brookfield property partners l.p. may 19-20/media/files/b/brookfield-bpy-ir/... · toronto; bank of...

BROOKFIELD PROPERTY PARTNERS L.P. May 19-20

2015 LONDON INVESTOR PRESENTATION & TOUR

Diversified, global owner and operator of high-quality real estate

Total Assets

$0.265/unit

Quarterly Distribution

72% ownership $28.791

Brookfield Asset Management

INVESTMENT PORTFOLIO CHARACTERISTICS

One of the world’s largest owners, developers and operators of premier office properties around the globe

Significant investment in class A regional malls and premier street retail in the U.S. through 33%4 stake in General Growth Properties (GGP)

Growing investments in modern logistics facilities, multifamily properties and hotels through Brookfield-managed private funds

Equity per Unit

Overview of Brookfield Property Partners

2

(1) As of March 31, 2015 and on a proportionate basis. (2) As of March 31, 2015. (3) 61% on a fully diluted basis. (4) On a fully diluted basis. .

$61.4 billion1

Public Float

~$6 billion2

68% ownership3

(1) All information is in total assets and based upon BPY’s proportionate ownership portfolio as of March 31, 2015.

$47.2B $7.8B

$4.7B $1.7B

NORTH AMERICA UK AUSTRALIA TOTAL2

$61.4B

OTHER

Global Portfolio of Premier Properties1

3

BRAZIL Retail: $0.5B

UNITED STATES Office: $22.1B Retail: $15.9B

CANADA Office: $4.9B UNITED KINGDOM &

WESTERN EUROPE Office: $7.8B

Industrial: $0.3B

AUSTRALIA, INDIA & CHINA

Office: $4.7B Retail: $0.2B

Geography

Diversified by Geography and Property Sector

U.S., 69% Australia, 7%

U.K., 14%

Canada, 7%

Other, 3%

Office, 61%

Retail, 31%

Opportunistic, 8%

Total Invested Capital of $29B1

Sector

4 (1) As of March 31, 2015 and excludes corporate.

Real Estate Investment Profile

Core Office

► Premier CBD assets in New York, Toronto, London, Los Angeles, Washington D.C., Calgary, Sydney and other gateway global cities

► Portfolio includes Brookfield Places in New York and Toronto; Bank of America Plaza in Los Angeles; Canary Wharf in London; Darling Park in Sydney

PROFILE

Brookfield Place New York

A leading global owner and operator of premier office properties

. (1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns.

► Interests in 137 core office properties totaling 98 MSF

► 31 MSF of developments

► $40B in assets

► $18B in equity

HIGHLIGHTS

6

Targeting returns on equity of 10-12% through current yield plus growth1

Core Retail

► Highly productive, best-in-market malls primarily in the United States

► Portfolio includes Ala Moana1 in Honolulu, Fashion Show1 in Las Vegas

Fashion Show Las Vegas

PROFILE

One of the highest-quality, fastest-growing retail platforms in North America

(1) Owned by GGP. (2) Represents BPY’s proportionate share. (3) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns.

HIGHLIGHTS

► Interests in 171 regional malls and urban retail properties with 155 MSF

► $540M of developments2

► $17B in assets

► $9B in equity

7

Targeting returns on equity of 10-12% through current yield plus growth3

Opportunistic

PROFILE

Includes multifamily, industrial, hotel, suburban office and triple net lease assets

► Office, retail, multifamily, industrial, hotel and triple net lease properties in North America, Europe, Australia, India and China

► Assets held predominantly in Brookfield-managed real estate opportunity funds

HIGHLIGHTS ► Interests in 28,000 multifamily units, 167 industrial assets

totaling 44 MSF, 12 hotels with 8,860 rooms, 125 office park properties, predominantly in India, and a 16 MSF portfolio of ~300 properties leased to automotive dealerships on a triple net lease basis

► 22% interest in China Xintiandi retail and office portfolio in Shanghai

► $5B in assets

► $2B in equity

Targeting returns on equity of 20%+ primarily through capital appreciation1

Triple Net Lease - US

Multifamily - US Industrial - Europe

Hotel - The Bahamas

(1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns.

8

BPY’s Operating Strategy

Our Value Creation Model

Recycle capital by monetizing interests in

stabilized assets

Acquire high-quality assets on

a value basis

Leverage operating

platforms to enhance value

10

BPY’s Investment Strategy

► Concentrate on most dynamic global markets

► Acquire high-quality assets at discount to replacement cost

Acquire High-Quality

Assets

Invest On a Value

Basis

► Focus on multi-faceted transactions that capitalize on structuring capability, including recapitalizations

► Allocation of capital to buy for value

11

Brookfield Place Perth

Our Operating Strategy

► Maximize revenues by:

Increasing occupancy

Marking-to-market rents

Optimizing tenants

Capitalizing on synergies

► Execute re-developments within existing assets

Core Office: Repositioning assets

Core Retail: Converting big-boxes to in-line

space

Opportunistic: Refurbishing multifamily assets

and redeveloping logistics facilities

12

Redevelopment Pipeline

BPY currently has $1.4B of redevelopment projects underway which will generate an average yield on cost of 12%1

(US$ millions) Sector Total Cost2 Yield on Cost

5 Manhattan West Office $ 312 18%

Brookfield Place New York Retail Retail 315 11%

2001 M. Street Office 98 11%

7 Westferry Circus Office 124 7%

Ala Moana Retail Center3 Retail 119 9-10%

Other Retail 422 10%

Total $ 1,390 12%

13

(1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns. (2) Represents BPY’s share of investment. (3) Owned by GGP.

