FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

Transcription

1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of November 2014 Commission File Number BROOKFIELD PROPERTY PARTNERS L.P. (Exact name of registrant as specified in its charter) 73 Front Street, Hamilton, HM 12 Bermuda (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F X Form 40-F Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

2 DOCUMENTS FILED AS PART OF THIS FORM 6-K See the Exhibit List to this Form 6-K. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: November 14, 2014 BROOKFIELD PROPERTY PARTNERS L.P., by its general partner Brookfield Property Partners Limited By: /s/ Jane Sheere Name: Jane Sheere Title: Secretary

3 EXHIBIT LIST Exhibit Description 99.1 Management s Discussion and Analysis of Financial Results of Brookfield Property Partners L.P. as of September 30, 2014 and December 31, 2013 and for the three and nine month periods ended September 30, 2014 and Unaudited condensed consolidated financial statements of Brookfield Property Partners L.P. as of September 30, 2014 and December 31, 2013 and for the three and nine month periods ended September 30, 2014 and Certification of Chief Executive Officer of Brookfield Property Group LLC, a manager of Brookfield Property Partners L.P Certification of Chief Financial Officer of Brookfield Property Group LLC, a manager of Brookfield Property Partners L.P.

4 Table Of Contents Exhibit 99.1 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS PART I OBJECTIVES AND FINANCIAL HIGHLIGHTS 3 PART II FINANCIAL STATEMENT ANALYSIS 6 PART III RISKS AND UNCERTAINTIES 26 PART IV ADDITIONAL INFORMATION 31 CORPORATE INFORMATION 32 1

5 Management s Discussion And Analysis Of Financial Results INTRODUCTION This management s discussion and analysis ( MD&A ) of Brookfield Property Partners L.P. ( BPY or the partnership ) covers the financial position as of September 30, 2014 and December 31, 2013 and results of operations for the three and nine months ended September 30, 2014 and For the period prior to the spin-off of the partnership on April 15, 2013, the financial results reflect Brookfield Asset Management Inc. s ( Brookfield Asset Management ) commercial property operations on a continuity of interest basis. Thereafter, the results reflect the partnership s actual results. The information included within this MD&A should be read in conjunction with the unaudited condensed consolidated financial statements (the Financial Statements ) and related notes as of September 30, 2014 and December 31, 2013 and for the three and nine month periods ended September 30, 2014 and 2013, included elsewhere in this report. STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND USE OF NON-IFRS MEASURES This MD&A of Financial Results, particularly Part IV Additional Information - Trend Information, 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 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 favorable terms; business competition; dependence on tenants financial condition; the use of debt to finance our business; the behavior of financial markets, including fluctuations in interest and foreign exchanges rates; uncertainties of real estate development or redevelopment; global equity and capital markets and the availability of equity and debt financing and refinancing 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, as applicable. 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. We disclose a number of financial measures in this MD&A that are calculated and presented using methodologies other than in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ). We utilize these measures in managing our business, including performance measurement, capital allocation and valuation purposes and believe that providing these performance measures on a supplemental basis to our IFRS results is helpful to investors in assessing our overall performance. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with IFRS. We caution readers that these non-ifrs financial measures may differ from the calculations disclosed by other businesses, and as a result, may not be comparable to similar measures presented by others. Reconciliations of these non-ifrs financial measures to the most directly comparable financial measures calculated and presented in accordance with IFRS, where applicable, are included within this MD&A. 2

