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

The decrease in equity accounted income reflects the transfer of the U.S. Office Fund to consolidatedproperties ($70 million) offset by income from the acquisition of interests in a new equity accounted property inNew York and increased income from other equity accounted properties. The increase in interest expense alsoreflects, in part, these activities, as well as the impact of foreign currency translation on borrowings in Australia andCanada.NOI for the year ended December 31, 2010 compared with the prior year increased by 3% to $747 millionbut decreased by 3% when excluding the effect of currency depreciation. Contractual increases in existing leasesand new leasing activity which led to higher in-place net rents were offset by reduced occupancy following theexpiry of leases in New York and Boston. Contributions from additions, dispositions and other since the beginningof the comparable period includes acquisitions in Houston and Washington, D.C., the consolidation of the NewZealand Property Fund and the completion of the Bay Adelaide Centre development in late 2009. The increase ininterest expense reflects these activities as well as the impact of foreign currency translation on borrowings inAustralia and Canada.FFO for the year ended December 31, 2011 decreased by $55 million to $312 million from $367 million inthe prior period. The decrease is primarily due to the increase of unallocated non-controlling interest which is aresult of the transfer of interests in the Australian assets to Brookfield Office Properties. In addition, the CanaryWharf dividend was $16 million in 2011 compared to $26 million in 2010, which was offset by income earned bynewly acquired properties in the period.FFO for the year ended December 31, 2010 increased by $44 million to $367 million from $323 million inthe prior year. The increase is a result of favorable foreign currency fluctuation in Canada and Australia and a $26million dividend from Canary Wharf (2009—nil) offset by an increase in unallocated non-controlling interest,which was a result of the transfer of Australian economic interests to Brookfield Office Properties.Total Return for the year ended December 31, 2011 increased by $221 million to $1.1 billion from $917million in the prior year. The increase in valuation gains is a result of decrease in discount and terminalcapitalization rates as detailed in the table below, we also recorded realized gains in the United States as a result ofthe sale of properties in New Jersey, Boston, and Houston. This was offset by the decrease in FFO as mentionedabove.Total Return for the year ended December 31, 2010 increased by $1.4 billion to $917 million from $(458)million in the prior year. The increase in valuation gains is a result of decrease in discount and terminalcapitalization rates as detailed in the table below. We also recorded realized gains in the United States, Canada andAustralia as a result of the sale of properties in Washington, D.C, Edmonton and New Zealand. In addition, we alsohad an increase in FFO as mentioned above. The loss in 2009 is related to the increase of discount and terminalcapitalization rates from 2008.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 2011 IFRS Value,after deducting non-controlling interests, of $1.6 billion. Discount and capitalization rates have declinedmeaningfully in all of our principal regions since 2009, giving rise to valuation gains.Dec. 31,2011United States Canada Australia Europe (1)Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,2010 2009 2011 2010 2009 2011 2010 2009 2011 2010Dec. 31,2009Discount rate 7.5% 8.1% 8.8% 6.7% 6.9% 7.4% 9.1% 9.2% 9.3% 6.1% 6.5% 6.9%Terminal cap rate 6.3% 6.7% 6.9% 6.2% 6.3% 6.7% 7.5% 7.7% 7.7% n/a n/a n/aInvestment horizon (years) 12 10 10 11 11 10 10 10 10 n/a 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 the impliedcapitalization rate. The terminal capitalization rate and investment horizon are not applicable.88