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Brookfield Property Partners Reports First Quarter 2013 Results

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HAMILTON, BERMUDA -- (Marketwired) -- 05/01/13 -- Brookfield Property Partners L.P. (NYSE: BPY) (TSX: BPY.UN) today announced financial results for the quarter ended March 31, 2013 for the commercial property operations of Brookfield Asset Management Inc. ("Brookfield carve-out"). Brookfield Property Partners also provided pro forma financial results that reflect the Brookfield carve-out financial statements with adjustments to give effect to the spinoff and the acquisition by Brookfield Property Partners of its business and assets as of March 31, 2013 (in the case of the statement of financial position data) and January 1, 2012 (in the case of the statement of operations data). A reconciliation of the Brookfield carve-out financial results to the pro forma financial results is provided in Appendix A.

"Brookfield Property Partners is an ideal security for investors seeking diversified exposure to best in class real estate on a global basis," stated Ric Clark, Chief Executive Officer. "We're pleased that we are now listed on the New York and Toronto stock exchanges and are pursuing investment opportunities in all sectors and across multiple geographies."


Pro Forma Financial Results(US$ millions) Three months ended March 31, 2013 2012 --------- ---------Total revenue $ 1,125 $ 752Funds from operations ("FFO") (1) 149 123Total Return(1) 357 526Net income 539 673 --------- ---------Net income attributable to limited partnership units ("LP Units") $ 49 $ 60Net income attributable to redeemable/exchangeable operating partnership units held by Brookfield ("REUs") 241 297 --------- ---------Net income attributable to LP Units and REUs 290 357Net income attributable interests of others in consolidated subsidiaries 249 316 --------- ---------Net income $ 539 $ 673 --------- --------- Mar. 31, Dec. 31, 2013 2012 --------- ---------Total assets $ 47,809 $ 47,145Total liabilities 24,953 24,471Equity attributable to LP Units 2,011 1,998Non-controlling interests of others in consolidated subsidiaries 10,974 10,865Non-controlling interests attributable to REUs 9,871 9,811 --------- ---------(1) FFO and Total Return represent interests attributable to LP Units and REUs. The interests attributable to REUs are presented as non-controlling interests in the pro forma statement of income. See "Pro-forma Reconciliation of NOI, FFO and Total Return to Net Income" below in this news release for the components FFO.




FFO for the quarter ended March 31, 2013 was $149 million which was an increase of $26 million from the prior year period.

Total Return for the quarter ended March 31, 2013 was $357 million which was a decrease of $169 million from the prior year period, primarily a result of significant valuation gains in the prior year partially offset by the increase in FFO in the current period.

Net income attributable to LP Units and REUs for the quarter ended March 31, 2013 was $49 million and $241 million, respectively, totalling $290 million, a decrease of $67 million from the prior year period.

Volume Weighted Average Trading Price

On April 15, 2013, Brookfield Asset Management Inc. ("Brookfield") paid a special dividend of one unit of Brookfield Property Partners per 17.42 shares held by shareholders of record as of March 26, 2013. On April 15, 2013, the units commenced trading on the New York Stock Exchange ("NYSE") and the Toronto Stock Exchange ("TSX") under the symbols "BPY" and "BPY.UN," respectively. Generally, the tax cost of Brookfield Property Partners units received on March 26, 2013 should equal their fair market value on that date. Neither U.S. nor Canadian tax rules specify the method to determine fair market value in this situation; however, a commonly used method is the weighted average trading price of the units on the NYSE and TSX for the five trading days commencing on April 15, 2013 which is $21.8271 and CAD $22.3805 respectively.

This summary is not intended to be, nor should it be construed to be, legal or tax advice to any particular holder of Brookfield Property Partners units, and no representation with respect to the U.S. and Canadian income tax consequences to any particular holder is made. Consequently, holders of Brookfield Property Partners units are advised to consult their own tax advisors with respect to their particular circumstances.

Significant Transactions During the First Quarter

Brookfield Property Partners, directly or through affiliates, acquired seven real estate assets totaling over $546 million and disposed of seven real estate assets totaling $308 million, generating $36 million net proceeds (at share) during the first quarter of 2013. Highlights from the quarter include:

Office

•Sold one non-core office asset, RBC Plaza in Minneapolis, for approximately $127 million •Entered into merger agreement to acquire MPG Office Trust subsequent to quarter end

Retail

•Divested one non-core retail mall for $80 million •Acquired $157 million of L.P. interest in Rouse Properties Inc. shares and General Growth Properties Inc. shares and warrants subsequent to quarter end

Multi-family

•Closed on nine properties for a gross purchase price of $213 million •Completed over $240 million value-add multi-family acquisitions in the U.S.

