All dollar references are in
BROOKFIELD NEWS, Feb. 02, 2021 (GLOBE NEWSWIRE) -- Brookfield Property Partners L.P. (NASDAQ: BPY; NASDAQ: BPYU; TSX: BPY.UN) (BPY) today announced financial results for the quarter and year ended December 31, 2020.
We were encouraged by a noticeable increase in private market activity in the fourth quarter, as we closed on several sizable asset sales, including One London Wall Place and our self-storage business, executed at premiums to both our current and pre-pandemic carrying values, said Brian Kingston, Chief Executive Officer. "Our office operations have continued to perform well, and we were pleased by the resilience of our retail portfolio leading up to and through the holiday shopping season."
Financial Results
Company FFO (CFFO) was
Net income for the quarter ended December 31, 2020 was a loss of $38million or
| Three months ended Dec. 31, | Twelve months ended Dec. 31, | |||
| (US$ Millions, except per unit amounts) | 2020 | 2019 | 2020 | 2019 |
| Net (loss) income(1) | $(38) | $1,551 | $(2,058) | $3,157 |
| Company FFO and realized gains(2) | $287 | $459 | $952 | $1,512 |
| Company FFO(2) | $167 | $379 | $815 | $1,345 |
| Net (loss) income per LP unit(3)(4) | $(0.40) | $1.00 | $(2.39) | $1.89 |
| Company FFO and realized gains per unit(4)(5) | $0.30 | $0.48 | $0.97 | $1.57 |
| (1) | Consolidated basis includes amounts attributable to non-controlling interests. |
| (2) | See "Basis of Presentation" and Reconciliation of Non-IFRS Measures in this press release for the definition and components. |
| (3) | Represents basic net income attributable to holders of LP units. IFRS requires the inclusion of preferred shares that are mandatorily convertible into LP units at a price of |
| (4) | Net income attributable to holders of LP units and Company FFO and realized gains per unit are reduced by preferred dividends of |
| (5) | Company FFO and realized gains per unit are calculated based on 927.3 million (2019 947.2 million) and 934.9 million (2019 955.0 million) units outstanding for the three and twelve months ended December 31, 2020, respectively. |
Operating Highlights
Our Core Office business generated CFFO of
Core Office leasing activity in the fourth quarter totaled 870,000 square feet, which were completed at rents 16% higher on average than expiring leases in the period. Occupancy in the portfolio decreased 90 basis points to 89.8%, with a remaining weighted average lease term of 8.2 years.
Our Core Retail business generated CFFO of
Our Core Retail operations leased approximately 6.3 million square feet over the past 12 months with comparable rent spreads of 1%. Our properties were 92.5% leased at December 31, 2020, a decrease of 90 basis points from the prior period. On a year-over-year basis, in-place rents were up 0.7%1.
Our LP Investments generated CFFO and realized gains of
______________________________
1 In-place rents reflect retail tenants <10K square feet.
| Three months ended Dec. 31, | Twelve months ended Dec. 31, | |||
| (US$ Millions) | 2020 | 2019 | 2020 | 2019 |
| Company FFO and realized gains: | ||||
| Core Office | $138 | $185 | $540 | $662 |
| Core Retail | $118 | $217 | $550 | $772 |
| LP Investments | $138 | $150 | $232 | $476 |
| Corporate | $(107) | $(93) | $(370) | $(398) |
| Company FFO and realized gains(1) | $287 | $459 | $952 | $1,512 |
(1) See "Basis of Presentation" and "Reconciliation of Non-IFRS Measures" below in this press release for the definitions and components.
Dispositions
In the fourth quarter, we completed
Dispositions completed in the fourth quarter include:
- Completed the sale of One London Wall Place in
London for$614 million , generating net proceeds of$262 million to BPY. - Completed the sale of Simply Self Storage for
$1.22 billion , generating net proceeds of$109 million to BPY. - Sold two
Brazil office assets, EZ Tower B and WT Morumbi, for an aggregate of$379 million , generating net proceeds of$50 million to BPY. - Sold assets in our triple net lease automotive dealership portfolio (CARS) for an aggregate of
$786 million , generating net proceeds of$52 million to BPY. - Entered into contract to sell our
Northeast U.S. life sciences office portfolio at a gross sales price of$3.5 billion , generating approximately$100 million in net proceeds to BPY.
Balance Sheet Update
To increase liquidity and extend the maturity of our debt, during the fourth quarter we executed the following financing transactions:
- Refinanced the Grace Building in
New York for$1.25 billion for a ten-year term at a fixed-rate, weighted average coupon of 2.69%. - Refinanced One New York Plaza in
New York for$835 million with a two-year (five years fully extended without credit tests) term at a floating interest rate of LIBOR +1.52%. - Refinanced or extended mortgage maturities for an average of three years on five Core Retail assets totaling approximately
$0.9 billion at a blended interest rate of 4.12%.
