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

The decrease in equity accounted income primarily reflects the transfer of the U.S. Office Fund ($29million), Four World Financial Center, and First Canadian Place to consolidated properties offset by incomefrom the acquisition of 450 West 33rd Street in New York and increased income from other equity accountedproperties. The increase in interest expense also reflects, in part, these activities, as well as the impact of foreigncurrency translation on borrowings in Australia and Canada.FFO for the three months ended March 31, 2012 increased by $21 million to $96 million from $75 millionfor the three months ended March 31, 2011. The increase is primarily a result of new acquisitions during theperiod and the refinancing of Australian debt which resulted in a decrease of interest expense. In addition, werecorded a $9 million dividend from our investment in Canary Wharf.Total Return for the three months ended March 31, 2012 decreased by $56 million from $298 million to$242 million for the three months ended March 31, 2011. The decrease is primarily from fair value gains inrespect of our investment in Canary Wharf offset by increased valuations in the United States and Canada in thefirst quarter of 2012 as a result of decreases in discount and terminal capitalization rates as detailed in the tablebelow. In addition, we also recorded realized gains from the sale of properties in Calgary and Melbourne in thefirst quarter of 2012.The key valuation metrics of our commercial office properties are presented in the following table. Thevaluations are most sensitive to changes in the discount rate and timing or variability of cash flows. A 100-basispoint change in the discount rate and terminal capitalization rate would result in a change in our IFRS Value,after deducting non-controlling interests, of $1.6 billion.United States Canada Australia Europe (1)Dec. 31, Mar. 31, Dec. 31, Mar. 31, Dec. 31, Mar. 31,2011 2012 2011 2012 2011 2012Mar. 31,2012Dec. 31,2011Discount rate 7.5% 7.5% 6.7% 6.7% 9.1% 9.1% 6.1% 6.1%Terminal cap rate 6.3% 6.3% 5.9% 6.2% 7.4% 7.5% n/a n/aInvestment horizon (years) 12 12 11 11 10 10 n/a n/a(1) The valuation method used by Europe is the direct capitalization method. The amounts presented as the discount rate relate to theimplied capitalization rate. The terminal capitalization rate and investment horizon are not applicable.The results of operations are primarily driven by occupancy and rental rates of the office properties andstability of earnings is driven by the average lease term. The following tables present key metrics relating to inplaceleases of our office property portfolio:Occupancy(%)SameStoreOccupancy(%)Mar. 31, 2012 Dec. 31, 2011Avg.LeaseTerm(Years)Avg.“InPlace”NetRentMarketNetRentOccupancy(%)SameStoreOccupancy(%)Avg.LeaseTerm(Years)United States 91.0% 91.0% 7.4 $24.76 $31.33 91.3% 91.3% 7.0 $24.53 $31.21Canada 96.8% 96.8% 8.6 26.06 31.34 96.3% 96.3% 8.7 25.48 29.87Australia 97.4% 97.4% 5.9 52.22 52.56 96.6% 96.9% 6.1 48.33 48.93Europe 100.0% 100.0% 10.2 61.13 57.38 100.0% 100.0% 10.3 60.47 59.87Average 93.3% 93.3% 7.5 $29.38 $34.50 93.3% 93.9% 7.3 $28.55 $33.62Avg.“InPlace”NetRentMarketNetRentThe total worldwide portfolio occupancy rate in our office properties at March 31, 2012 remained flat at93.3% from December 31, 2011. Leasing performance continues to be very strong with 2.3 million square feet ofnew leases signed through April 2012. This includes a 1.2 million square foot lease with Morgan Stanley indowntown Manhattan. The new lease rates were on average 41% higher than the expiring rents which led to the3% increase in our average “in place” net rent. Currently, we have a leasing pipeline of 4 million square feetwhich would further improve our leasing profile.75