Brookfield Property Partners L.P. (NASDAQ: BPY; NASDAQ: BPYU; TSX:
BPY.UN) (“BPY”) today announced financial results for the quarter
ended September 30, 2020.
“We saw consistent improvement in our operations
over the course of the third quarter and, while there may be
temporary setbacks as different regions reach different stages of
recovery, we are confident that the worst of the economic shutdown
is now behind us,” said Brian Kingston, Chief Executive Officer.
"Our staff has done an amazing job preparing our buildings for safe
re-opening and each day it is gratifying to see more office
workers, retailers, customers and visitors returning to our
properties around the globe." Financial
Results
Company FFO (CFFO) was $161 million for the
quarter ended September 30, 2020, compared to $324 million in the
prior-year period. CFFO was impacted this quarter by residual
effects of the global economic shutdown earlier in the year. In the
prior-year period, CFFO also benefited from the recognition of $41
million in transaction income.
Net income for the quarter ended September 30,
2020 was a loss of $135 million ($(0.24) per LP unit) versus a gain
of $870 million ($0.46 per LP unit) for the same period in 2019.
The decrease in net income over the prior year period is primarily
attributable to a non-cash and unrealized reduction of asset values
of certain assets within the portfolio.
|
Three months ended Sep. 30, |
Nine months ended Sep. 30, |
(US$
Millions, except per unit amounts) |
2020 |
2019 |
2020 |
2019 |
Net income(1) |
$ |
(135 |
) |
|
$ |
870 |
|
$ |
(2,020 |
) |
|
$ |
1,606 |
|
Company FFO and realized
gains(2) |
$ |
164 |
|
|
$ |
324 |
|
$ |
665 |
|
|
$ |
1,053 |
|
Company FFO(2) |
$ |
161 |
|
|
$ |
324 |
|
$ |
648 |
|
|
$ |
966 |
|
Net income per LP
unit(3)(4) |
$ |
(0.24 |
) |
|
$ |
0.46 |
|
$ |
(1.98 |
) |
|
$ |
0.90 |
|
Company
FFO and realized gains per unit(4)(5) |
$ |
0.16 |
|
|
$ |
0.34 |
|
$ |
0.68 |
|
|
$ |
1.09 |
|
(1) |
Consolidated
basis – includes amounts attributable to non-controlling
interests. |
(2) |
See "Basis of Presentation" and “Reconciliation of Non-IFRS
Measures” 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 shares that are
mandatorily convertible into LP units at a price of $25.70 without
an add-back to earnings of the associated carry on the preferred
shares. |
(4) |
Net income attributable to holders of LP units and Company FFO
and realized gains per unit are reduced by preferred dividends of
$11 million (2019 – $5 million) and $31 million (2019 – $8 million)
for the three and nine months ended September 30, 2020,
respectively, in determining per unit amounts. |
(5) |
Company FFO and realized gains per unit are calculated based on
933.5 million (2019 – 950.1 million) and 937.5 million (2019 –
957.6 million) units outstanding for the three and nine months
ended September 30, 2020, respectively. |
Operating Highlights
Our Core Office business generated CFFO of $141
million for the quarter ended September 30, 2020 compared to $137
million on a comparable basis in the same period in 2019, and $150
million in total when including the $13 million performance-based
fee. Results this quarter were also impacted by reduced
contributions from our parking and retail operations, offset by
same-store NOI growth in certain of our markets and $18 million in
contributions from condominium sales in London.
Core Office leasing activity in the third
quarter totaled 644,000 square feet, which were completed at rents
13% higher on average than expiring leases in the period. Occupancy
in the portfolio decreased 160 basis points to 90.7%, with a
remaining weighted average lease term of 8.3 years.
Our Core Retail business generated CFFO of $97
million for the quarter ended September 30, 2020 compared to $173
million on a comparable basis in 2019, and $201 million in total
when including the $28 million in transaction income. The current
quarter results continue to be impacted by the global economic
slowdown which caused a decline in mall revenues, fee income, and
an increase in credit loss reserves. Additionally, operating
expenses resumed at near normalized levels as all of our centers
reopened during the quarter and we are not yet operating at 100%
capacity.
Our Core Retail operations leased approximately
6.5 million square feet over the past 12 months with comparable
rent spreads of 5%. Our properties were 93.4% leased at September
30, 2020, a decrease of 1.6% from the prior year. On a
year-over-year basis, in-place rents were up 1.4%1.
