Brookfield Property Partners L.p. - 5.750% · NASDAQ:BPYPN
Brookfield Property Partners L.p. - 5.750% — Brookfield Property Partners — Investor Day (September 2014)
49 slides from Brookfield Property Partners L.p. - 5.750%'s investor day presentation, Sep 16, 2014
Slide 1: Brookfield Property Partners L.P. Investor Meeting 2014
September 16, 2014 Brookfield Property Partners L.P. Investor Meeting 2014
Slide 2: Our Goal
Our Goal Our goal is to be the leading global owner/operator of high quality real estate, generating sustainable and growing distributions per unit over the long term for our unitholders OFFICE RETAIL INDUSTRIAL MULTIFAMILY AND HOTELS 2 | Brookfield Property Partners LP
Slide 3: Significant Progress Since Spin-Off Last Year
Significant Progress Since Spin-Off Last Year ► Completed $5B privatization of Brookfield Office Properties ► Invested $1.4B increasing ownership of General Growth Properties to 33% ► Invested $480M to expand industrial and multifamily platforms ► Made $170M of inaugural investments in China and Ind
Slide 4: Global Portfolio of Premier Properties
Global Portfolio of Premier Properties1 NORTH DEVELOPING AMERICA EUROPE AUSTRALIA TOTAL MARKETS $42.9B $3.7B $5.5B $1.2B $53.4B Office Retail Multifamily, Industrial, Hotel 1) All information is in total assets and based upon BPY’s proportionate ownership portfolio as of June 30, 2014 4 | Brookfield
Slide 5: Diversified by Geography and Property Sector
Diversified by Geography and Property Sector Total Invested Capital of $18.3B Sector Geography Multifamily & China, 1% Brazil, 2% Industrial, 2% Hotels, 2% Canada, 9% Europe, 10% Retail, 34% Australia, 10% U.S., 68% Office, 62% 5 | Brookfield Property Partners LP
Slide 6: Office
Office The leading global owner and operator of premier office properties PROFILE ► Premier CBD assets in leading North American, Australian and European cities ► Brookfield Places in New York and Toronto; Bank of America Plaza in Los Angeles HIGHLIGHTS ► 197 properties with 98 MSF1 ► 19 MSF of deve
Slide 7: Retail
Retail One of the highest-quality, fastest growing retail platforms in North America PROFILE ► Highly productive malls in the United States, Brazil and China ► Ala Moana1 in Honolulu, Fashion Show1 in Las Vegas, Xintiandi in Shanghai HIGHLIGHTS ► 164 malls with 154 MSF ► $600M of redevelopments2 ► $
Slide 8: Industrial
Industrial Portfolio of modern logistics assets in North America and Europe PROFILE ► Built large and growing industrial platform in North America and Europe ► Recent acquisitions: Verde – December 2012 Gazeley – June 2013 IDI – October 2013 HIGHLIGHTS ► 190 properties with 47 MSF ► 63 MSF of
Slide 9: Multifamily and Hotels
Multifamily and Hotels High-quality assets in the multifamily and hotel sectors PROFILE ► Multifamily and hotel properties in North America, Europe and Australia ► Atlantis Paradise Island, Diplomat in Florida and Ritz Carlton in San Francisco HIGHLIGHTS ► 22,000 multifamily units ► 11 hotels with 8
Slide 10: Our Value Creation Model
Our Value Creation Model Acquire high- quality assets on a value basis Recycle capital by monetizing Leverage stabilized operating assets, platforms to redeploying into enhance value accretive investments 10 | Brookfield Property Partners LP
Slide 11: Leveraging Operating Platforms to Enhance Value
Leveraging Operating Platforms to Enhance Value RIC CLARK CHIEF EXECUTIVE OFFICER 11 | Brookfield Property Partners LP
Slide 12: Our Operating Strategy
Our Operating Strategy ► Maximize revenues by: Increasing occupancy Marking-to-market rents Optimizing tenants Capitalizing on synergies ► Execute re-developments within existing assets Office: Repositioning assets Retail: Converting large-boxes to in-line space Multifamily: Refurbishi
