UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September~~June 30, ~~2018~~2019

o☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period fromto

COMMISSION FILE NUMBER 1-34948

Brookfield Property REIT Inc.

(Exact name of registrant as specified in its charter)



Delaware			27-2963337
(State or other jurisdiction of incorporating or organization)			(I.R.S. Employer Identification Number)

250 Vesey Street, 15th Floor	New York NY	NY	10281-1023
(Address of principal executive offices)			(Zip Code)

~~(212) 417-7000~~
~~(Registrant's telephone number, including area code)~~

~~GGP Inc.~~
~~(Former name)~~

~~350 N. Orleans St., Suite 300, Chicago, IL~~
~~(Former address of principal executive offices)~~

(212) 417-7000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Stock, par value $.01 per share	BPR	Nasdaq Global Select Market
6.375% Series A Cumulative Perpetual Redeemable Preferred Stock, par value $0.01 per share	BPRAP	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

ý ☒Yeso☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

ý ☒Yeso ☐No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "non-accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 126-2 of the Exchange Act.



ý☒	Large accelerated filer	o ☐	Accelerated filer
o☐	Non-accelerated filer	o ☐	Smaller reporting company
		o☐	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o ☐Yes ý ☒No

Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

ý ~~Yes~~ o No

The number of shares of Class A Stock, $.01 par value, outstanding on ~~November 5, 2018~~August 7, 2019 was ~~127,325,845.~~73,532,097.

~~Table of Contents~~

Brookfield Property REIT Inc.

INDEX



			PAGE NUMBER

Part I	FINANCIAL INFORMATION

	Item 1: ~~Consolidated~~ Financial Statements ~~(Unaudited)~~

		Consolidated Balance Sheets as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017~~2018 (Unaudited)	3

		Consolidated Statements of Comprehensive Income (Loss) for the three and ~~nine~~six months ended ~~September~~June 30, 2019 and 2018 ~~and 2017~~(Unaudited)	4

		Consolidated Statements of Equity for the ~~nine~~three and six months ended ~~September~~June 30, 2019 and 2018 ~~and 2017~~(Unaudited)	6

		Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, 2019 and 2018 ~~and 2017~~	8

		~~Notes to Consolidated Financial Statements~~ (Unaudited)	10

		~~Note 1: Organization~~Notes to Consolidated Financial Statements (Unaudited)	1012

		Note ~~2: Summary of Significant Accounting Policies~~1: Organization	1112

		Note 2: Summary of Significant Accounting Policies	12

		Note 3: Acquisitions, Sales and Joint Venture Activity	20

		Note 4: Fair Value	2421

		Note 5: Unconsolidated Real Estate Affiliates	2623

		Note 6: Mortgages, Notes and Loans Payable	2925

		Note 7: Leases	28

		Note 8: Income Taxes	30

		Note 9: Equity and Redeemable Noncontrolling Interests	31

		Note ~~8: Equity and Redeemable Noncontrolling Interests~~	32

		~~Note 9:~~10: Earnings Per Share	38

		Note ~~10:~~11: Stock-Based Compensation Plans	4039

		Note ~~11:~~12: Accounts Receivable, net	41

		Note 13: Notes Receivable	41

		Note 14: Prepaid Expenses and Other Assets	42

		Note ~~12: Notes Receivable~~	42

		~~Note 13: Prepaid~~15: Accounts Payable and Accrued Expenses ~~and Other Assets~~	43

		Note ~~14: Accounts Payable~~16: Litigation	43

		Note 17: Commitments and ~~Accrued Expenses~~Contingencies	43

		Note 18: Subsequent Events	44

			~~Note 15: Litigation~~	44

		~~Note 16: Commitments~~Item 2: Management's Discussion and ~~Contingencies~~Analysis of Financial Condition and Results of Operations	45

		~~Note 17: Subsequent Events~~Liquidity and Capital Resources	4549

	~~Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations~~		46

		~~Liquidity and Capital Resources~~	51

	Item 3: Quantitative and Qualitative Disclosures about Market Risk		6257

	Item 4: Controls and Procedures		6257

Part II	OTHER INFORMATION

	Item 1: Legal Proceedings		6257

	Item 1A: Risk Factors		6258

	Item 2: Unregistered Sales of Equity Securities and Use of Proceeds		6658

	Item 3: Defaults Upon Senior Securities		6658

	Item 4: Mine Safety Disclosures		6758

	Item 5: Other Information		6758

	Item 6: Exhibits		6860

			~~SIGNATURE~~SIGNATURES		7062

PART IFINANCIAL INFORMATION

ITEM IFINANCIAL STATEMENTS

Brookfield Property REIT Inc.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	September 30, 2018			December 31, 2017			June 30, 2019			December 31, 2018
	(Dollars in thousands, except share and per share amounts)						(Dollars in thousands, except share and per share amounts)
Assets:
Investment in real estate:
Land	$	2,745,905		$	4,013,874		$	2,556,819		$	2,706,701
Buildings and equipment	11,005,853			16,957,720			10,860,654			10,774,079
Less accumulated depreciation	(2,183,128		)	(3,188,481		)	(2,365,688		)	(2,214,603		)
Construction in progress	525,169			473,118			591,643			576,695
Net property and equipment	12,093,799			18,256,231			11,643,428			11,842,872
Investment in Unconsolidated Real Estate Affiliates	5,197,113			3,377,112			5,282,932			5,385,582
Net investment in real estate	17,290,912			21,633,343			16,926,360			17,228,454
Cash and cash equivalents	260,716			164,604			199,859			247,019
Accounts receivable, net	221,535			334,081			222,033			222,562
Notes receivable	335,943			417,558			339,928			256,937
Deferred expenses, net	164,228			284,512			136,592			145,631
Prepaid expenses and other assets	292,746			494,795
Prepaid expenses and other assets (see Notes 7 and 14)							359,800			313,648
Deferred tax assets, net	591,589			18,633			612,922			619,275
Total assets	$	19,157,669		$	23,347,526		$	18,797,494		$	19,033,526
Liabilities:
Mortgages, notes and loans payable	$	13,012,731		$	12,832,459
Mortgages, notes and loans payable (including related party debt - see Note 6)							$	13,843,348		$	12,589,649
Investment in Unconsolidated Real Estate Affiliates	123,701			21,393			96,140			124,627
Accounts payable and accrued expenses	876,165			919,432
Accounts payable and accrued expenses (see Notes 7 and 15)							838,885			953,369
Dividend payable	3,942			219,508			16,262			4,668
Junior subordinated notes	206,200			206,200			206,200			206,200
Total liabilities	14,222,739			14,198,992			15,000,835			13,878,513
Redeemable equity interests	3,080,808			—
Redeemable Class A equity interests							1,674,301			2,305,895
Redeemable noncontrolling interests	73,581			248,126			62,222			73,696
Total redeemable interests	3,154,389			248,126			1,736,523			2,379,591
Equity:
Class B Stock: 4,942,500,000 shares authorized, $0.01 par value, 421,682,697 issued and outstanding as of September 30, 2018	4,217			—
Class C Stock: 1,000,000,000 shares authorized, $0.01 par value, 640,051,301 issued and outstanding as of September 30, 2018	6,401			—
Common Stock: 11,000,000,000 shares authorized, $0.01 par value, 1,040,382,900 issued, 956,982,536 outstanding as of December 31, 2017	—			10,130
Preferred Stock: 500,000,000 shares authorized, $0.01 par value, 10,000,000 shares issued and outstanding as of September 30, 2018 and December 31, 2017	242,042			242,042
Class B Stock & Series B Preferred Stock (collectively, "Combined Class B Stock"): 5,907,500,000 shares authorized, $0.01 par value, 466,376,490 and 454,744,938 issued and outstanding as of June 30, 2019 and December 31, 2018, respectively (see Note 9)							4,664			4,547
Class C Stock: 1,000,000,000 shares authorized, $0.01 par value, 640,051,301 issued and outstanding as of June 30, 2019 and December 31, 2018							6,401			6,401
Common Stock: 965,000,000 shares authorized, $0.01 par value, no shares issued or outstanding as of June 30, 2019 and December 31, 2018							—			—
Preferred Stock: 500,000,000 shares authorized, $0.01 par value, 10,000,000 shares issued and outstanding as of June 30, 2019 and December 31, 2018							242,042			242,042
Additional paid-in capital	5,088,787			11,845,532			6,087,409			5,772,824
Retained earnings (accumulated deficit)	(5,017,312		)	(2,107,498		)	(5,652,263		)	(4,721,335		)
Accumulated other comprehensive loss	(84,692		)	(71,906		)	(81,974		)	(82,653		)
Common stock in treasury, at cost, 55,969,390 shares as of December 31, 2017	—			(1,122,640		)
Total stockholders' equity	239,443			8,795,660			606,279			1,221,826
Noncontrolling interests in Consolidated Real Estate Affiliates	43,164			55,379			13,528			26,652
Noncontrolling interests of the Operating Partnership	1,497,934			49,369			1,440,329			1,526,944
Total equity	1,780,541			8,900,408			2,060,136			2,775,422
Total liabilities, redeemable noncontrolling interests and equity	$	19,157,669		$	23,347,526
Total liabilities, redeemable interests and equity							$	18,797,494		$	19,033,526

The accompanying notes are an integral part of these consolidated financial statements.

Brookfield Property REIT Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Brookfield Property REIT Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)													Brookfield Property REIT Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
	(Dollars in thousands, except per share amounts)												(Dollars in thousands, except per share amounts)
Revenues:
Minimum rents	$	309,983		$	363,857		$	1,057,817		$	1,062,075
Tenant recoveries	133,103			160,755			446,260			485,737
Overage rents	4,681			4,582			14,853			13,799
Rental revenues, net													$	314,239		$	539,394		$	637,259		$	1,071,163
Management fees and other corporate revenues	30,483			28,806			82,278			77,797			38,050			26,030			79,238			51,795
Other	14,899			20,357			49,250			61,079			8,743			17,720			20,918			34,351
Total revenues	493,149			578,357			1,650,458			1,700,487			361,032			583,144			737,415			1,157,309
Expenses:
Real estate taxes	55,081			61,516			177,417			178,053			42,374			62,604			83,229			122,337
Property maintenance costs	8,381			10,281			34,070			35,980			6,335			10,976			16,396			25,690
Marketing	1,801			1,744			4,961			5,185			921			1,744			1,825			3,160
Other property operating costs	66,327			75,848			209,832			214,742			41,076			71,752			84,498			143,504
Provision for doubtful accounts	3,517			2,152			9,180			8,769			—			2,234			—			5,662
Property management and other costs	43,763			35,195			119,932			115,334			59,247			36,595			115,301			76,169
General and administrative	15,947			12,037			40,235			42,582			5,320			12,041			10,733			24,288
Costs related to the BPY Transaction	204,159			—			204,159			—			840			—			9,179			—
Provision for impairment	7,487			—			45,866			—			184,347			—			184,347			38,379
Depreciation and amortization	156,401			161,278			515,437			505,875			118,382			173,642			237,181			359,035
Total expenses	562,864			360,051			1,361,089			1,106,520			458,842			371,588			742,689			798,224
Operating income (loss)	(69,715		)	218,306			289,369			593,967
Interest and dividend income	7,240			15,948			25,906			51,336			2,891			9,518			11,313			18,667
Interest expense	(144,632		)	(135,980		)	(423,120		)	(402,512		)	(158,845		)	(140,562		)	(313,551		)	(278,488		)
Gain on foreign currency	—			3,889			—			3,195
Gain on extinguishment of debt	—			—			—			55,112
Gain from changes in control of investment properties and other, net	2,850,017			95,165			2,862,681			79,325			—			—			—			12,664
Income before income taxes, equity in income of Unconsolidated Real Estate Affiliates and allocation to noncontrolling interests	2,642,910			197,328			2,754,836			380,423
Benefit from (provision for) income taxes	570,716			(6,993		)	571,018			(15,347		)
Equity in income of Unconsolidated Real Estate Affiliates	20,336			35,937			59,206			99,884
(Loss) income before income taxes, equity (loss) in income of Unconsolidated Real Estate Affiliates and related gain on investment, and allocation to noncontrolling interests													(253,764		)	80,512			(307,512		)	111,928
(Provision for) benefit from income taxes													(3,503		)	22			(7,953		)	302
Equity (loss) in income of Unconsolidated Real Estate Affiliates													(7,838		)	15,030			(15,711		)	38,869
Unconsolidated Real Estate Affiliates - gain on investment, net	478,293			—			488,654			—			—			—			104,354			10,361
Net income	3,712,255			226,272			3,873,714			464,960
Net (loss) income													(265,105		)	95,564			(226,822		)	161,460
Allocation to noncontrolling interests	(28,981		)	(3,492		)	(32,790		)	(9,157		)	37,885			(1,949		)	31,252			(3,809		)
Net income attributable to Brookfield Property REIT Inc.	3,683,274			222,780			3,840,924			455,803
Class A Stock Earnings Per Share (August 28, 2018 through September 30, 2018) (See Note 9):
Basic & Diluted Earnings Per Share Class A Stock	$	0.315					$	0.315
Dividends declared per share	$	0.315					$	0.315
Common Stock Earnings Per Share (Through August 27, 2018) (See Note 9):
Net (loss) income attributable to Brookfield Property REIT Inc.													$	(227,220	)	$	93,615		(195,570		)	157,651
Class A Stock Earnings Per Share (See Note 10):
Basic & Diluted Earnings Per Share													$	0.330					$	0.660
Common Stock Earnings Per Share (See Note 10):
Basic	$	4.70		$	0.25		$	4.16		$	0.50					$	0.09					$	0.16
Diluted	$	4.68		$	0.23		$	4.15		$	0.47					$	0.09					$	0.16
Dividends declared per share (1)	$	—		$	0.22		$	0.44		$	0.66

Brookfield Property REIT Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Continued)
(UNAUDITED)

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
(Dollars in thousands, except per share amounts)
Comprehensive Income, Net:

Net income $ 3,712,255
$ 226,272
$ 3,873,714
$ 464,960
Other comprehensive income (loss)
Foreign currency translation (2,347 ) 4,065
(12,764 ) 2,602
Net unrealized gains (losses) on other financial instruments 8
10
16
21
Other comprehensive income (loss) (2,339 ) 4,075
(12,748 ) 2,623
Comprehensive income 3,709,916
230,347
3,860,966
467,583
Comprehensive income allocated to noncontrolling interests (29,105 ) (3,674 ) (32,829 ) (9,024 )
Comprehensive income attributable to Brookfield Property REIT Inc. 3,680,811
226,673
3,828,137
458,559

Brookfield Property REIT Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Continued) (UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars in thousands, except per share amounts)
Comprehensive Income (Loss), Net:
Net (loss) income	$	(265,105	)	$	95,564		$	(226,822	)	$	161,460
Other comprehensive income (loss)
Foreign currency translation	1,131			(10,038		)	727			(10,417		)
Net unrealized gains (losses) on other financial instruments	8			(43		)	(48		)	8
Other comprehensive income (loss)	1,139			(10,081		)	679			(10,409		)
Comprehensive income (loss)	(263,966		)	85,483			(226,143		)	151,051
Comprehensive loss (income) allocated to noncontrolling interests	37,885			(1,865		)	31,252			(3,723		)
Comprehensive income (loss) attributable to Brookfield Property REIT Inc.	$	(226,081	)	$	83,618		(194,891		)	147,328

~~(1) Excludes the Pre-Closing Dividend (Note 1).~~

The accompanying notes are an integral part of these consolidated financial statements.

Brookfield Property REIT Inc.

CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)

Common
Stock
Class B Stock Class C Stock
Preferred
Stock

Additional
Paid-In
Capital

Retained
Earnings
(Accumulated
Deficit)

Accumulated
Other
Comprehensive
Income (Loss)

Common
Stock in
Treasury
Noncontrolling
Interests in Consolidated Real Estate Affiliates and Operating Partnership
Total
Equity
Redeemable Class A Stock
(Dollars in thousands, except for per share and share amounts)
Balance at January 1, 2017 $ 9,407
$ —
$ —
$ 242,042
$ 11,419,939
$ (1,827,866 ) $ (70,456 ) $ (1,137,960 ) $ 65,623
$ 8,700,729
$ —

Net income

455,803

2,171
457,974

Distributions to noncontrolling interests in consolidated Real Estate Affiliates

(4,472 ) (4,472 )
Acquisition/disposition of partner's noncontrolling interests in consolidated Real Estate Affiliates 8,638
8,638

Contributions from noncontrolling interest in consolidated Real Estate Affiliates —
15,258
15,258

Long-Term Incentive Plan Common Unit grants, net (451,585 LTIP Units) 795
(744 ) 12,550
12,601

Restricted stock grants, net (708,091 common shares) 7
—
6,792

6,799

Employee stock purchase program (127,619 common shares) 1

3,096

3,097

Stock options exercised (443,221 common shares) 4

17,212

17,216

Cancellation of repurchased common shares (12,980,447 common shares) (128 ) (170,514 ) (112,464 ) 283,106
—

Treasury stock purchase (12,650,991 common shares) (273,984 ) (273,984 )
Cash dividends reinvested (DRIP) in stock (34,625 common shares)
—
—
834
(138 )

696

Other comprehensive income

2,756

2,756

Cash distributions declared ($0.66 per share)

(580,149 )

(580,149 )
Cash distributions on Preferred Stock

(11,952 )

(11,952 )
Fair value adjustment for noncontrolling interest in Operating Partnership

34,123

34,123

Balance at September 30, 2017 $ 9,291
$ —
$ —
$ 242,042
$ 11,312,277
$ (2,077,510 ) $ (67,700 ) $ (1,128,838 ) $ 99,768
$ 8,389,330
$ —

Brookfield Property REIT Inc. CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

	Common Stock		Combined Class B Stock		Class C Stock		Preferred Stock		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Common Stock in Treasury			Noncontrolling Interests in Consolidated Real Estate Affiliates and Operating Partnership			Total Equity			Redeemable Class A Stock
	(Dollars in thousands, except for per share and share amounts)
Balance at January 1, 2018	$	10,130	$	—	$	—	$	242,042	$	11,845,532	$	(2,107,498	)	$	(71,906	)	$	(1,122,640	)	$	104,748		$	8,900,408		$	—

Cumulative effect of accounting change											(16,864		)										(16,864		)
Net income											157,651									1,170			158,821
Distributions to noncontrolling interests in consolidated Real Estate Affiliates																				(2,888		)	(2,888		)
Acquisition/disposition of partner's noncontrolling interests in consolidated Real Estate Affiliates																				(4,998		)	(4,998		)
Long-Term Incentive Plan Common Unit grants, net (238,655 LTIP Units)									—		—									4,634			4,634
Restricted stock grants, net (1,000,143 common shares)	10						—		4,997														5,007
Employee stock purchase program (80,522 common shares)	1								1,797														1,798
Stock options exercised (249,508 common shares)	2								4,116														4,118
OP Unit Conversion to Common Stock (67,064 common shares)	1								1,368								—						1,369
Cash dividends reinvested (DRIP) in stock (11,239 common shares)	—						—		245		(245		)										—
Other comprehensive loss														(10,323		)							(10,323		)
Cash distributions declared ($0.44 per share)											(421,447		)										(421,447		)
Cash distributions on Preferred Stock ($0.7968 per share)											(7,968		)										(7,968		)
Fair value adjustment for noncontrolling interest in Operating Partnership									22,395														22,395

Balance at June 30, 2018	$	10,144	$	—	$	—	$	242,042	$	11,880,450	$	(2,396,371	)	$	(82,229	)	$	(1,122,640	)	$	102,666		$	8,634,062		$	—

Brookfield Property REIT Inc.

CONSOLIDATED STATEMENTS OF EQUITY (Continued)
(UNAUDITED)

Common
Stock
Class B Stock Class C Stock
Preferred
Stock

Additional
Paid-In
Capital

Retained
Earnings
(Accumulated
Deficit)

Accumulated
Other
Comprehensive
Income (Loss)

Common
Stock in
Treasury

Noncontrolling
Interests in Consolidated Real Estate Affiliates and Operating Partnership

Total
Equity
Redeemable Class A Stock
(Dollars in thousands, except for per share and share amounts)
Balance at January 1, 2018 $ 10,130
$ —
$ —
$ 242,042
$ 11,845,532
$ (2,107,498 ) $ (71,906 ) $ (1,122,640 ) $ 104,748
$ 8,900,408
$ —

Cumulative effect of accounting change

(16,864 )

(16,864 )
Net income

3,789,792

(1,827 ) 3,787,965
51,132
Distributions to noncontrolling interests in consolidated Real Estate Affiliates (4,213 ) (4,213 )
Acquisition/disposition of partner's noncontrolling interests in consolidated Real Estate Affiliates 3,808
(9,229 ) (5,421 )
Cash dividends reinvested (DRIP) in stock 245
(245 ) —

Adjust Mezzanine Equity to Fair Value 40,294
40,294

Long Term Incentive Plan Common Unit (238,655 LTIP Units) 17,859
17,859

Employee stock purchase program 1,797
1,797

Stock options exercised (288,715 common shares) 3
4,972
4,975

Common Stock Issuance (4,098,105 common shares) 41
87,149
87,190

Preferred stock dividend (11,952 ) (11,952 )
Other comprehensive loss (12,786 ) (12,786 )
Dividends on Common Stock (421,446 ) (421,446 )
Restricted stock grants, net (48,773 Class A common shares) 10
9,241
9,251
2,910
Special Pre-Closing Dividend (9,152,446 ) (36,436 ) (9,188,882 )
BPR Equity Recapitalization (See Note 1) (10,184 ) 4,074
—
(7,428,698 ) 2,903,347
1,122,640
(661 ) (3,409,482 ) 3,408,889
Cash Contribution from BPY 6,401
193,599
200,000

Class A Conversion to Class B (14,328,654 Class B shares) 143
306,347
306,490
(306,490 )
Adjust Class A Stock to Fair Value 24,501
24,501
(24,501 )
Acquisition of Noncontrolling Interest by Institutional Investor 1,470,857
1,470,857

Class A Dividend —
(51,132 )

Balance at September 30, 2018 $ —
$ 4,217
$ 6,401
$ 242,042
$ 5,088,787
$ (5,017,312 ) $ (84,692 ) $ —
$ 1,541,098
$ 1,780,541
$ 3,080,808

Brookfield Property REIT Inc. CONSOLIDATED STATEMENTS OF EQUITY (Continued) (UNAUDITED)

	Common Stock		Combined Class B Stock		Class C Stock		Preferred Stock		Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Common Stock in Treasury			Noncontrolling Interests in Consolidated Real Estate Affiliates and Operating Partnership			Total Equity			Redeemable Class A Stock
	(Dollars in thousands, except for per share and share amounts)
Balance at April 1, 2018	$	10,143	$	—	$	—	$	242,042	$	11,876,351		$	(2,275,096	)	$	(72,231	)	$	(1,122,640	)	$	98,958		$	8,757,527		$	—

Net income												93,615									503			94,118
Distributions to noncontrolling interests in consolidated Real Estate Affiliates																					(1,275		)	(1,275		)
Acquisition/disposition of partner's noncontrolling interests in consolidated Real Estate Affiliates																					2,230			2,230
Long-Term Incentive Plan Common Unit forfeitures (64,499 LTIP Units)																					2,250			2,250
Restricted stock grants, net (5,918 common shares forfeited)									3,290															3,290
Employee stock purchase program (3,002 common shares)									61															61
Stock options exercised (3,306 common shares)									131															131
OP Unit Conversion to Common Stock (67,064 common shares)	1								1,368															1,369
Cash dividends reinvested (DRIP) in stock (5,333 common shares)									106			(106		)										—
Other comprehensive loss															(9,998		)							(9,998		)
Cash distributions declared ($0.22 per share)												(210,800		)										(210,800		)
Cash distributions on Preferred Stock ($0.3984 per share)												(3,984		)										(3,984		)
Fair value adjustment for noncontrolling interest in Operating Partnership									(857		)													(857		)

Balance at June 30, 2018	$	10,144	$	—	$	—	$	242,042	$	11,880,450		$	(2,396,371	)	$	(82,229	)	$	(1,122,640	)	$	102,666		$	8,634,062		$	—

Brookfield Property REIT Inc. CONSOLIDATED STATEMENTS OF EQUITY (Continued) (UNAUDITED)

	Common Stock		Combined Class B Stock			Class C Stock		Preferred Stock		Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Common Stock in Treasury		Noncontrolling Interests in Consolidated Real Estate Affiliates and Operating Partnership			Total Equity			Redeemable Class A Stock
	(Dollars in thousands, except for per share and share amounts)
Balance at January 1, 2019	$	—	$	4,547		$	6,401	$	242,042	$	5,772,824		$	(4,721,335	)	$	(82,653	)	$	—	$	1,553,596		$	2,775,422		$	2,305,895

Net income (loss)													(259,617		)						(34,288		)	(293,905		)	64,047
Distributions to noncontrolling interests in consolidated Real Estate Affiliates																					(61,703		)	(61,703		)
Acquisition/disposition of partner's noncontrolling interests in consolidated Real Estate Affiliates																					(3,204		)	(3,204		)
Buyback of Class A Stock													3,275											3,275			(114,542		)
Buyback of Class B-1 Stock			(105		)					(158,517		)	(65,902		)									(224,524		)
Series K Preferred Unit redemption													923								(544		)	379
Long Term Incentive Plan & Stock Option Expense													430											430
Preferred stock dividend ($0.7968 per share)													(7,968		)									(7,968		)
Other comprehensive loss																679								679
Dividends on Class A ( $0.66 per share) and Combined Class B Stock (Refer to Note 9)													(651,098		)									(651,098		)	(64,047		)
Restricted stock grants, net (14,214 Class A Common shares )										—														—			5,298
Class A Conversion to Class B-1 (24,873,824 Class A Shares converted to 22,128,255 Class B-1 Shares)			222							473,102			49,029											522,353			(522,350		)

Balance at June 30, 2019	$	—	$	4,664		$	6,401	$	242,042	$	6,087,409		$	(5,652,263	)	$	(81,974	)	$	—	$	1,453,857		$	2,060,136		$	1,674,301

Brookfield Property REIT Inc. CONSOLIDATED STATEMENTS OF EQUITY (Continued) (UNAUDITED)

	Common Stock		Combined Class B Stock		Class C Stock		Preferred Stock		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Common Stock in Treasury		Noncontrolling Interests in Consolidated Real Estate Affiliates and Operating Partnership			Total Equity			Redeemable Class A Stock
	(Dollars in thousands, except for per share and share amounts)
Balance at April 1, 2019	$	—	$	4,497	$	6,401	$	242,042	$	5,731,469	$	(5,233,154	)	$	(83,113	)	$	—	$	1,510,010		$	2,178,152		$	2,069,999

Net income (loss)											(257,231		)						(39,307		)	(296,538		)	30,011
Distributions to noncontrolling interests in consolidated Real Estate Affiliates																			(14,708		)	(14,708		)
Acquisition/disposition of partner's noncontrolling interests in consolidated Real Estate Affiliates																			(2,138		)	(2,138		)
Long Term Incentive Plan & Stock Option Expense											430											430
Buyback of Class A Stock																						—			(16,266		)
Preferred stock dividend ($0.3984 per share)											(3,984		)									(3,984		)
Other comprehensive loss														1,139								1,139
Dividends on Class A ( $0.33 per share) and Combined Class B Stock (Refer to Note 9)											(183,828		)									(183,828		)
Restricted stock expense, net of forfeitures (10,948 Class A Stock)																						—			2,176
Class A Conversion to Class B-1 (18,171,862 Class A Shares converted to 16,648,280 Class B-1 Shares)			167						355,940		25,504											381,611			(381,608		)
Class A Dividend																						—			(30,011		)

Balance at June 30, 2019	$	—	$	4,664	$	6,401	$	242,042	$	6,087,409	$	(5,652,263	)	$	(81,974	)	$	—	$	1,453,857		$	2,060,136		$	1,674,301

The accompanying notes are an integral part of these consolidated financial statements.

Brookfield Property REIT Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended September 30,						Six Months Ended June 30,
	2018			2017			2019			2018
	(Dollars in thousands)						(Dollars in thousands)
Cash Flows provided by Operating Activities:
Net income	$	3,873,714		$	464,960		$	(226,822	)	$	161,460
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in income of Unconsolidated Real Estate Affiliates	(59,206		)	(99,884		)
Equity in loss (income) of Unconsolidated Real Estate Affiliates							15,711			(38,869		)
Distributions received from Unconsolidated Real Estate Affiliates	85,269			133,158			39,610			46,256
Provision for doubtful accounts	9,180			8,769			3,746			5,662
Depreciation and amortization	515,437			505,875			237,181			359,035
Amortization/write-off of deferred finance costs	10,381			9,011			15,398			5,544
Accretion/write-off of debt market rate adjustments	(1,643		)	(3,256		)	(831		)	(2,230		)
Amortization of intangibles other than in-place leases	15,338			24,874			(4,107		)	7,150
Amortization of right of use assets							2,403			—
Straight-line rent amortization	766			(3,260		)	(3,949		)	(594		)
Deferred income taxes	(573,109		)	9,290			6,354			(1,692		)
Gain on dispositions, net	—			(4,775		)
Unconsolidated Real Estate Affiliates - gain on investment, net	(488,654		)	—			(104,354		)	(10,361		)
Gain from changes in control of investment properties and other, net	(2,862,681		)	(79,325		)	—			(12,664		)
Provision for impairment	45,866			—			184,347			38,379
Gain on extinguishment of debt	—			(55,112		)
Gain on foreign currency	—			(3,195		)
Net changes:
Accounts and notes receivable, net	(19,962		)	8,740			(6,159		)	5,963
Prepaid expenses and other assets	(7,791		)	(24,922		)
Prepaid expenses and other assets (see Notes 7 and 14)							4,603			32,811
Deferred expenses, net	(28,863		)	(16,380		)	(8,352		)	(21,577		)
Accounts payable and accrued expenses	(66,203		)	30,844
Accounts payable and accrued expenses (see Notes 7 and 15)							(59,240		)	(50,045		)
Other, net	40,386			32,327			5,728			13,803
Net cash provided by operating activities	488,225			937,739			101,267			538,031
Cash Flows (used in) provided by Investing Activities:
Cash Flows used in Investing Activities:
Acquisition of real estate and property additions	—			(291,046		)	(16,596		)	—
Development of real estate and property improvements	(587,418		)	(451,078		)	(291,244		)	(361,966		)
Loans to joint venture partners	(6,739		)	(53,196		)
Proceeds from repayment of loans to joint venture partners	82,000			47,076
Loans to affiliates							(330,000		)	—
Loans to joint venture and joint venture partners							(95,947		)	(5,772		)
Proceeds from repayment of loans to affiliates							330,000			—
Proceeds from repayment of loans to joint venture and joint venture partners							18,020			80,000
Proceeds from sales of investment properties and Unconsolidated Real Estate Affiliates	2,878,021			42,028			12,000			60,960
Contributions to Unconsolidated Real Estate Affiliates	(102,118		)	(71,076		)	(144,213		)	(82,637		)
Distributions received from Unconsolidated Real Estate Affiliates in excess of income	343,047			81,763			256,075			124,792
Net cash (used in) provided by investing activities	2,606,793			(695,529		)
Cash Flows used in Financing Activities:
Proceeds from refinancing/issuance of mortgages, notes and loans payable	6,571,856			1,355,000
Principal payments on mortgages, notes and loans payable	(1,186,149		)	(680,715		)
Net cash used in investing activities							(261,905		)	(184,623		)
Cash Flows provided by (used in) Financing Activities:
Proceeds from refinancing/issuance of mortgages, notes and loans payable (including related party debt - see Note 6)							2,492,339			790,000
Principal payments on mortgages, notes and loans payable - (including related party debt - see Note 6)							(1,238,657		)	(677,926		)
Deferred finance costs	(110,584		)	(3,133		)	(14,549		)	(213		)
Issuances of Class C Stock	200,000			—
Treasury stock purchases	—			(267,788		)
Cash contributions from noncontrolling interests in consolidated real estate affiliates	1,470,857			15,258
Buyback of Class A Stock							(111,266		)	—
Buyback of Combined Class B Stock							(224,524		)	—
Series K preferred unit redemptions							(14,556		)	—
Cash distributions to noncontrolling interests in consolidated real estate affiliates	(4,213		)	(4,472		)	(52,058		)	(2,888		)
Cash distributions paid to common stockholders	(9,835,798		)	(812,871		)
Cash distributions paid to stockholders							(715,144		)	(421,374		)
Cash distributions reinvested (DRIP) in common stock	357			834			—			245
Cash distributions paid to preferred stockholders	(11,952		)	(11,952		)	(7,969		)	(7,968		)
Cash distributions and redemptions paid to unit holders	(106,167		)	(15,182		)	(3,781		)	(6,361		)
Other, net	(9,631		)	29,681			—			5,705
Net cash used in financing activities	(3,021,424		)	(395,340		)
Effect of foreign exchange rates on cash and cash equivalents	—			3,195
Net cash provided by (used in) financing activities							109,835			(320,780		)
Net change in cash, cash equivalents and restricted cash	73,594			(149,935		)	(50,803		)	32,628
Cash, cash equivalents and restricted cash at beginning of period	231,939			531,705			298,693			231,939
Cash, cash equivalents and restricted cash at end of period	$	305,533		$	381,770		$	247,890		$	264,567


Brookfield Property REIT Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (UNAUDITED)					Brookfield Property REIT Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (UNAUDITED)
	Nine Months Ended September 30,				Six Months Ended June 30,
	2018		2017		2019		2018
	(Dollars in thousands)				(Dollars in thousands)
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	442,924	$	406,282	$	315,548	$	284,668
Interest capitalized	15,123		6,932		12,067		9,385
Income taxes paid	2,522		7,947		5,256		2,358
Accrued capital expenditures included in accounts payable and accrued expenses	219,022		126,306		260,636		243,924
Cash paid for amounts included in the measurement of lease liabilities					4,379		—
Recognition of right-of-use asset					75,504		—
Lease liabilities arising from obtaining right-of-use lease asset					75,504		—
Straight-line ground rent asset reclassed to right-of-use asset					53,779		—
Straight-line ground rent liability reclassed to right-of-use asset					3,817		—
Straight-line building rent liability reclassed to right-of-use asset					3,599		—
Non-cash transfer of legal rights for Coronado Center Mall (Refer to Note 3)					53,100		—

The accompanying notes are an integral part of these consolidated financial statements.

911

Table of Contents

Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 1 ORGANIZATION

Readers of this Quarterly Report on Form 10-Q (this "Quarterly Report") should refer to the Company's (as defined below) audited consolidated financial statements for the year ended December 31, ~~2017~~2018 which are included in the Company's Annual Report on Form 10-K (our "Annual Report") for the fiscal year ended December 31, ~~2017~~2018 (Commission File No. 001-34948), as certain footnote disclosures which would substantially duplicate those contained in our Annual Report have been omitted from this Quarterly Report. In the opinion of management, all adjustments necessary for a fair presentation (which include only normal recurring adjustments) have been included in this Quarterly Report. Unless context otherwise requires, capitalized terms used, but not defined in this Quarterly Report, have the same meanings as in our Annual Report.

General

~~GGP Inc., ("GGP” or the “Company”) (now known as~~ Brookfield Property REIT Inc. (referred to herein as "BPR or ~~“BPR"~~the "Company"), formerly known as GGP Inc. ("GGP"), a Delaware corporation, was organized in July 2010 and is an externally managed real estate investment trust, referred to as a "REIT".

On March 26, 2018, GGP and Brookfield Property Partners L.P. ~~(“BPY”~~("BPY") entered into ana definitive agreement ~~and plan of merger (as amended by the amendment thereto dated June 25, 2018, the “Merger Agreement”~~(the "Merger Agreement") pursuant to which BPY would acquire all of the shares of GGP common stock, par value $0.01 per share, that BPY and its affiliates did not already own through a series of transactions (collectively, the ~~“BPY Transaction”~~"BPY Transaction"), including, among other things, the exchange of all shares of GGP common stock owned by certain affiliates of BPY and any subsidiary of GGP for ~~a newly authorized series of preferred stock of GGP designated~~ Series B Preferred Stock (the ~~“Class~~"Class B ~~Exchange”~~Exchange") and the payment of a special dividend payable to certain holders of record of GGP common stock pursuant to the terms of the Merger Agreement (the ~~“Pre-Closing Dividend”~~"Pre-Closing Dividend").