Redevelopment: 5 Manhattan West

► With 100,000+ SF floor plates and 16-foot ceilings, property is ideally suited for tech and media tenants

► Investing $312M to upgrade building, incorporating it into Manhattan West project

New glass façade

New lobby

Replacing elevators/HVAC

Anticipated connection to High Line

► Recently executed leases with tech- and media-sector tenants totaling more than 400,000 SF

► Currently negotiating leases with asking rates starting at $80 PSF

► Expect to generate incremental NOI of $56M

Before & After: 450 W. 33rd St./5 Manhattan West – New York

14

Redevelopment: Brookfield Place New York Retail

► 25-year-old WFC built for different era

► $315M redevelopment of common and retail areas

► Transformational program including:

New entry pavilion, lobbies and entry façades

‘Hudson Eats’ dining terrace

‘Le District’ French marketplace

40+ luxury retailers

5 new high-end restaurants

Rebranding ‘Brookfield Place’

► Retail occupancy fully committed

► Expect to generate $35M of NOI, versus $2M under previous retail offering

15

Our Development Program

Bay Adelaide Centre, Toronto

► BPY has assembled a portfolio of developable land in high-value, supply constrained markets

► Opportunistically pursuing developments to:

Earn premium risk-adjusted returns compared to acquisitions

Upgrade portfolio in key strategic markets

► Development strategy is low risk

Typically seek to execute anchor leases for 40% to 50% of space before launching office development

Active developments account for less than 10% of invested capital

16

Active Development Projects

(US$ Millions) SF 000’s % Leased Cost1 Own % Yield on

Cost Date of

Stabilization

Office Projects

Brookfield Place Calgary East Tower 1,400 71% 630 100% 7% Q3 2018

Principal Place – Office, London 621 69% 550 100% 8% Q4 2019

Bay Adelaide East, Toronto 980 69% 365 100% 7% Q2 2017

London Wall Place 505 61% 289 50% 8% Q3 2019

Brookfield Place Perth Tower 2 362 52% 259 100% 8% Q1 2016

Giroflex, Sao Paulo 681 — 196 100% 9% Q1 2018

Subtotal 4,549 % $ 2,289 8%

Three Manhattan West – Residential 879 units — $ 739 100% 5% Q3 2018

Principal Place – Residential2 344 units — 214 50% — —

Multifamily 2,781 units — 245 30% 6% Various

Industrial 11,103 — 161 25% 8% Various

Total — — $ 3,749 7%

(1) Represents BPY’s share of investment. (2) Condo units therefore not included in Total Cost /Stabilized NOI/Yield on Cost calculation.

17

Next Phase of Growth – Development

18

Over 5 million sq. ft. of new development to come online between 2019-2022 will generate stabilized NOI of $270 million and yields on cost averaging 7%

(1) Represents BPY’s share of investment. (2) Condo units therefore not included in Total Cost /Stabilized NOI/Yield on Cost calculation.

(US$ Millions) SF 000’s % Leased Cost1 Own % Yield on

Cost Date of

Stabilization

Underway

One Manhattan West, New York City 2,117 25% $ 1,901 100% 6% Q1 2020

100 Bishopsgate, London 962 — 1,200 100% 7% Q3 2019

1 Bank Street, London 713 40% 344 50% 8% Q2 2019

Canary Wharf Retail, London 160 91% 68 50% 9% Q3 2015

Subtotal 3,952 25% $ 3,522 7%

Planned Projects – Wood Wharf, London

Wood Wharf Phase 1 – Office 319 — 163 50% 7% Q2 2022

Wood Wharf Phase 1 – Multifamily Rental 349 — 232 50% 6% Q3 2020

Wood Wharf Phase 1 – Multifamily Condo2 675 — 480 50% — —

Total 5,278 — 4,397 7%

Development – Manhattan West: Office, Residential, Hotel

19

► Brookfield is creating a new, premium mixed-use neighborhood at Manhattan West in the Hudson Yards District

► Manhattan West includes:

Two 2 million-square-foot class A office towers

A 844-unit high-rise luxury residential tower

A mixed-use hotel/retail property

The repositioned 5 Manhattan West office building

A 2-acre public park transecting the site

► Recently executed anchor lease with Skadden for 550,000 square feet

► Expect to generate NOI of $124M from first office tower

$397

$1,325

$657

$871

$2,019

$405

$40

$357

$190 $141

$511

$104

$(17) $(1)

$55 $16 $36 $4

2010 2011 2012 2013 2014 2015

Sales Price Realized Gains IFRS Gains

Accretive Execution of Asset Sales

Over the past five+ years, have sold $5.7B of office assets1, generating ~$1.3B of realized gains and ~$93M of IFRS gains2,3

(1) Represents dispositions of office assets by Brookfield Office Properties since 2010 at 100%. (2) IFRS carrying values at quarter prior to disposition. (3) Prior performance is not indicative of future results and there can be no assurance that an investment in BPY will achieve comparable results or avoid losses.

(US$ Millions)

Office Sales

20

Update on Asset Sales

21

Asset Status Net Proceeds Timing

75 State Street, Boston Closed $250M Q2

Washington DC portfolio Finalizing $350M Q2

99 Bishopsgate, London In process $300M Q3

Other Office Assets Ongoing $600M Q4

$1,500M

BPY’s Value Proposition

Q1 2015 NOI Annualized

Signed Leases not Currently

Producing NOI

Mark-to-Market of Expiring Leases

Occupancy Gains

Development/ Redevelopment

Planned Asset Sales

Future NOI

$350 $90

$160

$2,452

~$3,600 $670

With a ~4.5% yield and targeted annual distribution growth of 5%-8%, BPY offers investors an attractive total return

BPY Value Proposition – Current Yield Plus Growth1

(US$ millions)

23 (1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns.

