6-K
Brookfield Property Partners L.P. (BPYPP)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549
FORM 6-K
Reportof Foreign Private Issuer Pursuant to
Rule13a-16 or 15d-16
Underthe Securities Exchange Act of 1934
For the month of February 2020
Commission File Number 001-35505
BROOKFIELDPROPERTY PARTNERS L.P.
(Exact name of registrant as specified in its charter)
73 Front Street, Hamilton, HM 12 Bermuda
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
DOCUMENTS FILED AS PART OF THIS FORM6-K
See the Exhibit List to this Form 6-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: February 5, 2020 | Brookfield PROPERTY PARTNERS L.P., | |
|---|---|---|
| by its general partner, Brookfield Property Partners Limited | ||
| By: | /s/ “Jane Sheere” | |
| Name: | Jane Sheere | |
| Title: | Secretary |
EXHIBIT LIST
| Exhibit | Description |
|---|---|
| 99.1 | Brookfield Property Partners L.P. press release dated February 5, 2020 |
Exhibit99.1
BROOKFIELDPROPERTY PARTNERS REPORTS
FOURTHQUARTER & FULL-YEAR 2019 RESULTS
NetIncome of $1.5 Billion for the Quarter and $3.2 Billion for the Year;
Company FFO and Realized Gains of $459Million for the Quarter and $1.5 Billion for the Year
All dollar references are in U.S. dollars,unless noted otherwise.
BROOKFIELD NEWS, February 5, 2020 – Brookfield Property Partners L.P. (NASDAQ: BPY; NASDAQ: BPR; TSX: BPY.UN) (“BPY”) today announced financial results for the quarter and year ended December 31, 2019.
“In 2019 BPY generated a total return to unitholders of more than 20% and we continued to reinvest capital raised from the sales of mature assets into higher returning opportunities, including over $500 million of unit buybacks,” said Brian Kingston, Chief Executive Officer. “During the year we also delivered nearly five million square feet of newly developed best-in-class, premier assets across several of our major markets that will begin contributing meaningfully to BPY’s earnings in 2020 and moving forward.”
Financial Results
| Three months ended<br> <br>Dec. 31, | Twelve months ended<br> <br>Dec. 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| (US$ Millions, except per unit amounts) | 2019 | 2018 | 2019 | 2018 | ||||
| Net income^(1)^ | $ | 1,551 | $ | 858 | $ | 3,157 | $ | 3,654 |
| Company FFO and realized gains^(2)^ | $ | 459 | $ | 749 | $ | 1,512 | $ | 1,570 |
| Net income per LP unit^(3)(4)^ | $ | 1.00 | $ | 0.51 | $ | 1.89 | $ | 2.28 |
| Company FFO and realized gains per unit^(4)(5)^ | $ | 0.48 | $ | 0.77 | $ | 1.57 | $ | 1.97 |
| (1) | Consolidated basis – includes amounts attributable to non-controlling interests. | |||||||
| --- | --- | |||||||
| (2) | Excluding realized gains, Company FFO was $379 million ($0.39 per unit) compared with $416 million<br>($0.43 per unit) in the prior year period. See "Basis of Presentation" and “Reconciliation of Non-IFRS Measures”<br>in this press release for the definition and components. | |||||||
| --- | --- | |||||||
| (3) | Represents basic net income attributable to holders of LP units. IFRS requires the inclusion of preferred<br>shares that are mandatorily convertible into LP units at a price of $25.70 without an add-back to earnings of the associated carry<br>on the preferred shares. | |||||||
| --- | --- | |||||||
| (4) | Net income attributable to holders of LP units and Company FFO and realized gains per unit are reduced<br>by preferred dividends of $7 million and $15 million for the three and twelve months ended December 31, 2019, respectively in determining<br>per unit amounts. | |||||||
| --- | --- | |||||||
| (5) | Company FFO and realized gains per unit are calculated based on 947.2 million<br>(2018 – 974.1 million) and 955.0 million (2018 – 796.8 million) units outstanding for the three and twelve months ended<br>December 31, 2019, respectively. See "Reconciliation of Non-IFRS Measures" section in this press release for basic net<br>income. | |||||||
| --- | --- |
Company FFO (CFFO) and realized gains was $459 million ($0.48 per unit) for the quarter ended December 31, 2019, compared to $749 million ($0.77 per unit) for the same period in 2018. CFFO and realized gains was $1.5 billion ($1.57 per unit) for the year ended December 31, 2019, compared with $1.6 billion ($1.97 per unit) in 2018. The prior year benefited from higher realized gains as we exited a number of large transactions in our LP investments.
