Brookfield Asset Management : Property Partners - Presentation

Brookfield Property Partners

INVESTOR DAY

SEPTEMBER 24, 2020

Agenda

Overview and 12-Month Review

3

Brian Kingston, Chief Executive Officer

Retail Real Estate - State of the Industry	14
Meredith Darnall, SVP, Business Intelligence & Strategy
Financial Update	29
Bryan Davis, Chief Financial Officer

Q&A

Overview and 12-Month Review

BRIAN KINGSTON

CHIEF EXECUTIVE OFFICER

Global Owner, Developer and Operator of High-Quality Real Estate

Investment Portfolio Characteristics

CORE OFFICE

• 134 premier office properties
• 94 million square feet

CORE RETAIL

• 122 best-in-class retail properties
• Over 120 million square feet

LP INVESTMENTS

• High-qualityassets and portfolios with operational upside
• Sectors include office, retail and alternative asset classes

$86B1

Total Assets

$25B1

Unitholder Equity

$0.3325

Quarterly Distribution

Per Unit

11.6%2

Distribution Yield

1.	As of June 30, 2020 and on a proportionate basis.
4
2.	Based on BPY's closing price of $11.45 on the Nasdaq Stock Market, as of September 18, 2020.

Invested Capital by Sector

2020

	OFFICE
LP INVESTMENTS	43%

15%

100%

DIRECT

RETAIL

42%

5

State of the Market

Phases in 1 year...

February 2020

September 2020

September 2019
Business	Economic	June 2020	Recovery
as Usual	Shutdown

6

Phase I - Business as Usual

During Q4 2019 and Q1 2020, we completed

Office Leasing	• 5.3 million sq. feet at premiums to expiring rents
Retail Leasing	• 4.2 million sq. feet at premiums to expiring rents
Capital Recycling	• Realized $674 million of net proceeds from $1.3 billion
in asset sales at 7% premium to IFRS values
Development	• Reached practical completion on One Manhattan West &
100 Bishopsgate

7

Phase II - Economic Shutdown

Despite a shutdown of the global economy, our assets were resilient:

• Rent collection in office, logistics, multifamily remained above 90%
• Best-in-classoperating procedures developed for shutdowns & reopenings
• IFC Seoul Case Study: In Q2 2020...

90% 107,000sf

Occupancy New

Maintained Leasing

48,000sf	15
Lease	New Leases
Renewals	in Progress	IFC SEOUL
		SOUTH KOREA

8

Phase III - Reopening & Recovery

World-leadingsafety measures in place, including:

Bi-polar ionization air filtration

Temperature screening

Widely available PPE, hand sanitization, etc.

Enhanced surface cleaning

Allowed 85% of our US retail tenants to reopen by July 4th weekend

9

Trading Update

Unit performance over last 12 months is in line with peers

1 YR PRICE PERFORMANCE

100
90
80
70
60
50
40
30
9/30/2019	10/31/2019	11/30/2019	12/31/2019	1/31/2020	2/29/2020	3/31/2020	4/30/2020	5/31/2020	6/30/2020	7/31/2020	8/31/2020
				BPY	Shadow REIT

10

2020 Outlook

The worst is behind us

Capital Markets are accommodating and capital is plentiful Operating environment for our tenants is key challenge Urbanization is not slowing down

11

The Future of Cities

Population and number of urban clusters by size

	5000
						43 cities
(millions)	4000							66 cities
				33 cities
						48 cities		597 cities
Population	3000					467 cities
2000			243 cities			710 cities
						598 cities
				10 cities
Total				21 cities
				301 cities
	1000
	0
			1990	2018	2030

Megacities of 10 million or more

Large cities of 5 to 10 million

Medium-sized cities of 1 to 5 million

Cities of 500,000 to 1 million

Urban settlements with fewer than 500,000

Data source: United Nations, Department of Economic and Social Affairs, Population Division (2018a). World Urbanization Prospects 2018.	12

The Future of the Office

Working from home will become a supplement to, rather than a substitute for, the office

• Incubating a dynamic corporate culture
• Long-termemployee development and company growth
• Physical workspace drives employee recruitment, connectivity and productivity
• Increased workspace flexibility
• Demand for more personal space in the office