Industrial

•Obtained financings at three properties allowing us to return $60 million of total equity

Opportunistic & Other

•Acquired a Los Angeles based office campus consisting of nine buildings for $90 million

Dividend Declaration

The Board of Directors of Brookfield Property Partners declared a quarterly common unit dividend of $0.1277 per unit payable on June 28, 2013 to unitholders of record at the close of business on May 31, 2013. Unitholders resident in the United States will receive payment in U.S. dollars and unitholders resident in Canada will receive their dividends in Canadian dollars at the exchange rate on the record date, unless they elect otherwise. The dividend, calculated for the period from April 15, 2013 to May 31, 2013, represents an annualized dividend of $1.00 per unit.

Additional Information

Further details regarding the operations of Brookfield Property Partners 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 Brookfield Property Partners' SEDAR profile at www.sedar.com.

Brookfield Property Partners is a commercial real estate owner, operator and investor operating globally. Our diversified portfolio includes interests in over 300 office and retail properties encompassing approximately 250 million square feet. In addition, we have interests in approximately 19,800 multi-family units, 29 million square feet of industrial space and an 18 million square foot office development pipeline. Our goal is to be the leading global investor in best in class commercial property assets. For more information, please visit www.brookfieldpropertypartners.com.

Forward-Looking Statements

This news release contains "forward-looking information" within the meaning of Canadian provincial securities laws and applicable regulations and "forward-looking statements" within the meaning of "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding our operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods, and include words such as "expects", "anticipates", "plans", "believes", "estimates", "seeks", "intends", "targets", "projects", "forecasts", "likely", or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could".

Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.

Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: risks incidental to the ownership and operation of real estate properties including local real estate conditions; the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business; the ability to enter into new leases or renew leases on favourable terms; business competition; dependence on tenants' financial condition; the use of debt to finance our business; the behavior of financial markets, including fluctuations in interest and foreign exchanges rates; uncertainties of real estate development or redevelopment; global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; risks relating to our insurance coverage; the possible impact of international conflicts and other developments including terrorist acts; potential environmental liabilities; changes in tax laws and other tax related risks; dependence on management personnel; illiquidity of investments; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits therefrom; operational and reputational risks; catastrophic events, such as earthquakes and hurricanes; and other risks and factors detailed from time to time in our documents filed with the securities regulators in Canada and the United States.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements or information, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise.

Basis of Presentation

This press release and accompanying financial information make reference to net operating income and funds from operations on a total and per share basis. Net operating income is defined as revenues from commercial and hospitality operations of consolidated properties less direct commercial property and hospitality expenses, with the exception of depreciation and amortization of real estate assets. Brookfield Property Partners defines FFO as income, including equity accounted income, before realized gains (losses), 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 consolidated subsidiaries, but before non-controlling interests in the REUs. The company uses net operating income and FFO to assess its operating results. Net operating income is important in assessing operating performance and FFO is a widely-used measure to analyze real estate. The company provides the components of net operating income and a full reconciliation from net income to FFO with the financial information accompanying this press release. The company reconciles FFO to net income as opposed to cash flow from operating activities as it believes net income is the most comparable measure. Total Return is defined as income before income tax expense (benefit) and related non-controlling interests, and represents the amount by which we increase the value of our common equity through funds from operations and the increase or decrease in value of our investment properties over a period of time. We believe that our performance is best assessed by considering these two components in aggregate, and over the long term, because that is the basis on which we make investment decisions and operate the business. In fact, if we were solely focused on short-term financial results, it is quite likely that we would operate the business very differently and, in our opinion, in a manner that would produce lower long-term returns. Net operating income, FFO and Total Return are measures which do not have any standard meaning and therefore may not be comparable to similar measures presented by other companies.


