Brookfield Office

Properties

Investment Opportunities in the US Real-Estate Market

JULY 1, 2013

Agenda

• Brookfield

» Brookfield Office Properties

» Brookfield Asset Management

• Commercial Real Estate Environment

• A Trend Toward “Downtown”

» Los Angeles

» Denver

» Houston

» New York

• Midtown

• Downtown

Brookfield Place – New York

Brookfield Office Properties

• Owner, developer and manager of premier office properties globally

• Interests in 109 properties of 81 million sq. ft.

• 17 million sq. ft. office development pipeline

• Prominent, well-located assets in the top markets of the United States, Canada, Australia and London, UK

• Traded on the NYSE and the TSX under the symbol BPO with a $8.34 Billion market cap

Global Operating Platform… so we can invest where we find value

109 properties in 15 cities / 9 offices in 4 countries / 2,500 operating employees

U.S. 5 Offices

60 Properties – 51 msf New York

Washington D.C. Houston

Los Angeles Seattle Denver Boston

Canada 2 Offices

28 Properties – 21 msf Toronto Calgary Ottawa

Vancouver

U.K. 1 Office

4 Properties – 1 msf London

Australia 1 Office

19 Properties – 8 msf Sydney

Melbourne Perth

60 OFFICE ASSETS / 51 MILLION SQ. FT.

• Investment focus: United States, supply constrained, gateway markets driven by; resource & energy, financial services, technology and government sectors

• Ways to Partner with Brookfield:

» Co-investing on new acquisition opportunities (individual assets / companies)

» Recapitalization of existing Brookfield assets (i.e. new JV opportunities)

» Investing in Brookfield’s Fund Series – Currently marketing $1 Billion Core Plus U.S. Fund

BPO’s U.S. Presence and Focus

Brookfield Asset Management

• 100 year history as a global investor, operator and asset manager of high quality alternative assets

PROPERTY - $103 billion AUM

RENEWABLE POWER - $20 billion AUM

INFRASTRUCTURE- $28 billion AUM

PRIVATE EQUITY & RESIDENTIAL - $27 billion AUM

Over 300 million SF:

office, retail,

opportunity and

financial investments

~200 hydro

facilities,

11 wind farms

~5,800 MW

Ports, rails,

toll roads, natural

gas pipelines,

transmission lines,

timberlands and

agrilands

Private equity

in our areas of

expertise and

residential in

North America

and Brazil

Commercial Real Estate Environment

Source: Cushman & Wakefield

State of the U.S. Office Market – CBD Fundamentals • The U.S. office market continues to be characterized by a period of a slow and steady recovery

• Solid office job growth– expanded by 3.0% in the first quarter and 2.3% year-over-year (outpaced year-over-year total employment growth of 1.5%)

• Overall vacancy currently stands a 13.0%, 230 bps lower than the post-recession high of 15.3%

• Weighted average of overall rental rates for U.S. CBDs has been increasing for 8 consecutive quarters (up 3.5% year-over-year)

• Energy and/or technology driven cities continue to be the best performers, showing healthy employment growth. These markets include Denver, Houston, Seattle and San Francisco.

• Construction activity has generally remained constrained. However, as demand has increased, select multi-tenant construction projects are underway in New York, San Francisco, Houston, Washington, D.C. and Boston.

Source: Jones Lang LaSalle

Absorption Levels Continue with 12 Consecutive Quarters of Occupancy Growth

Trophy & Class A net absorption

58.6MSF 2011 - 2013

Class B & C net absorption

10.2 MSF 2011 - 2013

Source: Jones Lang LaSalle

Flight to Quality Nationally, demand centering around quality product

• Capital remains focused on real estate, and more specifically the office sector:

• Commercial real estate sales: 34% year-over-year

• Overall office sales: 13% year-over-year

• The current low interest rate environment has driven asset pricing higher and expected returns down

• In turn, investors are once again becoming more aggressive with underwriting assumptions to remain competitive

• Wide spread between returns for core and value-add office investment appears to be shrinking, to more of a balance between the two

• Market is rewarding investors with recession-induced pricing on lower occupancy buildings and those that need value-add upgrades. Premium pricing exists for buildings with little near-term investment risk

