Brookfield Property Partners/media/Files/B... · 47 Generating significant LP investment gains…...
Transcript of Brookfield Property Partners/media/Files/B... · 47 Generating significant LP investment gains…...
Brookfield Property Partners
INVESTOR DAY
SEPTEMBER 26 , 2018
Agenda
Overview & BPY’s 5-Year EvolutionBrian Kingston, Senior Managing Partner & CEO
3
GGP & the U.S. Retail OpportunityBrian Kingston, Senior Managing Partner & CEO
22
Financial UpdateBryan Davis, Managing Partner & CFO
45
Brookfield’s Multifamily BusinessRic Clark, Senior Managing Partner & Chairman
59
2
3
Brookfield Property Partners (“BPY”)
was launched in 2013 as
Brookfield’s primary vehicle
to make investments
across all strategies in real estate
4
At the time of launch, approximately
80% of BPY’s invested capital
was held in the form of other
public real estate securities…
Major acquisitions in the past five years…
5
2014$30B
2015$12B
2016$3B
2017$6B
2018$40B
Total Assets
Q2 2013
~$31B
Total Assets
TODAY
~$90B
Invested capital by sector
6
41%
42%
17%
Office Retail LP Invesments
51%
44%
5%
Office Retail LP Investments
2018
• Multifamily
• Logistics
2013
• Multifamily
• Logistics
• Hospitality
• Triple Net Lease
• Self-Storage
• Student Housing
• Manufactured
Housing
20%DIRECT
100%DIRECT
One of the world’s largest, highest quality portfolios
7
First Canadian Place
Toronto
Canary Wharf
London
Brookfield Place
New York
Potsdamer Platz
Berlin
Fashion Show
Las Vegas
8
~$90B Property AUM
UK & EUROPE
$11.7B
BRAZIL
$0.9BASIA & AUSTRALIA
$6.7B
CANADA
$4.7B
UNITED STATES
$63.1B
Projects delivered over the past 24 months…
9
London Wall Place
London
The Eugene
New York
Principal Place
London
5 Manhattan West
New York
One Blue Slip
Brooklyn
4.2M SFPREMIER
OFFICE SPACE
1,200APARTMENT
UNITS
Projects on schedule for delivery in 2019
10
1 Bank Street
London
1 Manhattan West
New York
Camarillo
Los Angeles
655 New York Ave
Washington DC
100 Bishopsgate
London
ICD Brookfield Place
Dubai
5.6M SFPREMIER
OFFICE SPACE
~3,500APARTMENT
UNITS
Capital deployment & recycling
11
1
Target Sector / Geography
4
Strategic Exits to Maximize Returns
2
Identify Opportunities / Invest Capital
3
Create Maximum Value
Case Study: IDI Gazeley projected to return 30% IRR in 5 years
• Assembled a 42M SF global logistics business through the acquisition of 3 industrial
companies in North America and Europe
12
30M SFCOMPLETED
DEVELOPMENT
30%PROJECTED
GROSS IRR
3.1xPROJECTED
GROSS MOC
50M SFAREA LEASED
16%RENT INCREASED
88 – 95%CHANGE IN OPERATING
OCCUPANCY 2013-2017
Case Study: Simply Self Storage returned 46% IRR in 2.5 years
• Acquired 90-asset, 6.8M SF portfolio and operating company in early 2016 and grew
business to over 200 assets totaling ~16M SF
13
$1.3BGROSS SALE PRICE*
$162MNET PROCEEDS TO BPY**
46%GROSS IRR
2.6xGROSS MOC
32%VALUE INCREASED PSF
*Partial sale of business
**Includes proceeds from portfolio refinancing following transaction
Five-year asset sales recap
• In BPY’s first 5 years, we have completed over $47B of gross asset sales that were
transacted at an average 4% premium over our carrying IFRS values
14
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2013 2014 2015 2016 2017
($’M @100%)
Gross Sales Price IFRS Value
Opportunistic real estate funds track record
15
GGP Acquisition
Closes
Fund Inception
Total
Equity
BPY
Stake
Projected
Gross IRR
Projected
Gross MOC
RE Opportunity Fund I 2006 11.0% 1.9x
RE Opportunity Fund II 2007 20.0% 2.1x
RE Turnaround Fund 2009 38.6% 2.3x
Strategic Real Estate
Partners I 2012 $4.5B 30% 25.0% 2.7x
Strategic Real Estate
Partners II2015 $9.0B 25% 19.0% 2.2x
Total 26.0% 2.2x
16
POLLING QUESTION #1
BPY trades at a 30% discount to NAV.