Consolidated Balance Sheet(US$ Millions) Carve-out (1) Pro forma Mar. 31, Dec. 31, Mar. 31, Dec. 31, 2013 2012 2013 2012 -------- -------- -------- --------AssetsNon-current assetsInvestment properties $ 32,336 $ 31,859 $ 31,415 $ 30,956Equity accounted investments 8,169 8,110 7,594 7,539Participating loan notes - - 790 775Other non-current assets 5,522 5,636 5,522 5,537Loans and notes receivable 283 246 283 246 -------- -------- -------- -------- 46,310 45,851 45,604 45,053 -------- -------- -------- --------Current assetsLoans and notes receivable 162 237 138 212Accounts receivable and other 1,098 1,022 1,128 975Cash and cash equivalents 970 910 939 905 -------- -------- -------- -------- 2,230 2,169 2,205 2,092 -------- -------- -------- --------Total assets $ 48,540 $ 48,020 $ 47,809 $ 47,145 ======== ======== ======== ========Liabilities and equity in net assetsNon-current liabilitiesProperty debt $ 17,673 16,358 $ 17,089 $ 15,785Capital securities 650 664 1,900 1,914Other non-current liabilities 585 441 585 439Deferred tax liability 1,073 997 1,174 1,075 -------- -------- -------- -------- 19,981 18,460 20,748 19,213 -------- -------- -------- --------Current liabilitiesProperty debt 2,855 3,366 2,855 3,366Capital securities - 202 - 202Accounts payable and other liabilities 1,345 1,747 1,350 1,690 -------- -------- -------- -------- 4,200 5,315 4,205 5,258 -------- -------- -------- --------Total liabilities 24,181 23,775 24,953 24,471 -------- -------- -------- --------Equity in net assetsNon-controlling interestsInterests of others in consolidated subsidiaries 11,002 10,870 10,974 10,865Redeemable/Exchangeable operating partnership units held by Brookfield Asset Management Inc. - - 9,871 9,811 -------- -------- -------- --------Total non-controlling interests 11,002 10,870 20,845 20,676Equity in net assets attributable to parent company 13,357 13,375 - -Limited partnership units - - 2,011 1,998 -------- -------- -------- --------Total equity in net assets 24,359 24,245 22,856 22,674 -------- -------- -------- --------Total liabilities and equity in net assets $ 48,540 $ 48,020 $ 47,809 $ 47,145 ======== ======== ======== ========(1) Carve-out financial statements of commercial property operations of BrookfieldSee Appendix A "Reconciliation of carve-out financial results to pro forma financial statements" for an explanation of the adjustments. Consolidated Statements of Income Carve-out (1) Pro forma(US$ Millions) Three months ended March 31, 2013 2012 2013 2012 ------- ------- ------- -------Commercial property revenue $ 751 $ 671 $ 728 $ 635Hospitality revenue 329 51 329 51Investment and other revenue 56 53 68 66 ------- ------- ------- -------Total revenue 1,136 775 1,125 752Direct commercial property expense 307 271 300 262Direct hospitality expense 274 46 274 46Investment and other expense 19 10 19 10Interest expense 268 246 276 245Administration expense 38 35 51 48 ------- ------- ------- -------Total expenses 906 608 920 611Fair value gains, net 247 340 216 313Share of equity accounted income excluding fair value gains 106 89 95 79Share of equity accounted fair value gains 126 353 126 353 ------- ------- ------- -------Income before income taxes 709 949 642 886Income tax expense 104 239 103 213 ------- ------- ------- -------Net income $ 605 $ 710 $ 539 $ 673 ======= ======= ======= =======Net income attributable to:Non-controlling interests:Interests of others in consolidated subsidiaries $ 254 $ 327 $ 249 $ 316Redeemable/Exchangeable operating partnership units held by Brookfield - - 241 297 ------- ------- ------- -------Total non-controlling interests 254 327 490 613Parent company 351 383 - -Limited partnership units - - 49 60 ------- ------- ------- -------Net income $ 605 $ 710 $ 539 $ 673 ======= ======= ======= =======(1) Carve-out financial statements of commercial property operations of Brookfield See "Appendix A "Reconciliation of carve-out financial results to pro forma financial statements" for an explanation of the adjustments. Reconciliation of NOI, FFO and Total Return Carve-out (1) Pro forma(US$ Millions) Three months ended March 31, 2013 2012 2013 2012 ------- ------- ------- -------Commercial property revenue $ 751 $ 671 $ 728 $ 635Hospitality revenue 329 51 329 51Direct commercial property expense (307) (271) (300) (262)Direct hospitality expense (274) (46) (274) (46)Depreciation and amortization of real estate assets(2) 22 4 22 4 ------- ------- ------- -------NOI 521 409 505 382Investment and other revenue 56 53 68 66Investment and other expense (19) (10) (19) (10)Share of equity accounted income excluding fair value gains 106 89 95 79Interest expense (268) (246) (276) (245)Administration expense (38) (35) (51) (48)Non-controlling interests