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Brookfield Property Partners L.P. Investor Meeting September 29, 2016
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Page 1: › ~ › media › Files › B › Brookfield-BPY-IR › events › ... · Brookfield Property Partners L.P.29-09-2016  · Case Study 26 Acquisition of Potsdamer Platz, Berlin’s

Brookfield Property Partners L.P.

Investor Meeting

September 29, 2016

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2

Our Business 3 Brian Kingston, Senior Managing Partner, Chief Executive Officer

Core Office 17 Ric Clark, Senior Managing Partner, Chairman

Urban Multifamily 35 Lowell Baron, Managing Partner, Head of Multifamily

Retail Business 47 Ashley Lawrence, Senior Vice President, Asset Management – Retail

Opportunistic Investment Strategy 64 Brian Kingston, Senior Managing Partner, Chief Executive Officer

Financial Update 75 Bryan Davis, Managing Partner, Chief Financial Officer

Wrap-up / Q&A 89 Brian Kingston, Senior Managing Partner, Chief Executive Officer

Table of Contents

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Our Business – Brian Kingston

3

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Brookfield Property Partners is Brookfield’s primary vehicle to

make investments across all strategies in real estate

4

Brookfield Property Partners L.P. (BPY)

Opportunistic

Value-Add

Core

Core-Plus

Through Participation in

Brookfield Private Funds Direct

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Our goal is to be the leading global owner & operator

of high-quality real estate, generating an attractive total return

for our unitholders comprised of:

5

Current yield backed by stable cash flow from a diversified portfolio

of assets

5-8% annual distribution growth

Capital appreciation of our asset base

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Opportunistic Core Office & Retail

• Currently 80% of BPY’s balance sheet

• Investing in high-quality, trophy assets

• Provides stable cash flow with growth and capital appreciation

• 20% of BPY’s balance sheet

• Investing in mispriced portfolios, properties with significant value-add

• Provides capital appreciation

10% to 12% Total Returns 20% Total Returns

Stable, predictable cash flows from our

Core Office and Retail units are enhanced by our

higher-yielding Opportunistic strategies

6

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Proven approach to investing

• We are value-oriented, counter-cyclical investors

• We specialize in executing multi-faceted transactions that allow us to

acquire high-quality assets at a discount to replacement cost

• We leverage our business units to enhance the value of our investments

• We have the flexibility to allocate capital to the sectors and geographies with the best risk-adjusted returns

• We continually recycle capital from stabilized assets to higher-yielding

assets in order to build long-term value for unitholders

7

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Brookfield Property Partners has undergone significant, transformative growth

in the three years since spin-out

8

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Progress since spin-out…

• Completed $5 billion acquisition of Brookfield Office Properties and

reduced balance sheet concentration in public securities from 80% to 30%

• Invested $1 billion in General Growth Properties to increase interest to 34%1

• Invested $1.8 billion alongside our joint venture partner to privatize

Canary Wharf and increase our interest to 50%

• Issued $6 billion of perpetual equity

• Recycled $5 billion of capital out of mature office and retail assets

• Invested $3 billion in new Brookfield-sponsored funds

9

1) Represents BPY’s fully diluted interest in GGP

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10

Through organic growth in existing markets…

2013

Canada

$8B

United States

$70B

UK & Europe

$4B

Australia

$9B

Brazil

$4B

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11

…and expansion into new markets we have grown

AUM to over $146 Billion1

Today

Canada

$7B

United States

$105B

UK & Europe

$23B

Brazil

$3B

Australia

$7B Middle East - $0.1B

India - $1.2B

China - $0.5B

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

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2013 TODAY

PRIMARY Traditional real estate sectors that

have deep public and private

institutional capital markets

Core Office

Core Retail Multifamily

Core Office

Core Retail Multifamily Logistics

ESTABLISHED Alternative real estate sectors that

have deep public and private capital

markets

Suburban Office

Alternate Retail

Suburban Office

Alternate Retail Hotels

Net Leases

NON-TRADITIONAL Some public market presence and

analyst coverage but highly

fragmented and largely privately held

Self-Storage

Manufactured Housing

Student Housing

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

12

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• 149 premier office properties totaling 101 million square feet (“msf”) in

gateway markets around the world

• 10 msf of office and multifamily development projects currently underway

• Interest in 128 best-in-class retail properties totaling 125 msf throughout the

United States

• High-quality assets with operational upside including:

• 35,000 multifamily units in the United States

• 54 msf of industrial in modern logistics properties in North America and Europe

• 18,400 hotel rooms throughout the United States, Europe and Australia

• Over 300 triple net lease properties throughout the United States

• Over 150 self-storage assets in the United States

• 13 student housing properties in the United Kingdom

…and built a diversified portfolio of premier properties

13

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...Which has led to significant growth of business

31 Total Assets ($ billions) 66

Total Equity ($ billions)

