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

Values are most sensitive to changes in discount rates and timing or variability of cashflows.Included in operating properties is $308 million (2010 - $255 million) of net straight line rent receivables arisingfrom the recognition of rental revenue on a straight line basis over the lease term in accordance with IAS 17,“Leases.”Operating properties with a fair value of approximately $4.9 billion (2010 - $4.8 billion) are situated on land heldunder leases or other agreements largely expiring after the year 2065. Investment properties do not include anyproperties held under operating leases.During the year ended December 31, 2011, the Business capitalized a total of $341 million (2010 - $198 million)of costs related to property developments. Included in this amount is $251 million (2010 - $135 million) ofconstruction and related costs and $90 million (2010 - $63 million) of borrowing costs capitalized. The weightedaverage rate used for the capitalization of borrowing costs to development properties is 7.1% (2010 - 6.7%).Investment properties with a fair value of $22.0 billion (2010 - $16.1 billion) are pledged as security for propertydebt.NOTE 6: INVESTMENT IN U.S. OFFICE FUNDThe company’s interest in the U.S. Office Fund is held through an indirect interest in TRZ Holdings LLC (“TRZHoldings”), an entity originally established by the company and a joint venture partner (the “JV partner”). Underthe terms of a joint venture agreement, the JV partner held an option, commencing January 2011 for nine months,to call certain properties sub-managed by the JV partner in exchange for its equity interest in TRZ Holdings; inthe event the JV partner did not first exercise its option, the Business had an option, commencing in 2013 for aperiod of 14 months, to put the JV partner’s sub-managed properties to the JV partner in redemption of itsinterest in TRZ Holdings (collectively, the “U.S. Office Fund Option”).On August 9, 2011, the JV partner exercised the U.S. Office Fund Option, redeeming its equity interest in TRZHoldings in exchange for its sub-managed properties and repayment of TRZ Holdings’ debt associated with thoseproperties. Prior to the exercise of the U.S. Office Fund Option, the Business and the JV partner had joint controlover the strategic financial and operating policy decisions of TRZ Holdings and it was accounted for as a jointlycontrolled entity following the equity method of accounting. Following the exercise of the U.S. Office FundOption, the Business held an 82.72% equity interest in TRZ Holdings and obtained control over the strategicfinancial and operating policy decisions of the entity. Accordingly, the Business has consolidated its interest inTRZ Holdings effective August 9, 2011 and recognized the assets, liabilities and non-controlling interests in TRZHoldings at fair value as at that date in accordance with IFRS 3, “Business Combinations”.The following is a summary of the amounts assigned to each major class of asset and liability of TRZ Holdings atthe date the Business obtained control:(US$ Millions) As at August 9, 2011Commercial properties and developments $ 4,953Cash and cash equivalents 32Restricted cash 44Accounts receivable and other assets 40Equity accounted investments 685Accounts payable and other (225)Commercial property debt assumed (3,293)Total $ 2,236Brookfield’s net interest $ 1,870Non-controlling interest (1) $ 366(1) Includes $24 million of non-controlling interest in net liabilities of an intermediary subsidiary.F-20