Net income for the quarter ended December 31, 2019 was $1.5 billion ($1.00 per LP unit) versus $858 million ($0.51 per LP unit) for the same period in 2018. The increase in net income over the prior year period is primarily attributable to higher valuation gains in our Canada and UK office portfolios, as well as strong performance in several of our LP investments. Net income for the year ended December 31, 2019 was $3.2 billion ($1.89 per unit) compared with $3.65 billion ($2.28 per unit) in 2018.
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Operating Highlights
**** Our Core Office operations generated Company FFO of $185 million for the quarter ended December 31, 2019 compared to $170 million in the same period in 2018 and $662 million for the year ended December 31, 2019 compared to $608 million on a comparable basis in 2018. The business generated 4% same-property NOI growth and fee income of $30 million.
Occupancy in our Core Office portfolio increased 40 basis points in the fourth quarter to 92.8% on 3.3 million square feet of total leasing. Leases signed in the fourth quarter were at rents 41% higher on average than leases that expired in the period. Total leasing for the year was 7.8 million square feet and occupancy increased 90 basis points year-over-year on a comparable basis.
Our Core Retail operations generated Company FFO of $217 million for the quarter ended December 31, 2019 compared to $270 million in the comparable period in 2018 and $772 million for the year ended December 31, 2019 compared to
$651 million in 2018. Compared to the prior year period, the current quarter results were impacted by the sale of assets now not contributing, downtime on leasing and an accounting change, which has no economic effect on the business.
Our Core Retail business leased approximately 10.5 million square feet over the past 12 months with suite-to-suite NOI-weighted rent spreads of 4%. Same-store occupancy levels remained at 96.4% for quarter-end December 31, 2019, compared to 96.5% in prior year. On a year-over-year basis, in-place rents remained unchanged, and NOI-weighted sales grew 5.9% to $798 per square foot, a new high for the portfolio.
Our LP Investments generated Company FFO and realized gains of $150 million for the quarter ended December 31, 2019, compared to $410 million in the comparable period in 2018 and $476 million for the year ended December 31, 2019 compared to $721 million in 2018. Excluding $333 million of realized gains recognized in the prior-year period, results declined $7 million primarily due to higher merchant-build income recognized in the prior-year period.
| Three months ended December 31, | Twelve months ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (US$ Millions) | 2019 | 2018 | 2019 | 2018 | ||||||||
| Company FFO and realized gains: | ||||||||||||
| Core Office | $ | 185 | $ | 170 | $ | 662 | $ | 608 | ||||
| Core Retail | 217 | 270 | 772 | 651 | ||||||||
| LP Investments | 150 | 410 | 476 | 721 | ||||||||
| Corporate | (93 | ) | (101 | ) | (398 | ) | (410 | ) | ||||
| Company FFO and realized gains^(1)^ | $ | 459 | $ | 749 | $ | 1,512 | $ | 1,570 |
(1) See "Basis of Presentation" and "Reconciliation of Non-IFRS Measures" below in this press release for the definitions and components.
Dispositions
In the fourth quarter we completed $1.1 billion of gross asset dispositions at our share, at prices that were 9% higher on average than our IFRS carrying values. These sales generated approximately $555 million in net proceeds to BPY.
Dispositions completed in the fourth quarter include:
| • | Interests in various U.S. multifamily assets for net proceeds of<br>$320 million. |
|---|---|
| • | Our 74% interest in Jessie Street Centre in Sydney for net proceeds<br>of $115 million. |
| --- | --- |
| • | Interests in JK Towers D & E in Sao Paulo for net proceeds of<br>$52 million. |
| --- | --- |
| • | Our 51% interest in 15 Broad Street in Boston for net proceeds of<br>$14 million. |
| --- | --- |
Brookfield Property Partners L.P.