13

Retail Real Estate - State of the Industry

MEREDITH DARNALL

SVP, BUSINESS INTELLIGENCE AND STRATEGY

Retail is here to stay,

but the game has changed

Physical retail sales have been strong and growing

+2% annually, continuing to represent the bulk of retail spending

U.S. RETAIL SALES GROWTH BY CHANNEL

$3.04T	+3.4%		$3.36T
	$0.71T	+12%
Non-Store$0.51T
					Three-Year CAGR
	83%	Physical Retail as a %	79%
In-Store$2.53T	of Total U.S. Retail Sales	$2.65T	+2%

2016

2019

Source: Euromonitor, BPY BI	16

Sales rebounded quickly following 2020 economic shutdown

Physical stores still represent the vast majority of sales

YTD 2020 U.S. RETAIL SALES VOLUME BY CHANNEL

Total U.S.

$316B

$315B

$325B

$383B

$448B

$477B

Retail Sales

$315B

25%

25%

Digital Sales

22%

22%

22%

27%

% of Total

27%

Pandemic

Forced Store

Closures

Physical

Stores Reopen

Jan-20

Feb-20

Mar-20

Apr-20

May-20

Jun-20

Jul-20

In-Store

Non-Store

Source: U.S. Census Bureau: Total Retail Sales excluding Auto, Gas, and Food Service	17

"While traffic is down, customers are excited to be back in our stores, and their intent to purchase is high, which has led to meaningful improvements in conversion."

- RICHARD JOHNSON, CEO OF FOOT LOCKER

Healthy retailers continue to open new stores

Our top-quality locations have been gaining a disproportionate share

NATIONAL RETAILERS' PHYSICAL STORE OPENINGS

	JANUARY 2019-JULY 2020
Aerie					91
Carter's					56
Warby Parker					39
Tempur-Pedic					36
Amazon 4-Star					33
Untuckit					25
Hibbett Sports		12
Lululemon Athletica		12
Madewell		11
				Non-BPY		BPY

Source: Coresight Research Store Trackers, YTD comparing Jan 1- July 31, 2020 vs. Jan 1- July 31, 2019, BPY BI, Chain XY	19

Accelerating shift to leverage stores for one-channel capabilities

Store as a brand-awareness builder (or "billboard") that drives sales across channels (halo effect)

Customer	Point of
Acquisition	Sale

In-Store revenue

Store as brand engagement	Brand
for customers to touch, feel	Building
and try on product

Total

Store

Value

Returns

Center

Store as a returns center reduces shipping costs AND leads to incremental in-storesales

Store as a pickup center reduces cost of last mile of distribution AND leads to incremental in-storesales

Pickup Distribution

Location Center

Store as a distribution center reduces cost of last mile of distribution

20

Store fulfillment increases operational profitability

Lessens last-mile distribution and inventory management costs

OPTIMIZED FULFILLMENT JOURNEY MARGINS

VS. THE SAME JOURNEYS, NON-OPTIMIZED

17.1x

13.5x

6.7x

6.1x

2.3x

1.6x

Buy Online, Pick Up	Buy Online,	Curbside Pickup	Buy In-Store, Ship	Click & Collect	Buy In-Store, Pick
In-Store (BOPIS)	Return In-Store		from Warehouse		Up in Another Store
BOPIS is the fastest-
growing (+43% vs. last
year) and best- margin
one-channel distribution
capability for retailers.

Source: IHL Group, Adobe Analytics , WWD	21

When optimized, high-quality real estate wins

BPY owns 19% of high-quality retail property in the U.S.

U.S. GRADED RETAIL REAL ESTATE BY QUALITY

GLA PER GREEN STREET ADVISORS, 2020

36%			100%
High-Quality Retail Real Estate		BPY
					Owns 19% of All
					High-Quality Retail
64%					Real Estate GLA
Other Retail			All Other
Real Estate
Owners

Source: Green Street Advisors April 2020, "High-Quality" represents properties rated A- or better, "Mid-to-Low Quality" are rated B+ and lower by Green Street Advisors, Green
Street Advisors rates over 500M SF of U.S investment grade retail real estate; the remaining long tail of assets they do not evaluate are generally non-institutionally owned, smaller	23
independent properties.

