Brookfield Office Properties Inc. · TSX:BPO.PR.A
Brookfield Office Properties — Merger or Acquisition (February 2014)
35 slides from Brookfield Office Properties's merger presentation, Feb 19, 2014
Slide 1: Brookfield Property Partners L.P. Corporate Profile
BROOKFIELD PROPERTY PARTNERS L.P. CORPORATE PROFILE 2014 JANUARY
Slide 2: Overview of Brookfield Property Partners
Diversified, global owner and operator of high-quality real estate assets KEY METRICS AT DECEMBER 31, 2013 Market Symbol $0.25 per unit ~5% yield Quarterly Distribution General Partner & Manager Brookfield Asset Management $25.231 INVESTMENT CHARACTERISTICS Total assets: $36 Billion1 Portfolio size:
Slide 3: Update on BPO Privatization
Update on BPO Privatization 3 On September 30, 2013, BPY announced its intention to make an offer to acquire “any or all” of the common shares of Brookfield Office Properties Inc. (“BPO”) that it does not currently own An Independent Committee of the board of directors of BPO was formed and appointe
Slide 4: BPY's Mission
Our mission is to be the leading globally-diversified owner and operator of high-quality real estate assets We seek to earn leveraged, after-tax returns of 12% to 15% on our invested capital Returns will be generated from a combination of cashflow and capital appreciation From time to time, capital
Slide 5: Our Value Proposition
Our Value Proposition 2013 Distributions Same Store NOI Growth Re-development/ Development Reducing Discount to NAV 2018 5 BPY offers investors the opportunity to earn a ~20% per annum return over the next five years with upside from new investments that Brookfield originates Organic growth of ~20%
Slide 6: Our Value Creation Model
We acquire high-quality assets on an opportunistic and/or core-plus return basis, then Utilize our operating platforms to add value through pro-active management, then Recycle capital to harvest value Our Value Creation Model Opportunistic Return Investments Typical Returns 15% + Acquire Actively ma
Slide 7: Generating Premium Returns Through Capital Allocation
Generating Premium Returns Through Capital Allocation 7 Source: Green Street, PMA, IPD, Bloomberg, Brookfield Property valuations fluctuate considerably based on market sentiment and other factors We leverage Brookfield’s global real estate platform to allocate capital to investments in sectors and
Slide 8: Strong Track Record of Recycling Capital
Strong Track Record of Recycling Capital 8 # of Asset Dispositions 29 33 23 52 59 Over the past five years, Brookfield has sold $4.5 billion of assets, generating approximately $100 million of gain over its IFRS carrying values
Slide 9: Global Portfolio of Premier Properties
NORTH AMERICA $28.7B Assets2 SOUTH AMERICA $1.0B Assets2 EUROPE $2.9B Assets2 AUSTRALIA $3.2B Assets2 Global Portfolio of Premier Properties1 9 All information is based upon BPY’s portfolio as of December 31, 2013 Based on proportionate ownership. OFFICE 163 properties, 93 MSF and 19 MSF development
Slide 10: Office
Office Our office holdings primarily consist of our interest in BPO as well as directly-owned assets; we develop, own and manage premier assets in North America, Australia and Europe We also own an approximately 22% interest in Canary Wharf Group plc (“Canary Wharf”), which includes 18 properties an
Slide 11: Retail
Retail Our retail platform consists of our fully-diluted 32% interest General Growth Properties, Inc. (“GGP”) and 39% interest in Rouse Properties, Inc. (“Rouse”), which together own, manage, lease and redevelop 154 high-quality regional malls in the United States with average sales of $522 psf Plat
Slide 12: Diversity Across Geographies and Property Sectors
Diversity Across Geographies and Property Sectors By Sector By Geography By Type of Investment Total Invested Capital of $15.9 billion1 12 (1) Invested capital represents equity attributable to BPY limited partnership units, and REUs (defined as Redeemable/Exchangeable and special limited partnershi
Slide 13: Industrial
Industrial KEY FINANCIAL METRICS PROFILE A high quality portfolio of logistics assets operating in North America and Europe $ millions, unless otherwise noted Proportionate basis, unless otherwise noted As at and for the year ending December 31, 2013 NOI $31 FFO $7 Total Assets $893 Equity Attributa
Slide 14: Multi-family and Other
Multi-family and Other KEY FINANCIAL METRICS PROFILE A diversified portfolio of high-quality assets in the multi-family and hospitality sectors $ millions, unless otherwise noted Proportionate basis, unless otherwise noted As at and for the year ending December 31, 2013 NOI $108 FFO $43 Total Assets
Slide 15: Our Development Strategy
Target selected development projects that offer attractive risk-adjusted returns Office: create “best-in-class” new stock in premium locations Retail: Convert large-box space into in-line retail; select expansion and renovation to strengthen mall within its market Industrial: leverage land bank with