6 PART I OBJECTIVES AND FINANCIAL HIGHLIGHTS BASIS OF PRESENTATION Our sole material asset is our 36% interest in Brookfield Property L.P. (the Operating Partnership ). As we have the ability to direct its activities pursuant to our rights as owners of the general partner units, we consolidate the Operating Partnership. Accordingly, our Financial Statements reflect 100% of its assets, liabilities, revenues, expenses and cash flows, including non-controlling interests therein, which capture the ownership interests of other third parties. We also discuss the results of operations on a segment basis, consistent with how we manage our business. Our six operating segments are i) Office, ii) Retail, iii) Industrial, iv) Multi-family, v) Hotels and vi) Corporate and are independently and regularly reviewed and managed by the Chief Executive Offer, who is also known as the Chief Operating Decision Maker. For presentation purposes, the Multi-family and Hotels segments have been combined in this MD&A. The partnership s equity interests include general partnership units ( GP Units ), publicly traded limited partnership units ( LP Units ), redeemable/exchangeable partnership units of the Operating Partnership ( Redeemable/Exchangeable Partnership Units ), special limited partnership units of the Operating Partnership ( Special LP Units ) and limited partnership units of Brookfield Office Properties Exchange LP ( Exchange LP Units ). Holders of the GP Units, LP Units, Redeemable/Exchangeable Partnership Units, Special LP Units, and Exchange LP Units will be collectively referred to throughout this report as unitholders. The GP Units, LP Units, Redeemable/Exchangeable Partnership Units, Special LP Units and Exchange LP Units have the same economic attributes in all respects, except that the Redeemable/Exchangeable Partnership Units provide Brookfield Asset Management the right to request that its units be redeemed for cash consideration starting in April In the event that Brookfield Asset Management exercises this right, the partnership has the right, at its sole discretion, to satisfy the redemption request with its LP Units, rather than cash, on a one-for-one basis. As a result, Brookfield Asset Management, as holder of Redeemable/Exchangeable Partnership Units, participates in earnings and distributions on a per unit basis equivalent to the per unit participation of the LP Units of the partnership. However, given the redeemable feature referenced above, we present the Redeemable/Exchangeable Partnership Units as a component of non-controlling interests. The Exchange LP Units are exchangeable at any time on a one-for-one basis, at the option of the holder, for LP Units. As a result of this redemption feature, we present the Exchange LP Units as a component of non-controlling interests. This MD&A includes financial data for the three and nine months ended September 30, 2014 and includes material information up to November 5, Financial data have been prepared using accounting policies in accordance with IFRS as issued by the IASB. Non-IFRS measures used in this MD&A are reconciled to or calculated from such financial information. Unless otherwise specified, all operating and other statistical information is presented as if we own 100% of each property in our portfolio, regardless of whether we own all of the interests in each property, excluding information relating to our interests in Canary Wharf Group plc ( Canary Wharf ) and China Xintiandi ( CXTD ), as these are accounted for as financial investments. We believe this is the most appropriate basis on which to evaluate the performance of properties in the portfolio relative to each other and others in the market. All dollar references, unless otherwise stated, are in millions of U.S. Dollars. Canadian Dollars (C$), Australian Dollars (A$), British Pounds ( ), Euros ( ), Brazilian Reais (R$), and Indian Rupee ( ) are identified where applicable. Additional information is available on our website at or on or CONTINUITY OF INTEREST On April 15, 2013, Brookfield Asset Management completed a spin-off of its commercial property operations (the business ) to the partnership (the Spin-off ), which was effected by way of a special dividend of units of the partnership to holders of Brookfield Asset Management s Class A and B limited voting shares as of March 26, Brookfield Asset Management directly and indirectly controlled the Business prior to the Spin-off and continues to control the partnership subsequent to the Spinoff through its interests in the partnership. As a result of this continuing common control, there is insufficient substance to justify a change in the measurement of the Business. Accordingly, the partnership has reflected the Business in its financial position and results of operations using Brookfield Asset Management s carrying values prior to the Spin-off. To reflect the continuity of interests, the MD&A provides comparative information of the Business for the periods prior to the Spin-off, as previously reported by Brookfield Asset Management. The economic and accounting impact of contractual relationships created or modified in conjunction with the Spin-off have been reflected prospectively from the date of the Spin-off and have not been reflected in the results of operations or financial position of the partnership prior to April 15, 2013 as such items were in fact not created or modified prior thereto. Accordingly, the financial information for the periods prior to April 15, 2013 is presented based on the historical financial information for the contributed operations as previously reported by Brookfield Asset Management. For the periods after the Spin-off, the results are based on the actual results of the partnership, including the adjustments associated with the Spin-off and the execution of several new and amended agreements including management service and relationship agreements. Certain of these new or amended agreements resulted in differences in the basis of accounting as recorded by Brookfield Asset Management and as recorded by the partnership. OVERVIEW OF OUR BUSINESS The partnership is Brookfield Asset Management s primary public entity to make investments in the real estate industry. We are a globally-diversified owner and operator of high-quality properties that typically generate stable and sustainable cash flows over the long term. With approximately 15,000 employees involved in our real estate businesses around the globe, we have built operating platforms in the Office, Retail, Industrial, Multi-family and Hotel sectors. We leverage these operating platforms to enhance the cash flow and value of our assets, including through active asset management and by executing development and redevelopment projects. 3