Slide 13: Positive Leasing Momentum in Office Portfolio
Positive Leasing Momentum in Office Portfolio Executed 2.7 MSF of leases at Brookfield Place NY in last 12 months and expect occupancy to reach 95% by year-end Total Occupancy – Office Platform 92.3% Merrill Lynch expiry at Brookfield Place NY 92.1% 91.9% 90.8% 89.5% 89.3% Q2 2013 Q3 2013 Q4 2013 Q1
Slide 14: Redevelopment Pipeline
Redevelopment Pipeline BPY currently has $1.3B of redevelopment projects underway which will generate an average yield on cost of 11% Total Yield on (US$ millions) Sector Cost1 Cost 5 Manhattan West Office $ 284 13% Brookfield Place New York Retail Retail 315 11% 2001 M. Street Office 113 11% 799 9t
Slide 15: Brookfield Place New York Retail
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 European-style market 40+ luxury retailers 5 new high
Slide 16: 5 Manhattan West
5 Manhattan West ► With 100,000+ SF floor plates, property is ideally suited for tech and media tenants ► Investing $284M to upgrade building, incorporating it into Manhattan West project New glass exterior New lobby Replacing elevators/HVAC Anticipated connection to High Line ► Currently ne
Slide 17: Ala Moana Mall
Ala Moana Mall ► One of the world’s most productive malls with sales in excess of $1,400 PSF ► GGP is converting Sears store into a new Bloomingdales, Nordstrom and in-line stores; increasing leasable area by ~650,000 SF ► Expect to earn an initial yield of 9-10% on investment of $190M 17 | Brookfie
Slide 18: Multifamily Portfolio
Multifamily Portfolio ► Since 2010, acquired 22,000 multifamily units primarily in the Sun Belt ► Strategy is to invest capital to upgrade well-located older assets Updating kitchens, bathrooms Upgrading common areas Adding new building amenities ► Since 2010, have invested $20M to refurbish u
Slide 19: Our Development Program
Our Development Program ► BPY assembled a portfolio of developable land in high-value, supply constrained markets during periods of market weakness ► Opportunistically pursuing developments to: Earn premium risk-adjusted returns compared to acquisitions Upgrade portfolio in key strategic markets
Slide 20: Active Development Projects
Active Development Projects Yield on (US$ Millions) SF 000’s % Leased Cost Cost Office Projects Bay Adelaide East 980 60% $ 434 7% Brookfield Place Calgary East Tower 1,400 71% 749 7% Brookfield Place Perth Tower 2 366 40% 308 8% 1 London Wall Place1 310 100% 188 9% Principal Place – Office 625 69%
Slide 21: Principal Place
Principal Place ► Located in Hackney/Shoreditch area in high demand by tech companies ► Site zoned: 625,000 SF office building 50-story residential condominium 20,000 SF of retail ► Signed lease for ~430,000 SF with Amazon ► Launching sale of residential units this month to very strong demand
Slide 22: Industrial Property Development Pipeline
Industrial Property Development Pipeline ► Own 63 MSF land bank in North America and Europe ► Over past 18 months, have executed 4.7 MSF of build-to-suit logistics assets ► Commenced construction on 10 MSF of properties in the U.S., France, Italy and the U.K. ► Expect to generate $11M of NOI 22 | Br
Slide 23: Acquiring High-Quality Assets on a Value Basis
Acquiring High-Quality Assets on a Value Basis BRIAN KINGSTON PRESIDENT & CHIEF INVESTMENT OFFICER 23 | Brookfield Property Partners LP
Slide 24: BPY's Investment Strategy
BPY’s Investment Strategy ► Concentrate on markets with high barriers to entry Acquire ► Acquire high-quality assets at discount to High-Quality replacement cost Assets ► Target investments in large-scale platforms and single-assets ► Leverage local relationships across global platform to Invest ori
Slide 25: Global Asset Manager with Local Expertise
