{"id":1030,"date":"2020-12-13T07:10:15","date_gmt":"2020-12-13T13:10:15","guid":{"rendered":"https:\/\/1reason.com\/re\/brookfield-property-partners-reports-third-quarter-2020-results\/1030\/"},"modified":"2020-12-14T01:10:15","modified_gmt":"2020-12-14T07:10:15","slug":"brookfield-property-partners-reports-third-quarter-2020-results","status":"publish","type":"post","link":"https:\/\/1reason.com\/re\/brookfield-property-partners-reports-third-quarter-2020-results\/1030\/","title":{"rendered":"Brookfield Property Partners Reports Third Quarter 2020 Results"},"content":{"rendered":"
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\u201cWe saw consistent improvement in our operations over the course of the third quarter and, while there may be temporary setbacks as different regions reach different stages of recovery, we are confident that the worst of the economic shutdown is now behind us,\u201d said Brian Kingston, Chief Executive Officer. “Our staff has done an amazing job preparing our buildings for safe re-opening and each day it is gratifying to see more office workers, retailers, customers and visitors returning to our properties around the globe.” <\/p>\n

Financial Results<\/strong><\/p>\n

Company FFO (CFFO) was $161 million for the quarter ended September 30, 2020, compared to $324 million in the prior-year period. CFFO was impacted this quarter by residual effects of the global economic shutdown earlier in the year. In the prior-year period, CFFO also benefited from the recognition of $41 million in transaction income.<\/p>\n

Net income for the quarter ended September 30, 2020 was a loss of $135 million ($(0.24) per LP unit) versus a gain of $870 million ($0.46 per LP unit) for the same period in 2019. The decrease in net income over the prior year period is primarily attributable to a non-cash and unrealized reduction of asset values of certain assets within the portfolio.<\/p>\n\n\n\n\n\n\n\n\n
\nThree months ended Sep. 30,<\/em><\/td>\nNine months ended Sep. 30,<\/em><\/td>\n<\/tr>\n
(US$ Millions, except per unit amounts)<\/td>\n2020<\/strong><\/td>\n2019<\/td>\n2020<\/strong><\/td>\n2019<\/td>\n<\/tr>\n
Net income(1)<\/sup><\/td>\n$<\/strong><\/td>\n(135<\/strong><\/td>\n)<\/strong><\/td>\n\n$<\/td>\n870<\/td>\n\n$<\/strong><\/td>\n(2,020<\/strong><\/td>\n)<\/strong><\/td>\n\n$<\/td>\n1,606<\/td>\n<\/tr>\n
Company FFO and realized gains(2)<\/sup><\/td>\n$<\/strong><\/td>\n164<\/strong><\/td>\n\n\n$<\/td>\n324<\/td>\n\n$<\/strong><\/td>\n665<\/strong><\/td>\n\n\n$<\/td>\n1,053<\/td>\n<\/tr>\n
Company FFO(2)<\/sup><\/td>\n$<\/strong><\/td>\n161<\/strong><\/td>\n\n\n$<\/td>\n324<\/td>\n\n$<\/strong><\/td>\n648<\/strong><\/td>\n\n\n$<\/td>\n966<\/td>\n<\/tr>\n
Net income per LP unit(3)(4)<\/sup><\/td>\n$<\/strong><\/td>\n(0.24<\/strong><\/td>\n)<\/strong><\/td>\n\n$<\/td>\n0.46<\/td>\n\n$<\/strong><\/td>\n(1.98<\/strong><\/td>\n)<\/strong><\/td>\n\n$<\/td>\n0.90<\/td>\n<\/tr>\n
Company FFO and realized gains per unit(4)(5)<\/sup><\/td>\n$<\/strong><\/td>\n0.16<\/strong><\/td>\n\n\n$<\/td>\n0.34<\/td>\n\n$<\/strong><\/td>\n0.68<\/strong><\/td>\n\n\n$<\/td>\n1.09<\/td>\n<\/tr>\n<\/table>\n

<\/p>\n\n\n\n\n\n\n
(1)<\/td>\nConsolidated basis \u2013 includes amounts attributable to non-controlling interests.<\/td>\n<\/tr>\n
(2)<\/td>\nSee “Basis of Presentation” and \u201cReconciliation of Non-IFRS Measures\u201d in this press release for the definition and components.<\/td>\n<\/tr>\n
(3)<\/td>\nRepresents 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 $25.70 without an add-back to earnings of the associated carry on the preferred shares.<\/td>\n<\/tr>\n
(4)<\/td>\nNet income attributable to holders of LP units and Company FFO and realized gains per unit are reduced by preferred dividends of $11 million (2019 \u2013 $5 million) and $31 million (2019 \u2013 $8 million) for the three and nine months ended September 30, 2020, respectively, in determining per unit amounts.<\/td>\n<\/tr>\n
(5)<\/td>\nCompany FFO and realized gains per unit are calculated based on 933.5 million (2019 \u2013 950.1 million) and 937.5 million (2019 \u2013 957.6 million) units outstanding for the three and nine months ended September 30, 2020, respectively.<\/td>\n<\/tr>\n<\/table>\n