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New Investments
| · | Unwound a joint venture in our Core Retail<br>portfolio, acquiring our partner’s interests in four malls (Park Meadows, Shops at Merrick Park, Towson Town Center and Perimeter<br>Mall) and selling them our interest in one (Bridgewater Commons). |
|---|---|
| · | Acquired partner’s 50% interest in London Wall Place for £334 million ($432<br>million). The property, which is now 97% leased, was concurrently refinanced for £515 million. |
| · | Through<br> investment in BSREP III, acquired interests in: |
| o | A mixed-use campus in Shanghai consisting<br>of 1.2 million square feet of office and 460,000 square feet of retail ($141 million at BPY’s share). |
| --- | --- |
| o | Aveo, an owner-operator of over 90 retirement<br>villages and aged-care facilities in Australia ($40 million at BPY’s share). |
| --- | --- |
| o | Two million square feet of beachfront<br>retail in Dubai ($18 million at BPY’s share). |
| --- | --- |
| o | Leela Palaces Hotels & Resorts in<br>India ($40 million at BPY’s share). |
| --- | --- |
Balance Sheet Update
To increase liquidity and extend the maturity of our debt, during and subsequent to the fourth quarter we executed the following financing transactions:
| • | In Core Office, we financed $2.8 billion of mortgages with an average<br>term of over four years at an average interest rate of 218 bps over benchmark, generating net proceeds to BPY of approximately<br>$633 million. |
|---|---|
| • | In Core Retail, we raised an aggregate of $1.8 billion in various<br>financings, generating net proceeds to BPY of approximately $850 million. The new asset-level mortgages carry an average fixed<br>interest rate of 3.68% with an average term of over five years. |
| --- | --- |
Subsequent to quarter end:
| • | Issued C$400 million of Green Bonds at a rate of 3.93% with a seven-year<br>term. Proceeds will be used to fund sustainable building initiatives. |
|---|---|
| • | Issued an incremental C$100 million of our outstanding 4.35% July<br>2023 bonds at an implied yield of 3.02% with a 3.5-year term. Proceeds will be used for general corporate purposes. |
| --- | --- |
Unit Repurchase Program
Utilizing in-place normal course issuer bids (“NCIBs”), we purchased 3,740,558 of BPY units and BPR shares in the fourth quarter of 2019 at an average price of $18.84 per unit/share. In 2019, the total units purchased under the NCIB were 27,328,945 units at an average price of $20.27 per unit.
Board of Directors Update
The Board of Directors of BPY is pleased to announce the appointment of a new director, Doug McGregor, who will be joining the Board effective March 1, 2020. Mr. McGregor brings an impressive resume of experience in corporate finance and investment banking, recently having served as the Group Head, RBC Capital Markets and RBC Investor & Treasury Services and Chairman and CEO of RBC Capital Markets.
Distribution Declaration
The Board of Directors has declared a quarterly distribution on the partnership’s LP units of $0.3325 per unit payable on March 31, 2020 to unitholders of record at the close of business on February 28, 2020.
The quarterly distributions on the LP units are declared in U.S. dollars. Registered unitholders residing in the United States shall receive quarterly cash distributions in U.S. dollars and registered unitholders not residing in the United States shall receive quarterly cash distributions in the Canadian dollar equivalent, based on the Bank of Canada exchange rate on the record date. Registered unitholders residing in the United States have the option, through Brookfield Property Partners’ transfer agent, AST Trust Company (Canada) ("AST"), to elect to receive quarterly cash distributions in the Canadian dollar equivalent and registered unitholders not residing in the United States have the option through AST to elect to receive quarterly cash distributions in U.S. dollars. Beneficial unitholders (i.e., those holding their units in street name with their brokerage) should contact the broker with whom their units are held to discuss their options regarding distribution currency.
The Board of Directors has also declared quarterly distributions on the partnership’s Class A Series 1 and Class A Series 2 preferred units of $0.40625 per unit, and $0.39844 per unit, respectively, payable on March 31, 2020 to holders of record at the close of business on March 2, 2020.
Brookfield Property Partners L.P.
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Additional Information
Further details regarding the operations of the Partnership are set forth in regulatory filings. A copy of the filings may be obtained through the website of the SEC at www.sec.gov and on the Partnership’s SEDAR profile at www.sedar.com.
The Partnership’s quarterly letter to unitholders and supplemental information package can be accessed before the market open on February 5, 2020 at bpy.brookfield.com. This additional information should be read in conjunction with this press release.
* * * *
Basis of Presentation
This press release and accompanying financial information make reference to net operating income (“NOI”), same-property NOI, funds from operations (“FFO”), Company FFO and realized gains (“Company FFO and realized gains”) and net income attributable to unitholders.