Company FFO ($ millions)

13

570

22

950+

TODAY 2013

Distribution per Unit ($)

Value per Unit ($)

113%

69%

67%

25

1.00 12%

20% 30

1.12

14

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Continue to be focused on key objectives

Enhance the flexibility of our balance sheet

In 2016:

• Refinanced corporate credit facility, upsizing capacity from $2.0 to $2.5 billion, reducing

interest costs by 55bps and extending maturity to 2019

• BBB credit rating from S&P

• Issued C$200 million of perpetual preferred shares, using proceeds to repay on-demand capital securities

Recycle capital

• $1.5 billion of net equity year to date; on target for $2.0 billion in 2016

• Proceeds redeployed:

• Repayment of BPO acquisition facility

• Private fund capital calls

• Development funding

• Repurchase of units

15

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Stabilize occupancy in Core Office and Retail portfolios

• Flat occupancy in existing office portfolio at 92%

• Development pre-leasing increased at One Manhattan West, Principal Place and

Brookfield Place Calgary

• Stable occupancy in Core Retail portfolio at 95%

Share price to reflect value of business

• Active investor relations program

• Index inclusion

• Buying back units

Continue to be focused on key objectives

16

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Core Office – Ric Clark

17

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Brookfield’s Core Office business features an

iconic, irreplaceable portfolio

of the world’s most sought-after

commercial properties

18

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Iconic Properties

Premier locations, high-quality properties

in the most dynamic, resilient cities around the globe

Brookfield Place, New York City Canary Wharf, London

Potsdamer Platz, Berlin

Brookfield Place, Toronto

Darling Park, Sydney

Brookfield Place, Perth

19

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Comprehensive Capabilities

20

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

of best-in-class quality and service throughout the lifecycle of our properties

“…Of our top 20 office

tenants, 75% are in Brookfield buildings in more than one city and

50% are in buildings in more than three cities,

which speaks to the consistency and quality

of our properties.”

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Scale of Operations

21

We have $15 billion of capital invested in Core Office

149 PROPERTIES

92% OCCUPANCY

101msf PORTFOLIO SIZE

8.3yrs AVERAGE

LEASE TERM

18 CITIES

1,600 EMPLOYEES

6 COUNTRIES

9msf AVERAGE ANNUAL

LEASING VOLUME

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50%

18%

16%

14%

$ 500

$ 1,000

$ 1,500

$ 2,000

2013 2014 2015 2016

NET OPERATING INCOME (US$ in millions)

Stable Income

22

Long average lease life, market diversification and

high-quality tenants produce very stable income

U.S.

UK

Australia

Canada

Other

1

1) Forecast to reflect incremental NOI at Brookfield Place New York

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0%

2%

4%

6%

8%

10%

12%

14%

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016

SAME PROPERTY NOI GROWTH (in natural currency)

Organic Growth

23

Significant income growth driven by recently signed leases at

Brookfield Place New York and increasing occupancy

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We have been taking advantage of

strong pricing and demand

for stabilized office assets in select core markets

to extract equity capital and reinvest in higher yielding opportunities

24

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Property City

Interest

Sold Net Proceeds

(US$ Millions)

Cap

Rate

World Square Retail Sydney 100% $ 200 4.2%

Royal Centre Vancouver 100% 220 3.3%

Principal Place London 50% 360 4.0%

Two Ballston Plaza Greater Washington, DC 100% 60 5.6%

Potsdamer Platz Berlin 25% 170 3.4%

One New York Plaza New York City 33% 550 4.6%

King Street Wharf Sydney 100% 30 4.9%

One Shelley Street Sydney 100% 250 5.1%

Total $ 1,840 4.2%

Asset Sales

25

On track to achieve goal of raising $2 billion of equity

from asset sales in 2016

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Case Study

26

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

property estate

COMPETITIVE

ADVANTAGE

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

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

office, retail, multifamily, hospitality, leisure and gaming

• Motivated seller divested asset as part of mandatory liquidation of a

maturing closed-end fund and required transaction assurance of a

well-capitalized buyer with strong lending and JV equity

relationships

STRONG

MARKET FUNDAMENTALS

• Market vacancy at 10-year low in 2016

• Rental growth in Berlin has consistently outpaced other major

German cities

• Demand driven by growing technology, media and

telecommunications (TMT) sector tenants particularly strong with

40% of total leases executed

VALUE

ENHANCEMENT MEASURES

• Brookfield expertise in lease-ups of significant vacancy – increased

office occupancy from 53% to 75% in first 9 months of control

• 85 residential units had been held vacant by previous owner in

condo conversion exercise; Brookfield’s plan is to aggressively re-

lease as rentals to tap into existing apartment demand on the estate

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Development Strategy

• Earn premium risk-adjusted returns

compared to acquisitions

• Upgrade our portfolio with new, trophy assets

in strategic markets

• Mitigate risk by typically securing:

– Anchor leases for 40-50% prior to launch

– Maximum price construction contracts

– Construction financing with term extensions

– JV equity partners once project is substantially

de-risked

– Limit development capital to <10% of total assets

• Focus on prominent, large-scale projects in

high-growth markets

27

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Development Activity

7.3msf UNDER DEVELOPMENT

7% AVERAGE YIELD-ON-COST

$300M INCREMENTAL NOI

56% PRE-LEASED

28

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Active Development Projects

Building best-in-class regional headquarters premises for a

diversified high-credit-quality tenant roster

Project City Sq. Ft. (000’s)

Pre-

Leased

Date of

Completion Cost1

(US$ millions) Yield

Principal Place London 621 84% Q4 2016 $ 510 8%

L’Oreal Brazil HQ Rio de Janeiro 197 100% Q1 2017 40 12%

London Wall Place London 505 73% Q2 2017 270 7%

Brookfield Place East Calgary 1,400 81% Q3 2017 620 7%

655 New York Avenue Washington, DC 766 70% Q3 2018 290 7%

100 Bishopsgate London 938 38% Q4 2018 1,140 7%

1 Bank Street London 715 40% Q2 2019 330 7%

One Manhattan West New York 2,117 30% Q4 2019 1,060 6%

Total 7,259 56% $ 4,260 7%

29

1) At BPY’s proportionate share

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$ 0

$ 100

$ 200

$ 300

2017 2018 2019 2020 2021

Brazil UK Canada U.S.

Development Income

At current capitalization rates this income stream is

worth ~$7 billion

(US$ in millions)

30

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Next Phase of Developments

Project City Sq. Ft. (000’s)

Manhattan West New York 2,296

ICD Brookfield Place Dubai 1,079

10 Bank Street London 857

Shell Centre London 317

North Quay London 2,400

One Park Place London 680

Wood Wharf – Phase 1 London 338

Bay Adelaide Centre North Toronto 825

Total 8,792

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

31

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Insulated from ‘Brexit Effect’…

32

• 98% leased to high-credit-quality tenant roster

• Average remaining lease term of 12 years

• Current developments 55% pre-leased ahead of delivery in

2017-19 timeframe

• Completed £515 million construction facility on 100 Bishopsgate

following Brexit outcome

• Only 5% of total BPY equity exposed to British pound

We maintain our view that the UK will remain a

very important center of commerce in the world, and that an

acceptable deal with the EU will be negotiated

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….and Energy Market Downturn

33

• 91% leased to high-credit-quality tenant roster

• Average remaining lease-term of 7.4 years

• Manageable lease expiry through year-end 2019

• Current development 81% pre-leased

• Executed 1.2 msf of leases in the last 18 months

• Only 6% of total BPY’s total assets exposed to these markets

Energy markets1 are seeing increasing demand from tenants

seeking “flight to quality” opportunities which align

with Brookfield’s portfolio attributes

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

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Brookfield has built its real estate business

by capitalizing on

distressed assets and businesses

in capital-deprived markets and will continue to monitor the current investment

landscape for such opportunities

34

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Urban Multifamily – Lowell Baron

35

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Brookfield is building a core investment platform of

premier Urban Multifamily rental assets

36

Creating a long-term, best-in-class urban multifamily business complementary

and with similar characteristics to Brookfield’s established, highly regarded global

office portfolio

Initial strategy includes a build-to-core model, leveraging urban infill parcels owned

within the office business as well as newly sourced transactions

Acquiring single assets or portfolios will become a major avenue of growth for the

right opportunities and at the right time

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Brookfield’s History of Multifamily Investment

37

Recapitalizes

Fairfield

2010/11 2012 2013 2014 2015

Acquires 4,900 unit

portfolio for $500 million

Acquires 4,275 unit

portfolio for $290 million

Acquires 3,962 unit

portfolio in Manhattan for

$1 billion

Privatizes AEC for

$2.5 billion - 14,200 unit

portfolio

Properties 4 23 70 90 150

Units 1,270 6,680 19,010 26,700 42,060

GAV (US millions) $140 $715 $1,980 $4,030 $7,400

Commits $300

million to second Value-Add fund

Commits $50

million to first Value-Add fund

Construction

begins on Manhattan West

residential tower

(879 units)

Acquires four

development projects in US

representing

2,350 units

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Scale of Operations1

38

129 PROPERTIES

94% OCCUPANCY

~1,600 EMPLOYEES

Seattle

Sacramento San Francisco

San Jose

Los Angeles

Inland Empire

Denver

Dallas Metro

San Antonio

Houston

Miami / Ft. Lauderdale

/ West Palm Beach

Atlanta

Washington, DC

Metro

New York City

Boston Metro

Las Vegas

Phoenix

Detroit Cleveland/

Columbus

Indianapolis

Charlotte

1) Only includes U.S. assets

Raleigh/Durham

Tampa

Charlottesville

Virginia Beach

~38,000 UNITS

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Why Urban Multifamily?

