Net Income of
Company FFO of
Quarterly Distribution Raised by 5.4%
All dollar references are in
“We achieved meaningful earnings growth, enhanced the flexibility of our balance sheet, made strategic acquisitions in several new real estate sectors, and continued to expand our global investment and operating footprint,” said Brian Kingston, chief executive officer. “We are positioned for further growth in 2017 and, to reflect this, our Board of Directors approved a 5.4% increase to our annual distribution.”
Financial Results
| Three months ended December 31, |
Year ended December 31, |
|||||||||||||||
| (US$ Millions, except per unit amounts) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Net income(1) | $ | 92 | $ | 1,157 | $ | 2,717 | $ | 3,766 | ||||||||
| Company FFO(2) | $ | 268 | $ | 242 | $ | 967 | $ | 839 | ||||||||
| Net income per LP unit(3) | $ | (0.08) | $ | 1.10 | $ | 2.30 | $ | 3.72 | ||||||||
| Company FFO per unit(4) | $ | 0.38 | $ | 0.34 | $ | 1.36 | $ | 1.18 | ||||||||
(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.
(3) Represents basic net income attributable to holders of LP units. IFRS requires the inclusion of preferred units that are mandatorily convertible into LP units at a price of
(4) Company FFO per unit is calculated based on 710.0 million units and 710.8 million units outstanding for the three and twelve months ended December 31, 2016 (2015 – 712.0 million and 712.6 million), respectively. See reconciliation of basic net income in the "Reconciliation of Non-IFRS Measures" section in this press release.
Net income for the quarter ended December 31, 2016 was
Company FFO was
Operating Highlights
Our core office operations generated Company FFO of
Occupancy in our core office portfolio finished the quarter at 92.3% on 2.9 million square feet of total leasing, bringing the year-end total to 8.2 million square feet. New leases were signed at average rents approximately 14% higher than expiring leases in the quarter. We also continued to advance our development pre-leasing with a 176,000-square-foot lease with the National Hockey League (NHL) at One Manhattan West, bringing that project to 37% pre-leased. In addition, we secured an anchor tenant at Wynyard Place in
Our core retail operations generated Company FFO of
Core same-property retail occupancy finished the fourth quarter of 2016 at 96.5%, with average suite-to-suite rent spreads of 20% for leases commencing in 2016 and 2017. Tenant sales (excluding anchors) increased by 0.9% on a trailing 12-month basis to
Our opportunistic investments generated Company FFO of
| Three months ended December 31, | Year ended December 31, | |||||||||||
| (US$ Millions) | 2016 | 2015 | 2016 | 2015 | ||||||||
| Company FFO by segment | ||||||||||||
| Core Office | $ | 182 | $ | 160 | $ | 630 | $ | 612 | ||||
| Core Retail | 132 | 131 | 459 | 452 | ||||||||
| Opportunistic | 68 | 68 | 341 | 245 | ||||||||
| Corporate | (114) | (117) | (463) | (470) | ||||||||
| Company FFO(1) | $ | 268 | $ | 242 | $ | 967 | $ | 839 | ||||
(1) See "Basis of Presentation" and "Reconciliation of Non-IFRS Measures" below in this press release for the definitions and components.
Strategic Initiatives
Dispositions
During the fourth quarter, we advanced a number of our capital recycling initiatives:
- Contributed interests in eight
U.S. office and multifamily assets for$337 million of cash proceeds and an 18.7% interest in a new,Brookfield -sponsored open-ended core fund. - Completed the sale of the Moor Place office building in
London for £271 million, generating net proceeds of approximately £130 million. - Sold a further 16% interest in One New York Plaza, generating net proceeds of
$75 million . - Sold two Australian office assets for
A$143 million , generating net proceeds ofA$82 million . - Sold 13 U.S. suburban office assets for
$173 million , generating net proceeds of$29 million . - Sold seven
U.S. multifamily assets for approximately$314 million ($68 million at BPY’s share). - Sold the Ritz-Carlton San Francisco hotel for
$280 million ($84 million at BPY’s share). - Sold interests in two retail malls for
$57 million ($23 million at BPY’s share). - Sold eight European logistics assets for €153 million (€55 million at BPY’s share).
- Subsequent to quarter-end, completed the 50:50 joint venture on the office development at Principal Place,
London , raising net proceeds of approximately £243 million.
New Investments
The proceeds raised from asset sales were used to invest in our active development pipeline and to fund new acquisitions, including:
- A premier, mixed-use project in
Seoul, South Korea consisting of three office buildings, a retail mall and a five-star hotel for$2.1 billion ($550 million at BPY’s share). - As part of a debt-to-equity conversion, we acquired the CityPoint Tower office building in
London for £607 million (£186 million at BPY’s share). - Three multifamily properties in the
U.S. for$157 million ($77 million at BPY’s share). - 14 self-storage assets in the
U.S. for$114 million ($29 million at BPY’s share). - The Marriott Bethesda North hotel for
$85 million ($21 million at BPY’s share). - Five triple net leased assets for
$45 million ($12 million at BPY’s share). - The Shops at Somerset Square in
Glastonbury, CT for$42 million ($21 million at BPY’s share). - Two student housing assets in the
UK for £72 million (£18 million at BPY’s share). - 605 N. Michigan Avenue for
$140 million ($40 million at BPY’s share). - A further 25% interest in Riverchase Galleria for
$73 million ($21 million at BPY’s share). - Five Macy’s stores for approximately
$86 million ($26 million at BPY’s share). - Subsequent to quarter-end, an agreement to invest up to
$400 million ($100 million at BPY’s share) of convertible preferred equity in a non-traded hospitality REIT which owns 141 hotels encompassing 17,200 keys throughout theU.S. - Subsequent to quarter-end, a proposal to acquire the approximately 16.9% interest in our Canadian REIT subsidiary Brookfield Canada Office Properties (“BOX”) that we or our affiliates do not own (approximately 15.8 million units) for
C$30.10 cash per unit. A special committee of the Board of Trustees of BOX is currently evaluating the offer.
Balance Sheet Update
To increase our balance sheet flexibility by increasing liquidity and extending the maturity of our debt, we executed on the following during the quarter:
- Refinanced a total of approximately
$1 billion of property-level loans on sevenU.S. core office buildings. - Refinanced the Canary Wharf Group retail loan facility for £700M.
- Received AED 1.55 billion of construction financing for ICD Brookfield Place Dubai.
- Subsequent to quarter-end, received a special dividend from GGP of
$66 million .
Unit Repurchase Program
Utilizing the in-place Normal Course Issuer Bid, the Partnership purchased 1,600,753 of its Limited Partnership units in the fourth quarter of 2016 at an average price of
Distribution Increase and Declaration
The Board of Directors has announced an increase in the company’s quarterly distribution from
Registered unitholders residing in
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