Global Asset Manager with Local Expertise 3030 Offices | 255 Offices | 255Real RealEstate EstateProfessionals Professionals || 15,200 OperatingEmployees 15,200 Operating (1)1 Employees UNITED KINGDOM & CANADA WESTERN EUROPE 20 Professionals 20 Professionals 1,375 Employees 3,105 Employees UNITED STA
Slide 26: Generating Premium Returns Through Capital Allocation
Generating Premium Returns Through Capital Allocation ► We seek to allocate capital to investments that offer the highest risk-adjusted returns Employees around the world providing real-time market intelligence Invest in markets and sectors when they are out of favour or experiencing distress 26
Slide 27: Leveraging Operating Platforms in Investment Process
Leveraging Operating Platforms in Investment Process ► Benefit from the deep expertise of operating platforms ► Influence all phases of the investment cycle in order to reduce risk and enhance value Sourcing Acquisitions Exits / Due Dispositions Diligence Office Properties Construction & PLATFORM Ri
Slide 28: Urban American
Urban American ► 4,000-unit multifamily portfolio in Upper Manhattan/Roosevelt Island ► Following broken auction, negotiated deal to buy 100% ► Priced well below replacement cost in high barrier-to-entry market with significant upside catalysts Columbia University expansion Cornell tech campus o
Slide 29: CARS
CARS ► 15.6 MSF portfolio of triple-net leases with ~300 automotive dealerships ► Acquired high-quality cash flow stream for attractive value due to unconventional nature of asset base 100% occupancy with WALE of 9.3 years 90%+ of rent indexed to inflation Dealers average 3X rent coverage with
Slide 30: Global Expansion Strategy
Global Expansion Strategy Over the past decade, we have expanded into a number of new markets that offered attractive risk-adjusted returns 2003: UK 2007: Australia 2012: Europe 2014: China, India 30 | Brookfield Property Partners LP
Slide 31: Criteria for New Markets
Criteria for New Markets Not all countries will meet every criteria, but must meet enough to ensure that “country risk” in the investment equation is manageable ► We have strict criteria for entering new markets: Stable system of government Rule of law Independent judiciary and media Well-de
Slide 32: Approach to New Markets
Approach to New Markets ► Manage risk by: Making small initial investments until we are comfortable with the market Supplement local management with experienced Brookfield leaders Find strong local partners and align our interests Generally, start with operating properties, not new developme
Slide 33: India Case Study
India Case Study ► Established office in Mumbai 2008 ► Assigned Senior Managing Partner responsibility for building business ► Re-located senior executive from Toronto to Mumbai 2009 – 2012 ► Hired 68 local professionals ► Entered market with Brookfield’s construction business without deploying mean
Slide 34: New Investment: Unitech
New Investment: Unitech ► Portfolio of 14 MSF of existing buildings and properties in construction that are 72% leased, mostly to Western IT tenants ► 3 MSF land bank for future development ► Complex recapitalization enabled us to purchase high-quality real estate for a very attractive price Priva
Slide 35: Recycling Capital to Fund New Investments
Recycling Capital to Fund New Investments BRIAN KINGSTON PRESIDENT & CHIEF INVESTMENT OFFICER 35 | Brookfield Property Partners LP
Slide 36: Capital Recycling Strategy
Capital Recycling Strategy ► To fund new investments, BPY regularly disposes of stabilized assets as this represents a low cost source of capital ► Have identified $4B of primarily office assets (net of debt) that are candidates for sale ► We will sell 100% of certain assets that are not strategic ►
Slide 37: Heritage Plaza
