Brookfield Property Partners L.P.

Brookfield Property Partners L.P. (BPY) operates as Brookfield Corporation's primary vehicle for real estate investments across various strategies, aiming to be a leading global owner and operator of high-quality real estate ⁴⁰. The company generates revenue primarily through rental payments from tenants in its commercial properties and through its hospitality operations [15, 55]. The business model includes a mix of direct investments, asset-level partnerships, joint ventures, and participation in Brookfield-sponsored private equity funds and consortiums ⁴⁸. The LP Investments segment, unlike Office and Retail, has a defined hold period and typically generates the majority of profits from realization events, such as asset sales or full investment exits, with capital recycling over time into future Brookfield-sponsored funds [50, 65].

BPY's core business is segmented into Office, Retail, and LP Investments. The Office portfolio comprises 67 million leasable square feet across 110 office assets in major commercial markets globally, including New York, London, Dubai, Toronto, and Berlin ³⁹. This portfolio includes "Super Core" irreplaceable premier properties in global gateway cities, such as 16 office and ancillary mixed-use complexes, intended for long-term holding, as well as "Core Plus" centrally located assets and "Value Add" and "Opportunistic" assets targeted for shorter-term monetization ³⁹.

The Retail portfolio consists of 99 million leasable square feet across 96 best-in-class malls and urban retail properties throughout the United States ³⁹. Similar to the Office segment, the Retail portfolio features 18 "Super Core" irreplaceable retail centers in attractive U.S. markets like Honolulu and Las Vegas, which contribute the majority of equity attributable to Unitholders in this segment and are expected to provide stable, growing cash flows over the long term ³⁹. The Retail segment also includes "Core Plus" premier, centrally located retail assets and "Value Add" and "Opportunistic" retail assets in secondary markets intended for shorter-term monetization ³⁹.

The LP Investments portfolio encompasses equity invested in Brookfield-sponsored real estate opportunity funds, which focus on high-quality assets with operational upside across diverse real estate sectors, including office, retail, multifamily, logistics, hospitality, mixed-use, and other alternative real estate [39, 65]. These investments are designed to achieve opportunistic returns, with profits largely derived from realization events, and the capital is recycled into new fund vintages over time [50, 65]. As of December 31, 2025, BPY holds a 31% interest in BSREP I (which realized its remaining investments in 2025), a 26% interest in BSREP II (fully invested and executing realizations), a 5% interest in BSREP III (fully invested and executing realizations), and a 10% interest in BSREP IV ⁶⁵. Additionally, BPY has a blended 30% interest in two value-add multifamily funds targeting U.S. multifamily properties and a blended 33% interest in a series of real estate debt funds ⁶⁵.

For the fiscal year ended December 31, 2025, BPY reported a net loss of $305 million ⁴. Total revenue for the period was $7,147 million ⁵, with commercial property revenue at $4,703 million ⁶, hospitality revenue at $1,641 million ⁷, and investment and other revenue at $803 million ⁸. Total expenses amounted to $8,004 million ⁹, including direct commercial property expense of $1,894 million ¹⁰, direct hospitality expense of $1,195 million ¹¹, investment and other expense of $160 million ¹², interest expense of $3,530 million ¹³, and general and administrative expense of $1,225 million ¹⁴. The company also recorded net fair value losses of $173 million ¹⁵ and a share of net earnings from equity accounted investments of $882 million ¹⁶. Income tax expense was $157 million ¹⁷. As of December 31, 2025, total assets were $99,280 million ¹⁸, with investment properties (commercial properties and developments) totaling $54,672 million and $2,262 million, respectively ¹⁹, equity accounted investments at $21,244 million ²⁰, property, plant and equipment at $6,982 million ²¹, cash and cash equivalents at $1,859 million ²², and assets held for sale at $3,004 million ²³. Total debt obligations were $46,230 million ²⁴, and total equity was $42,574 million ²⁵.