of others in consolidated subsidiaries in funds from operations (173) (112) (173) (101) ------- ------- ------- -------FFO(3) 185 148 149 123Depreciation and amortization of real estate assets(2) (22) (4) (22) (4)Fair value gains, net 247 340 216 313Share of equity accounted fair value gains 126 353 126 353Non-controlling interests of others in consolidated subsidiaries in Total Return (117) (259) (112) (259) ------- ------- ------- -------Total Return(3) 419 578 357 526Income tax expense (104) (239) (103) (213)Non-controlling interest of others in consolidated subsidiaries in income tax expense 36 44 36 44 ------- ------- ------- -------Net income attributable to parent company/LP Units and REUs(4) 351 383 290 357Net income attributable to non- controlling interests 254 327 - -Net income attributable to non- controlling interests of others in consolidated subsidiaries - - 249 316 ------- ------- ------- -------Net income $ 605 $ 710 $ 539 $ 673 ------- ------- ------- -------(1) Carve-out financial statements of commercial property operations of Brookfield(2) Depreciation and amortization of real estate assets is a component of direct hospitality expense that is added back to NOI and is deducted in the Total Return calculation.(3) FFO, Total Return, and net income represent interests attributable to LP Units and REUs. The interests attributable to REUs are presented as non-controlling interests in the pro forma statement of income.(4) For the carve-out columns this line item represents net income attributable to parent company, and for the pro forma columns this represents net income attributable to LP Units and REUs.See "Appendix A: Reconciliation of carve-out financial results to pro forma financial results" for an explanation of the adjustments.Appendix A: Reconciliation of carve-out financial results to pro forma financial results Brookfield Property Brookfield Partners Carve-out Pro Forma AdjustmentsAs at March 31, 2013 L.P. (1) ------------------------- Australian Australian Investments Exclusions(US$ Millions) (a) (b) ----------- ----------- ----------- -----------AssetsNon-current assetsInvestment properties $ - $ 32,336 $ (755) $ (166)Equity accounted investments - 8,169 (575) -Participating loan notes - - 790 -Other non-current assets - 5,522 - -Loans and notes receivable - 283 - - ----------- ----------- ----------- ----------- - 46,310 (540) (166) ----------- ----------- ----------- -----------Current assetsLoans and notes receivable - 162 - (24)Accounts receivable and other - 1,098 63 (33)Cash and cash equivalents - 970 (13) (18) ----------- ----------- ----------- ----------- - 2,230 50 (75) ----------- ----------- ----------- ----------- Total assets $ - $ 48,540 $ (490) $ (241) =========== =========== =========== ===========Liabilities and equity in net assetsNon-current liabilitiesProperty debt $ - $ 17,673 $ (537) $ (47)Capital securities - 650 - -Other non-current liabilities - 585 - -Deferred tax liability - 1,073 64 (16) ----------- ----------- ----------- ----------- - 19,981 (473) (63) ----------- ----------- ----------- -----------Current liabilitiesProperty debt - 2,855 - -Capital securities - - -Accounts payable and other liabilities - 1,345 44 (12) ----------- ----------- ----------- ----------- - 4,200 44 (12) ----------- ----------- ----------- -----------Equity in net assetsNon-controlling interests Interests of others in consolidated subsidiaries - 11,002 (40) (13) Redeemable/exchange able operating partnership units held by parent - - - - ----------- ----------- ----------- -----------Total non-controlling interests - 11,002 (40) (13)Equity in net assets attributable to parent company - 13,357 (21) (153)Limited partnership units - - - - ----------- ----------- ----------- -----------Total equity in net assets - 24,359 (61) (166) ----------- ----------- ----------- -----------Total liabilities and equity in net assets $ - $ 48,540 $ (490) $ (241) =========== =========== =========== ===========As at March 31, 2013 Pro Forma Adjustments ------------------------------------------------------- Capital Preferred Tax Impact of Securities Shares Equity Reorganization(US$ Millions) (c) (d) (e) (f) ----------- ----------- ----------- --------------AssetsNon-current assetsInvestment properties $ - $ - $ - $ -Equity accounted investments - - - -Participating loan notes - - - -Other non-current assets - - - -Loans and notes receivable - - - - ----------- ----------- ----------- -------------- - - - - ----------- ----------- ----------- --------------Current assetsLoans and notes receivable - - - -Accounts receivable and other - - - -Cash and cash equivalents - - - - ----------- ----------- ----------- -------------- - - - - ----------- ----------- ----------- -------------- Total