FORM 20-F/A Brookfield Property Partners L.P. - Brookfield Asset ...

more stringent environmental laws and regulations in the future, which could have an adverse effect on ourbusiness, financial condition or results of operations.Economic RiskReal estate is relatively illiquid. Such illiquidity may limit our ability to vary our portfolio promptly inresponse to changing economic or investment conditions. Also, financial difficulties of other property ownersresulting in distressed sales could depress real estate values in the markets in which we operate.Our commercial properties generate a relatively stable source of income from contractual tenant rentpayments. Continued growth of rental income is dependent on strong leasing markets to ensure expiring leasesare renewed and new tenants are found promptly to fill vacancies.Taking into account the current state of the economy, 2012 may not provide the same level of increases inrental rates on renewal as compared to prior years. We are, however, substantially protected against short-termmarket conditions, as most of our leases are long-term in nature with an average term of seven years.Insurance RiskWe maintain insurance on our properties in amounts and with deductibles that we believe are in line withwhat owners of similar properties carry. We maintain all risk property insurance and rental value coverage(including coverage for the perils of flood, earthquake and named windstorm).Foreign Exchange FluctuationsFor the year ended December 31, 2011, approximately 39% of our assets and 43% of our revenuesoriginated outside the United States and consequently are subject to foreign currency risk due to potentialfluctuations in exchange rates between these currencies and the U.S. dollar. To mitigate this risk, we attempt tomaintain a natural hedged position with respect to the carrying value of assets through debt agreementsdenominated in local currencies and, from time to time, supplemented through the use of derivative contracts asdiscussed under “—Derivative Financial Instruments”.The following table shows the impact of a 10% decrease in foreign exchange rates on net income andother comprehensive income:December 31, 2011 December 31, 2010 December 31, 2009(Millions) IFRS Value OCI Net Income IFRS Value OCI Net Income IFRS Value OCI Net IncomeCanadian Dollar C$ 935 $ (84) $ - C$ 820 $ (74) $ - C$ 1,032 $ (89) $ -Australian Dollar A$ 2,005 (186) - A$ 1,863 (173) - A$ 1,997 (163) -British Pound £ 641 (90) - £ 482 (69) - £ 255 (37) -Euro € 83 - (10) € 83 - (10) € 83 - (11)Brazilian Real R$ 586 (28) - R$ 265 (14) - R$ 223 (12) -Total $ (388) $ (10) $ (330) $ (10) $ (301) $ (11)Derivative Financial InstrumentsOur operating entities use derivative and non-derivative instruments to manage financial risks, includinginterest rate, commodity, equity price and foreign exchange risks. The use of derivative contracts is governed bydocumented risk management policies and approved limits. We do not use derivatives for speculative purposes.Our operating entities use the following derivative instruments to manage these risks:• foreign currency forward contracts to hedge exposures to Canadian Dollar, Australian Dollar andBritish Pound denominated investments in foreign subsidiaries and foreign currency denominatedfinancial assets;101