark-to-market releasing and occupancy, cost and value of development and re-development projects, recognition of capital appreciation on our asset base, targeted unlevered returns on re-development and committed development projects, pending acquisitions, the availability of financing and our financing plan, and expected asset sales Although we 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 forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which 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 forward-looking statements include, but are not limited to: risks incidental to the ownership 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 which 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 within 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 laws and other tax related risks; dependence on management personnel; illiquidity of investments; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits therefrom; operational and reputational risks; catastrophic events, such as earthquakes and hurricanes; and other risks and factors detailed from time to time in our documents filed with 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. 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, we undertake no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise. 107