Leases not Currently Producing NOI Mark-to-Market of Expiring Leases Occupancy Gains Development/ Redevelopment Planned Asset Sales

($140)

BPY’s net asset value has significant upside driven by visible growth initiatives within its existing asset base

IFRS value per unit Q1 20153

Mark-to-Market of Expiring Leases

Increased Occupancy

Development/ Redevelopment

Opportunistic Investments

Future IFRS value per unit3

BPY’s Value Proposition – Capital Appreciation1,2

24

(1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns. (2) Capital appreciation from opportunistic assets roughly offsets divestitures of core assets. (3) Presented as book value per unit, diluted for impact of $1,800M of preferred shares issued in Q4 2014 that are convertible into 70.0M units

$2.50

$2.00 $7.50

$28.00

$6.00

$46.00

Mark-to-Market of Expiring Leases Occupancy Gains Development/ Redevelopment

City of London Office Market

London Executive Summary

• The Central London office market comprises of 224.4 m sq. ft. (all classes) and Q1 2015 vacancy is 4.8%. The City of

London office market, including Southbank, consists of 111.6 m sq. ft. (all classes) and Q1 2015 vacancy is 5.7%.

• Q1 2015 take-up for Central London was 2.6 m sq. ft., which is a decrease of 9.9%, from Q4 2014 volume of 2.8 m sq.

ft. The City take up for Q1 2015 was 1.7 m sq. ft. over 78 transactions, marking the highest first quarter result since

2010, despite a 10.3% decrease from Q4 2014 volume of 1.9 m sq. ft. Take-up in Canary Wharf/Docklands was 92,000

sq. ft. compared to 326,000 sq. ft. let in Q4 2014.

• Availability in the City decreased to 6.3 m sq .ft. (5.7% vacancy) due to strong demand and no new supply completions.

Grade A supply is 4.6 m sq. ft. and Grade A overall vacancy rate is 4.1%. Availability in Canary Wharf/Docklands

remains at 1.2 m sq. ft. and a vacancy rate of 7.2%, due to subdued take-up and newly marketed second hand space.

• In the City, the most active sectors remain business services (36%), banking and finance (24%), professional services

(15%) and TMT (15%).

• Current prime office headline rents for the City remained unchanged this quarter at £62.50 psf. Assuming a 10 year

term, the rent free incentive also remained at 21 months. The rental growth outlook remains positive as the

supply/demand imbalance intensifies. Prime rents are forecasted to increase with incentives further reducing in the

second half of the year. Canary Wharf/Docklands prime rents also remained at £40.00 psf.

• Prime City net initial yields are trading at approximately +/- 4.25% for sub-£40m lot sizes and +/- 4.50% for lot sizes of

£40-£125m but there is still general downward pressure on yields.

26

Availability: Central London: 4.8%; City: 5.7%; Docklands: 7.2% Strong occupier demand levels evidencing consistent take-up volumes even with new supply entering the market. The strength of leasing activity had led to a decrease in total occupier demand which fell 17% quarter on quarter to 9.2 m sq. ft. and is now marginally lower than the 10 year average of 9.6 m sq. ft. Availability generally decreased due to lack of new supply delivered (exception in Canary Wharf/Docklands where availability increased due to new second hand stock coming to market). Assuming current levels of demand persist, availability is anticipated to decrease throughout 2015.

Q1 15 Leasing Activity: Central London: 2.6 m sq. ft.; City: 1.7 m sq. ft.; Canary Wharf/Docklands: 0.9 m sq. ft. Q1 2015 take-up for the City was 1.7 m sq. ft. over 78 transactions marking the highest first quarter result since 2010. Business services, banking/finance, professional services and TMT sectors remain the most active in the City and Canary Wharf/Docklands market.

Supply/Under Construction:

Central London: 4.0 m sq. ft. (excluding the City); City: 2.4 m sq. ft. (under construction but excluding pre-lets) No new development completions in Q1 2015. Strong pre-leasing in 2013/2014 has absorbed much of the 2015 development. There is only 361,000 sq. ft. of speculative supply remaining from a total of 1.8 m sq. ft under construction, with anticipated completions later this year, in the City pipeline.

Rent:

Prime City rents remained stable at £62.50 per sq. ft. compared to Q4 2014. Assuming a 10 year term, the rent free incentive also remained at 21 months. The rental growth outlook remains positive as the supply/demand imbalance intensifies. Prime rents are forecasted to increase with incentives further reducing in the second half of the year. Prime Canary Wharf/Docklands rents also remained stable at £40.00 per sq. ft.

12-Month Forward Outlook:

Economy Rent Vacancy

London City – Demand remains strong. Limited new supply post-2017.

27

27

City Vacancy, Take-up & New Supply

City Prime Rents vs. Rent Free Periods

Central London Average Investment Yields

Source: JLL

Central London Vacancy Rates

28

0.0%

2.0%

4.0%

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8.0%

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£ PSF Months Rent Free Periods (LHS) Rent (RHS) Net Rent (RHS)

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City West End City Average

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1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Take-up(mn sf) Completions Vacancy

28

Total Occupational Costs

City (psf) West End (psf) Docklands (psf)

Headline Rent £62.50 £115.00 £40.00

Rates £20.00 £47.50 £15.50

Service Charge £10.00 £10.50 £15.501

Total Occupation Costs £92.50 £173.00 £71.00

Discount for net effective

rent2

17.5% 15% 20%

Net effective rent £51.56 £97.75 £32.00

(1) Includes the Canary Wharf Estate Charge

(2) Net effective discount % age reflects the quantum of rent free available on a 10 year lease

29

29

City Office Pipeline: Under Construction >50k sq ft

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Spec: 0.5 m Committed: 1.4 m 2017 Total: 1.5 m

Spec: 0.3 m Committed: 1.4 m 2015 Total: 1.7 m

30

City Office Pipeline: Proposed >100k sq ft

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31

City Office Pipeline: Proposed Office Developments >100k sq ft

Address Earliest

Delivery Date Proposed sq ft Ownership

150 Holborn 2016 142,100 Ocubis

148 Old Street 2016 145,300 Great Portland Estates

33 Central 2016 230,800 HB Reavis

The Bower - The Tower 2017 165,400 Helical Bar plc / Crosstree Real Estate Partners