Comparing 2025 to 2024, BPY's net loss improved from $1,997 million in 2024 to $305 million in 2025 ⁴. This improvement was primarily driven by a $1,234 million reduction in interest expense ²⁶, largely due to the deconsolidation of BSREP IV and India REIT, as well as corporate and asset-level debt paydowns from disposition activities ⁵⁵. Commercial property revenue decreased by $1,258 million ²⁷, and direct commercial property expense decreased by $487 million ²⁸, both primarily due to the deconsolidation events and net disposition activity ⁵⁵. Hospitality revenue decreased by $716 million ²⁹, mainly due to the deconsolidation of BSREP IV, partially offset by acquisition activity in LP Investments and strong performance in the U.K. and Ireland ⁵⁵. Investment and other revenue increased by $10 million ³⁰, while investment and other expense increased by $123 million ³¹, largely from LP Investments dispositions ⁵⁵. Fair value losses, net, decreased from $692 million in 2024 to $173 million in 2025 ¹⁵, with LP Investments showing gains of $334 million in 2025 compared to losses of $80 million in 2024 ⁵⁶. Share of net earnings from equity accounted investments increased by $551 million to $882 million in 2025 ¹⁶, driven by fair value gains and deconsolidation impacts ⁵⁶. Total assets decreased by $3,311 million ³², and debt obligations decreased by $5,185 million ³³, mainly due to deconsolidation and disposition activities [57, 60]. Total equity increased by $4,325 million to $42,574 million [25, 60].

During 2025, BPY completed several significant operational developments. In Q4 2025, the company sold 68 manufactured housing communities in the U.S. within the BSREP II fund for approximately $1,356 million ³⁴ and three U.S. malls in the same fund for approximately $162 million ³⁵. Acquisitions included a portfolio of six housing assets in Sweden and Finland for approximately €158 million ($184 million) ³⁶, two logistics portfolios in the U.S. for approximately $326 million ³⁷, a hotel in the United Arab Emirates for approximately AED1,032 million ($281 million) ³⁸, and a logistics portfolio in Sweden for approximately SEK2,047 million ($216 million) ³⁹. In Q3 2025, BPY acquired a portfolio of hostel assets across Europe for total consideration of €329 million ($376 million) ⁴⁰ and a portfolio of 23 storage assets in Canada for C$334 million ($240 million) ⁴¹. Dispositions included thirteen U.S. hotels in the BSREP II fund for approximately $119 million ⁴², a logistics asset in Spain for approximately €164 million ($188 million) ⁴³, two U.S. malls in the BSREP II fund for approximately $123 million ⁴⁴, and an office asset in India in the BSREP II fund for approximately Rs37,788 million ($427 million) ⁴⁵. In Q1 2025, BPY sold an office asset in Australia for approximately A$441 million ($276 million) ⁴⁶ and six logistics assets in Europe for approximately €453 million ($489 million) ⁴⁷. On March 18, 2025, BPY sold a partial interest in Brookfield India Real Estate Trust for net proceeds of $102 million, leading to a loss of control and deconsolidation of this investment ⁴⁸.

BPY's management aims to increase cash flows from its office and retail properties through continued leasing activity, leveraging opportunities to expand cash flows through higher occupancy in the U.S. office market, which is currently operating below historical levels ⁸³. The company anticipates strengthening leasing activity in its office and retail portfolios, driven by tenant demand for high-quality, well-located space and resilient consumer spending trends ⁸³. Management believes that its ownership of high-quality, well-located buildings will continue to create opportunities to increase occupancy levels, lease rates, and cash flows ⁸³.

The company's strategy includes actively recycling capital from maturing assets and redeploying proceeds into higher-yielding opportunities globally, which is expected to support portfolio growth and enhance returns over time ⁸³. BPY's business model is described as self-funding, not requiring access to capital markets for continued growth, due to the scale of its stabilized portfolio and balance sheet flexibility ⁸³.

In terms of operational outlook, BPY sees an opportunity to advance its development inventory in the near term for both office and retail properties, responding to demand in major markets ⁸⁴. This includes repositioning and redeveloping existing retail properties, particularly high-performing shopping centers in the United States ⁸⁴.

Regarding capital allocation, BPY's principal liquidity needs for the current year and beyond include recurring expenses, debt service requirements, distributions to preferred unitholders, mandatory capital expenditures (including tenant improvements), development costs not covered by construction loans, unfunded committed capital to funds, and investing activities such as property acquisitions and future developments ⁷⁹. The company plans to meet these needs through cash flows from operations, construction loans, creation of new funds, proceeds from asset sales (primarily from the LP Investments segment), proceeds from the sale of non-controlling interests in subsidiaries and properties, and credit facilities and refinancing opportunities ⁷⁹. As of December 31, 2025, BPY had an aggregate available borrowing capacity of $5,375 million under its credit facilities ⁷⁹. The company expects to refinance the majority of debt obligations maturing in 2026 and 2027 or exercise contractual extension options ⁷⁹. Specifically, of the $15,391 million in 2026 maturities, approximately $9,550 million will be addressed through refinancings, repayments, and other measures subsequent to December 31, 2025, with the remaining $5,841 million having extension options in place ⁷⁹.

