Brookfield Property Partners L.P. Investor Meeting September 29, - - PowerPoint PPT Presentation

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Brookfield Property Partners L.P. Investor Meeting September 29, - - PowerPoint PPT Presentation

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


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SLIDE 1

Brookfield Property Partners L.P.

Investor Meeting September 29, 2016

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SLIDE 2

2

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

Table of Contents

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SLIDE 3

Our Business – Brian Kingston

3

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Brookfield Property Partners is Brookfield’s primary vehicle to make investments across all strategies in real estate

4

Brookfield Property Partners L.P. (BPY)

Opportunistic Value-Add Core Core-Plus

Through Participation in Brookfield Private Funds Direct

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SLIDE 5

Our goal is to be the leading global owner & operator

  • f high-quality real estate, generating an attractive total return

for our unitholders comprised of:

5

Current yield backed by stable cash flow from a diversified portfolio

  • f assets

5-8% annual distribution growth Capital appreciation of our asset base

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SLIDE 6

Opportunistic Core Office & Retail

  • Currently 80% of BPY’s balance sheet
  • Investing in high-quality, trophy assets
  • Provides stable cash flow with growth and capital

appreciation

  • 20% of BPY’s balance sheet
  • Investing in mispriced portfolios,

properties with significant value-add

  • Provides capital appreciation

10% to 12% Total Returns 20% Total Returns

Stable, predictable cash flows from our Core Office and Retail units are enhanced by our higher-yielding Opportunistic strategies

6

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SLIDE 7

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

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SLIDE 8

Brookfield Property Partners has undergone significant, transformative growth in the three years since spin-out

8

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SLIDE 9

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

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1) Represents BPY’s fully diluted interest in GGP

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Through organic growth in existing markets…

2013

Canada $8B United States $70B UK & Europe $4B Australia $9B Brazil $4B

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…and expansion into new markets we have grown AUM to over $146 Billion1

Today

Canada $7B United States $105B UK & Europe $23B Brazil $3B Australia $7B Middle East - $0.1B India - $1.2B China - $0.5B

1) Figure represents AUM of Brookfield Property Group. BPY’s proportionate total assets have grown to approxim ately $66 billion

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SLIDE 12

2013 TODAY

PRIMARY

Traditional real estate sectors that have deep public and private institutional capital markets

Core Office Core Retail Multifamily Core Office Core Retail Multifamily Logistics

ESTABLISHED

Alternative real estate sectors that have deep public and private capital markets

Suburban Office Alternate Retail Suburban Office Alternate Retail Hotels Net Leases

NON-TRADITIONAL

Some public market presence and analyst coverage but highly fragmented and largely privately held

Self-Storage Manufactured Housing Student Housing

We have also expanded into a number of new asset classes…

12

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SLIDE 13
  • 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

…and built a diversified portfolio of premier properties

13

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...Which has led to significant growth of business

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Total Assets ($ billions)

66

Total Equity ($ billions) Company FFO ($ millions)

13 570 22 950+

TODAY 2013 Distribution per Unit ($) Value per Unit ($) 113% 69% 67%

25 1.00

12% 20%

30 1.12

14

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SLIDE 15

Continue 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

15

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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

Continue to be focused on key objectives

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Core Office – Ric Clark

17

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Brookfield’s Core Office business features an iconic, irreplaceable portfolio

  • f the world’s most sought-after

commercial properties

18

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Iconic 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 19

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Comprehensive Capabilities

20

We offer a full suite of real estate services for our tenants, assuring them

  • f 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

  • f our properties.”
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Scale of Operations

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We have $15 billion of capital invested in Core Office

149

PROPERTIES

92%

OCCUPANCY

101msf

PORTFOLIO SIZE

8.3yrs

AVERAGE LEASE TERM

18

CITIES

1,600

EMPLOYEES

6

COUNTRIES

9msf

AVERAGE ANNUAL LEASING VOLUME

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SLIDE 22

50% 18% 16% 14%

$ 500 $ 1,000 $ 1,500 $ 2,000 2013 2014 2015 2016

NET OPERATING INCOME

(US$ in millions)

Stable Income

22

Long average lease life, market diversification and high-quality tenants produce very stable income

U.S. UK Australia Canada Other

1

1) Forecast to reflect increm ental NOI at Brookfield Place New York

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SLIDE 23

0% 2% 4% 6% 8% 10% 12% 14% Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016

SAME PROPERTY NOI GROWTH

(in natural currency)