Company FFO and realized gains, and net income attributable to unitholders are also presented on a per unit basis. NOI, same-property NOI, FFO, Company FFO and realized gains, and net income attributable to unitholders 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 companies. The Partnership uses NOI, same-property NOI, FFO, Company FFO and realized gains, and net income attributable to unitholders to assess its operating results. These measures should not be used as alternatives to Net Income and other operating measures determined in accordance with IFRS, but rather to provide supplemental insights into performance. Further, these measures do not represent liquidity measures or cash flow from operations and are not intended to be representative of the funds available for distribution to unitholders either in aggregate or on a per unit basis, where presented.
NOI is defined as revenues from commercial and hospitality operations of consolidated properties less direct commercial property and hospitality expenses. As NOI includes the revenues and expenses directly associated with owning and operating commercial property and hospitality assets, it provides a measure to evaluate the performance of the property operations.
Same-property NOI is a subset of NOI, which excludes NOI that is earned from assets acquired, disposed of or developed during the periods presented, or not of a recurring nature, and from opportunistic assets. Same-property NOI allows the Partnership to segregate the performance of leasing and operating initiatives on the portfolio from the impact to performance from investing activities and “one-time items,” which for the historical periods presented consist primarily of lease termination income.
FFO is defined 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. FFO is a widely recognized measure that is frequently used by securities analysts, investors and other interested parties in the evaluation of real estate entities, particularly those that own and operate income producing properties. The Partnership’s definition of FFO includes all of the adjustments that are outlined in the National Association of Real Estate Investment Trusts (“NAREIT”) definition of FFO. In addition to the adjustments prescribed by NAREIT, the Partnership also makes adjustments to exclude any unrealized fair value gains (or losses) that arise as a result of reporting under IFRS, and income taxes that arise as certain of its subsidiaries are structured as corporations as opposed to real estate investment trusts (“REITs”). These additional adjustments result in an FFO measure that is similar to that which would result if the Partnership was organized as a REIT that determined net income in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), which is the type of organization on which the NAREIT definition is premised. The Partnership’s FFO measure will differ from other organizations applying the NAREIT definition to the extent of certain differences between the IFRS and U.S. GAAP reporting frameworks, principally related to the recognition of lease termination income. FFO provides a performance measure that, when compared year-over-year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and interest costs.
Brookfield Property Partners L.P.
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Company FFO and realized gains is defined as FFO before the impact of depreciation and amortization of non-real estate assets, transaction costs, gains (losses) associated with non-investment properties, imputed interest on equity accounted investments, realized gains in the partnership’s LP Investment segment and the partnership’s share of BSREP III Company FFO and realized gains. Realized LP Investment gains represent income earned on investing activity when fund investments are realized, inclusive of associated change in carried interest to be due at a future date to the general partner of the relevant Brookfield Asset Management-sponsored funds. The partnership accounts for the investment in BSREP III as a financial asset and income (loss) of the fund is not presented in the partnership’s results. Distributions from BSREP III, recorded as dividend income under IFRS, are removed from investment and other income for Company FFO and realized gains presentation.
Net income attributable to unitholders is defined as net income attributable to holders of general partnership units and limited partnership units of the Partnership, redeemable/exchangeable and special limited partnership units of Brookfield Property L.P., limited partnership units of Brookfield Office Properties Exchange LP and Class A shares of Brookfield Property REIT Inc. Net income attributable to unitholders is used by the Partnership to evaluate the performance of the Partnership as a whole as each of the unitholders participates in the economics of the Partnership equally. In calculating net income attributable to unitholders per unit, the Partnership excludes the impact of mandatorily convertible preferred units in determining the average number of units outstanding as the holders of mandatorily convertible preferred units do not participate in current earnings. The Partnership reconciles this measure to basic net income attributable to unitholders per unit determined in accordance with IFRS which includes the effect of mandatorily convertible preferred units in the basic average number of units outstanding.
###
About Brookfield Property Partners
Brookfield Property Partners, through Brookfield Property Partners L.P. and its subsidiary Brookfield Property REIT Inc., is one of the world’s premier real estate companies, with approximately $88 billion in total assets. We own and operate iconic properties in the world’s major markets, and our global portfolio includes office, retail, multifamily, logistics, hospitality, self-storage, triple net lease, manufactured housing and student housing.