Management has flagged structural headwinds and execution risks, noting that certain planned divestitures may be delayed, though they do not anticipate execution risk that would materially impact cash flows ⁷⁹. However, the company has suspended contractual payments on approximately 3% of its non-recourse mortgages (excluding assets in receivership) and is engaging in modification or restructuring discussions with creditors ⁷⁹. If these negotiations are unsuccessful, properties securing these loans could be transferred to lenders ⁷⁹.

BPY faces significant risks, including those incidental to real estate ownership such as downturns in economic conditions, local real estate market conditions, changes in interest rates, and competition, which can adversely affect asset values and profitability ¹². The company is highly leveraged, with debt obligations to capitalization at 51% as of December 31, 2025 ⁷⁰, making it sensitive to declines in revenues and increases in expenses and interest rates ¹⁴. Refinancing risk is material, as BPY may not be able to refinance indebtedness on favorable terms or at all, especially with rising interest rates ¹⁴. Tenant defaults, bankruptcies, or insolvencies, particularly from significant tenants, could lead to substantial revenue loss and operational difficulties, as could the inability to renew or secure new leases on favorable terms ¹⁵. Insurance may not cover all potential losses, such as those from war or environmental contamination, or may not be obtainable at commercially reasonable rates ¹⁵. Trends in the office real estate industry, including shifts to hybrid or remote work models, could decrease demand, occupancy, and rental rates ¹⁶. The retail segment is vulnerable to factors like unemployment, weak income growth, inflation, and competition from online shopping, which could negatively impact tenant sales and rental revenues ¹⁶. Cybersecurity failures and data security incidents pose risks of operational disruption, data compromise, and reputational damage ¹⁷. Investments with co-venturers, partners, or fund investors limit BPY's control over certain decisions and expose it to risks if these parties fail to meet their obligations ¹⁸. BPY is also subject to environmental liabilities, health and safety risks, and potential losses from fraud, bribery, or other illegal acts [18, 19]. Climate change presents physical risks (e.g., increased extreme weather events) and transition risks (e.g., policy changes, low-carbon technologies) that could damage properties and disrupt operations ²⁰. Furthermore, BPY's reliance on Brookfield and its Service Providers creates potential conflicts of interest, as Brookfield's broader business interests may influence decisions to BPY's detriment [21, 22, 23]. The Preferred Units and New LP Preferred Units carry risks related to redemption, subordination to debt, limited voting rights, and market price volatility due to interest rate fluctuations [24, 25, 26]. Tax risks include potential non-U.S. and U.S. state and local tax liabilities, uncertainty in U.S. federal income tax treatment of guaranteed payments, and Canadian federal income tax implications for non-Canadian holders [28, 29, 30, 31, 32, 33, 34, 35].

Management's message to shareholders emphasizes BPY's role as Brookfield Corporation's primary vehicle for real estate investments, with a goal to be a leading global owner and operator of high-quality real estate ³⁹. They highlight the company's diversified portfolio across Office, Retail, and LP Investments, focusing on "Super Core" irreplaceable properties for long-term holding and "Core Plus," "Value Add," and "Opportunistic" assets for shorter-term monetization ³⁹. Management believes that the company's global scale and operating platforms provide a competitive advantage, enabling efficient capital allocation to sectors and geographies with the greatest returns ⁸³. Key strategic priorities include increasing cash flows from existing properties through enhanced occupancy and rental rates, reducing operating costs, and actively recycling capital from maturing assets into higher-yielding opportunities [51, 83]. Management also plans to advance development inventory in the near term in response to market demand and to reposition and redevelop existing retail properties ⁸⁴. While acknowledging potential delays in planned divestitures, management does not anticipate material execution risk to cash flows ⁷⁹. They expect to refinance or extend the majority of debt obligations maturing in 2026 and 2027 ⁷⁹.