What more can we do?
A. Reduce leverage
B. Buy back our units
C. Simplify our business
D. Improve disclosure / investor communication
Investment and Operating Segments
17
High-quality core office assets
18
* Last 12 Months at June 30, 2018
Grace Building
New York
Amex House
Sydney
First Canadian Place
Toronto
Canary Wharf
London
Brookfield Place
New York
Eichhornstraße 3
Berlin
FL3500
São Paulo
46MPROPORTIONATE
OFFICE SF
93%OCCUPANCY
$1.4BPROPORTIONATE
NOI*
Highly productive best-in-class malls and urban retail
19
GGP Acquisition
Closes
The Shops at LaCantera
San Antonio
Fashion Show
Las Vegas
Oakbrook
Illinois
Stonebriar Centre
Frisco
* Last 12 Months at June 30, 2018 (proportionate NOI post closing of GGP, adjusted for asset sales at closing)
122MPREMIER
RETAIL SF
95%NOI-WEIGHTED TOTAL
OCCUPANCY
$1.7BPROPORTIONATE
NOI*
LP investments in mispriced assets with upside to earn outsized returns
20
The Diplomat Resort & Spa
Florida
Wynyard Place
Sydney
Center Parcs
U.K.
Conrad Hotel
Seoul
1,400+NO. OF PROPERTY
INTERESTS
$5.8BINVESTED CAPITAL
IN BAM PRIVATE FUNDS
$781MPROPORTIONATE
NOI*
* Last 12 Months at June 30, 2018
21
POLLING QUESTION #2
Which sector do you think offers
the best risk-adjusted returns over the next 5 years?
A. Office
B. Retail
C. Industrial
D. Multifamily
GGP & the U.S. Retail Opportunity
22
GGP transaction summary
23
1Shareholder approval
July 26, 2018
Acquisition completed
August 28, 2018
2Offer price
$23.50/share
3Issued 160M of
BPR shares &
110M of BPY units
BPY’s public float
increased by ~$6B
The acquisition of GGP plays to Brookfield’s core investing principles
24
Acquire high-quality assets
Invest on a value basis
Enhance value through operations
Contrarian
Large-scale/Multifaceted
25
GGP owns 8% of the high-quality retail space in the U.S.
92%OTHERS
8%OWNED BY GGP
1.2B SF (4 SF Per Person)
of High-Quality Retail GLA in the U.S.
U.K.
Australia
Canada
U.S.
Retail GLA
(SF Per Person)
24
16
11
5
The acquisition of GGP plays to Brookfield’s core investing principles
26
Acquire high-quality assets
Invest on a value basis
Enhance value through operations
Contrarian
Large-scale/Multifaceted
Doubling down on retail by capturing opportunistic market window…
27
2015 2016 2017 2018
Regional Mall Index Performance*
*Source: FTSE NAREIT
2015 2016 2017 2018 Aug 2018
March 2018
GGP price agreed
July 2016
Peak
The acquisition of GGP plays to Brookfield’s core investing principles
28
Acquire high-quality assets
Invest on a value basis
Enhance value through operations
Contrarian
Large-scale/Multifaceted
29
We are uniquely positioned to capitalize on value-add opportunities…
Complete Redevelopment Initiatives
Identify and Execute Densification Opportunities
Optimize Tenant Mix
Drive Operating
Performance
Oakbrook Center
Oakbrook, Illinois
Ala Moana
Honolulu, Hawaii
Village of Merrick Park
Coral Gables, Florida
Brookfield can control the redevelopment
process across multiple asset classes and
capitalize on the value-add beyond retail
30
From retail centers to mixed-use, live-work-play destinations…
31
Ma
ll P
rod
uc
tivit
y
Land Value
We tailor value creation strategy for malls with different attributes…
AVOID
EXPAND DENSIFY
REDEVELOP
32
Ma
ll P
rod
uc
tivit
y
Land Value
Value Creation Strategy
EXPAND
Baybrook Mall (TX)
Case Study 1 – Baybrook Mall Expansion
Post Development Yield on Cost 7.5%
33
Acquired Land for
Lifestyle Center
Expanded
Power Center
Added Outdoor F&B
and Entertainment
Before After
DENSIFY
Ala Moana Center (HI)
34
Ma
ll P
rod
uc
tivit
y
Land Value
Value Creation Strategy
EXPAND
Baybrook Mall (TX)
Case Study 2 – Ala Moana Center Densification