Organic Growth

23

Significant income growth driven by recently signed leases at Brookfield Place New York and increasing occupancy

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SLIDE 24

We 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

24

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Property City Interest Sold Net Proceeds

(US$ Millions)

Cap 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%

Asset Sales

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On track to achieve goal of raising $2 billion of equity from asset sales in 2016

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Case Study

26

Acquisition of Potsdamer Platz, Berlin’s premier mixed-use property estate

COMPETITIVE ADVANTAGE

  • Capitalizing on Brookfield’s unique capability to underwrite, acquire

and asset manage a large-scale mixed-use trophy estate that spans

  • ffice, retail, multifamily, hospitality, leisure and gaming
  • 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

STRONG MARKET FUNDAMENTALS

  • Market vacancy at 10-year low in 2016
  • Rental growth in Berlin has consistently outpaced other major

German cities

  • Demand driven by growing technology, media and

telecommunications (TMT) sector tenants particularly strong with 40% of total leases executed

VALUE ENHANCEMENT MEASURES

  • Brookfield expertise in lease-ups of significant vacancy – increased
  • ffice occupancy from 53% to 75% in first 9 months of control
  • 85 residential units had been held vacant by previous owner in

condo conversion exercise; Brookfield’s plan is to aggressively re- lease as rentals to tap into existing apartment demand on the estate

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SLIDE 27

Development 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 to <10% of total assets

  • Focus on prominent, large-scale projects in

high-growth markets

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Development Activity

7.3msf

UNDER DEVELOPMENT

7%

AVERAGE YIELD-ON-COST

$300M

INCREMENTAL NOI

56%

PRE-LEASED

28

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Active Development Projects Building best-in-class regional headquarters premises for a diversified high-credit-quality tenant roster

Project City

  • Sq. Ft.

(000’s)

Pre- Leased Date of Completion Cost1

(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%

29

1) At BPY’s proportionate share

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SLIDE 30

$ 0 $ 100 $ 200 $ 300 2017 2018 2019 2020 2021

Brazil UK Canada U.S.

Development Income At current capitalization rates this income stream is worth ~$7 billion

(US$ in millions) 30

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Next Phase of Developments

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

Over 8 million square foot pipeline will fuel growth post-2021

31

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Insulated from ‘Brexit Effect’…

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  • 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

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

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….and Energy Market Downturn

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  • 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

Energy markets1 are seeing increasing demand from tenants seeking “flight to quality” opportunities which align with Brookfield’s portfolio attributes

1) Data on this slide attributable to BPY’s Core Office business in Houston, Calgary and Perth

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Brookfield 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

34

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Urban Multifamily – Lowell Baron

35

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Brookfield is building a core investment platform of premier Urban Multifamily rental assets

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Creating a long-term, best-in-class urban multifamily business complementary and with similar characteristics to Brookfield’s established, highly regarded global

  • ffice 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

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Brookfield’s History of Multifamily Investment

37

Recapitalizes Fairfield

2010/11 2012 2013 2014 2015

Acquires 4,900 unit portfolio for $500 million Acquires 4,275 unit portfolio for $290 million Acquires 3,962 unit portfolio in Manhattan for $1 billion Privatizes AEC for $2.5 billion - 14,200 unit portfolio 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 Commits $300 million to second Value-Add fund Commits $50 million to first Value-Add fund Construction begins on Manhattan West residential tower (879 units) Acquires four development projects in US representing 2,350 units

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Scale of Operations1

38

129

PROPERTIES

94%

OCCUPANCY

~1,600

EMPLOYEES Seattle Sacramento San Francisco San Jose Los Angeles Inland Empire Denver Dallas Metro San Antonio Houston Miami / Ft. Lauderdale / West Palm Beach Atlanta Washington, DC Metro New Y

  • rk City

Boston Metro Las Vegas Phoenix Detroit Cleveland/ Columbus Indianapolis Charlotte

1) Only includes U.S. assets

Raleigh/Durham T ampa Charlottesville Virginia Beach

~38,000

UNITS

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Why Urban Multifamily?