Our LP Investments generated CFFO and realized
gains of $26 million for the quarter ended September 30, 2020,
compared to earnings of $74 million in the comparable period in
2019. Results in the current quarter were negatively impacted by a
year-over-year decrease in earnings from our Hospitality
investments of $38 million due to hotel closures and travel
restrictions, as well as a decrease in contributions from our
Multifamily business where we sold properties last year.
______________________________1 In-place rents
reflect retail tenants <10K square feet
|
|
|
|
Three months ended Sep. 30, |
Nine months ended Sep. 30, |
(US$
Millions) |
2020 |
2019 |
2020 |
2019 |
Company FFO and realized
gains: |
|
|
|
|
Core Office |
$ |
141 |
|
|
$ |
150 |
|
|
$ |
402 |
|
|
$ |
477 |
|
Core Retail |
$ |
97 |
|
|
$ |
201 |
|
|
$ |
432 |
|
|
$ |
555 |
|
LP Investments |
$ |
26 |
|
|
$ |
74 |
|
|
$ |
94 |
|
|
$ |
326 |
|
Corporate |
$ |
(100 |
) |
|
$ |
(101 |
) |
|
$ |
(263 |
) |
|
$ |
(305 |
) |
Company FFO and realized gains(1) |
$ |
164 |
|
|
$ |
324 |
|
|
$ |
665 |
|
|
$ |
1,053 |
|
(1) |
See "Basis of Presentation" and "Reconciliation of Non-IFRS
Measures" below in this press release for the definitions and
components. |
Dispositions
In the third quarter, we completed $86 million
of gross asset dispositions at our share, generating approximately
$63 million in net proceeds to BPY.
Subsequent to quarter-end, we entered into sales
contracts on two transactions at higher values than our IFRS
carrying values. Completion of these shortly will generate
approximately $235 million of net proceeds to BPY:
- One London Wall Place in London for
£480 million ($620 million), representing a 3.8% cap rate. We
acquired the remaining half of this property from our joint venture
partner in November of last year and are selling the entire
property now at a strong return.
- Simply Self Storage portfolio for
$1.225 billion.
New Investments
- We reorganized our investment in
the Atlantis which resulted in our ownership increasing from 33% to
41.5%. With the assistance of the Bahamian government, we have
established a COVID-19 bubble at the Atlantis which will allow us
to once again welcome visitors to the resort on or after December
15, 2020. We have procured rapid testing facilities which will be
located on-site and will test all of our employees, and guests will
be tested prior to boarding their flights. The Atlantis Bubble will
follow the Cleveland Clinic protocols, allowing our guests to enjoy
all of the resort’s beach, water park, casino and other
entertainment options. We plan to start flying planes to the resort
beginning December 15 from east coast locations, including New
York, Toronto and Montreal.
Balance Sheet Update
To increase liquidity and extend the maturity of
our debt, during the third quarter we executed the following
financing transactions:
- Refinanced One Manhattan West in
New York for $1.8 billion for a seven-year term at a fixed-rate,
weighted-average coupon of 2.94%. Net proceeds of $138 million were
generated for BPY.
- Refinanced EY Plaza in Los Angeles
for $305 million with a five-year term at a floating interest rate
of LIBOR +3.25%. Net proceeds of $19 million were generated for
BPY.
- Refinanced 22 Front Street in
Toronto for C$52.5 million ($39.4 million) with a five-year term at
a floating rate of Canadian Dollar Offered Rate (CDOR) +2.5%. Net
proceeds of C$38 million ($29 million) were generated for BPY and
the cost of debt reduced by over 300 bps.
- Extended debt maturity at
Brookfield Place Calgary East for a further two years at a floating
rate of approximately LIBOR +3%.
- Extended mortgage maturities on
five Core Retail assets totaling approximately $1.2 billion at a
blended interest rate of 3.74%.
- Issued C$500 million in 5-year
medium term notes at a fixed interest rate of 3.93%. Proceeds are
being used to fund recently completed and future green
initiatives.
- Subsequent to quarter-end,
refinanced Oakbrook Center in Chicago for $475 million with a
two-year (three years fully extended) term at a floating interest
rate of LIBOR +3.50%.
Ended the quarter with $6.0 billion of
group-wide liquidity, including $1.6 billion of cash on hand, $3.0
billion of corporate and subsidiary credit facilities and $1.4
billion of undrawn construction facilities.
Unit Repurchases
On September 2, 2020, through a substantial
issuer bid ("SIB"), we purchased 35.5 million of BPY's limited
partnership units from the public for a price of $12.00 per unit,
for a total value of approximately $426 million. The SIB was funded
by drawing on an equity commitment with Brookfield Asset Management
and certain of its institutional clients.