Roman Wall House 2017 177,300 London & Regional

20 Old Bailey 2017 183,000 Blackstone

The Scapel 2017 388,000 WR Berkley

120 Fenchurch Street 2017 420,000 Generali Group

Blossom Street 2018 262,000 City of London Corporation/ British Land

One Crown Place 2018 270,000 AlloyMtd Group

70 St. Mary Axe 2018 300,000 Henderson

80 Fenchurch Street 2018 300,000 Shieldpoint

Plumtree Court / Fleet Buildings 2018 422,000 Goldman Sachs

100 Bishopsgate 2018 962,000 Brookfield Property Partners

1 Swan Lake 2019 140,000 Sellar Property Group

Barts Square 2019 230,000 Baupost Group/ Helical Bar

The Goodsyard 2019 466,400 Hammerson / Ballymore Group

100 Liverpool Street 2019 529,400 British Land / GIC

40 Leadenhall 2019 890,000 Henderson

22 Bishopsgate (formerly Pinnacle) 2019 1,000,000 AXA Real Estate led consortium

32

City: Major Investment Deals Building Sq. Ft. Price £m Price £psf Cap Rate Buyer Seller

63 St Mary Axe 72,000 £70.0m £972 5.25% AXA Real Estate Rockspring / National Pension Service

Monument Place 75,000 £100.0m £1,333 4.00% CERN Rockspring

Milton Gate 201,666 £198.0m £982 5.00% Taikang Life Insurance / Gaw Capital

AGC Equity Partners

55 Moorgate 64,583 £50.0m £774 5.60% Kajima Corporation

Metropolis

1 Carter Lane 132,654 £138.8m £1,046 4.30% Fubon Financial LondonMetric Property

100 Cheapside 100,000 £95.5m £955 N/A Standard Life Investments

CarVal / Orion Capital Managers

Plantation Place South 162,213 £142.2m £877 5.42% London Wall Group

CS Euroreal

111 Old Broad Street 122,226 £113.0m £925 5.06% China Construction Bank

KBC Bank

131 Finsbury Pavement 78,653 £57.5m £731 5.00% RLAM Orion Capital Managers

33

City: Major Leasing deals

Address Market Occupier Size sq ft Rent psf Term (yrs) Rent free Date

New Street Square (pre-let) EC4 Deloitte 258,000 £64.00 20 Confidential Mar-15

Moor Place EC2 WeWork 167,900 £57.77 20 4 months Feb-15

30 Gresham Street EC2 Investec Asset Management

61,100 £60.00 13 26 + 6 months Feb-15

51 Lime Street (The Willis Building)

EC3 Deutsche Bank 52,300 £52.50 6 Confidential Feb-15

Aldgate Tower E1 Tag Worldwide 39,200 £49.00 10 21 months Feb-15

1 Aldermanbury Square EC2 Hewlett Packard 65,000 £51.73 15 28 + 4 months Jan-15

34

Brookfield’s City of London Business

London Portfolio

Operating Properties 4

Total Leasable Sq. Ft. 686,165

Portfolio Vacancy 2.4%

Market Vacancy (City of London) 5.7%

Development Properties 4

Total Sq. Ft 2,088,000

6.4%

0.3%

8.1% 7.7%

14.2%

63.3%

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

Vacant 2015 2016 2017 2018 2019+

Sq. f

t.

Vacancy / Rollover Exposure - as at March 31, 2015

36

37

Mar 2010

Oct 2014

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Dec 2014

May 2015

38

Principal Place

Leadenhall Court

London Wall

Place

125 Old Broad St

99 Bishopsgate

100 Bishopsgate

Principal Place

Leadenhall Court

London Wall Place

125 Old Broad St

100 Bishopsgate

Moor Place

99 Bishopsgate

Darling Park,

Sydney

99 Bishopsgate

Key Attributes 26-storey Grade A office building (336,000 sf) centrally located within the City

of London’s cluster of tall towers

On acquisition 2012, 62% leased

In 2013, Brookfield completed major refurbishment works to the façade, lobby, terrace and common areas

2015 occupancy 100%

Unexpired WALE, as at end of Q1 2015, is 6.4 years

Unexpired WALE, as at end of Q1 2015, is 5.6 years adjusted for lease breaks

Debt secured on a 5 year loan facility for £133.6m with an all in cost of 4.27%

Major Tenants: Latham & Watkins 138,063 sf

Deutsche Bank 82,365 sf

I2 Offices 42,364 sf

Brookfield 27,557 sf

39

99 Bishopsgate

Leadenhall Court

Leadenhall Court

Key Attributes 7-storey 109,000 sf office building (including 7,000 sf ground floor

retail space). Acquired as part of the Hammerson portfolio in June 2013

Held leasehold from City of London until 2139

Constructed in 1988 and occupies a prime City of London location, especially appealing for insurance tenants given its close proximity to Lloyds of London

Agreement for Lease executed with Amazon for 93,851 sf through to 1 January 2018. Tenant break option from 1 April 2017

Amazon took occupation on 13 March 2015, following a successful refurbishment managed by Brookfield

Loan facility with Wells Fargo for £30.0m, at 3M Libor + 225 bps in place

Potential for substantial refurbishment or redevelopment

40

Moor Place

Moor Place

Key Attributes Moor Place is a 236,000 sf Grade A office building located adjacent to

Brookfield’s 500,000 sf London Wall Place office development project (75% pre-let) and the future Moorgate Crossrail entrance.

Brookfield acquired Moor Place on 18 December 2014, with 7% occupation (single floor leased).

Practical Completion delivered in April 2014

Now 100% let or contracted, with a significant 168,000 sq ft let to We Work

Under offer on the last remaining floor (level 9)

Finance placed with Wells Fargo for £138m debt at Libor +200bps, capped at +300bps

41

Darling Park,

Sydney

100 Bishopsgate

100 Bishopsgate

Key Attributes 40-storey Grade A office development (930,000 RSF) centrally located within

the City of London’s cluster of tall towers.