39

Sources: McKinsey & Com pany, MIT and Edward Glaeser (Harvard Econom ics Professor)

Urbanization

  • 50% of the world’s population lives in cities; figure expected to rise

to 75% by 2050

Global Growth

  • Cities generate 80% of today’s total GDP; figure expected to rise

to 90% by 2050

Concentrated Wealth

  • More urbanized countries have incomes on average 5x those of

less urbanized countries

Social Connectivity

  • People of all ages choose urban living for: (1) Social possibilities

and networking; (2) Attractions, entertainment, shopping and restaurants; (3) Public transit and walkability; (4) Access to medical care and services for seniors

Cities are places of collaboration, innovation and opportunity - The urbanization trend exists because cities make people smarter, healthier and happier

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Historical Returns

40

Multifamily has been one of the top performing asset types

  • ver the long term with a favorable risk-to-return profile

Source: NAREIT (data through 2015)

Sector Compounded Annual Returns Since 1994 Returns/Risk (Sharpe Ratio) Since 1994

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U.S. Multifamily Rent Growth

41

Expected rent growth of 3.7% in 2016 with select markets experiencing double-digit increases

Source: Axiom etrics

Apartment Rent Growth

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U.S. Multifamily Occupancy Rates

42

Historically strong and stable occupancy rates

Apartment Occupancy Rates

Source: Axiom etrics

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U.S. Homeownership Rate

43

Declining homeownership creating incremental demand for apartments

Sources: U.S. Census Bureau, Green Street Advisors

U.S. Homeownership Rate

69.0% 68.9% 68.8% 68.2% 67.8% 67.4% 66.9% 66.2% 65.5% 65.1% 64.5% 63.8% 63.0% 62.8% 62.3% 62.5% 62.7%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Long Term Average – 64%

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Target Markets

44

  • “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 San Francisco San Jose Los Angeles San Diego Denver Dallas Austin Houston Miami Atlanta Washington, DC New York City Boston

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Active Development Projects

45

Project City

# of Units

Date of Completion Cost1

(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%

Active development pipeline with value in excess of $2 billion

1) At BPY’s proportionate share

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Future Development Projects

46

… and value in excess of $1 billion from our future development pipeline

Project City

# of Units

Date of Completion Cost1

(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

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Retail Business – Ashley Lawrence

47

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The 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

48

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Through our 34% fully diluted interest in General Growth Properties (“GGP”) we are invested in 100 of the top 500 malls in the United States

49

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Scale of Operations

50

We have $9 billion of capital invested in Core Retail

128

PROPERTIES

95%

OCCUPANCY

125msf

PORTFOLIO SIZE

$583psf

  • AVG. TENANT SALES
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SLIDE 51

Although there is much publicity about the decline

  • f brick-and-mortar shopping in the face of

increased online retail, the statistics do not support this

51

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Regional Mall Visitation by Generation

52

Sources: GGP Strategy & Analytics, Nielsen Local, 2014-2015. 400,489 respondents

For one, millennials are shopping in malls more than any other living generation

50 100 150 Millenials (18-34) Gen Xers (35-49) Baby Boomers (50-65) Silents (Over 65)

PROPENSITY TO SHOP AT LEAST ONCE EVERY 3 MONTHS (100 = Average Shopper)

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Same-Property Occupancy

53

…and our mall occupancy has stayed consistently in the 95% range for several years

Source: GGP

80% 82% 84% 86% 88% 90% 92% 94% 96% 98% 100% Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016

SAME-PROPERTY OCCUPANCY

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Tenant Sales

54

At the same time our tenants’ sales continue to increase…

$ 500 $ 525 $ 550 $ 575 $ 600 2012 2013 2014 2015

TENANT SALES/PSF

(<10 SF)

Source: GGP

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Core Retail Mall Sales and NOI Percentage by Rank

55

Source: GGP 1) Percentage of GGP’s reported Com pany NOI

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%

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Redeveloping Obsolete Big-Box Stores

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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

  • pportunity to convert these

spaces into more productive uses, including full-service restaurants, chef-driven food halls, high-end grocers, fitness centers and movie theaters.”

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Core Retail – 2016 Asset Sales

57

1) At BPY’s fully-diluted interest

Property City Interest Sold Net Proceeds

(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

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)…

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Core Retail – Development Sites

58

1) At BPY’s proportionate cost

Project City Description Stabilized Year Cost1

(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%

…and reinvesting proceeds into higher-yielding development and redevelopment initiatives

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SLIDE 59

We made an incremental investment in the class B mall sector through the recent privatization of Rouse Properties… Not all B malls are created equal!