Brookfield Property Partners is the flagship listed real estate company of Brookfield Asset Management Inc., a leading global alternative asset manager with over $540 billion in assets under management. More information is available at www.brookfield.com.
Brookfield Property Partners L.P. is listed on the Nasdaq Stock Market and the Toronto Stock Exchange. Brookfield Property REIT Inc. is listed on the Nasdaq Stock Market. Further information is available at bpy.brookfield.com.
Certain investor relations content is also available on our investor relations app, which offers access to SEC filings, press releases, presentations and more. Click here to download on the iPhone or iPad, or here for Android mobile devices.
Brookfield Property Partners L.P.
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Brookfield Contact:
Matt Cherry
Senior Vice President, Investor Relations
Tel: (212) 417-7488 / Email: matthew.cherry@brookfield.com
Conference Call and Quarterly EarningsDetails
Investors, analysts and other interested parties can access BPY’s fourth quarter and year end 2019 results as well as the letter to unitholders and supplemental information on BPY’s website at bpy.brookfield.com.
The conference call can be accessed via webcast on February 5, 2020 at 11:00 a.m. Eastern Time at bpy.brookfield.com or via teleconference by dialing +1 (844) 358-9182 toll-free in the U.S. and Canada or for overseas calls, dial +1 (478) 219-0399, conference ID: 2019519, at approximately 10:50 a.m. A recording of the teleconference can be accessed by dialing +1 (855) 859-2056 toll-free in the U.S. or Canada or for overseas calls, dial +1 (404) 537-3406, conference ID: 2019519.
Forward-Looking Statements
This communication contains “forward-lookinginformation” within the meaning of applicable securities laws and regulations. Forward-looking statements include statementsthat are predictive in nature or 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, ongoingobjectives, strategies and outlook, as well as the outlook for North American and international economies for the current fiscalyear 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.”
Although we believe that our anticipatedfuture results, performance or achievements expressed or implied by the forward-looking statements and information are based uponreasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and informationbecause they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which maycause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievementexpressed or implied by such forward-looking statements and information.
Factors that could cause actual resultsto differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: risks incidentalto the ownership and operation of real estate properties including local real estate conditions; the impact or unanticipated impactof general economic, political and market factors in the countries in which we do business; the ability to enter into new leasesor renew leases on favorable terms; business competition; dependence on tenants’ financial condition; the use of debt tofinance our business; the behavior of financial markets, including fluctuations in interest and foreign exchange rates; uncertaintiesof real estate development or redevelopment; global equity and capital markets and the availability of equity and debt financingand refinancing within these markets; risks relating to our insurance coverage; the possible impact of international conflictsand other developments including terrorist acts; potential environmental liabilities; changes in tax laws and other tax relatedrisks; dependence on management personnel; illiquidity of investments; the ability to complete and effectively integrate acquisitionsinto existing operations and the ability to attain expected benefits therefrom; operational and reputational risks; catastrophicevents, such as earthquakes and hurricanes; and other risks and factors detailed from time to time in our documents filed withthe securities regulators in Canada and the United States.
We caution that the foregoing list ofimportant 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 requiredby law, we undertake no obligation to publicly update or revise any forward-looking statements or information, whether writtenor oral, that may be as a result of new information, future events or otherwise.
Brookfield Property Partners L.P.