Source: PPR

The US Real Estate Market – Strong Investment Demand

Source: Real Capital Analytics

Market Vol ($bil) $/sf Cap Rate

1 NYC Metro* $23.54 $334 6.47%

2 SF Metro $8.43 $309 5.76%

3 LA Metro* $8.23 $131 6.78%

4 DC Metro* $6.91 $253 6.11%

5 Chicago $4.74 $133 7.16%

6 Seattle* $4.59 $389 6.03%

7 Houston* $4.33 $151 7.34%

8 Atlanta $2.56 $141 7.70%

9 Boston* $2.55 $189 N/A

10 Dallas $2.20 $74 7.66%

US Capital Markets – Most Active Investment Markets (Past 12 Months, as of June 20th)

*BPO Markets

Cross-Border U.S. Capital Inflow

Source: Real Capital Analytics

2010 2011 2012 2013 (YTD)

($ mil) Vol

#Prop ($ mil)

Vol #Prop

($ mil) Vol

#Prop ($ mil)

Vol #Prop Total

Canada 2,545 29 3,998 33 2,322 41 2,646 23 11,511

Germany 327 3 1,511 11 2,257 14 512 3 4,606

S. Korea 333 1 1,075 2 977 16 1,082 4 3,467

Israel 616 6 447 7 666 6 1,013 22 2,741

China 150 1 892 3 40 3 1,360 1 2,442

Brazil 719 3 33 1 — — 1,360 1 2,112

U.K. 752 3 631 9 724 6 — — 2,107

Switzerland — — 1,480 7 313 3 271 3 2,064

Hong Kong 404 3 393 3 857 2 75 1 1,729

Singapore — — — — 837 1 368 1 1,205

All Others 784 36 1,816 20 3,508 59 1,347 15 7,455

Peaking phase

Falling phase

Rising phase

Bottoming phase

Source: Jones Lang LaSalle & ULI 2013 Emerging Trends in Real Estate

Los Angeles

Denver

Boston

New York

Washington, DC

Seattle

Houston

Brookfield’s Markets are Well-Positioned

#2

#5

#7

#6 #8

#14

#16

• All BPO markets are ranked within the “Top 20 Markets” according to the ULI 2013 Emerging Trends

in Real Estate Report

A Trend Toward “Downtown”

“When cities collect networks of entrepreneurial firms, smart people, communities, and other supporting institutions in close proximity, incredible things happen. As Henry Cisneros, former U.S. Secretary of Housing and Urban Development used to say, “Cities are places where two plus two equals five.” -Bruce Katz, Brookings Institution author of The Metropolitan Revolution (2013)

A Trend Toward “Downtown”

Los Angeles

Downtown Los Angeles

Downtown Los Angeles

• Downtown Los Angeles remains a market in transition

• Undergoing a dramatic renaissance into a vibrant, 24-hour “live/work/play” urban environment that is rapidly changing the area

• Demographics are shifting as the new Downtown has attracted young professionals from higher priced areas such as Santa Monica, Brentwood, Manhattan Beach, and Pasadena

• 54.4% of downtown residents are 23-34 years old

• This increased residential activity has spurred additional planning and development for retail outlets and entertainment venues

• The office market continues to morph from a headquarters market into a diversified tenant base

• There is a shift from law firms and banking tenants to creative and entertainment companies

• Tenant in-migration to the CBD has exceeded 1 million sq. ft. over the last 5 years - indicates that the urban renaissance has begun to positively impact the LA CBD office sector

$20

$22

$24

$26

$28

$30

$32

$34

0%

2%

4%

6%

8%

10%

12%

14%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*2014*

Asking Rent (Gross) Vacancy

Downtown LA Office Market – Poised for Resurgence

» While still recovering from the recession,

leasing fundamentals in the CBD have remained

relatively strong, compared to other L.A.

submarkets

» Flight to quality - 95% of Q1 2013 leasing activity

was Class A

» New office construction expected to remain at

historically low levels in the near to medium-term

» Tenants continue to right-size space needs

Sources: Cushman & Wakefield, PPR

Los Angeles CBD - Office Fundamentals

» As a result, near-term occupancy will continue to fluctuate

• Projects planned / currently under construction:

» The Broad Collection – $308 million art museum on Bunker Hill

» Farmers Field – Approved $1.2 billion football

stadium adjacent to the convention center and LA

Live

» Wilshire Grand Hotel Site (hotel and 400,000 sq. ft.

of office space in a 70-story-tower)

Source: Downtown LA Center Business Improvement District

Meaningful Current and Future Investment in Downtown LA

Farmers Field

• Since 2000, over $15 billion of public/private investment in Downtown LA development projects

» ~$10 billion was allocated to residential and mixed-use projects including;

» ~$2.5 billion L.A. Live project that includes the Staples Center, Nokia Theatre, Club Nokia and Grammy Museum

» 54-story JW Marriott / Ritz Carlton building – LA Live

» Brookfield’s $40 million renovation of the FIGat7th retail complex

Eli Broad Museum FIGat7th

Denver

Downtown Denver

Downtown Denver • Denver has emerged as one of the top, most rapidly expanding economic markets in the nation –

fueled by Oil and natural Gas industries

• Favorable business climate and quality of life has made the CBD the location of choice for major

corporations actively pursuing relocations (both from within and outside Colorado) or significant

expansion

• CBD has been adding jobs at a pace well above the national average, growing 3.9% year-over-year

• Further, growth in energy companies downtown has spurred growth in other sectors (law firms, financial

services, etc.) – Est. that 1/3rd of the CBD is occupied by companies that support the energy sector

• Redevelopment / gentrification of the LoDo, Union Station, Ballpark areas have transformed Denver’s

CBD into one of the most attractive/vibrant 24-hour city centers in the country

• Currently 17,000 residents in the urban core (up 25% over the past year alone), 65,000 residents in

City Center neighborhoods and 44,000 university students

• #3 in average annual migration of 25-34 year olds from 2009-2011

• Continued investment in Downtown - $350 million Union Station redevelopment

$0

$5

$10

$15

$20

$25

$30

5%

7%

9%

11%

13%

15%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* 2014*

Asking Rent (Net) Vacancy

Downtown Denver Office Market – Energy and Tech Demand

» Unique position as both a tech and energy

market should lead to continued demand

and yield landlord-favorable conditions in

CBD

» Shifting trend from tenants executing

renewal and lateral relocations to new deals

and expansions

» Vacancy trending downwards to 11.4% as

of year-end 2012 from a high of 14.6% in

2009

» Minimal speculative construction and

Limited large-block availability – only 6

blocks of 100,000 sq. ft. in Class A Market

» Asking rents are expected to rise in the near future – remain highest in the CBD ($28.72 psf, compared

to $20.10 psf in the suburban markets)

» Institutional capital has developed an appetite for well-leased, large, investment-grade assets in the

CBD and LoDo submarket

Denver CBD - Office Fundamentals

Sources: PPR

Houston

Downtown Houston

Downtown Houston

• Among the strongest local economies in the U.S., adding over 260,000 jobs over the past 10 years

• Benefits from the conventional and alternative energy sector, the Texas Medical Center (the largest medical complex in the world), an established port and manufacturing industry

• Despite recent declines in both natural gas prices and active drilling rigs, long-range growth strategies involving shale plays, international exploration and off-shore drilling continue to drive profits in the region

• Home to the headquarters of 24 Fortune 500 companies (2nd most behind New York) – 11 located in the CBD

• Over the past decade, Houston's population has grown by 24%, five times the rate of San Francisco, Boston and New York; making it the 4th most populous MSA

• Growing downtown population of 19,000 residents and 55,000 within two miles

• 25-34 year olds make up one-third of downtown residents

• Houston’s historically strong employment and population growth, propelled by further expansion in energy, health-related and distribution industries should lead to above-average gains and long-term expansion

$0

$5

$10

$15

$20

$25

$30

$35

$40

5%

7%

9%

11%

13%

15%

17%

19%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*2014*

Asking Rent (Net) Vacancy

Downtown Houston Office Market – Well Positioned For Growth

» Demand has picked up for Class A

» Vacancy rate trending down to 10.8% as of

year-end 2012 (12.4% prior year)