39

Sources: McKinsey & Company, MIT and Edward Glaeser (Harvard Economics Professor)

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

to 75% by 2050

Global

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

to 90% by 2050

Concentrated

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

less urbanized countries

Social

Connectivity

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

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

Cities are places of collaboration, innovation and opportunity -

The urbanization trend exists because cities make

people smarter, healthier and happier

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Historical Returns

40

Multifamily has been one of the top performing asset types

over the long term with a favorable risk-to-return profile

Source: NAREIT (data through 2015)

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

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U.S. Multifamily Rent Growth

41

Expected rent growth of 3.7% in 2016 with select markets

experiencing double-digit increases

Source: Axiometrics

Apartment Rent Growth

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U.S. Multifamily Occupancy Rates

42

Historically strong and stable occupancy rates

Apartment Occupancy Rates

Source: Axiometrics

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U.S. Homeownership Rate

43

Declining homeownership creating incremental demand

for apartments

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

U.S. Homeownership Rate

69.0% 68.9% 68.8% 68.2%

67.8% 67.4%

66.9% 66.2%

65.5% 65.1% 64.5%

63.8%

63.0% 62.8% 62.3% 62.5% 62.7%

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

Long Term Average –

64%

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Target Markets

44

• “Coastal core” markets of New York City, Boston, Washington DC, Los Angeles,

San Francisco and Seattle

• Also targeting markets that offer a great lifestyle, affordable cost of living, are business

friendly and have a diversified economy

Seattle

Portland

San Francisco

San Jose

Los Angeles

San Diego

Denver

Dallas

Austin

Houston Miami

Atlanta

Washington, DC

New York City

Boston

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Active Development Projects

45

Project City # of Units

Date of

Completion Cost1

(US$ millions) Yield

For Rent

Three Manhattan West Manhattan 473 Q1 2018 $ 414 5%

Greenpoint Landing - G Brooklyn 341 Q1 2019 273 6%

Camarillo Ventura County 446 Q3 2019 128 7%

Newfoundland London 636 Q4 2019 322 4%

For Sale

Principal Place London 329 Q1 2019 249 N/A

Shell Centre London 597 Q3 2019 219 N/A

Total 2,822 $ 1,605 5%

Active development pipeline with value

in excess of $2 billion

1) At BPY’s proportionate share

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Future Development Projects

46

… and value in excess of $1 billion

from our future development pipeline

Project City # of Units

Date of

Completion Cost1

(US$ millions) Yield

For Rent

Wood Wharf Phase I London 677 Q4 2019 $ 245 5%

Greenpoint Landing - F Brooklyn 400 Q3 2020 364 6%

1810 Main Houston 286 Q2 2019 81 7%

Westcreek Houston 409 Q4 2020 166 7%

Dallas Hi-Line Dallas 426 Q4 2020 164 7%

Studio Plaza Silver Spring 343 Q1 2019 106 7%

Total 2,541 $1,126 6%

1) At BPY’s proportionate share

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Retail Business – Ashley Lawrence

47

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The premier quality assets and operations

in our Core Retail business

mirrors that of the Core Office portfolio

These class A malls are

long-term investments that provide stable cash flow

48

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Through our 34% fully diluted interest in

General Growth Properties (“GGP”)

we are invested in

100 of the top 500 malls in the United States

49

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Scale of Operations

50

We have $9 billion of capital invested in Core Retail

128 PROPERTIES

95% OCCUPANCY

125msf PORTFOLIO SIZE

$583psf AVG. TENANT SALES

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Although there is much publicity about the decline

of brick-and-mortar shopping in the face of

increased online retail,

the statistics do not support this

51

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Regional Mall Visitation by Generation

52

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

For one, millennials are shopping in malls

more than any other living generation

50

100

150

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

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

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Same-Property Occupancy

53

…and our mall occupancy has stayed consistently

in the 95% range for several years

Source: GGP

80%

82%

84%

86%

88%

90%

92%

94%

96%

98%

100%

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016

SAME-PROPERTY OCCUPANCY

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Tenant Sales

54

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

$ 500

$ 525

$ 550

$ 575

$ 600

2012 2013 2014 2015

TENANT SALES/PSF (<10 SF)

Source: GGP

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Core Retail Mall Sales and NOI Percentage by Rank

55

Source: GGP

1) Percentage of GGP’s reported Company NOI

Top Properties 2016 Sales/psf % of NOI1

Top 10 $792 23%

Top 30 $727 48%

Top 50 $677 67%

Top 100 $598 96%

Total $583 100%

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Redeveloping Obsolete Big-Box Stores

56

Since 2011, GGP has redeveloped 82 vacant department stores

for a total cost of $1.4 billion, generating an 11% annual return

“The decline of certain big-box

retailers has unlocked the

opportunity to convert these

spaces into more productive

uses, including full-service

restaurants, chef-driven food

halls, high-end grocers, fitness

centers and movie theaters.”