59

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SLIDE 60

Rouse Properties

60

35

PROPERTIES

91%

IN-LINE OCCUPANCY

24msf

PORTFOLIO SIZE

$2.9billion

GROSS ASSET VALUE

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Rouse Properties – Mall Portfolio

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In many instances these malls represent the ‘only game in town’ – limited competition and appealing demographics

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We 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

62

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Rouse Properties – Value Creation and Growth

63

  • We have 17 redevelopment projects requiring $155 million to complete at expected

returns of 9-11%

  • We are targeting acquisitions in retail locations along the coasts and in select markets

with high population densities and significant value creation opportunities

Shoppes at Carlsbad Redevelopment Completion Q2 2018

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Opportunistic Investments – Brian Kingston

64

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SLIDE 65

Brookfield Property Partners participates in Opportunistic real estate strategies to diversify the investment portfolio and bolster returns

65

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SLIDE 66

The assets acquired in this strategy are of high-quality, but have operational upside through efficiencies and synergies with Brookfield’s global operating footprint

66

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Investment Approach

67

  • Sectors or markets that are out-of-favor

and where capital is scarce

  • Distressed assets, activist investors /

public-to-private, socioeconomic headwinds

  • Fragmented industries with outsized

returns

  • Avoid auctions
  • Identify operational improvements and

synergies

Counter- Cyclical / Contrarian Investments Multi-faceted / Structured Transactions Proprietary Investments

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SLIDE 68

Case Study

68

Acquisition of Simply Self Storage, the largest privately held self-storage owner/operator in the U.S. and 7th largest overall

Farmington Hills, Michigan Grand Rapids Michigan Brighton, Massachusetts

TRANSACTION MERITS

  • Transaction sourced through Brookfield relationship with

previous owners/operator

  • Forward cap rate of 6.6% represents a significant discount

to recent portfolio transactions in the sector

  • Sector is attractive due to limited new supply and growing

demand

GROWTH OPPORTUNITY

  • Lack of available capital by previous owners provides
  • pportunity to redevelop and add density to existing asset

base

  • Acquire individual, small/medium portfolios in secondary

markets where public REITs are not active

  • Develop new assets in primary and secondary markets

EXPERIENCED MANAGEMENT

  • Existing management team was retained and expanded
  • CEO is a 20 year veteran of the storage sector and is the
  • perating member of a joint venture with Brookfield

Grand Rapids, Michigan

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SLIDE 69

Case Study

69

Acquisition of a portfolio of seven high-quality assets located in prime regions of São Paulo and Rio de Janeiro

CONTRARIAN THESIS

  • 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

relationships with both portfolio owner and owner’s majority shareholder

  • Successful history of investing in market with strong underlying

economic indicators in medium- to long-term

HIGH-QUALITY ASSETS

  • Acquisition, at ~40% discount to replacement cost, of newly

delivered, high-quality assets

  • Portfolio of primarily AAA assets in prime regions of São Paulo

and Rio de Janeiro

STABILITY + GROWTH

  • Long-term leases in place with inflation-protected income

streams to investment-grade multinational tenants

  • Vacancy concentrated in 2 of the 7 properties
  • Ability to fill vacancy by offering competitive rents due to low

investment basis

A lfa Laval São Paulo Cidade Jardim São Paulo JK Complex – Towers D & E São Paulo

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SLIDE 70

BPY Fund Commitments

70

Fund Strategy/Sector(s) Year(s) Size

($US Millions)

BPY (%) Target Return1 BPY’s Equity2

($US Millions)

BSREP II Opportunistic/ Diversified 2015 $ 9,000 26 20%+ $ 1,350 BSREP I Opportunistic/ Diversified 2012 4,350 31 20%+ 1,850 VAMF Series Value-Add/ Multifamily 2011-15 1,900 34 14-16% 300 BREF Series Debt/ Diversified 2004-14 3,125 27 12-13% 200 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 targeted range or within a com parable range or will be able to avoid losses 2) Represents BPY’s invested equity to-date

…We now have $4 billion of capital invested in Opportunistic strategies

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SLIDE 71

71

…Which has given us exposure to new sectors and new geographies with our capital invested alongside partners

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SLIDE 72

…A sizeable pipeline of investments will continue to broaden

  • ur sector and geographic exposure

72

NEW SECTORS

  • In binding agreement to purchase second largest privately held

manufactured housing portfolio in North America

  • Highly-fragmented, recession-resistant sector has achieved positive

same-store NOI growth every quarter for last 20 years

NEW MARKETS

  • In advanced negotiations to acquire the premier, mixed-use 5.4msf

International Financial Center complex in Seoul, South Korea

  • T

enant roster of large, multinational corporations – many ‘repeat customers’ in Brookfield’s global portfolio