assets $ - $ - $ - $ - =========== =========== =========== ==============Liabilities and equity in net assetsNon-current liabilitiesProperty debt $ - $ - $ - $ -Capital securities 1,250 - - -Other non-current liabilities - - - -Deferred tax liability - - - 53 ----------- ----------- ----------- -------------- 1,250 - - 53 ----------- ----------- ----------- --------------Current liabilitiesProperty debt - - - -Capital securities - - - -Accounts payable and other liabilities - - - - ----------- ----------- ----------- -------------- - - - - ----------- ----------- ----------- --------------Equity in net assetsNon-controlling interests Interests of others in consolidated subsidiaries - 25 - - Redeemable/exchange able operating partnership units held by parent - - 9,871 - ----------- ----------- ----------- --------------Total non-controlling interests - 25 9,871 -Equity in net assets attributable to parent company (1,250) (25) (11,882) (53)Limited partnership units - - 2,011 - ----------- ----------- ----------- --------------Total equity in net assets (1,250) - - (53) ----------- ----------- ----------- --------------Total liabilities and equity in net assets $ - $ - $ - $ - =========== =========== =========== ============== Pro Forma Brookfield Pro Forma Adjustments Property PartnersAs at March 31, 2013 L.P. ---------------------- Total Pro HHC Forma(US$ Millions) (h) Adjustments -------- ----------- -----------AssetsNon-current assetsInvestment properties $ - $ (921) $ 31,415Equity accounted investments - (575) 7,594Participating loan notes - 790 790Other non-current assets - - 5,522Loans and notes receivable - - 283 -------- ----------- ----------- - (706) 45,604 -------- ----------- -----------Current assetsLoans and notes receivable - (24) 138Accounts receivable and other - 30 1,128Cash and cash equivalents - (31) 939 -------- ----------- ----------- - (25) 2,205 -------- ----------- ----------- Total assets $ - $ (731) $ 47,809 ======== =========== ===========Liabilities and equity in net assetsNon-current liabilitiesProperty debt $ - $ (584) $ 17,089Capital securities - 1,250 1,900Other non-current liabilities - - 585Deferred tax liability - 101 1,174 -------- ----------- ----------- - 767 20,748 -------- ----------- -----------Current liabilitiesProperty debt - - 2,855Capital securities - - -Accounts payable and other liabilities (27) 5 1,350 -------- ----------- ----------- (27) 5 4,205 -------- ----------- -----------Equity in net assetsNon-controlling interests Interests of others in consolidated subsidiaries - (28) 10,974 Redeemable/exchange able operating partnership units held by parent - 9,871 9,871 -------- ----------- -----------Total non-controlling interests - 9,843 20,845Equity in net assets attributable to parent company 27 (13,357) -Limited partnership units - 2,011 2,011 -------- ----------- -----------Total equity in net assets 27 (1,503) 22,856 -------- ----------- -----------Total liabilities and equity in net assets $ - $ (731) $ 47,809 ======== =========== ===========(1) Includes Brookfield Property Partners L.P. balance sheet as at March 31, 2013 which includes partnership equity of $0.001 which is not presented due to rounding.See notes for an explanation of each adjustment. Brookfield Property BrookfieldAs at December 31, Partners Carve-out Pro Forma Adjustments 2012 L.P. (1) ------------------------- Australian Australian Investments Exclusions(US$ Millions) (a) (b) ----------- ----------- ----------- -----------AssetsNon-current assetsInvestment properties $ - $ 31,859 $ (740) $ (163)Equity accounted investments - 8,110 (568) (3)Participating loan notes - - 775 -Other non-current assets - 5,636 - -Loans and notes receivable - 246 - - ----------- ----------- ----------- ----------- - 45,851 (533) (166) ----------- ----------- ----------- -----------Current assetsLoans and notes receivable - 237 - (25)Accounts receivable and other - 1,022 - (47)Cash and cash equivalents - 910 (3) (2) ----------- ----------- ----------- ----------- - 2,169 (3) (74) ----------- ----------- ----------- ----------- Total assets $ - $ 48,020 $ (536) $ (240) =========== =========== =========== ===========Liabilities and equity in net assetsNon-current liabilitiesProperty debt $ - $ 16,358 $ (526) $ (47)Capital securities - 664 - -Other non-current liabilities - 441 - (2)Deferred tax liability - 997 59 (16) ----------- ----------- ----------- ----------- - 18,460 (467) (65) ----------- ----------- ----------- -----------Current liabilitiesProperty debt - 3,366 - -Capital securities 202 - -Accounts payable and other liabilities - 1,747 (33) (11) ----------- ----------- ----------- ----------- - 5,315 (33) (11) ----------- ----------- ----------- -----------Equity