Brookfield Property Preferred (BPYPM) 6-K Management’s Discussion and Analysis of Financial Results

Brookfield Property Partners L.P.

Condensed consolidated financial statements (unaudited)

As at March 31, 2021 and December 31, 2020 and

for the three months ended March 31, 2021 and 2020

        1

Brookfield Property Partners L.P.

Condensed Consolidated Balance Sheets

Unaudited		As at
(US$ Millions)	Note	Mar. 31, 2021		Dec. 31, 2020
Assets
Non-current assets
Investment properties	3	$	72,961	$	72,610
Equity accounted investments	4	19,903		19,719
Property, plant and equipment	5	5,189		5,235
Goodwill	6	1,079		1,080
Intangible assets	7	988		982
Other non-current assets	8	3,782		3,177
Loans and notes receivable		174		139
Total non-current assets		104,076		102,942
Current assets
Loans and notes receivable		92		77
Accounts receivable and other	9	1,586		1,871
Cash and cash equivalents		1,635		2,473
Total current assets		3,313		4,421
Assets held for sale	10	285		588
Total assets		$	107,674	$	107,951
Liabilities and equity
Non-current liabilities
Debt obligations	11	$	38,621	$	41,263
Capital securities	12	2,132		2,384
Other non-current liabilities	14	1,829		1,703
Deferred tax liabilities		2,920		2,858
Total non-current liabilities		45,502		48,208
Current liabilities
Debt obligations	11	14,619		13,074
Capital securities	12	899		649
Accounts payable and other liabilities	15	4,669		4,101
Total current liabilities		20,187		17,824
Liabilities associated with assets held for sale	10	114		396
Total liabilities		65,803		66,428
Equity
Limited partners	16	11,706		11,709
General partner	16	4		4
Preferred equity	16	699		699
Non-controlling interests attributable to:
Redeemable/exchangeable and special limited partnership units	16, 17	12,242		12,249
Limited partnership units of Brookfield Office Properties Exchange LP	16, 17	72		73
FV LTIP units of the Operating Partnership	16, 17	51		52
Class A shares of Brookfield Property REIT Inc. (“BPYU”)	16, 17	1,039		1,050
Interests of others in operating subsidiaries and properties	17	16,058		15,687
Total equity		41,871		41,523
Total liabilities and equity		$	107,674	$	107,951

See accompanying notes to the condensed consolidated financial statements.

        2

Brookfield Property Partners L.P.

Condensed Consolidated Income Statements

Unaudited		Three months ended Mar. 31,
(US$ Millions, except per unit amounts)	Note		2021		2020
Commercial property revenue	18		$	1,285	$	1,404
Hospitality revenue	19		59		366
Investment and other revenue	20		106		130
Total revenue			1,450		1,900
Direct commercial property expense	21		486		480
Direct hospitality expense	22		73		290
Investment and other expense			8		4
Interest expense			612		709
Depreciation and amortization	23		68		87
General and administrative expense	24		213		196
Total expenses			1,460		1,766
Fair value gains (losses), net	25		640		(310)
Share of net earnings (losses) from equity accounted investments	4		206		(36)
Income (loss) before income taxes			836		(212)
Income tax expense	13		105		161
Net income (loss)			$	731	$	(373)
Net income (loss) attributable to:
Limited partners			$	124	$	(228)
General partner			—		—
Non-controlling interests attributable to:
Redeemable/exchangeable and special limited partnership units			129		(226)
Limited partnership units of Brookfield Office Properties Exchange LP			1		(1)
FV LTIP units of the Operating Partnership			1		—
Class A shares of Brookfield Property REIT Inc.			11		(31)
Interests of others in operating subsidiaries and properties			465		113
Total			$	731	$	(373)
Net income (loss) per LP Unit:
Basic	16		$	0.25	$	(0.49)
Diluted	16		$	0.25	$	(0.49)

See accompanying notes to the condensed consolidated financial statements.

        3

Brookfield Property Partners L.P.

Condensed Consolidated Statements of Comprehensive Income

Unaudited		Three months ended Mar. 31,
(US$ Millions)	Note		2021		2020
Net income (loss)			$	731	$	(373)
Other comprehensive income (loss)	27
Items that may be reclassified to net income:
Foreign currency translation			(70)		(354)
Cash flow hedges			54		(154)
Equity accounted investments			23		(69)
Items that will not be reclassified to net income:
Securities - fair value through other comprehensive income ("FVTOCI")			—		22
Share of revaluation surplus on equity accounted investments			—		(21)
Revaluation surplus (deficit)			—		(96)
Total other comprehensive income (loss)			7		(672)
Total comprehensive income (loss)			$	738	$	(1,045)
Comprehensive income (loss) attributable to:
Limited partners
Net income (loss)			$	124	$	(228)
Other comprehensive income (loss)			17		(249)
			141		(477)
Non-controlling interests
Redeemable/exchangeable and special limited partnership units
Net income (loss)			129		(226)
Other comprehensive income (loss)			19		(247)
			148		(473)
Limited partnership units of Brookfield Office Properties Exchange LP
Net income (loss)			1		(1)
Other comprehensive income (loss)			—		(2)
			1		(3)
FV LTIP units of the Operating Partnership
Net income (loss)			1		—
Other comprehensive income (loss)			—		(1)
			1		(1)
Class A shares of Brookfield Property REIT Inc.
Net income (loss)			11		(31)
Other comprehensive income (loss)			2		(34)
			13		(65)
Interests of others in operating subsidiaries and properties
Net income (loss)			465		113
Other comprehensive income (loss)			(31)		(139)
			434		(26)
Total comprehensive income (loss)			$	738	$	(1,045)