Utilizing our in-place normal course issuer bid
(“NCIB”), we purchased 9,949,466 of BPY units in the third quarter
of 2020 at an average price of $11.33 per unit. The NCIB was funded
by drawing on the equity commitment.
Board of Directors Update
The Board of Directors of BPY is pleased to
announce the appointment of a new director, Michael Warren. Mr.
Warren is the Global Managing Director of Albright Stonebridge
Group, a premier strategic advisory firm advising senior executives
on their mission-critical business priorities across the globe. He
serves on the boards of Commonfund, Walker and Dunlop, MAXIMUS, is
a trustee of the Yale University Corporation and the Yale Endowment
Investment Committee.
Concurrent with Mr. Warren's appointment, the
Board also announced the resignation of director Scott Cutler, who
will be joining the board of affiliate company Brookfield Renewable
Partners (NYSE, TSX: BEP). Mr. Cutler has been an integral member
of the BPY board since February 2019 and we thank him for his
various contributions and dedication and wish him well in his new
role at BEP.
Distribution Declaration
The Board of Directors has declared a quarterly
distribution on the partnership’s LP units of $0.3325 per unit
payable on December 31, 2020 to unitholders of record at the close
of business on November 30, 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,
Series 2 and Series 3 preferred units of $0.40625 per unit,
$0.39844 per unit and $0.35938, respectively, payable on December
31, 2020 to holders of record at the close of business on December
1, 2020.
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 November 6, 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.
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 approximately $575
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 Contacts:
Matt
Cherry |
Kerrie
McHugh |
Senior Vice President, Investor Relations |
Senior Vice President, Communications and Branding |
Tel: (212) 417-7488 |
Tel: (212) 618-3469 |
Email: matthew.cherry@brookfield.com |
Email: kerrie.mchugh@brookfield.com |
Conference Call and Quarterly Earnings
Details
Investors, analysts and other interested parties
can access BPY’s third quarter 2020 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 November 6, 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 +1 (478) 219-0399 for
overseas calls, conference ID: 9887182 , five minutes prior to the
scheduled start of the call. A recording of the teleconference can
be accessed by dialing +1 (855) 859-2056 toll-free in the U.S. and
Canada or +1 (404) 537-3406 for overseas calls, conference ID:
9887182.
Forward-Looking Statements
This communication contains “forward-looking
information” within the meaning of applicable securities laws and
regulations. Forward-looking statements include statements that 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, 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.”
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, including as a result of the
recent global economic shutdown; 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 exchange 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, hurricanes or
pandemics/epidemics; and other risks and factors detailed from time
to time in our documents filed with the securities regulators in
Canada and the United States. In addition, our future results may
be impacted by risks associated with the global economic shutdown
caused by a novel strain of coronavirus, COVID-19, and the related
global reduction in commerce and travel and substantial volatility
in stock markets worldwide, which may result in a decrease of cash
flows and impairment losses and/or revaluations on our investments