in net assetsNon-controlling interests Interests of others in consolidated subsidiaries - 10,870 - (13) Redeemable/exchange able operating partnership units held by parent - - - - ----------- ----------- ----------- -----------Total non-controlling interests - 10,870 - (13)Equity in net assets attributable to parent company - 13,375 (36) (151)Limited partnership units - - - - ----------- ----------- ----------- -----------Total equity in net assets - 24,245 (36) (164) ----------- ----------- ----------- -----------Total liabilities and equity in net assets $ - $ 48,020 $ (536) $ (240) =========== =========== =========== ===========As at December 31, 2012 Pro Forma Adjustments ------------------------------------------------------- Capital Preferred Tax Impact of Securities Shares Equity Reorganization(US$ Millions) (c) (d) (e) (f) ----------- ----------- ----------- --------------AssetsNon-current assetsInvestment properties $ - $ - $ - $ -Equity accounted investments - - - -Participating loan notes - - - -Other non-current assets - - - -Loans and notes receivable - - - - ----------- ----------- ----------- -------------- - - - - ----------- ----------- ----------- --------------Current assetsLoans and notes receivable - - - -Accounts receivable and other - - - -Cash and cash equivalents - - - - ----------- ----------- ----------- -------------- - - - - ----------- ----------- ----------- -------------- Total assets $ - $ - $ - $ - =========== =========== =========== ==============Liabilities and equity in net assetsNon-current liabilitiesProperty debt $ - $ - $ - $ -Capital securities 1,250 - - -Other non-current liabilities - - - -Deferred tax liability - - - 43 ----------- ----------- ----------- -------------- 1,250 - - 43 ----------- ----------- ----------- --------------Current liabilitiesProperty debt - - - -Capital securities - - - -Accounts payable and other liabilities - - - - ----------- ----------- ----------- -------------- - - - - ----------- ----------- ----------- --------------Equity in net assetsNon-controlling interests Interests of others in consolidated subsidiaries - 25 - - Redeemable/exchange able operating partnership units held by parent - - 9,811 - ----------- ----------- ----------- --------------Total non-controlling interests - 25 9,811 -Equity in net assets attributable to parent company (1,250) (25) (11,809) (43)Limited partnership units - - 1,998 - ----------- ----------- ----------- --------------Total equity in net assets (1,250) - - (43) ----------- ----------- ----------- --------------Total liabilities and equity in net assets $ - $ - $ - $ - =========== =========== =========== ============== Pro Forma Brookfield Pro Forma Adjustments PropertyAs at December 31, Partners 2012 L.P. ---------------------- Total Pro HHC Forma(US$ Millions) (h) Adjustments -------- ----------- -----------AssetsNon-current assetsInvestment properties $ - $ (903) $ 30,956Equity accounted investments - (571) 7,539Participating loan notes - 775 775Other non-current assets (99) (99) 5,537Loans and notes receivable - - 246 -------- ----------- ----------- (99) (798) 45,053 -------- ----------- -----------Current assetsLoans and notes receivable - (25) 212Accounts receivable and other - (47) 975Cash and cash equivalents - (5) 905 -------- ----------- ----------- - (77) 2,092 -------- ----------- ----------- Total assets $ (99) $ (875) $ 47,145 ======== =========== ===========Liabilities and equity in net assetsNon-current liabilitiesProperty debt $ - $ (573) $ 15,785Capital securities - 1,250 1,914Other non-current liabilities - (2) 439Deferred tax liability (8) 78 1,075 -------- ----------- ----------- (8) 753 19,213 -------- ----------- -----------Current liabilitiesProperty debt - - 3,366Capital securities - - 202Accounts payable and other liabilities (13) (57) 1,690 -------- ----------- ----------- (13) (57) 5,258 -------- ----------- -----------Equity in net assetsNon-controlling interests Interests of others in consolidated subsidiaries (17) (5) 10,865 Redeemable/exchange able operating partnership units held by parent - 9,811 9,811 ----------- -----------Total non-controlling interests (17) 9,806 20,676Equity in net assets attributable to parent company (61) (13,375) -Limited partnership units - 1,998 1,998 -------- ----------- -----------Total equity in net assets (78) (1,571) 22,674 -------- ----------- -----------Total liabilities and equity in net assets $ (99) $ (875) $ 47,145 ======== =========== ===========(1) Includes Brookfield Property Partners L.P. balance sheet as at January 15, 2013 which includes partnership equity of $0.001 which is not presented due to rounding. See notes for an explanation of each adjustment.




