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

TRZ HOLDINGS LLC AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAS OF DECEMBER 31, 2011 AND 2010 AND FOR THE YEARS ENDED DECEMBER 31, 2011, 2010AND 2010(U.S. dollars in thousands except share and per share amounts)1. ORGANIZATION AND DESCRIPTION OF THE BUSINESSOrganization — TRZ Holdings LLC (“TRZ Holdings” or the “Company”) is a Delaware limited liabilitycompany that was formed on June 5, 2006. The Company, directly or indirectly through one or moresubsidiaries, is principally engaged in owning, managing, leasing and developing office properties. ThroughApril 9, 2009, the Company was approximately 35% directly owned by Brookfield Properties OfficePartners, Inc. (“BPO REIT”) and approximately 65% directly owned by BREP/TZ Holdco L.L.C.(“BREP”). BPO REIT, a Maryland corporation, is an affiliate of Brookfield Office Properties Inc. (formerly,Brookfield Properties Corporation), a publicly traded real estate company (“Brookfield Properties” or“Brookfield”). BREP, a Delaware limited liability company, is an affiliate of The Blackstone Group(“Blackstone”). The Company was formed as a result of the Agreement and Plan of Merger andArrangement Agreement, (the “Merger Agreement” or the “Merger”) announced on June 5, 2006, betweenTrizec Properties, Inc. (“Trizec Properties”), Trizec Holdings Operating LLC (the “Operating Company”),Trizec Canada Inc. and affiliates of Brookfield Properties.On April 9, 2009, BPO REIT exercised its Brookfield acquisition option that resulted in a reorganization ofownership interests in the Company. As a result, TRZ Holdings acquired all of the shares of TRZHoldings II, Inc. (“TRZ Holdings II”), a consolidated subsidiary, and its subsidiary, TRZ Holdings III LLC(“Holdings III”), not previously owned by the Company. Upon BPO REIT exercising the option, EmeraldBlue KFT (“Emerald”), a wholly owned subsidiary of Brookfield, through a series of transactions,transferred its interest in TRZ Holdings II to BPOP Investor, Inc. (“FREIT”), a Maryland corporation andaffiliate of Brookfield. FREIT then exchanged all its ownership interest in TRZ Holdings II and Holdings IIIfor units of the Company. Further, the Company issued notes with a face value of $765,000 to a whollyowned subsidiary of Brookfield. The Brookfield subsidiary subsequently assigned these notes to third partylenders in exchange for notes previously issued to the lenders by the Brookfield subsidiary. The face valueof the notes assigned were of equal value. After reorganization, the Company was approximately 14%directly owned by BPO REIT, approximately 60% directly owned by FREIT and approximately 26%directly owned by BREP (collectively, the “Members”).During the period commencing on January 1, 2011 and ending on September 30, 2011, BREP had an option (the“Call Option”) to cause the Company and its subsidiaries, through a series of transactions, to transfer indirectownership of all of the BREP Properties (as designated under Exhibit B of the amended and Restated LimitedLiability Company Agreement of TRZ Holdings LLC) to BREP in consideration for the exchange of 100% of theClass A Units (the “Units”) held by BREP. On August 9, 2011, BREP partially exercised its Call Option and allBREP Properties were transferred by the Company with the exception of 5670 Wilshire. On September 29, 2011,BREP fully exercised its Call Option causing the Company to transfer the Operating Company and its soleremaining investment 5670 Wilshire to BREP. BREP did not retain any ownership interest in the Companyfollowing the exercise of its Call Option. At the date of transfer, the Operating Company had redeemable preferredunits valued at $17,554 outstanding. The holders of the redeemable preferred units are entitled, when, as and ifauthorized, to cumulative preferred distributions at a 6% fixed rate per annum. The redeemable preferred units areredeemable at the option of the unitholder at any time or from time to time for cash. The Company retained aninterest in the Operating Company after transfer, requiring it to fund all preferred distributions to the redeemablepreferred unitholders but does not expose the Company to any subsequent risk and rewards of ownership.Additionally, the Company has an obligation to fund a portion of future redemptions of the redeemable preferredunits in relation to the non-economic interest. The Company’s liability related to the non-economic interest atDecember 31, 2011 is $12,859, which is included within accounts payable and other liabilities.F-78