100% ownership from 4 December 2015.

Cleared 2 acre site held under four 225-year leases from The Leathersellers Livery Company .

Obligation to redevelop 5/7 St Helen’s Place to provide the Leathersellers with new accommodation and 40,000 sf of office space currently ongoing with completion due July 2015.

Construction completion H2 2018

42

Principal Place Commercial

Principal Place Commercial

43

Key Attributes

15-storey Grade A office development (620,000 sf) located on the City of

London/Shoreditch border, immediately north of Broadgate in the London Borough of Hackney

100% owned by Brookfield. On completion, this will be held leasehold under a 987 year lease from London Borough of Hackney

Majority pre-let to Amazon (431,000 sf) on a 15-year term, with options on the remaining office space. Obligation to deliver by December 2016

Construction contract signed with BMCE in Q3 2014 for £171m

Construction finance facility secured for £280m

Darling Park,

Sydney

Principal Place Residential

Principal Place Residential

44

Key Attributes Principal Place Residential is located on the City of London / Shoreditch border

adjacent to Broadgate in the London Borough of Hackney (LBH)

The site has planning consent for a Foster + Partners designed 50-storey residential tower and affordable housing blocks (56 affordable units)

Planning consent granted on 1 April 2015 for 30 additional units to take Tower unit total from 243 to 273. No gain in saleable area but sales risk reduction on more efficient unit sizes

Stage E detailed design concluded January 2015

125 sales (125 exchanged) for a total of £142m (Average price of £1,515 psf)

3 Reservations totaling £6.5m (Average price £1,895 psf)

The development is held in a 50/50 joint venture with Concord Pacific

Estimated completion H2 2019

31 Principal Place Residential

Darling Park,

Sydney

London Wall Place

London Wall Place

Key Attributes 1.8 acre site with planning consent for two office buildings totaling 500,000 sf of

offices

Prominent City of London location (c.500m west of 100 Bishopsgate); strategically positioned by a major new Crossrail station (London transport system due 2018)

1LWP - 310,000 sf over 12 storeys. Lower floors of 40,000 sf, nine outdoor terraces

1LWP pre-leased to Schroders plc

2LWP - 190,000 sf of regular, highly efficient 12,000 sf floors over 16 storeys – 60,000 sf pre-leased to Cleary Gottlieb Steen & Hamilton LLP

The development will include significant new public realm including City

The development is held in a 50/50 JV with Oxford Properties and will be owned under a new 250 year lease from City of London on completion

Construction contract for £216.5m signed with BMCE in Q4 2014

Completion scheduled for Q1 2017

70% debt financed with Wells Fargo, Santander and HSBC completed in Q4 2014 45

City Gate House

46

Key Attributes Seven-story, 161,711 sq ft building which currently serves as

Bloomberg’s European headquarters

Located on Finsbury Square, which is in close proximity to public transportation links at Moorgate Station and the future CrossRail stop at Moorgate/Liverpool Street

Bloomberg to enter a six-year fully repairing and insuring lease at an annual rental of £6.5m (£40.20 per sq. ft.) that will expire in December 2020. Bloomberg will have the option to renew for up to a two-year term at an annual rent of £9.0m (£55.65 per sq. ft.)

The Bloomberg lease expiration is well timed to coincide with CrossRail coming online in 2018 allowing City Gate House to offer attractive office space at a compelling price point when compared to new construction deliveries that will require average rents well in excess of £75/ sq. ft.

47

Property Tenants Size sq ft Timing of deal

Moor Place WeWork 167,000 sq ft April 2015

CHP Consulting 19,250 sq ft April 2015

Pure Gym 8,700 sq ft April 2015

Sub Total 194,950 sq ft

125 Old Broad Street* Landmark Plc 11,100 sq ft Feb 2014

Eaton Vance 7,000 sq ft Feb 2014

King & Spalding 5,800 sq ft July 2014

FQS Capital Partners 3,850 sq ft June 2014

Pioneer Trader 3,500 sq ft July 2014


99 Bishopsgate Deutsche Bank 49,000 sq ft Aug 2014

I2 Business Centres 43,000 sq ft Oct 2013 & Aug 2014

Brookfield 28,000 sq ft Dec 2013

Latham, & Watkins 10,750 sq ft Jan 2014

IDI Gazeley 4,500 sq ft July 2014

MBIA Insurance UK 4,500 sq ft Oct 2014


One London Wall Place Schroders 310,000 sq ft Dec 2013

Leadenhall Court Amazon 94,000 sq ft Aug 2014

Principal Place Amazon 431,000 sq ft Aug 2014

Total 1,200,950 sq ft

*125 Old Broad Street was sold by Brookfield in July 2014

Canary Wharf Group Por/olio May 2015

BROOKFIELD PROPERTY PARTNERS

2

Canary Wharf Backgrounder •  The Canary Wharf estate is a 97-‐acre business and shopping district in East London,

consisPng of 37 buildings and five retail malls that total 16 million square feet with over 105,000 workers in major Financial Services, Law, Professional Services and TMT businesses.

•  Canary Wharf Group is a fully integrated property developer, owner and operator that has been responsible for the office and retail developments on the estate over the past two decades.

•  Canary Wharf Group’s exisPng investment por/olio comprises 6.9 million square feet across 11 office buildings and five retail malls. The office por/olio is 97% leased with an average remaining lease term of 14.6 years. The retail por/olio is 100% leased. In addiPon, Canary Wharf Group owns joint venture interests in 20 Fenchurch in the City of London (682,000 square feet) as well as the future Shell Centre redevelopment in London’s Southbank (530,000 square feet of office, 820,000 square feet of residenPal)

•  With over 11 million square feet of future residenPal and office developments, Canary Wharf has one of the largest mixed development pipelines in London and is regarded as one of the city’s pre-‐eminent developers in terms of execuPon and project quality.