Phase 1 Yield on Cost 9.6% / Phase 2 Yield on Cost 6.9%
35
Replaced Anchor Added Residential Density Placemaking
Before After
REDEVELOP
NewPark Mall (CA)
DENSIFY
Ala Moana Center (HI)
36
Ma
ll P
rod
uc
tivit
y
Land Value
Value Creation Strategy
EXPAND
Baybrook Mall (TX)
Case Study 3 – NewPark Mall Redevelopment
Phase 1 Yield on Cost 8.5% / Phase 2 Yield on Cost 7.1%
37
Before After
Replaced
Anchor
Redeveloped
Vacant Box
Developed Land to
Highest & Best Use
Create value via redevelopment initiatives…
Average Yield on Cost 7.9% - 8.8%
38
Historical
Redevelopment
Projects Under
Redevelopment
$1.1BTOTAL
COST
8.8%YIELD
ON COST
$1.6BESTIMATED
COST
7.9%YIELD
ON COST
The acquisition of GGP plays to Brookfield’s core investing principles
39
Acquire high-quality assets
Invest on a value basis
Enhance value through operations
Contrarian
Large-scale/Multifaceted
40
POLLING QUESTION #3
Today, e-commerce makes up less than 10% of total retail
sales in the U.S. What do you think the percentage will be
in five years?
A. Less than 10%
B. 10%-20%
C. 20%-30%
D. More than 30%
E-Commerce Brick-and-Mortar ONE Channel
E-commerce vs Brick-and-Mortar? NOT a Zero-Sum Game…
93% of all retail sales are owed all or in part to brick-and-mortar presence*
41
Amazon Bonobos Rent the Runway
Online-to-offline examples
* U.S. Census Bureau
The acquisition of GGP plays to Brookfield’s core investing principles
42
Acquire high-quality assets
Invest on a value basis
Enhance value through operations
Contrarian
Large-scale/Multifaceted
Funding Sources
The purchase of GGP was supported by $10B of equity and $5B of
acquisition financing
43
Sources
Acquisition Financing $2.5B
Bridge Financing to Asset Sales $2.5B
Partner Equity $4.0B
BPY Equity $6.0B
Total Capital $15.0B
We adhere to Brookfield’s five core investing principles…
44
Acquire high-quality assets
Invest on a value basis
Enhance value through operations
Contrarian
Large-scale/Multifaceted
45
Financial Update
Bryan Davis
Chief Financial Officer, Brookfield Property Partners
46
Another year under our belts…
Earnings and distribution growth for
five consecutive years since launch
Annual CFFO growth of 9%
Annual distribution growth of 6%
Reduced payout ratio from 90%
of CFFO to our target of 80%
2014 2015 2016 2017
$1.06
$1.12
$1.00
$1.18
$1.11
$1.18
$1.36
$1.44
$1.26
$1.50+
9%CAGR
2018
6%CAGR
CFFO Distribution (per unit)
47
Generating significant LP investment gains…
2014 2015 2016 2017
$0.14
$0.37
$0.08
$0.66
We have earned realized gains from our
LP investments in private funds
In the early years, these gains were from
the sale of individual assets or smaller
portfolios
As these funds mature, and investment-
level business plans are executed, the
pace and size of realizations will
increase
Realized Gains on LP Investments (per unit)
48
Future Earnings Growth
Achieve annual CFFO growth for the
next 5 years with target of 7%-9%
Realize significant earnings from our LP
investments including, on average,
$500 million in annual realized gains
Earnings provide ample coverage for
distributions
Earnings growth will support distribution
growth in line with target of 5%-8%
annually
2018 2019 2020 2021
$2.15+
2022
$2.65+
CFFO Realized Gains Distributions
$1.70+
$1.26
$1.50+
$2.00+
(per unit)
49
Main drivers of earnings growth are unchanged…
Annual CFFO growth between 2017 and 2022 continues to be driven by:
• Achieving same property growth of 2-3%
• Completion of active developments on time and budget:
$1.18In US$ millions
$0
$100
$200
$300
$400
$500
$600
2017 2018 2019 2020 2021 2022
Office Retail Urban multifamily Condo sales
Cumulative Development NOI
50
LP Investments – BSREP I
• What does this mean for BPY?