7 Our portfolio is comprised of high-quality properties, including interests in: 196 office properties totaling 98 million square feet primarily located in the world s leading commercial markets such as New York, London, Los Angeles, Washington, D.C., Sydney, Toronto, Houston, Calgary, and Perth; 166 retail properties containing over 155 million square feet in the United States, Brazil and Australia; a substantial portion of our retail properties are held through our 29% interest in General Growth Properties, Inc. ( GGP ) (33% on a fully diluted basis, assuming all outstanding warrants are exercised) and our 34% interest in Rouse Properties, Inc. ( Rouse ); Over 48 million square feet of industrial space across 192 industrial properties, primarily consisting of modern logistics assets in North America and Europe; and Over 23,000 multi-family units across 82 properties as well as eleven hotel assets with 8,850 rooms. In addition, we have a 19 million square foot office development pipeline, a $630 million retail mall redevelopment pipeline (on a proportionate basis) and a land portfolio with the potential to build 63 million square feet of industrial properties. Our strategy is to be the leading globally-diversified owner and operator of commercial properties. Due to the cyclical nature of the real estate industry, we believe that a real estate portfolio diversified by property type and geography will perform consistently over time. Furthermore, since property valuations fluctuate considerably based on market sentiment and other factors, we believe that the flexibility to shift capital to sectors and geographies that are out of favor will enable us to earn premium returns on the capital that we invest. As we grow our business, we will seek to acquire high-quality assets on a value basis, utilize our operating platforms to add value through pro-active management and recycle capital for re-investment in new opportunities. Our diversified portfolio of high-quality assets has a stable cash flow profile with growth potential. As a result of the mark-to-market of rents upon lease expiry, escalation provisions in leases and increases in occupancy, our existing assets should generate strong same-property net operating income ( NOI ) growth without significant capital investment. Furthermore, we expect to earn between 8% and 11% unlevered, pre-tax returns on construction costs for our development and redevelopment projects. With this cash flow profile, our goal is to pay an attractive annual distribution to our unitholders and to grow our distribution by 5% to 8% per annum. Overall, we seek to earn leveraged after-tax returns of 12% to 15% on our invested capital. These returns will be comprised of current cash flow that is generated by our assets and capital appreciation. Some of the capital appreciation will be reflected in the fair value gains that flow through our income statement as a result of our revaluation of investment properties in accordance with IFRS. The remainder of the capital appreciation will be realized in future periods to the extent we are able to successfully execute development and redevelopment projects as well as other value creation strategies. From time to time, we will convert some or all of these unrealized gains to cash through asset sales, joint ventures or refinancings. PERFORMANCE MEASURES We expect to generate returns to unitholders from a combination of cash flow earned from our operations and capital appreciation. Furthermore, if we are successful in increasing cash flow earned from our operations we will be able to increase distributions to unitholders to provide them with an attractive current yield on their investment. To measure our performance against these targets, we focus on NOI, funds from operations ( FFO ), fair value changes, and net income and equity attributable to unitholders. Some of these performance metrics do not have standardized meanings prescribed by IFRS and therefore may differ from similar metrics used by other companies. We define each of these measures as follows: NOI: revenues from our commercial and hospitality operations of consolidated properties less direct property expenses. FFO: net income, prior to realized gains (losses) on the sale of investment properties, fair value changes, depreciation and amortization of real estate assets, and income taxes less non-controlling interests of others in operating subsidiaries and properties share of these items. When determining FFO, we include our proportionate share of the FFO of unconsolidated partnerships and joint ventures/associates. Fair value changes: Increase or decrease in the value of properties that is reflected in the statement of profit and loss. Net income attributable to unitholders: net income attributable to holders of GP Units, LP units, Redeemable/Exchangeable Partnership Units, Special LP Units and Exchange LP Units. For the period prior to the Spin-off of the partnership on April 15, 2013, net income attributable to unitholders represented net income attributable to Brookfield Asset Management. Equity attributable to unitholders: equity attributable to holders of GP Units, LP Units, Redeemable/Exchangeable Partnership Units, Special LP Units and Exchange LP Units. 4

8 NOI is a key indicator of our ability to increase cash flow from our operations. We seek to grow NOI through pro-active management and leasing of our properties. In evaluating our performance, we also look at a subset of NOI, defined as same-property NOI, which excludes NOI that is earned from assets recently acquired, disposed of, developed, or not of a recurring nature, and from opportunistic assets. Same-property NOI allows us to segregate the performance of leasing and operating initiatives on the portfolio from the impact to performance of investing activities and one-time items, which for the historical periods presented consist primarily of lease termination income. We also consider FFO an important measure of our operating performance. FFO is a widely recognized measure that is frequently used by securities analysts, investors and other interested parties in the evaluation of real estate entities, particularly those that own and operate income producing properties. Our definition of FFO includes all of the adjustments that are outlined in the National Association of Real Estate Investment Trusts ( NAREIT ) definition of FFO, including the exclusion of gains (or losses) from the sale of investment properties, the add back of any depreciation and amortization related to real estate assets and the adjustment for unconsolidated partnerships and joint ventures. In addition to the adjustments prescribed by NAREIT, we also make adjustments to exclude any unrealized fair value gains (or losses) that arise as a result of reporting under IFRS, and income taxes that arise as certain of our subsidiaries are structured as corporations as opposed to real estate investment trusts ( REITs ). These additional adjustments result in an FFO measure that is similar to that which would result if our partnership was organized as a REIT that determined net income in accordance with generally accepted accounting principles in the United States ( U.S. GAAP ), which is the type of organization on which the NAREIT definition is premised. Our FFO measure will differ from other organizations applying the NAREIT definition to the extent of certain differences between the IFRS and U.S. GAAP reporting frameworks, principally related to the recognition of lease termination income. Because FFO excludes fair value gains (losses), including equity accounted fair value gains (losses), realized gains (losses) on the sale of investment properties, depreciation and amortization of real estate assets and income taxes, it provides a performance measure that, when compared year-over-year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and interest costs, providing perspective not immediately apparent from net income. We reconcile FFO to net income rather than cash flow from operating activities as we believe net income is the most comparable measure. In addition to reviewing earnings performance, we also review initiatives and market conditions that contribute to changes in the fair value of our properties. These value changes, combined with earnings, represent a total return on the equity attributable to unitholders and form an important component in measuring how we have performed relative to our targets. We also consider the following items to be important drivers of our current and anticipated financial performance: Increases in occupancies by leasing vacant space; Increases in rental rates through maintaining or enhancing the quality of our assets and as market conditions permit; and Reductions in operating costs through achieving economies of scale and diligently managing contracts. We also believe that key external performance drivers include the availability of the following: Debt capital at a cost and on terms conducive to our goals; Equity capital at a reasonable cost; New property acquisitions that fit into our strategic plan; and Investors for dispositions of peak value or non-core assets. 5