•  Fair value of operaPng and development por/olio: ~$5.5 billion1

(1)  At Brookfield’s 50% share

3

Canary Wharf Estate -‐ Opera8ng Assets

(1)  Represents BPY’s ownership interest net of JV partnership interest of QIA (2)  20 Canada Square located on Canary Wharf estate but is wholly owned by BPY (3)  Canary Wharf owns 10% of 10 Upper Bank Street

# Property BPY Stake1 Occupancy Square feet

1 20 Canada Square2 100% 100% 610,000

2 One Churchill Place 50% 100% 1,038,500

3 10 Cabot Square 50% 100% 634,100

4 20 Cabot Square 50% 100% 558,100

5 One Canada Square 50% 97% 1,220,500

6 33 Canada Square 50% 100% 562,700

7 20 Bank Street 50% 100% 546,500

8 40 Bank Street 50% 94% 606,000

9 10 Upper Bank Street3 5% 100% 1,027,300

10 7 Wes/erry Circus 50% 8% 177,700

11 15 Wes/erry Circus 50% 100% 171,000

12 25 Churchill Place 50% 90% 545,000

7,697,400

13 Retail and Parking 50% 100% 732,000

Total 95.3% 8,429,400

4


One Canada Square 1,220,500 square feet

97% Leased

Key Tenants: Moody’s, Bank of New York, Mirror Group

One Churchill Place 1,038,500 square feet

100% Leased

Key Tenants: Barclays, BCG International

10 Cabot Square

634,100 square feet 100% Leased

Key Tenants:

Barclays, WPP Group

20 Cabot Square


Key Tenant: Barclays

5

25 Churchill Place 545,000 square feet

90% Leased

Key Tenants: EMA, EY

7 Westferry Circus 177,700 square feet

8% Leased Key Tenant: Under Refurbishment

15 Westferry Circus 171,000 square feet

100% Leased

Key Tenant: Morgan Stanley

20 Canada Square 610,000 square feet

100% Leased

Key Tenants: BP, McGraw-Hill


6

20 Bank Street 546,500 square feet 100% Leased


33 Canada Square 562,700 square feet

100% Leased

Key Tenant: Citi

40 Bank Street


Key Tenants: Skadden, Shell


20 Bank Street



7



Canada Place Mall 71,300 square feet

100% Leased

Key Tenants: Ted Baker, Boots, GAP, Mango

Jubilee Place Mall 134,560 square feet

100% Leased

Key Tenants: Michael Kors, The White Company, Molton Brown


Cabot Place Mall


Key Tenants: Tiffany & Co.,

Zara, Boss

8



Canada Place Link Mall


Key Tenants: Sk:n, Chopp’d,

Costa


Canada Place Building


Key Tenants: Waitrose, Reebok

Reuters Plaza


Key Tenant: Carluccio’s

9




Churchill Place


Key Tenants: Barclays, Jamie’s Italian, Rocket

Park Pavilion


Key Tenants: Roka, Lloyds

West Wintergarden


Key Tenant: Obica

10



East Wintergarden

Canary Wharf’s Premier Venue 7,341 square feet


Crossrail Place (Phase 1)

95,000 square feet Retail: 94% Leased

Key Tenants: Big Easy, Everyman Cinema, Sports Bar & Grill,

Sticks ‘n’ Sushi, Chai Ki, Bespoke Cycling, Bupa, NatWest

11



Car Park

2,894 Spaces

Perimeter Retail / Restaurants1

57,000 square feet

Key Tenants: Iberica,

Cat & Canary, Bang & Olufsen


(1)  Included within total building NIAs on page 3

•  Canary Wharf Group has a current development pipeline of 11 million square feet.

•  Over the last 21 months the Group has secured over 8 million square feet of new planning permissions including a new permission for a 4.9 million square foot mixed use development on Wood Wharf.

•  Over the next 6 years we plan to deliver 5 million square feet across four significant development sites:

•  Shell Centre

•  Newfoundland

•  Heron Quays West -‐ 1 Bank Street / 10 Bank Street and a Private Members Club

•  Phase I of Wood Wharf

•  In total 22 buildings delivering 5 million square feet of NIA

•  Significant infrastructure and enabling works

12

Canary Wharf Group -‐ Development Programme

Phase 1 of the Development Programme will be delivered through a combina8on of:

•  Office pre-‐lets

•  Retail pre-‐lets

•  Limited speculaPve office development to establish the Wood Wharf office district

•  Forward sales

•  Sales of residenPal apartments

•  CreaPon of a private rental (PRS) residenPal pla/orm

•  This first phase represents a Gross Development Value of circa £4.5billion.

Future Development Pipeline:

•  We also have a future development pipeline of a further 6.5 million square feet that includes Park Place, North Quay, the later phases of Wood Wharf.

•  Our Development & Planning group will be working on detailed planning permissions on future sites to create mixed use schemes and more residenPal opportuniPes

•  Total Gross Development Value for the Future Development Pipeline is in the order of £6.7 billion.

13

Canary Wharf Group -‐ Development Programme

14

Shell Centre Summary Total: 1,415,000 square feet Office: 530,000 square feet Residential: 820,000 square feet Retail: 55,000 square feet Apartments: 863 units

15

Squire & Partners - B1

Office and Retail: 269,000 square feet

KPF - B2


16

Patel Taylor - B3

PRS: 151,000 square feet Units: 203

Affordable: 74,000 square feet Units: 98

Squire & Partners - B4a

Residential for sale: 175,000 square feet

Units: 199

Squire & Partners - B4b

Residential for sale: 140,000 square feet

Units: 158

17

Stanton Williams - B5

Residential for sale: 177,000 square feet Units: 108

Grid - B6/7

Residential for sale: 130,000 square feet Units: 97

18 One Bank Street Ten Bank Street Wood Wharf Newfoundland Private Members Club

Development Programme -‐ 5 Year Pipeline

19

Development Programme -‐ 5 Year Pipeline

One Bank Street 700,000 square feet of offices

40% leased Key Tenant: Societe Generale

Ten Bank Street Up to 700,000 square feet of

offices

Horden Cherry Lee - Newfoundland

PRS: 534,000 square feet Units: 611

20

Wood Wharf Phase 1

Wood Wharf Phase 1 Total: 1,670,000 square feet Office: 289,000 square feet Residential: 1,260,000 square feet Retail: 85,000 square feet Units for sale: 811 units PRS units: 461 units