On July 26, 2018, GGP obtained the requisite stockholder approval for the BPY Transaction at a special meeting of GGP stockholders. Therefore, on July 27, 2018, GGP effected the Class B Exchange by exchanging shares of GGP common stock owned by certain affiliates of BPY and any subsidiary of GGP into Series B Preferred Stock.

On August 27, 2018, pursuant to the Merger Agreement, the Pre-Closing Dividend and consideration was paid to all holders of record of GGP common stock (not including holders of GGP restricted stock, but including certain holders of GGP options who are deemed stockholders) on July 27, 2018 following the Class B Exchange. The Pre-Closing Dividend and consideration provided for the distribution of up to $23.50 in cash or a choice of either one BPY limited partnership unit ("BPY unit") or one share of newly authorized Class A Stock of BPR, par value $0.01 per share ("Class A Stock"), subject to proration in each case, based on an aggregate cash consideration amount of $9.25 billion.

Pursuant to the Merger Agreement, on August 27, 2018, GGP’s certificate of incorporation was amended and restated (the “Charter Amendments”) to, among other things, change the Company's name to Brookfield Property REIT Inc., authorize the issuance of Class A Stock, Class B-1 Stock, par value $0.01 per share (“Class B-1 Stock”) and Class C Stock, par value $0.01 per share (“Class C Stock”) and to provide the terms governing the Series B Preferred Stock and Class B-1 Stock (collectively, “Class B Stock”). In addition, the Company amended and restated its bylaws (the “Bylaws Amendments”) and the agreement of limited partnership of GGP Operating Partnership, LP (“GGPOP”), a subsidiary of GGP that was renamed BPR OP, LP (“BPROP”) (the “Amended BPR OP Partnership Agreement”). The Charter Amendments superseded the certificate of designations authorizing the Company's Series B Preferred stock, such that the Series B Preferred Stock remains outstanding but is referred to following the Charter Amendments as Class B Stock, having the rights, powers, preferences and other terms given to Class B Stock in the Charter Amendments.

Each share of Class A Stock was structured to provide its holder with an economic return that is equivalent to that of a BPY unit, including rights to identical distributions. Subsequent to the BPY Transaction, Class A stockholders have the right to exchange all or a portion of their Class A Stock for cash at a price equal to the value of an equivalent number of BPY units, subject to adjustment in the event of certain dilutive or other capital events by BPY or BPR. BPY has the option, but not the obligation, to settle any exchange requests by exchanging each share of Class A Stock for one BPY unit. All dividends to holders of Class A Stock will be paid prior and in preference to any dividends or distributions on the Class B Stock, Class C Stock or the common stock of BPR and will be fully declared and paid before any dividends are declared and paid or any other distributions are made

~~on any Class B Stock, Class C Stock or the common stock of BPR. The holders of Class A Stock shall not be entitled to any dividends from BPR other than the class A dividend.~~

Except as otherwise expressly provided in the Charter Amendments or as required by law, the holders of Class A Stock, Class B Stock and Class C Stock will vote together and not as separate classes. The holders of shares of each of Class B Stock and Class C Stock will be entitled to one vote for each share thereof held at the record date for the determination of stockholders entitled to vote on any matter. The holders of shares of Class A Stock will be entitled to one vote for each share thereof held at the record date for the determination of stockholders entitled to vote on any matter, except that holders of shares of Class A Stock will not be entitled to vote (i) on a liquidation or dissolution or conversion of the Class A Stock in connection with a market capitalization liquidation event (as described in the Charter Amendments), or (ii) to reduce the voting power of the Class B Stock or Class C Stock.

BPR is an indirect subsidiary of BPY, one of the world's largest commercial real estate companies. Although the BPY Transaction resulted in a change of control of the Company, BPR remains a reporting entity. Accordingly, the Company accounted for the BPY Transaction as an equity recapitalization transaction. The BPY Transaction resulted in the consummation of a series of recapitalization and financing transactions (see Note 6) and joint venture asset sales (see Note 3). As a result of the BPY Transaction, our financial information should be considered in conjunction with BPY’s financial information.

In these notes, the terms "we", "us" and "our" refer to BPR and its subsidiaries. BPR, through its subsidiaries and affiliates, is an owner and operator of retail properties. As of ~~September~~June 30, ~~2018,~~2019, we ~~are~~were the owner, either entirely or with joint venture partners, of ~~125~~123 retail ~~properties.~~properties in the United States.

Substantially all of our business is conducted through ~~BPROP,~~BPR OP, LP ("BPROP"), which we sometimes refer to herein as the Operating Partnership, and its subsidiaries. As of ~~September~~June 30, ~~2018,~~2019, BPR held approximately 99% of the common equity of BPROP, while the remaining 1% was held by limited partners and certain previous contributors of properties to BPROP.

In addition to holding ownership interests in various joint ventures, the Operating Partnership generally conducts its operations through BPR REIT Services LLC. ("BPRRS"), Brookfield Properties Retail Inc. ("BPRI") and General Growth Management, Inc. ("GGMI")~~, General Growth Services, Inc. ("GGSI") and GGPLP REIT Services, LLC ("GGPRS")~~. Each of GGMI and ~~GGSI~~BPRI is a taxable REIT subsidiary ("TRS"), which ~~provides~~earn real estate management, leasing, ~~tenant coordination, business~~ development, ~~marketing, strategic partnership~~ and financing fees for other ancillary services for a majority of our Unconsolidated Real Estate Affiliates (defined below) and for substantially all of our Consolidated Properties (defined below). ~~GGSI~~BPRI also serves as a contractor to GGMI for these services. ~~GGPRS~~BPRRS generally provides financial, accounting, tax, legal, development, and other services to our Consolidated Properties.

We refer to our ownership interests in properties in which we own a majority or controlling interest and are consolidated under accounting principles generally accepted in the United States of America ("GAAP") as the "Consolidated Properties." We also own interests in certain properties through joint venture entities in which we own a noncontrolling interest ("Unconsolidated Real Estate Affiliates") and we refer to those properties as the "Unconsolidated Properties".

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of BPR, our subsidiaries and joint ventures in which we have a controlling interest. For consolidated joint ventures, the noncontrolling partner's share of the assets, liabilities and operations of the joint ventures (generally computed as the joint venture partner's ownership percentage) is included in noncontrolling interests in consolidated real estate affiliates as permanent equity of the Company. Intercompany balances and transactions have been eliminated. Noncontrolling interests are included on our Consolidated Balance Sheets related to the Common,

Table of Contents

Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Preferred, and LTIP Units of BPROP and are presented either as redeemable noncontrolling interests or as noncontrolling interests in our permanent equity. The Operating Partnership and each of our consolidated joint ventures are variable interest entities as the limited partners do not have substantive kick-out rights or substantive participating rights. However, as the Company holds a majority voting interest in the Operating Partnership and our consolidated joint ventures, it qualifies for the exemption from providing certain of the disclosure requirements associated with variable interest entities.

We operate in a single reportable segment, which includes the operation, development and management of retail and other rental properties. Our portfolio is targeted to a range of market sizes and consumer tastes. Each of our operating properties is considered a separate operating segment, as each property earns revenues and incurs expenses, individual operating results are reviewed and discrete financial information is available. The Company's chief operating decision maker is comprised of a team of several members of executive management who use ~~Company net operating income, or NOI,~~property operations in assessing segment operating performance.

~~Table of Contents~~

~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

We do not distinguish or group our consolidated operations based on geography, size or type for purposes of making property operating decisions. Our operating properties have similar economic characteristics and provide similar products and services to our tenants. There are no individual operating segments that are greater than 10% of combined revenue ~~Company NOI~~ or combined assets. ~~Company NOI excludes~~When assessing segment operating performance, certain non-cash and non-comparable items such as straight-line rent, depreciation expense and intangible asset and liability amortization are excluded from property operations, which are a result of ~~our~~GGP's emergence from bankruptcy, acquisition accounting and other capital contribution or restructuring events. Further, all material operations are within the United States and no customer or tenant comprises more than 10% of consolidated revenues. As a result, the Company's operating properties are aggregated into a single reportable segment.

~~Properties~~Reclassifications

~~Real estate~~Components of revenue that were previously reported as minimum rents, tenant recoveries, and overage rents have been combined and reported as rental revenues on the Consolidated Statements of Comprehensive Income. This change in presentation was done to improve comparability by conforming prior year presentation to the current year presentation required under Accounting Standards Codification ("ASC") 842. Total revenues of the Company are unchanged by this reclassification. Refer to Note 7 for further information.



	Three Months Ended June 30, 2018				Six Months Ended June 30, 2018
	As Originally Reported		As Reclassified		As Originally Reported		As Reclassified
Minimum rents	$	379,312	$	—	$	747,835	$	—
Tenant recoveries	156,155		—		313,157		—
Overage rent	3,927		—		10,171		—
Total rental revenues	$	—	$	539,394	$	—	$	1,071,163

Acquisitions of Operating Properties (Note 3)

The fair values of tangible assets are ~~stated at~~determined on an "if vacant" basis. The "if vacant" fair value is allocated to land, where applicable, buildings, equipment and tenant improvements based on comparable sales and other relevant information with respect to the property. Specifically, the "if vacant" value of the buildings and equipment was calculated using a cost ~~less any provisions~~approach utilizing published guidelines for ~~impairments. Expenditures~~current replacement cost or actual construction costs for ~~significant betterments~~similar, recently developed properties; and ~~improvements are capitalized. Maintenance~~an income approach. Assumptions used in the income approach to the value of buildings include: capitalization and ~~repairs are charged~~discount rates, lease-up time, market rents, make ready costs, land value, and site improvement value.

The estimated fair value of in-place tenant leases includes lease origination costs (costs we would have incurred to ~~expense when incurred. Construction~~lease the property to the current occupancy level of the property) and ~~improvement costs incurred in connection with~~ the ~~development~~lost revenues during the period necessary to lease-up from vacant to current occupancy level. Such estimates include the fair value of ~~new properties or the redevelopment of existing properties are capitalized. Real estate taxes, interest~~leasing commissions, legal costs and ~~internal~~tenant coordination costs ~~associated with leasing~~that would be incurred to lease the property to this occupancy level. Additionally, we evaluate the time period over which such occupancy level would be achieved and ~~development overhead incurred during construction periods are capitalized. Capitalization is based on qualified expenditures and interest rates. Capitalized~~include an estimate of the net operating costs (primarily real estate taxes, ~~interest costs,~~insurance, and ~~internal costs associated with leasing~~utilities) incurred during the lease-up period, which generally ranges up to one year. The fair value of the acquired in-place tenant leases is included in the balance of buildings and ~~development overhead are~~equipment and amortized over ~~lives which are consistent with~~ the ~~related assets.~~remaining lease term for each tenant.

Pre-development costs, which generally include legal and professional fees and other third-party costs directly related to the construction assets, are capitalized as part of the property being developed. In the event a development is no longer deemed to be probable of occurring, the capitalized costs are expensed (see also our impairment policies in this note below).

~~We periodically review the estimated useful lives of our properties, and may adjust them as necessary. The estimated useful lives of our properties range from 10-45 years.~~

~~Depreciation or amortization expense is computed using the straight-line method based upon the following estimated useful lives:~~



	~~Years~~
~~Buildings and improvements~~	~~10 - 45~~
~~Equipment and fixtures~~	~~3 - 20~~
~~Tenant improvements~~	~~Shorter of useful life or applicable lease term~~

~~Reclassifications~~

In November 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-18, which requires that a statement of cash flows explain the change during the reporting period in the total of cash, cash equivalents and restricted cash or restricted cash equivalents. The Company adopted this guidance on December 31, 2017, which changes our statements of cash flows and related disclosures for all periods presented. The following is a summary of our cash, cash equivalents and restricted cash total as presented in our statements of cash flows for the nine months ended September 30, 2018 and 2017:

Nine Months Ended September 30,
2018 2017
Cash and cash equivalents $ 260,716
$ 311,107
Restricted cash 44,817
70,663
Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 305,533
$ 381,770

For the nine months ended September 30, 2017, the changes in restricted cash related to cash flows provided by operating activities of $0.6 million, restricted cash related to cash flows used in investing activities of $0.9 million and restricted cash related to cash flows used in financing activities of $15.2 million were reclassified.

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

In addition, certain prior period amounts included in prepaid expenses and other assets and deferred tax liabilities in the Consolidated Balance Sheets have been reclassified to deferred tax assets, net as of September 30, 2017.

~~Acquisitions of Operating Properties (Note 3)~~

Acquisitions of properties are typically accounted for as acquisitions of assets rather than acquisitions of a business. Accordingly, the results of operations of acquired properties have been included in the results of operations from the respective dates of acquisition and acquisition costs are capitalized. Estimates of future cash flows and other valuation techniques are used to allocate the purchase price of acquired property between land, buildings and improvements, equipment, assumed debt liabilities and identifiable intangible assets and liabilities such as amounts related to in-place tenant leases, acquired above and below-market tenant and ground leases, and tenant relationships.

Identifiable intangible assets and liabilities are calculated for above-market and below-market tenant and ground leases where we are ~~either~~ the lessor or the lessee. The difference between the contractual rental rates and our estimate of market rental rates is measured over a period equal to the remaining non-cancelable term of the leases, including significantly below-market renewal options for which exercise of the renewal option appears to be reasonably ~~assured.~~certain. The remaining term of leases with renewal options at terms significantly below market reflect the assumed exercise of such below-market renewal options and assume the amortization period would coincide with the extended lease term.

The gross asset balances of the in-place value of tenant leases are included in buildings and equipment in our Consolidated Balance Sheets.



	Gross Asset		Accumulated Amortization			Net Carrying Amount

As of June 30, 2019
Tenant leases:
In-place value	$	160,459	$	(74,427	)	$	86,032

As of December 31, 2018
Tenant leases:
In-place value	$	188,140	$	(86,510	)	$	101,630

Gross Asset
Accumulated
Amortization

Net Carrying
Amount

As of September 30, 2018

Tenant leases:

In-place value $ 197,953
$ (89,964 ) $ 107,989

As of December 31, 2017
Tenant leases:
In-place value $ 347,232
$ (181,088 ) $ 166,144

The above-market tenant ~~leases and below-market ground~~ leases are included in prepaid expenses and other assets (Note ~~13)~~14); the below-market tenant leases ~~above-market ground leases and above-market headquarters office lease~~ are included in accounts payable and accrued expenses (Note ~~14)~~15) in our Consolidated Balance Sheets.

Amortization/accretion of all intangibles, including the intangibles in Note 1314 and Note ~~14,~~15, had the following effects on our income from continuing operations:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Amortization/accretion effect on continuing operations	$	(4,599	)	$	(14,826	)	$	(9,781	)	$	(30,866	)

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Amortization/accretion effect on continuing operations $ (11,524 ) $ (15,100 ) $ (42,390 ) $ (56,417 )

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~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

Future amortization/accretion of all intangibles ~~including the intangibles~~ in Note 1314 and Note ~~14,~~15, is estimated to decrease results from continuing operations as follows:



Year	Amount
2019 Remaining	$	9,479
2020	14,121
2021	9,493
2022	8,628
2023	8,345

Year Amount
2018 Remaining $ 7,076
2019 21,822
2020 15,292
2021 10,322
2022 9,471

~~Investments in Unconsolidated Real Estate Affiliates (Note 5)~~

We account for investments in joint ventures where we own a non-controlling joint interest using either the equity method or the cost method. If we have significant influence but not control over the investment, we utilize the equity method. If we have neither control nor significant influence, we utilize the cost method. Under the equity method, the cost of our investment is adjusted for our share of the earnings of such Unconsolidated Real Estate Affiliates from the date of acquisition, increased by our contributions and reduced by distributions received. Under the cost method, the cost of our investment is not adjusted for our share of the earnings of such Unconsolidated Real Estate Affiliates from the date of acquisition and distributions are treated as earnings when received.

To determine the method of accounting for partially owned joint ventures, we evaluate the characteristics of associated entities and determine whether an entity is a variable interest entity ("VIE"). A limited partnership or other similar entity is considered a VIE unless a simple majority of limited partners (excluding limited partners that are under common control with the general partner) have substantive kick-out rights or participating rights. Accounting guidance amended the following: (i) modified the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, (ii) eliminated the presumption that a general partner should consolidate a limited partnership, (iii) affected the consolidation analysis of reporting entities that are involved with VIEs, and (iv) provided a scope exception for certain entities. If an entity is determined to be a VIE, we determine which party is the primary beneficiary by analyzing whether we have both the power to direct the entity's significant economic activities and the obligation to absorb potentially significant losses or receive potentially significant benefits. Significant judgments and assumptions inherent in this analysis include the nature of the entity's operations, future cash flow projections, the entity's financing and capital structure, and contractual relationship and terms.

~~Primary risks associated with our VIEs include the potential of funding the entities' debt obligations or making additional contributions to fund the entities' operations.~~

Generally, the operating agreements with respect to our Unconsolidated Real Estate Affiliates provide that assets, liabilities and funding obligations are shared in accordance with our ownership percentages. Therefore, we generally also share in the profit and losses, cash flows and other matters relating to our Unconsolidated Real Estate Affiliates in accordance with our respective ownership percentages. Except for Retained Debt (as described in Note 5), differences between the carrying amount of our investment in the Unconsolidated Real Estate Affiliates and our share of the underlying equity of our Unconsolidated Real Estate Affiliates are typically amortized over lives ranging from 5 to 45 years. When cumulative distributions exceed our investment in the joint venture, the investment is reported as a liability in our consolidated financial statements. The liability is limited to our maximum potential obligation to fund contractual obligations, including recourse related to certain debt obligations.

Partially owned joint ventures over which we have a controlling financial interest are consolidated in our consolidated financial statements. In determining if we have a controlling financial interest, we consider factors such as ownership interest, authority to make decisions, kick-out rights and substantive participating rights. Partially owned joint ventures where we do not have a controlling financial interest, but have the ability to exercise significant influence, are accounted for using the equity method.

To the extent that we contribute assets to a joint venture accounted for using the equity method, our investment in the joint venture is recorded at the fair value of the consideration of the assets that were contributed to the joint venture. We will recognize gains and losses on the contribution of our real estate to joint ventures, relating to our entire investment in the property, to the extent the

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~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

buyer is independent of the Company, the collection of the sales price is reasonably assured, and we will not be required to support the operations of the property or its related obligations to an extent greater than our proportionate interest.

~~The combined summarized financial information of unconsolidated joint ventures is disclosed in Note 5 to the Consolidated Financial Statements.~~

We continually analyze and assess reconsideration events, including changes in the factors mentioned above, to determine if the consolidation treatment remains appropriate. Decisions regarding consolidation of partially owned entities frequently require significant judgment by our management.

Revenue Recognition and Related Matters

Minimum rents are recognized on a straight-line basis over the terms of the related operating leases, including the effect of any free rent periods. Minimum rents also include lease termination income collected from tenants to allow for the tenant to vacate their space prior to their scheduled termination dates, as well as accretion related to above-market and below-market tenant leases on acquired properties and properties that were recorded at fair value at the emergence from bankruptcy.

Overage rent is paid by a tenant when the tenant's sales exceed an agreed upon minimum amount and is recognized on an accrual basis once tenant sales exceed contractual tenant lease thresholds and is calculated by multiplying the sales in excess of the minimum amount by a percentage defined in the lease.

Tenant recoveries are established in the leases or computed based upon a formula related to real estate taxes, insurance and other property operating expenses and are generally recognized as revenues in the period the related costs are incurred.

Accounting for real estate sales distinguishes between sales to a customer or non-customer for purposes of revenue recognition. Once we, as the seller, determine that we have a contract, we will identify each distinct non-financial asset promised to the counter-party and whether the counter-party obtains control and transfers risks and rewards of ownership of each non-financial asset to determine if we should derecognize the asset.

Leases

We ~~provide~~have entered into lease arrangements for the land and buildings at certain properties, as well as for the use of office space in Chicago, Illinois. We account for leases under Accounting Standards Update ("ASU") 2016-02, Leases ("Topic 842" or "the new leasing standard"). We elected to use the "package of practical expedients", as discussed below, which allowed us not to reassess

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

under the new leasing standard prior conclusions about lease identification, lease classification, and initial direct costs. We elected to recast prior-period comparative information presented in our Consolidated Statements of Comprehensive Income (Loss) related to rental revenues.

The new leasing standard requires lessees to record a right-of-use ("ROU") asset and a related lease liability for the rights and obligations associated with all lessee leases. Topic 842 also modified the lease classification criteria through the elimination of "bright-line" tests, the removal of historical real estate specific lease provisions, and changes to lessor accounting to align with the new revenue recognition standard (ASC 606).

On the adoption date, we recognized lease liabilities of $73.4 million and ROU assets of $118.9 million for operating leases of Consolidated Properties for which we are the lessee included in accounts payable and accrued expenses and prepaid expenses and other assets, respectively, on the Consolidated Balance Sheet and there was no cumulative effect on retained earnings. In order to determine the lease liabilities recognized upon adoption, we discounted the remaining lease payments using our incremental borrowing rates ("IBR") at January 1, 2019. The weighted average rate applied was 7.36%. The ROU asset balance was initially measured as the lease liability amount adjusted by the amount of prepaid or accrued lease payments, deferred straight-line lease liabilities, and intangible ground lease assets and liabilities relating to leases recognized on our Consolidated Balance Sheet as of December 31, 2018. In transition, an adjustment of $45.4 million was made to the ROU asset balance to derecognize $52.8 million of below-market ground lease intangible assets (within prepaid expenses and other assets) and $7.4 million of accrued straight-line rent (within accounts payable and accrued expenses) which are now part of the total ROU assets previously recorded on our Consolidated Balance Sheet.

In addition to the "package of practical expedients", we elected to use the following additional practical expedients permitted by the new leasing standard:

The transition practical expedient that allows us to carry forward our historical accounting treatment for land easements on existing agreements.

The short-term lease election that allows a lessee not to apply the balance sheet recognition requirements to leases with a term of 12 months or less; lease payments associated with these leases are recognized on a straight-line basis as an expense over the lease term and are not material.

The practical expedient which allows a lessee to not separate lease and non-lease components. We have elected to apply this election to all classes of underlying assets.

The Company did not elect to apply the practical expedients related to hindsight or assessing impairment of ROU assets.

Lessee arrangements (policy applicable from January 1, 2019)

To account for leases for which we are the lessee under the new leasing standard, contracts must be analyzed upon inception to determine if the arrangement is, or contains, a lease. A lease conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Lease classification tests and measurement procedures are performed at the lease commencement date. Differences in lease classification will affect only the pattern and classification of expense recognition in our Consolidated Statements of Comprehensive Income (Loss).

The lease liability is initially measured as the present value of the lease payments over the lease term, discounted using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the lessee’s incremental borrowing rate is used. The lease liability balance is subsequently amortized using the effective interest method. The incremental borrowing rate is determined using an approach based on the rate of interest that the lessee would pay to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. We utilized a market-based approach to estimate the IBR for each individual lease. The approach required significant judgment. Therefore, we utilized different data sets to estimate base IBRs via an analysis of (i) yields on outstanding public debt of BPR, as well as comparable companies, (ii) observable mortgage rates, and (iii) unlevered property yields and discount rates. We then applied adjustments to account for considerations related to (i) term and (ii) security that may not be fully incorporated by the aforementioned data sets. Based on individual characteristics of each lease, we selected an IBR taking into consideration how each data approach and adjustments thereto incorporate term, currency and security.

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

The lease term is the noncancelable period of the lease, and includes any renewal and termination options we are reasonably certain to exercise. The reasonably certain threshold is evaluated at lease commencement and is typically met if substantial economic incentives or termination penalties are identified.

Lease payments measured at the commencement date include fixed payments, in-substance fixed payments, variable lease payments dependent on a rate or index (using the index or rate in effect at lease commencement), any purchase option the lessee is reasonably certain to exercise, and payments of penalties for terminating the lease if the lease term reflects the lessee exercising the termination option. Fully variable lease payments without an in-substance fixed component are not included in the measurement of the lease liability and are recognized in the period in which the underlying contingency is resolved.

The lease liability is remeasured when the contract is modified, upon the resolution of a contingency such that variable payments become fixed or if our assessment of exercising an extension, termination or purchase option changes. Once remeasured, an adjustment is made to the ROU asset. However, if the carrying amount of the right-of-use asset is reduced to zero, any remaining amount of the remeasurement is recognized in earnings.

The ROU asset balance is initially measured as the lease liability amount, adjusted for any lease payments made prior to the commencement date, initial direct costs, estimated costs to dismantle, remove, or restore the underlying asset and incentives received.

Our current lessee lease portfolio is comprised entirely of operating leases; however if we enter into a finance lease in the future, the new leasing standard requires us to initially recognize and measure these leases using the same method as described above for operating leases. Subsequent to initial recognition, each lease payment would be allocated between interest expense and a reduction of the lease liability. Interest expense would be recognized over the lease term using the interest method to produce a constant periodic rate of interest on the remaining balance of the liability for each period and would be included in interest expense in our Consolidated Statements of Comprehensive Income (Loss). The ROU asset would be amortized on a straight-line basis over the lease term, with depreciation recorded in depreciation and amortization in our Consolidated Statements of Comprehensive Income (Loss).

The ROU assets in our operating leases are evaluated for impairment in a manner similar to our operating properties, as described below under "Impairment".

Lessor arrangements (policy applicable from January 1, 2019)

At the inception of a new lease arrangement, including new leases that arise from amendments, we assess the terms and conditions to determine the proper lease classification. When the terms of a lease effectively transfer control of the underlying asset, the lease is classified as a sales-type lease. When a lease does not effectively transfer control of the underlying asset to the lessee, but we obtain a guarantee for the value of the asset from a third party, we classify the lease as a direct financing lease. All other leases are classified as operating leases. Control of the underlying asset is transferred to the lessee if any of the following criteria are met: (i) transfer of ownership to the lessee prior to or shortly after the end of the lease term, (ii) lessee has an option to purchase the underlying property that the lessee is reasonably certain to exercise, (iii) the lease term is for the major part of the underlying property’s remaining economic life, (iv) the present value of the sum of lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments is equal to or exceeds substantially all of the fair value of the leased property or (v) the underlying property is of such a specialized nature that it is expected to have no alternative use at the end of the lease term. As of June 30, 2019, we do not have any material sales-type or direct financing leases.

For operating leases with minimum scheduled rent increases, we recognize rental income on a straight‑line basis, including the effect of any free rent periods, over the lease term when collectability of lease payments (and, if applicable, any amounts necessary to satisfy a residual value guarantee) is probable. Variable lease payments are recognized as rental income in the period when the changes in facts and circumstances on which the variable lease payments are based occur. Variable lease payments include overage rent, which is paid by a tenant when the tenant's sales exceed an agreed upon minimum amount, is recognized once tenant sales exceed contractual tenant lease thresholds and is calculated by multiplying the sales in excess of the minimum amount by a percentage defined in the lease.

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Our leases also contain provisions for tenants to reimburse us for real estate taxes and insurance, as well as for other property operating expenses, marketing costs, and utilities, which are considered to be non-lease components. These tenant reimbursements are most often established in the leases or in less frequent cases computed based upon a formula. We have elected the practical expedient to not separate non-lease components from the lease component for all classes of underlying assets and determined that the lease component is the predominant component in the contract; therefore, these recoveries are recognized in a manner similar to minimum rents and variable rents within rental revenues on our Consolidated Statements of Comprehensive Income (Loss).

Recognizing rental and related income on a straight-line basis results in a difference in the timing of revenue recognition from what is contractually due from tenants. Straight-line rents are recorded in accounts receivable, net in our Consolidated Balance Sheet. For leases where collectability of the lease payments is probable, we establish a general allowance for doubtful accounts against the portion of accounts receivable, net, including straight-line rents, which is estimated to be ~~uncollectible. Such allowances~~uncollectible based on our previous recovery experience. Changes in the general allowance are ~~reviewed each period based upon~~recognized in rental income on our ~~recovery experience~~Consolidated Statements of Comprehensive Income (Loss). If we determine that collectability of the lease payments is not probable, we record a current-period adjustment to rental income to reduce cumulative income recognized since lease commencement to the amount of cash collected from the lessee. Future revenue recognition is limited to amounts paid by the lessee. Generally, a lease is returned to accrual status when all delinquent payments become current under the terms of the lease agreement and collectability of the ~~specific facts~~remaining contractual lease payments is reasonably probable.

Rental revenues also includes lease termination income collected from tenants to allow for the tenant to vacate their space prior to their scheduled termination dates, as well as accretion related to above-market and below-market tenant leases on acquired properties and properties that were recorded at fair value at the emergence from bankruptcy.

In leasing tenant space, we may provide funding to the lessee through a tenant allowance. To account for a tenant allowance, we determine whether the allowance represents funding for the construction of ~~each outstanding amount.~~leasehold improvements and evaluate the control and ownership of such improvements. If we are considered the owner of the leasehold improvements, we capitalize the amount of the tenant allowance and depreciate it over the shorter of the useful life of the leasehold improvements or the related lease term. If the tenant allowance represents a payment for a purpose other than funding leasehold improvements, or in the event we are not considered the owner of the leasehold improvements, the allowance is capitalized to deferred expenses and considered to be a lease incentive and is recognized over the lease term as a reduction of rental revenue on a straight-line basis.

Deferred expenses (policy applicable from January 1, 2019)

The new leasing standard defines initial direct costs as incremental costs of a lease that would not have been incurred if the lease had not been obtained. These initial direct costs (consisting primarily of leasing commissions paid to third parties) are recognized as deferred expenses on our Consolidated Balance Sheet and are amortized using the straight-line method over the life of the leases. Other leasing costs which do not meet the definition of initial direct costs (consisting primarily of internal legal and leasing overhead costs) are expensed as incurred and included in property management and other costs in our Consolidated Statements of Comprehensive Income (Loss).

Policy applicable to periods prior to January 1, 2019

Our accounting policy for leases in which we are the lessor or lessee prior to the adoption of the new leasing standard can be found in our audited consolidated financial statements for the year ended December 31, 2018, which are included in our Annual Report.

Management Fees and Other Corporate Revenues

Management fees and other corporate revenues primarily represent real estate management and leasing fees, development fees, financing fees and fees for other ancillary services performed for the benefit of certain of the Unconsolidated Real Estate Affiliates. Management fees are reported at 100% of the revenue earned from the joint venture in management fees and other corporate revenues on our Consolidated Statements of Comprehensive ~~Income.~~Income (Loss). Our share of the management fee expense incurred by the Unconsolidated Real Estate Affiliates is reported within equity in income of Unconsolidated Real Estate Affiliates on our Consolidated Statements of Comprehensive Income (Loss) and in property management and other costs in the Condensed Combined

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Statements of Income in Note 5. The following table summarizes the management fees from affiliates and our share of the management fee expense:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Management fees from affiliates	$	38,050		$	26,030		$	79,238		$	51,795
Management fee expense	(12,013		)	(10,287		)	(24,530		)	(20,779		)
Net management fees from affiliates	$	26,037		$	15,743		$	54,708		$	31,016

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Management fees from affiliates $ 30,483
$ 28,806
$ 82,278
$ 77,797
Management fee expense (11,630 ) (10,675 ) (32,409 ) (27,684 )
Net management fees from affiliates $ 18,853
$ 18,131
$ 49,869
$ 50,113

Based upon the new revenue recognition guidance, we determined that typical management fees including property and asset management, construction and development management services, leasing services, property acquisition and disposition services and financing services, needed to be evaluated for each separate performance obligation included in the contract in order to

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~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

determine timing of revenue recognition. Revenues from contracts within the scope of the new revenue recognition guidance were $80.4 million for the nine months ended September 30, 2018. Management determined that property and asset management and construction and development management services each represent a series of stand-ready performance obligations satisfied over time with each day of service being a distinct performance obligation. For property and asset management services, we are compensated for our services through a monthly management fee earned based on a specified percentage of the monthly rental income or rental receipts generated from the property under management. For construction and development services, we are compensated for planning, administering and monitoring the design and construction of projects at our joint venture properties typically based on a percentage of project costs, hourly rate of development staff or a fixed fee. Revenues from such contracts were $69.4 million for the nine months ended September 30, 2018 and are recognized over the life of the applicable contract.

Conversely, leasing services, property acquisition and disposition services and financing services are each considered to be a single performance obligation, satisfied as of a point in time. Our fee is paid upon the occurrence of certain contractual event(s) that may be contingent and pattern of revenue recognition may differ from the timing of payment. For these services, the obligation is the execution of the lease, closing of the sale or acquisition, or closing of the financing or refinancing. As such, revenues are recognized at the point in time when the respective obligation has been satisfied. Revenues from such contracts were $11.0 million for the nine months ended September 30, 2018.

Following the BPY Transaction, certain Brookfield Asset Management Inc. ("BAM")-owned entities provide certain management and administration services to BPR. BPR will pay an annual base management fee to BAM equal to 1.25% of the total capitalization of BPR, subject to certain adjustments. For the first twelve months following closing of the BPY Transaction, BAM has agreed to waive management fees payable by BPR. There were no amounts due pursuant to these services for the ~~nine~~three and six months ended ~~September~~June 30, ~~2018.~~2019.

Following the BPY Transaction, an affiliate of BAM is entitled to receive incentive distributions based on an amount by which quarterly distributions exceed specified target levels. There were no such amounts payable for the ~~nine~~three and six months ended ~~September~~June 30, ~~2018.~~2019.

Impairment

Operating Properties

We regularly review our ~~consolidated properties~~Consolidated Properties for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment indicators are assessed separately for each property and include, but are not limited to, significant decreases in real estate property net operating income, significant decreases in occupancy, ~~percentage,~~ debt maturities, changes in management's intent with respect to the properties and prevailing market conditions.

If an indicator of potential impairment exists, the property is tested for recoverability by comparing its carrying amount to the estimated future undiscounted cash flows. Although the carrying amount may exceed the estimated fair value of certain properties, a real estate asset is only considered to be impaired when its carrying amount cannot be recovered through estimated future undiscounted cash flows. To the extent an impairment provision is determined to be necessary, the excess of the carrying amount of the property over its estimated fair value is expensed to operations. In addition, the impairment provision is allocated proportionately to adjust the carrying amount of the asset group. The adjusted carrying amount, which represents the new cost basis of the property, is depreciated over the remaining useful life of the property.

Although we may market a property for sale, there can be no assurance that the transaction will be complete until the sale is finalized. However, GAAP requires us to utilize the Company's expected holding period of our properties when assessing recoverability. If we cannot recover the carrying value of these properties within the planned holding period, we will estimate the fair values of the assets and record impairment charges for properties when the estimated fair value is less than their carrying value.

Impairment indicators for pre-development costs, which are typically costs incurred during the beginning stages of a potential development and construction in progress, are assessed by project and include, but are not limited to, significant changes in the Company's plans with respect to the project, significant changes in projected completion dates, tenant demand, anticipated revenues or cash flows, development costs, market factors and sustainability of development projects.

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~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

Impairment charges are recorded in the Consolidated Statements of Comprehensive Income (Loss) when the carrying value of a property is not recoverable and it exceeds the estimated fair value of the property, which can occur in accounting periods preceding disposition and/or in the period of disposition.

During the ~~nine~~three and six months ended ~~September~~June 30, ~~2018,~~2019, we recorded a ~~$45.9~~$184.3 million impairment charge on our Consolidated Statements of Comprehensive Income (Loss) related to one operating property as a result of a significant decrease in market leasing assumptions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

During the six months ended June 30, 2018, we recorded a $38.4 million impairment charge on our Consolidated Statements of Comprehensive Income (Loss) related to one operating property that ~~has~~had non-recourse debt maturing during 2019 that ~~exceeds~~exceeded the fair value of the operating property.

No provisions for impairment were recognized for the three ~~and nine~~ months ended ~~September~~June 30, ~~2017.~~2018.

Changes in economic and operating conditions that occur subsequent to our review of recoverability of our properties could impact the assumptions used in that assessment and could result in future impairment if assumptions regarding those properties differ from actual results.

Investment in Unconsolidated Real Estate Affiliates

A series of operating losses of an investee or other factors may indicate that an other-than-temporary decline in value of our investment in an Unconsolidated Real Estate Affiliate has occurred. The investment in each of the Unconsolidated Real Estate Affiliates is evaluated for valuation declines below the carrying amount. Accordingly, in addition to the property-specific impairment analysis that we performed for such joint ventures (as part of our operating property impairment process described above), we also considered whether there were other-than-temporary declines with respect to the carrying values of our Unconsolidated Real Estate Affiliates.