Prime locations near highly engaged consumers

BPY'S SHOPPING CENTERS

PROXIMITY TO DENSITY OF ENGAGED SHOPPERS

Less Dense

More Dense

64% of the U.S. population lives within an hour of a BPY center

Source: BPY Business Intelligence & Strategy, ESRI, Claritas Prizm	24

Our strategy and commitment to retailers and

communities remains, with a twist

Evolving centers into hubs of daily life and commerce

Changing in concert with consumer and tenant needs

Shopping

YESTERDAY		TODAY
Shopping Centers as	Discovery &	The Center as a Hub	Community
Recreation	of Daily Life	Gathering
Shopping Destination
	Owner/Developer as
Owner/Developer as Landlord
	Lifestyle "Architect"

Fullfillment &	Food &
Logistics	Entertainment

26

We curate the best retailers to provide consumers the most compelling shopping, dining and entertainment experiences

FOOD & BEVERAGE

EDUTAINMENT/ ENTERTAINMENT

PERSONAL CARE

HEALTH & WELLNESS

DIGITAL NATIVES

BIG BOX

HOME FURNISHINGS

ELECTRONICS

GROCERY

27

Mixed-use developments can include residential, office and hospitality uses

MIZNER PARK, BOCA RATON, FL

STONEBRIAR CENTER, FRISCO, TX

OAKBROOK CENTER, OAK BROOK, IL

SHOPS AT MERRICK PARK, CORAL GABLES, FL

ALA MOANA, HONOLULU, HI	NATICK MALL, NATICK, MA
28

Financial Update

BRYAN DAVIS

CHIEF FINANCIAL OFFICER

Irreplaceable core assets

Core Office

$13.5B Equity

Core Retail

$13.0B Equity

Global business with 134 premier office properties with value concentrated in our top 15 complexes

• $21B VALUE | $10B EQUITY
• 94% OCCUPIED | 10-YR LEASE LIFE

122 best-in-class retail properties in the United States with value concentrated in our top 25 performing malls

• $15B VALUE | $10B EQUITY
• 97% OCCUPIED | >$1,000 SALES PSF

30

Core operating metrics are extremely stable

Supports cash flows and values through cycles

OCCUPANCY	AVERAGE IN-PLACE RENT1
100%	$80

90%

$60

80%

$40

70%											$20
2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019

1. Reflects retail tenants <10K square feet	31

Unique investment opportunities

LP Investments

$4.8B Equity

Corporate

Access to top-performing real estate funds that are diversified by geography and sector

• TRACKING NET PROJECTED RETURNS OF 15% IRR | 1.8X MOC

Conservative corporate level capitalization on our

invested capital

• $28B OF PERPETUAL CAPITAL | $3B OF CORPORATE DEBT

32

Real estate is cyclical

Current negative sentiment will shift to positive and we are well positioned

TRADING PRICE - CAPITALIZATION RATE	UNAFFECTED NAV1 - CAPITALIZATION RATE
					Retail Peer
			10.1%
			BPY
			7.9%
	Office Peer
						Retail Peer
	6.8%
									BPY
										6.5%
										5.9%
								Office Peer
								4.7%

1. Based on Q4 2019 NAV from covering analyst	33

Progress on ESG initiatives across all investments

Issued $1.2B in green bonds and preferred units since 2019 Supported communities impacted by the pandemic

Achieved sustainability designation in 99% of our core office portfolio

United Nations-supported Principles for Responsible Investing

Taskforce on Climate-related Financial Disclosure

34

Our focus remains the same in core

85% of our balance sheet is invested in these businesses

Target stabilized occupancy across portfolio

Recycle capital from mature properties where value is maximized

Repay portion of debt in core retail with proceeds from asset sales Identify and execute redevelopment opportunities on select properties

Complete our active development pipeline on time and budget

35

Active development pipeline

Significant progress advancing our development pipeline

income	$400				Two Manhattan West
			Bay Adelaide North
net operating			Wood Wharf	755 Figueroa
	One Manhattan West	Office
	100 Bishopsgate
$200
stabilized
Cumulative	$0
2019	2020	2021	2022	2023