Size of Fund BPY Share Called from LPs Net IRR Net MOC
BSREP I $4.4B 30% $4.9B 21% 2.3x
1) Including co-invest
In US$ millions
$0
$1,000
$2,000
$3,000
$4,000
$0
$1,000
$2,000
$3,000
$4,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Cumulative capital Cumulative FFO Cumulative gains
Profit1
$1.9B
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LP Investments – Layering on BSREP II
Size of Fund BPY Share Called from LPs Net IRR Net MOC
BSREP I $4.4B 30% $4.9B 21% 2.3x
BSREP II 9.0B 25% 6.0B 17% 1.8x
In US$ millions
1) Including co-invest
$0
$1,000
$2,000
$3,000
$4,000
$0
$1,000
$2,000
$3,000
$4,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Cumulative capital Cumulative FFO Cumulative gains
Profit1
$4.1B
52
Significant liquidity will be generated from LP Investments
Until the end of last year, we were investing a significant portion of our available liquidity
into LP investments in funds
• Now these investments will be generating liquidity:
In US$ millions 2012-2017 2018-2022
Net capital (invested) returned $ (2,700) $ 2,700
Profit 1,000. 3,100
Net cash (outflow) inflow $ (1,700) $ 5,800
Available to:
• Recycle into core businesses
• Buy back shares
• Fund distributions
• De-lever balance sheet
• Reinvest into new funds
53
What about the next 15 years?
Even as we invest capital into each new fund, this investing strategy will continue to
produce significant cash flows:
In US$ millions 2012-2017 2018-2022 2023-2027 2028-2032
BSREP I & II $ (2,700) $ 2,700.
Profit 1,000. 3,100.
Future Opportunity Funds (4,500) 1,000 (400)
Profit 900. 4,100 4,200.
Net cash (outflow) inflow $ (1,700) $ 2,200 $ 5,100 $ 3,800.
Liquidity
$11B
54
Payout Ratio
Target payout ratio leaves sufficient retained cash to protect distribution levels, sustain
properties and fund future growth:
In US$ millions2022
Forecasted CFFO $ 2,300
Annual realized gains from LP investments 600
Annual earnings $ 2,900
Distributions at target payout (1,800)
Available to maintain properties and fund growth $ 1,100
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Financing Strategy
Our approach is to put an appropriate amount of leverage on each asset to provide the
best risk-adjusted return on your equity
Raise debt in local currency with primarily
fixed interest rates
Use of minimal amounts of “consolidated” leverage
Focus on non-recourse, asset-level debt
Maintain a well-laddered debt maturity profile
Focus on maintaining our
investment-grade credit rating for the long term
56
Path to achieving leverage targets
Long-term goal is to maintain a proportionate debt-to-capital ratio of 50% and debt-to-
EBITDA of <11x
• Conversion of $500 million of capital securities into equity
• Acquisition of GGP improves credit metrics once acquisition debt is repaid
In US$ millions Current1 Pro Forma
Net debt $ 36,000 $ 43,000
Capitalization 61,000 74,000
EBITDA 2,600 3,400
Debt to capital 59% 58%
Debt to EBITDA 13.8X 12.6X
1) Q2’18 EBITDA annualized
57
Near-term path to leverage targets
Focused on making progress to achieve target credit metrics
• Completion of active development pipeline
• Mandatory conversion of $1.8 billion of capital securities into BPY units
• Repayment of credit facilities and remaining capital securities