~~No impairments related to our investments in Unconsolidated Real Estate Affiliates were recognized for the three and nine months ended September 30, 2018 and 2017.~~

Changes in economic and operating conditions that occur subsequent to our review of recoverability of our investments in Unconsolidated Real Estate Affiliates could impact the assumptions used in that assessment and could result in future impairment if assumptions regarding those investments differ from actual results.

~~Notes Receivable~~

Notes receivable are evaluated for impairment at least quarterly. Impairment occurs when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the loan. If a loan is considered to be impaired, we record an allowance through the provision for loan losses to reduce the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral.

~~No impairments related to our notes receivable were recognized for the three and nine months ended September 30, 2018 and 2017.~~

~~Fair Value Measurements (Note 4)~~

~~The accounting principles for fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:~~

~~Level 1 - defined as observable inputs such as quoted prices for identical assets or liabilities in active markets;~~

~~Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and~~

~~Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.~~

~~Table of Contents~~

~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

Note 4 includes a discussion of properties measured at fair value on a non-recurring basis using Level 2 and Level 3 inputs and the fair value of debt, which is estimated on a recurring basis using Level 2 and Level 3 inputs. Note 8 includes a discussion of certain redeemable noncontrolling interests that are measured at fair value using Level 1 inputs.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents. We are exposed to credit risk with respect to cash held at various financial institutions and access to our credit facility. Our credit risk exposure with regard to our cash and the $1.5 billion available under our credit facility is spread among a diversified group of investment grade financial institutions. We had ~~$347.0~~$629.5 million ~~outstanding~~ and ~~no amount~~$387.0 million outstanding under our credit facility as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

Recently Issued Accounting Pronouncements

Based upon the new revenue recognition guidance, revenue recognized for the three and nine months ended September 30, 2018 is not significantly different as compared to what would have been recognized in the same period under guidance that was in effect before the change. Effective January 1, 2018, companies were required to apply a five-step model in accounting for revenue. The core principle of the revenue model is that a company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Lease contracts are excluded from this revenue recognition criteria; however, the sale of real estate is required to follow the new model. Expanded quantitative and qualitative disclosures regarding revenue recognition are required for contracts that are subject to this pronouncement. The new standard could be adopted either retrospectively to each prior reporting period presented or on a modified retrospective approach as a cumulative effect adjustment as of the date of adoption. The Company adopted the model effective January 1, 2018 using the modified retrospective approach for implementation. The Company elected to use the practical expedient to apply the model only to contracts not yet completed as of the date of adoption. The adoption resulted in a cumulative-effect adjustment to increase equity as of January 1, 2018 of approximately $1.90 million related to changes in the revenue recognition pattern of lease commissions earned by the Company from our joint ventures and the sale of condos in our Unconsolidated Real Estate Affiliates (Note 5).

In February 2016, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ASU 2016-02, ~~Leases.~~Leases. This new guidance, isincluding related ASUs that have been subsequently issued, was effective January 1, 2019, ~~with early adoption permitted. The pronouncement will require~~and required lessees to recognize a liability to make lease payments and a right-of-use ~~(ROU)~~ asset, initially measured at the present value of lease payments, for both operating and ~~financing~~finance leases. For leases with a term of 12 months or less, lessees ~~will be~~were permitted to make an accounting policy election by class of underlying asset to not recognize lease liabilities and lease assets. The guidance ~~allows~~allowed lessors and lessees to make an accounting policy election, by class of underlying asset, to not separate non-lease components from lease ~~components if certain requirements are met but requires lessors to recognize real estate tax expense and recovery income for tenants that self-pay real estate taxes.~~components. The guidance also ~~provides~~provided an optional transition method which ~~would allow~~allowed entities to initially apply the new guidance in the period of adoption, recognizing a cumulative-effect adjustment to the opening balance of retained earnings, if necessary.

~~Upon adoption, the Company will recognize a lease liability and an ROU asset for operating leases where it is the lessee, such as ground leases and office leases.~~ The Company ~~is in~~elected to apply the ~~process~~alternative transition method and no cumulative-effect adjustment to the opening balance of ~~evaluating the inputs required~~retained earnings was deemed necessary to ~~calculate the amounts that will be recorded on its balance sheet for each lease. For leases with a term of 12 months or less, the~~record.

The Company expects to make an accounting policy election by class of underlying asset to not recognize lease liabilities and lease assets. For leases where it is the lessor, the Company expects that accounting for lease components will be largely unchanged from existing GAAP and to elect the practical expedient to not separate non-lease components from lease components. Only incremental direct leasing costs may be capitalized underadopted the new ~~guidance. The Company expects to adopt this new guidance~~standard on January 1, 2019 and ~~apply~~applied the ~~requirements~~new guidance as of that date. In addition, the Company has presented all income as a single line item within "rental revenues" in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the current and comparative period. Refer to the Reclassifications section of Note 2 for additional detail. The Company ~~will continue~~elected to ~~evaluate~~use the ~~impact~~"package of ~~this guidance until it becomes effective, but~~practical expedients", which allowed the Company ~~does~~to not ~~expect~~reassess under the ~~guidance regarding capitalization~~new standard prior conclusions about lease identification, lease classification, and initial direct costs. The Company did not make any adjustments to the opening balance of ~~leasing costs will have any~~retained earnings upon adoption of the new standard given the nature of the impacts and other transition practical expedients elected by the Company. The leases section above and Note 7 includes a discussion of the effect ~~on its condensed consolidated financial statements.~~of the adoption of the new standard.

In June 2016, the FASB issued ASU 2016-13,Financial Instruments - Credit Losses, which changes the model for the measurement of credit losses on financial instruments. Specifically, the amendments in the ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments in this ASU will be effective for the Company January 1, ~~2020 with early adoption~~2020. The Company is evaluating the potential impact of this pronouncement on its consolidated financial statements.

1819

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

~~permitted on January 1, 2019. The Company is evaluating the potential impact of this pronouncement on its consolidated financial statements.~~

In October 2016, the FASB issued ASU 2016-16, which changed the current income tax accounting for intra-entity asset sales to be only for inventory. The Company adopted this standard effective January 1, 2018. For those companies that did not recognize the income tax impact of a sale other than inventory before the adoption date, the new ASU was applied on a modified retrospective basis, with a cumulative-effect adjustment directly to retained earnings as of January 1, 2018. This resulted in a cumulative-effect adjustment to decrease retained earnings by the unamortized balance of the $18.8 million prepaid asset established in December 2016.

In November 2016, the FASB issued ASU 2016-18, which requires that a statement of cash flows explain the change during the reporting period in the total of cash, cash equivalents and restricted cash or restricted cash equivalents. This standard is effective for public entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption was permitted, including adoption in an interim period. If an entity early adopted the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company adopted this guidance on December 31, 2017, which changed our statements of cash flows and related disclosures for all periods presented.

In February 2017, the FASB issued ASU 2017-05, which clarifies the accounting for the derecognition of nonfinancial assets by eliminating the exception in current GAAP for transfers of investments in real estate entities (including equity method investments). The amendments in this update provide guidance on the accounting of partial sales of nonfinancial assets and contributions of nonfinancial assets to a joint venture or other noncontrolling investee. Once this guidance is adopted, an entity would use the guidance in the new revenue recognition standard (discussed above) to determine whether it is transferring multiple, distinct assets and would recognize a gain or loss for each distinct asset transferred. When an entity transfers nonfinancial assets included in a subsidiary and retains or receives an equity interest, it first determines whether it has retained a controlling financial interest in the subsidiary. If so, the entity does not derecognize the assets and accounts for the sale of noncontrolling interest in the subsidiary under the consolidation guidance covering decreases in ownership which would result in recognizing a gain or loss. If an entity retains or receives a noncontrolling interest in the entity that owns the asset post-sale, that noncontrolling interest is considered noncash consideration and is included in the transaction price at its fair value. The retained noncontrolling interest is included at its fair value and results in an entity recognizing 100% of the gain on sale of the asset. The Company adopted this standard as of January 1, 2018 using the modified retrospective approach for implementation. We elected to use the practical expedient to apply the standard only to contracts not yet completed as of the date of adoption. The adoption will result in higher gains on future sales of partial real estate interests due to recognizing 100% of the gain on the sale of the partial interest and recording the retained noncontrolling interest at fair value. As of the adoption date, January 1, 2018, there was no cumulative-effect adjustment recorded to retained earnings.

In August 2018, the FASB issued ASU 2018-13, Fair Value ~~Measurement.~~Measurement. This new guidance is effective January 1, 2020, with early adoption permitted, and provides new, and in some cases eliminates or modifies the existing disclosure requirements on fair value measurements. Public entities will be required to disclose the following: (i) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (ii) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. In addition, public entities will no longer be required to disclose the following: (i) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (ii) the policy for timing of transfers between levels and (iii) the valuation processes for Level 3 fair value measurements. The new pronouncement also clarifies and modifies certain existing provisions, including eliminating ~~“at~~"at a ~~minimum”~~minimum" from the phrase ~~“an~~"an entity shall disclose at a ~~minimum”~~minimum" to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and clarifying that materiality is an appropriate consideration when evaluating disclosure requirements. The Company is evaluating the potential impact of this pronouncement on its consolidated financial statements.

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~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. For example, estimates and assumptions have been made with respect to allocating the purchase price of real estate acquisitions, the useful lives of assets, capitalization of development and leasing costs, provision for income taxes, recoverable amounts of receivables and deferred taxes, provision for loan loss, initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to acquisitions, impairment of long-lived assets, litigation related accruals and disclosures and fair value of debt. Actual results could differ from these and other estimates.

NOTE 3 ACQUISITIONS, SALES AND JOINT VENTURE ACTIVITY

On ~~August 27, 2018,~~April 19, 2019, BPR Cumulus LLC (an indirect subsidiary of the Company) purchased 1,250,000 shares of Series F Convertible Preferred Stock in Pinstripes, Inc. (par value $0.01 per share) at a price of $8.00 per share, for a $10.0 million total investment, resulting in a 7.6% ownership interest in Pinstripes, Inc. The investment is accounted for using the cost method as the Company has neither control nor significant influence over Pinstripes, Inc. and is included in Investment in Unconsolidated Real Estate Affiliates on the Consolidated Balance Sheets.

In connection with the formation of the BPR-FF JV LLC ~~("Future Fund")~~joint venture described below, the Company agreed to use reasonable efforts to cause a transfer to BPR-FF JV LLC of the legal rights it held in the Seritage Venture at Coronado Center Mall at an agreed upon value of $53.1 million. On April 9, 2019, the Company transferred its rights in the Sears Anchor Parcel at Coronado Center Mall to Coronado Center LLC. No gain or loss was recognized on the transaction.

On January 7, 2019, the Company completed the sale of our 12.0% interest in Bayside Marketplace for a sales price of $42.0 million. Due to cumulative distributions received in excess of its investment, the Company had a liability balance associated with its investment in Bayside Marketplace. Accordingly, the Company recognized a gain of $104.4 million included in Unconsolidated Real Estate Affiliates - gain on investment on our Consolidated Statements of Comprehensive Income (Loss) for the six months ended June 30, 2019.

The Company entered into a series of separate transactions on August 27, 2018 as a result of the BPY Transaction as follows:

The BPR-FF JV LLC joint venture was formed with Brookfield Real Estate Partners F LP. The Company contributed properties and recognized ~~gains (losses) as summarized~~a gain from the change in control of the ~~table below ($~~investment properties and other, net of $1.4 billion for the year ended December 31, 2018. In addition, the Company recognized a gain in ~~millions):~~Unconsolidated Real Estate Affiliates - gain on investment of $18.5 million for the year ended December 31, 2018.

Property Prior Ownership Current Ownership Total Asset Value Other Costs (1) Debt Balance Book Value of Investment Gain from changes in control of investment properties and other, net Unconsolidated Real Estate Affiliates - gain on investment, net
Apache Mall 100% 51% $ 143.0
$ (1.7 ) $ 73.5
$ 56.9
$ 10.9
$ —
Augusta Mall 100% 51% 251.8
2.0
170.0
(34.1 ) 117.9
—
Boise Towne Square 100% 51% 354.5
2.2
142.0
41.6
173.1
—
Columbiana Centre 100% 51% 268.8
(1.7 ) 137.3
1.0
128.8
—
Coronado Center 100% 51% 359.2
1.0
182.8
54.3
123.1
—
Glenbrook Square 100% 51% 166.8
0.9
160.0
0.5
7.2
—
Governor's Square 100% 51% 105.7
0.6
66.9
39.8
(0.4 ) —
Lynnhaven Mall 100% 51% 383.7
0.9
235.0
40.9
108.7
—
Market Place Shopping Center 100% 51% 153.1
2.6
113.4
20.0
22.3
—
Mizner Park 50% 26% 235.2
—
—
39.1
—
18.5
Northridge Fashion Center 100% 51% 584.7
1.6
221.1
79.0
286.2
—
Oglethorpe Mall 100% 51% 203.1
0.8
149.8
8.5
45.6
—
Park Place 100% 51% 269.6
1.2
176.8
84.6
9.4
—
Pembroke Lakes Mall 100% 51% 471.1
0.9
260.0
40.1
171.9
—
Riverchase Galleria 100% 51% 260.9
6.6
164.2
110.0
(6.7 ) —
The Crossroads 100% 51% 108.8
3.1
92.0
15.2
4.7
—
The Gallery at Harborplace 100% 51% 122.3
1.1
74.1
37.8
11.5
—
The Maine Mall 100% 51% 339.7
1.8
235.0
4.8
101.7
—
The Oaks Mall 100% 51% 160.2
0.8
125.1
36.0
(0.1 ) —
Tucson Mall 100% 51% 260.1
1.0
246.0
25.7
(10.6 ) —
Westroads Mall 100% 51% 287.4
0.9
141.3
68.8
78.2
—
White Marsh Mall 100% 51% 233.5
0.7
190.0
16.1
28.1
—
Woodbridge Center 100% 51% 247.6
6.7
245.1
10.7
(1.5 ) —
$ 5,970.8
$ 34.0
$ 3,601.4
$ 797.3
$ 1,410.0
$ 18.5
Joint ventures were formed with the Teachers Insurance and Annuity Association of America. The Company contributed properties and recognized a gain from the change in control of the investment properties and other, net of $943.4 million for the year ended December 31, 2018. In addition, the Company recognized a gain in Unconsolidated Real Estate Affiliates - gain on investment of $18.4 million for the year ended December 31, 2018.


~~(1)~~	~~Includes working capital, closing costs and financing costs.~~

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

On August 27, 2018, joint ventures were formed with the Teachers Insurance and Annuity Association of America. The Company contributed properties and recognized gains (losses) as summarized in the table below ($ in millions):


~~(1)~~	~~Includes working capital, closing costs and financing costs.~~

~~On August 27, 2018, joint~~Joint ventures were formed with CBRE Global Investment Partners. The Company contributed properties and recognized ~~gains (losses) as summarized~~a gain from the change in control of the ~~table below ($ in millions):~~investment properties and other, net of $454.0 million for the year ended December 31, 2018.


~~(1)~~	~~Includes working capital, closing costs and financing costs.~~

~~On August 27, 2018, joint~~Joint ventures were formed with the California Public Employees' Retirement System. The Company contributed properties and recognized ~~gains (losses) as summarized~~a gain in Unconsolidated Real Estate Affiliates - gain on investment of $440.3 million for the ~~table below ($ in millions):~~year ended December 31, 2018.


~~(1)~~	~~Includes working capital, closing costs and financing costs.~~

~~On August 27, 2018, a~~A new joint venture, BPY Retail Holdings LLC, was formed with an institutional investor. As a result of this investment, the institutional investor owns a noncontrolling interest in all retail assets of the Company, as all retail assets are wholly or partially owned by the Operating Partnership.

On August 3, 2018, we completed the sale of an anchor box at The Oaks Mall for a gross sales price of $5.0 million, which resulted in a loss of $13.8 million recognized in gain from changes in control of investment properties and other for the three and nine months ended September 30, 2018.

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~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

On July 13, 2018, we completed the sale of the commercial office unit at 685 Fifth Avenue for a gross sales price of $135.0 million. In conjunction with the sale, we paid down a $100.0 million loan and recognized a gain of $11.4 million in gain from changes in control of investment properties and other, net for the three and nine months ended September 30, 2018.

On January 29, 2018, we completed the sale of a 49.49% joint venture interest in ~~the Sears Box~~an anchor box at Oakbrook Center to our joint venture partner for a sales price of $44.7 million, which resulted in a gain of $12.7 million recognized in gain from changes in control of investment properties and other, net for the ~~nine~~six months ended ~~September~~June 30, 2018.

On September 15, 2016, joint ventures we formed with Simon Property Group and Authentic Brands Group LLC ("ABG") acquired Aeropostale, Inc. ("Aeropostale") for $80.0 million in total cash which included cash for working capital requirements of the retail business. The intellectual property and brand related assets were assigned to the Aero IpCo, LLC venture ("IPCO") and the assets and liabilities necessary to run the stores were assigned to the Aero OpCo, LLC ~~venture ("OPCO").~~venture. In connection with the transaction, our total investment was $20.4 million of cash contributed to the ventures for an effective ownership of approximately 26% in the two joint ventures. Aeropostale is a tenant at certain properties for which we receive rental income included in ~~minimum rents~~rental revenues on the Consolidated Statements of ~~Operations and~~ Comprehensive ~~Income.~~Income (Loss).

On December 29, 2017, we sold approximately 54% of our interest in IPCO to ABG for a sales price of $16.6 million, which resulted in a gain of $12.0 million recognized in Unconsolidated Real Estate Affiliates - gain on investment on our Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2017. On March 30, 2018, ABG exercised their call right to purchase the remaining 46% of our original interest in IPCO for a sales price of $13.9 million, which resulted in a gain of $10.4 million recognized in Unconsolidated Real Estate Affiliates - gain on investment on our Consolidated Statements of Comprehensive Income (Loss) for the ~~nine~~six months ended ~~September~~June 30, 2018. In addition, we invested $30.5 million in ABG units on December 29, 2017. The investment is considered a cost method investment and is included in investment in Unconsolidated Real Estate Affiliates on the Consolidated Balance Sheets.

On September 19, 2017, we entered into three transactions with affiliates of Thor Equities (“Thor”) related to three separate joint ventures with Thor. First, we acquired 49.9% of its partner's interest in 218 West 57th Street based on a gross property valuation of $104.0 million. After the acquisition, we owned a 99.9% interest in 218 West 57th Street, while Thor retained a 0.1% interest. A portion of the net proceeds from the acquisition were used by Thor to pay off their $12.3 million note receivable to the Company related to the property. Of the remaining net proceeds, $9.75 million was used to pay down a portion of their note receivable for 530 Fifth Avenue and $3.36 million was used to pay down a portion of their note receivable to the Company for 685 Fifth Avenue.

Second, we recapitalized the 530 Fifth Avenue joint venture based on a gross property valuation of $334 million, whereby (i) Thor’s common interest having a value of $48.1 million was converted to a preferred equity interest with a 7.0% cumulative return in 530 Fifth Avenue, which serves as collateral for Thor's still-outstanding note receivable, and (ii) we owned a 90.23% common equity interest in 530 Fifth Avenue, while Thor retained a 9.77% common equity interest. The preferred return payable to Thor must first go toward interest and principal due to the Company under Thor’s note receivable for 530 Fifth Avenue.

Finally, we agreed to recapitalize the 685 Fifth Avenue joint venture based on a gross property valuation of $652.6 million, whereby upon closing (i) Thor’s common interest having a value of $150 million was converted to a preferred equity interest with a 7.0% cumulative return in 685 Fifth Avenue, which serves as collateral for Thor's still-outstanding note receivable, and (ii) we own a 97.03% common equity interest in 685 Fifth Avenue, while Thor retains a 2.97% common equity interest. The preferred return payable to Thor must first go toward interest and principal due to the Company under Thor’s note receivable for 685 Fifth Avenue. The recapitalization was effective on December 31, 2017.

We had previously accounted for our interest in these three joint ventures using the equity method of accounting (Note 2). As a result of the transactions described above, we account for our interest in these three joint ventures using the consolidation method of accounting with our joint venture partner's share of equity included in noncontrolling interest (Note 2). In addition, the $51.8 million and $111.1 million notes receivable due from our joint venture partner at 530 Fifth Avenue and 685 Fifth Avenue, respectively, are presented on the balance sheet in noncontrolling interests in consolidated real estate affiliates. The notes receivable and our joint venture partners' share of equity effectively net within the noncontrolling interest.

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~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

~~The table below summarizes the gain from changes in control calculation ($ in millions):~~

Gain from changes in control for 218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenue
Net implied fair value of previous investment and consideration $ 250.0
Less: proportionate share of previous investments 198.1
Gain from changes in control of investment properties and other, net $ 51.9

The following table summarizes the allocation of the purchase price to the net assets acquired at the date of acquisition. These allocations were based on the relative fair values of the assets acquired and liabilities assumed ($ in millions):

Allocation of Thor Equities Purchase Price 218 W. 57th Street 530 Fifth Avenue 685 Fifth Avenue
Investment in real estate, including intangible assets and liabilities $ 104.0
$ 334.0
$ 652.6
Fair value of debt (1) (53.0 ) (221.0 ) (340.0 )
Net working capital (2) 0.1
14.3
1.7
Net assets acquired $ 51.1
$ 127.3
$ 314.3


~~(1)~~	530 Fifth Avenue includes $31.0 million of an intercompany loan between 530 Fifth Avenue and the Company. 218 W. 57th Street includes $53.0 million of an intercompany loan between 218 W. 57th Street and the Company. Both loans eliminate in consolidation.


~~(2)~~	~~530 Fifth Avenue includes a $9.4 million escrow.~~

On July 12, 2017, we closed on the acquisition of the remaining 50% interest in eight of the 12 anchor boxes included in the existing GS Portfolio Holdings LLC ("GSPH") joint venture with Seritage Growth Properties ("Seritage") for $190.1 million based on a total valuation of $380.2 million. We had previously owned a 50% interest in the joint venture and accounted for the joint venture using the equity method of accounting (Note 2), but as a result of the transaction we now account for this joint venture using the consolidation method of accounting. Of the total purchase price, $126.4 million was settled upon closing and Seritage retained certain special rights (governed by a Special Rights Agreement), which are callable by the Company for $63.7 million. Simultaneously, the four remaining anchor boxes in GSPH were distributed to a newly formed joint venture, GS Portfolio Holdings II, LLC ("GSPHII"), between the Company and Seritage in which the ownership interest remains at 50% for both joint venture partners. We account for GSPHII using the equity method of accounting (Note 2). In addition, BPROP provided a loan to GSPHII for $127.4 million. This loan is collateralized by GSPHII's interest in the properties (Note 12). Finally, we acquired a 50% interest in five anchor boxes through a newly formed joint venture, GS Portfolio Holdings 2017 ("GSPH2017"), for $57.5 million. We account for this joint venture using the equity method of accounting (Note 2).

~~The table below summarizes the gain from changes in control calculation ($ in millions):~~

Gain from a Change of Control in GSPH
Consideration paid to acquire our joint venture partner's interest $ 190.1
Less: proportionate share of previous investment 147.2
Gain from changes in control of investment properties and other, net $ 42.9

On June 30, 2017, we conveyed Lakeside Mall to the lender in full satisfaction of $144.5 million in outstanding debt. This transaction resulted in a $55.1 million gain on extinguishment of debt for the three and nine months ended September 30, 2017.

On June 9, 2017, we closed on the acquisition of our joint venture partner's 50% interest in Neshaminy Mall located in Bensalem, Pennsylvania for a gross purchase price of $65.0 million. Post-acquisition, we own 100% of the mall. Prior to the acquisition of the remaining interest, the carrying value for our investment was $55.2 million. As a result of this acquisition, the implied fair value of our previous investment in Neshaminy Mall is $33.7 million, resulting in a loss of $21.5 million, recognized in loss from changes in control of investment properties and other for the three and nine months ended September 30, 2017.

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~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

On May 12, 2017, we closed on the sale of Red Cliffs Mall in St. George, Utah for $39.1 million. The transaction netted proceeds of approximately $36.3 million and resulted in a gain on sale of $5.6 million recognized in gain from changes in control of investment properties and other for the three and nine months ended September 30, 2017.

NOTE 4 FAIR VALUE

Nonrecurring Fair Value Measurements

We estimate fair value relating to impairment assessments based upon discounted cash flow and direct capitalization models that include all projected cash inflows and outflows over a specific holding period, or the negotiated sales price, if applicable. Such projected cash flows are comprised of contractual rental revenues and forecasted rental revenues and expenses based upon market conditions and expectations for growth. Capitalization rates and discount rates utilized in these models are based on a reasonable range of current market rates for each property analyzed. Based upon these inputs, we determined that our valuations of properties using a discounted cash flow or a direct capitalization model were classified within Level 3 of the fair value hierarchy. For our properties for which the estimated fair value was based on negotiated sales prices, we determined that our valuation was classified within Level 2 of the fair value hierarchy.

The following table summarizes certain of our assets that are measured at fair value on a nonrecurring basis as a result of impairment charges recorded. During the three and six months ended June 30, 2019, we recognized $184.3 million in impairment charges. During the six months ended June 30, 2018, we recognized $38.4 million in impairment charges. There were no impairment charges recorded during the ~~nine~~three months ended ~~September~~June 30, 2018. ~~No impairment charges were recognized during the nine months ended September 30, 2017.~~

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)


	Total Fair Value Measurement		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Provisions for Impairment		Total Fair Value Measurement		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Provisions for Impairment
Three Months Ended September 30, 2018
Three and six months ended June 30, 2019
Investments in real estate (1)	$	62,490	$	—	$	—	$	62,490	$	7,487	$	180,394	$	—	$	—	$	180,394	$	184,347

Nine Months Ended September 30, 2018
Six months ended June 30, 2018
Investments in real estate (1)	$	62,490	$	—	$	—	$	62,490	$	45,866	$	71,181	$	—	$	—	$	71,181	$	38,379


(1)	Refer to Note 2 for more information regarding impairment. Investments in real estate includes consolidated properties and Unconsolidated Real Estate Affiliates.



Unobservable Quantitative Input		Rate
~~Discount rates~~Three and six months ended June 30, 2019		~~9.75% to 11.00%~~
Discount rate		5.50%
Terminal capitalization ~~rates~~rate		~~9.50% to~~ 4.00%
Six months ended June 30, 2018
Discount rate		9.75%
Terminal capitalization rate		10.25%

Disclosure of Fair Value of Financial Instruments

The fair values of our financial instruments approximate their carrying amount in our consolidated financial statements except for debt. Management's estimates of fair value are presented below for our debt as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017.~~2018.


	September 30, 2018				December 31, 2017				June 30, 2019				December 31, 2018
	Carrying Amount (1)		Estimated��Fair Value		Carrying Amount (2)		Estimated Fair Value		Carrying Amount (1)		Estimated Fair Value		Carrying Amount (2)		Estimated Fair Value
Fixed-rate debt	$	6,448,841	$	6,390,026	$	10,420,252	$	10,467,262	$	7,009,354	$	6,920,339	$	6,073,193	$	6,048,104
Variable-rate debt	6,563,890		6,661,291		2,412,207		2,415,457		6,833,994		6,920,058		6,516,456		6,614,172
	$	13,012,731	$	13,051,317	$	12,832,459	$	12,882,719	$	13,843,348	$	13,840,397	$	12,589,649	$	12,662,276


(1)	Includes net market rate adjustments of ~~$8.2~~$6.9 million and deferred financing costs of ~~$131.4~~$123.0 million, net.


(2)	Includes net market rate adjustments of ~~$23.5~~$7.7 million and deferred financing costs of ~~$30.3~~$123.8 million, net.

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~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

The fair value of our junior subordinated notes approximates their carrying amount as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017.~~2018. We estimated the fair value of mortgages, notes and other loans payable using Level 2 and Level 3 inputs based on recent financing transactions, estimates of the fair value of the property that serves as collateral for such debt, historical risk premiums for loans of comparable quality, current LIBOR, U.S. treasury obligation interest rates and on the discounted estimated future cash payments to be made on such debt. The discount rates estimated reflect our judgment as to what the approximate current lending rates for loans or groups of loans with similar maturities and assume that the debt is outstanding through maturity. We have utilized market information as available or present value techniques to estimate the amounts required to be disclosed. Since such amounts are estimates that are based on limited available market information for similar transactions and do not acknowledge transfer or other repayment restrictions that may exist in specific loans, it is unlikely that the estimated fair value of any such debt could be realized by immediate settlement of the obligation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 5UNCONSOLIDATED REAL ESTATE AFFILIATES

Following is summarized financial information for all of our real estate related Unconsolidated Real Estate Affiliates accounted for using the equity method and a reconciliation to our total investment in Unconsolidated Real Estate Affiliates. The reconciliation to our total investment in Unconsolidated Real Estate Affiliates is inclusive of investments accounted for using the cost method (Note 2).

September 30, 2018 December 31, 2017
Condensed Combined Balance Sheets - Unconsolidated Real Estate Affiliates (1)

Assets:

Land $ 3,555,900
$ 2,908,181
Buildings and equipment 22,824,411
14,014,665
Less accumulated depreciation (4,142,134 ) (3,794,792 )
Construction in progress 518,835
545,305
Net property and equipment 22,757,012
13,673,359
Investment in unconsolidated joint ventures 572,884
613,136
Net investment in real estate 23,329,896

14,286,495
Cash and cash equivalents 515,015
438,664
Accounts receivable, net 361,217
386,634
Notes receivable 21,149
15,058
Deferred expenses, net 514,482
339,327
Prepaid expenses and other assets 708,096
381,980
Total assets $ 25,449,855
$ 15,848,158
Liabilities and Owners' Equity: \

Mortgages, notes and loans payable $ 15,998,163
$ 10,504,799
Accounts payable, accrued expenses and other liabilities 1,099,667
1,115,549
Cumulative effect of foreign currency translation ("CFCT") (23,551 ) (38,013 )
Owners' equity, excluding CFCT 8,375,576
4,265,823
Total liabilities and owners' equity $ 25,449,855
$ 15,848,158
Investment in Unconsolidated Real Estate Affiliates, Net:

Owners' equity $ 8,352,025
$ 4,227,810
Less: joint venture partners' equity (4,673,246 ) (2,413,822 )
Plus: excess investment/basis differences 1,353,185
1,547,462
Investment in Unconsolidated Real Estate Affiliates, net (equity method) 5,031,964
3,361,450
Investment in Unconsolidated Real Estate Affiliates, net (cost method) 30,483
30,483
Elimination of consolidated real estate investment interest through joint venture —
(52,305 )
Retail investment, net 10,965
16,091
Investment in Unconsolidated Real Estate Affiliates, net $ 5,073,412
$ 3,355,719
Reconciliation - Investment in Unconsolidated Real Estate Affiliates:

Asset - Investment in Unconsolidated Real Estate Affiliates $ 5,197,113
$ 3,377,112
Liability - Investment in Unconsolidated Real Estate Affiliates (123,701 ) (21,393 )
Investment in Unconsolidated Real Estate Affiliates, net $ 5,073,412
$ 3,355,719


~~(1)~~	The Condensed Combined Statements of Balance Sheets - Unconsolidated Real Estate Affiliates include the joint ventures formed in conjunction with the BPY Transaction subsequent to August 27, 2018 (Note 3).



	June 30, 2019			December 31, 2018
Condensed Combined Balance Sheets - Unconsolidated Real Estate Affiliates
Assets:
Land	$	3,608,922		$	3,595,706
Buildings and equipment	23,294,340			23,468,110
Less accumulated depreciation	(4,643,043		)	(4,361,210		)
Construction in progress	461,701			489,250
Net property and equipment	22,721,920			23,191,856
Investment in unconsolidated joint ventures	774,037			632,060
Net investment in real estate	23,495,957			23,823,916
Cash and cash equivalents	633,354			540,905
Accounts receivable, net	369,194			348,655
Notes receivable	22,562			22,881
Deferred expenses, net	485,955			511,814
Prepaid expenses and other assets	687,697			796,815
Total assets	$	25,694,719		$	26,044,986
Liabilities and Owners' Equity:	\
Mortgages, notes and loans payable	$	16,210,922		$	16,139,498
Accounts payable, accrued expenses and other liabilities	1,027,729			1,118,663
Cumulative effect of foreign currency translation ("CFCT")	(6,206		)	(21,384		)
Owners' equity, excluding CFCT	8,462,274			8,808,209
Total liabilities and owners' equity	$	25,694,719		$	26,044,986
Investment in Unconsolidated Real Estate Affiliates, Net:
Owners' equity	$	8,456,069		$	8,786,824
Less: joint venture partners' equity	(4,621,828		)	(4,796,896		)
Plus: excess investment/basis differences	1,296,693			1,220,632
Investment in Unconsolidated Real Estate Affiliates, net (equity method)	5,130,934			5,210,560
Investment in Unconsolidated Real Estate Affiliates, net (cost method)	40,483			30,483
Retail investment, net	15,375			19,912
Investment in Unconsolidated Real Estate Affiliates, net	$	5,186,792		$	5,260,955
Reconciliation - Investment in Unconsolidated Real Estate Affiliates:
Asset - Investment in Unconsolidated Real Estate Affiliates	$	5,282,932		$	5,385,582
Liability - Investment in Unconsolidated Real Estate Affiliates	(96,140		)	(124,627		)
Investment in Unconsolidated Real Estate Affiliates, net	$	5,186,792		$	5,260,955

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Condensed Combined Statements of Income - Unconsolidated Real Estate Affiliates (1)
Revenues:
Minimum rents	$	352,597		$	295,294		$	947,172		$	880,767
Tenant recoveries	146,992			124,927			388,742			366,869
Overage rents	8,160			7,110			19,789			17,302
Rental revenues, net													$	621,741		$	427,536		$	1,262,777		$	847,954
Condominium sales	28,401			97,573			77,674			277,962			—			12,384			—			49,273
Other	16,278			12,894			47,280			38,736			18,470			12,732			33,836			31,002
Total revenues	552,428			537,798			1,480,657			1,581,636			640,211			452,652			1,296,613			928,229
Expenses:
Real estate taxes	47,160			39,731			121,516			107,195			60,461			38,221			122,582			74,357
Property maintenance costs	10,047			9,437			22,655			30,501			12,463			945			28,140			12,608
Marketing	4,379			4,771			13,296			13,249			3,745			3,326			9,819			8,917
Other property operating costs	71,226			60,147			184,218			170,076			83,339			56,686			162,891			112,991
Condominium cost of sales	20,701			71,336			56,625			202,860			—			9,029			—			35,924
Provision for doubtful accounts	3,882			473			7,802			4,495			—			1,361			—			3,921
Property management and other costs (2)	25,821			23,102			71,681			61,472			26,961			22,453			56,004			45,863
General and administrative	566			292			2,232			1,355			464			1,109			2,131			1,667
Depreciation and amortization	174,295			128,800			458,617			378,531			262,917			159,243			526,316			284,323
Total expenses	358,077			338,089			938,642			969,734			450,350			292,373			907,883			580,571
Operating income	194,351			199,709			542,015			611,902
Interest income	1,763			2,987			5,187			8,530			3,213			1,583			5,495			3,424
Interest expense	(149,139		)	(123,014		)	(369,786		)	(348,195		)	(176,073		)	(116,083		)	(349,672		)	(220,647		)
Provision for income taxes	(320		)	(364		)	(722		)	(911		)
Equity in gain (loss) of unconsolidated joint ventures	555			(4,715		)	(17,116		)	(15,426		)
(Benefit from) provision for income taxes													180			(198		)	(389		)	(402		)
Loss in unconsolidated joint ventures													(8,511		)	(10,107		)	(17,244		)	(17,672		)
Income from continuing operations	47,210			74,603			159,578			255,900			8,670			35,474			26,920			112,361
Allocation to noncontrolling interests	(17		)	(25		)	(54		)	(69		)	(13		)	(19		)	(27		)	(37		)
Net income attributable to the ventures	$	47,193		$	74,578		$	159,524		$	255,831		$	8,657		$	35,455		$	26,893		$	112,324
Equity In Income of Unconsolidated Real Estate Affiliates:
Equity In Income (loss) of Unconsolidated Real Estate Affiliates:
Net income attributable to the ventures	$	47,193		$	74,578		$	159,524		$	255,831		$	8,657		$	35,455		$	26,893		$	112,324
Joint venture partners' share of income	(16,287		)	(30,050		)	(64,528		)	(116,372		)	(3,565		)	(12,639		)	(12,626		)	(48,240		)
Elimination of loss (gain) from consolidated real estate investment with interest owned through joint venture	53			(77		)	679			1,363
Elimination of gain from consolidated real estate investment with interest owned through joint venture													—			714			—			626
Gain (loss) on retail investment	10,526			5,933			3,427			(4,853		)	916			(1,243		)	(4,536		)	(7,099		)
Amortization of capital or basis differences	(21,149		)	(14,447		)	(39,896		)	(36,085		)	(13,846		)	(7,257		)	(25,442		)	(18,742		)
Equity in income of Unconsolidated Real Estate Affiliates	$	20,336		$	35,937		$	59,206		$	99,884
Equity in income (loss) of Unconsolidated Real Estate Affiliates													$	(7,838	)	$	15,030		$	(15,711	)	$	38,869


(1)	The Condensed Combined Statements of Income - Unconsolidated Real Estate Affiliates include ~~income from Miami Design District subsequent to June 1, 2017 and~~ income from the joint ventures formed in conjunction with the BPY Transaction subsequent to August 27, 2018 (Note 3).