Slide 16: Regional market outlook
BRAZIL Slowing growth and stubbornly high inflation Opportunities emerging as foreign capital leaves Growth of middle-class fuelling demand UNITED STATES Economic growth accelerating Real estate fundamentals improving at different paces Decreasing distress but still recapitalization opportunities CA
Slide 17: Our Financing Strategy
Our Financing Strategy 17 Finance predominantly with non-recourse debt Utilize a modest amount of corporate debt and preferred stock Raise debt financing in local currency with primarily fixed interest rates Seek to ladder maturities to reduce refinancing risk Target a pay-out ratio of 80% of FFO Re
Slide 18: The BPY Value Proposition
The BPY Value Proposition
Slide 19: Same-Store NOI Growth
Same-Store NOI Growth Office Lease Spreads Approximately 11 MSF of expiring space on a proportionate basis between 2014-2019 Average ~$3 per square foot initial lease spreads between 2014-2019 3.3% annual gross rent escalation on ~76% of leases Retail Lease Spreads Approximately 13 MSF of expiring s
Slide 20: Development and Re-Development Potential
Development and Re-Development Potential BPY has identified 90 million square feet of near-term development and re-development investments, representing $4.0 billion at BPY’s share of cost Expected to generate 8-11% yields over the next five years Existing Development and Re-Development Opportunitie
Slide 21: Reducing BPY's Trading Discount
Discount to NAV (%) Dividend Yield (%) Significant upside from narrowing BPY’s discount to intrinsic value as well as to peers 180 bps differential 870 bps differential 1 2 2 Reducing BPY’s Trading Discount 21 (1) Based on Pro Forma IFRS value per unit of $24.17 for BPY, as of December 31, 2013 (2)
Slide 22: Financial Overview
Financial Overview
Slide 23: BPY Pro Forma Income Statement by Segment
23 BPY Pro Forma Income Statement by Segment1 (1) Pro forma for BPY’s additional $1.4 billion investment in GGP announced Nov 1, 2013. (2) Proportionate represents interests attributable to BPY based upon its ownership of underlying assets. Proportionate adjustments are made to allocate most of the
Slide 24: BPY Pro Forma Balance Sheet by Segment
24 BPY Pro Forma Balance Sheet by Segment1 (1) Pro forma for BPY’s additional $1.4 billion investment in GGP announced Nov 1, 2013 (2) Proportionate represents interests attributable to LP Units and REUs (defined as Redeemable/Exchangeable and special partnership units of the operating partnership).
Slide 25: BPY Proportionate Debt Maturity Schedule
25 BPY Proportionate Debt Maturity Schedule Approximately 85% of BPY’s debt is non-recourse Currently 81% of debt is fixed rate debt, inclusive of interest rate swaps
Slide 26: Structure and Governance
Structure and Governance
Slide 27: Relationship with Brookfield
Relationship with Brookfield Largest investor with an effective economic interest of approximately 89% (~$12B equity investment) General partner BPY has a board of seven directors, the majority of whom are independent from Brookfield Relationship Agreement BPY is the primary entity through which Bro
Slide 28: Strong Alignment with Brookfield
Base management fee sized to cover manager’s overhead Equity enhancement and incentive distribution fees reward increase in market capitalization and distribution increases With an ~$12B equity investment, Brookfield’s greatest value driver is to increase returns on BPY’s equity Component Basis Init
Slide 29: Attractive Structure
Attractive Structure Bermuda-based publicly traded partnership that owns holding corporations primarily in the U.S., Canada, Australia, Western Europe and Brazil Committed to structuring our activities to avoid generating income connected with the conduct of a trade or business(1) BPY’s Structure Ty
Slide 30: Management Team & Contacts
Management Team & Contacts
Slide 31: Investor Relations Contacts
Investor Relations Contacts Contact Title E-Mail Address Phone Number Ric Clark Chief Executive Officer [email protected] (212) 417.7063 Brian Kingston President & Chief Investment Officer [email protected] (212) 979.1646 John Stinebaugh Chief Financial Officer john.stinebaugh@bro
Slide 32: Important Cautionary Notes
Brookfield Property Partners Important Cautionary Notes
Slide 33: Important Cautionary Notes
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 December 31, 2013. All market data in this report is attributable to the following sources: Cushman & Wakefield, C
Slide 34: Important Cautionary Notes
Important Cautionary Notes 34 market factors in the countries in which we do business; the ability to enter into new leases or renew leases on favourable terms; business competition; dependence on tenants’ financial condition; the use of debt to finance our business; the behavior of financial market
Slide 35: Brookfield Property Partners 2014
Brookfield Property Partners 2014
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