“We continued with another quarter of FFO growth, fueled largely by organic drivers within our business,” said Brian Kingston, chief executive officer. “We also continued to reallocate capital from mature, stable assets into higher returning investment opportunities.”
Financial Results
| Three months ended June 30, |
Six months ended June 30, |
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| (US$ Millions, except per unit amounts) | 2017 | 2016 | 2017 | 2016 | |||||||
| Net income(1) | $ | 664 | $ | 569 | $ | 851 | $ | 1,009 | |||
| Company FFO(2) | $ | 258 | $ | 250 | $ | 495 | $ | 467 | |||
| Net income per LP unit(3) | $ | 0.31 | $ | 0.45 | $ | 0.09 | $ | 0.77 | |||
| Company FFO per unit(4) | $ | 0.37 | $ | 0.35 | $ | 0.70 | $ | 0.66 | |||
| (1) Consolidated basis – includes amounts attributable to non-controlling interests. |
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| (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 |
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| (4) Company FFO per unit is calculated based on 704.6 million (2016 – 711.2 million) and 705.7 million (2016 – 711.2 million) units outstanding for the three and six months ended June 30, 2017, 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 June 30, 2017 was
Company FFO was
Operating Highlights
Our core office operations generated Company FFO of
Occupancy in our core office portfolio finished the quarter at 91.9% – an increase of 40 basis points over the prior quarter – on 1.8 million square feet of total leasing. New leases were signed at average rents approximately 42% higher than expiring leases in the quarter.
Our core retail operations generated Company FFO of
Core same-property retail occupancy finished the second quarter of 2017 at 94.6%, with average suite-to-suite rent spreads of 20% for leases commencing in the trailing 12 months. Tenant sales (excluding anchors) increased by 0.8% on a trailing 12-month basis to
Our opportunistic segment generated Company FFO of
| Three months ended June 30, |
Six months ended June 30, |
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| (US$ Millions) | 2017 | 2016 | 2017 | 2016 | ||||||||
| Company FFO by segment | ||||||||||||
| Core Office | $ | 162 | $ | 150 | $ | 318 | $ | 299 | ||||
| Core Retail | 119 | 108 | 229 | 219 | ||||||||
| Opportunistic | 96 | 110 | 179 | 183 | ||||||||
| Corporate | (119 | ) | (118 | ) | (231 | ) | (234 | ) | ||||
| Company FFO(1) | $ | 258 | $ | 250 | $ | 495 | $ | 467 | ||||
| (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 and subsequent to the second quarter, we continued to advance our capital recycling initiatives via the dispositions of:
- Our 51% interest in 245 Park Avenue in
New York City for$1.1 billion , generating net proceeds of approximately$689 million . - 20 Canada Square in
London for £410 million, generating net proceeds of approximately$125 million . - Nine triple net lease properties in the
U.S. , generating net proceeds of$58 million ($17 million at BPY’s share). - Red Cliffs Mall in
St. George, UT , generating net proceeds of$39 million ($11 million at BPY’s share).
New Investments
The proceeds raised from asset sales were used to invest in our active development pipeline and to fund new acquisitions, including the:
- Redemption of the remaining 16.7% of Brookfield Canada Office Properties that BPY did not own for approximately
C$516 million . - Acquisition of the remaining 19.5% public float of Brookfield Prime Property Fund (
Australia ) that BPY did not own for approximatelyA$90 million . - Acquisition of an interest in the 1.8-million-square-foot, mixed-use California Market Center in Los Angeles’ Fashion District for
$437 million ($114 million at BPY’s share). - Acquisition of two multifamily properties in
Orange County, CA and MetroWashington, DC for$168 million ($110 million at BPY’s share). - Acquisition of interests in three opportunistic
U.S. malls for$152 million ($77 million at BPY’s share). - Acquisition of partner’s 50% interest in Neshaminy Mall in
Bensalem, PA for$34 million ($10 million at BPY’s share). - Subsequent to quarter-end, the acquisition of interests in 13 Sears parcels in the
U.S. earmarked for redevelopment and repositioning for$248 million ($74 million at BPY’s share).
Balance Sheet Update
We also executed on the following transactions to increase our balance sheet flexibility by increasing liquidity and extending the maturity of our debt:
- We refinanced a portfolio of
U.S. triple net lease assets for$970 million for a term of six years at an average coupon rate of 4.03%, lowering the cost of debt on these assets by 150 basis points. - Our
U.K. hospitality business raised £830 million in three tranches of notes with a blended coupon rate of 4.36% for an average term of six years. A portion of the proceeds were used to repay £560 million of 7.00% notes. Net proceeds to BPY were$93 million . - We refinanced a portfolio of our
Manhattan multifamily properties with a new, seven-year$714 million loan facility at a floating interest rate of L+1.94%. Net proceeds to BPY were$42 million .
Unit Repurchase Program
Utilizing the in-place Normal Course Issuer Bid, the Partnership purchased 493,622 of its Limited Partnership units in the second quarter of 2017 at an average price of
Distribution Declaration
The Board of Directors has declared the quarterly distribution of
The quarterly distributions are declared in
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 Partnership’s SEDAR profile at www.
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