• Increase in equity value
In US$ millions Pro Forma Target
Net debt $ 43,000 $ 40,000
Capitalization 74,000 80,000
EBITDA 3,400 3,800
Debt-to-capital 58% 50%
Debt-to-EBITDA 12.6X 10.5X
58
BPY = compelling investment opportunity
$ 20
Narrowing
Discount1,2,3Today
$ 55
$ 48
$ 35
Current
Discount1,2
$ 20 $ 20
$ 6 $ 6
2022
$ 22
$ 9
1) Using forecasted 2022 CFFO
2) Distributions assumed at 80% of forecasted 2022 CFFO
3) Using consensus NAV implied multiple
An investment today has the potential
to offer a very attractive return to
shareholders
Yield backed by cash flow from a
portfolio of high-quality assets
Entry point at discount to average
analyst NAV of ~$29 per unit
Potential for significant appreciation
15%CAGR
25%CAGR
Investment Current Yield Appreciation
Brookfield Multifamily
59
Ric Clark
Chairman, Brookfield Property Partners
Cities across the globe are expanding rapidly1
Over the next ~30 years, the world’s population is expected to become dramatically
more urban
1) Source: U.N.
29% 67%54%
Urban Population
Worldwide Urban Population
U.S. Urban Population
60
125M1950
258M2014
350M2050
725M1950 3.9B
20146.0B
2050
U.S. homeownership rate1
Homeownership rates in the U.S. have decreased over the last decade. The Q1’18
rate was equal to long-term level of 64%, close to the lowest level since 1965
61
34.0%
35.0%
36.0%
37.0%
38.0%
39.0%
40.0%
41.0%
42.0%
43.0%
44.0%
60.0%
61.0%
62.0%
63.0%
64.0%
65.0%
66.0%
67.0%
68.0%
69.0%
70.0%
U.S. All Age Groups- Homeownership Rate (left axis)
Under 35 years - Homeownership Rate (right axis)
64.0%Q1’18
35.6%Q1’18
43.3%Q1’05
69.1%Q1’05
> 35 years
All age groups
1) Unless otherwise noted, source: U.S. Census Bureau (1Q 2018)
2) Source: Wall Street Journal (February 16, 2018)
3) Source: Wall Street Journal (February 27, 2018)
Price pressure to rent vs. own1
On average, from 2000-2016, home purchase prices in the U.S. have increased
by more than 100% in some markets
62
1) Source: St. Louis Federal Reserve GEOFRED
Prices Decreased
25% Increase
50% Increase
100% Increase
More Than 100% Increase
No Data Available
U.S. apartment occupancy growth1,2
Apartment occupancies are above the long-term average, driven by strong
demographics creating 10 million renters over the past 12 years
63
85.0%
85.5%
86.0%
86.5%
87.0%
87.5%
88.0%
88.5%
89.0%
89.5%
90.0%
90.5%
91.0%
91.5%
92.0%
92.5%
93.0%
93.5%
94.0%
94.5%
95.0%
95.5%
96.0%
96.5%
Occupancy Occupancy Forecast
1) Source for all information on this slide is Axiometrics (1Q 2018).
2) Projections reflected herein have been prepared based on various estimations and assumptions made by a third party, including estimations and assumptions about events that have not
occurred, any of which may prove to be incorrect. Due to various risks, uncertainties and changes beyond the control of the third party, actual results could differ materially. In addition, industry
experts may disagree with the estimations and assumptions used in preparing the projections. No assurance, representation or warranty is made by any person that any of the projections are
accurate or will be achieved and you should not place undue reliance on the projections. Please refer to the Notice to Recipients for additional information regarding third party sources.