21

Herzog & de Meuron - A1

Residential and Retail: 413,000 square feet Units: 468

Stanton Williams - A3

Residential and Retail: 262,000 square feet Units: 343

22

Stanton Williams - A2

PRS and Retail: 127,000 square feet Units: 174

Grid - E1/2

PRS and Retail: 226,000 square feet Units: 287

23

Allies & Morrison - G3

Intermediate Rent and Retail: 120,000 square feet Units: 176

Patel Taylor / Darling Associates - Affordable Housing

Affordable Rent and Retail: 179,000 square feet1 Units: 169

(1)  Includes Community Space

24

Allies & Morrison - B3


Allies & Morrison - D1


25

Park Place 680,000 square feet

North Quay 2,400,000 square feet

Wood Wharf Future Phases 3,300,000 square feet

Development Programme -‐ Future Pipeline

26

Canary Wharf Group -‐ Development Portfolio

(1) Represents BPY’s ownership interest net of JV partnership interest of QIA (2) Development recently completed

Project BPY Stake1 Leased % Use NIA (square feet) Target Comple8on Year

Projects in development

Crossrail StaPon (Phase 2) 50% 0% Retail 18,000 2018 One Bank Street 50% 40% Office 700,000 2019

Ten Bank Street 50% Office 700,000 2020

Private Members Club 50% 100% Retail 60,000 2018

Wood Wharf (Phase 1 & Infrastructure)

50% Mixed-‐Use 1,670,000 2019-‐2020

Newfoundland 50% PRS 534,000 2018

Subtotal 3,682,000 Future Developments

Off-‐Estate Developments

Shell Centre 25% Mixed-‐Use 1,415,000 2017-‐2019

20 Fenchurch Street 7.5% 93% Office 682,0002 2015

Off-‐Estate Subtotal 2,097,000

Canary Wharf Future Developments

Wood Wharf Future Phases Mixed-‐Use 3,300,000 2020-‐2025

North Quay 50% Office 2,400,000 2024

One Park Place 50% Office 680,000 2024

Canary Wharf Subtotal 6,380,000

Future Development Subtotal 8,477,000

Total 12,159,000

29

Forecast Average Annual Housing Supply vs. Demand

30

Shia Of Tenure From Ownership To Rental In London

31

Growth In PRS Households 2001 -‐ 2011

32

Ten Year Residen8al Growth London & Prime London

33

The Grid Building

34

2 Bed Apartment Plan 87m2

The Grid Building

36



Perimeter Retail / Restaurants

57,000 square feet

Key Tenant: Iberica, Cat & Canary, Bang & Olufsen

Canary Wharf Estate Leasing Overview

•  15.5 million square feet of offices

•  866,045 square feet available, of which 134,434 square feet is CWG space

•  5.58% vacancy rate

•  Rental levels

•  ConPnuing diversificaPon

37



One Canada Square

1,204,000 square feet of offices 97% leased

Canary Wharf -‐ Leasing Strategy -‐ Opera8ng Assets

25 Churchill Place

545,000 square feet of offices 90% leased

40 Bank Street

606,000 square feet of offices 94% leased

38



Canary Wharf -‐ Leasing Strategy -‐ Developments

One Bank Street 700,000 square feet of offices

40% leased Key Tenant: Societe Generale

Ten Bank Street Up to 700,000 square feet of

offices

39



Canary Wharf -‐ Leasing Strategy -‐ Developments

1 Park Place Up to 680,000 square feet of

offices

7 Westferry Circus 160,000 square feet of offices

Under refurbishment

40

Wood Wharf -‐ Leasing Strategy -‐ Developments Phase 1

Building 3 87,000 square feet of offices

Building D1 202,000 square feet of offices

41

Key Tenant:

20 Fenchurch Street

682,000 square feet of offices 93% Leased

City -‐ Leasing Strategy -‐ Opera8ng Assets

42



Perimeter Retail / Restaurants

57,000 square feet

Key Tenant: Iberica, Cat & Canary, Bang & Olufsen

Canary Wharf Group -‐ Retail Overview

•  812,000 square feet of exisPng retail

•  Up to 878,000 square feet of future development

•  0% vacancy rate

43

Canary Wharf Group -‐ Retail Development

Crossrail Phase I - 2015 Total NIA of 95,000 square feet

Crossrail Phase II - 2018 18,000 square feet at level -3

C2 Building Wood Wharf

200,000 square feet

45

Canary Wharf Group -‐ Retail Development

UK & LONDON ECONOMIC & PROPERTY MARKET PROSPECTS

Dr Neil Blake

Head of EMEA Research,

CBRE

19th May 2015

THE UK ECONOMY IN CONTEXT

95

115

135

155

175

195

215

235

255

275

19

84

19

85

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19

87

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99

20

00

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20

1984 =

100

USA UK

Euro Area

Source: Oxford Economics

2.7% p.a.

1.6% p.a.

2.5% p.a.

Growth picking up after a damaging

recession

Conservatives with slim or no majority

Europe top of the agenda

Big budget deficit to deal with

Is the 1992-1997 Major Government any guide to what’s next?

BACK TO THE 1990S?