  • Discount to replacement cost with upside from active lease-up

strategy and repositioning of retail and hotel offerings

PLATFORM EXPANSION

  • Building on 2014 acquisition of Candor Office Park portfolio in Delhi,

India, in advanced negotiations to acquire a 4.2msf portfolio of prime office and retail properties in Mumbai

  • 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

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SLIDE 73

While our investment in Opportunistic strategies will continue to grow, we intend to limit it to 25% of our balance sheet

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Self-“Fund”ing

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BPY’s Opportunistic investment strategy will be largely self-funding as we begin to harvest capital from legacy funds

2017 2018 2019 2020

$1 $ 2 $ 3 $ 4

CUMULATIVE RETURN OF CAPITAL ($ billions)

BSREP II Other BSREP I

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SLIDE 75

Financial Update – Bryan Davis

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SLIDE 76
  • 1. Positioning our Balance Sheet
  • 2. Stable and growing cash flows

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Multifamily Office Retail Multifamily Office Retail Multifamily

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SLIDE 77

Accomplished our Initial Objectives

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Launched BPY Used BPY equity to acquire Brookfield Office Properties and 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: 1) Active developments 2) Funds 3) Repayment of corporate debt Continued to raise capital from high demand assets and markets to redeploy into higher yielding opportunities

2014 2013

  

2015 2016

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SLIDE 78

Re-shaped our Balance Sheet…

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1) Reflects m andatorily convertible preferred shares as equity ($1.8 billion, 70 m illion units) 2) Diluted IFRS value per unit

(US$ millions, except per unit amount)

2013

BPO & Canary Allocation

  • f Capital

Organic 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 outstanding1 540 241 781 Value per unit2 $ 25 $ 30

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Net Proceeds

(US$ Millions)

Cap Rate 2016 2,000+ 4.0% 2015 2,000 4.5% 2014 1,000 5.5% Total $ 5,000+ 4.5%

Sourced 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:

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2017+ will start to realize significant amounts of capital from ‘first generation’ fund investments

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…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

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Increased 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:

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($ 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

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($ 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% T arget 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

Now positioned to achieve earnings potential

  • Target long-term return on equity of 12-15%:

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SLIDE 83

$1.11

$1.80 2014 2015

$1.18 $1.32+

2016 2021

$2.00

Same store growth of 2-3% – $220m Active developments – $160m Reinvestment of capital at higher returns – $100m

Future 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:

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9%

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SLIDE 84

2015

$1.18

2016 2021

$2.00 $1.60 $1.06

90% 80%

($ per unit)

Funds from operations $ 2.00 Average annual realized gains 0.35 Second generation leasing costs (0.35) Sustaining capital expenditures (0.15) Annual non-cash rents (0.10) Adjusted AFFO $1.75

Conservative payout ratio + diversity of cash flows provides support for current yield

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7%

$1.32 $1.12

85%

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SLIDE 85

Conservative 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

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SLIDE 86

Our long-term goal is to maintain a proportionate debt-to-capital ratio of <50%

  • We have made significant progress in reducing debt levels post the acquisition of BPO and

are continuing to work toward our long-term goal:

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53% 50%

($ in millions)

Repay unsecured bonds $ (400) Reduce corporate and subsidiary debt (1,600) $ (2,000)

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SLIDE 87

38% 25%

($ in millions)

Reduce corporate and subsidiary debt (4%) Planned refinances (4%) Swap to fixed in floating rate markets (3%) Convert construction financing to permanent (2%) (13%)

We 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

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SLIDE 88

We 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:

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(£ in millions)

T

  • tal 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%

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SLIDE 89

Wrap-up / Q&A – Brian Kingston

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SLIDE 90

Global 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

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BPY 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:

$ 23 Year 1 Year 2 Year 5 Year 10 Current Yield

(5-8% distribution growth)

+

Appreciation

(Multiple of 8-11% FFO growth)

+

Investment

(as of NYSE closing on 9/27/16)

$ 16

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Today $ 38

$ 77 $ 42

$ 7 $ 12 $ 23 $ 23 13%

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SLIDE 92

Q&A

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SLIDE 93

Special 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,

  • pportunities, 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 cash 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.

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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

  • w 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

  • n 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 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.

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SLIDE 94

Special 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 substitute 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.

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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.

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SLIDE 95

Brookfield Property Partners L.P. 2016

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