(2) Includes management fees charged to the unconsolidated joint ventures by ~~GGMI~~BPRRS and ~~GGSI.~~BRMI.

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~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

The Unconsolidated Real Estate Affiliates represent our investments in real estate joint ventures that are not consolidated. We hold interests in 2728 domestic joint ventures, comprising 66 U.S. retail properties and one joint venture in Brazil. Generally, we share in the profits and losses, cash flows and other matters relating to our investments in Unconsolidated Real Estate Affiliates in accordance with our respective ownership percentages. We manage most of the properties owned by these joint ventures. We account for investments in joint ventures where we own a non-controlling joint interest using either the equity method or the cost

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(Dollars in thousands, except share and per share amounts)

(Unaudited)

method. If we have significant influence but not control over the investment, we utilize the equity method. If we have neither control nor significant influence, we utilize the cost method. If we control the joint venture, we account for the venture as a consolidated investment.

OnAs of June ~~1, 2017, we received an additional 7.3%~~30, 2019, the balance of ~~our joint venture partner's membership interests~~ROU assets was $68.8 million, net and lease liabilities of $78.8 million for 25 ground leases in Miami Design District in full satisfaction of two promissory notes for $57.6 million and $40.4 million, respectively, resulting in a total ownership of 22.3%. We determined that we had significant influence over the ~~investment subsequent to the acquisition of the additional interest, and therefore we changed our method of accounting for this joint venture from the cost method to the equity method (Note 2).~~

~~On July 12, 2017, we closed on the acquisition of the remaining 50% interest in eight anchor boxes~~Condensed Combined Balance Sheets - Unconsolidated Real Estate Affiliates under Topic 842, included in ~~the GSPH joint venture with Seritage. We had previously owned a 50% interest in the joint venture~~prepaid expenses and accounted for the joint venture using the equity method of accounting, but as a result of the transaction we now account for this joint venture using the consolidation method of accounting. Simultaneously, we distributed the four remaining anchor boxes in GSPH to a newly formed joint venture, GSPHII, between the Companyother assets and ~~Seritage in which the ownership interest remains at 50% for both joint venture partners,~~accounts payable and we continue to account for this joint venture using the equity method of accounting. Finally, we acquired a 50% interest in five anchor boxes through a newly formed joint venture, GSPH2017, which we account for using the equity method of accounting.

On September 19, 2017, we entered into three transactions with affiliates of Thor related to joint ventures between the Company and Thor at 218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenue. As a resultaccrued expenses, respectively. All of these ~~transactions,~~leases are operating leases; we changed our method of accounting for these three joint ventures from the equity method of accounting. We now consolidate the joint ventures with our joint venture partner's share of equity included in noncontrolling interest.do not have any finance leases.

~~Condominium Sales and Condominium Cost of Sales~~

On March 7, 2014, we formed a joint venture, AMX Partners, LLC, with Kahikolu Partners, LLC, for the purpose of constructing a luxury residential condominium tower (the Park Lane condominium project) on a site located within the Ala Moana Shopping Center. Under the previous revenue recognition guidance, the percentage of completion method was used to account for the sales revenue of the Park Lane condominium project. Upon adoption of the new revenue recognition standard (Note 2), risks and rewards of ownership and control over the condominium unit transfers upon the closing of the sale to the customer, and as such, the joint venture will recognize revenue for the condominium unit upon closing.

Unconsolidated Mortgages, Notes and Loans Payable, and Retained Debt

Our proportionate share of the mortgages, notes and loans payable of the unconsolidated joint ventures was ~~$7.5~~$7.7 billion as of ~~September~~June 30, ~~2018~~2019 and ~~$5.1~~$7.6 billion as of December 31, ~~2017,~~2018, including Retained Debt (as defined below). There can be no assurance that the Unconsolidated Properties will be able to refinance or restructure such debt on acceptable terms or otherwise, or that joint venture operations or contributions by us and/or our partners will be sufficient to repay such loans.

We have debt obligations in excess of our pro rata share of the debt for one of our Unconsolidated Real Estate Affiliates ("Retained Debt"). This Retained Debt represents distributed debt proceeds of the Unconsolidated Real Estate Affiliates in excess of our pro rata share of the non-recourse mortgage indebtedness. The proceeds of the Retained Debt which were distributed to us are included as a reduction in our investment in Unconsolidated Real Estate Affiliates. We had Retained Debt of ~~$83.7~~$82.4 million at one property as of ~~September~~June 30, ~~2018,~~2019, and ~~$85.2~~$83.3 million as of December 31, ~~2017.~~2018. We are obligated to contribute funds on an ongoing basis, as needed, to our Unconsolidated Real Estate Affiliates in amounts sufficient to pay debt service on such Retained Debt. If we do not contribute such funds, our interest in or our distributions from such Unconsolidated Real Estate Affiliates could be reduced to the extent of such deficiencies. As of ~~September~~June 30, ~~2018,~~2019, we do not anticipate an inability to perform on our obligations with respect to Retained Debt.

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~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

NOTE 6 MORTGAGES, NOTES AND LOANS PAYABLE

Mortgages, notes and loans payable and the weighted-average interest rates are summarized as follows:


	September 30, 2018 (1)		Weighted-Average Interest Rate (2)		December 31, 2017 (3)			Weighted-Average Interest Rate (2)		June 30, 2019 (1)		Weighted-Average Interest Rate (2)		December 31, 2018 (3)		Weighted-Average Interest Rate (2)
Fixed-rate debt:
Collateralized mortgages, notes and loans payable	$	6,448,841	4.40	%	$	10,420,252		4.41	%	$	6,021,558	4.39	%	$	6,073,193	4.38	%
Senior secured notes - silver bonds										987,796		5.75	%	—		—
Total fixed-rate debt	6,448,841		4.40	%	10,420,252			4.41	%	7,009,354		4.58	%	6,073,193		4.38	%
Variable-rate debt:
Collateralized mortgages, notes and loans payable (4)	1,606,123		3.97	%	2,418,628			3.39	%	1,682,197		4.35	%	1,702,142		4.22	%
Unsecured corporate debt (5)	4,957,767		4.56	%	(6,421		)	—		5,151,797		4.77	%	4,814,314		4.86	%
Total variable-rate debt	6,563,890		4.42	%	2,412,207			3.39	%	6,833,994		4.67	%	6,516,456		4.69	%
Total Mortgages, notes and loans payable	$	13,012,731	4.41	%	$	12,832,459		4.22	%	$	13,843,348	4.62	%	$	12,589,649	4.54	%
Junior subordinated notes	$	206,200	3.79	%	$	206,200		2.83	%	$	206,200	4.03	%	$	206,200	3.97	%


(1)	Includes ~~$8.2~~$6.9 million of market rate adjustments and ~~$131.4~~$123.0 million of deferred financing costs, net.


(2)	Represents the weighted-average interest rates on our principal balances, excluding the effects of market rate adjustments and deferred financing costs.


(3)	Includes ~~$23.5~~$7.7 million of market rate adjustments and ~~$30.3~~$123.8 million of deferred financing costs, net.


(4)	$~~1.4~~1.3 billion of the variable-rate balance is cross-collateralized.


(5)	Includes deferred financing costs, which are shown as a reduction to the debt balance. See table below for the balance excluding deferred financing costs.

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Collateralized Mortgages, Loan Extension, Notes and Loans Payable

As of ~~September~~June 30, ~~2018, $12.8~~2019, $11.8 billion of land, buildings and equipment (before accumulated depreciation) and construction in progress have been pledged as collateral for our mortgages, notes and loans payable. Certain of these consolidated secured loans, representing ~~$1.4~~$1.3 billion of debt, are cross-collateralized. Although a majority of the ~~$8.1~~$7.7 billion of fixed and variable rate collateralized mortgages, notes and loans payable are non-recourse, ~~$689.6~~$679.7 million of such mortgages, notes and loans payable are recourse to the Company as guarantees on secured financings. In addition, certain mortgage loans contain other credit enhancement provisions which have been provided by BPR. Certain mortgages, notes and loans payable may be prepaid but are generally subject to a prepayment penalty equal to a yield-maintenance premium, defeasance or a percentage of the loan balance.

On June 28, 2019, the Company paid off loans totaling $180.0 million on 730 Fifth Avenue and extended the loan to August 27, 2019. The payoff of the notes resulted in a $90.0 million increase in notes receivable as a result of the Company's funding of the joint venture partner's share of the loan paydown in the Consolidated Balance Sheets at June 30, 2019 (Note 13).

On June 3, 2019, the Company closed a new loan on the Grand Canal Shoppes in the amount of $975.0 million with a 10-year fixed interest rate of 4.29%, maturing July 2, 2029. This loan replaced the previous debt of $625.0 million on the property that matured on June 3, 2019.

On April 25, 2019, the Company obtained a one-year extension of a $1.3 billion loan secured by cross-collateralized mortgages on 15 properties with an interest rate of LIBOR plus 1.75%. A principal repayment of $10.1 million was made in conjunction with the extension.

On April 9, 2019, the Company closed a new loan on three properties included in the BPR-FF JV LLC joint venture. The three properties are Coronado Center, Governor's Square and Lynnhaven Mall. These properties were previously encumbered by $462.0 million of third-party debt which was replaced by a $515.0 million loan with an interest rate of LIBOR plus 340 basis points, maturing May 1, 2024. The new loan was recorded as an extinguishment of the previous loans and allocation of the new debt to the three properties.

During the ~~nine months~~year ended ~~September 30,~~December 31, 2018, we refinanced a consolidated mortgage note at 685 Fifth Avenue. The prior $340.0 million variable-rate consolidated mortgage note matured on July 1, 2018 and had an interest rate of LIBOR plus 2.75%. In connection with the refinancing, $100.0 million remained related to the commercial office unit and a new $275.0 million fixed-rate consolidated mortgage note with a term-to-maturity of 10.0 years and an interest rate of 4.53% was obtained on the retail unit. The $100.0 million was paid down in full in conjunction with the sale of the commercial office unit on July 13, 2018. In addition, we obtained a new fixed-rate subordinate loan at The Woodlands Mall for $62.4 million with an interest rate of 4.05% and obtained a new fixed-rate loan at 605 North Michigan Avenue for $80.0 million with an interest rate of 4.76%. We also refinanced mortgage notes totaling $117.0 million at two properties. The prior loans totaling $152.3 million had a weighted-average interest rate of 4.42%. The new loans have a weighted-average term-to-maturity of 4.3 years and a weighted-average interest rate of 5.24%. We released Columbiana Centre from the $1.4 billion term loan, substituting Columbia Mall and Quail Springs ~~Mall.~~

~~During~~Mall, and conveyed Oak View Mall to the lender in full satisfaction of $74.7 million in outstanding debt. The Oak View transaction resulted in a $12.4 million gain on extinguishment of debt for the year ended December 31, ~~2017, we paid down a $73.4 million consolidated mortgage note at Four Seasons Town Centre. The prior loan had a term-to-maturity~~2018.

Corporate and Other Unsecured Loans

We have certain debt obligations, the terms of 0.2 years and an interest rate of 5.6%. Four Seasons Town Centre subsequently replaced a property that was sold during the year ended December 31, 2017 as collateral in our $1.4 billion loan secured by cross-collateralized mortgages on 14 properties. In addition, we obtained a new consolidated mortgage note at Mall of Louisiana for $325.0 million with an interest rate of 3.98%. Finally, as a result of the three transactions at 218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenue, we now consolidate a total of $450.0 million consolidated mortgage notes with interest rates of LIBOR plus 2.75% and LIBOR plus 3.25%. Finally, we refinanced a $190.0 million consolidated mortgage note with a $110.0 million consolidated mortgage note at 530 Fifth Avenue. Both notes had an interest rate of LIBOR plus 3.25%. We manage our exposure to interest rate fluctuations related to this debt using interest rate cap agreements. However, our efforts to manage risks associated with interest rate volatility may not be successful.

which are described below:



	June 30, 2019 (1)		Weighted-Average Interest Rate		December 31, 2018 (2)		Weighted-Average Interest Rate
Corporate debt:
Unsecured corporate debt	$	5,249,131	4.77	%	$	4,923,740	4.86	%
Senior secured notes - silver bonds	1,000,000		5.75	%	—		—
Total corporate debt	$	6,249,131	4.93	%	$	4,923,740	4.86	%

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Our $1.4 billion loan is secured by cross-collateralized mortgages on 15 properties. The interest rate is LIBOR plus 1.75% and the recourse is 50%. The loan matures on April 25, 2019, with two one year extension options.

~~Corporate and Other Unsecured Loans~~

~~We have certain unsecured debt obligations, the terms of which are described below:~~

September 30, 2018 (1)
Weighted-Average
Interest Rate
December 31, 2017 (2)
Weighted-Average
Interest Rate
Unsecured debt:

Unsecured corporate debt $ 5,057,500
4.56 % $ —
—
Total unsecured debt $ 5,057,500
4.56 % $ —
—


(1)	Excludes deferred financing costs of ~~$99.7~~$109.5 million in ~~2018~~2019 that decrease the total amount that appears outstanding in our Consolidated Balance Sheets.


(2)	Excludes deferred financing costs of ~~$6.4~~$109.4 million in ~~2017~~2018 that decrease the total amount that appears outstanding in our Consolidated Balance Sheets.

On May 1, 2019, the Company and BPR Cumulus LLC, BPR Nimbus LLC and GGSI Sellco LLC (each, an indirect subsidiary of the Company) issued $1.0 billion aggregate principal amount of 5.75% Senior Secured Notes due 2026. The notes bear interest at an annual rate of 5.75% payable on May 15 and November 15 of each year, beginning on November 15, 2019 and will mature on May 15, 2026.

On March 25, 2019, the Company secured a $341.8 million subordinated unsecured note with Brookfield BPY Holdings Inc., a related party. The note bears interest at a rate equal to LIBOR plus 2.75% and is scheduled to mature on March 25, 2029. During the quarter ended June 30, 2019, the Company made a principal payment of $200.1 million. The balance at June 30, 2019 was $141.7 million. The Company borrowed an additional $70.5 million during the period with a maturity date of June 25, 2029. The balance at June 30, 2019 was $70.5 million.

The Company entered into a new credit agreement (the ~~“Agreement”~~"Agreement") dated as of August 24, 2018 consisting of a revolving credit facility (the ~~“Facility”~~"Facility"), Term A-1 and A-2 loans, and a Term B loan. The Facility provides for revolving loans of up to $1.5 billion and borrowings bear interest at a rate equal to LIBOR plus 225 basis points. The Facility is scheduled to mature in August 2022 and had outstanding borrowings of ~~$347.0~~$629.5 million as of ~~September~~June 30, ~~2018.~~2019. The Term A-1 Loan has a total commitment of $900.0 million, with $700.0 million attributable to BPR and $200.0 million attributable to an affiliate, and is scheduled to mature in August 2021 bearing interest at a rate equal to LIBOR plus 225 basis points. The Term A-2 Loan has a total commitment of $2.0 billion and is scheduled to mature in August 2023 bearing interest at a rate equal to LIBOR plus 225 basis points. The Term B Loan has a total commitment of $2.0 billion and is scheduled to mature in August 2025 bearing interest at a rate equal to LIBOR plus 250 basis points. The Term A-1, A-2, and B Loans are contractually obligated to be prepaid through net proceeds from property level refinances and asset sales as outlined in the Agreement. The Agreement contains certain restrictive covenants which limit material changes in the nature of our business conducted, including, but not limited to, mergers, dissolutions or liquidations, dispositions of assets, liens, incurrence of additional indebtedness, dividends, transactions with affiliates, prepayment of subordinated debt, negative pledges and changes in fiscal periods. In addition, we are required not to exceed a maximum net debt-to-value ratio and fixed charge coverage ratio. As of ~~September~~June 30, ~~2018,~~2019, we are not aware of any instances of non-compliance with such covenants.

Junior Subordinated Notes

GGP Capital Trust I, a Delaware statutory trust (the "Trust"), completed a private placement of $200.0 million of trust preferred securities ("TRUPS") in 2006. The Trust also issued $6.2 million of common securities to BPROP. The Trust used the proceeds from the sale of the TRUPS and common securities to purchase $206.2 million of floating rate junior subordinated notes of BPROP due 2036. Distributions on the TRUPS are equal to LIBOR plus 1.45%. Distributions are cumulative and accrue from the date of original issuance. The TRUPS mature on April 30, 2036, but may be redeemed beginning on ~~April��~~April 30, 2011 if the Trust exercises its right to redeem a like amount of junior subordinated notes. The junior subordinated notes bear interest at LIBOR plus 1.45% and are fully recourse to the Company. We have recorded the junior subordinated notes as a liability and our common equity interest in the Trust as prepaid expenses and other assets in our Consolidated Balance Sheets as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017.~~2018.

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~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

Letters of Credit and Surety Bonds

We had outstanding letters of credit and surety bonds of ~~$42.4~~$46.5 million as of ~~September~~June 30, ~~2018~~2019 and ~~$51.3~~$42.4 million as of December 31, ~~2017.~~2018. These letters of credit and bonds were issued primarily in connection with insurance requirements, special real estate assessments and construction obligations.

We are not aware of any instances of non-compliance with our financial covenants related to our mortgages, notes and loans payable as of ~~September~~June 30, ~~2018.~~2019.

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 7 LEASES

Lessee arrangements

We are the lessee in several ground lease agreements for the land under some of our owned buildings. Generally, we own the land underlying the properties; however, at certain properties, all or part of the underlying land is owned by a third party that leases the land to us through a long-term ground lease. In addition, we lease office space for our corporate headquarters and field offices. Our material consolidated leases have reasonably certain lease terms ranging from four years to forty years. Certain leases provide the lessee with two to threerenewal options which are considered to be termination options unless it is reasonably certain that the Company will elect to renew and generally range from five years to ten years each, with renewal rent payments based on a predetermined annual increase, market rates at the time of exercise of the renewal, or changes in the Consumer Price Index ("CPI").

As of June 30, 2019, the balance of ROU assets was $119.5 million, net and lease liabilities of $73.9 million for seven ground leases and one office lease in the Consolidated Balance Sheets under Topic 842, included in prepaid expenses and other assets and accounts payable and accrued expenses, respectively.

The maturity of ouroperating lease liabilities as of June 30, 2019 is as follows:



Year	Amount
Remainder of 2019	$	4,372
2020	8,985
2021	9,203
2022	9,424
2023	9,651
2024	9,883
2025 and thereafter	95,278
Total undiscounted lease payments	146,796
Less: Present value adjustment	(72,906		)
Total lease liability	$	73,890

The maturity of ouroperating lease liabilities as of December 31, 2018 is as follows:



Year	Amount
2019	$	9,948
2020	10,164
2021	10,386
2022	10,592
2023	10,794
2024 and thereafter	118,835
Total	$	170,719

Straight-line rent expense recognized for ourconsolidated operating leases was $0.7 million and $1.4 million for ground leases and $1.7 million and $3.7 millionfor the office leasefor the three and six months ended June 30, 2019, respectively, and is included in other property operating costs for ground leases and property management and other costs for the office lease, respectively, in the Consolidated Statements of Comprehensive Income (Loss). Several lease agreements include variable lease payments which vary based on factors such as sublease income received, the revenues or net operating income of the properties constructed on the leased premises, increases in CPI, and changes in market rents. In addition, our leases require us to reimburse the lessor for the lessor’s tax, insurance and common area costs. Variable lease payments and short-term lease costs recognized as rent expense for operating leases were not significant for the three and six months ended June 30, 2019 and are included in other property operating costs in the Consolidated Statements of Comprehensive Income (Loss).

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

The following summarizes additional information related to our operating leases as of June 30, 2019:



Weighted-average remaining lease term (years)	17.3
Weighted-average discount rate	7.36%

Supplemental disclosure for the statement of cash flows:
Cash paid for amounts included in the measurement of lease liabilities	$4,379

Lessor arrangements

We own a property portfolio comprised primarily of Class A retail properties and lease this retail space to tenants. As of June 30, 2019, we own a controlling interest in and consolidated 57 retail properties located throughout the United States comprising approximately 50 million square feet of GLA. We enter into operating leases with a variety of tenants, the majority of which are national and regional retail chains and local retailers. These operating leases expire starting in year 2019 and typically include renewal options, which are generally exercisable only by the tenant. Certain leases also include early termination options which are typically exercisable only by the tenant. Our leases do not allow the tenant to purchase the retail space.

The maturity analysis of the lease payments we expect to receive from our operating leases as of June 30, 2019 is as follows:



Year	Amount
Remainder of 2019	$	486,206
2020	911,840
2021	828,089
2022	738,350
2023	644,876
2024	537,230
Subsequent	1,734,029
	$	5,880,620

The maturity analysis of the lease payments we expect to receive from our operating leases as of December 31, 2018 is as follows:



Year	Amount
2019	$	764,196
2020	696,381
2021	621,582
2022	543,232
2023	464,453
Subsequent	1,442,312
	$	4,532,156

All lease-related income is reported as a single line item, rental revenues, in our Consolidated Statements of Comprehensive Income (Loss). Effective January 1, 2019, with the adoption of Topic 842, rental revenues is presented net of provision for doubtful accounts. Rental income recognized on a straight-line basis consists primarily of fixed and in-substance fixed lease payments (including lease payments related to non-lease components which have been combined with the lease component). Variable rental income represents variable lease payments, which consist primarily of overage rents; reimbursements for tenants’ pro rata share of real estate taxes, insurance, property operating and marketing expenses, and utilities; lease payments related to CPI-based escalations and market rent resets; and lease termination income.

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

In accordance with the terms of our operating leases, we bill our tenants separately for minimum rents, tenant recoveries and overage rents, lease termination income as shown below for the three and six months ended June 30, 2019:



	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Minimum rents, billed	$	218,974		$	440,936
Tenant recoveries, billed	88,166			180,093
Lease termination income, billed	950			2,445
Overage rent, billed	1,944			6,295
Total contractual operating lease billings	310,034			629,769
Adjustment to recognize contractual operating lease billings on a straight-line basis	751			3,949
Above and below-market tenant leases, net	4,493			7,287
Less provision for doubtful accounts	(1,039		)	(3,746		)
Total rental revenues, net	$	314,239		$	637,259

Of the total contractual rental revenues we have billed, 79.4% and 79.3% are fixed lease payments for the three and six months ended June 30, 2019, respectively.

NOTE 7 8 INCOME TAXES

The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. We intend to maintain REIT status. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement to distribute at least 90% of our taxable ordinary income. In addition, the Company is required to meet certain asset and income tests.

As a REIT, we will generally not be subject to corporate level Federal income tax on taxable income we distribute currently to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to Federal income taxes at regular corporate rates and may not be able to qualify as a REIT for four subsequent taxable years. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income or property, and to Federal income and excise taxes on our undistributed taxable income and capital gains. We are currently statutorily open to audit by the Internal Revenue Service for the years ended December 31, 2015 through ~~2017~~2018 and are statutorily open to audit by state taxing authorities for the years ended December 31, 2014 through ~~2017.~~2018.

In conjunction with the BPY Transaction, certain of BPR’s subsidiaries contributed in a taxable manner a portion of their interests in specific assets to a newly formed corporate subsidiary of GGSI. This taxable contribution caused an increase in the tax basis of the contributed assets to fair market value and generated a related taxable gain to the Company, which has been distributed to shareholders. The increase in tax basis in the assets created a book to tax basis temporary difference of approximately $2.6 billion and a related deferred tax asset of $571.1 million within the newly formed subsidiary of GGSI. We determined that this deferred tax asset was properly recorded through our income statement and that no valuation allowance is necessary on the deferred tax assets as of September 30, 2018 primarily due to our ability to recognize the benefit of the increased tax basis through operations or sale of properties.

We have no unrecognized tax benefits recorded pursuant to uncertain tax positions as of ~~September~~June 30, ~~2018.~~2019.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 8 9 EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

Allocation to Noncontrolling Interests

Noncontrolling interests consists of the redeemable interests related to BPROP Common, Preferred, and LTIP Units and the noncontrolling interest in our consolidated joint ventures. The following table reflects the activity included in the allocation to noncontrolling interests.



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Distributions to preferred BPROP units ("Preferred Units")	$	(1,423	)	$	(628	)	$	(3,036	)	$	(1,261	)
Net income allocation to noncontrolling interests in BPROP from continuing operations ("Common Units")	—			(818		)	—			(1,378		)
Net income allocation to noncontrolling interests in BPROP from continuing operations ("LTIP Units")	—			(190		)	—			(324		)
Net income allocated to noncontrolling interest in consolidated real estate affiliates	9,616			(313		)	9,920			(846		)
Net income allocated to noncontrolling interest of the Operating Partnership (1)	29,692			—			24,368			—
Allocation to noncontrolling interests	37,885			(1,949		)	31,252			(3,809		)
Other comprehensive (income) loss allocated to noncontrolling interests	—			84			—			86
Comprehensive income allocated to noncontrolling interests	$	37,885		$	(1,865	)	$	31,252		$	(3,723	)

(1) Represents the noncontrolling interest of our institutional investor (Note 3).

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Distributions to preferred BPROP units ("Preferred Units") $ (1,554 ) $ (874 ) $ (2,814 ) $ (3,889 )
Net income allocation to noncontrolling interests in BPROP from continuing operations ("Common Units") (30,425 ) (1,846 ) (31,803 ) (3,097 )
Net income allocation to noncontrolling interests in BPROP from continuing operations ("LTIP units") (7,835 ) (515 ) (8,159 ) (1,068 )
Net income allocated to noncontrolling interest in consolidated real estate affiliates 10,833
(257 ) 9,986
(1,103 )
Allocation to noncontrolling interests (28,981 ) (3,492 ) (32,790 ) (9,157 )
Other comprehensive (income) loss allocated to noncontrolling interests (124 ) (182 ) (39 ) 133
Comprehensive income allocated to noncontrolling interests $ (29,105 ) $ (3,674 ) $ (32,829 ) $ (9,024 )

Noncontrolling Interests

The noncontrolling interest related to the Common, Preferred, and LTIP Units of BPROP are presented either as redeemable noncontrolling interests in mezzanine equity or as noncontrolling interests in our permanent equity on our Consolidated Balance Sheets. Classification as redeemable or permanent equity is considered on a tranche-by-tranche basis and is dependent on whether we could be required, under certain events outside of our control, to redeem the securities for cash by the holders of the securities, Those tranches for which we could be required to redeem the security for cash are included in redeemable equity. If we control the decision to redeem the securities for cash, the securities are classified as permanent equity.

The redeemable Common and Preferred Units of BPROP are recorded at the greater of the carrying amount adjusted for the noncontrolling interest’s share of the allocation of income or loss (and its share of other comprehensive income or loss) and dividends or their redemption value (i.e. fair value) as of each measurement date. The excess of the fair value over the carrying amount from period to period is recorded within additional paid-in capital in our Consolidated Balance Sheets. Allocation to noncontrolling interests is presented as an adjustment to net income to arrive at net income (loss) attributable to BPR.

~~The common redeemable noncontrolling interests have been recorded at fair value for all periods presented.~~ The preferred redeemable noncontrolling interests have been recorded at carrying value.

Generally, each Series K Preferred Unit of BPROP entitles its holder to distributions and a liquidation preference identical to those established for each share of BPR’s Class A Stock, and each Series L Preferred Unit of BPROP entitles its holder to distributions and a liquidation preference identical to those established for each share of BPR’s Class B Stock. Each LTIP Unit of BPROP is convertible into, and, except for the level of preference, entitles its holder to regular and liquidating distributions equivalent to that of, 0.016256057 Series K Preferred Units, subject to adjustment.

Holders of Series B Preferred Units, Series D Preferred Units, Series E Preferred Units and Series G Preferred Units of BPROP are each entitled to periodic distributions at the rates set forth in the ~~Fifth~~Sixth Amended and Restated Agreement of Limited Partnership of BPROP. Generally, each Series K Preferred Unit of BPROP entitles its holder to distributions and a liquidation preference identical to those established for each share of BPR's Class A Stock. The holders of Series L Preferred Units of BPROP are generally entitled to a pro rata distribution of an aggregate cash amount equal to the sum of (i) the aggregate cash dividends declared on all outstanding shares of BPR's Class B Stock and (ii) the aggregate cash dividends declared on all outstanding shares of BPR's Series B Preferred Stock. Holders of Common Units of BPROP are entitled to distributions of all or a portion of BPROP’s remaining net operating cash flow, when and as declared by BPROP’s general partner. However, the ~~Fifth~~Sixth Amended and Restated Agreement of Limited Partnership of BPROP permits distributions solely to BPR if such distributions were required to allow the Company to comply with the REIT distribution requirements or to avoid the imposition of excise tax.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Noncontrolling Interests - Permanent

As of June 30, 2019, there were 9,717.658 Series B Preferred Units of BPROP outstanding. As of July 10, 2017, the Series B Preferred Unit conversion option expired, and each Series B Preferred Unit now has a carrying value of $50 per unit.

Also, as of June 30, 2019, there were 4,156,971.851 Common Units of BPROP outstanding and 1,691,144.853 Series K Preferred Units of BPROP (former common unit holders). These Series K Units were established at $21 per unit and are not subject to adjustment based on fair value.

Noncontrolling Interests - Redeemable

The Series D Preferred Units of BPROP are convertible based on a conversion ratio of 1.50821, which is the quotient of the Series D Preferred Unit’s $50 liquidation preference and $33.151875 conversion price. Upon conversion, each Series D Preferred Unit entitles its holder to (i) $21.9097 in cash, (ii) a number of Series K Preferred Units of BPROP equal to (x) 0.40682134 Series K Preferred Units (which is subject to adjustment), multiplied by (y) the Series D conversion ratio; and (iii) a number of Common Units of BPROP equal to (x) one Common Unit (which is subject to adjustment), multiplied by (y) the Series D conversion ratio. As of June 30, 2019, there were 532,749.6574 Series D Preferred Units of BPROP outstanding.

The Series E Preferred Units of BPROP are convertible based on a conversion ratio of 1.29836, which is the quotient of the Series E Preferred Unit’s $50 liquidation preference and $38.51 conversion price. Upon conversion, each Series E Preferred Unit entitles its holder to (i) $18.8613 in cash, (ii) a number of Series K Preferred Units of BPROP equal to (x) 0.40682134 Series K Preferred Units (which is subject to adjustment), multiplied by (y) the Series E conversion ratio; and (iii) a number of Common Units of BPROP equal to (x) one Common Unit (which is subject to adjustment), multiplied by (y) the Series E conversion ratio.

As of ~~September~~June 30, ~~2018,~~2019, there were ~~532,749.6574 Series D Preferred Units of BPROP outstanding and~~ 502,657.8128 Series E Preferred Units of BPROP outstanding.

Also as of September 30, 2018, there were 9,717.658 Series B Preferred Units of BPROP outstanding. As of July 10, 2017, the Series B Preferred Unit conversion option expired, and each Series B Preferred Unit now has a fixed cash redemption value of $50 per unit. As of September 30, 2018, there were 4,176,972.006 Common Units of BPROP outstanding that had been issued upon conversion of Series B Preferred Units and 1,044,082.000 Series K Preferred Units of BPROP outstanding that were distributed with respect to such Common Units, which are both subject to certain redemption rights.

The holder of each Series K Preferred Unit of BPROP issued upon conversion of Series D Preferred Units or Series E Preferred Units of BPROP has the right to redeem such Series K Preferred Unit for a cash amount equal to the average closing price of BPR’s Class A Stock for the five consecutive trading days ending on the date of the notice of redemption, provided that BPR may elect to satisfy such redemption by delivering one share of BPR’s Class A Stock. The holder of each Common Unit of BPROP issued upon conversion of Series D Preferred Units or Series E Preferred Units of BPROP has the right to redeem such Common Unit for a cash amount equal to $0.324405869, subject to adjustment.

~~Except as otherwise noted, the Common, Preferred, and~~Each LTIP ~~Units~~Unit of BPROP ~~are not~~is convertible orinto, and, except for the level of preference, entitles its holder to regular and liquidating distributions equivalent to that of 0.016256057 Series K Preferred Units, subject to adjustment. Each Series K Preferred Unit received by an LTIP holder in connection with the BPY Transaction is redeemable atfor a cash amount equal to the ~~election~~average closing price of ~~either~~BPR's Class A Stock for five consecutive trading days ending on the ~~holder or BPROP.~~date of the notice of redemption, provided that BPR may elect to satisfy such redemption by delivering one share of BPR's Class A Stock. If the holders had requested redemption of the Class A Stock and Preferred Units as of June 30, 2019, the aggregate amount of cash the Company would have paid would have been $1.50 billion and $58.1 million, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

The following table reflects the activity of the common redeemable noncontrolling interests for the ~~nine~~three and six months ended ~~September~~June 30, ~~2018,~~2019, and ~~2017.~~2018.



Balance at January 1, 2018	$	248,126
Net income	560
Distributions	(1,842		)
Other comprehensive loss	(2		)
Fair value adjustment for noncontrolling interests in Operating Partnership	(23,252		)
Balance at March 31, 2018	223,590
Net income	818
Distributions	(1,842		)
Other comprehensive loss	(84		)
Fair value adjustment for noncontrolling interests in Operating Partnership	857
Balance at June 30, 2018	$	223,339

Balance at January 1, 2019	$	73,696
Net income	3,358
Series K Preferred Unit redemption	(14,935		)
Balance at March 31, 2019	62,119
Net income	103
Balance at June 30, 2019	$	62,222

Balance at January 1, 2017 $ 262,727
Net income 3,097
Distributions (4,731 )
Redemption of BPROP units (651 )
Other comprehensive loss (133 )
Fair value adjustment for noncontrolling interests in Operating Partnership (34,123 )
Balance at September 30, 2017 $ 226,186

Balance at January 1, 2018 $ 248,126
Net income 31,803
Distributions (3,685 )
Adjustment of Mezzanine Equity to fair value (40,294 )
Common Unit Redemption to Common Stock (85,818 )
Other comprehensive income 39
Reclassification of Mezzanine Equity to Permanent Equity (37,840 )
Pre-Closing Dividend (60,673 )
BPR Equity Recapitalization 21,923
Balance at September 30, 2018 $ 73,581

Class A Stock

Class A Stock refers to ~~a new series of stock~~the Company's Class A Stock, par value $0.01 per share, authorized and issued to unaffiliated GGP common stockholders as part of the BPY Transaction.

Each share of Class A Stock is entitled to cumulative dividends per share in a cash amount equal in value to the amount of any distribution made on a BPY ~~unit.~~limited partnership unit ("BPY unit"). In addition, each share of Class A Stock is exchangeable for one BPY unit or its cash equivalent (the form of payment to be determined by BP US REIT LLC, in its sole discretion). Such exchange and distribution rights are subject to adjustment in the event of certain dilutive or other capital events by BPY or BPR. If and to the extent declared by the ~~BPR~~Company's board of directors, the record and payment dates for the dividends or other distributions upon the shares of Class A Stock, to the extent not prohibited by applicable law, is expected to be the same as the record and payment dates for the dividends or other distributions upon the BPY units. ~~All~~Pursuant to the terms of the Company's charter, all such dividends to holders of Class A Stock will be paid prior and in preference to any dividends or distributions on the Class B Stock, Series B Preferred Stock or Class C Stock ~~or the Common Stock and~~ will be fully declared and paid before any dividends are declared and paid or any other distributions are made on any Class B Stock, ~~Class C~~Series B Preferred Stock or ~~the Common~~Class C Stock. The holders of Class A Stock shall not be entitled to any dividends from BPR other than the Class A dividend.