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Core Retail – 2016 Asset Sales

57

1) At BPY’s fully-diluted interest

Property City

Interest

Sold Net Proceeds

(US$ Millions)1

Fashion Show Las Vegas, NV 50% $ 282

Eastridge Mall San Jose, CA 100% 74

Pioneer Place (office) Portland, OR 100% 40

One Stockton San Francisco, CA 49.8% 11

522 Fifth Avenue New York, NY 10% 6

Owings Mills Mall Owings Mills, MD 50% 4

Newgate Mall Salt Lake City, UT 100% 3

Total $ 420

Similar to Core Office, we have been raising equity capital by

selling interests in premier quality U.S. malls

at near or peak valuations (~4% cap rates)…

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Core Retail – Development Sites

58

1) At BPY’s proportionate cost

Project City Description

Stabilized

Year Cost1

(US$ millions) Return

Ala Moana Center Honolulu Anchor Repositioning 2018 $ 15 9-10%

Staten Island Mall New York Expansion 2019 60 8-9%

Other Various Redevelopment 2017-18 70 6-8%

Under construction $ 145 7-9%

The SoNo Collection Norwalk Ground-up development 2020 80 8-10%

Other Various Redevelopment TBD 75 8-9%

Total under construction and in planning $ 300 8-9%

…and reinvesting proceeds into higher-yielding development

and redevelopment initiatives

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We made an incremental investment in the

class B mall sector through the

recent privatization of Rouse Properties…

Not all B malls are created equal!

59

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Rouse Properties

60

35 PROPERTIES

91% IN-LINE OCCUPANCY

24msf PORTFOLIO SIZE

$2.9billion GROSS ASSET VALUE

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Rouse Properties – Mall Portfolio

61

In many instances these malls represent the ‘only game in town’ –

limited competition and appealing demographics

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We have identified $200 million of non-strategic

assets in lower-tier markets for disposition

in the near-term

And expect to recycle this capital into new

acquisitions and redevelopment of existing assets

62

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Rouse Properties – Value Creation and Growth

63

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

returns of 9-11%

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

with high population densities and significant value creation opportunities

Shoppes at Carlsbad Redevelopment

Completion Q2 2018

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Opportunistic Investments – Brian Kingston

64

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Brookfield Property Partners participates in

Opportunistic real estate strategies to

diversify the investment portfolio

and bolster returns

65

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The assets acquired in this strategy are of high-quality,

but have operational upside through

efficiencies and synergies

with Brookfield’s global operating footprint

66

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Investment Approach

67

• Sectors or markets that are out-of-favor

and where capital is scarce

• Distressed assets, activist investors /

public-to-private, socioeconomic

headwinds

• Fragmented industries with outsized

returns

• Avoid auctions

• Identify operational improvements and

synergies

Counter-

Cyclical /

Contrarian

Investments

Multi-faceted /

Structured

Transactions

Proprietary

Investments

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Case Study

68

Acquisition of Simply Self Storage, the largest privately held

self-storage owner/operator in the U.S. and 7th largest overall

Farmington Hills,

Michigan

Grand Rapids

Michigan

Brighton,

Massachusetts

TRANSACTION

MERITS

• Transaction sourced through Brookfield relationship with

previous owners/operator

• Forward cap rate of 6.6% represents a significant discount to recent portfolio transactions in the sector

• Sector is attractive due to limited new supply and growing demand

GROWTH

OPPORTUNITY

• Lack of available capital by previous owners provides

opportunity to redevelop and add density to existing asset base

• Acquire individual, small/medium portfolios in secondary

markets where public REITs are not active

• Develop new assets in primary and secondary markets

EXPERIENCED

MANAGEMENT

• Existing management team was retained and expanded

• CEO is a 20 year veteran of the storage sector and is the operating member of a joint venture with Brookfield

Grand Rapids,

Michigan

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Case Study

69

Acquisition of a portfolio of seven high-quality assets located in

prime regions of São Paulo and Rio de Janeiro

CONTRARIAN

THESIS

• Flight of capital / lack of competition in region due to geo-

political instability and uncertain near-term economic landscape

• Off-market opportunity sourced through long-standing relationships with both portfolio owner and owner’s majority

shareholder

• Successful history of investing in market with strong underlying

economic indicators in medium- to long-term

HIGH-QUALITY

ASSETS

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

delivered, high-quality assets

• Portfolio of primarily AAA assets in prime regions of São Paulo and Rio de Janeiro