U.S. apartment supply and demand
• The U.S. housing shortage continues in coastal markets
64
Supply1
as of 1Q 2018
Demandas of 1Q 2018
U.S. / Global Markets
1) Source: U.S. Census Bureau (1Q 2018)
2) Source: Axiometrics (1Q 2018)
3) Source: U.S. Federal Reserve (1Q 2018)
4) Source: U.S. Bureau of Labor Statistics (1Q 2018)
5) Source: CBRE Global Investor Survey (1Q 2018)
• 94.5% apartment occupancy
(near 14-year high)2
• 64.0% homeownership rate
(4-quarter average) (52-year low)1
• 100% apartment supply absorbed during
past seven years2
• 10.0M new renter households created
from 2005 through 20171
• $1.4 trillion in U.S. student debt3
• 5 million young adults living with parents
above 25-year average1
• Favorable demographics: Millennials,
Baby Boomers, Gen Z, and Immigrants1
• Total U.S. Housing Starts
1.2M 12-month average
93% of 25-year average of 1.3M
886,000 average post-recession
(2008-2017); 67% of 25-year average
• Single-Family Starts
863,000 12-month average
612,000 average post-recession
(2008-2017); 60% of 25-year average
• Multifamily Rental Starts
361,000 12-month average
Renter demand absorbing new
supply: occupancy remains near 95%
• Condo (for-sale multifamily) Starts
22,000 12-month average
60% below 25-year average
• Median age of U.S. rental stock is
40 years old
• Steady U.S. job recovery
since last recession4
• Low cap rates with rising
interest rates3
• High capital flows to U.S.
real estate5
BPY’s multifamily footprint
• We continue to be one of the largest owners of residential apartment properties in the
U.S., with assets located in diverse, urban and suburban locations in over 20 states
65
Units1
~35,000
MANHATTAN MULTIFAMILY
Manhattan, NY
Properties1
~120Equity2
~$1.9 billion Gross Asset Value2
~$3.6 billion
GREENPOINT LANDING
Brooklyn, NY
L SEVEN APARTMENTS
San Francisco, CA
NIIDO ORLANDO
Kissimmee, FL
1) Units and properties on a 100% basis.
2) Equity and GAV as of Q2’18 on an IFRS basis at BPY’s share
BPY multifamily properties by state
3 properties
22 properties
1 property
2 properties
10 properties
4 properties
3 properties
2 properties
5 properties
5 properties
7 properties
5 properties
2 properties
10 properties
15 properties
3 properties
6 properties
7 properties
5 properties
0 1000 2000 3000 4000 5000 6000 7000
AZ
CA
CO
CT
FL
GA
IN
MA
MD
MI
NC
NJ
NV
NY
OH
OR
TX
VA
WA
Units
66
Multifamily platform growth
Our multifamily portfolio has grown strongly since 2010 through acquisition and
development activities in urban and suburban locations
67
2014
Acquired Manhattan
Multifamily Portfolio
$330 million equity
invested to date
Acquired Ginkgo
Multifamily in 2012
and Palmetto
Multifamily in 2013
Total equity invested
of $192 million
(realized)
U.S. Multifamily
Value Add Fund II
$849 million equity
invested to date
2016
U.S. Multifamily
Value Add Fund III
$127 million equity
invested to date
Acquired land for
Greenpoint Landing,
Studio Plaza and
Andorra developments
2017
U.S. Multifamily Value
Add Fund I
$315 million equity
invested to date (realized)
20112010
Acquired Fairfield
(Investment
Company and
Service Company)
Acquisition of The
Alexander and 8500
Sunset Boulevard
$122 million equity
invested to date
20132012
Acquired Associated
Estates Realty
$848 million equity
invested to date
NYC Tristate
Multifamily
Developments
$67 million equity
invested to date
2015 2018
Opening of The
Eugene at
Manhattan West, a
844-unit luxury
building
Opening of One Blue
Slip, the first of four
multifamily towers at
Greenpoint Landing
Select investments shown above.