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CONSOLIDATED BALANCE SHEETS
| Dec. 31, | Dec. 31, | |||
|---|---|---|---|---|
| (US$ Millions) | 2019 | 2018 | ||
| Assets | ||||
| Investment properties | $ | 75,511 | $ | 80,196 |
| Equity accounted investments in properties | 20,764 | 22,698 | ||
| Participating loan notes | - | 268 | ||
| Property, plant and equipment | 7,278 | 7,506 | ||
| Financial assets | 1,250 | 222 | ||
| Accounts receivable and other | 5,015 | 7,338 | ||
| Cash and cash equivalents | 1,438 | 3,288 | ||
| Assets held for sale | 387 | 1,004 | ||
| Total Assets | $ | 111,643 | $ | 122,520 |
| Liabilities | ||||
| Corporate borrowings | $ | 1,902 | $ | 2,159 |
| Asset-level debt obligations | 47,466 | 50,407 | ||
| Subsidiary borrowings, non-recourse to BPY | 6,022 | 11,245 | ||
| Capital securities | 3,075 | 3,385 | ||
| Deferred tax liability | 2,515 | 2,378 | ||
| Accounts payable and other liabilities | 5,588 | 6,043 | ||
| Liabilities associated with assets held for sale | 140 | 163 | ||
| Equity | ||||
| Preferred equity | 420 | - | ||
| General partner | 4 | 4 | ||
| Limited partners | 13,274 | 12,353 | ||
| Non-controlling interests attributable to: | ||||
| Limited partner units of the operating partnership held by Brookfield Asset Management Inc. | 13,199 | 12,740 | ||
| Limited partner units of Brookfield Office Properties Exchange LP | 87 | 96 | ||
| FV LTIP units of the operating partnership | 35 | - | ||
| Class A shares of Brookfield Property REIT Inc. | 1,931 | 3,091 | ||
| Interests of others in operating subsidiaries and properties | 15,985 | 18,456 | ||
| Total Equity | 44,935 | 46,740 | ||
| Total Liabilities and Equity | $ | 111,643 | $ | 122,520 |
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CONSOLIDATED STATEMENT OF OPERATIONS
| Three Months Ended<br> Dec. 31, | Twelve Months Ended<br> Dec. 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (US$ Millions) | 2019 | 2018 | 2019 | 2018 | ||||||||
| Commercial property and hospitality revenue | $ | 1,894 | $ | 2,018 | $ | 7,600 | $ | 6,956 | ||||
| Direct commercial property and hospitality expense | (783 | ) | (837 | ) | (3,186 | ) | (3,087 | ) | ||||
| 1,111 | 1,181 | 4,414 | 3,869 | |||||||||
| Investment and other revenue | 193 | 122 | 603 | 283 | ||||||||
| Share of net earnings from equity accounted investments | 470 | 366 | 1,969 | 947 | ||||||||
| 1,774 | 1,669 | 6,986 | 5,099 | |||||||||
| Expenses | ||||||||||||
| Interest expense | (730 | ) | (775 | ) | (2,924 | ) | (2,464 | ) | ||||
| Depreciation and amortization | (85 | ) | (79 | ) | (341 | ) | (308 | ) | ||||
| General and administrative expense | (226 | ) | (439 | ) | (882 | ) | (1,032 | ) | ||||
| Investment and other expense | (72 | ) | (9 | ) | (82 | ) | (26 | ) | ||||
| 661 | 367 | 2,757 | 1,269 | |||||||||
| Fair value gains, net | 869 | 523 | 596 | 2,466 | ||||||||
| Income tax (expense) benefit | 21 | (32 | ) | (196 | ) | (81 | ) | |||||
| Net income | $ | 1,551 | $ | 858 | $ | 3,157 | $ | 3,654 | ||||
| Net income attributable to: | ||||||||||||
| General partner | $ | - | $ | - | $ | - | $ | - | ||||
| Limited partners | 475 | 226 | 884 | 764 | ||||||||
| Non-controlling interests: | ||||||||||||
| Limited partner units of the operating partnership held by Brookfield Asset Management Inc. | 472 | 240 | 896 | 1,085 | ||||||||
| Limited partner units of Brookfield Office Properties Exchange LP | 3 | 2 | 6 | 17 | ||||||||
