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

each individual loan. The review involves, but is not limited to, a detailed analysis of recent operating statementsin addition to rent rolls and other occupancy reports obtained from borrowers or loan reviewers. Further, wetypically communicate directly with third party sale, leasing or financing brokers to gather the latest informationon local markets or current market trends. By reviewing this information, we are able to make an informedassessment regarding the expected future performance of underlying collateral properties and therefore reach aconclusion about the credit quality and levels of risk associated with existing investments. As such, we do notgroup the loan portfolio by credit quality indicators based on the likelihood of loss.Property debt related to our opportunistic investments segment totaled $949 million at March 31, 2012 andhad a weighted average interest rate of 4.04% and an average term to maturity of 6.3 years.Other liabilities consists primarily of obligations relating to our real estate finance funds which are securedby loans and notes receivable having a carrying value of $0.3 billion (2011 - $0.7 billion).Operating Results – Opportunistic InvestmentsThe following table presents the NOI, FFO, and Total Return of our opportunistic investments businessfor the three months ended March 31, 2012 and 2011:(US$ Millions) Three months ended Mar. 31, 2012 2011NOI (1) $ 27 $ 38Investment and other income 2 -29 38Interest and other expense 23 16Depreciation and amortization 32 -Non-controlling interests (20) 13FFO (1) $ (6) $ 9Fair value changes 81 8Realized gains 35 -Non-controlling interests (87) (5)Total valuation gains 29 3Total Return (1) $ 23 $ 12(1) Refer to tables under “—Reconciliation of Performance Measures to IFRS Measures” below in this MD&A for explanation ofcomponents of NOI, FFO, Total Return, and for a reconciliation to IFRS measures.NOI for the three months ended March 31, 2012 decreased by $11 million compared to the three monthsended March 31, 2011 as a result of the sale of operating assets in the current period. FFO for the three monthsended March 31, 2012 decreased by $15 million when compared with the three months ended March 31, 2011.This was a result of the decrease in NOI as well as depreciation and amortization and interest expense of a hotelasset we acquired at the end of the first quarter of 2011. The decrease was partially offset by an increase ininvestment and other income which is a result of income received from distressed loan portfolios that wereacquired by our opportunity funds.Total Return for the three months ended March 31, 2012 increased by $11 million when compared to thethree months ended March 31, 2011 as a result of an increase in realized gains from the disposition of assets andvaluation gains in our opportunity and finance funds, net of non-controlling interests therein.The key valuation metrics of these properties are presented in the following table. The valuations are mostsensitive to changes in the discount rate and timing or variability of cash flows.United StatesMar. 31, 2012 Dec. 31, 2011Discount rate 8.6% 8.2%Terminal cap rate 7.4% 8.1%Investment horizon (years) 10 1082