Source: BBC

Growth picking up after a damaging

recession

Conservatives with slim or no majority

Europe top of the agenda

Big budget deficit to deal with

1992 2015

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.political-rant.com/john-major-a-closet-leftie-after-all/&ei=crZMVd2yM8yQ7AaS1IGACA&bvm=bv.92765956,d.ZGU&psig=AFQjCNEVCPtY64svt-BrjGsm8fSVorz60g&ust=1431177199109888

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.telegraph.co.uk/news/politics/david-cameron/8621560/David-Cameron-We-are-creating-a-new-era-of-transparency.html&ei=v7ZMVdmdJ4mt7AbVgoGoBA&bvm=bv.92765956,d.ZGU&psig=AFQjCNFLvxsk1Yaql3iP9AXfC3576kD_hw&ust=1431177271757859

Generally…

Whether Cameron’s slim majority will be enough to keep a hold on power?

Could the Government be pulled off track by minor interests?

Whether there could be a second general election (unlikely?)

Specifically…

What will happen on an EU referendum?

Where is the devolution and independence debate going next?

How will the government hit its fiscal targets?

What new property-specific policies can we expect?

• Business rates

• Housing supply

We are mostly dealing with ‘known unknowns’

UNCERTAINTIES WE STILL HAVE

BREXIT: WHAT DO INVESTORS THINK? Q. The UK may decide to hold a Referendum on EU Membership: how would it affect the attractiveness

of property investment in the UK if they voted to leave the EU?

31% 38%

27%

4% 1% Makes the UK a muchless attractive location

Makes the UK a slightlyless attractive location

Makes no difference Makes the UK a slightlymore attractive location

Makes the UK a muchmore attractive location

Source: CBRE Investor Intentions Survey

Interest Rates have turned?

ZERO INFLATION IS TEMPORARY

0

1

2

3

4

5

6

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

CPI Inflation

10-year Gilt Yields

Source: Oxford Economics, CBRE

Office-Based Jobs in Central London

THE LONDON PHENOMENA

500

700

900

1100

1300

1500

1700

1900

2100

230019

84

19

85

19

86

19

87

19

88

19

89

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90

19

91

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92

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93

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94

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97

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00

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tho

usan

ds

Source: Oxford Economics, CBRE

17.7% growth 2009-14

Change in employees in 2009-14

CONSULTANCY & TMT LEAD THE WAY

-20000 -10000 0 10000 20000 30000 40000 50000 60000

Banking

Other professional & scientific

Publishing

Insurance

Scientific R&D

Rental & leasing

Public admin

Media

Information services

Membership organisations

Fund management

Real Estate

Architecture & engineering services

Programming & broadcasting

Telecommunications

Building services

Legal & Accounting

Employment agencies

Office admin & support

Advertising & MR

Computer Programming

Head offices; management consultancy

Source: ONS, CBRE. Covers Central London & adjacent boroughs

Office-based employment growth since the peak (2009-2014)

LONDON’S GROWTH AMONGST THE BEST

-5 0 5 10 15 20 25

Madrid

Paris

Milan

New York (metro)

Frankfurt

Berlin

Stockholm

San Francisco (metro)

Munich

Hong Kong

Shanghai

London (inner)

Warsaw

Source: Oxford Economics

Office completions in Central London

NO BOOM IN LONDON SUPPLY - YET

0

2000

4000

6000

8000

10000

12000

14000

16000

1800019

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21

000’s

sq

uare

feet;

4 q

uart

er

rollin

g t

ota

l

Source: CBRE

London Office Prime Rents

LONDON RENTS ON THE RISE

0

20

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180

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95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

£ p

er

sq

uare

fo

ot

West End, 25.8% growth 3 years to 2019Q1

Source: CBRE (soft landing scenario)

City, 14.6% growth 3 years to 2019Q1

London Office Prime Rents

REAL RENTS* LOOK MORE STABLE

0

20

40

60

80

100

120

140

160

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

£ p

er

sq

uare

fo

ot,

at

2015Q

1 p

rices

Source: CBRE (soft landing scenario);

*deflated by the UK GDP deflator

0 50 100 150 200

Stratford

Docklands

Hammersmith

Shoreditch

Southbank

Farringdon

King's Cross

Paddington

Midtown (Holborn)

City core

Fitzrovia

Covent Garden

Victoria

Soho

Knightsbridge

Mayfair and St James's

£ per sq ft

Average Grade A Rent Average Grade A Business Rate Cost increase by 2018

Average grade A office costs

HOW LONG WILL CENTRAL AREAS REMAIN AFFORDABLE?

Source: CBRE

Note: Rates payable. Excludes service charge

London Office Yields vs Gilt Yields

YIELDS BUT RELATIVE PRICING STILL ATTRACTIVE

-2

-1

0

1

2

3

4

5

6

7

8

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

per

cen

t

*Weighted average of the City and Docklands

London Financial Area Prime

Office Yields*

Nominal 10 year Gilt yields

Real 10 year Gilt yields

Source: CBRE, Bank of England

Prime City Office Yields & 10-year Gilt yields

CURRENT SPREADS A CUSHION AGAINST FUTURE INTEREST RATE INCREASES

-2

-1

0

1

2

3

4

5

6

7

8

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Real Gilts

City Offices

Nominal Gilts

Spread between City Office and Real 10-year Gilt Yields

RENTAL GROWTH & ECONOMIC OPTIMISM TO NARROW YIELD SPREADS?

0

1

2

3

4

5

6

7

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

SUMMARY

Optimism following election

result to be balanced by

growing caution over the EU

referendum

New government still faces

policy challenges

Extra-ordinary growth of the

London economy over the

past 30 years

London is a global city;

No immediate reason for a

slowdown if the world

economy continues to recover

Threat to pricing from rising interest rates

Threat to occupier demand from cost escalation and BREXIT worries

Growing shortage of office space in Central London

Rental Growth is taking off

No immediate supply surge to rebalance the market

Supply surge towards the end of the decade possible

Re-rating and rental growth will have major implications for the relative affordability of London sub-markets

Brookfield Property Partners 2015

brookfield property partners l.p. may 19-20/media/files/b/brookfield-bpy-ir/... · toronto; bank of...

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