| FV LTIP units of the operating partnership | 1 | - | 1 | - | ||||||||
| Class A shares of Brookfield Property REIT | 71 | 66 | 169 | 112 | ||||||||
| Interests of others in operating subsidiaries and properties | 529 | 324 | 1,201 | 1,676 | ||||||||
| $ | 1,551 | $ | 858 | $ | 3,157 | $ | 3,654 |
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RECONCILIATION OF NON-IFRS MEASURES
| Three Months Ended<br> Dec. 31, | Twelve Months Ended<br> Dec. 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (US$ Millions) | 2019 | 2018 | 2019 | 2018 | ||||||||
| Commercial property and hospitality revenue | $ | 1,894 | $ | 2,018 | $ | 7,600 | $ | 6,956 | ||||
| Direct commercial property and hospitality expense | (783 | ) | (837 | ) | (3,186 | ) | (3,087 | ) | ||||
| NOI | 1,111 | 1,181 | 4,414 | 3,869 | ||||||||
| Investment and other revenue | 193 | 122 | 603 | 283 | ||||||||
| Share of equity accounted income excluding fair value gains | 292 | 285 | 914 | 833 | ||||||||
| Interest expense | (730 | ) | (775 | ) | (2,924 | ) | (2,464 | ) | ||||
| General and administrative expense | (226 | ) | (439 | ) | (882 | ) | (1,032 | ) | ||||
| Investment and other expense | (72 | ) | (9 | ) | (82 | ) | (26 | ) | ||||
| Depreciation and amortization of non-real estate assets | (13 | ) | (17 | ) | (58 | ) | (45 | ) | ||||
| Non-controlling interests of others in operating subsidiaries and properties in FFO | (218 | ) | (43 | ) | (838 | ) | (552 | ) | ||||
| FFO | 337 | 305 | 1,147 | 866 | ||||||||
| Depreciation and amortization of non-real estate assets, net^(1)^ | 9 | 11 | 40 | 35 | ||||||||
| Transaction costs^(1)^ | 24 | 85 | 96 | 221 | ||||||||
| Gains/losses on disposition of non-investment properties^(1)^ | (1 | ) | 2 | (1 | ) | 6 | ||||||
| Imputed Interest^(2)^ | 7 | 13 | 49 | 51 | ||||||||
| LP Investments realized gains^(3)^ | 80 | 333 | 167 | 391 | ||||||||
| BSREP III earnings^(4)^ | 3 | - | 14 | - | ||||||||
| Company FFO and realized gains | $ | 459 | $ | 749 | $ | 1,512 | $ | 1,570 | ||||
| FFO | 337 | 305 | 1,147 | 866 | ||||||||
| Depreciation and amortization of real estate assets | (72 | ) | (63 | ) | (283 | ) | (264 | ) | ||||
| Fair value (losses) gains, net | 869 | 523 | 596 | 2,466 | ||||||||
| Share of equity accounted income - Non FFO | 178 | 81 | 1,055 | 114 | ||||||||
| Income tax (expense) benefit | 21 | (32 | ) | (196 | ) | (81 | ) | |||||
| Non-controlling interests of others in operating subsidiaries and properties in non-FFO | (311 | ) | (280 | ) | (363 | ) | (1,123 | ) | ||||
| Non-controlling interests of others in operating subsidiaries and properties | 529 | 324 | 1,201 | 1,676 | ||||||||
| Net income | $ | 1,551 | $ | 858 | $ | 3,157 | $ | 3,654 | ||||
| ^(1)^ | Presentednet of non-controlling interests on a proportionate basis. | |||||||||||
| --- | --- | |||||||||||
| ^(2)^ | Representsimputed interest on commercial developments accounted for under the equity method under IFRS. | |||||||||||
| --- | --- | |||||||||||
| ^(3)^ | Netof associated carried interest to be due at a future date. | |||||||||||
| --- | --- | |||||||||||
| ^(4)^ | BSREPIII is now accounted for as a financial asset which results in FFO being recognized in line with distributions. As such, the BSREPIII earnings adjustment reflects our proportionate share of the Company FFO. | |||||||||||
| --- | --- |
BrookfieldProperty Partners L.P.