Brookfield Property BrookfieldFor the three months Partners Carve-out Pro Forma Adjustments ended March 31, 2013 L.P. ------------------------- Australian Australian Investments Exclusions(US$ Millions) (a) (b) ----------- ----------- ----------- -----------Commercial property revenue $ - $ 751 $ (19) $ (4)Hospitality revenue - 329 - -Investment and other revenue - 56 13 (1) ----------- ----------- ----------- -----------Total revenue - 1,136 (6) (5)Direct commercial property expense - 307 (5) (2)Direct hospitality expense - 274 - -Investment and other expense - 19 - -Interest expense - 268 (10) (1)Administration expense - 38 - - ----------- ----------- ----------- -----------Total expenses - 906 (15) (3)Fair value gains - 247 2 3Share of net earnings from equity accounted investments - 232 (11) - ----------- ----------- ----------- -----------Income before income taxes - 709 - 1Income tax (expense) benefit - (104) - - ----------- ----------- ----------- -----------Net income $ - $ 605 $ - $ 1 =========== =========== =========== ===========Net income attributable to:Non-controlling interests: Interests of others in consolidated subsidiaries $ - $ 254 $ - $ 1 Redeemable/exchangeable operating partnership units held by parent - - - - ----------- ----------- ----------- -----------Total non-controlling interests - 254 - 1Parent company - 351 - -Limited partnership units - - - - ----------- ----------- ----------- ----------- $ - $ 605 $ - $ 1 =========== =========== =========== ===========For the three months ended March 31, 2013 Pro Forma Adjustments ------------------------------------------ Capital Tax Impact of Securities Equity Reorganization(US$ Millions) (c) (e) (f) ----------- ----------- --------------Commercial property revenue $ - $ - $ -Hospitality revenue - - -Investment and other revenue - - - ----------- ----------- --------------Total revenue - - -Direct commercial property expense - - -Direct hospitality expense - - -Investment and other expense - - -Interest expense 19 - -Administration expense - - - ----------- ----------- --------------Total expenses 19 - -Fair value gains - - -Share of net earnings from equity accounted investments - - - ----------- ----------- --------------Income before income taxes (19) - -Income tax (expense) benefit - - (7) ----------- ----------- --------------Net income $ (19) $ - $ (7) =========== =========== ==============Net income attributable to:Non-controlling interests: Interests of others in consolidated subsidiaries $ - $ - $ - Redeemable/exchangeable operating partnership units held by parent - 241 - ----------- ----------- --------------Total non-controlling interests - 241 -Parent company (19) (290) (7)Limited partnership units - 49 - ----------- ----------- -------------- $ (19) $ - $ (7) =========== =========== ============== Pro Forma Brookfield Pro Forma Adjustments PropertyFor the three months Partners ended March 31, 2013 L.P. ----------------------------------- Management Total Pro Fee HHC Forma(US$ Millions) (g) (h) Adjustments ----------- -------- ----------- -----------Commercial property revenue $ - $ - $ (23) $ 728Hospitality revenue - - - 329Investment and other revenue - - 12 68 ----------- -------- ----------- -----------Total revenue - - (11) 1,125Direct commercial property expense - - (7) 300Direct hospitality expense - - - 274Investment and other expense - - - 19Interest expense - - 8 276Administration expense 13 - 13 51 ----------- -------- ----------- -----------Total expenses 13 - 14 920Fair value gains - (36) (31) 216Share of net earnings from equity accounted investments - - (11) 221 ----------- -------- ----------- -----------Income before income taxes (13) (36) (67) 642Income tax (expense) benefit 3 5 1 (103) ----------- -------- ----------- -----------Net income $ (10) $ (31) $ (66) $ 539 =========== ======== =========== ===========Net income attributable to:Non-controlling interests: Interests of others in consolidated subsidiaries $ - $ (6) $ (5) $ 249 Redeemable/exchangeable operating partnership units held by parent - - 241 241 ----------- -------- ----------- -----------Total non-controlling interests - (6) 236 490Parent company (10) (25) (351) -Limited partnership units - - 49 49 ----------- -------- ----------- ----------- $ (10) $ (31) $ (66) $ 539 =========== ======== =========== ===========See notes for an explanation of each adjustment. Brookfield Property BrookfieldFor the three months Partners Carve-out Pro Forma Adjustments ended March 31, 2012 L.P. ------------------------- Australian Australian Investments Exclusions(US$ Millions) (a) (b) ----------- ----------- ----------- -----------Commercial property revenue $ - $ 671 $ (25) $ (11)Hospitality revenue - 51 - -Investment and other revenue - 53 14 (1) ----------- ----------- ----------- -----------Total revenue - 775 (11) (12)Direct commercial property expense - 271 (5) (4)Direct hospitality expense - 46 - -Investment and other expense - 10 - -Interest expense - 246 (16) (4)Administration expense - 35 - - ----------- ----------- ----------- -----------Total expenses - 608 (21) (8)Fair value gains - 340 - (14)Share of net earnings from equity accounted investments - 442 (10) - ----------- ----------- ----------- -----------Income before income taxes - 949 - (18)Income tax (expense) benefit - (239) - 1 ----------- ----------- ----------- -----------Net income $ - $ 710 $ - $ (17) =========== =========== =========== ===========Net income attributable to:Non-controlling interests: Interests of others in consolidated subsidiaries $ - $ 327 $ - $ (11) Redeemable/exchangeable operating partnership units held by parent - - - - ----------- ----------- ----------- -----------Total non-controlling interests - 327 - (11)Parent company - 383 - (6)Limited partnership units - - - - ----------- ----------- ----------- ----------- $ - $ 710 $ - $ (17) =========== =========== =========== ===========For the three months ended March 31, 2012 Pro Forma Adjustments ----------------------------------------- Capital Tax Impact of Securities Equity Reorganization(US$ Millions) (c) (e) (f) ----------- ----------- --------------Commercial property revenue $ - $ - $ -Hospitality revenue - - -Investment and other revenue - - - ----------- ----------- --------------Total revenue - - -Direct commercial property expense - - -Direct hospitality expense - - -Investment and other expense - - -Interest expense 19 - -Administration expense - - - ----------- ----------- --------------Total expenses 19 - -Fair value gains - - -Share of net earnings from equity accounted investments - - - ----------- ----------- --------------Income before income taxes (19) - -Income tax (expense) benefit - - 22 ----------- ----------- --------------Net income $ (19) $ - $ 22 =========== =========== ==============Net income attributable to:Non-controlling interests: Interests of others in consolidated subsidiaries $ - $ - $ - Redeemable/exchangeable operating partnership units held by parent - 297 - ----------- ----------- --------------Total non-controlling interests - 297 -Parent company (19) (357) 22Limited partnership units - 60 - ----------- ----------- -------------- $ (19) $ - $ 22 =========== =========== ============== Pro Forma Brookfield Pro Forma Adjustments PropertyFor the three months Partners ended March 31, 2012 L.P. ----------------------------------- Management Total Pro Fee HHC Forma(US$ Millions) (g) (h) Adjustments ----------- -------- ----------- -----------Commercial property revenue $ - $ - $ (36) $ 635Hospitality revenue - - - 51Investment and other revenue - - 13 66 ----------- -------- ----------- -----------Total revenue - - (23) 752Direct commercial property expense - - (9) 262Direct hospitality expense - - - 46Investment and other expense - - - 10Interest expense - - (1) 245Administration expense 13 - 13 48 ----------- -------- ----------- -----------Total expenses 13 - 3 611Fair value gains - (13) (27) 313Share of net earnings from equity accounted investments - - (10) 432 ----------- -------- ----------- -----------Income before income taxes (13) (13) (63) 886Income tax (expense) benefit 3 - 26 (213) ----------- -------- ----------- -----------Net income $ (10) $ (13) $ (37) $ 673 =========== ======== =========== ===========Net income attributable to:Non-controlling interests: Interests of others in consolidated subsidiaries $ - $ - $ (11) $ 316 Redeemable/exchangeable operating partnership units held by parent - - 297 297 ----------- -------- ----------- -----------Total non-controlling interests - - 286 613Parent company (10) (13) (383) -Limited partnership units - - 60 60 ----------- -------- ----------- ----------- $ (10) $ (13) $ (37) $ 673 =========== ======== =========== ===========See notes for an explanation of each adjustment.