STABILITY +

GROWTH

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

streams to investment-grade multinational tenants

• Vacancy concentrated in 2 of the 7 properties

• Ability to fill vacancy by offering competitive rents due to low

investment basis

Alfa Laval

São Paulo

Cidade Jardim

São Paulo

JK Complex – Towers D & E

São Paulo

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BPY Fund Commitments

70

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

($US Millions)

BPY

(%)

Target

Return1 BPY’s Equity2

($US Millions)

BSREP II Opportunistic/

Diversified 2015 $ 9,000 26 20%+ $ 1,350

BSREP I Opportunistic/

Diversified 2012 4,350 31 20%+ 1,850

VAMF Series Value-Add/

Multifamily 2011-15 1,900 34 14-16% 300

BREF Series Debt/

Diversified 2004-14 3,125 27 12-13% 200

Other direct 500

Total $ 4,200

1) Targeted gross internal rate of return (“IRR”) – There can be no assurance that the funds will achieve returns within the targeted range or within a comparable range or will be able to avoid losses

2) Represents BPY’s invested equity to-date

…We now have $4 billion of capital invested in

Opportunistic strategies

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71

…Which has given us exposure to new sectors and

new geographies with our capital invested alongside partners

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…A sizeable pipeline of investments will continue to broaden

our sector and geographic exposure

72

NEW SECTORS

• In binding agreement to purchase second largest privately held

manufactured housing portfolio in North America

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

same-store NOI growth every quarter for last 20 years

NEW MARKETS

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

International Financial Center complex in Seoul, South Korea

• Tenant roster of large, multinational corporations – many ‘repeat

customers’ in Brookfield’s global portfolio

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

strategy and repositioning of retail and hotel offerings

PLATFORM

EXPANSION

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

India, in advanced negotiations to acquire a 4.2msf portfolio of

prime office and retail properties in Mumbai

• Portfolio located in Powai submarket – the ‘Silicon Valley’ of India –

high-quality infrastructure and location

• Acquisition basis at discount to replacement cost with upside from

platform integration and repositioning to ‘Live-Work-Play’ community

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While our investment in Opportunistic strategies

will continue to grow, we intend to limit it to

25% of our balance sheet

73

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Self-“Fund”ing

74

BPY’s Opportunistic investment strategy will be largely

self-funding as we begin to harvest capital from legacy funds

2017 2018 2019 2020

$1

$ 2

$ 3

$ 4

CUMULATIVE RETURN OF CAPITAL ($ billions)

BSREP II

Other

BSREP I

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Financial Update – Bryan Davis

75

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1. Positioning our Balance Sheet

2. Stable and growing cash flows

76

Multifamily Office

Retail

Multifamily

Office

Retail

Multifamily

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Accomplished our Initial Objectives

77

Launched BPY

Used BPY equity to acquire Brookfield Office Properties and

converted our passive investment in Canary Wharf into a control

position

Raised capital through sales of interests in mature assets and

developments to fund our capital commitments to:

1) Active developments

2) Funds

3) Repayment of corporate debt

Continued to raise capital from high demand assets and markets

to redeploy into higher yielding opportunities

2014

2013

2015

2016

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Re-shaped our Balance Sheet…

78

1) Reflects mandatorily convertible preferred shares as equity ($1.8 billion, 70 million units)

2) Diluted IFRS value per unit

(US$ millions, except per unit amount) 2013 BPO &

Canary

Allocation

of Capital Organic

Growth Today

Assets

Office $ 6,200 $ 6,700 $ (6,000) $ 4,900 $ 11,800

Development 1,000 2,500 3,500

Retail 7,600 1,300 8,900

Opportunistic 1,200 2,000 1,000 4,200

16,000 6,700 (1,500) 7,200 28,400

Corporate debt 500 1,500 (1,500) 1,600 2,100

Capital securities 1,250 1,250

Other liabilities 600 1,000 1,600

Equity $ 13,650 $ 5,200 $ − $ 4,600 $ 23,450

Units outstanding1 540 241 781

Value per unit2 $ 25 $ 30

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Net Proceeds (US$ Millions)

Cap

Rate

2016 2,000+ 4.0%

2015 2,000 4.5%

2014 1,000 5.5%

Total $ 5,000+ 4.5%

Sourced the most effective capital…

• Issued 173 million limited partnership units in 2014 to acquire BPO

• Issued $1.8 billion of preferred units which are mandatorily convertible into 70 million BPY

units to fund the privatization of Canary Wharf

• In 2015 and 2016 accelerated recycling of capital to take advantage of strong market

demand:

79

2017+ will start to realize significant amounts of capital

from ‘first generation’ fund investments

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…Advanced development pipeline

• Completed on time and budget $1.2 billion of development and redevelopment projects and created $800+ million in value

• Added $3.6 billion in projects to the active development pipeline, including:

– Pipeline in Canary Wharf

– Development sites in London, New York, Washington, DC, Rio de Janeiro

• Invested $2 billion on advancing construction, on time and on budget

• Secured over $3 billion in committed construction financings

• Advanced pre-leasing by executing 3 million square feet of leases

80

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Increased capital invested in Opportunistic strategies…

• >$4 billion of capital invested compared to $1 billion in 2013

• Earned $110 million in FFO in Q2 2016, up 93% year over year

• Diversified our cash flows by exposing us to both new geographies and real estate sectors:

81

($ in millions) U.S. Europe Brazil India China Total

Hospitality $ 360 $ 740 $ 1,100

Multifamily 850 850

Retail 350 250 200 800

Office 200 40 240 250 730

Industrial 400 250 50 700

Triple net lease 400 400

Mezzanine 170 170

Self-storage 150 150

Student housing 150 150

Total $ 2,880 $ 1,180 $ 490 $ 250 $ 250

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($ in millions expect per unit amounts) Capital FFO Appreciation Total

Core Office and Retail $ 19,000 6% 4–6% 10–12%

Opportunistic 4,500 7% 11–13% 18–20%

$ 23,500 6% 6–9% 12–15%

Target Earnings per unit $1.90 $2.10 $4.00

Funds attractive distribution per unit of… $1.12

and distribution growth targets between… 5–8%

Provides capital to re-invest into

platforms for future growth

Now positioned to achieve earnings potential

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

82

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$1.11

$1.80

2014 2015

$1.18

$1.32+

2016 2021

$2.00

Same store growth of 2-3% – $220m

Active developments – $160m

Reinvestment of capital at higher

returns – $100m

Future drivers of earnings growth…

• To date, we have benefited from earnings growth driven by lease-up of Brookfield Place

New York and reallocation of capital to higher-returning Opportunistic strategies

• Over the next 5 years, growth will be driven by three things:

83

9%

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2015

$1.18

2016 2021

$2.00

$1.60

$1.06

90% 80%

($ per unit)

Funds from operations $ 2.00

Average annual realized gains 0.35

Second generation leasing costs (0.35)

Sustaining capital expenditures (0.15)

Annual non-cash rents (0.10)

Adjusted AFFO $1.75

Conservative payout ratio + diversity of cash flows

provides support for current yield

84

7%

$1.32

$1.12

85%

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Conservative Financing Strategy

• We finance predominantly with asset-level, non-recourse debt

• We raise asset-level debt in local currency with primarily fixed interest rates

• We source the lowest cost capital to fund growth

• Our investment-grade corporate credit rating provides financing flexibility

• We target a distribution pay-out ratio of 80% of Company FFO

85

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Our long-term goal is to maintain a

proportionate debt-to-capital ratio of <50%

• We have made significant progress in reducing debt levels post the acquisition of BPO and are continuing to work toward our long-term goal:

86

53%

50% ($ in millions)

Repay unsecured bonds $ (400)

Reduce corporate and subsidiary debt (1,600)

$ (2,000)

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38%

25%

($ in millions)

Reduce corporate and subsidiary debt (4%)

Planned refinances (4%)

Swap to fixed in floating rate markets (3%)

Convert construction financing to permanent (2%)

(13%)

We target to limit floating rate debt to 25% of total

• Although we may maintain higher floating rate exposure during certain periods where economic conditions and investment strategy support it

87

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We proactively manage foreign exchange exposures…

• Finance using local currency debt which reduces exposure by 45-50%

• Layer on currency hedges to reduce the exposure a further 30-40%

• Leaving only 10-20% of our equity exposed to foreign currencies at any given time

• Actively manage this exposure to protect equity – Brexit case study:

88

(£ in millions)

Total assets invested in U.K. £ 7,100

Local currency debt (3,400)

Reduces our capital at risk prior to hedging £ 3,700

Currency hedges (2,900)

Net exposure to the Pound £ 800

Reduced % of total equity exposed to Pound from 12% to …. 5%

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Wrap-up / Q&A – Brian Kingston

89

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Global reach to identify and acquire high-quality

real estate on a value basis

• Strong operating platforms which enables us to acquire real estate in need of leasing, capital or re-positioning, to generate core-plus returns

• Extensive development pipeline assembled over time in high-value, supply-constrained markets

– 10 msf of core office and multifamily developments and expected to produce +/-15% levered returns over next 5+ years

– Significant shadow pipeline, with minimal invested capital that will be well-positioned for the next development cycle

• Access to opportunistic real estate returns through ability to invest in Brookfield Asset Management-sponsored real estate funds

90

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BPY offers a compelling, unique combination of

current yield and organic growth

• Yield backed by stable and secure cash flow from a portfolio of high-quality assets

• Attractive entry point at discount to IFRS value

• A $23 per unit investment today has the potential to offer a very attractive return to

shareholders:

$ 23

Year 1 Year 2 Year 5 Year 10

Current Yield (5-8% distribution growth)