9
NET INCOME PER UNIT
| Three months ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dec. 31, 2019 | Dec.31, 2018 | ||||||||||||
| (US$ Millions, except per unit amounts) | Net income attributable to Unitholders | Average<br> number of<br> units | Per unit | Net income attributable <br><br>to Unitholders | Average number of units | Per unit | |||||||
| Basic | $ | 1,022 | 947.2 | $ | 1.08 | $ | 534 | 974.1 | $ | 0.55 | |||
| Preferred share dividends | (7 | ) | - | - | - | - | - | ||||||
| Number of units on conversion of preferred shares^(1)^ | - | 70.1 | - | - | 70.0 | - | |||||||
| Basic per IFRS | 1,015 | 1,017.3 | 1.00 | 534 | 1,044.1 | 0.51 | |||||||
| Dilutive effect of conversion of capital securities and options^(2)^ | - | - | - | 7 | 19.6 | 0.36 | |||||||
| Fully-diluted per IFRS | $ | 1,015 | 1,017.3 | $ | 1.00 | $ | 541 | 1,063.7 | $ | 0.51 | |||
| ^.^**^(1)^ | IFRS requires the inclusion of preferred shares that are mandatorily convertible into units at a price of $25.70 without an add back to earnings of the associated carry on the preferred shares. | ||||||||||||
| --- | --- | ||||||||||||
| ^.^**^(2)^ | For the three months ended December 31, 2019, capital securities were fully redeemed and therefore excluded from the calculation of fully-diluted net income per IFRS. | ||||||||||||
| Three months ended | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Dec. 31, 2019 | Dec.31, 2018 | ||||||||||||
| (US$ Millions, except per unit amounts) | Net income attributable to Unitholders | Average<br> number of<br> units | Per unit | Net income attributable <br><br>to Unitholders | Average number of units | Per unit | |||||||
| Basic per management | $ | 1,022 | 947.2 | $ | 1.08 | $ | 534 | 974.1 | $ | 0.55 | |||
| Preferred share dividends | (7 | ) | - | - | - | - | - | ||||||
| Dilutive effect of conversion of preferred shares^(1)^ | 29 | 70.1 | 0.41 | 29 | 70.0 | 0.41 | |||||||
| Dilutive effect of conversion of capital securities and options^(2)^ | - | - | - | 7 | 19.6 | 0.36 | |||||||
| Fully-diluted per management | $ | 1,044 | 1,017.3 | $ | 1.03 | $ | 570 | 1,063.7 | $ | 0.54 | |||
| ^(1)^ | Represents preferred shares that are mandatorily convertible into units at a price of $25.70 and the associated carry. | ||||||||||||
| --- | --- | ||||||||||||
| ^(2)^ | For the three months ended December 31, 2019, capital securities were fully redeemed and therefore excluded from the calculation of fully-diluted net income per IFRS. |
Brookfield Property Partners L.P.
10
NET INCOME PER UNIT
| Twelve<br> months ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dec.<br> 31, 2019 | Dec.31,<br> 2018 | ||||||||||||
| (US$ Millions,<br> except per unit amounts) | Net<br> income<br><br> attributable<br><br> to<br><br> Unitholders | Average<br><br> number of<br> units | Per<br> unit | Net<br> income<br><br> attributable<br><br> to<br><br> Unitholders | Average<br><br> number of<br><br> units | Per<br> unit | |||||||
| Basic | $ | 1,956 | 955.0 | $ | 2.05 | $ | 1,978 | 796.8 | $ | 2.48 | |||
| Preferred share dividends | (15 | ) | - | - | - | - | - | ||||||
| Number<br> of units on conversion of preferred shares^(1)^ | - | 70.1 | - | - | 70.0 | - | |||||||
| Basic per IFRS | 1,941 | 1,025.1 | 1.89 | 1,978 | 866.8 | 2.28 | |||||||
| Dilutive<br> effect of conversion of capital securities and options | 8 | 6.7 | 1.19 | 27 | 18.4 | 1.47 | |||||||
| Fully-diluted per IFRS | $ | 1,949 | 1,031.8 | $ | 1.89 | $ | 2,005 | 885.2 | $ | 2.26 |
^(1)^IFRS requiresthe inclusion of preferred shares that are mandatorily convertible into units at a price of $25.70 without an add back to earningsof the associated carry on the preferred shares.
| Twelve<br> months ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dec.<br> 31, 2019 | Dec.31,<br> 2018 | ||||||||||||
| (US$ Millions,<br> except per unit amounts) | Net<br> income<br><br> attributable<br><br> to<br><br> Unitholders | Average<br><br> number of<br> units | Per<br> unit | Net<br> income<br><br> attributable<br><br> to<br><br> Unitholders | Average<br><br> number of<br><br> units | Per<br> unit | |||||||
| Basic per management | $ | 1,956 | 955.0 | $ | 2.05 | $ | 1,978 | 796.8 | $ | 2.48 | |||
| Preferred share dividends | (15 | ) | - | - | - | - | - | ||||||
| Dilutive<br> effect of conversion of preferred shares^(1)^ | 117 | 70.1 | 1.67 | 117 | 70.0 | 1.67 | |||||||
| Dilutive<br> effect of conversion of capital securities and options | 8 | 6.7 | 1.19 | 27 | 18.4 | 1.47 | |||||||
| Fully-diluted per management | $ | 2,066 | 1,031.8 | $ | 2.00 | $ | 2,122 | 885.2 | $ | 2.40 |
^(1)^Represents preferredshares that are mandatorily convertible into units at a price of $25.70 and the associated carry.
Brookfield Property Partners L.P.
11