Upon any liquidation, dissolution or winding up of the Company that is not a Market Capitalization Liquidation Event (as defined below) or substantially concurrent with the liquidation, dissolution or winding up of BPY, the holders of Class A Stock ~~shall be~~are entitled to a cash amount, for each share of Class A Stock, equal to the market price of one BPY unit (subject to adjustment in the event of certain dilutive or other capital events by BPY or BPR) on the date immediately preceding announcement of such liquidation, dissolution or winding up, plus all declared and unpaid dividends. If, upon any such liquidation, dissolution or winding up, the assets of BPR are insufficient to make such payment in full, then the assets of BPR will be distributed among the holders of Class A Stock ratably in proportion to the full amounts to which they would otherwise be respectively entitled to receive.

If the market capitalization of the Class A Stock (i.e., if the price per share of Class A Stock, multiplied by the number of shares of Class A Stock outstanding) averages, over any period of 30 consecutive trading days, less than one (1) billion dollars, the BPR board will have the right to liquidate BPR’s assets and wind up BPR’s operations (a ~~“Market~~"Market Capitalization Liquidation ~~Event”~~Event"). Upon any Market Capitalization Liquidation Event, the holders of Class A Stock shall be entitled to a cash amount, for each share

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

of Class A Stock, equal to the dollar volume-weighted average price of one BPY unit over the ten (10) trading days immediately following the public announcement of such Market Capitalization Liquidation Event, plus all declared and unpaid dividends. If,

~~Table of Contents~~

~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

upon any such ~~market capitalization liquidation event,~~Market Capitalization Liquidation Event, the assets of BPR are insufficient to make such payment in full, then the assets of BPR will be distributed among the holders of Class A Stock ratably in proportion to the full amounts which they would otherwise be respectively entitled to receive. Notwithstanding the foregoing, upon any ~~market capitalization liquidation event,~~Market Capitalization Liquidation Event, BPY may elect to exchange all of the outstanding shares of the Class A Stock for BPY units on a one-for-one basis, subject to adjustment in the event of certain dilutive or other capital events by BPY or BPR.

Holders of Class A Stock shall have the right to exchange all or a portion of their Class A Stock for cash at a price equal to the value of an equivalent number of BPY units, subject to adjustment in the event of certain dilutive or other capital events by BPY or BPR. Upon receipt of a request for exchange, BPR will deliver a notice of exchange to BPY within one (1) business day and will have ten (10) business days to deliver the cash amount to the tendering holder. Upon receipt of the notice of exchange, BPY may elect to satisfy BPR’s exchange obligation by exchanging all of the shares of the Class A Stock tendered for BPY units on a one-for-one basis. This initial one-for-one conversion factor is subject to adjustment in the event of certain dilutive or other capital events by BPY or BPR. If so elected, BPY will have to satisfy such obligation within ten (10) business days from the date of the notice of exchange. If BPY exercises its right to assume the exchange obligation, units of BPY units will be delivered in exchange for the Class A Stock and such Class A Stock will automatically be converted into Class B Stock.

As there are certain events outside of the Company’s control whereby it could be required to redeem the Class A Stock for cash by the holders of the securities, the Class A Stock is included in redeemable equity. Accordingly, the Class A Stock are recorded at the greater of the carrying amount or their redemption value (i.e. fair value) as of each measurement date. The excess of the fair value over the carrying amount from period to period is recorded within additional paid-in capital in the Company’s Consolidated Balance Sheets. There is no adjustment within additional paid-in capital for the Class A stock when the fair value is less than the carrying value.

Class B Stock

The ~~following description~~Company’s shareholders approved the amendment and restatement of the Company’s charter at its annual stockholder meeting on June 19, 2019 (the “Restated Charter”), which became effective on June 26, 2019 and, among other things, authorized the Company’s issuance of up to 965,000,000 shares of a new class of stock called Class ~~B Stock sets forth certain general terms and provisions of Class B~~B-2 Stock. Each share of Class ~~B-1~~B-2 Stock shall have terms (including the same powers, preferences and relative, participating, optional and other special rights, and qualifications, limitations and restrictions) identical to the terms of a share of Class ~~B Stock. References herein to~~B-1 Stock other than voting rights. The following description sets forth certain general terms and provisions of the Company's Class ~~B Stock shall be deemed to be a reference to Class B~~B-1 Stock and Class ~~B-1~~B-2 Stock ~~as applicable.~~

(together the "Class B Stock").

Pursuant to the Restated Charter ~~Amendments~~ and subject to the prior rights of holders of all classes, including the Class A Stock, and any series of preferred stock at the time outstanding having prior rights as to dividends, each share of Class B Stock ~~will entitle~~entitles its holder to cumulative dividends per share in a cash amount at a rate of ~~10%~~6.5% per year of the Class B liquidation amount per share ~~with~~(which rate was 10.0% per year until the effective date of the Restated Charter on June 26, 2019) equal to $21.39 per share. On October 18, 2018, each holder of the Class B-1 Stock hereby irrevocably waived, all of its right, title and interest in and to 2.5% of the dividend rate, including without elimination all rights and entitlement to payment of such amounts. This partial dividend waiver resulted in a 7.5% effective rate per year of the Class B ~~liquidation amount~~Liquidation Amount per share ~~equal to~~and was terminated upon the ~~last closing price of a share of GGP common stock on the New York Stock Exchange on the trading day immediately preceding the date the series B designations was filed with the Secretary of State~~effectiveness of the ~~State of Delaware.~~Restated Charter. Dividends on the Class B Stock may also be paid by an in-kind distribution of additional shares of Class B Stock or any other class of shares of capital stock of BPR ranking junior to the Class A Stock. Dividends on the Class B Stock shall be cumulative and shall be payable quarterly in arrears, ~~provided however that the first payment date (when,~~when, as and if declared by the ~~BPR board)~~Company's Board of Directors with respect to dividends on the Class B ~~Stock shall not be before January 15, 2019.~~

Stock.

Holders of the Class B Stock ~~will~~are not be entitled to receive dividends, redemptions or other distributions: (i) unless and until (a) BPR has paid the aggregate dividends owed to the holders of Class A Stock and (b) the dividend coverage ratio (as defined below) is equal to or greater than 1.25:1, (ii) if any tendering holder of Class A Stock has not received the cash or BPY units due upon exchange or (iii) if holders of Class A Stock are owed cash in the event of an adjustment to the conversion factor. The dividend coverage ratio is referred to as a ratio of (i) BPR’s funds from operations, as calculated in accordance with the definition of funds from operations used by the National Association of Real Estate Investment Trusts ("Nareit"), for the immediately preceding fiscal quarter, to (ii) the product of (a) the amount of the most recent regular quarterly distribution declared by BPY on each BPY unit, times (b) the number of shares of Class A Stock outstanding at such time.

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Series B Preferred Stock

The following description sets forth certain general terms and provisions of the Series B Preferred Stock, par value $0.01 per share, of the Company (the "Series B Preferred Stock").

Pursuant to the Restated Charter and subject to the prior rights of holders of all classes, including the Class A Stock, Class B Stock and any series of preferred stock at the time outstanding having prior rights as to dividends, each share of Series B Preferred Stock will entitle its holder to cumulative dividends per share in a cash amount at a rate of 8.65% per year of the Class B liquidation amount per share (which rate was 10.0% until the effective date of the Restated Charter on June 26, 2019), with such Class B liquidation amount per share equal to $21.39. Dividends on the Series B Preferred Stock may also be paid by an in-kind distribution of additional shares of Series B Preferred Stock or any other class of shares of capital stock of BPR ranking junior to the Class A Stock and Class B Stock. Dividends on the Series B Preferred Stock shall be cumulative and shall be payable quarterly in arrears, when, as and if declared by the Company's Board of Directors with respect to dividends on the Series B Preferred Stock.

Holders of the Series B Preferred Stock are not entitled to receive dividends, redemptions or other distributions: (i) unless and until (a) BPR has paid the aggregate dividends owed to the holders of Class A Stock and Class B Stock and (b) the dividend coverage ratio (as defined below) is equal to or greater than 1.25:1, (ii) if any tendering holder of Class A Stock has not received the cash or BPY units due upon exchange or (iii) if holders of Class A Stock are owed cash in the event of an adjustment to the conversion factor. The dividend coverage ratio is referred to as a ratio of (i) BPR’s funds from operations, as calculated in accordance with the definition of funds from operations used by Nareit, for the immediately preceding fiscal quarter, to (ii) the product of (a) the amount of the most recent regular quarterly distribution declared by BPY on each BPY unit, times (b) the number of shares of Class A Stock outstanding at such time.

Class C Stock

Class C Stock refers to the ~~new series~~Company's Class C Stock, par value $0.01 per share, authorized as part of ~~stock authorized by~~ the ~~Charter Amendments.~~BPY Transaction. Pursuant to the amended charter and subject to the prior rights of holders of all classes, including the holders of Class A Stock, ~~and~~ Class B Stock, Series B Preferred Stock and any series of preferred stock at the time outstanding having prior rights as to dividends, each share of Class C Stock will entitle its holder to dividends

~~Table of Contents~~

~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

when, as and if declared by the ~~BPR board~~Company's Board of Directors out of any assets of BPR legally available therefore. The record and payment date for dividends on shares of Class C Stock shall be such date that the ~~BPR board~~Company's Board of Directors shall designate.

Notwithstanding the foregoing, holders of the Class C Stock ~~will~~are not be entitled to receive dividends, redemptions or other distributions: (i) unless and until (a) BPR has paid the aggregate dividends owed to the holders of Class A Stock and (b) the dividend coverage ratio is equal to or greater than 1.25:1, (ii) if any tendering holder of Class A Stock has not received the cash or BPY units due upon exchange, (iii) if holders of Class A Stock are owed cash in the event of an adjustment to the conversion factor or (iv) unless and until the full cumulative dividends on the Class B Stock for all past dividend periods and any current dividend periods have been (or contemporaneously are) (a) declared or paid in cash or (b) declared and a sum sufficient for the payment thereof in cash is set apart for such payment.

Voting Rights



Stock Class	Authorized	Issued	Shares Outstanding	Votes per Share
Class A Stock	4,517,500,000	80,236,673	79,389,423	1:1
Class B-1 Stock	4,517,500,000	142,734,650	142,734,650	1:1
Class B-2 Stock	965,000,000	121,203,654	121,203,654	0:1
Series B Preferred Stock	425,000,000	202,438,184	202,438,184	1:1
Class C Stock	1,000,000,000	640,051,301	640,051,301	1:1

All share counts in table above are as of June 30, 2019.

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Class A Stock Dividend

Our Board of Directors declared Class A Stock dividends during 2019 and 2018 as follows:

Declaration Date

Record Date

Payment Date

Dividend Per Share

Record Date

Payment Date

Dividend Per Share

2019

August 1

August 30, 2019

September 30, 2019

0.330

May 6

May 31, 2019

June 28, 2019

0.330

February 6

February 28, 2019

March 29, 2019

0.330

2018

November 1

November 30, 2018

December 31, 2018

0.315

October 31

November 30, 2018

December 31, 2018

0.315

August 28

August 31, 2018

September 28, 2018

0.315

August 31, 2018

September 28, 2018

0.315

Class A Stock Repurchases

On August 28, 2018, the Company’s Board of Directors authorized the repurchase of the greater of (i) 5% of the Company’s Class A Stock that are issued or outstanding or (ii) 10% of its public float of Class A Stock over the next 12 months from time to time as market conditions warrant. On March 29, 2019, BPR purchased for cancellation 4,679,802 shares of Class A Stock at a purchase price of $20.30 per share, for an aggregate cost of approximately $95 million, excluding fees and expenses.

In the quarter, BPR purchased 200,000 shares of Class A Stock at an average purchase price of $18.37 per share for an aggregate cost of approximately $3.68 million. As of June 30, 2019, these shares are held in treasury and were subsequently canceled in July 2019.

Furthermore, there were 647,250 shares of Class A Stock that were purchased in relation to the 2019 restricted stock grant. These shares were purchased at an average purchase price of $19.40 per share for an aggregate cost of approximately $12.59 million.

Class B Stock and Series B Preferred Stock Dividends

Our Board of Directors declared dividends on the Class B-1 Stock and the Series B Preferred Stock during 2019 as follows:



Declaration Date	Record Date	Payment Date	Average Dividend Per Share
2019
May 25	June 25, 2019	June 25, 2019	$	0.397
March 25	March 27, 2019	March 27, 2019	1.015

A dividend was declared on the Class B-1 Stock and the Series B Preferred Stock of the Company in the amount equal to all unpaid dividends on such shares from the date of issue to March 31, 2019 at the rate of 7.5% per annum payable on March 27, 2019 to the holders of record of Class B-1 Stock and the Series B Preferred Stock on March 27, 2019 for a combined distribution total of approximately $467.3 million.

In the quarter ended June 30, 2019, a dividend was declared on the Class B-1 Stock and the Series B Preferred Stock of the Company in the amount equal to all unpaid dividends on such shares from March 31, 2019 to June 25, 2019 at the rate of 7.5% per annum payable on June 25, 2019 to the holders of record of Class B-1 Stock and the Series B Preferred Stock on June 25, 2019 for a combined distribution total of approximately $183.8 million.

Class B-1 Stock Redemption

In the first quarter of 2019, BPR redeemed 10,496,703 shares of Class B-1 Stock held by BPR FIN 1 Subco LLC, a related party, for fair market value consideration of $224.5 million, being the redemption amount of the shares acquired at $21.39 per share.

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Class B-2 Stock Exchange

On June 26, 2019, following the effectiveness of the Restated Charter, certain subsidiaries of BPR FIN 1 Subco LLC, a related party, exchanged an aggregate of 121,203,654 shares of Class B-1 Stock held by such subsidiaries for 121,203,654 shares of Class B-2 Stock.

Common Stock Dividend

Our Board of Directors declared common stock dividends during 2018 ~~and 2017~~ as follows:



Declaration Date (1)	Record Date	Payment Date	Dividend Per Share
2018
May 3	July 13, 2018	July 31, 2018	$	0.22
February 7	April 13, 2018	April 30, 2018	0.22

Declaration Date (1) Record Date Payment Date Dividend Per Share
2018
May 3 July 13, 2018 July 31, 2018 $ 0.22
February 7 April 13, 2018 April 30, 2018 0.22
2017
October 31 December 15, 2017 January 5, 2018 $ 0.22
August 2 October 13, 2017 October 31, 2017 0.22
May 1 July 13, 2017 July 28, 2017 0.22
January 30 April 13, 2017 April 28, 2017 0.22

(1) Excludes the Pre-Closing Dividend (Note 1).

~~Our~~A Dividend Reinvestment Plan ("DRIP") provided eligible holders of GGP's common stock with a convenient method of increasing their investment in the Company by reinvesting all or a portion of cash dividends in additional shares. Pursuant to the DRIP, eligible stockholders who enrolled in the DRIP on or before the fourth business day preceding the record date for a dividend payment were able to have that dividend reinvested. As a result of the DRIP elections, 0no shares were issued during the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~34,625~~5,906 shares were issued during the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2018. The Company terminated the registration statement relating to ~~our~~the DRIP (File No. 333-172795) with the filing of a post-effective amendment on August 28, 2018.

Preferred Stock

On February 13, 2013, we issued, in a public offering, 10,000,000 shares of 6.375% Series A Cumulative Perpetual Preferred Stock (the "Pre-Merger Preferred Stock") at a price of $25.00 per share, resulting in net proceeds of $242.0 million after issuance costs. In connection with the BPY Transaction, each share of Pre-Merger Preferred Stock was converted into one share of 6.375% Series A cumulative redeemable preferred stock of BPR (the "Series A Preferred Stock"). The Series A Preferred Stock is recorded net of issuance costs within equity on our Consolidated Balance Sheets, and accrues a quarterly dividend at an annual rate of 6.375%.

~~Table of Contents~~

~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

The dividend is paid in arrears in preference to dividends on our Class A Stock, and reduces net income available to ~~common~~ stockholders, and therefore, earnings per share.

The Series A Preferred Stock does not have a stated maturity date but we may redeem the Series A Preferred Stock for $25.00 per share plus all accrued and unpaid dividends. Upon certain circumstances surrounding a change of control, holders of Series A Preferred Stock may elect to convert each share of their Series A Preferred Stock into a number of shares of Class A Stock or Class BC Stock, at the option of the holder, equivalent to $25.00 plus accrued and unpaid dividends, but not to exceed a cap of 2.4679 shares of Class A Stock or Class C Stock (subject to certain adjustments related to splits, subdivisions, or combinations). The BPY Transaction did not meet the definition of a change in control per the certificate of designation governing the Series A Preferred Stock.

~~Our Board of Directors declared preferred stock dividends during 2018 and 2017 as follows:~~

Declaration Date Record Date Payment Date Dividend Per Share
2018
November 1 December 14, 2018 January 1, 2019 $ 0.3984
July 31 September 17, 2018 October 1, 2018 0.3984
May 3 June 15, 2018 July 2, 2018 0.3984
February 7 March 15, 2018 April 2, 2018 0.3984
2017
October 31 December 15, 2017 January 2, 2018 $ 0.3984
August 2 September 15, 2017 October 2, 2017 0.3984
May 1 June 15, 2017 July 3, 2017 0.3984
January 30 March 15, 2017 April 3, 2017 0.3984

~~Accumulated Other Comprehensive Loss~~

~~The following table reflects the activity of the components of accumulated other comprehensive loss for the three months ended September 30, 2018, and 2017:~~

Foreign currency translation Net unrealized gains (losses) on other financial instruments Total
Balance at July 1, 2017 $ (71,708 ) $ 115
$ (71,593 )
Other comprehensive income (loss) 3,884
9
3,893
Balance at September 30, 2017 $ (67,824 ) $ 124
$ (67,700 )

Balance at July 1, 2018 $ (82,353 ) $ 124
$ (82,229 )
Other comprehensive income (loss) (2,471 ) 8
(2,463 )
Balance at September 30, 2018 $ (84,824 ) $ 132
$ (84,692 )

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Our Board of Directors declared preferred stock dividends during 2019 and 2018 as follows:



Declaration Date	Record Date	Payment Date	Dividend Per Share
2019
August 1	September 13, 2019	October 1, 2019	$	0.3984
May 6	June 14, 2019	July 1, 2019	0.3984
February 6	March 15, 2019	April 1, 2019	0.3984
2018
October 31	December 14, 2018	January 1, 2019	$	0.3984
July 31	September 17, 2018	October 1, 2018	0.3984
May 3	June 15, 2018	July 2, 2018	0.3984
February 6	March 15, 2018	April 2, 2018	0.3984

Accumulated Other Comprehensive Loss

The following table reflects ~~the activity of~~ the components of accumulated other comprehensive loss ~~for the nine months ended September~~as of June 30, ~~2018,~~2019 and ~~2017:~~2018:



	June 30, 2019			June 30, 2018
Net unrealized gains on financial instruments	$	83		$	123
Foreign currency translation	(82,057		)	(82,352		)
Accumulated other comprehensive loss	$	(81,974	)	$	(82,229	)

Foreign currency translation Net unrealized gains (losses) on other financial instruments Total
Balance at January 1, 2017 $ (70,560 ) $ 104
$ (70,456 )
Other comprehensive income (loss) 2,736
20
2,756
Balance at September 30, 2017 $ (67,824 ) $ 124
$ (67,700 )

Balance at January 1, 2018 $ (72,022 ) $ 116
$ (71,906 )
Other comprehensive income (loss) (12,802 ) 16
(12,786 )
Balance at September 30, 2018 $ (84,824 ) $ 132
$ (84,692 )

NOTE 9 10EARNINGS PER SHARE

Class A Stock ~~(August 28, 2018 through September 30, 2018)~~

Income available to Class A stockholders is limited to distributed income or dividends declared. Additionally, for purposes of allocating earnings to Class A Stock, the portion of the change in the carrying amount of Class A Stock that reflects a redemption in excess of fair value is considered a dividend to the Class A stockholders. As the Class A Stock redemption value approximates its fair value, basic and diluted earnings per share ("EPS") for Class A Stock is equivalent to the dividends declared for the period ~~August 28, 2018~~January 1, 2019 through ~~September~~June 30, ~~2018.~~2019. There were 109,804,513 and 79,389,423 shares of Class A ~~shares~~Stock outstanding ~~were 162,323,967 and 147,477,653~~ as of ~~August 28,~~December 31, 2018 and ~~September~~June 30, ~~2018,~~2019, respectively. EPS is not presented for Class B Stock, ~~and~~Series B Preferred Stock or Class C Stock as ~~neither class~~these classes of stock isare not publicly traded.

Common Stock

~~Basic~~In 2018, basic EPS for common stock iswas computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding. Diluted EPS for common stock iswas computed after adjusting the numerator and denominator of the basic EPS computation for the effects of all potentially dilutive common shares. The dilutive effect of ~~the warrants and the dilutive effect of~~ options and their equivalents (including fixed awards and nonvested stock issued under stock-based compensation plans), ~~are~~were computed using the "treasury" method. The dilutive effect of the Preferred Units iswas computed using the "if-converted" method.

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Information related to our EPS calculations is summarized as follows:



	Three Months Ended June 30, 2018			Six Months Ended June 30, 2018
Numerators - Basic:
Net income	$	95,564		$	161,460
Preferred Stock dividends	(3,984		)	(7,968		)
Allocation to noncontrolling interests	(1,949		)	(3,809		)
Net income attributable to common stockholders	$	89,631		$	149,683
Denominators:
Weighted-average number of common shares outstanding - basic	958,387			957,921
Effect of dilutive securities	1,808			2,321
Weighted-average number of common shares outstanding - diluted	960,195			960,242
Anti-dilutive Securities:
Effect of Preferred Units	1,514,030			1,514,030
Effect of Common Units	8,374,109			8,374,109
Effect of LTIP Units	1,724,953			1,756,343
Weighted-average number of anti-dilutive securities	11,613,092			11,644,482

July 1, 2018 through August 27, 2018 January 1, 2018 through August 27, 2018
Numerators - Basic:
Net income $ 3,698,966
$ 3,860,424
Preferred Stock dividends (3,984 ) (11,952 )
Allocation to noncontrolling interests (39,240 ) (43,049 )
Net income attributable to common stockholders $ 3,655,742
$ 3,805,423
Numerators - Diluted:
Distributions to Preferred Units 450
1,711
Net income attributable to common stockholders 3,656,192
3,807,134
Denominators:
Weighted-average number of common shares outstanding - basic 777,208
914,066
Effect of dilutive securities 3,822
3,831
Weighted-average number of common shares outstanding - diluted 781,030
917,897
Anti-dilutive Securities:
Effect of Common Units 5,438
7,662
Effect of LTIP Units 1,721
1,748
Weighted-average number of anti-dilutive securities 7,159
9,410

Three Months Ended September 30, Nine Months Ended September 30,
2017 2017
Numerators - Basic and Diluted:

Net income $ 226,272
$ 464,960
Preferred Stock dividends (3,984 ) (11,952 )
Allocation to noncontrolling interests (3,492 ) (9,157 )
Net income attributable to common stockholders $ 218,796
$ 443,851
Denominators:

Weighted-average number of common shares outstanding - basic 878,663
881,786
Effect of dilutive securities 61,521
63,207
Weighted-average number of common shares outstanding - diluted 940,184
944,993
Anti-dilutive Securities:

Effect of Preferred Units 1,514
1,514
Effect of Common Units 8,374
5,991
Effect of LTIP Units 1,805
1,852
Weighted-average number of anti-dilutive securities 11,693
9,357

For the period July 1, 2018 through August 27, 2018 and the period January 1, 2018 through August 27, 2018, dilutive options and dilutive shares related to the Preferred Units are included in the denominator of dilutive EPS. Distributions to Preferred Units are included in the numerator of dilutive EPS. For the three and nine months ended September 30, 2017, dilutive options and dilutive shares related to the warrants are included in the denominator of diluted EPS.

~~Table of Contents~~

~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

Outstanding Common Units and LTIP Units have been excluded from the diluted earnings per share calculation because including such units would also require that the share of BPROP income attributable to such units be added back to net income therefore resulting in no effect on EPS. For the three and nine months ended September 30, 2017, outstanding Preferred Units have been excluded from the diluted EPS calculation for all periods presented because including the Preferred Units would also require that the Preferred Units dividend be added back to the net income, resulting in anti-dilution.

During the year ended December 31, 2017, BAM, Abu Dhabi Investment Authority and Future Fund Board of Guardians exercised warrants for 83,866,187 shares of common stock using both full and net share settlement.

BPY owned 55,969,390 shares of treasury stock of GGP as of September 30, 2017. These shares are presented as common stock in treasury, at cost, on our Consolidated Balance Sheets. Additionally, GGPN holds 27,459,195 shares of stock as a result of warrants purchased during the year ended December 31, 2013. These shares are presented as issued, but not outstanding on our Consolidated Balance Sheets. Accordingly, these shares have been excluded from the calculation of EPS.

NOTE 1011STOCK-BASED COMPENSATION PLANS

The GGP Inc. 2010 Equity Plan (the "Equity Plan") was renamed as the Amended and Restated Brookfield Property REIT Inc. 2010 Equity Incentive Plan on August 28, 2018 in connection with the BPY ~~Transaction, reserves for the issuance of 4% of outstanding Class A Stock on a fully diluted basis.~~Transaction. The Equity Plan provides for grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, other stock-based awards and performance-based compensation (collectively, the "Awards"). The Company's directors, officers and other employees and those of its subsidiaries and affiliates are eligible for the Awards. The Equity Plan is not subject to the Employee Retirement Income Security Act of 1974, as amended. No participant may be granted more than 4,000,000 shares, or the equivalent dollar value of such shares, in any year. Options granted under the Equity Plan will be designated as either nonqualified stock options or incentive stock options. An option granted as an incentive stock option will, to the extent it fails to qualify as an incentive stock option, be treated as a nonqualified option. The exercise price of an option may not be less than the fair value of a share of BPR's Class A Stock on the date of grant. The term of each option will be determined prior to the date of grant, but may not exceed 10 years.

On November 12, 2013, the Equity Plan was amended to allow for the grant of LTIP Units to certain officers, directors, and employees of the Company as an alternative to stock options or restricted stock. LTIP Units are classes of partnership interests that under certain conditions, including vesting, are convertible by the holder into units of BPROP Series K preferred stock of the Operating Partnership, which are redeemable by the holder for Class A shares on a one-to-one ratio (subject to adjustment for changes to the Company's capital structure) or for the cash value of such shares at the option of the Company.

On February 17, 2016, the Equity Plan was amended to allow for the grant of restricted stock or LTIP Units to certain of its officers, directors, and employees that vest based on the achievement of certain established metrics that are based on the performance of the Company.

On January 1, 2017, the Company adopted ASU 2016-09, Compensation - Stock Compensation. This new guidance allowed us to make the election to account for share-based payment forfeitures when they occur versus estimating a forfeiture rate. This resulted in a cumulative effect of accounting change adjustment of $3.0 million to additional paid-in capital, noncontrolling interests related to LTIP Units and accumulated distributions in excess of earnings as of January 1, 2017.

In connection with the BPY Transaction, the ~~Company's~~ Equity Plan was amended and certain outstanding awards were modified. All outstanding GGP ~~Inc.~~ in and out of the money options were canceled and replaced with Class A Stock of BPR and BPY options, respectively. Certain existing appreciation only LTIP awards were canceled and replaced with substitute awards of a BPY affiliate. Outstanding restricted GGP ~~Inc.~~ shares were replaced with restricted shares of Class A Stock. As the awards were modified in conjunction with an equity restructuring, they were accounted for as modifications. Incremental compensation cost was measured as the excess of the fair value of the replacement awards over the fair value of the original awards immediately before the terms were modified. Total compensation cost measured at the date of modification was the grant-date fair value of the original awards for which the requisite service is expected to be rendered (or has already been rendered) plus the incremental cost associated with the replacement awards. For vested awards, incremental compensation cost was recognized on the modification date. For unvested awards, incremental compensation cost is being recognized over the remaining service period.

4039

Table of Contents

Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Compensation expense related to stock-based compensation plans for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019 and ~~2017~~2018 is summarized in the following table in thousands:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Stock options - Property management and other costs	$	29	$	59	$	29	$	147
Stock options - General and administrative	4		10		4		74
Restricted stock - Property management and other costs	1,741		2,002		3,125		3,105
Restricted stock - General and administrative	425		1,284		760		1,894
LTIP Units - Property management and other costs	82		272		154		635
LTIP Units - General and administrative	417		3,793		1,374		7,962
Total	$	2,698	$	7,420	$	5,446	$	13,817

Three Months Ended September 30, Nine Months Ended September 30,
2018 (1) 2017 2018 (1) 2017
Stock options - Property management and other costs $ 41
$ 811
$ 188
$ 2,766
Stock options - General and administrative 38
1,814
112
6,449
Restricted stock - Property management and other costs 5,952
1,366
9,056
4,424
Restricted stock - General and administrative 10,231
540
12,125
2,368
LTIP Units - Property management and other costs 552
397
1,187
1,189
LTIP Units - General and administrative 13,176
3,389
21,138
14,330
Total $ 29,990
$ 8,317
$ 43,806
$ 31,526


~~(1)~~	~~In connection with the BPY Transaction, outstanding equity awards were modified resulting in an acceleration of expense of $21.5 million.~~

The following tables summarize stock option, LTIP Unit and restricted stock activity for the Equity Plan for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017:~~2018:



	2019				2018
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Stock options Outstanding at January 1,	1,011,523		$	19.71	14,427,103		$	17.84
Granted	—		—		—		—
Exercised	(773,642	)	17.91		(249,508	)	15.66
Forfeited	(13	)	26.05		(1,082	)	28.86
Expired	—		—		(48,919	)	22.96
Conversion effect (1)	—		—		—		—
Stock options Outstanding at June 30,	237,868		$	25.59	14,127,594		$	17.86

2018 2017
Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price
Stock options Outstanding at January 1, 14,427,103
$ 17.84
15,277,189
$ 17.90
Granted (1) 1,068,818
19.70
—
—
Exercised (338,715 ) 16.55
(443,221 ) 18.05
Forfeited (1,082 ) 28.86
(148,040 ) 22.31
Expired (55,917 ) 23.27
(4,107 ) 28.86
Conversion effect (1) (14,081,389 ) 17.85
—
—
Stock options Outstanding at September 30, 1,018,818
$ 19.76
14,681,821
$ 17.85

(1)

In connection with the BPY Transaction, outstanding GGP ~~Inc.~~ in and out of the money options were canceled and replaced with Class A Stock of BPR and BPY options, respectively. The BPY options remain outstanding as of ~~September~~June 30, ~~2018~~2019 as they are held by employees of BPR ~~employees.~~subsidiaries. Stock compensation costs related to the grant of BPY option awards to employees of BPR subsidiaries are recognized as compensation expense with a corresponding capital contribution from BPY.



	2019				2018
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
LTIP Units Outstanding at January 1,	3,921,175		$	25.96	4,747,664		$	26.98
Granted (1)	—		—		—		—
Exercised	(1,715,722	)	28.34		(64,499	)	29.15
Forfeited	—		—		(179,824	)	25.82
Expired	—		—		—		—
Conversion effect (1)	—		—		—		—
LTIP Units Outstanding at June 30,	2,205,453		$	24.11	4,503,341		$	26.99

2018 2017
Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value
LTIP Units Outstanding at January 1, 4,747,664
$ 26.98
4,345,912
$ 27.27
Granted (1) 1,387,289
22.51
553,526
25.38
Exercised (73,660 ) 28.95
(92,880 ) 29.15
Forfeited (1,014,366 ) 25.83
(58,894 ) 26.77
Expired —
—
—
—
Canceled (1) (1,204,203 ) 25.93
—
—
LTIP Units Outstanding at September 30, 3,842,724
$ 25.96
4,747,664
$ 27.02

~~Table of Contents~~

~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~


(1)	In connection with the BPY Transaction, certain existing LTIP awards were canceled and replaced with substitute awards of a BPY affiliate. The substitute LTIP awards remain outstanding as of ~~September~~June 30, ~~2018~~2019 as they are held by ~~BPR employees.~~employees of

Table of Contents

Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

2018 2017
Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value
Restricted stock Outstanding at January 1, 1,089,364
$ 25.29
476,686
$ 27.11
Granted 1,074,137
21.52
808,448
25.30
Vested (394,995 ) 23.69
(170,137 ) 26.78
Canceled (123,232 ) 24.42
(100,357 ) 26.02
Conversion effect (1) (635,698 ) 24.52
—
—
Restricted stock Outstanding at September 30, 1,009,576
$ 22.49
1,014,640
$ 25.83

BPR subsidiaries. Stock compensation costs related to the grant of BPY affiliate LTIP awards to employees of BPR subsidiaries are recognized as compensation expense with a corresponding capital contribution from BPY.



	2019				2018
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Class A Restricted Stock Outstanding at January 1,	986,937		$	22.48	1,089,364		$	25.29
Granted	647,226		19.94		1,074,137		21.52
Vested	(385,081	)	22.60		(230,147	)	26.18
Forfeited	(14,214	)	22.12		(73,994	)	25.74
Conversion effect (1)	—		—		—		—
Class A Restricted Stock Outstanding at June 30,	1,234,868		$	21.11	1,859,360		$	22.98


(1)	In connection with the BPY Transaction, outstanding restricted GGP ~~Inc.~~ shares were replaced with restricted shares of Class A Stock.

NOTE 1112ACCOUNTS RECEIVABLE, NET

The following table summarizes the significant components of accounts receivable, net.



	June 30, 2019			December 31, 2018
Trade receivables	$	100,124		$	97,329
Short-term tenant receivables	4,647			4,378
Straight-line rent receivable	140,599			137,387
Other accounts receivable	(931		)	3,126
Total accounts receivable	244,439			242,220
Provision for doubtful accounts	(22,406		)	(19,658		)
Total accounts receivable, net	$	222,033		$	222,562

September 30, 2018 December 31, 2017
Trade receivables $ 87,659
$ 109,968
Short-term tenant receivables 4,333
4,776
Straight-line rent receivable 144,137
233,630
Other accounts receivable 3,588
5,165
Total accounts receivable 239,717
353,539
Provision for doubtful accounts (18,182 ) (19,458 )
Total accounts receivable, net $ 221,535
$ 334,081

NOTE 1213NOTES RECEIVABLE

The following table summarizes the significant components of notes receivable.



	June 30, 2019		December 31, 2018
Notes receivable	$	331,109	$	239,597
Accrued interest	8,819		17,340
Total notes receivable	$	339,928	$	256,937

September 30, 2018 December 31, 2017
Notes receivable $ 323,417
$ 404,129
Accrued interest 12,526
13,429
Total notes receivable $ 335,943
$ 417,558

On July 12, 2017, we entered into a promissory note with our joint venture GSPHII, in which we lent GSPHII $127.4 million that bears interest at 6.3% from January 1, 2018 until the note matures on December 31, 2018. Interest payments occur a month in arrears, commencing on the first day of the second calendar month with a final payment on the maturity date. The note is collateralized by GSPHII's interest in four anchor boxes.

On May 23, 2017, we entered into a promissory note with our joint venture partner, Bayside Equities, LLC ("Bayside Equities"), a subsidiary of Ashkenazy Holding Co., LLC, in which we lent Bayside Equities $19.1 million that bears interest at 12.2% per annum. The note was collateralized by Bayside Equities' economic interest in Riverchase Galleria and the Tysons Galleria anchor box and was paid down as of September 30, 2018 in conjunction with the BPY Transaction.

~~Table of Contents~~

~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

Notes receivable includes ~~$204.3 million of notes receivable~~a note from our joint venture partners related to the acquisition of 730 Fifth Avenue in New York, New York. The ~~first~~ note ~~was issued for $104.3 million to our joint venture partner in the retail portion and~~ bears interest at 8.0% compounded annually and matures on February 12, 2025. The second note was issued for $100.0 million to the joint venture partner acquiring the office portion of the property and bears interest at 8.0% subject to terms and conditions in the loan agreement and matures on April 17, 2025. As of ~~September~~June 30, ~~2018,~~2019, there was ~~$177.5~~$292.4 million outstanding on the ~~first~~note, which includes an increase of $90.0 million related to the payoff of loans as a result of the Company's funding of the joint venture partner's share of the loan paydown on June 28, 2019 (Note 6). As of April 1, 2019, the note accrued total interest of $2.4 million. Due to uncertainties regarding the collectability, the note has been placed on non-accrual status whereby the Company is no longer recognizing unpaid interest on this note. The ~~$80.0 million outstanding~~Company has evaluated the note for impairment, including consideration of the collateral value, and has concluded that it is not deemed probable that it will not be able to collect all amount due according to the contractual terms of the note. Accordingly, an allowance for loan loss has not been recognized.