9 PART II FINANCIAL STATEMENTS ANALYSIS REVIEW OF CONSOLIDATED FINANCIAL RESULTS In this section, we review our consolidated performance for the three and nine months ended September 30, 2014 and 2013 and our financial position as of September 30, 2014 and December 31, Further details on our results from operations and our financial positions are contained within the Segment Performance section on page 41. Summary Statement of Operating Results and Key Metrics Commercial property revenue $ 746 $ 721 $ 2,211 $ 2,180 Hospitality revenue Investment and other revenue Total revenue 1,040 1,048 3,310 3,266 Direct commercial property expense Direct hospitality expense Interest expense Depreciation and amortization Administration and other expense Total expenses ,840 2,792 Fair value gains, net , Share of net earnings from equity accounted investments Income before income taxes 1, ,619 1,792 Income tax expense Net income 1, ,825 1,437 Net income attributable to non-controlling interests of others in operating subsidiaries and properties Net income attributable to unitholders $ 978 $ 235 $ 2,242 $ 717 NOI $ 477 $ 491 $ 1,421 $ 1,498 FFO $ 172 $ 124 $ 544 $ 440 Our basic and diluted net income per unit attributable to unitholders and weighted average units outstanding are calculated as follows: (US$ Millions, except per units information) Net income attributable to unitholders basic $ 978 $ 235 $ 2,242 $ 717 Dilutive effect of conversion of capital securities corporate 8 10 Net income attributable to unitholders diluted , Weighted average units outstanding basic Conversion of capital securities corporate Weighted average units outstanding diluted Net income per unit attributable to unitholders basic $ 1.37 $ 0.50 $ 3.43 $ 1.54 Net income per unit attributable to unitholders diluted $ 1.33 $ 0.50 $ 3.39 $ 1.54 FFO per unit attributable to unitholders $ 0.24 $ 0.27 $ 0.83 $ 0.94 For the three months ended September 30, 2014, we reported net income of $1,043 million, of which $978 million is attributable to unitholders. This compares to net income of $383 million, of which $235 million is attributable to unitholders, for the same period in the prior year. Net income attributable to unitholders increased mainly due to fair value gains in our office and retail segments, particularly in our U.S. portfolios, as a result of strong leasing activity and improved market conditions. In addition, we recorded higher net income attributable to unitholders as a result of our additional ownership in Brookfield Office Properties Inc. ( BPO ) common shares. Ownership during the current quarter was 100% as compared to 49% during the same period in For the nine months ended September 30, 2014, we reported net income of $2,825 million, of which $2,242 million is attributable to unitholders. This compares to net income of $1,437 million, of which $717 million is attributable to unitholders for the same period in the prior year. Net income attributable to unitholders increased during the nine months ended September 30, 2014 mainly due to our increased weighted average ownership in BPO which increased to 83% from 49% since the prior year, additional acquisition activity and valuation gains in our office and retail segments as mentioned above. Commercial property revenue was $746 million for the three months ended September 30, 2014 compared to $721 million during the same period in the prior year. The increase is primarily attributable to revenue from acquisitions in our office and industrial segments which were partially offset by a significant lease expiry in downtown New York City in October