Operating Highlights<\/strong><\/p>\n

Our Core Office business generated CFFO of $141 million for the quarter ended September 30, 2020 compared to $137 million on a comparable basis in the same period in 2019, and $150 million in total when including the $13 million performance-based fee. Results this quarter were also impacted by reduced contributions from our parking and retail operations, offset by same-store NOI growth in certain of our markets and $18 million in contributions from condominium sales in London.<\/p>\n

Core Office leasing activity in the third quarter totaled 644,000 square feet, which were completed at rents 13% higher on average than expiring leases in the period. Occupancy in the portfolio decreased 160 basis points to 90.7%, with a remaining weighted average lease term of 8.3 years.<\/p>\n

Our Core Retail business generated CFFO of $97 million for the quarter ended September 30, 2020 compared to $173 million on a comparable basis in 2019, and $201 million in total when including the $28 million in transaction income. The current quarter results continue to be impacted by the global economic slowdown which caused a decline in mall revenues, fee income, and an increase in credit loss reserves. Additionally, operating expenses resumed at near normalized levels as all of our centers reopened during the quarter and we are not yet operating at 100% capacity.<\/p>\n

Our Core Retail operations leased approximately 6.5 million square feet over the past 12 months with comparable rent spreads of 5%. Our properties were 93.4% leased at September 30, 2020, a decrease of 1.6% from the prior year. On a year-over-year basis, in-place rents were up 1.4%1<\/sup>.<\/p>\n

Our LP Investments generated CFFO and realized gains of $26 million for the quarter ended September 30, 2020, compared to earnings of $74 million in the comparable period in 2019. Results in the current quarter were negatively impacted by a year-over-year decrease in earnings from our Hospitality investments of $38 million due to hotel closures and travel restrictions, as well as a decrease in contributions from our Multifamily business where we sold properties last year.<\/p>\n

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1<\/sup> In-place rents reflect retail tenants <10K square feet<\/p>\n\n\n\n\n\n\n\n\n\n\n
\n\n<\/tr>\n
\nThree months ended Sep. 30,<\/em><\/td>\nNine months ended Sep. 30,<\/em><\/td>\n<\/tr>\n
(US$ Millions)<\/td>\n2020<\/strong><\/td>\n2019<\/td>\n2020<\/strong><\/td>\n2019<\/td>\n<\/tr>\n
Company FFO and realized gains:<\/td>\n\n\n\n<\/tr>\n
Core Office<\/td>\n$<\/strong><\/td>\n141<\/strong><\/td>\n\n\n$<\/td>\n150<\/td>\n\n\n$<\/strong><\/td>\n402<\/strong><\/td>\n\n\n$<\/td>\n477<\/td>\n<\/tr>\n
Core Retail<\/td>\n$<\/strong><\/td>\n97<\/strong><\/td>\n\n\n$<\/td>\n201<\/td>\n\n\n$<\/strong><\/td>\n432<\/strong><\/td>\n\n\n$<\/td>\n555<\/td>\n<\/tr>\n
LP Investments<\/td>\n$<\/strong><\/td>\n26<\/strong><\/td>\n\n\n$<\/td>\n74<\/td>\n\n\n$<\/strong><\/td>\n94<\/strong><\/td>\n\n\n$<\/td>\n326<\/td>\n<\/tr>\n
Corporate<\/td>\n$<\/strong><\/td>\n(100<\/strong><\/td>\n)<\/strong><\/td>\n\n$<\/td>\n(101<\/td>\n)<\/td>\n\n$<\/strong><\/td>\n(263<\/strong><\/td>\n)<\/strong><\/td>\n\n$<\/td>\n(305<\/td>\n)<\/td>\n<\/tr>\n
Company FFO and realized gains(1)<\/sup><\/td>\n$<\/strong><\/td>\n164<\/strong><\/td>\n\n\n$<\/td>\n324<\/td>\n\n\n$<\/strong><\/td>\n665<\/strong><\/td>\n\n\n$<\/td>\n1,053<\/td>\n<\/tr>\n<\/table>\n

<\/p>\n\n\n
(1)<\/td>\nSee “Basis of Presentation” and “Reconciliation of Non-IFRS Measures” below in this press release for the definitions and components.<\/td>\n<\/tr>\n<\/table>\n


Dispositions<\/strong><\/p>\n

In the third quarter, we completed $86 million of gross asset dispositions at our share, generating approximately $63 million in net proceeds to BPY.<\/p>\n

Subsequent to quarter-end, we entered into sales contracts on two transactions at higher values than our IFRS carrying values. Completion of these shortly will generate approximately $235 million of net proceeds to BPY:<\/p>\n