Ended the quarter with
Privatization Proposal from Brookfield Asset Management
On January 4, 2021, Brookfield Asset Management announced a proposal to acquire 100% of the limited partnership units of BPY that it does not already own (approximately 357.6 million Units) for a price of
Unit Repurchases
Utilizing our in-place normal course issuer bid (NCIB), we purchased 20,222,827 of BPY units in the fourth quarter of 2020 at an average price of
Distribution Declaration
The Board of Directors has declared a quarterly distribution on the partnerships LP units of
The quarterly distributions on the LP units are declared in
The Board of Directors has also declared quarterly distributions on the partnerships Class A Series 1, Series 2 and Series 3 preferred units of
Additional Information
Further details regarding the operations of the Partnership are set forth in regulatory filings. A copy of the filings may be obtained through the website of the SEC at www.sec.gov and on the Partnerships SEDAR profile at www.sedar.com. The Partnerships quarterly letter to unitholders and supplemental information package can be accessed before the market open on February 2, 2021 at bpy.brookfield.com. This additional information should be read in conjunction with this press release.
Basis of Presentation
This press release and accompanying financial information make reference to net operating income (NOI), same-property NOI, funds from operations (FFO), Company FFO and realized gains (Company FFO and realized gains) and net income attributable to unitholders.
Company FFO and realized gains, and net income attributable to unitholders are also presented on a per unit basis. NOI, same-property NOI, FFO, Company FFO and realized gains, and net income attributable to unitholders do not have any standardized meaning prescribed by International Financial Reporting Standards (IFRS) and therefore may not be comparable to similar measures presented by other companies. The Partnership uses NOI, same-property NOI, FFO, Company FFO and realized gains, and net income attributable to unitholders to assess its operating results. These measures should not be used as alternatives to Net Income and other operating measures determined in accordance with IFRS, but rather to provide supplemental insights into performance. Further, these measures do not represent liquidity measures or cash flow from operations and are not intended to be representative of the funds available for distribution to unitholders either in aggregate or on a per unit basis, where presented.
NOI is defined as revenues from commercial and hospitality operations of consolidated properties less direct commercial property and hospitality expenses. As NOI includes the revenues and expenses directly associated with owning and operating commercial property and hospitality assets, it provides a measure to evaluate the performance of the property operations.
Same-property NOI is a subset of NOI, which excludes NOI that is earned from assets acquired, disposed of or developed during the periods presented, or not of a recurring nature, and from opportunistic assets. Same-property NOI allows the Partnership to segregate the performance of leasing and operating initiatives on the portfolio from the impact to performance from investing activities and one-time items, which for the historical periods presented consist primarily of lease termination income.
FFO is defined as income, including equity accounted income, before realized gains (losses) from the sale of investment property (except gains (losses) related to properties developed for sale), fair value gains (losses) (including equity accounted fair value gains (losses)), depreciation and amortization of real estate assets, income tax expense (benefit), and less non-controlling interests of others in operating subsidiaries and properties. 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. The Partnerships definition of FFO includes all of the adjustments that are outlined in the National Association of Real Estate Investment Trusts (NAREIT) definition of FFO. In addition to the adjustments prescribed by NAREIT, the Partnership also makes 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 its 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 the Partnership was organized as a REIT that determined net income in accordance with generally accepted accounting principles in
Company FFO and realized gains is defined as FFO before the impact of depreciation and amortization of non-real estate assets, transaction costs, gains (losses) associated with non-investment properties, imputed interest on equity accounted investments, realized gains in the partnerships LP Investment segment and the partnerships share of BSREP III Company FFO and realized gains. Realized LP Investment gains represent income earned on investing activity when fund investments are realized, inclusive of associated change in carried interest to be due at a future date to the general partner of the relevant Brookfield Asset Management-sponsored funds. The partnership accounts for the investment in BSREP III as a financial asset and income (loss) of the fund is not presented in the partnerships results. Distributions from BSREP III, recorded as dividend income under IFRS, are removed from investment and other income for Company FFO and realized gains presentation.
Net income attributable to unitholders is defined as net income attributable to holders of general partnership units and limited partnership units of the Partnership, redeemable/exchangeable and special limited partnership units of Brookfield Property L.P., limited partnership units of Brookfield Office Properties Exchange LP and Class A shares of Brookfield Property REIT Inc. Net income attributable to unitholders is used by the Partnership to evaluate the performance of the Partnership as a whole as each of the unitholders participates in the economics of the Partnership equally. In calculating
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