» Rental rates are expected to continue their

impressive year-over-year gains

(8% growth from June 2012 – 2013)

» No new supply / deliveries expected in

near term

» However, with improving fundamentals,

spec development will become a greater

possibility

» 1.8 million sq. ft. of leases expire over the next three years - just 3.7% of the inventory – will keep

supply / demand in check

» Institutional capital has developed an appetite for well-leased, large, investment-grade office assets

in the CBD, recently setting local pricing records - $445 million / $527 psf for Hess Tower (2011)

Houston CBD - Office Fundamentals

Sources: PPR, CoStar

New York

• The most dynamic, diverse and developed economy in the U.S.

• Job recovery since the end of the recession has climbed to approximately 245,000 jobs (6.7%), outpacing the national total of 4.5%

• Although FIRE tenants continue to dominate the office landscape, there has been robust growth in the creative, media and technology sectors

• IT job growth in NYC from 2007 – 2012 measured 28.7%, far surpassing the 3.6% private sector growth

• Midtown: Remains the largest single commercial district in the nation

• Midtown South: Lowest office vacancy of all CBDs, driven by expanding tech sector

• Downtown: Positive momentum as tenants continue to focus on value and growing amenities

Sources: C&W & NYS Department of Labor, NGKF

New York City

Midtown Manhattan

Source: PPR, Cushman & Wakefield, CompStak

41%

59%

Midtown Leasing Activity (Q1 2013)

New

Renewal

Midtown Office Market

• Strongest office market in the U.S. –

commanding highest office rents in New

York City and the nation

• April ‘13 - Strongest month of leasing

since June ‘11, pacing 84% ahead of the

submarket’s five-year monthly average

of 1.16 MM sq. ft.

• Year-to-date leasing is 30% above

2012 levels

• Average asking rents have increased

8.2% year-over-year

Downtown Manhattan

Source: PPR, Cushman & Wakefield, CompStak

65%

35%

Downtown Leasing Activity (Q1 2013)

New

Renewal

Downtown Office Market

• On its own, 4th largest office market in U.S.

• Shift from east to west as amenities of

TriBeCa, Hudson waterfront and the WTC

create a new sense of place

• Total leasing activity is 28% ahead of 2012’s

year-to-date level

• 7 of 10 largest leases were relocations from

tenants outside of the market or expansions

from tenants entering the market

• Asking rents have increased by 17.8% year-

over-year

Midtown/Downtown Office Market (continued)

• Significant competition has posed a challenge for high-yield driven investors to deploy capital in New York

• Three transactions completed in 2013 for greater than $1 billion / $1,000 psf

• Pending transactions over $1 Billion: Time Warner Center ($1.2 billion bid received) / 650 Madison ($1.3 billion in contract)

Sources: Real Capital Analytics, PPR, WSJ

The GM Building $3.4 billion / $1,870 psf

Sony Building $1.1 billion / $1,290 psf

30 Rockefeller Center $1.4 billion / $1,077 psf

HY – South Tower

Manhattan West

One Hudson Yards

3 Hudson Blvd

HY – North Tower

Developer Related Brookfield Related / Boston Prop.

Moinian Related

Occupancy 2015 2015 - 2018 2017 2017 2019

Square Feet 1.7M 6.0M 1.8M 1.5M 2.5M

Midtown Developments: Hudson Yards District

Downtown Developments

World Trade Center Development Site

• One and Four World Trade Center expected to deliver Q4 2013

• Towers 2 and 3 retail platforms are underway

• One World Trade Center executed leases with:

» Condé Nast (1.3 million sq. ft.)

» General Services Administration (300,000 sq. ft.)

» China Center of New York (200,000 sq. ft.)

Brookfield Place

• 4 towers, 7.7 MSF office space, 166,000 sq. ft. retail

• $250 million renovation

» Chef driven food concepts / restaurants

» Dining terrace

» Gourmet marketplace

» Retail and fashion corridor

• A new sense of place for tenants, residents and

tourists

Downtown Events & Open Space