Heritage Plaza ► In 2010, acquired 53-story, 1.2 MSF class A tower in Houston ► Property was 84% leased at acquisition ► Leveraged local team to lease building to 98% ► Sold 90% of building to institutional investor, retaining 10% stake and operating responsibility ► Acquisition value: $286 PSF ► Di
Slide 38: Strong Track Record of Capital Recycling
Strong Track Record of Capital Recycling Over past five years, have sold $3.5B of office assets1, generating ~$800M of realized gains and ~$55M of fair value gains2 Office Sales (US$ Millions) $1,325 $871 $657 $397 $357 $295 $190 $141 $76 $55 $40 $16 $3 -$17 -$1 2009 2010 2011 2012 2013 Sales Price
Slide 39: Financial Impact of Capital Recycling Program
Financial Impact of Capital Recycling Program In 2014, we have recycled $570M of capital, increasing our FFO yield by an average of 400 basis points and generating over $450M of value Net Stabilized Net Stabilized Disposition Proceeds FFO Yield Acquisition Equity FFO Yield Heritage Plaza $ 107M 6% C
Slide 40: BPY's Value Proposition
BPY’s Value Proposition JOHN STINEBAUGH CHIEF FINANCIAL OFFICER 40 | Brookfield Property Partners LP
Slide 41: Value from Marking-to-Market Expiring Leases
Value from Marking-to-Market Expiring Leases Mark-to-Market of Expiring Leases Rollover of leases through 2018 25 MSF Office Platform $4.91 Incremental NOI generated from $ 312M releasing Incremental value, net of costs $ 5,159M Retail Platform $2.33 Per unit $ 7.24 41 | Brookfield Property Partners
Slide 42: Value from Occupancy Gains
Value from Occupancy Gains Occupancy Gains Leasing to achieve occupancy of 95% 3 MSF NOI from increased occupancy $ 133M Incremental value, net of costs $ 2,306M Office Platform $3.23 Per unit $ 3.23 42 | Brookfield Property Partners LP
Slide 43: Value from Redevelopment
Value from Redevelopment Redevelopment Stabilized NOI from investments by 2018 $ 145M Office Platform $1.76 Incremental development cost $ 949M Value at 4.9% cap. rate $ 2,959M Value created $ 2,010M Retail Platform $1.06 Per unit $ 2.82 43 | Brookfield Property Partners LP
Slide 44: Value from Development
Value from Development Development Stabilized NOI from investments by 2018 $ 266M Office Platform $3.95 Incremental development cost $ 2,379M Value at 4.9% cap. rate $ 5,429M Value created $ 3,050M Per unit $ 4.28 Other $0.33 44 | Brookfield Property Partners LP
Slide 45: BPY's Value Proposition
BPY’s Value Proposition With its 5% current yield, BPY offers investors the opportunity to earn up to a ~20% annual return over the next five years ~$7.00 ~$43.00 ~$3.00 ~$7.00 $25.69 Today’s IFRS value Mark-to-Market of Increased Development/ 2018 IFRS value per unit Expiring Leases Occupancy Redev
Slide 46: Additional Upsides
Additional Upsides ► Value proposition only reflects existing assets and active development projects ► We stand to benefit from additional upsides: Further monetization of developable land Manhattan West North and South office towers 100 Bishopsgate office project in London Accretive acquisi
Slide 47: Distribution Growth
Distribution Growth Strong NOI growth expected to drive FFO growth of 8-11% per year. As a result, we are increasing our distribution growth target to 5-8% per annum $411 $3,247 (US$ millions) $133 $312 $136 $2,256 Q2 2014 NOI Signed Leases not Mark-to-Market of Occupancy Development/ 2018 NOI Annua
Slide 48: Q&A
Q&A 48 | Brookfield Property Partners LP
Slide 49: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements (Brookfield Property Partners) This presentation contains “forward-looking information” within the meaning of Canadian provincial securities laws and applicable regulation and “forward looking statements” within the meaning of “safe harbor” provis
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