Multifamily development profile
We are developing in core markets that are supply constrained and have high
barriers to entry, with +14,000 units in our development pipeline
68
• Located in
downtown LA
financial district
• 781-unit high rise
development
across 64 stories
• Completed
schematic design
and working
through
completion of
entitlements, with
target scenario of
early 2019
construction
• Brookfield
development
located on the
waterfront in
Greenpoint,
Brooklyn
• Unobstructed
views of Manhattan
• Five towers in total
• 2,040 units
UNDER
CONSTRUCTION PLANNING STAGESCOMPLETED
The Eugene
$791 million1
MANHATTAN, NY
• Located on the
West side of
Manhattan
• Brookfield
completed in
2017
• First development
as part of
Brookfield’s
“Manhattan West”
• 844 units, 675
market rate and
169 affordable
• Market-rate units
96% leased
755 Figueroa
$515 million1
LOS ANGELES, CA
Greenpoint Landing
$1.6 billion1
BROOKLYN, NY
One Blue Slip
$287 million1
BROOKLYN, NY
Mott Haven
$950 million1
BRONX, NY
Halley Rise
$1.4 billion1
RESTON, VA
• Two-phased,
4.3 acre
development,
located on the
Harlem River
shoreline in the
South Bronx
• one of the
largest private
developments in
the history of the
Bronx
• Seven towers
• 1,300+ units
• First market rate
building completed
as part of the
Greenpoint
Landing Master
Plan
• 359 market rate
units, Brookfield
completed in 2018
• Opened in
September, 2018,
lease up is
ongoing, achieving
projected rents at
below market
concessions
• 24-acre site in
Fairfax County
• Six development
blocks totaling
3.6 million SF,
incl. ~1,300 MF
apts., 450K SF
retail, and 5+
acres of parks
• Completed
schematic
design, and
received county
board approval
July 2018
1) Reflects total cost
Opportunity zones
More than 8,700 census tracts across the U.S. have been qualified as distressed
communities, making private investments eligible for Opportunity Zone tax benefits
69
Map source: Economic Innovation Group
Typical resident services & amenities
More and more, we are seeing buildings that are enhanced by technology and
curated amenities, providing convenience, service and social connectivity
70
• Gym
• Common room / party room
• Shared workspace
• Mail and package center
• Pool (in warmer climates)
• Parking garage/spaces
• Laundry in unit
• Dog runs
• Bike storage and repair
• On-site property manager
• On-site leasing
• Fresh paint and cleaning prior to move in
• 5-10 year capital plan
Typical Building
Services & Amenities
Enhanced Offerings at
Luxury/High-Rise Buildings
• Concierge services
• Resident event coordinator
• Package delivery management
• Personal shopper
• Pet grooming
• Rock-climbing wall
• Rooftop terrace
• Spa / massage center
• Wine cellar
• Yoga / aerobics / wellness classes
• Car-sharing service
• Dry cleaning / laundry service
• Child-care service
New innovations in resident services
Latch
Smart Access Technology
71
Hello Alfred
Personal Concierge
Via
Ride Share Platform
72
GGP Acquisition
Closes
Multifamily Rental Location Units Completion ($M) Cost1 Yield
The Eugene Manhattan 844 2017 414 5%
One Blue Slip Greenpoint 359 2018 273 6%
Village Gateway Camarillo 450 2018 127 7%
Studio Plaza Silver Spring 399 2019 106 7%
Water St. / George St. London 352 2019 200 5%
Greenpoint Bldg. F Greenpoint 421 2020 358 6%
Newfoundland London 636 2020 329 4%
TOTAL 3,461
1) Represents BPY’s proportionate share of investment.
Multifamily Condo Location Units Completion ($M) Cost1 Yield
Principal Place London 301 2019 251 17%
Southbank Place London 777 2019 296 20%
10 Park Drive London 345 2019 156 31%
One Park Drive London 468 2021 292 30%
TOTAL 1,891
Planned Units
Projects in Planning Phase 6,400
11,752TOTAL COMPLETED, ACTIVE AND PLANNED
Recently completed, active and planned developments
Q&A
73
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Important Cautionary Notes
All amounts are in U.S. dollars unless otherwisespecified. Unless otherwise indicated, the statistical andfinancial data in this document is presented as of June30, 2018.
This presentation contains “forward-looking information”within the meaning of applicable securities laws andregulations. Forward-looking statements includestatements that are predictive in nature, depend upon orrefer to future events or conditions, include statementsregarding our operations, business, financial condition,expected financial results, performance, prospects,opportunities, priorities, targets, goals, ongoingobjectives, strategies and outlook, as well as the outlookfor North American and international economies for thecurrent fiscal year and subsequent periods, and includewords such as “expects,” “anticipates,” “plans”, “believes,”“estimates”, “seeks,” “intends,” “targets,” “projects,”“forecasts,” “likely,” or negative versions thereof and othersimilar expressions, or future or conditional verbs such as“may,” “will,” “should,” “would” and “could”.