10 Commercial property revenue increased by $31 million for the nine months ended September 30, 2014 to $2,211 million compared to $2,180 million during the same period in the prior year. The increase was primarily the result of acquisitions during the period which were partially offset by the lease expiry mentioned above and dispositions of mature assets. Hospitality revenue was $236 million for the three months ended September 30, 2014 compared to $294 million during the same period in the prior year. The decrease was related to the deconsolidation of certain hotel assets in Australia as part of a re-organization. Before considering the impact of the deconsolidation, hospitality revenue decreased by $14 million which was primarily a result of the sale of the One&Only Ocean Club in the Bahamas in the second quarter of Hospitality revenue was $775 million for the nine months ended September 30, 2014 compared to $954 million during the same period in the prior year. The decrease from the prior year was related to the deconsolidation of certain hotel assets in Australia and the sale of the One&Only Ocean Club. Direct commercial property expense increased by $34 million for the three months ended September 30, 2014 over the same period in the prior year due to acquisition activity in our office and industrial segments. Direct hospitality expense decreased by $53 million, primarily as a result of the deconsolidation of certain hotel assets. Before considering the impact of the deconsolidation, direct hospitality expense decreased by $20 million, which was primarily a result of the sale of the One&Only Ocean Club as described above. Direct commercial property expense increased by $81 million for the nine months ended September 30, 2014 over the same period in the prior year also due to acquisition activity as described above. Direct hospitality expense decreased by $152 million as a result of the deconsolidation of certain hotel assets and the sale of the One&Only Ocean Club as described above. Investment and other revenue increased by $25 million for the three months ended September 30, 2014 as compared to the same period in the prior year. In the current period, we recorded a gain from the completion of an industrial development of $22 million and earned income from our interest in preferred securities convertible into CXTD ordinary shares of $10 million. Investment and other revenue increased by $192 million for the nine months ended September 30, 2014 as compared to the same period in the prior year. The increase is largely driven by a $140 million gain realized on the repayment of a debt investment in Inmobiliaria Colonial ( Colonial ), a Spanish office company in the second quarter of Additionally, we recorded gains from the completion of industrial developments in 2014 of $38 million and income from our interest in preferred securities convertible into CXTD ordinary shares of $28 million in the current year offset by a gain recognized from a loan modification in the prior year. Interest expense increased by $23 million and $75 million for the three and nine months ended September 30, 2014, respectively, as compared to the same period in the prior year. These increases were primarily driven by additional property-level debt as a result of acquisition and refinancing activity and the interest associated with the acquisition facility used to acquire common shares of BPO in Administration and other expense decreased by $10 million for the three months ended September 30, 2014 compared to the same period in the prior year. The decrease was primarily a result of the deconsolidation of management fees associated with our private funds. This decrease was offset by an equity enhancement distribution of $14 million in the current quarter. Administration and other expense increased by $58 million for the nine months ended September 30, 2014 compared to the same period in the prior year. The increase was primarily attributable to $70 million of management fees and equity enhancement distributions paid by the partnership in the current period compared to $23 million in the prior year period, as well as other corporate costs that were incurred following the Spin-off of the partnership in April 2013 and expenses from subsidiaries acquired during the current period. This increase was partially offset by the deconsolidation of management fees associated with our private funds as mentioned above. Fair value gains of $781 million were recognized in the current quarter as compared to $185 million in the same period in the prior year as detailed in the table below. Commercial properties and developments recorded fair value gains of $662 million due primarily to positive adjustments to discount rates and terminal capitalization rates, specifically in downtown New York City as the market continues to strengthen, as well as changes in projected property level cash flows due to leasing and timing. Fair value gains on our financial instruments and other include the appreciation in our investments in Canary Wharf and CXTD preferred shares and warrants. Fair value gains of $2,363 million were recognized in the nine months ended September 30, 2014 as compared to $775 million in the same period in the prior year as detailed in the table below. Commercial properties and developments increased in value by $1,958 million for reasons discussed above, as well as appreciation on the remainder of our U.S., Europe and Australia portfolios due to capitalization rate and discount rate compression as a result of improving market conditions. Fair value gains on our financial instruments and other were $405 million which includes the appreciation of our investments in GGP warrants and CXTD preferred shares and warrants. Additional information on key valuation parameters is included in the Segment Performance section starting on page 41. 7