and real estate properties, and we may be unable to achieve our
expected returns.
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.
CONSOLIDATED BALANCE SHEETS
|
Sep. 30, |
Dec. 31, |
(US$
Millions) |
2020 |
2019 |
Assets |
|
|
Investment properties |
$ |
73,246 |
|
$ |
75,511 |
|
Equity accounted investments
in properties |
19,573 |
|
20,764 |
|
Property, plant and
equipment |
4,980 |
|
7,278 |
|
Financial assets |
1,448 |
|
1,250 |
|
Accounts receivable and
other |
5,441 |
|
5,015 |
|
Cash and cash equivalents |
1,803 |
|
1,438 |
|
Assets held for sale |
1,757 |
|
387 |
|
Total Assets |
$ |
108,248 |
|
$ |
111,643 |
|
Liabilities |
|
|
Corporate borrowings |
$ |
2,721 |
|
$ |
1,902 |
|
Asset-level debt
obligations |
45,253 |
|
47,466 |
|
Subsidiary borrowings,
non-recourse to BPY |
6,574 |
|
6,022 |
|
Capital securities |
3,037 |
|
3,075 |
|
Deferred tax liability |
2,615 |
|
2,515 |
|
Accounts payable and other
liabilities |
5,784 |
|
5,588 |
|
Liabilities associated with
assets held for sale |
825 |
|
140 |
|
Equity |
|
|
Preferred equity |
699 |
|
420 |
|
General partner |
4 |
|
4 |
|
Limited partners |
11,706 |
|
13,274 |
|
Non-controlling interests
attributable to: |
|
|
Limited partner units of the
operating partnership held by Brookfield Asset Management Inc. |
12,327 |
|
13,200 |
|
Limited partner units of
Brookfield Office Properties Exchange LP |
74 |
|
87 |
|
FV LTIP units of the operating
partnership |
51 |
|
35 |
|
Class A shares of Brookfield
Property REIT Inc. |
1,127 |
|
1,930 |
|
Interests of others in
operating subsidiaries and properties |
15,451 |
|
15,985 |
|
Total Equity |
41,439 |
|
44,935 |
|
Total Liabilities and Equity |
$ |
108,248 |
|
$ |
111,643 |
|
CONSOLIDATED STATEMENT OF
OPERATIONS
|
Three Months Ended |
Nine Months Ended |
|
Sep. 30, |
Sep. 30, |
(US$
Millions) |
2020 |
2019 |
2020 |
2019 |
Commercial property and hospitality revenue |
$ |
1,54 |
|
$ |
1,852 |
|
$ |
4,666 |
|
$ |
5,706 |
|
Direct commercial property and
hospitality expense |
(677 |
) |
(776 |
) |
(1,998 |
) |
(2,403 |
) |
|
868 |
|
1,076 |
|
2,668 |
|
3,303 |
|
Investment and other
revenue |
91 |
|
165 |
|
307 |
|
410 |
|
Share of net earnings from
equity accounted investments |
76 |
|
409 |
|
(717 |
) |
1,499 |
|
|
1,035 |
|
1,650 |
|
2,258 |
|
5,212 |
|
Expenses |
|
|
|
|
Interest expense |
(642 |
) |
(738 |
) |
(1,950 |
) |
(2,194 |
) |
Depreciation and
amortization |
(83 |
) |
(86 |
) |
(253 |
) |
(256 |
) |
General and administrative
expense |
(205 |
) |
(214 |
) |
(596 |
) |
(656 |
) |
Investment and other
expense |
(5 |
) |
— |
|
(18 |
) |
(10 |
) |
|
100 |
|
612 |
|
(559 |
) |
2,096 |
|
Fair value gains, net |
(156 |
) |
449 |
|
(1,269 |
) |
(273 |
) |
Income tax (expense)
benefit |
(79 |
) |
(191 |
) |
(192 |
) |
(217 |
) |
Net income |
$ |
(135 |
) |
$ |
870 |
|
$ |
(2,020 |
) |
$ |
1,606 |
|
|
|
|
|
|
Net income attributable
to: |
|
|
|
|
General partner |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
Limited partners |
(107 |
) |
218 |
|
(919 |
) |
418 |
|
Non-controlling
interests: |
|
|
|
|
Limited partner units of the
operating partnership held by Brookfield Asset Management Inc. |
(109 |
) |
218 |
|
(923 |
) |
427 |
|
Limited partner units of
Brookfield Office Properties Exchange LP |
(1 |
) |
2 |
|
(6 |
) |
3 |
|
FV LTIP units of the operating
partnership |
— |
|
— |
|
(3 |
) |
— |
|
Class A shares of Brookfield
Property REIT |
(12 |
) |
36 |
|
(117 |
) |
86 |
|
Interests of others in
operating subsidiaries and properties |
94 |
|
396 |
|
(52 |
) |
672 |
|
|
$ |
(135 |
) |
$ |
870 |
|
$ |
(2,020 |
) |
$ |
1,606 |
|
RECONCILIATION OF NON-IFRS
MEASURES
|
Three Months Ended |
Nine Months Ended |
|