Table of Contents

Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

On January 30, 2019, we entered into a revolving credit facility with BPY Bermuda Holdings IV Limited, a related party, in which we lent $330.0 million. The note had an interest rate of LIBOR plus 2.50% and matured on January 30, 2020. On March 25, 2019, the ~~second~~ note was paid down in ~~full during the second quarter of 2018.~~full.

NOTE 1314PREPAID EXPENSES AND OTHER ASSETS

The following table summarizes the significant components of prepaid expenses and other assets.



	June 30, 2019							December 31, 2018
	Gross Asset		Accumulated Amortization			Balance		Gross Asset		Accumulated Amortization			Balance
Intangible assets:
Above-market tenant leases, net	$	118,322	$	(91,292	)	$	27,030	$	160,363	$	(125,152	)	$	35,211
Below-market ground leases, net	—		—			—		61,983		(8,293		)	53,690
Real estate tax stabilization agreement, net	111,506		(54,548		)	56,958		111,506		(51,393		)	60,113
Total intangible assets	$	229,828	$	(145,840	)	$	83,988	$	333,852	$	(184,838	)	$	149,014
Remaining prepaid expenses and other assets:
Restricted cash						48,031							51,674
Security and escrow deposits						1,196							1,394
Prepaid expenses						32,208							39,816
Other non-tenant receivables						46,864							53,016
Right of use assets, net						119,463							—
Other						28,050							18,734
Total remaining prepaid expenses and other assets						275,812							164,634
Total prepaid expenses and other assets						$	359,800						$	313,648

September 30, 2018 December 31, 2017
Gross Asset
Accumulated
Amortization
Balance Gross Asset
Accumulated
Amortization
Balance
Intangible assets:

Above-market tenant leases, net $ 169,299
$ (128,698 ) $ 40,601
$ 411,789
$ (313,228 ) $ 98,561
Below-market ground leases, net 62,720
(8,282 ) 54,438
118,994
(14,870 ) 104,124
Real estate tax stabilization agreement, net 111,506
(49,802 ) 61,704
111,506
(45,081 ) 66,425
Total intangible assets $ 343,525

$ (186,782 ) $ 156,743
$ 642,289

$ (373,179 ) $ 269,110
Remaining prepaid expenses and other assets:

Restricted cash 44,817
67,335
Security and escrow deposits

1,258
2,308
Prepaid expenses

39,377
54,987
Other non-tenant receivables

30,679
31,265
Other

19,872
69,790
Total remaining prepaid expenses and other assets

136,003

225,685
Total prepaid expenses and other assets

$ 292,746

$ 494,795

4342

Table of Contents

Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 1415ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The following table summarizes the significant components of accounts payable and accrued expenses.



	June 30, 2019							December 31, 2018
	Gross Liability		Accumulated Accretion			Balance		Gross Liability		Accumulated Accretion			Balance
Intangible liabilities:
Below-market tenant leases, net	143,406		(67,399		)	$	76,007	194,858		(76,825		)	$	118,033
Above-market ground leases, net	—		—			—		754		(73		)	681
Total intangible liabilities	$	143,406	$	(67,399	)	$	76,007	$	195,612	$	(76,898	)	$	118,714
Remaining accounts payable and accrued expenses:
Accrued interest						36,120							29,576
Accounts payable and accrued expenses						51,177							68,425
Accrued real estate taxes						54,344							59,877
Deferred gains/income						65,985							75,841
Accrued payroll and other employee liabilities						40,618							64,515
Construction payable						260,636							267,102
Tenant and other deposits						12,865							12,248
Lease liability right of use						73,890							—
Insurance reserve liability						12,404							12,281
Capital lease obligations						5,385							5,385
Conditional asset retirement obligation liability						2,319							2,484
Other						147,135							236,921
Total remaining Accounts payable and accrued expenses						762,878							834,655
Total Accounts payable and accrued expenses						$	838,885						$	953,369

September 30, 2018 December 31, 2017

Gross
Liability

Accumulated
Accretion
Balance
Gross
Liability

Accumulated
Accretion
Balance
Intangible liabilities:

Below-market tenant leases, net 203,565
(78,497 ) $ 125,068
348,984
(162,228 ) $ 186,756
Above-market headquarters office leases, net —
—
—
4,342
(3,860 ) 482
Above-market ground leases, net 754
(60 ) 694
9,880
(2,648 ) 7,232
Total intangible liabilities $ 204,319

$ (78,557 ) $ 125,762
$ 363,206

$ (168,736 ) $ 194,470
Remaining accounts payable and accrued expenses:

Accrued interest

31,401

43,874
Accounts payable and accrued expenses

43,378

77,405
Accrued real estate taxes

62,402

78,213
Deferred gains/income

67,711

90,379
Accrued payroll and other employee liabilities

51,589

54,520
Construction payable

222,436

221,172
Tenant and other deposits

16,669

32,106
Insurance reserve liability

13,001

12,035
Capital lease obligations

5,385

5,385
Conditional asset retirement obligation liability

2,357

6,149
Other

234,074

103,724
Total remaining Accounts payable and accrued expenses

750,403

724,962
Total Accounts payable and accrued expenses

$ 876,165

$ 919,432

NOTE 1516LITIGATION

In the normal course of business, from time to time, we are involved in legal proceedings relating to the ownership and operations of our properties. In management's opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a material effect on our consolidated financial position, results of operations or liquidity.

The Company is subject to litigation related to the BPY Transaction. The Company cannot predict the outcome of pending litigation, nor can it predict the amount of time and expense that will be required to resolve such litigation.

~~Table of Contents~~

~~Brookfield Property REIT Inc.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

NOTE 1617COMMITMENTS AND CONTINGENCIES

We lease land or buildings at certain properties from third parties. The leases generally provide us with a right of first refusal in the event of a proposed sale of the property by the landlord. Rental payments are expensed as incurred and have, to the extent applicable, been straight-lined over the term of the lease. The following is a summary of our contractual rental expense as presented in our Consolidated Statements of Comprehensive Income:

Table of Contents

Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
(Dollars in thousands)
Contractual rent expense, including participation rent $ 1,982
$ 2,177
$ 6,323
$ 6,562
Contractual rent expense, including participation rent and excluding amortization of above and below-market ground leases and straight-line rent 1,204
1,605
4,441
4,846



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(Dollars in thousands)
Contractual rent expense, including participation rent	$	2,932	$	2,191	$	6,192	$	4,341
Contractual rent expense, including participation rent and excluding amortization of above and below-market ground leases and straight-line rent	2,932		1,639		6,192		3,237

NOTE 1718 SUBSEQUENT EVENTS

On ~~October~~July 1, ~~2018,~~2019, the Company made a principal payment of $7.0 million for a one-year extension of a loan at 830 North Michigan Avenue with an interest rate of LIBOR plus 1.60%. After this principal payment, the outstanding balance of the loan is $78.0 million.

On July 5, 2019, the Company obtained new loans at The Woodlands Mall for a total of $465.0 million, which consists of $425.0 million with an interest rate of 4.25% and $40.0 million with an interest rate of 5.50%, to replace previous debt on the property. The loan bears a weighted average interest rate of 4.36% and will mature on August 1, 2029. This loan replaced a previous $294.4 million loan that had an interest rate of 4.05% and a maturity date of June 10, 2023.

On July 10, 2019, the Company closed on a new ~~variable-rate~~ loan ~~at Hulen Mall~~on Westlake Center for ~~$90.0~~$48.8 million with an interest rate of LIBOR plus ~~2.80%. The~~2.50% and a maturity date of July 10, 2021. This loan replaced ~~a fixed-rate loan~~the previous debt of ~~$118.7~~$42.5 million with an interest rate of ~~4.25%.~~LIBOR plus 2.30% that matured on July 10, 2019.

~~On November 1, 2018, the Company conveyed Oak View Mall to the lender in full satisfaction of $74.7 million in outstanding debt.~~

On November 1, 2018, the Company obtained a new fixed-rate loan at St. Louis Galleria for $265.0 million with an interest rate of 5.12%. The loan replaced a fixed-rate loan of $215.0 million with an interest rate of 3.44%.

~~On November 7, 2018, the Company obtained a new fixed-rate loan at 605 N. Michigan Avenue for $80.0 million with an interest rate of 4.76%.~~


ITEM 2	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All references to numbered Notes are to specific footnotes to our ~~consolidated financial statements~~Consolidated Financial Statements included in this Quarterly Report and whose descriptions are incorporated into the applicable response by reference. The following discussion should be read in conjunction with such ~~consolidated financial statements~~Consolidated Financial Statements and related Notes. Capitalized terms used, but not defined, in this Management's Discussion and Analysis of Financial Condition and Results of Operations have the same meanings as in such Notes.

Overview

GGP Inc., ("~~GGP”~~GGP" or the ~~“Company”~~"Company") (now known as Brookfield Property REIT Inc. or ~~“BPR"~~"BPR"), a Delaware corporation, was organized in July 2010 and is an externally managed real estate investment trust, referred to as a "REIT".

On March 26, 2018, GGP and Brookfield Property Partners L.P. ~~(“BPY”~~("BPY") entered into a definitive agreement (the ~~“Merger Agreement”~~"Merger Agreement") pursuant to which BPY would acquire all of the shares of GGP common stock, par value $0.01 per share, that BPY and its affiliates did not already own through a series of transactions (collectively, the ~~“BPY Transaction”~~"BPY Transaction"), including, among other things, the exchange of all shares of GGP common stock owned by certain affiliates of BPY and any subsidiary of GGP for Series B Preferred Stock (the ~~“Class~~"Class B ~~Exchange”~~Exchange") and the payment of a special dividend payable to certain holders of record of GGP common stock pursuant to the terms of the Merger Agreement (the ~~“Pre-Closing Dividend”~~"Pre-Closing Dividend").

On July 26, 2018, GGP obtained the requisite stockholder approval of the BPY Transaction at a special meeting of GGP stockholders. Therefore, on July 27, 2018, GGP effected the Class B Exchange by exchanging 407,070,423 shares of GGP common stock owned by certain affiliates of BPY and any subsidiary of GGP into Series B Preferred Stock.

Pursuant to the Merger Agreement, on August 27, 2018, GGP’s certificate of incorporation was amended and restated (the “Charter Amendments”) to, among other things, change the Company's name to Brookfield Property REIT Inc., authorize the issuance of Class A Stock, Class B-1 Stock, par value $0.01 per share (“Class B-1 Stock”) and Class C Stock, par value $0.01 per share (“Class C Stock”) and to provide the terms governing the Series B Preferred Stock and Class B-1 Stock (collectively, “Class B Stock”). In addition, the Company amended and restated its bylaws (the “Bylaws Amendments”) and the agreement of limited partnership of GGP Operating Partnership, LP (“GGPOP”), a subsidiary of GGP that was renamed BPR OP, LP (“BPROP”) (the “Amended BPR OP Partnership Agreement”). The Charter Amendments superseded the certificate of designations authorizing the Company's Series B Preferred Stock, such that the Series B Preferred Stock remains outstanding but is referred to following the Charter Amendments as Class B Stock, having the rights, powers, preferences and other terms given to Class B Stock in the Charter Amendments.

~~liquidation event (as described in the Charter Amendments), or (ii) to reduce the voting power of the Class B Stock or Class C Stock.~~

BPR is an indirect subsidiary of BPY, one of the world's largest commercial real estate companies. Although the BPY Transaction resulted in a change of control of the Company, BPR remains a reporting entity. Accordingly, the Company accounted for the BPY Transaction as an equity recapitalization transaction. The BPY Transaction resulted in the consummation of a series of recapitalization and financing transactions (see Note 6) and joint venture asset sales (see Note 3). As ~~a result of the BPY Transaction, our financial information should be considered in conjunction with BPY’s financial information.~~

~~In these notes,~~used herein, the terms "we", "us" and "our" refer to BPR and its subsidiaries. BPR, through its subsidiaries and affiliates, is an owner and operator of retail properties. As of ~~September~~June 30, ~~2018,~~2019, we ~~are~~were the owner, either entirely or with joint venture partners, of ~~125~~123 retail ~~properties.~~properties located throughout the United States comprising approximately 121 million square feet of gross leasable area, or GLA.

In addition to holding ownership interests in various joint ventures, the Operating Partnership generally conducts its operations through BPR REIT Services LLC. ("BPRRS"), Brookfield Properties Retail Inc. ("BPRI") and General Growth Management, Inc. ("GGMI")~~, General Growth Services, Inc. ("GGSI") and GGPLP REIT Services, LLC ("GGPRS")~~. Each of GGMI and ~~GGSI~~BPRI is a taxable REIT subsidiary ("TRS"), which ~~provides~~earn real estate management and leasing ~~tenant coordination, business~~fees, development ~~marketing, strategic partnership and~~fees, financing fees for other ancillary services for a majority of our ~~Unconsolidated Real Estate Affiliates (defined below)~~unconsolidated real estate affiliates and for substantially all of our ~~Consolidated Properties (defined below). GGSI~~consolidated properties. BPRI also serves as a contractor to GGMI for these services. ~~GGPRS~~BPRRS generally provides financial, accounting, tax, legal, development, and other services to our ~~Consolidated Properties.~~consolidated properties.

Our primary business is owning and operating best-in-class retail properties that provide an outstanding environment and experience for our communities, retailers, ~~employees,~~ consumers and stockholders. We own a property portfolio comprised primarily of Class A retail properties (defined primarily by sales per square foot) and urban retail properties. BPR defines best-in-class retail and modern luxury through curated merchandising and elegant culinary experiences set against the backdrop of refined ambiance across this distinguished collection of destinations. Our retail properties are the core centers of retail, dining and entertainment within their trade areas and, therefore, represent hubs of daily life. As of September 30, 2018, we own, either entirely or with joint venture partners, 125 retail properties located throughout the United States comprising approximately 122 million square feet of gross leasable area, or GLA.

. We provide management and other services to substantially all of our properties, including properties which we own through joint venture arrangements and which are unconsolidated for GAAP purposes. Our management operating philosophies and strategies are the same whether the properties are consolidated or unconsolidated.

We seek to increase long-term Company NOI and Company EBITDA (each as defined below) growth through proactive management and leasing of our properties. We also recycle capital through strategic dispositions in order to opportunistically invest in high quality retail properties. We believe that the most significant operating factor affecting incremental cash flow and Company EBITDA growth is increased rents earned from tenants at our properties. This growth is primarily achieved by:

~~contractual rent increases;~~

~~occupancy growth;~~

~~positive leasing spreads;~~

~~income from redevelopment projects; and~~

~~controlling operating expenses.~~

As of ~~September~~June 30, ~~2018,~~2019, the portfolio was ~~94.6% occupied,~~95.0% leased, compared to ~~95.4% occupied~~95.7% leased at ~~September~~June 30, ~~2017.~~2018. On a suite-to-suite basis, the leases commencing occupancy in the trailing 12 months exhibited initial rents that were ~~11.6%~~7.2% higher than the final rents paid on expiring leases.

We have identified approximately ~~$1.7~~$1.6 billion of development and redevelopment projects within our portfolio, including re-development of anchor box spaces, over 80% of which is being invested into Class A retail properties. We currently expect to achieve stabilized returns of approximately ~~7-9%~~6-9% for all projects.

We believe our long-term strategy can provide our stockholders with a competitive risk-adjusted total return comprised of dividends and share price appreciation.

Financial Overview

Net income attributable to BPR ~~increased~~decreased from ~~$455.8~~$157.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 to ~~$3.8 billion~~$(195.6) million for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 primarily due to ~~gains~~impairment at one operating property followed by the sale of partial interests in

properties related to joint ventures formed in conjunction with the BPY Transaction and an increase in interest expense as a result of the new debt related to the BPY Transaction. Our ~~Company NOI (as defined below)~~funds from operations ("FFO") decreased ~~1.0%~~55.4% from ~~$1.3 billion~~$669.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 to ~~$1.3 billion~~$299.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2018. Our Company FFO (as defined below) increased 46.5% from $1.0 billion for the nine months ended September 30, 2017 to $1.5 billion for the nine months ended September 30, 2018~~2019 primarily due to ~~gains~~the impairment of one operating property followed by the sale of partial interests in properties related to joint ventures formed in conjunction with the BPY Transaction.

See Non-GAAP Supplemental Financial Measures below for a discussion of ~~Company NOI, Company EBITDA and Company~~ FFO, along with a reconciliation to ~~the comparable GAAP measures, Operating income and~~ Net income attributable to BPR.

Operating Metrics

The following table summarizes selected operating metrics for our portfolio.


	September 30, 2018 (1)			September 30, 2017 (1)			June 30, 2019 (1)			June 30, 2018 (1)
In-Place Rents Per Square Foot for Total Retail Properties (2)	$	78.28		$	78.14		$	80.13		$	78.44

Percentage Occupied for Total Retail Properties	94.6		%	95.4		%
Percentage Leased for Total Retail Properties							95.0		%	95.7		%


(1)	Metrics exclude properties acquired in the year ended December 31, ~~2017~~2018 and the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, reductions in ownership as a result of sales or other transactions, and certain redevelopments and other properties.


(2)	Rent is presented on a cash basis and consists of base minimum rent and common area costs.

Lease Spread Metrics

The following table summarizes signed leases compared to expiring leases in the same suite, for leases where (1) the downtime between new and previous tenant was less than 24 months, (2) the occupied space between the previous tenant and new tenant did not change by more than 10,000 square feet and (3) the new lease is at least a year.

# of Leases SF
Term
(in years)
Initial Rent PSF (1) Expiring Rent PSF (2)
Initial Rent
Spread
% Change
Trailing 12 Month Commencements 1,263
4,141,699
6.9
$ 71.40
$ 63.96
$ 7.44
11.6 %



	# of Leases	SF (in thousands)	Term (in years)	Initial Rent PSF (1)		Expiring Rent PSF (2)		Initial Rent Spread (4)		% Change (3)
Trailing 12 Month Commencements	1,151	4,451	6.9	$	63.36	$	59.09	$	4.26	7.2	%



	# of Leases	SF (in thousands)	Term (in years)	Initial Rent PSF (1)		Expiring Rent PSF (2)		Initial Rent Spread (5)		% Change (3)
Trailing 12 Month Commencements	1,151	4,451	6.9	$	47.88	$	43.82	$	4.05	9.2	%


(1)	Represents initial annual rent over the lease consisting of base minimum rent and common area maintenance.


(2)	Represents expiring rent at end of lease consisting of base minimum rent and common area maintenance.


(3)	Spread excludes short-term renewals at Ala Moana that are less than two years.


(4)	These metrics are weighted based on the operating income contribution of the properties.


(5)	These metrics are not weighted based on the operating income contribution of the properties.

Results of Operations

Three months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018

The following table is a breakout of the components of ~~minimum rents:~~rental revenues:


	Three Months Ended September 30,											Three Months Ended June 30,
	2018			2017			$ Change			% Change		2019			2018			$ Change			% Change
	(Dollars in thousands)											(Dollars in thousands)
Components of Minimum rents:
Components of Rental Revenues:
Base minimum rents	$	311,683		$	357,292		$	(45,609	)	(12.8	)%	$	218,975		$	362,649		$	(143,674	)	(39.6	)%
Lease termination income	1,320			9,071			(7,751		)	(85.4	)%	950			20,306			(19,356		)	(95.3	)%
Straight-line rent	(1,359		)	2,768			(4,127		)	(149.1	)%	752			(667		)	1,419			(212.7	)%
Above and below-market tenant leases, net	(1,661		)	(5,274		)	3,613			(68.5	)%	4,492			(2,976		)	7,468			(250.9	)%
Total Minimum rents	$	309,983		$	363,857		$	(53,874	)	(14.8	)%
Tenant recoveries												88,166			156,155			(67,989		)	(43.5	)%
Overage rent												1,944			3,927			(1,983		)	(50.5	)%
Less provision for doubtful accounts												(1,040		)	—			(1,040		)	—
Total rental revenues, net												$	314,239		$	539,394		$	(225,155	)	(41.7	)%

Base minimum rents decreased ~~$45.6~~$143.7 million, primarily due to the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018. The joint ventures resulted in a ~~$44.3~~$133.2 million decrease in permanent base minimum rents during the ~~third~~second quarter of 2019 compared to the second quarter of 2018 ~~compared to the third quarter of 2017~~ (Note 3).

Tenant recoveries decreased ~~$27.7~~$68.0 million, primarily due to the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018. The joint ventures resulted in a ~~$23.7~~$59.7 million decrease in tenant recoveries during the ~~third~~second quarter of 2019 compared to the second quarter of 2018 ~~compared to the third quarter of 2017~~ (Note 3).

~~Other revenue decreased $5.5 million, primarily due to the sale of a land parcel at one property during 2017, resulting in $2.3 million in~~Management fees and other ~~revenue, and a $1.7 million decrease in deferred revenue related to condominiums at Ala Moana.~~

~~Real estate taxes decreased $6.4~~corporate revenues increased $12.0 million, primarily due to the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018. The joint ventures resulted in a ~~$7.7~~$12.9 million ~~decrease~~increase in ~~real estate taxes~~property management and leasing fees during the ~~third~~second quarter of 2019 compared to the second quarter of 2018 ~~compared to the third quarter of 2017~~ (Note 3).

~~Other property operating costs~~Real estate taxes decreased ~~$9.5~~$20.2 million, primarily due to the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018. The joint ventures resulted in a ~~$10.3~~$21.2 million decrease in ~~other property operating costs~~real estate taxes during the ~~third~~second quarter of ~~2018~~2019 compared to the ~~third quarter of 2017 (Note 3).~~

~~The provision for impairment during the three months ended September 30, 2018 is related to an impairment charge recorded on one operating property (Note 2).~~

~~Interest and dividend income decreased $8.7 million, primarily due to the settlement of notes receivable with our joint venture partners during 2017.~~

Interest expense increased $8.7 million, primarily due to a $20.7 million increase in interest expense on the new credit agreement entered into during the third quarter of 2018 (Note 6). In addition, 218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenue became consolidated properties during the third quarter of 2017. This resulted in a $5.5 million increase in interest expense during the third quarter of 2018 compared to the third quarter of 2017. This was partially offset by the joint venture transactions related to the BPY Transaction in the third quarter of 2018. This resulted in a $19.1 million decrease in interest expense during the third quarter of 2018 compared to the third quarter of 2017 (Note 3).

The gain on foreign currency during the three months ended September 30, 2017 is related to the impact of changes in the exchange rate on the proceeds from the settlement of a note receivable denominated in Brazilian Reais and received in conjunction with the sale of Aliansce in the third quarter of 2013.

The gain from changes in control of investment properties and other of $2.9 billion during the three months ended September 30, 2018 is due to the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018, the sale of an anchor box at The Oaks Mall and the sale of the commercial office unit at 685 Fifth Avenue (Note 3). The gain from changes in control of investment properties and other of $95.2 million during the three months ended September 30, 2017 relates to the transaction at 218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenue and the Seritage joint venture transactions (Note 3).

Benefit from income taxes of $570.7 million during the three months ended September 30, 2018 is primarily due to the recognition of deferred taxes related to certain transactions effectuated in the BPY Transaction.

~~Equity in income of Unconsolidated Real Estate Affiliates decreased $15.6 million, primarily due to a decrease in income recognition on condominiums and demolition work at one property.~~

~~The Unconsolidated Real Estate Affiliates - gain on investment during the three months ended September 30, 2018 is due to the joint ventures formed in conjunction with the BPY Transaction in the third~~second quarter of 2018 (Note 3).

~~Nine months ended September 30, 2018 and 2017~~

~~The following table is a breakout of the components of minimum rents:~~

Nine Months Ended September 30,
2018 2017 $ Change % Change
(Dollars in thousands)
Components of Minimum rents:

Base minimum rents $ 1,036,243
$ 1,061,730
$ (25,487 ) (2.4 )%
Lease termination income 27,229
18,379
8,850
48.2 %
Straight-line rent (766 ) 3,260
(4,026 ) (123.5 )%
Above and below-market tenant leases, net (4,889 ) (21,294 ) 16,405
(77.0 )%
Total Minimum rents $ 1,057,817
$ 1,062,075
$ (4,258 ) (0.4 )%

~~Base minimum rents~~Other property operating costs decreased ~~$25.5~~$30.7 million, primarily due to the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018. The joint ventures resulted in a ~~$39.0~~$29.7 million decrease in ~~permanent base minimum rents during the third quarter of 2018 compared to the third quarter of 2017 (Note 3). In addition, the acquisition of our joint venture partner's interest in Neshaminy~~other property operating costs during the second quarter of 2017 resulted in a $5.1 million increase in permanent base minimum rents. The offsetting decrease relates primarily to 218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenue becoming consolidated properties during the third quarter of 2017. This resulted in a $20.1 million increase in base minimum rents during the first nine months of 20182019 compared to the ~~first nine~~second quarter of 2018 (Note 3).

The provision for impairment during the three months ~~of 2017.~~ended June 30, 2019 is related to an impairment charge recorded on one operating property (Note 2).

~~Tenant recoveries~~Depreciation and amortization decreased ~~$39.5~~$55.3 million, primarily due to the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018. The joint ventures resulted in a ~~$23.7~~$61.0 million decrease in ~~tenant recoveries~~depreciation and amortization during the ~~first nine months~~second quarter of ~~2018~~2019 compared to the ~~first nine months~~second quarter of 2017 (Note 3). In addition, the disposition of three operating properties during 2017 resulted in a $5.5 million decrease in tenant recoveries during the first nine months of 2018 compared to the first nine months of 2017.2018.

Other revenue decreased $11.8 million, primarily due to the sale of land parcels at two operating properties during 2017, resulting in $4.6 million in other revenue, and a $5.0 million decrease in deferred revenue related to condominiums at Ala Moana.

~~The provision for impairment during the nine months ended September 30, 2018 is related to an impairment charge recorded on one operating property (Note 2).~~

~~Interest and dividend income decreased $25.4 million primarily due to the settlement of notes receivable with our joint venture partners during 2017.~~

Interest expense increased ~~$20.6~~$18.3 million, primarily due to a ~~$22.0~~$72.9 million increase in interest expense on the new credit agreement entered into during the third quarter of 2018 (Note 6). In addition, 218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenue became consolidated properties during the third quarter of 2017. This resulted in a $18.8 million increase in interest expense during the third quarter of 2018 compared to the third quarter of 2017. This was partially offset by the joint ~~venture transactions related to~~ventures formed in conjunction with the BPY Transaction in the third quarter of 2018. This resulted in a ~~$20.4~~$51.4 million decrease in interest expense during the ~~third~~second quarter of 2019 compared to the second quarter of 2018 ~~compared to the third quarter of 2017~~ (Note 3).

The ~~gain on foreign currency during the nine months ended September 30, 2017 is related to the impact~~provision for income taxes of ~~changes in the exchange rate on the proceeds from the settlement of a note receivable denominated in Brazilian Reais and received in conjunction with the sale of Aliansce in the third quarter of 2013.~~

~~The gain on extinguishment of debt during the nine months ended September 30, 2017 relates to Lakeside Mall, which was conveyed to the lender in full satisfaction of the debt.~~

The gain from changes in control of investment properties and other, net of $2.9 billion during the nine months ended September 30, 2018 is due to the joint venture transactions related to the BPY Transaction in the third quarter of 2018, the sale of an anchor box at The Oaks Mall, the sale of the commercial office unit at 685 Fifth Avenue and the sale of a 49.9% joint venture interest in the Sears Box at Oakbrook Center (Note 3). The gain from changes in control of investment properties and other of $79.3$3.5 million during the ~~nine~~three months ended ~~September~~June 30, ~~2017 relates to the transaction at 218 West 57th Street, 530 Fifth Avenue and 685~~

~~Fifth Avenue, the Seritage joint venture, the acquisition of the remaining interest in Neshaminy Mall and our sale of our interest in Red Cliffs Mall (Note 3).~~

~~Benefit from income taxes of $571.0 million during the nine months ended September 30, 2018~~2019 is primarily due to the recognition of deferred taxes related to certain transactions effectuated in the BPY Transaction.

Equity in income of ~~Unconsolidated Real Estate Affiliates~~unconsolidated real estate affiliates decreased ~~$40.7~~$22.9 million, primarily due to a decrease in income recognition on ~~condominiums and demolition work at one property.~~condominiums.

~~The Unconsolidated Real Estate Affiliates - gain on investment during the nine~~Six months ended ~~September~~June 30, 2019 and 2018

The following table is a breakout of the components of rental revenues:



	Six Months Ended June 30,
	2019			2018			$ Change			% Change
	(Dollars in thousands)
Components of Rental Revenues:
Base minimum rents	$	440,934		$	724,561		$	(283,627	)	(39.1	)%
Lease termination income	2,446			25,909			(23,463		)	(90.6	)%
Straight-line rent	3,949			593			3,356			565.9	%
Above and below-market tenant leases, net	7,288			(3,228		)	10,516			(325.8	)%
Tenant recoveries	180,093			313,157			(133,064		)	(42.5	)%
Overage rent	6,295			10,171			(3,876		)	(38.1	)%
Less provision for doubtful accounts	(3,746		)	—			(3,746		)	—
Total rental revenues, net	$	637,259		$	1,071,163		$	(433,904	)	(40.5	)%

Base minimum rents decreased $283.6 million, primarily due to the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018. The joint ventures resulted in a $265.3 million decrease in permanent base minimum rents during the first six months of 2019 compared to the first six months of 2018 (Note 3).

Tenant recoveries decreased $133.1 million, primarily due to the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018. The joint ventures resulted in a $118.1 million decrease in tenant recoveries during the first six months of 2019 compared to the first six months of 2018 (Note 3).

Management fees and other corporate revenues increased $27.4 million, primarily due to the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018. The joint ventures resulted in a $25.5 million increase in property management and leasing fees during the first six months of 2019 compared to the first six months of 2018 (Note 3).

Real estate taxes decreased $39.1 million, primarily due to the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018. The joint ventures resulted in a $40.7 million decrease in real estate taxes during the first six months of 2019 compared to the first six months of 2018 (Note 3).

Other property operating costs decreased $59.0 million, primarily due to the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018. The joint ventures resulted in a $58.0 million decrease in other property operating costs during the first six months of 2019 compared to the first six months of 2018 (Note 3).

The provisions for impairment during the six months ended June 30, 2019 and six months ended June 30, 2018 are related to impairment charges recorded on one operating property in each period. (Note 2).

Depreciation and amortization decreased $121.9 million, primarily due to the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018. The joint ventures resulted in a $122.5 million decrease in depreciation and amortization during the first six months of 2019 compared to the first six months of 2018.

Interest expense increased $35.1 million, primarily due to a $141.2 million increase in interest expense on the new credit agreement entered into during the third quarter of 2018 (Note 6). This was partially offset by the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018. This resulted in a $102.1 million decrease in interest expense during the first six months of 2019 compared to the first six months of 2018 (Note 3).

The gain from changes in control of investment properties and other of $12.7 million during the six months ended June 30, 2018 relates to the sale of a 49.9% joint venture interest in the Sears Box at Oakbrook Center (Note 3).

Provision for income taxes of $8.0 million during the six months ended June 30, 2019 is primarily due to the recognition of deferred taxes related to certain transactions effectuated in the BPY Transaction.

Equity in income of Unconsolidated Real Estate Affiliates decreased $54.6 million, primarily due to a decrease in income recognition on condominiums.

The Unconsolidated Real Estate Affiliates - gain on investment during the six months ended June 30, 2019 relates to the sale of our 12.0% interest in Bayside Marketplace (Note 3). The Unconsolidated Real Estate Affiliates - gain on investment during the six months ended June 30, 2018 relates to the sale of a portion of our interest in Aeropostale (Note 3).

Liquidity and Capital Resources

Our primary source of cash is from the ownership and management of our properties and strategic dispositions. In addition, we will also use strategic dispositions and financings as a source of capital. We may generate cash from refinancings or borrowings under our revolving credit facility. Our primary uses of cash include payment of operating expenses, debt service, reinvestment in and redevelopment of properties, tenant allowances, dividends, share repurchases and strategic acquisitions.

We anticipate maintaining financial flexibility by managing our future maturities and amortization of debt. We believe that we currently have sufficient liquidity to satisfy all of our commitments in the form of ~~$260.7~~$199.9 million of consolidated unrestricted cash and ~~$1.1 billion~~$870.5 million of available credit under our credit facility as of ~~September~~June 30, ~~2018,~~2019, as well as anticipated cash provided by operations.

Our key financing objectives include:

to obtain property-secured debt with laddered maturities; and

to minimize the amount of debt that is cross-collateralized and/or recourse to us.

We may raise capital through public or private issuances of debt securities, preferred stock, Class A Stock, Common ~~Stock~~Units of BPROP, share repurchases or other capital raising activities.

The Company entered into a new credit agreement (the "Agreement") dated as of August 24, 2018 consisting of a revolving credit facility (the "Facility"), Term A-1 and A-2 loans, and a Term B loan. The Facility provides for revolving loans of up to $1.5 billion and borrowings bear interest at a rate equal to LIBOR plus 225 basis points. The Facility is scheduled to mature in August 2022 and had outstanding borrowings of $629.5 million as of June 30, 2019. The Term A-1 Loan has a total commitment of $900.0 million, with $700.0 million attributable to BPR and $200.0 million attributable to an affiliate, and is scheduled to mature in August 2021 bearing interest at a rate equal to LIBOR plus 225 basis points. The Term A-2 Loan has a total commitment of $2.0 billion and is scheduled to mature in August 2023 bearing interest at a rate equal to LIBOR plus 225 basis points. The Term B Loan has a total commitment of $2.0 billion and is scheduled to mature in August 2025 bearing interest at a rate equal to LIBOR plus 250 basis points. The Term A-1, A-2, and B Loans are contractually obligated to be prepaid through net proceeds from property level refinances and asset sales as outlined in the Agreement. The Agreement contains certain restrictive covenants which limit material changes in the nature of our business conducted, including, but not limited to, mergers, dissolutions or liquidations, dispositions of assets, liens, incurrence of additional indebtedness, dividends, transactions with affiliates, prepayment of subordinated debt, negative pledges and changes in fiscal periods. In addition, we are required not to exceed a maximum net debt-to-value ratio and fixed charge coverage ratio. As of June 30, 2019, we are not aware of any instances of non-compliance with such covenants.

During the ~~nine months~~year ended ~~September 30,~~December 31, 2018, we refinanced a consolidated mortgage note at 685 Fifth Avenue. The prior $340.0 million variable-rate consolidated mortgage note matured on July 1, 2018 and had an interest rate of LIBOR plus 2.75%. In connection with the refinancing, $100.0 million remained related to the commercial office unit and a new $275.0 million fixed-rate consolidated mortgage note with a term-to-maturity of 10.0 years and an interest rate of 4.53% was obtained on the retail unit. The $100.0 million was paid down in full in conjunction with the sale of the commercial office unit on July 13, 2018. In addition, we refinanced mortgage notes totaling ~~$319.9 million~~$1.1 billion at ~~four~~nine properties. The prior loans totaling ~~$248.7 million~~$1.2 billion had ~~a weighted-average term-to-maturity of 0.7 years and~~ a weighted-average interest rate of ~~4.06%~~4.89%. The new loans have a weighted-average term-to-maturity of ~~7.6~~5.1 years and a weighted-average interest rate of ~~4.52%~~5.21%. We also obtained new mortgage notes totaling ~~$336.2~~$416.2 million at ~~five~~six properties with a weighted-average term-to-maturity of 4.6 years and a weighted-average interest rate of ~~4.71%~~4.72%.

~~During~~On June 28, 2019, the ~~year ended December 31, 2017, we~~Company paid ~~down~~off loans totaling $180.0 million on 730 Fifth Avenue and extended the loan to August 27, 2019. The payoff of the notes resulted in a ~~$73.4~~$90.0 million ~~consolidated mortgage note~~increase in notes receivable as a result of the Company's funding of the joint venture partner's share of the loan paydown in the Consolidated Balance Sheets at ~~Four Seasons Town Centre. The prior~~June 30, 2019.

On June 3, 2019, the Company closed a new loan ~~had~~on the Grand Canal Shoppes in the amount of $975.0 million with a ~~term-to-maturity of 0.2 years and an~~10-year fixed interest rate of ~~5.6%. Four Seasons Town Centre subsequently~~4.29%, maturing July 2, 2029. This loan replaced athe previous debt of $625.0 million on the property that ~~was sold during~~matured on June 3, 2019.