Estimated construction completion date

36

Our focus remains the same with our LP capital

15% of our balance sheet is invested in real estate funds

Monitoring performance of our invested capital

Matching future capital calls with capital returned from earlier generation fund investments

37

Significant liquidity is coming from our LP investments

We plan to re-invest the capital into new funds or our core businesses

				NEXT 5-YEARS
	CAPITAL	LIQUIDITY	NET PROFIT	REMAINING
($ Millions)	INVESTED	GENERATED	REALIZED	CAPITAL
BSREP I	$	550	$	1,000	$	450	$ -
BSREP II		2,650		3,850		1,550	350
BSREP III		650		1,250		700	150
Other Investments		900		1,150		250	-
Net cash (outflow) inflow	$	4,750	$	7,250	$	2,950	$ 500

1.	LP investments in BSREP I, II and III including co-investments.
38
2.	LP Investment in a retail portfolio in Brazil, real estate finance fund series, and multifamily fund series.

BPY is a yield vehicle

The return on BPY investment includes a current yield supported by stable cash flow from a diversified portfolio

Cumulative Earnings					$7,400
Cumulative Distributions
					$5,180
2014	2015	2016	2017	2018	2019

39

A highly compelling investment opportunity

We see tremendous value in BPY units today above the dislocated trading price

NAV = $27.011

~$19.50 analysts consensus NAV

~$11 current unit price

$12.90

$4.80

$13.40

($4.10)

Corporate Core Office LP Investments Core Retail

1. Includes the impact of the conversion of preferred shares.	40

Q&A

Important Cautionary Notes

All amounts are in U.S. dollars unless otherwise specified. Unless otherwise indicated, the statistical and financial data in this document is presented as of June 30, 2020.

This presentation contains "forward-looking information" within the meaning of applicable securities laws and regulations. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding our operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods, and include words such as "expects," "anticipates," "plans", "believes," "estimates", "seeks," "intends," "targets," "projects," "forecasts," "likely," or negative versions thereof and other similar expressions, or future or conditional verbs such as "may," "will," "should," "would" and "could".

Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.

Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: risks incidental to the ownership and operation of real estate properties including local real estate conditions; the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business, including as a result of the recent global economic shutdown; the ability to enter into new leases or renew leases on favorable terms; business competition; dependence on tenants' financial condition; the use of debt to finance our business; the behavior of financial markets, including fluctuations in interest and foreign exchange rates;

uncertainties of real estate development or redevelopment; global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; risks relating to our insurance coverage; the possible impact of international conflicts and other developments including terrorist acts; potential environmental liabilities; changes in tax laws and other tax related risks; dependence on management personnel; illiquidity of investments; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits therefrom; operational and reputational risks; catastrophic events, such as earthquakes, hurricanes or pandemics/epidemics; and other risks and factors detailed from time to time in our documents filed with the securities regulators in Canada and the United States. In addition, our future results may be impacted by risks associated with the global economic shutdown caused by a novel strain of coronavirus, COVID-19, and the related global reduction in commerce and travel and substantial volatility in stock markets worldwide, which may result in a decrease of cash flows and impairment losses and/or revaluations on our investments and real estate properties, and we may be unable to achieve our expected returns.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements or information, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise.

In considering investment performance information contained herein, prospective investors should bear in mind that past performance is not necessarily indicative of future results and there can be no assurance that comparable results will be achieved, that an investment will be similar to the historic investments presented herein (because of economic conditions, the availability of investment opportunities or otherwise), that targeted returns, diversification or asset allocations will be met or that an investment strategy or investment objectives will be achieved.

This presentation includes estimates regarding market and industry data that is prepared based on its management's knowledge and experience in the markets in which we operate, together with information obtained from various sources, including publicly available information and industry reports and publications. While we believe such information is reliable, we cannot guarantee the accuracy or completeness of this information and we have not independently verified any third-party information.

This presentation makes reference to net operating income ("NOI"), funds from operations ("FFO"), and Company funds from operations ("CFFO"). NOI, FFO and CFFO 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, FFO and CFFO 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.

For further reference, specific definitions of NOI, FFO, and CFFO are available in the Partnership's press releases announcing its financial results each quarter.

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Brookfield Property Partners

INVESTOR DAY

SEPTEMBER 24, 2020