Sep. 30, |
Sep. 30, |
(US$
Millions) |
2020 |
2019 |
2020 |
2019 |
Commercial property and hospitality revenue |
$ |
1,545 |
|
$ |
1,852 |
|
$ |
4,666 |
|
$ |
5,706 |
|
Direct commercial property and
hospitality expense |
|
(677 |
) |
|
(776 |
) |
|
(1,998 |
) |
|
(2,403 |
) |
NOI |
|
868 |
|
|
1,076 |
|
|
2,668 |
|
|
3,303 |
|
Investment and other
revenue |
|
91 |
|
|
165 |
|
|
307 |
|
|
410 |
|
Share of equity accounted
income excluding fair value gains |
|
151 |
|
|
177 |
|
|
516 |
|
|
622 |
|
Interest expense |
|
(642 |
) |
|
(738 |
) |
|
(1,950 |
) |
|
(2,194 |
) |
General and administrative
expense |
|
(205 |
) |
|
(214 |
) |
|
(596 |
) |
|
(656 |
) |
Investment and other
expense |
|
(5 |
) |
|
— |
|
|
(18 |
) |
|
(10 |
) |
Depreciation and amortization
of non-real estate assets |
|
(18 |
) |
|
(14 |
) |
|
(53 |
) |
|
(45 |
) |
Non-controlling interests of
others in operating subsidiaries and properties in FFO |
|
(106 |
) |
|
(191 |
) |
|
(296 |
) |
|
(620 |
) |
FFO |
|
134 |
|
|
261 |
|
|
578 |
|
|
810 |
|
Depreciation and amortization
of non-real estate assets, net(1) |
|
13 |
|
|
10 |
|
|
36 |
|
|
31 |
|
Transaction costs(1) |
|
7 |
|
|
35 |
|
|
5 |
|
|
72 |
|
Gains/losses on disposition of
non-investment properties(1) |
|
— |
|
|
1 |
|
|
3 |
|
|
— |
|
Imputed Interest(2) |
|
5 |
|
|
15 |
|
|
21 |
|
|
42 |
|
LP Investments realized
gains(3) |
|
3 |
|
|
— |
|
|
17 |
|
|
87 |
|
BSREP III earnings(4) |
|
2 |
|
|
2 |
|
|
5 |
|
|
11 |
|
Company FFO and realized gains |
$ |
164 |
|
$ |
324 |
|
$ |
665 |
|
$ |
1,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO |
$ |
134 |
|
$ |
261 |
|
$ |
578 |
|
$ |
810 |
|
Depreciation and amortization
of real estate assets |
|
(65 |
) |
|
(72 |
) |
|
(200 |
) |
|
(211 |
) |
Fair value (losses) gains,
net |
|
(156 |
) |
|
449 |
|
|
(1,269 |
) |
|
(273 |
) |
Share of equity accounted
income - Non FFO |
|
(75 |
) |
|
232 |
|
|
(1,233 |
) |
|
877 |
|
Income tax (expense)
benefit |
|
(79 |
|
|
(191 |
) |
|
(192 |
) |
|
(217 |
) |
Non-controlling interests of
others in operating subsidiaries and properties in non-FFO |
|
12 |
|
|
(205 |
) |
|
348 |
|
|
(52 |
) |
Non-controlling interests of
others in operating subsidiaries and properties |
|
94 |
|
|
396 |
|
|
(52 |
) |
|
672 |
|
Net income |
$ |
(135 |
) |
$ |
870 |
|
$ |
(2,020 |
) |
$ |
1,606 |
|
(1)
Presented net of non-controlling interests on a proportionate
basis. |
(2) Represents
imputed interest on commercial developments accounted for under the
equity method under IFRS. |
(3 )Net of
associated carried interest to be due at a future date. |
(4) BSREP III is
now accounted for as a financial asset which results in FFO being
recognized in line with distributions. As such, the BSREP III
earnings adjustment reflects our proportionate share of the Company
FFO. |
NET INCOME PER UNIT
|
Three months ended |
|
Sep. 30, 2020 |
|
Sep. 30, 2019 |
(US$
Millions, except per unit amounts) |
Net income attributable to Unitholders |
Average number of
units |
Per unit |
|
Net income attributable to Unitholders |
Average number of units |
Per unit |
Basic |
$ |
(229 |
) |
933.5 |
|
$ |
(0.25 |
) |
|
$ |
474 |
|
950.1 |
|
$ |
0.50 |
Preferred share dividends |
(11 |
) |
— |
|
— |
|
|
(5 |
) |
— |
|
— |
Number
of units on conversion of preferred shares(1) |
— |
|
70.1 |
|
— |
|
|
— |
|
70.1 |
|
— |
Basic
per IFRS |
(240 |
) |
1,003.6 |
|
(0.24 |
) |
|
469 |
|
1,020.2 |
|
0.46 |
Dilutive effect of conversion of capital securities and
options(2) |
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
Fully-diluted per IFRS |
$ |
(240 |
) |
1,003.6 |
|
$ |
(0.24 |
) |
|
$ |
469 |
|
1,020.2 |
|
$ |
0.46 |
(1) IFRS requires
the inclusion of preferred shares that are mandatorily convertible