11 The table below presents further information of the fair value gains recorded during the three and nine months ended September 30, 2014 and 2013: Commercial properties $ 574 $ 113 $ 1,719 $ 683 Commercial developments Financial instruments and other Total fair value gains, net $ 781 $ 185 $ 2,363 $ 775 Our share of net earnings from equity accounted investments was $257 million for the three months ended September 30, 2014, which represents an increase of $108 million compared to the same period in the prior year. Our joint ventures earned $112 million during the current quarter, which represents an increase of $63 million compared to the same period in the prior year. This increase is primarily attributable to valuation gains on equity accounted properties in New York City in the current quarter as well as the contribution from Republic Plaza, which was deconsolidated in the second quarter of 2014 following the disposition of a 50% interest in the property, partially offset by the consolidation of Five Manhattan West. We earned $145 million from associates, a $45 million increase compared with the prior year primarily driven by an increased ownership in GGP from 22% to 29% (24% to 33% on a fully diluted basis assuming all the outstanding warrants are exercised). Our share of net earnings from equity accounted investments was $786 million for the nine months ended September 30, 2014, which represents an increase of $243 million compared to the same period in the prior year. Our investments in joint ventures earned $287 million during the current nine months, which represents an increase of $97 million compared to the same period in the prior year. This increase is primarily attributable to fair value gains on our equity accounted properties in New York City and Los Angeles in the current year and acquisition activity in our industrial segment which was offset by the consolidation of several office assets, which were previously equity accounted. We earned $499 million from associates, a $146 million increase compared with the prior year primarily driven by an increased ownership in GGP which was partially offset by higher valuation gains in the prior year. The components of earnings from equity accounted investments for the three and nine months ended September 30, 2014 and 2013 are presented as follows: Joint ventures $ 112 $ 49 $ 287 $ 190 Associates Share of net earnings from equity accounted investments $ 257 $ 149 $ 786 $ 543 Income tax expense increased to $105 million and $794 million for the three and nine months ended September 30, 2014, respectively, compared with $60 million and $355 million during the same periods in the prior year. The increase is mostly attributable to an increase in income, a change in state tax legislation which was substantively enacted during the first quarter of 2014 and resulted in an increase in our effective tax rate applicable to earnings from certain subsidiaries in the impacted jurisdictions, and the impact of the reversal of reserves in both the current and prior periods. Net income attributable to non-controlling interests declined as a result of our acquisition of the remaining common shares of BPO which we did not previously own. This acquisition reduced the weighted average non-controlling interest share of net income from BPO to nil from 51% for the three months ended, and to 17% from 51% for the nine months ended September 30, This decrease was offset by higher net income for both periods compared to the prior year as discussed above. 8

12 NON-IFRS MEASURES As described in the Performance Measures section on page 33, the partnership uses non-ifrs measures to assess the performance of its operations. An analysis of the measures and reconciliation to IFRS measures is included below. Commercial property NOI decreased to $432 million in the third quarter compared with $441 million during the third quarter in the prior year. The decrease was primarily the result of an anticipated lease expiry at Brookfield Place New York in the fourth quarter of 2013 and dispositions of mature, non-core assets, which was largely offset by acquisitions in our office, industrial and multi-family segments. Hospitality NOI decreased to $45 million in the quarter compared to $50 million during the same period in the prior year following the deconsolidation of hotel assets in Australia and the sale of the One&Only Ocean Club, offset by an increase of NOI at Paradise Island Holdings Limited ( Atlantis ) and BREF HR, LLC ( Hard Rock Hotel and Casino ). Commercial property NOI decreased to $1,252 million in the nine months ending September 30, 2014 from $1,302 million during the same period in the prior year. The decrease of $50 million is largely due to the large lease expiry at Brookfield Place New York offset by acquisition activity. Hospitality NOI decreased to $169 million during the period compared to $196 million during the same period in the prior year following the deconsolidation of hotel assets in Australia and the sale of the One&Only Ocean Club, as mentioned above. The following table reconciles NOI to net income for the three and nine months ended September 30, 2014 and 2013: Commercial property revenue $ 746 $ 721 $ 2,211 $ 2,180 Direct commercial property expense (314) (280) (959) (878) Commercial property NOI ,252 1,302 Hospitality revenue Direct hospitality expense (191) (244) (606) (758) Hospitality NOI Total NOI ,421 1,498 Investment and other revenue Interest expense (298) (275) (893) (818) Depreciation and amortization (37) (40) (113) (127) Administration and other expenses (90) (100) (269) (211) Fair value gains, net , Share of net earnings from equity accounted investments Income before income taxes 1, ,619 1,792 Income tax expense (105) (60) (794) (355) Net income 1, ,825 1,437 Net income attributable to non-controlling interests of others in operating subsidiaries and properties (65) (148) (583) (720) Net income attributable to unitholders $ 978 $ 235 $ 2,242 $ 717 FFO increased to $172 million in the quarter compared with $124 million for the same period in the prior year. The increase was driven by additional earnings from our increased investment in BPO and in GGP following our merger with BPO and our $1.4 billion investment in GGP common shares and warrants in November This increase was partially offset by the impact of a large lease expiry at Brookfield Place New York. FFO increased to $544 million in the nine months ended September 30, 2014 compared with $440 million for the same period in the prior year. The increase was driven by our increased ownership in BPO and GGP. The increase also reflects a gain realized on a debt investment in Colonial in the second quarter as well as a gain on extinguishment of debt in our retail portfolio and a fee recognized in connection with the disposition of Heritage Plaza, both recorded in the first quarter of 2014 as well as development gains in our industrial portfolio. This increase was partially offset by the impact of the large lease expiry at Brookfield Place New York. The following table reconciles net income to FFO for the three and nine months ended September 30, 2014 and 2013: Net income $ 1,043 $ 383 $ 2,825 $ 1,437 Add (deduct): Fair value gains, net (781) (185) (2,363) (775) Share of equity accounted fair value gains, net (146) (46) (402) (241) Depreciation and amortization of real-estate assets Income tax expense Non-controlling interests in above items (78) (120) (395) (433) FFO $ 172 $ 124 $ 544 $ 440 9