Forward-looking statements include, without limitation,statements about target earnings and distribution growth,the growth potential of our existing and new investments,return on invested capital, gains on mark-to-marketreleasing and occupancy, targeted same-store growthand returns on redevelopment and development projects,the ability to recycle capital, the availability of suitableinvestment opportunities, and the availability of financingand our financing strategy.
Although we believe that our anticipated future results,performance or achievements expressed or implied bythe forward-looking statements and information are basedupon reasonable assumptions and expectations, thereader should not place undue reliance on forward-looking statements and information because they involveknown and unknown risks, uncertainties and otherfactors, many of which are beyond our control, which maycause our actual results, performance or achievements todiffer materially from anticipated future results,performance or achievement expressed or implied bysuch forward-looking statements and information.
Factors that could cause actual results to differ materiallyfrom those contemplated or implied by forward-lookingstatements include, but are not limited to: risks incidentalto the ownership and operation of real estate propertiesincluding local real estate conditions; the impact orunanticipated impact of general economic, political andmarket factors in the countries in which we do business;the ability to enter into new leases or renew leases onfavorable terms; business competition; dependence ontenants’ financial condition; the use of debt to finance ourbusiness; the behavior of financial markets, includingfluctuations in interest and foreign exchanges rates;uncertainties of real estate development orredevelopment; global equity and capital markets and theavailability of equity and debt financing and refinancingwithin these markets; risks relating to our insurancecoverage; the possible impact of international conflictsand other developments including terrorist acts; potentialenvironmental liabilities; changes in tax laws and othertax related risks; dependence on management personnel;illiquidity of investments; the ability to complete andeffectively integrate acquisitions into existing operationsand the ability to attain expected benefits therefrom;operational and reputational risks; catastrophic events,such as earthquakes and hurricanes; and other risks andfactors detailed from time to time in our documents filedwith the securities regulators in Canada and the UnitedStates.
We caution that the foregoing list of important factors thatmay affect future results is not exhaustive. When relyingon our forward-looking statements or information,investors and others should carefully consider theforegoing factors and other uncertainties and potentialevents. Except as required by law, we undertake noobligation to publicly update or revise any forward-lookingstatements or information, whether written or oral, thatmay be as a result of new information, future events orotherwise.
In considering investment performance informationcontained herein, prospective investors should bear inmind that past performance is not necessarily indicativeof future results and there can be no assurance thatcomparable results will be achieved, that an investment
will be similar to the historic investments presented herein(because of economic conditions, the availability ofinvestment opportunities or otherwise), that targetedreturns, diversification or asset allocations will be met orthat an investment strategy or investment objectives willbe achieved.
This presentation includes estimates regarding marketand industry data that is prepared based on itsmanagement's knowledge and experience in the marketsin which we operate, together with information obtainedfrom various sources, including publicly availableinformation and industry reports and publications. Whilewe believe such information is reliable, we cannotguarantee the accuracy or completeness of thisinformation and we have not independently verified anythird-party information.
This presentation makes reference to net operatingincome (“NOI”), funds from operations (“FFO”), andCompany funds from operations (“CFFO”). NOI, FFO andCFFO do not have any standardized meaning prescribedby International Financial Reporting Standards (“IFRS”)and therefore may not be comparable to similar measurespresented by other companies. The Partnership usesNOI, FFO and CFFO to assess its operating results.These measures should not be used as alternatives toNet Income and other operating measures determined inaccordance with IFRS but rather to provide supplementalinsights into performance. Further, these measures donot represent liquidity measures or cash flow fromoperations and are not intended to be representative ofthe funds available for distribution to unitholders either inaggregate or on a per unit basis, where presented.
For further reference, specific definitions of NOI, FFO,and CFFO are available in the Partnership’s pressreleases announcing its financial results each quarter.
Brookfield Property Partners
INVESTOR DAY
SEPTEMBER 26 , 2018