into units at a price of $25.70 without an add back to earnings of
the associated carry on the preferred shares. |
(2) For the three
months ended September 30, 2020, capital securities were fully
redeemed and therefore excluded from the calculation of
fully-diluted net income per IFRS. |
|
|
|
|
|
|
|
|
|
Three months ended |
|
Sep. 30, 2020 |
|
Sep. 30, 2019 |
(US$
Millions, except per unit amounts) |
Net income attributable to Unitholders |
Average number of
units |
Per unit |
|
Net income attributable to Unitholders |
Average number of units |
Per unit |
Basic per management |
$ |
(229 |
) |
933.5 |
|
$ |
(0.25 |
) |
|
$ |
474 |
|
950.1 |
|
$ |
0.50 |
Preferred share dividends |
(11 |
) |
— |
|
— |
|
|
(5 |
) |
— |
|
— |
Dilutive effect of conversion
of preferred shares(1) |
29 |
|
70.1 |
|
0.41 |
|
|
29 |
|
70.1 |
|
0.41 |
Dilutive effect of conversion of capital securities and
options(2) |
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
Fully-diluted per management |
$ |
(211 |
) |
1,003.6 |
|
$ |
(0.21 |
) |
|
$ |
498 |
|
1,020.2 |
|
$ |
0.49 |
(1) Represents
preferred shares that are mandatorily convertible into units at a
price of $25.70 and the associated carry. |
(2) For the three
months ended September 30, 2020, capital securities were fully
redeemed and therefore excluded from the calculation of
fully-diluted net income per IFRS. |
NET INCOME PER UNIT
|
Nine months ended |
|
Sep. 30, 2020 |
|
Sep. 30, 2019 |
(US$
Millions, except per unit amounts) |
Net income attributable to Unitholders |
Average number of units |
Per unit |
|
Net income attributable to Unitholders |
Average number of units |
Per unit |
Basic |
$ |
(1,968 |
) |
937.5 |
|
$ |
(2.10 |
) |
|
$ |
934 |
|
957.6 |
|
$ |
0.98 |
Preferred share dividends |
(31 |
) |
— |
|
— |
|
|
(8 |
) |
— |
|
— |
Number
of units on conversion of preferred shares(1) |
— |
|
70.1 |
|
— |
|
|
— |
|
70.1 |
|
— |
Basic
per IFRS |
(1,999 |
) |
1,007.6 |
|
(1.98 |
) |
|
926 |
|
1,027.7 |
|
0.90 |
Dilutive effect of conversion of capital securities and
options(2) |
— |
|
— |
|
— |
|
|
8 |
|
9.0 |
|
0.89 |
Fully-diluted per IFRS |
$ |
(1,999 |
) |
1,007.6 |
|
$ |
(1.98 |
) |
|
$ |
934 |
|
1,036.7 |
|
$ |
0.90 |
(1) IFRS requires
the inclusion of preferred shares that are mandatorily convertible
into units at a price of $25.70 without an add back to earnings of
the associated carry on the preferred shares. |
(2) For the nine
months ended September 30, 2020, capital securities were fully
redeemed and therefore excluded from the calculation of
fully-diluted net income per IFRS. |
|
|
|
|
|
|
|
|
|
Nine months ended |
|
Sep. 30, 2020 |
|
Sep. 30, 2019 |
(US$
Millions, except per unit amounts) |
Net income attributable to Unitholders |
Average number of units |
Per unit |
|
Net income attributable to Unitholders |
Average number of units |
Per unit |
Basic per management |
$ |
(1,968 |
) |
937.5 |
|
$ |
(2.10 |
) |
|
$ |
934 |
|
957.6 |
|
$ |
0.98 |
Preferred share dividends |
(31 |
) |
— |
|
— |
|
|
(8 |
) |
— |
|
— |
Dilutive effect of conversion
of preferred shares(1) |
88 |
|
70.1 |
|
1.26 |
|
|
88 |
|
70.1 |
|
1.26 |
Dilutive effect of conversion of capital securities and
options(2) |
— |
|
— |
|
— |
|
|
8 |
|
9.0 |
|
0.89 |
Fully-diluted per management |
$ |
(1,911 |
) |
1,007.6 |
|
$ |
(1.90 |
) |
|
$ |
1,022 |
|
1,036.7 |
|
$ |
0.99 |
(1) Represents
preferred shares that are mandatorily convertible into units at a
price of $25.70 and the associated carry. |
(2) For nine
months ended September 30, 2020, capital securities were fully
redeemed and therefore excluded from the calculation of
fully-diluted net income per IFRS. |
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