13 Summary Statement of Financial Position and Key Metrics (US$ Millions, except per unit information) Sep. 30, 2014 Dec. 31, 2013 Investment properties: Commercial properties $ 33,184 $ 31,679 Commercial developments 3,283 2,474 Equity accounted investments 9,788 9,281 Cash and cash equivalents 1,304 1,368 Total assets 55,480 52,446 Debt obligations 23,643 21,640 Total equity 25,092 24,990 Equity attributable to unitholders $ 18,774 $ 13,624 Equity attributable to unitholders per unit $ $ As of September 30, 2014, we had $55,480 million in assets, compared with $52,446 million at December 31, This $3,034 million increase is primarily due to an increase of $1,505 million in commercial properties which was primarily attributable to the acquisition of additional interests in Five Manhattan West in Midtown Manhattan, KPMG Tower in Sydney, and Faria Lima 3500 in São Paulo, the recognition of valuation gains and capital spend on our assets, offset by the dispositions of 125 Old Broad Street in London, Heritage Plaza in Houston and Republic Plaza in Denver and the impact of foreign exchange. The increases are discussed further below. The following table presents the changes in commercial properties from December 31, 2013 to September 30, 2014: (US$ Millions) Sep. 30, 2014 Commercial properties, beginning of period $ 31,679 Acquisitions 1,307 Capital expenditures 576 Dispositions (1,792) Fair value gains 1,719 Foreign currency translation (452) Reclassification from development and other 147 Commercial properties, end of period $ 33,184 Commercial developments consist of commercial property development sites, density rights and related infrastructure. The total fair value of development land and infrastructure was $3,283 million at September 30, 2014, an increase of $809 million from the balance at December 31, The increase is primarily attributable to capital expenditures and the recognition of valuation gains, primarily at our Manhattan West, Brookfield Place Calgary and Brookfield Place Perth Tower 2 developments, offset by the negative impact of foreign exchange. Equity accounted investments, which includes our investments in GGP, Rouse and other income producing property, increased by $507 million since December 31, 2013 as a result of our share of net income from such investments, including valuation gains on our U.S. retail portfolio, asset acquisitions, including the Diplomat Resort and Spa and related facilities ( Diplomat ), and the inclusion of Republic Plaza which was deconsolidated as a result of a sale of a 50% interest in the property and is now accounted for under the equity method. These increases were offset in part by dividends received from GGP and Rouse during the period and the consolidation of Five Manhattan West following the acquisition of additional interests. Subsequent to the acquisition of additional interests in Five Manhattan West, the property is no longer accounted for as an investment in joint venture under the equity method of accounting. The following table presents a roll-forward of changes in our equity accounted investments: (US$ Millions) Sep. 30, 2014 Equity accounted investments, beginning of period $ 9,281 Additions, net of disposals 188 Share of net income, including fair value gains 786 Distributions received (479) Foreign exchange (13) Other 25 Equity accounted investments, end of period $ 9,788 To fund the increase in total assets, our debt obligations increased to $23,643 million as at September 30, 2014 from $21,640 million as at December 31, Contributing to this increase was a new $1.5 billion acquisition facility and a $1 billion credit facility put in place in March 2014 to fund the acquisition of remaining BPO common shares that were previously not owned by the partnership. These facilities, collectively, replaced our existing bilateral credit facilities. At September 30, 2014, the balance drawn on all of our credit facilities was $2,560 million compared with $496 million at December 31,