Note regarding pro forma financial information:

The pro forma financial information in this release has been prepared to give effect to the acquisition by Brookfield Property Partners of Brookfield's commercial property operations (the "reorganization"), including its office, retail, multi-family and industrial and opportunistic assets, located in the United States, Canada, Australia, Brazil and Europe, that have historically been owned and operated, both directly and through its operating entities. The commercial property operations transferred to the company through the reorganization includes all of the commercial property operations of Brookfield included in the Brookfield carve-out financial statements except for (i) its interest in the Howard Hughes Corporation, a publicly listed real estate entity; and (ii) certain assets within Brookfield's Australian operations which are not being transferred.

In addition, the pro forma information was prepared reflecting adjustments for the following:

a) Acquisition of interests in Brookfield's Australian properties through participating loan notes.
b) Exclusion of certain assets within Brookfield's Australian operations which are not being transferred to the company as part of the reorganization.
c) Issuance of $1.25 billion of Capital Securities to Brookfield as partial consideration for the business acquired by the company.
d) Issuance of $25 million of Preferred Shares by certain holding entities of Brookfield Property Partners.
e) Issuance of partnership units by Brookfield Property Partners as partial consideration for the business acquired, and issuance of approximately 80 million units of the company in the spin-off based on the number of Class A limited voting shares and Class B limited voting shares of Brookfield.
f) Reorganization of the legal structure through which the business is held, including the issuance of certain inter-company debt between the property partnership and the holding entities, resulting in changes in the effective tax rate and the tax basis of certain investments.
g) Annual management fees of $50 million paid by the company to Brookfield pursuant to a Master Services Agreement.
h) Exclusion of Brookfield's 3% investment in Howard Hughes Corporation, which is not being transferred to the company as part of the reorganization. This investment has been disposed of during the first quarter of 2013; however, certain liabilities related to the assets still remain which are being excluded in the pro forma financial statements.

The unaudited pro forma information has been prepared based upon currently available information and assumptions deemed appropriate by management. The unaudited pro forma financial information is provided for information purposes only and is not intended to represent, or be indicative of, the results that would have occurred had the transactions reflected in the pro forma adjustments been effected on the dates indicated.



Contact:
Melissa Coley
Vice President, Investor Relations & Communications
Tel: 212-417-7215
Email: Email Contact



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