On May 1, 2019, the Company and BPR Cumulus LLC, BPR Nimbus LLC, and GGSI Sellco LLC (each, an indirect subsidiary of the Company) issued $1.0 billion aggregate principal amount of 5.75% Senior Secured Notes due 2026. The notes bear interest

at an annual rate of 5.75% payable on May 15 and November 15 of each year, ~~ended December 31, 2017 as collateral in our $1.4~~beginning on November 15, 2019 and will mature on May 15, 2026.

On April 25, 2019, the Company obtained a one-year extension of a $1.3 billion loan secured by cross-collateralized mortgages on 14 properties. In addition, we obtained a new consolidated mortgage note at Mall of Louisiana for $325.0 million with an interest rate of 3.98%. We also obtained a new unconsolidated mortgage note at one property for $74.2 million with an interest rate of 3.77% and paid down a $60.0 million unconsolidated mortgage note at that property15 properties with an interest rate of LIBOR plus 1.75%. ~~Finally, we refinanced~~A principal repayment of $10.1 million was made in conjunction with the extension.

On April 9, 2019, the Company closed a ~~$190.0~~new loan on three properties included in the BPR-FF JV LLC joint venture. The three properties are Coronado Center, Governor's Square and Lynnhaven Mall. These properties were previously encumbered by $462.0 million ~~consolidated mortgage note~~of third-party debt which was replaced by a $515.0 million loan with ~~a $110.0 million consolidated mortgage note at 530 Fifth Avenue. Both notes had~~ an interest rate of LIBOR plus ~~3.25%. Additional financing activity~~340 basis points, maturing May 2024. The new loan was recorded as an extinguishment of the previous loans and allocation of the new debt to the three properties.

On March 25, 2019, the Company secured a $341.8 million subordinated unsecured note with Brookfield BPY Holdings Inc., a related party. The note bears interest at a rate equal to LIBOR plus 2.75% and is ~~related~~scheduled to ~~draws and repayments~~mature on March 25, 2029. During the ~~corporate revolver.~~quarter ended June 30, 2019, the Company made a principal payment of $200.1 million. The balance at June 30, 2019 was $141.7 million. The Company borrowed an additional $70.5 million during the period with a maturity date of June 25, 2029. The balance at June 30, 2019 was $70.5 million.

As of ~~September~~June 30, ~~2018,~~2019, we had ~~$7.5~~$7.1 billion of debt pre-payable at our proportionate share without penalty. We may pursue opportunities to refinance this debt at lower interest rates and longer maturities.

As of ~~September~~June 30, ~~2018,~~2019, our proportionate share of total debt aggregated ~~$21.1~~$22.0 billion. Our total debt includes our consolidated debt of ~~$13.2~~$14.0 billion and our share of ~~Unconsolidated Real Estate Affiliates~~unconsolidated real estate affiliates debt of ~~$7.9~~$8.0 billion. Of our proportionate share of

total debt, ~~$6.0~~$6.1 billion is recourse to the Company or its subsidiaries (including the ~~facility)~~Facility) due to guarantees or other security provisions for the benefit of the note holder.

The amount of debt due in the next three years represents ~~17.2%~~29.8% of our total debt at maturity. The maximum amount due in any one of the next ten years is no more than ~~$2.9 billion~~$4.1 million at our proportionate share or approximately ~~14.4%~~20.4% of our total debt at maturity.

The following table illustrates the scheduled payments for our proportionate share of total debt as of ~~September~~June 30, ~~2018.~~2019. The $206.2 million of junior subordinated notes are due in 2036, but we may redeem them any time after April 30, 2011 (Note 6). As we do not expect to redeem the notes prior to maturity, they are included in the consolidated debt maturing subsequent to ~~2022.~~2023.


	Consolidated		Unconsolidated		Consolidated		Unconsolidated
	(Dollars in thousands)				(Dollars in thousands)
2018	$	118,700	$	221,033
2019	410,702		871,933		$	215,153	$	665,377
2020	932,936		1,280,042		783,348		903,813
2021	2,221,914		761,240
2021 (1)					2,631,375		828,555
2022	1,079,667		1,125,720		1,691,156		1,123,779
2023 (2)					3,232,090		1,197,032
Subsequent(3)	8,455,012		3,643,114		5,496,426		3,330,316
Total	$	13,218,931	$	7,903,082	$	14,049,548	$	8,048,872


(1)	Includes the Term A-1 Loan (Note 6).


(2)	Includes the Term A-2 Loan (Note 6).


(3)	Includes the Term B Loan (Note 6).

We believe we will be able to extend the maturity date, repay under our available line of credit or refinance the consolidated debt that is scheduled to mature in ~~2018.~~2019. We also believe that the joint ventures will be able to refinance the debt of our ~~Unconsolidated Real Estate Affiliates~~unconsolidated real estate affiliates upon maturity; however, there can be no assurance that we will be able to refinance or restructure such debt on acceptable terms or otherwise, or that joint venture operations or contributions by us and/or our partners will be sufficient to repay such loans.

Acquisitions and Joint Venture Activity

From time-to-time we may acquire whole or partial interests in high-quality retail properties or make strategic dispositions. Refer to Note 3 for more information.

Developments and Redevelopments

We are currently redeveloping several consolidated and unconsolidated properties primarily to improve the productivity and value of the property, convert large-scale anchor boxes into smaller leasable areas and to create new in-line retail space and new restaurant venues. The execution of these redevelopment projects within our portfolio was identified as providing compelling risk-adjusted returns on investment.

We have development and redevelopment activities totaling approximately ~~$1.2 billion~~$720.0 million under construction and ~~$539~~$856.0 million in the pipeline. We continue to evaluate a number of other redevelopment projects to further enhance the quality of our assets. Expected returns are based on the completion of current and future redevelopment projects, and the success of the leasing and asset management plans in place for each project. Expected returns are subject to a number of variables, risks, and uncertainties including those disclosed within Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 (our "Annual Report"). We also refer the reader to our disclosure related to forward-looking statements, below. The following table illustrates our planned redevelopments:

Property Description BPR's Total Projected Share of Cost BPR's Investment to Date (1) Expected Return on Investment (2) Stabilized Year
Major Development Summary (in millions, at share unless otherwise noted)
Under Construction

New Development
Norwalk, CT
Ground up development $ 474
$ 258
7% 2022
Staten Island Mall
Staten Island, NY
Expansion 209
176
6-7% 2020
Other Projects Redevelopment projects at various properties 491
286
6-8% 2018-2020
Total Projects Under Construction $ 1,174
$ 720

Projects in Pipeline

Other Projects Redevelopment projects at various properties 539
54
6-8% TBD
Total Projects in Pipeline $ 539
$ 54



			Stabilized Year	Proportionate Cost (1)
Property	Location	Description	Stabilized Year	Total		To-Date
Major Development Summary (in millions, at share unless otherwise noted)
Active developments

The SoNo Collection	Norwalk, CT	Ground up development	2022	460		279

Active redevelopments

Paramus Park	Paramus, NJ	Sears Redevelopment for Stew Leonard's	2021	21		13
Stonestown Galleria	San Francisco, CA	Anchor Redevelopment for Retail and Entertainment	2022	149		14
Other Projects	Various		2020-2022	90		25
Active developments/redevelopments				$	720	$	331
In planning

Ala Moana	Honolulu, HI	Residential Tower	2025	160		—
North Point	Alpharetta, GA	Sears Redevelopment - Residential	2022	63		—
Northbrook Court	Northbrook, IL	Macy’s Redevelopment - Retail expansion	2022	41		2
Northbrook Court	Northbrook, IL	Macy’s Redevelopment - Residential	2022	98		—
Oxmoor Center	Louisville, KY	Sears Redevelopment for Top Golf + restaurants	2022	29		1
Streets at Southpoint	Durham, NC	Mixed Use Densification	2024	107		—
Tysons Galleria	McLean, VA	Macy's Redevelopment for iPic and multi-level small-shop expansion	2021	124		2
Valley Plaza Mall	Bakersfield, CA	Sears backfill for multi-tenant spec	2021	18		—
Other Projects	Various		2021-2025	216		2
In planning				$	856	$	7
Total retail developments				$	1,576	$	338


(1)	~~Projected costs and investments to date exclude capitalized interest and internal overhead.~~


~~(2)~~	~~Return on investment represents first year stabilized cash on cost return, based upon budgeted assumptions. Actual costs may vary.~~Costs are at BPR's ownership share post August 28, 2018, with closing of new joint venture partnerships.

Our investment in these projects for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 increased from December 31, ~~2017~~2018 in conjunction with the applicable development plan and as projects near completion. The continued progression of redevelopment projects resulted in increases to our investment to date.

Capital Expenditures, Capitalized Interest and Overhead (at share)

The following table illustrates our capital expenditures, capitalized interest, and internal costs associated with leasing and development overhead, which primarily relate to ordinary capital projects at our operating properties. In addition, we incurred tenant allowances and capitalized leasing costs for our operating properties as outlined below. Capitalized interest is based upon qualified expenditures and interest rates; capitalized leasing and development costs are based upon time expended on these activities. These costs are amortized over lives which are consistent with the related asset.


	Nine Months Ended September 30,				Six Months Ended June 30,
	2018		2017		2019		2018
	(Dollars in thousands)				(Dollars in thousands)
Operating capital expenditures (1)	$	107,488	$	110,683	$	80,524	$	71,364
Tenant allowances and capitalized leasing costs (2)	146,785		140,300		91,646		96,798
Capitalized interest and capitalized overhead	52,852		44,475		21,593		36,162
Total	$	307,125	$	295,458	$	193,763	$	204,324


(1)	Reflects only non-tenant operating capital expenditures.


(2)	Tenant allowances paid on ~~6.2~~4.8 million square feet.

Class A Stock Dividend

Our Board of Directors declared Class A Stock dividends during ~~2018~~2019 as follows:

Declaration Date

Record Date

Payment Date

Dividend Per Share

Record Date

Payment Date

Dividend Per Share

2019

August 1

August 30, 2019

September 30, 2019

0.330

May 6

May 31, 2019

June 28, 2019

0.330

February 6

February 28, 2019

March 29, 2019

0.330

2018

November 1

November 30, 2018

December 31, 2018

0.315

October 31

November 30, 2018

December 31, 2018

0.315

August 28

August 31, 2018

September 28, 2018

0.315

August 31, 2018

September 28, 2018

0.315

Class B Stock Dividend

Our Board of Directors declared Class B Stock dividends during 2019 as follows:



Declaration Date	Record Date	Payment Date	Average Dividend Per Share
2019
May 25	June 25, 2019	June 25, 2019	$	0.397
March 25	March 27, 2019	March 27, 2019	1.015

In the quarter ended June 30, 2019, a dividend was declared on the Class B Stock of the Company in the amount equal to all unpaid dividends on such shares from the date of issue to May 25, 2019 at the rate of 7.5% per annum payable on June 25, 2019 to the holders of record of Class B Stock on June 25, 2019.

Common Stock Dividends

~~Our~~GGP's Board of Directors declared common stock dividends during 2018 ~~and 2017~~ as follows:



Declaration Date (1)	Record Date	Payment Date	Dividend Per Share
2018
May 3	July 13, 2018	July 31, 2018	$	0.22
February 7	April 13, 2018	April 30, 2018	0.22

(1) Excludes the Pre-Closing Dividend (Note 1).

Preferred Stock Dividends

On February 13, 2013, weGGP issued, under a public offering, 10,000,000 shares of 6.375% Series A Cumulative Stock at a price of $25.00 per share. In connection with the BPY Transaction, each share ~~of Pre-Merger Preferred Stock~~ was converted into one share of 6.375% Series A Preferred Stock. Our Board of Directors declared preferred stock dividends during ~~2018~~2019 and ~~2017~~2018 as follows:

Declaration Date

Record Date

Payment Date

Dividend Per Share

Record Date

Payment Date

Dividend Per Share

2019

August 1

September 13, 2019

October 1, 2019

0.3984

May 6

June 14, 2019

July 1, 2019

0.3984

February 6

March 15, 2019

April 1, 2019

0.3984

2018

November 1

December 14, 2018

January 1, 2019

0.3984

October 31

December 14, 2018

January 1, 2019

0.3984

July 31

September 17, 2018

October 1, 2018

0.3984

September 17, 2018

October 1, 2018

0.3984

May 3

June 15, 2018

July 2, 2018

0.3984

June 15, 2018

July 2, 2018

0.3984

February 7

March 15, 2018

April 2, 2018

0.3984

March 15, 2018

April 2, 2018

0.3984

2017

October 31

December 15, 2017

January 2, 2018

0.3984

August 2

September 15, 2017

October 2, 2017

0.3984

May 1

June 15, 2017

July 3, 2017

0.3984

January 30

March 15, 2017

April 3, 2017

0.3984

Summary of Cash Flows

Cash Flows from Operating Activities

Net cash provided by operating activities was ~~$488.2~~$101.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~$937.7~~$538.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2018. Significant changes in the components of net cash provided by operating activities include:

in 2019, a decrease of cash inflows was primarily due to the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018 ~~an increase in cash outflows from transaction expenses;~~(Note 3); and

in ~~2017, an increase~~2019, a decrease in cash inflows ~~from condominium sales revenue;~~related to account payables and accrued expenses.

~~in 2017, an increase in cash inflows from tenant recoveries.~~

Cash Flows from Investing Activities

Net cash ~~provided by (used in)~~used in investing activities was ~~$2.6 billion for the nine months ended September 30, 2018 and $(695.5)~~$(261.9) million for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2019 and $(184.6) million for the six months ended June 30, 2018. Significant components of net cash ~~(used in) provided by~~used in investing activities include:

in ~~2018,~~2019, development of real estate and property improvements of $(291.2) million;

in 2019, proceeds from ~~sales~~repayment of ~~investment properties and~~loans to joint venture partners of $18.0 million;

in 2019, contributions to unconsolidated real estate affiliates ~~$2.9 billion;~~of $(144.2) million;

in 2019, distributions received from unconsolidated real estate affiliates in excess of income of $256.1 million;

in 2019, loan to joint venture and joint venture partners of $(95.9) million;

in 2019, proceeds from loan to affiliates of $330.0 million;


•	in 2019, loans to affiliates of $(330.0) million;

in 2018, development of real estate and property improvements ~~$(587.4)~~of $(362.0) million;

in 2018, proceeds from repayment of loans to joint venture partners ~~$82.0~~of $80.0 million;

in 2018, contributions to unconsolidated real estate affiliates ~~$(102.1)~~of $(82.6) million; and

in 2018, distributions received from unconsolidated real estate affiliates in excess of income ~~$343.0 million;~~of $124.8 million.

~~in 2017, proceeds from sales of investment properties and unconsolidated real estate affiliates, $42.0 million;~~

~~in 2017, development of real estate and property improvements, $(742.1) million;~~

~~in 2017, proceeds from repayment of loans to joint venture partners, $47.1 million;~~

~~in 2017, contributions to unconsolidated real estate affiliates, $(71.1) million; and~~

in ~~2017, distributions received from unconsolidated real estate affiliates in excess of income, $81.8 million.~~

Cash Flows from Financing Activities

Net cash ~~used in~~provided by (used in) financing activities was ~~$3.0 billion for the nine months ended September 30, 2018 and $395.3~~$109.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2019 and $(320.8) million for the six months ended June 30, 2018. Significant components of net cash ~~used in~~provided by (used in) financing activities include:

in 2019, proceeds from the refinancing or issuance of mortgages, notes and loans payable of $2.5 billion, which includes a $1 billion bonds issuance;

in 2019, principal payments on mortgages, notes, and loans payable of $(1.2) billion;

in 2019, buyback of Class A Stock of $(111.3) million;

in 2019, buyback of Class B-1 Stock of $(224.5) million;


•	in 2019, cash distributions to noncontrolling interests in consolidated real estate affiliates of $(52.1) million

in 2019, cash distributions paid to stockholders of $(715.1) million;

in 2018, proceeds from the refinancing or issuance of mortgages, notes and loans payable of ~~$6.6 billion; net of~~$790.0 million;

in 2018, principal payments on mortgages, notes, and loans payable of ~~$(1.2) billion;~~$(677.9) million; and

in 2018, cash distributions paid to common stockholders of ~~$(9.8) billion;~~

~~in 2018, cash contributions from noncontrolling interests from institutional investors of~~ ~~$1.5 billion~~;

~~in 2017, proceeds from the refinancing or issuance of mortgages, notes and loans payable of $1.4 billion; net of principal payments of $(680.7) million;~~

~~in 2017, repurchase of treasury stock of $(267.8) million; and~~

~~in 2017, cash distributions paid to common stockholders of $(812.9)~~$(421.4) million.

Seasonality

Although we have a year-long temporary leasing program, occupancies for short-term tenants and, therefore, rental income recognized, are higher during the fourth quarter of the year. In addition, the majority of our tenants have December or January lease years for purposes of calculating annual overage rent amounts. Accordingly, overage rent thresholds are most commonly achieved in the fourth quarter. As a result, revenue production is generally highest in the fourth quarter of each year.

Critical Accounting Policies

Our discussion and analysis of financial condition and results of operations is based on our consolidated interim financial statements, which have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statements and disclosures. Some of these estimates and assumptions require application of difficult, subjective, and/or complex judgment about the effect of matters that are inherently uncertain and that may change in subsequent periods. We evaluate our estimates and assumptions on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

A disclosure of our critical accounting policies which affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements is included in our Annual Report in Management's Discussion and Analysis of Financial Condition and Results of Operations.

For the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, there were no significant changes to these policies except for the policies related to the ~~derecognition of nonfinancial assets and in substance nonfinancial assets, including real estate, and the recognition of the related gain on sale of investment properties as a result of the~~ adoption of ~~ASU 2014-09, Revenue from Contracts with Customers and ASU 2017-05, Other Income–Gains and Losses from the Derecognition of Nonfinancial Assets,~~Accounting Standards Update ("ASU") 2016-02, Leases as of January 1, ~~2018~~2019 as described in Note 2.2 and below.

~~Revenue Recognition~~Leases

Effective January 1, ~~2018,~~2019, we adopted the requirements of the new ~~revenue recognition guidance.~~lease guidance which required lessees to recognize a liability to make lease payments and a right-of-use asset, initially measured at the present value of lease payments, for both operating and finance leases. For ~~additional information on~~leases with a term of 12 months or less, lessees were permitted to make an accounting policy election by class of underlying asset to not recognize lease liabilities and lease assets. The guidance allowed lessors and lessees to make an accounting policy election, by class of underlying asset, to not separate non-lease components from lease components. The guidance also provided an optional transition method which allowed entities to initially apply the new ~~standard and~~guidance in the ~~impact to our results~~period of ~~operations, refer to Note 2. We determine the appropriate revenue recognition for our contracts with customers by analyzing the type, terms and conditions of each contract or arrangement with~~adoption, recognizing a ~~customer. We classify contract revenues as product or service according~~cumulative-effect adjustment to the ~~predominant attributes~~opening balance of retained earnings, if necessary. The Company elected to apply the ~~relevant underlying contracts unless~~alternative transition method and no cumulative-effect adjustment to the ~~contract can clearly be split between product and service. We define service revenue as revenue from activities that are not associated with the design, development or production~~opening balance of ~~tangible assets. Our service revenue is primarily related~~retained earnings was deemed necessary to ~~our property management services provided to our joint ventures.~~record.

Refer also to the accounting policies discussed in Note 2.

REIT Requirements

In order to remain qualified as a REIT for Federal income tax purposes, we must distribute at least 90% of our taxable ordinary income to stockholders. We are also subject to federal income tax to the extent we distribute less than 100% of our REIT taxable income, including capital gains. See Note 78 to the Consolidated Financial Statements for more detail on our ability to remain qualified as a REIT.

Recently Issued Accounting Pronouncements

Refer to Note 2 of the Consolidated Financial Statements for recently issued accounting pronouncements.

Non-GAAP Supplemental Financial Measures and Definitions

Proportionate or At Share Basis

The following non-GAAP supplemental financial measures are all presented on a proportionate basis. The proportionate financial information presents the consolidated and unconsolidated properties at the Company's ownership percentage or ~~“at share”~~"at share". This

form of presentation offers insights into the financial performance and condition of the Company as a whole, given the significance of the Company's unconsolidated property operations that are owned through investments accounted for under GAAP using the equity method.

The proportionate financial information is not, and is not intended to be, a presentation in accordance with GAAP. The non-GAAP proportionate financial information reflects our proportionate economic ownership of each asset in our property portfolio that we do not wholly own. The amounts in the column labeled "Noncontrolling Interests" were derived on a property-by-property basis by including the share attributable to noncontrolling interests in each line item from each individual property. The Company does not have legal claim to the noncontrolling interest of assets, liabilities, revenue, and expenses. The amount of cash each noncontrolling interest receives is based on the specific provisions of each operating agreement and varies depending on certain factors including the amount of capital contributed by each investor and whether any investors are entitled to preferential distributions. The amounts in the column labeled "Unconsolidated Properties" were derived on a property-by-property basis by including our share of each line item from each individual entity. This provides visibility into our share of the operations of our joint ventures.

We do not control the unconsolidated joint ventures and the presentations of the assets and liabilities and revenues and expenses do not represent our legal claim to such items. The operating agreements of the unconsolidated joint ventures generally provide that partners may receive cash distributions (1) to the extent there is available cash from operations, (2) upon a capital event, such as a refinancing or sale or (3) upon liquidation of the venture. The amount of cash each partner receives is based upon specific provisions of each operating agreement and varies depending on factors including the amount of capital contributed by each partner and whether any contributions are entitled to priority distributions. Upon liquidation of the joint venture and after all liabilities, priority distributions and initial equity contributions have been repaid, the partners generally would be entitled to any residual cash remaining based on their respective legal ownership percentages.

We provide non-GAAP proportionate financial information because we believe it assists investors and analysts in estimating our economic interest in our unconsolidated joint ventures when read in conjunction with the Company's reported results under GAAP. Other companies in our industry may calculate their proportionate interest differently than we do, limiting the usefulness as a comparative measure. Because of these limitations, the non-GAAP proportionate financial information should not be considered in isolation or as a substitute for our financial statements as reported under GAAP.

~~Net Operating Income ("NOI") and Company NOI~~

The Company defines NOI as proportionate income from operations and after operating expenses have been deducted, but prior to deducting financing, property management, administrative and income tax expenses. NOI excludes management fees and other corporate revenue and reductions in ownership as a result of sales or other transactions. The Company considers NOI a helpful supplemental measure of its operating performance because it is a direct measure of the actual results of our properties. Because NOI excludes reductions in ownership as a result of sales or other transactions, management fees and other corporate revenue, general and administrative and property management expenses, interest expense, retail investment property impairment or non-recoverable development costs, depreciation and amortization, gains and losses from property dispositions, allocations to noncontrolling interests, provision for income taxes, preferred stock dividends, and extraordinary items, it provides a performance

measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact on operations from trends in occupancy rates, rental rates and operating costs.

The Company also considers Company NOI to be a helpful supplemental measure of its operating performance because it excludes from NOI items such as straight-line rent, and amortization of intangibles resulting from acquisition accounting and other capital contribution or restructuring events. However, due to the exclusions noted, Company NOI should only be used as an alternative measure of the Company's financial performance.

We present Company NOI, Company EBITDA (as defined below) and Company FFO (as defined below); as we believe certain investors and other users of our financial information use these measures of the Company's historical operating performance.

Adjustments to NOI, EBITDA and FFO, including debt extinguishment costs, market rate adjustments on debt, straight-line rent, intangible asset and liability amortization, real estate tax stabilization, gains and losses on foreign currency and other items that are not a result of normal operations, assist management and investors in distinguishing whether increases or decreases in revenues and/or expenses are due to growth or decline of operations at the properties or from other factors. In addition, the Company's leases include step rents that increase over the term of the lease to compensate the Company for anticipated increases in market rentals over time. The Company's leases do not include significant front loading or back loading of payments or significant rent-free periods. Therefore, we find it useful to evaluate rent on a contractual basis as it allows for comparison of existing rental rates to market rental rates. Management has historically made these adjustments in evaluating our performance, in our annual budget process and for our compensation programs.

Other REITs may use different methodologies for calculating NOI and Company NOI, and accordingly, the Company's Company NOI may not be comparable to other REITs. As a result of the elimination of corporate-level costs and expenses and depreciation and amortization, the Company NOI we present does not represent our total revenues, expenses, operating profit or net income and should not be used to evaluate our performance as a whole. Management compensates for these limitations by separately considering the impact of these excluded items, to the extent they are material, to operating decisions or assessments of our operating performance. Our consolidated GAAP statements of operations include such amounts, all of which should be considered by investors when evaluating our performance.

~~Earnings Before Interest Expense, Income Tax, Depreciation, and Amortization ("EBITDA") and Company EBITDA~~

The Company defines EBITDA as NOI less certain property management and administrative expenses, net of management fees and other corporate revenues. EBITDA is a commonly used measure of performance in many industries, but may not be comparable to measures calculated by other companies. Management believes EBITDA provides useful information to investors regarding our results of operations because it helps us and our investors evaluate the ongoing operating performance of our properties after removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization). Management also believes the use of EBITDA facilitates comparisons between us and other equity REITs, retail property owners who are not REITs and other capital-intensive companies. Management uses Company EBITDA to evaluate property-level results and as one measure in determining the value of acquisitions and dispositions and, like FFO (discussed below), it is widely used by management in the annual budget process and for compensation programs. Please see adjustments discussion above for the purpose and use of the adjustments included in Company EBITDA.

EBITDA and Company EBITDA, as presented, may not be comparable to similar measures calculated by other companies. This information should not be considered as an alternative to net income, operating profit, cash from operations or any other operating performance measure calculated in accordance with GAAP.

Funds From Operations ("FFO") ~~and Company FFO~~

The Company determines FFO based upon the definition set forth by ~~National Association of Real Estate Investment Trusts (“Nareit”).~~Nareit. The Company determines FFO to be its share of consolidated net income (loss) attributable to ~~common stockholders and redeemable non-controlling common unit holders~~Brookfield Property REIT Inc. computed in accordance with GAAP, ~~excluding~~adjusted for real estate related depreciation and amortization, excluding gains and losses from extraordinary items, excluding cumulative effects of accounting changes, excluding gains and losses from the sales of, or any impairment charges related to, previously depreciated operating properties, plus the allocable portion of FFO of unconsolidated joint ventures based upon the Company's economic ownership interest, and all determined on a consistent basis in accordance with GAAP. ~~As with the~~The Company's presentation of ~~NOI,~~ FFO has been reflected on a proportionate basis.

The Company considers FFO a helpful supplemental measure of the operating performance for equity REITs and a complement to GAAP measures because it is a recognized measure of performance by the real estate industry. FFO facilitates an understanding

of the operating performance of the Company's properties between periods because it does not give effect to real estate depreciation and amortization since these amounts are computed to allocate the cost of a property over its useful life. Since values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, the Company believes that FFO provides investors with a clearer view of the Company's operating performance.

We calculate FFO in accordance with standards established by Nareit, which may not be comparable to measures calculated by other companies who do not use the Nareit definition of FFO or do not calculate FFO in accordance with Nareit guidance. In addition, although FFO is a useful measure when comparing our results to other REITs, it may not be helpful to investors when comparing us to non-REITs. As with the presentation of Company NOI and Company EBITDA, we also consider Company FFO, which is not in accordance with Nareit guidance and may not be comparable to measures calculated by other REITs, to be a helpful supplemental measure of our operating performance. Please see adjustments discussion above for the purpose and use of the adjustments included in Company FFO.

FFO and Company FFO do not represent cash flow from operations as defined by GAAP, should not be considered as an alternative to net income determined in accordance with GAAP as a measure of operating performance, and is not an alternative to cash flows as a measure of liquidity or indicative of funds available to fund our cash needs. In addition, Company FFO per diluted share does not measure, and should not be used as a measure of, amounts that accrue directly to stockholders' benefit.

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures

~~The Company presents NOI, EBITDA and FFO as they are financial measures widely used in the REIT industry.~~ In order to provide a better understanding of the relationship between the Company's non-GAAP financial measures of ~~NOI, Company NOI, EBITDA, Company EBITDA,~~ FFO, and Company FFO, reconciliations have been provided as follows: a reconciliation of GAAP operating income to NOI and Company NOI, a reconciliation of GAAP net income attributable to BPR to EBITDA and Company EBITDA, and a reconciliation of GAAP net income attributable to BPR to FFO ~~and Company FFO.~~has been provided. None of the Company's non-GAAP financial measures represents cash flow from operating activities in accordance with GAAP, none should be considered as an alternative to GAAP net income (loss) attributable to BPR and none are necessarily indicative of cash flow. In addition, the Company has presented such financial measures on a consolidated and unconsolidated basis (at the Company's proportionate share) as the

Company believes that given the significance of the Company's operations that are owned through investments accounted for by the equity method of accounting, the detail of the operations of the Company's unconsolidated properties provides important insights into the income and FFO produced by such investments.

~~The following table reconciles GAAP Operating Income to Company NOI (dollars in thousands) for the three and nine months ended September 30, 2018 and 2017:~~

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017

Operating Income (Loss) $ (69,715 ) $ 218,306
$ 289,369
$ 593,967
Loss (gain) on sales of investment properties 276
173
298
(956 )
Depreciation and amortization 156,401
161,278
515,437
505,875
Provision for impairment 7,487
—
45,866
—
General and administrative 15,947
12,037
40,235
42,582
Costs related to the BPY Transaction 204,159
—
204,159
—
Property management and other costs 43,763
35,195
119,932
115,334
Management fees and other corporate revenues (30,483 ) (28,806 ) (82,278 ) (77,797 )
Consolidated Properties 327,835
398,183
1,133,018
1,179,005
Noncontrolling interest in NOI of Consolidated Properties (21,477 ) (4,831 ) (31,698 ) (13,768 )
NOI of sold interests (77,093 ) (132,371 ) (336,856 ) (397,711 )
Unconsolidated Properties 196,540
177,650
539,087
539,579
Proportionate NOI 425,805
438,631
1,303,551
1,307,105
Company adjustments:
Minimum rents 94
2,376
1,623
11,713
Real estate taxes 1,333
1,345
4,022
4,033
Property operating expenses 762
599
1,922
1,793
Company NOI $ 427,994
$ 442,951
$ 1,311,118
$ 1,324,644

~~The following table reconciles GAAP Net income attributable to BPR to Company EBITDA for the three and nine months ended September 30, 2018 and 2017:~~

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017

Net Income Attributable to BPR $ 3,683,274
$ 222,780
$ 3,840,924
$ 455,803
Allocation to noncontrolling interests 28,981
3,492
32,790
9,157
Loss (gain) on sales of investment properties 276
173
298
(956 )
Gain on extinguishment of debt —
—
—
(55,112 )
Gains (losses) from changes in control of investment properties and other (2,850,017 ) (95,165 ) (2,862,681 ) (79,325 )
Unconsolidated Real Estate Affiliates - gain on investment (478,293 ) —
(488,654 ) —
Equity in income of Unconsolidated Real Estate Affiliates (20,336 ) (35,937 ) (59,206 ) (99,884 )
Provision for impairment 7,487
—
45,866
—
(Benefit from) provision for income taxes (570,716 ) 6,993
(571,018 ) 15,347
Gain on foreign currency —
(3,889 ) —
(3,195 )
Interest expense 144,632
135,980
423,120
402,512
Interest and dividend income (7,240 ) (15,948 ) (25,906 ) (51,336 )
Depreciation and amortization 156,401
161,278
515,437
505,875
Consolidated Properties 94,449
379,757
850,970
1,098,886
Noncontrolling interest in EBITDA of Consolidated Properties (10,986 ) (4,651 ) (20,807 ) (13,186 )
EBITDA of sold interests (75,272 ) (130,620 ) (331,044 ) (392,293 )
Unconsolidated Properties 183,961
166,348
503,646
508,753
Noncontrolling interest in EBITDA of Unconsolidated Properties (8,591 ) —
(8,593 ) —
Proportionate EBITDA 183,561
410,834
994,172
1,202,160
Company adjustments:
Minimum rents 94
2,376
1,623
11,713
Real estate taxes 1,333
1,345
4,022
4,033
Property operating costs 762
599
1,922
1,793
General and administrative 202,587
—
$ 203,988
$ —
Company EBITDA $ 388,337
$ 415,154
$ 1,205,727
$ 1,219,699

The following table reconciles GAAP net income attributable to BPR to ~~Company~~ FFO for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017:~~

2018:

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017

Net Income Attributable to BPR $ 3,683,274
$ 222,780
$ 3,840,924
$ 455,803
Redeemable noncontrolling interests 37,601
2,361
39,303
4,165
Provision for impairment excluded from FFO 6,757
—
45,866
—
Noncontrolling interests in depreciation of Consolidated Properties (10,410 ) (2,047 ) (15,738 ) (6,830 )
Unconsolidated Real Estate Affiliates - gain on investment (3,692 ) —
(3,692 ) —
Allocation of noncontrolling interests of Institutional Investors to Consolidated Properties (2,303 ) —
(2,304 ) —
Gain on sales of investment properties (473,274 ) (1,394 ) (473,252 ) (2,523 )
Preferred stock dividends (3,984 ) (3,984 ) (11,952 ) (11,952 )
Gain (loss) from changes in control of investment properties and other (2,850,017 ) (95,165 ) (2,862,681 ) (79,325 )
Depreciation and amortization of capitalized real estate costs - Consolidated Properties 151,494
156,987
492,870
494,137
Depreciation and amortization of capitalized real estate costs - Unconsolidated Properties 93,921
75,477
249,843
224,036
FFO (1) 629,367
355,015
1,299,187
1,077,511
Company adjustments:
Minimum rents 94
2,376
1,623
11,713
Real estate taxes 1,333
1,345
4,022
4,033
Property operating expenses 762
599
1,922
1,793
General and administrative 202,587
—
203,988
—
Depreciation on non-income producing assets 27
—
9,435
—
Investment income, net (198 ) (205 ) (607 ) (614 )
Market rate adjustments (1,040 ) (745 ) (2,586 ) (2,324 )
Gain on foreign currency —
(3,889 ) —
(3,195 )
FFO from sold interests 771
(28 ) 1,974
(52,211 )
Company FFO $ 833,703
$ 354,468
$ 1,518,958
$ 1,036,706



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018

Net (Loss) Income Attributable to BPR	$	(227,220	)	$	93,615		$	(195,570	)	$	157,651
Allocation of noncontrolling interests of the JV partner for impairment	(18,011		)	—			(18,011		)	—
Redeemable noncontrolling interests	—			1,008			—			1,702
Provision for impairment excluded from FFO	184,347			—			184,347			38,379
Noncontrolling interests in depreciation	(28,116		)	(2,135		)	(50,193		)	(4,331		)
Unconsolidated Real Estate Affiliates - gain on investment	—			—			(104,354		)	(10,361		)
Allocation of noncontrolling interests of partner to Consolidated and Unconsolidated Properties	(16,218		)	—			(6,043		)	—
Gain (loss) on sales of investment properties	(34		)	40			(5,546		)	10,384
Preferred stock dividends	(3,984		)	(3,984		)	(7,968		)	(7,968		)
Gain (loss) from changes in control of investment properties and other	—			—			—			(12,664		)
Depreciation and amortization of capitalized real estate costs - Consolidated Properties	113,594			169,297			227,564			341,133
Depreciation and amortization of capitalized real estate costs - Unconsolidated Properties	136,423			83,856			274,831			155,922
FFO	$	140,781		$	341,697		$	299,057		$	669,847


~~(1)~~	~~FFO as defined by the National Association of Real Estate Investment Trusts.~~

Forward-Looking Statements

Certain statements made in this section or elsewhere in this report may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of ~~1995.~~1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that do not relate to historical or current facts or matters are forward-looking statements. When used, the words “may," "will," "seek," "expects," "anticipates," "believes," "targets," "intends," "should," "estimates," "could," "continue," "assume," "projects," "plans," or similar expressions, are intended to identify forward-looking statements. Although ~~the Company believes~~we believe the expectations reflected in any forward-looking statement are based on reasonable assumptions, itwe can give no assurance that ~~its~~our expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and other factors. ~~Such factors~~Accordingly, investors should use caution in relying on forward-looking statements.