+ Appreciation

(Multiple of 8-11% FFO growth)

+ Investment

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

$ 16

91

Today

$ 38

$ 77

$ 42

$ 7

$ 12

$ 23 $ 23

13%

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Q&A

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Special Note Regarding Forward-looking Statements

This presentation contains “forward-looking information” w ithin the meaning of Canadian provincial securities law s and applicable regulation and “forward looking statements” w ithin the

meaning of “safe harbor” provisions of the United States Private Security Litigation Reform Act of 1995. Forw ard-looking statements include statements that are predictive in nature,

depend upon or refer to future events or conditions, include statements regarding our operations, business, f inancial condition, expected f inancial results, performance, prospects,

opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook, as w ell as the outlook for North American and international economies for the current f iscal year and

subsequent periods, and include w ords such as “expects”, “anticipates”, “plans”, “believes”, “estimates”, “seeks”, “intends”, “targets”, “projects”, “forecasts”, “likely”, or negative versions thereof and other similar expressions, or future or conditional verbs such as “may”, “will”, “should”, “would” and “could”.

Forw ard-looking statements include, w ithout limitation, statements about the quality of our assets and the resiliency of the cash flow they will generate, our target distribution grow th, the

performance of our assets and their potential for capital appreciation, our f inancial and operating objectives and strategies to achieve those objectives, our ability to recycle capital from

stabilized or non-strategic assets and realize capital from our fund investments, our ability to allocate capital and capitalize on investment opportunities, the potential grow th of our business and related revenue streams, grow th to be achieved by increasing occupancy, the prospects for increasing our cash f low from c ontinued achievement of targeted returns on our

investments and development and re-development pipeline, the anticipated cost and value of our development and re-development pipeline, the impact of Brexit and the energy market

dow nturn on our business and the availability of f inancing and our f inancing strategy.

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Although w e believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon

reasonable assumptions and expectations, the reader should not place undue reliance on forw ard-looking statements and information because they involve know n and unknow n risks,

uncertainties and other factors, many of w hich are beyond our control, w hich may cause our actual results, performance or achievements to differ materially from anticipated future

results, performance or achievement expressed or implied by such forward-looking statements and information.

Factors that could cause actual results to differ materially from those contemplated or implied by forw ard-looking statements include, but are not limited to: risks incidental to the

ow nership and operation of real estate properties including local real estate conditions; the impact or unanticipated impact of general economic, political and market factors in the

countries in w hich we do business; the ability to enter into new leases or renew leases on favorable terms; business competition; dependence on tenants’ f inancial condition; the use of

debt to f inance our business; the behavior of f inancial markets, including f luctuations 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 f inancing and refinancing w ithin these markets; risks relating to our insurance coverage; the possible impact of international conflicts and other developments including terrorist acts; potential environmental liabilities; changes in tax law s and other tax related risks; dependence

on management personnel; illiquidity of investments; the ability to complete and effectively integrate acquisitions into exis ting operations and the ability to attain expected benefits

therefrom; operational and reputational risks; catastrophic events, such as earthquakes and hurricanes; and other risks and f actors detailed from time to time in our documents f iled

w ith the securities regulators in Canada and the United States.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. The forward-looking statements represent our view s as of the date of this

presentation and should not be relied upon as representing our view s as of any date subsequent to the date of this presentation. When relying on our forward-looking statements or

information, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law , w e undertake no obligation to

publicly update or revise any forward-looking statements or information, w hether written or oral, that may be as a result of new information, future events or otherwise.

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Special Note Regarding Use of Non-IFRS Measures

This presentation contains references to net operating income (“NOI”) and funds from operations (“FFO”) w hich do not have any standardized meaning prescribed by International Financial

Reporting Standards (“IFRS”) and therefore may not be comparable to similar measures presented by other entities. We define FFO as income, including equity accounted income, before

realized gains (losses) from the sale of investment property (except gains (losses) related to properties developed for sale) , fair value gains (losses) (including equity accounted fair value

gains (losses)), depreciation and amortization of real estate assets, income tax expense (benefit), and less non-controlling interests of others in operating subsidiaries and properties. We

believe that these are useful supplemental measures that may assist investors in assessing the f inancial performance and the cash anticipated to be generated by our business. NOI and FFO should not be considered as the sole measure of our performance and should not be considered in isolation from, or as a s ubstitute for, analysis of our f inancial statements prepared

in accordance with IFRS. See “Reconciliation of Non-IFRS Measures” in our most recent annual report on Form 20-F and our 6-K filed on August 11, 2016 for a more detailed discussion

including a reconciliation to the most directly comparable IFRS measures.

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Additional Notes

All amounts are in U.S. dollars unless otherw ise specified.

Unless otherw ise indicated, the statistical and financial data in this document is presented as of June 30, 2016.

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Brookfield Property Partners L.P. 2016

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