14 The following table presents additional information on the partnership s outstanding debt obligations: (US$ Millions) Sep. 30, 2014 Dec. 31, 2013 Corporate borrowings $ 3,811 $ 1,159 Non-recourse borrowings: Property specific borrowings 19,789 19,828 Subsidiary borrowings Total debt obligations 23,643 21,640 Current 3,649 5,120 Non-current 19,994 16,520 Total debt obligations $ 23,643 $ 21,640 The following table presents the components used to calculate equity attributable to unitholders per unit: (US$ Millions, except unit information) Sep. 30, 2014 Dec. 31, 2013 Total equity $ 25,092 $ 24,990 Less: Non-controlling interests 6,318 11,366 Equity attributable to unitholders 18,774 13,624 Total units 712,919, ,070,228 Equity attributable to unitholders per unit $ $ Equity attributable to unitholders was $18,774 million at September 30, 2014, an increase of $5,150 million from the balance at December 31, The increase was primarily a result of the issuance of LP Units and Exchange LP Units to acquire additional interests in BPO. At September 30, 2014, we had a total of 712,919,648 units issued and outstanding compared with 540,070,228 units at December 31, Equity attributable to unitholders per unit was $26.33 at September 30, 2014, an increase of $1.10 from December 31, The increase was primarily the result of additional investments made and fair value gains recognized since year-end. The increase was partially offset by the issuance of partnership units below carrying value to acquire additional interests in BPO. Non-controlling interests was $6,318 million at September 30, 2014, a decrease of $5,048 million from the balance at December 31, The decrease was primarily a result of the acquisition of additional interests in BPO, in which our voting interest increased from 51% to 100%. SUMMARY OF QUARTERLY RESULTS (US$ Millions, except per unit information) Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Revenue $ 1,040 $ 1,215 $ 1,055 $ 1,021 $ 1,048 $ 1,086 $ 1,132 $ 1,014 Direct operating costs Net income 1,043 1, Net income attributable to unitholders Net income attributable to unitholders per unit basic $ 1.37 $ 1.31 $ 0.67 $ 0.37 $ 0.50 $ 0.33 Net income attributable to unitholders per unit diluted $ 1.33 $ 1.30 $ 0.67 $ 0.37 $ 0.50 $ 0.33 Revenue varies from quarter to quarter due to acquisitions and dispositions of commercial and other income producing assets, changes in occupancy levels, as well as new leases and renewals at market net rents. In addition, revenue also fluctuates as a result of changes in foreign exchange rates and seasonality. Seasonality primarily affects our retail assets, wherein the fourth quarter exhibits stronger performance in conjunction with the holiday season. Our hotel assets generally have stronger performance in the winter and spring months compared to the summer and fall months. Our net income fluctuates largely due to fair value gains and losses in each given period. The economic and accounting impact of contractual relationships created or modified in conjunction with the Spin-off are reflected prospectively from the date of the Spin-off on April 15, 2013 and accordingly have not been reflected in the results of operations of our partnership, as such items were in fact not created or modified prior thereto. As a result, results from periods prior the Spin-off are not comparable to results after the Spin-off. 11

15 SEGMENT PERFORMANCE Our operations are organized into five operating platforms in addition to our corporate activities. The following table presents FFO by segment for comparison purposes: Office $ 145 $ 89 $ 410 $ 289 Retail Industrial Multi-family and Hotels Corporate (91) (47) (239) (98) FFO $ 172 $ 124 $ 544 $ 440 The following table presents equity attributable to unitholders by segment as of September 30, 2014 and December 31, 2013: (US$ Millions) Sep. 30, 2014 Dec. 31, 2013 Office $ 15,693 $ 7,910 Retail 8,455 7,704 Industrial Multi-family and Hotels Corporate (6,477) (2,915) Equity attributable to unitholders $ 18,774 $ 13,624 Office Our office segment consists of interests in 196 office properties totaling 98 million square feet, which are located primarily in the world s leading commercial markets such as New York, London, Los Angeles, Washington, D.C., Sydney, Toronto, Houston, Calgary, and Perth. The following table presents FFO and net income attributable to unitholders in our office segment for the three and nine months ended September 30, 2014 and 2013: FFO $ 145 $ 89 $ 410 $ 289 Net income attributable to unitholders , FFO from our office sector was $145 million for the three months ended September 30, 2014 as compared to $89 million in the same period in the prior year. The increase of $56 million is primarily driven by the additional ownership in BPO, which was 100% on a weighted average basis for the current quarter compared to 49% in the prior period. Offsetting this increase was a decrease in NOI following a large lease expiry at Brookfield Place New York in October FFO from our office sector was $410 million for the nine months ended September 30, 2014 as compared to $289 million in the same period in the prior year. In addition to the items mentioned above, the increase in FFO was also attributable to a $43 million net gain realized on our investment in Colonial and a fee recognized in connection with the disposition of Heritage Plaza in Houston during the first quarter of Net income attributable to unitholders increased by $712 million to $936 million in the current quarter as compared to $224 million in the prior year period. In addition to the increase in FFO described above, net income increased due to valuation gains resulting from positive changes to discount rates and terminal capitalization rates reflecting strengthening market conditions and asset profiles, as well as changes in projected property level cash flows due to leasing and timing. Market conditions also continued to improve in the London office market, which resulted in valuation gains of $178 million related to our investment in Canary Wharf. These increases were offset by an increase in taxes of $37 million due to higher fair value gains in the current period compared to the prior year. Net income attributable to unitholders was $1,932 million for the nine months ended September 30, 2014, which is an increase of $1,224 million compared to the prior year period. In addition to the increase in FFO described above, we realized $2,040 million of fair value gains as a result of improved valuation metrics, particularly in our U.S. and U.K. portfolio, and gains on our investment in Canary Wharf as a result of continued recovery in the London office market. This increase was offset partially by higher taxes of $377 million due to fair value gains and an increase in deferred tax liability as a result of a change in state tax legislation that resulted in an increase in our effective tax rate applicable to future earnings from certain subsidiaries in the impacted jurisdictions. 12