Some of the risks and uncertainties that may cause our actual results, performance, or achievements to differ materially from those expressed or implied by forward-looking statements include, but are not limited to:

General volatility of conditions affecting the retail sector;

our inability to acquire and maintain tenants or to lease space on terms favorable to us;

risks related to the ~~Company's ability~~bankruptcy or store closures of national tenants with chains of stores in many of our properties;

our inability to sell real estate quickly;

risks related to perceptions by retailers and shoppers of the convenience and attractiveness of our retail properties;

risks related to the development, expansion and acquisitions of properties;

risks related to competition in our business;

risks related to natural disasters or terrorist attacks;

risks related to cyber and data security breaches or information technology failures;

environmental uncertainties and related costs, including costs resulting from uninsured potential losses;

general risks related to inflation or deflation;

risks relating to impairment charges for our real estate assets;

risks related to conflicts of interest with BPY and our status as a "controlled company" within the meaning of the rules of Nasdaq;

our dependence on our subsidiaries for cash;

risks related to our joint venture partners, including risks related to conflicts of interests, potential bankruptcies, tax-related obligations and financial support relating to such joint venture partners;

our inability to maintain status as a REIT, and possible adverse changes to tax laws;

risks related to our indebtedness and debt restrictions and covenants;

our inability to refinance, extend, restructure or repay near and ~~intermediate term debt, its indebtedness, its ability~~indeterminate debt;

our inability to raise capital through ~~equity issuances, asset sales or~~financing activities; and

risks related to the ~~incurrence of new debt, retail and credit market conditions, impairments, its liquidity demands and economic conditions. The Company discusses~~BPY Transaction.

We discuss these and other risks and uncertainties in ~~its annual~~our Annual Report and our quarterly periodic reports filed with the Securities and Exchange Commission. The Company may update that discussion in its periodic reports, but otherwise takes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

ITEM 3QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~There~~In the event that LIBOR is discontinued, the interest rate for the majority of our variable rate debt and the swap rate for the majority of our interest rate swaps following such event will be based on an alternative variable rate as specified in the applicable documentation governing such debt or swaps or as otherwise agreed upon. Such an event would not affect the Company’s ability to borrow or maintain already outstanding borrowings or swaps, but the alternative variable rate could be higher and more volatile than LIBOR prior to its discontinuance. We understand that LIBOR is expected to remain available through the end of 2021, but may be discontinued or otherwise become unavailable thereafter. Other than the potential changes noted in connection with LIBOR, there have been no significant changes in the market ~~risks~~risk described in our Annual Report.

ITEM 4CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including the persons performing the functions of principal executive and principal financial officers for us pursuant to a Master Services Agreement, dated August 27, 2018, among us, Brookfield Asset Management Inc. and other parties thereto (the "Master Services Agreement") of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")).

Based on that evaluation, the persons performing the functions of principal executive and principal financial officers for us pursuant to the Master Services Agreement have concluded that our disclosure controls and procedures were effective at the end of the period covered by this report.

Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART IIOTHER INFORMATION

ITEM 1LEGAL PROCEEDINGS

The Company is subject to litigation related to the BPY Transaction. The Company cannot predict the outcome of pending litigation, nor ~~any~~can it predict the amount of ~~the Unconsolidated Real Estate Affiliates is currently involved in any material pending legal proceedings nor,~~time and expense that it will be required to ~~our knowledge, is any material legal proceeding currently threatened against the Company or any of the Unconsolidated Real Estate Affiliates.~~resolve such litigation.

ITEM 1A RISK FACTORS

For a discussion of our potential risks and uncertainties, please refer to the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2017, as filed on February 22, 2018, and as updated by our Quarterly Reports on Form 10-Q for the quarter ended March 31, 2018, as filed on May 7, 2018, and for the quarter ended June 30, 2018, as filed on July 31, 2018. Other than the risks associated with the transactions set forth below, there have beenThere are no material changes to the risk factors previously ~~disclosed.~~disclosed in our Annual Report.

~~BPR and BPY may fail to realize any or all of the anticipated benefits of the BPY Transaction or those benefits may take longer to realize than expected.~~

BPR and BPY entered into the merger agreement and the other agreements related to the BPY Transaction because each believed that the BPY Transaction would be beneficial to the companies and their stockholders or unitholders and that combining the businesses of BPR and BPY would produce benefits and cost savings. If BPY is not able to combine successfully the businesses of BPR and BPY in an efficient and effective manner, the anticipated benefits and cost savings of the transactions may not be realized fully, or at all, or may take longer to realize than expected, and the value of Class A Stock may be adversely affected.

An inability to realize the full extent of the anticipated benefits of the transactions, as well as any delays encountered in the integration process, could have an adverse effect on the revenues, level of expenses and operating results of BPY and BPR, which may adversely affect the value of Class A Stock.

The management of BPY and BPR will have to dedicate substantial effort to integrating the businesses of BPR and BPY during the integration process. These efforts may divert management’s focus and resources from the business, corporate initiatives or strategic opportunities of BPY and BPR. In addition, the actual integration may result in additional and unforeseen expenses and the anticipated benefits of the integration may not be realized. Actual growth and cost savings, if achieved, may be lower than what BPY and BPR expect and may take longer to achieve than anticipated. Difficulties associated with managing a larger and

more complex property portfolio could prevent BPY and BPR from realizing the anticipated benefits of the transactions and have a material adverse effect on their business. If BPY and BPR are not able to address integration challenges adequately, they may be unable to realize the anticipated benefits of the integration of the two companies. Failure to achieve the anticipated benefits of the BPY Transaction could adversely affect BPY and BPR’s results of operations or cash flows, cause dilution to the earnings per BPY unit and per share of Class A Stock, decrease or delay the expected benefits of the BPY Transaction and negatively affect the price of BPY units and shares of Class A Stock.

~~BPY and BPR may be unable to retain necessary personnel.~~

The success of the BPY Transaction will depend in part on BPY and BPR’s ability to retain their key employees. Key employees of BPY and BPR may depart because of, among other things, issues relating to the combination of two companies, and uncertainty and difficulty of integration or a desire not to remain long term with the companies. If key employees terminate their employment, or if an insufficient number of employees are retained to maintain effective operations, the business activities of BPR or BPY may be adversely affected and management’s attention may be diverted from successfully integrating the companies to hire suitable replacements, all of which may cause BPR or BPY’s business to suffer. In addition, BPR and BPY may not be able to locate suitable replacements for any key employees or to offer employment to potential replacements on reasonable terms.

If BPY and BPR (and BAM, as service provider for BPR) are unable to attract, retain and motivate personnel that are critical to the successful integration of BPR into BPY and the future operation of the companies, BPY and BPR could face disruptions in their operations, loss of key employees, strategic relationships, key information, expertise or know-how and unanticipated additional recruiting and training costs. In addition, the loss of key personnel could diminish the anticipated benefits of the acquisition of BPR by BPY.

~~In connection with the BPY Transaction, certain affiliates of BPR and BPY entered into a new credit facility containing restrictive covenants that may impair BPR’s ability to conduct business.~~

In connection with the BPY Transaction, certain affiliates of BPR and BPY entered into a new credit facility containing operating and financial covenants. BPR’s obligations under the terms of the credit facility could impact BPR negatively. For example, it could:

~~limit BPR’s ability to obtain additional financing and to grant additional liens;~~

~~restrict BPR from making strategic acquisitions, sales, dispositions and transfers of assets or engaging in investment activities;~~

~~restrict BPR from paying dividends to its stockholders and redeeming or repurchasing its capital stock; and~~

~~restrict BPR from modifying its organizational documents.~~

~~Each of BPR and BPY have incurred and expects to incur significant costs in connection with the BPY Transaction and the integration of BPR and BPY.~~

Each of BPR and BPY have incurred and expects to incur significant costs in connection with the BPY Transaction and integrating the portfolios of BPR and BPY, including unanticipated costs and the assumption of known and unknown liabilities. While BPR and BPY have assumed that a certain level of transaction and integration expenses will be incurred, there are factors beyond BPR’s and BPY’s control that could affect the total amount or the timing of integration expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. Although BPR and BPY expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the two businesses, should allow BPR and BPY to offset these incremental expenses over time, the net benefit may not be achieved in the near term, or at all.

Moreover, diversion of management focus and resources from the day-to-day operation of the business to matters relating to the integration of BPR and BPY could adversely affect each company’s business.

~~Class A Stock may not trade at the same price as the BPY units.~~

Although the Class A Stock is intended to provide an economic return that is equivalent to BPY units, there can be no assurance that the market price of Class A Stock will be equal to the market price of BPY units at any time. Factors that could cause differences in such market prices may include:

~~perception and/or recommendations by analysts, investors and/or other third parties that these securities should be priced differently;~~

~~actual or perceived differences in distributions to holders of Class A Stock versus BPY unitholders, including as a result of any legal prohibitions;~~

~~business developments or financial performance or other events or conditions that may be specific to only BPR or BPY; and~~

difficulty in the exchange mechanics between Class A Stock and BPY units, including the potential expiration or termination of the Rights Agreement, dated as of April 27, 2018 by and between BAM and Wilmington Trust, National Association, in accordance with its terms.

~~Holders of Class A Stock may not receive the same distributions as holders of BPY units, and, accordingly, may not receive the intended economic equivalence of the securities.~~

BPR intends to pay identical distributions in respect of the Class A Stock and BPY units. However, unforeseen circumstances (including legal prohibitions) may prevent the same distributions from being paid on each security. Accordingly, there can be no assurance that distributions will be identical for Class A Stock and BPY units in the future, which may impact the market price of these securities.

~~If a sufficient amount of Class A Stock is exchanged for BPY units, then Class A Stock may be de-listed.~~

Shares of Class A Stock began trading on the National Association of Securities Dealers Automated Quotations ("NASDAQ") following the consummation of the BPY Transaction. However, if a sufficient amount of Class A Stock is exchanged for BPY units, BPR may fail to meet the minimum listing requirements on the NASDAQ and NASDAQ may take steps to de-list the Class A Stock. This, in turn, would have a significant adverse effect on the liquidity of the Class A Stock, and holders thereof may not be able to exit their investments on favorable terms, or at all.

Additionally, if the market capitalization of Class A Stock (i.e., if the price per share of Class A Stock, multiplied by the number of shares of Class A Stock outstanding) averages less than $1,000,000,000 over any period of thirty (30) consecutive trading days, the BPR board will have the right to liquidate BPR’s assets and wind up BPR’s operations, which we refer to as a market capitalization liquidation event. Upon any market capitalization liquidation event, and subject to the prior rights of holders of the BPR Series A Preferred Stock and after the payment in full to any holder of BPR Class A Stock that has exercised its exchange rights, the holders of Class A Stock shall be entitled to a cash amount, for each share of Class A Stock, equal to the dollar volume-weighted average price of one BPY unit over the ten (10) trading days immediately following the public announcement of such market capitalization liquidation event, plus all declared and unpaid dividends. If, upon any such market capitalization liquidation event, the assets of BPR are insufficient to make such payment in full, then the assets of BPR will be distributed among the holders of Class A Stock ratably in proportion to the full amounts to which they would otherwise be respectively entitled to receive. Notwithstanding the foregoing, upon any market capitalization liquidation event, Brookfield Properties, Inc. ("BPI") may elect to exchange all of the outstanding shares of Class A Stock for BPY units on a one-for-one basis. This initial one-for-one conversion factor is subject to adjustment in the event of certain dilutive or other capital events by BPY or BPR. Such a forced exchange of the Class A Stock for cash or BPY units could have a negative impact on the BPR stockholder’s investment, including adverse tax consequences.

~~The market price of Class A Stock and BPY units may be volatile, and holders of Class A Stock could lose a significant portion of their investment due to drops in the market price of Class A Stock.~~

The market price of shares of Class A Stock and BPY units may be volatile, and holders of Class A Stock may not be able to resell their shares at or above the implied price at which they acquired such securities due to fluctuations in the market price of Class A Stock, including changes in market price caused by factors unrelated to BPR or BPY’s operating performance or prospects. Specific factors that may have a significant effect on the market price of Class A Stock include, among others, the following:

~~changes in stock market analyst recommendations or earnings estimates regarding the Class A Stock and/or BPY units, other companies comparable to BPR or BPY or companies in the industries they serve;~~

~~changes in the market price of BPY units;~~

~~actual or anticipated fluctuations in BPY’s or BPR’s operating results or future prospects;~~

~~reactions to public announcements by BPY and BPR;~~

~~strategic actions taken by BPY, BPR and/or their competitors;~~

~~adverse conditions in the financial market or general U.S. or international economic conditions, including those resulting from war, incidents of terrorism and responses to such events; and~~

~~sales of such securities by BPY, BPR and/or members of their management team or significant stockholders.~~

Investors in Class A Stock will be affected by BPY’s performance, including the performance of assets of BPY that are not assets of BPR. There can be no assurance that BPY will be able to continue paying distributions equal to the level currently paid by BPY, or that BPR will be able to pay all of the distributions intended to be payable on the Class A Stock.

Each share of Class A Stock is intended to provide an economic return equivalent to one BPY unit, and is exchangeable for one BPY unit or its cash equivalent (the form of payment to be determined by BPI in its sole discretion) at any time from and after the date of the issuance of the Class A Stock. Therefore, investors in Class A Stock will be affected by BPY’s performance, including the performance of assets of BPY that are not assets of BPR. BPY and its business may be affected by a wide variety of factors, and we can provide no assurance that BPY’s future performance will be comparable to its performance in the past.

~~In addition, distributions on BPY units may not be equivalent to the level currently paid by BPY for various reasons, including, but not limited to, the following:~~

~~BPY may not have enough unrestricted funds to pay such distributions due to changes in BPY’s cash requirements, capital spending plans, cash flow or financial position;~~

decisions on whether, when and in which amounts to make any future distributions will be dependent on then-existing conditions, including BPY and BPR’s financial condition, earnings, legal requirements, including limitations under Bermuda law, restrictions in BPY’s borrowing agreements that limit its ability to pay dividends to unitholders and other factors BPY deems relevant; and

~~BPY may desire to retain cash to improve its credit profile or for other reasons.~~

~~An active trading market for Class A Stock may not be sustained.~~

Prior to the BPY Transaction, there was no public market for Class A Stock. Although we have completed the BPY Transaction and shares of our Class A Stock are listed on the NASDAQ, an active trading market for our Class A Stock may not be developed or sustained and we cannot assure you as to the liquidity of markets that may develop for Class A Stock or to your ability to sell Class A Stock or the price at which you would be able to sell Class A Stock. If an active market for Class A Stock does develop, Class A Stock could trade at prices that may be lower than market prices for BPY units. A number of factors, principally factors relating to BPY but also including factors specific to BPR and its business, financial condition and liquidity, economic and financial market conditions, interest rates, unavailability of capital and financing sources, volatility levels and other factors could lead to a decline in the value of Class A Stock and a lack of liquidity in any market for Class A Stock.

The amended BPR charter provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain disputes between BPR’s stockholders and BPR and its current or former directors, officers and other stockholders, which could limit BPR’s stockholders’ ability to obtain a favorable judicial forum for disputes with BPR or its current or former directors, officers or other stockholders.

The amended BPR charter includes a forum selection provision that (i) applies to suits for breach of fiduciary duty brought against (a) current and former stockholders and (b) current and former directors and officers and (ii) expressly permits BPR to waive the forum selection provision with respect to certain proceedings. The amended BPR charter generally provides that, unless BPR consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of BPR, (ii) any action asserting a claim of breach of fiduciary duty owed by any current or former director, officer or stockholder of BPR to BPR or its stockholders, (iii) any action asserting a claim against BPR arising pursuant to any provision of the Delaware General Corporation Law the amended BPR charter or the amended bylaws or (iv) any action asserting a claim against BPR governed by the internal affairs doctrine. The choice of forum provision may limit a BPR stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with BPR or its current or former directors, officers or other stockholders, which may discourage such lawsuits against BPR and its current or former directors, officers and other stockholders. Alternatively, if a court were to find the choice of forum

provision contained in the amended BPR charter to be inapplicable or unenforceable in an action, BPR may incur additional costs associated with resolving such action in other jurisdictions, which could harm its business, results of operations, and financial condition.

~~General market conditions and unpredictable factors could adversely affect market prices of the BPR series A preferred stock.~~

There can be no assurance about the market prices of BPR series A preferred stock. Several factors, many of which are beyond the control of BPR and BPY, could influence the market prices of BPR series A preferred stock, including:

~~whether BPR declares or fails to declare dividends on the BPR series A preferred stock from time to time;~~

~~real or anticipated changes in the credit ratings assigned to BPR or BPY securities;~~

~~BPR’s and BPY’s creditworthiness and credit profile;~~

~~interest rates;~~

~~developments in the securities, credit and housing markets, and developments with respect to financial institutions generally;~~

~~the market for similar securities; and~~

~~economic, corporate, securities market, geopolitical, regulatory or judicial events that affect BPR and BPY, the asset management or real estate industries or the financial markets generally.~~

Shares of Class A Stock, Class B Stock, Class C Stock and BPR Series A Preferred Stock will rank junior to all indebtedness of, and other non-equity claims on, BPR with respect to assets available to satisfy such claims.

~~BPR is subject to litigation related to the BPY Transaction.~~

BPR is subject to litigation related to the BPY Transaction. BPR cannot predict the outcome of pending litigation, nor can it predict the amount of time and expense that will be required to resolve such litigation. The costs of defending the litigation, even if resolved in BPR’s favor, could be substantial and such litigation could distract BPR from pursuing potentially beneficial business opportunities.

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On June 26, 2019, following the effectiveness of the Restated Charter, certain subsidiaries of BPR FIN 1 Subco LLC, a related party, exchange an aggregate of 121,203,654 shares of Class B-1 Stock held by such subsidiaries for 121,203,654 shares of Class B-2 Stock. The issuance of the Class B-2 Stock was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.



Period	(a) Total number of shares (or units) purchased			(b) Average price paid per share (or unit)		(c) Total number of shares (or units) purchased as part of publicly announced plans or programs		(d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
April 1 - April 30, 2019	$	—		$	—	$	—	(1)
May 1 - May 31, 2019	100,000			18.4227		100,000		(1)
June 1 - June 30, 2019	747,250		(3)	19.2571		100,000		(1)
Total	$	847,250		$	18.8399	$	200,000	(2)



(1)	~~Total Number~~On August 28, 2018, the Company’s Board of ~~Shares Purchased~~Directors authorized the repurchase of the greater of (i) 5% of the Company’s Class A Stock that are issued or outstanding or (ii) 10% of its public float of Class A Stock over the next 12 months from time to time as market conditions warrant.

	~~Average Price Paid Per Share~~	~~Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs~~		~~Approximate Dollar Value of Shares That May Be Purchased Under the Plans or Programs~~
~~July 1, 2018~~(2)	As of June 30, 2019, the number of shares of Class A Stock comprising 10% of the Company's public float was greater than 5% of the Company's issued and outstanding Class A Stock, and was equal to ~~July 31, 2018~~7,759,121 shares of Class A Stock. As of June 30, 2019, 7,559,121 shares of Class A Stock were available for repurchase under the Company's stock repurchase plan.

	—		$	—	—		~~(1)~~
~~August 1, 2018~~(3)	Includes 647,250 shares of Class A Stock repurchased by the Company and deposited in a trust account maintained by the Company’s transfer agent for the benefit of individuals who have received grants of restricted shares of Class A Stock, which shares will be released to ~~August 31, 2018~~	—		—		—		~~(1)~~
~~September 1, 2018 to September 30, 2018~~	—		—		—		~~(1)~~
	—		$	—	—		~~(1)~~such individuals upon vesting in accordance with the terms of the Brookfield Property Group Restricted BPR Class A Stock Plan and the applicable award agreements. These shares were repurchased at an average price of $19.40 per share for an aggregate purchase price of approximately $12.59 million.

(1 ) On August 28, 2018, the Company’s Board of Directors authorized the repurchase of the greater of (i) 5% of the Company’s Class A Stock that are issued or outstanding or (ii) 10% of its public float of Class A Stock over the next 12 months from time to time as market conditions warrant. The Company has made no repurchases as of September 30, 2018 under the share repurchased program.

On August 28, 2018, in connection with the BPY Transaction, each issued and outstanding share of the Company’s common stock, other than shares of common stock owned by BPY or its affiliates, were cancelled and extinguished and automatically converted into the right to receive cash from BPY in an amount, without interest, equal to $0.312 per share.

ITEM 3DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5OTHER INFORMATION

The other information presented below is being filed as a result of the Company's adoption of the new accounting guidance for lease accounting ("ASC 842") on January 1, 2019. As part of that adoption, the Company elected the available practical expedient, for all classes of assets, not to separate lease components in contracts from the nonlease components in those contracts, when recording revenues associated with operating leases where it is the lessor. Since the lease component is the predominant component under the Company's leases, combined revenues from both the lease and nonlease components are accounted for in accordance with ASC 842 and will be reported in all periods subsequent to the adoption of the new accounting guidance in a single caption, "rental revenues", onthe Company's Consolidated Statements of Comprehensive Income. The presentation and disclosure of rental revenueshave been adjusted to reflect these changes for the six months ended June 30, 2019. Refer to Note 2 of Part I, Item 1 "Financial Statements" for further details on these updates to significant accounting policies.

This information is intended to assist investors in making comparisons of the Company's historical financial information with future financial information. The reported financial information below has been reclassified to conform to the current presentation.

~~None.~~The table below summarizes the reclassified presentation of our total revenues by year due to the adoption of the new leasing standard.



	Years Ended December 31,
	2018		2017		2016
Minimum rents	$	1,297,945	$	1,455,039	$	1,449,704
Tenant recoveries	540,376		643,607		668,081
Overage rents	29,659		34,874		42,534
Management fees and other corporate revenues	125,776		105,144		95,814
Other	70,278		89,198		90,313
Total revenues, as reported	$	2,064,034	$	2,327,862	$	2,346,446

The table below summarizes our total revenues as originally reported in our Annual Report to reflect the revised presentation of total combined rental revenues due to the adoption of the new leasing standard.



	Years Ended December 31,
	2018		2017		2016
Total rental revenues	$	1,867,980	$	2,133,520	$	2,160,319
Management fees and other corporate revenues	125,776		105,144		95,814
Other	70,278		89,198		90,313
Total revenues, as reported	$	2,064,034	$	2,327,862	$	2,346,446

ITEM 6EXHIBITS

Incorporated by Reference Herein
Exhibit Number Description Form Exhibit Filing Date File No.

2.1
Agreement and Plan of Merger, dated as of March 26, 2018, by and among Brookfield Property Partners L.P., Goldfinch Merger Sub Corp. and GGP Inc.
8-K 2.1 3/27/2018 001-34948

2.2
Amendment to Agreement and Plan of Merger, dated as of June 25, 2018, by and among Brookfield Property Partners L.P., Goldfinch Merger Sub Corp. and GGP Inc.
S-4 2.2 6/25/2018 333-224593

3.1
Certificate of Designations, Preferences and Rights of Series B Preferred Stock of GGP Inc.
8-K 3.1 7/27/2018 001-34948

3.2
Certificate of Correction of Second Amended and Restated Certificate of Incorporation of GGP Inc.
8-K 3.1 8/28/2018 001-34948

3.3
Third Amended and Restated Certificate of Incorporation of GGP Inc.
8-A12B 3.1 8/27/2018 001-34948

3.4
Certificate of Amendment of Third Amended and Restated Certificate of Incorporation of Brookfield Property REIT Inc.
8-K 3.3 8/28/2018 001-34948

3.5
Fifth Amended and Restated Bylaws of Brookfield Property REIT Inc.
8-A12B 3.2 8/27/2018 001-34948

10.1
Fifth Amended and Restated Agreement of Limited Partnership of BPR OP, LP
8-K 10.1 8/28/2018 001-34948

10.2
Master Services Agreement, dated as of August 27, 2018, by and among Brookfield Asset Management Inc., Brookfield Property REIT Inc., GGP Operating Partnership, LP, Brookfield Global Property Advisor Limited, Brookfield Property Group LLC and Brookfield Asset Management Private Institutional Capital Adviser US, LLC.
8-K 10.3 8/28/2018 001-34948

10.3
Joint Governance Agreement, dated as of August 28, 2018, by and among Brookfield Property REIT Inc., Brookfield Property Partners L.P., Brookfield Property Partners Limited and Brookfield Properties, Inc.
8-K 10.5 8/28/2018 001-34948



		Incorporated by Reference Herein
Exhibit Number	Description	Form	Exhibit	Filing Date	File No.

3.1	Fourth Amended and Restated Certificate of Incorporation of Brookfield Property REIT Inc.	8-K	3.1	June 25, 2019	001-34948

4.1	Indenture, dated as of May 1, 2019, by and among Brookfield Property REIT Inc., BPR Nimbus LLC, BPR Cumulus LLC and GGSI Sellco, LLC, as issuers, the guarantors party thereto and Wells Fargo Bank, National Association, as trustee and collateral agent.	8-K	3.1	May 2, 2019	001-34948

10.1	Sixth Amended and Restated Agreement of Limited Partnership of BPR OP, LP	8-K	10.1	June 25, 2019	001-34948

31.1*	Certification of Brian W. Kingston, Chief Executive Officer, Brookfield Property Group LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*	Certification of Bryan K. Davis, Chief Financial Officer, Brookfield Property Group LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**	Certification of Brian W. Kingston, Chief Executive Officer, Brookfield Property Group LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**	Certification of Bryan K. Davis, Chief Financial Officer, Brookfield Property Group LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101	The following financial information from Brookfield Property REIT Inc.'s. Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, has been filed with the SEC on August 9, 2019, formatted in XBRL (Extensible Business Reporting Language): (1) Consolidated Balance Sheets, (2) Consolidated Statements of Comprehensive Income, (3) Consolidated Statements of Equity, (4) Consolidated Statements of Cash Flows and (5) Notes to Consolidated Financial Statements.

101.SCH*	Inline XBRL Taxonomy Extension Schema Document

101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document

10.4
Credit Agreement, dated as of August 24, 2018, by and among Brookfield Retail Holdings VII Sub 3 LLC, Brookfield Property REIT Inc., GGP Nimbus, LLC, GGP Limited Partnership LLC, BPR OP, LP, GGSI Sellco, LLC, GGPLP Real Estate 2010 Loan Pledgor Holding, LLC, GGPLPLLC 2010 Loan Pledgor Holding, LLC, GGPLP 2010 Loan Pledgor Holding, LLC, and GGPLP L.L.C., each of the foregoing as the Borrowers, the Lenders party thereto, the Issuing Banks party thereto, the Swingline Lender party thereto, Morgan Stanley Senior Funding, Inc., in its capacity as co-administrative agent for the Term Lenders under the Term B Facility and Wells Fargo Bank, National Association, in its capacities as administrative agent and collateral agent for the Lenders.
8-K 4.1 8/28/2018 001-34948

10.5
Amended and Restated Brookfield Property REIT Inc. 2010 Equity Incentive Plan
S-8 4.3 8/29/2018 333-227086

31.1*
Certification of Brian W. Kingston, Chief Executive Officer, Brookfield Property Group LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*
Certification of Bryan K. Davis, Chief Financial Officer, Brookfield Property Group LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**
Certification of Brian W. Kingston, Chief Executive Officer, Brookfield Property Group LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**
Certification of Bryan K. Davis, Chief Financial Officer, Brookfield Property Group LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101 The following financial information from Brookfield Property REIT Inc.'s. Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, has been filed with the SEC on November 8, 2018, formatted in XBRL (Extensible Business Reporting Language): (1) Consolidated Balance Sheets, (2) Consolidated Statements of Comprehensive Income, (3) Consolidated Statements of Equity, (4) Consolidated Statements of Cash Flows and (5) Notes to Consolidated Financial Statements.



101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

104*		Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*).


*	Filed herewith.

** Furnished herewith.

Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the registrant has not filed debt instruments relating to long-term debt that is not registered and for which the total amount of securities authorized thereunder does not exceed 10% of total assets of the registrant and its subsidiaries on a consolidated basis as of September 30, 2018. The registrant agrees to furnish a copy of such agreements to the SEC upon request.

~~SIGNATURE~~SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




	Brookfield Property REIT Inc.

Date: ~~November 8, 2018~~August 9, 2019	By:	/s/ Michelle Campbell
		Michelle Campbell
		Secretary

Date: ~~November 8, 2018~~August 9, 2019	By:	/s/ Bryan K. Davis
		Bryan K. Davis
		Chief Financial ~~Officer~~Officer*
		Brookfield Property Group LLC


*	Mr. Davis performs the functions of chief financial officer for Brookfield Property REIT Inc. (the ~~“Company”~~"Company") pursuant to a Master Services Agreement, dated August 27, 2018, among Brookfield Asset Management Inc., the Company and certain other parties thereto.

7062



Year	Amount
2018 Remaining	$	7,076
2019	21,822
2020	15,292
2021	10,322
2022	9,471



Property	Prior Ownership	Current Ownership	Total Asset Value		Other Costs (1)			Debt Balance		Book Value of Investment			Gain from changes in control of investment properties and other, net			Unconsolidated Real Estate Affiliates - gain on investment, net
Apache Mall	100%	51%	$	143.0	$	(1.7	)	$	73.5	$	56.9		$	10.9		$	—
Augusta Mall	100%	51%	251.8		2.0			170.0		(34.1		)	117.9			—
Boise Towne Square	100%	51%	354.5		2.2			142.0		41.6			173.1			—
Columbiana Centre	100%	51%	268.8		(1.7		)	137.3		1.0			128.8			—
Coronado Center	100%	51%	359.2		1.0			182.8		54.3			123.1			—
Glenbrook Square	100%	51%	166.8		0.9			160.0		0.5			7.2			—
Governor's Square	100%	51%	105.7		0.6			66.9		39.8			(0.4		)	—
Lynnhaven Mall	100%	51%	383.7		0.9			235.0		40.9			108.7			—
Market Place Shopping Center	100%	51%	153.1		2.6			113.4		20.0			22.3			—
Mizner Park	50%	26%	235.2		—			—		39.1			—			18.5
Northridge Fashion Center	100%	51%	584.7		1.6			221.1		79.0			286.2			—
Oglethorpe Mall	100%	51%	203.1		0.8			149.8		8.5			45.6			—
Park Place	100%	51%	269.6		1.2			176.8		84.6			9.4			—
Pembroke Lakes Mall	100%	51%	471.1		0.9			260.0		40.1			171.9			—
Riverchase Galleria	100%	51%	260.9		6.6			164.2		110.0			(6.7		)	—
The Crossroads	100%	51%	108.8		3.1			92.0		15.2			4.7			—
The Gallery at Harborplace	100%	51%	122.3		1.1			74.1		37.8			11.5			—
The Maine Mall	100%	51%	339.7		1.8			235.0		4.8			101.7			—
The Oaks Mall	100%	51%	160.2		0.8			125.1		36.0			(0.1		)	—
Tucson Mall	100%	51%	260.1		1.0			246.0		25.7			(10.6		)	—
Westroads Mall	100%	51%	287.4		0.9			141.3		68.8			78.2			—
White Marsh Mall	100%	51%	233.5		0.7			190.0		16.1			28.1			—
Woodbridge Center	100%	51%	247.6		6.7			245.1		10.7			(1.5		)	—
			$	5,970.8	$	34.0		$	3,601.4	$	797.3		$	1,410.0		$	18.5



Gain from changes in control for 218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenue
Net implied fair value of previous investment and consideration	$	250.0
Less: proportionate share of previous investments	198.1
Gain from changes in control of investment properties and other, net	$	51.9



Allocation of Thor Equities Purchase Price	218 W. 57th Street			530 Fifth Avenue			685 Fifth Avenue
Investment in real estate, including intangible assets and liabilities	$	104.0		$	334.0		$	652.6
Fair value of debt (1)	(53.0		)	(221.0		)	(340.0		)
Net working capital (2)	0.1			14.3			1.7
Net assets acquired	$	51.1		$	127.3		$	314.3



Gain from a Change of Control in GSPH
Consideration paid to acquire our joint venture partner's interest	$	190.1
Less: proportionate share of previous investment	147.2
Gain from changes in control of investment properties and other, net	$	42.9



	September 30, 2018 (1)		Weighted-Average Interest Rate		December 31, 2017 (2)		Weighted-Average Interest Rate
Unsecured debt:
Unsecured corporate debt	$	5,057,500	4.56	%	$	—	—
Total unsecured debt	$	5,057,500	4.56	%	$	—	—



Balance at January 1, 2017	$	262,727
Net income	3,097
Distributions	(4,731		)
Redemption of BPROP units	(651		)
Other comprehensive loss	(133		)
Fair value adjustment for noncontrolling interests in Operating Partnership	(34,123		)
Balance at September 30, 2017	$	226,186

Balance at January 1, 2018	$	248,126
Net income	31,803
Distributions	(3,685		)
Adjustment of Mezzanine Equity to fair value	(40,294		)
Common Unit Redemption to Common Stock	(85,818		)
Other comprehensive income	39
Reclassification of Mezzanine Equity to Permanent Equity	(37,840		)
Pre-Closing Dividend	(60,673		)
BPR Equity Recapitalization	21,923
Balance at September 30, 2018	$	73,581



	July 1, 2018 through August 27, 2018			January 1, 2018 through August 27, 2018
Numerators - Basic:
Net income	$	3,698,966		$	3,860,424
Preferred Stock dividends	(3,984		)	(11,952		)
Allocation to noncontrolling interests	(39,240		)	(43,049		)
Net income attributable to common stockholders	$	3,655,742		$	3,805,423
Numerators - Diluted:
Distributions to Preferred Units	450			1,711
Net income attributable to common stockholders	3,656,192			3,807,134
Denominators:
Weighted-average number of common shares outstanding - basic	777,208			914,066
Effect of dilutive securities	3,822			3,831
Weighted-average number of common shares outstanding - diluted	781,030			917,897
Anti-dilutive Securities:
Effect of Common Units	5,438			7,662
Effect of LTIP Units	1,721			1,748
Weighted-average number of anti-dilutive securities	7,159			9,410



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018 (1)		2017		2018 (1)		2017
Stock options - Property management and other costs	$	41	$	811	$	188	$	2,766
Stock options - General and administrative	38		1,814		112		6,449
Restricted stock - Property management and other costs	5,952		1,366		9,056		4,424
Restricted stock - General and administrative	10,231		540		12,125		2,368
LTIP Units - Property management and other costs	552		397		1,187		1,189
LTIP Units - General and administrative	13,176		3,389		21,138		14,330
Total	$	29,990	$	8,317	$	43,806	$	31,526



Property	Description	BPR's Total Projected Share of Cost		BPR's Investment to Date (1)		Expected Return on Investment (2)	Stabilized Year
Major Development Summary (in millions, at share unless otherwise noted)
Under Construction
New Development Norwalk, CT	Ground up development	$	474	$	258	7%	2022
Staten Island Mall Staten Island, NY	Expansion	209		176		6-7%	2020
Other Projects	Redevelopment projects at various properties	491		286		6-8%	2018-2020
	Total Projects Under Construction	$	1,174	$	720
Projects in Pipeline
Other Projects	Redevelopment projects at various properties	539		54		6-8%	TBD
	Total Projects in Pipeline	$	539	$	54



10.4	Credit Agreement, dated as of August 24, 2018, by and among Brookfield Retail Holdings VII Sub 3 LLC, Brookfield Property REIT Inc., GGP Nimbus, LLC, GGP Limited Partnership LLC, BPR OP, LP, GGSI Sellco, LLC, GGPLP Real Estate 2010 Loan Pledgor Holding, LLC, GGPLPLLC 2010 Loan Pledgor Holding, LLC, GGPLP 2010 Loan Pledgor Holding, LLC, and GGPLP L.L.C., each of the foregoing as the Borrowers, the Lenders party thereto, the Issuing Banks party thereto, the Swingline Lender party thereto, Morgan Stanley Senior Funding, Inc., in its capacity as co-administrative agent for the Term Lenders under the Term B Facility and Wells Fargo Bank, National Association, in its capacities as administrative agent and collateral agent for the Lenders.	8-K	4.1	8/28/2018	001-34948

10.5	Amended and Restated Brookfield Property REIT Inc. 2010 Equity Incentive Plan	S-8	4.3	8/29/2018	333-227086

31.1*	Certification of Brian W. Kingston, Chief Executive Officer, Brookfield Property Group LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*	Certification of Bryan K. Davis, Chief Financial Officer, Brookfield Property Group LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**	Certification of Brian W. Kingston, Chief Executive Officer, Brookfield Property Group LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**	Certification of Bryan K. Davis, Chief Financial Officer, Brookfield Property Group LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101	The following financial information from Brookfield Property REIT Inc.'s. Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, has been filed with the SEC on November 8, 2018, formatted in XBRL (Extensible Business Reporting Language): (1) Consolidated Balance Sheets, (2) Consolidated Statements of Comprehensive Income, (3) Consolidated Statements of Equity, (4) Consolidated Statements of Cash Flows and (5) Notes to Consolidated Financial Statements.