See accompanying notes to the condensed consolidated financial statements.

        4

Brookfield Property Partners L.P.

Condensed Consolidated Statements of Changes in Equity

	Limited partners										General partner										Preferred Equity		Non-controlling interests
Unaudited (US$ Millions)	Capital		Retained earnings		Ownership Changes		Accumulated other comprehensive (loss) income		Total limited partners equity		Capital		Retained earnings		Ownership Changes		Accumulated other comprehensive (loss) income		Total general partner equity		Total preferred equity		Redeemable / exchangeable and special limited partnership units		Limited partnership units of Brookfield Office Properties Exchange LP		FV LTIP units of the Operating Partnership		Class A shares of Brookfield Property REIT Inc.		Interests of others in operating subsidiaries and properties		Total equity
Balance as at Dec. 31, 2020	$	8,562	$	486	$	3,010	$	(349)	$	11,709	$	4	$	2	$	(1)	$	(1)	$	4	$	699	$	12,249	$	73	$	52	$	1,050	$	15,687	$	41,523
Net income	—		124		—				124		—		—		—		—		—		—		129		1		1		11		465		731
Other comprehensive income (loss)	—		—		—		17		17		—		—		—		—		—		—		19		—		—		2		(31)		7
Total comprehensive income	—		124		—		17		141		—		—		—		—		—		—		148		1		1		13		434		738
Distributions	—		(145)		—		—		(145)		—		—		—		—		—		—		(152)		(1)		(1)		(13)		(768)		(1,080)
Preferred distributions	—		(6)		—		—		(6)		—		—		—		—		—		—		(5)		—		—		—		—		(11)
Issuance / repurchase of interests in operating subsidiaries	2		(11)		14		—		5		—		—		—		—		—		—		7		—		1		(17)		705		701
Exchange of exchangeable units	2		—		1		—		3		—		—		—		—		—		—		1		(4)		—		—		—		—
Change in relative interests of non-controlling interests	—		—		(1)		—		(1)		—		—		—		—		—		—		(6)		3		(2)		6		—		—
Balance as at Mar. 31, 2021	$	8,566	$	448	$	3,024	$	(332)	$	11,706	$	4	$	2	$	(1)	$	(1)	$	4	$	699	$	12,242	$	72	$	51	$	1,039	$	16,058	$	41,871
Balance as at Dec. 31, 2019	$	9,257	$	2,539	$	1,960	$	(482)	$	13,274	$	4	$	2	$	(1)	$	(1)	$	4	$	420	$	13,200	$	87	$	35	$	1,930	$	15,985	$	44,935
Net (loss) income	—		(228)		—		—		(228)		—		—		—		—		—		—		(226)		(1)		—		(31)		113		(373)
Other comprehensive (loss)	—		—		—		(249)		(249)		—		—		—		—		—		—		(247)		(2)		(1)		(34)		(139)		(672)
Total comprehensive (loss)	—		(228)		—		(249)		(477)		—		—		—		—		—		—		(473)		(3)		(1)		(65)		(26)		(1,045)
Distributions	—		(146)		—		—		(146)		—		—		—		—		—		—		(144)		(1)		—		(20)		(118)		(429)
Preferred distributions	—		(4)		—		—		(4)		—		—		—		—		—		—		(3)		—		—		—		—		(7)
Issuance / repurchase of interest in operating subsidiaries	(158)		1		57		—		(100)		—		—		—		—		—		279		3		—		1		(1)		155		337
Exchange of exchangeable units	—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Conversion of Class A shares of Brookfield Property REIT Inc.	110		—		111		—		221		—		—		—		—		—		—		—		—		—		(221)		—		—
Change in relative interest of non-controlling interests	—		—		(62)		(5)		(67)		—		—		—		—		—		—		54		—		20		(7)		—		—
Balance as at Mar. 31, 2020	$	9,209	$	2,162	$	2,066	$	(736)	$	12,701	$	4	$	2	$	(1)	$	(1)	$	4	$	699	$	12,637	$	83	$	55	$	1,616	$	15,996	$	43,791

See accompanying notes to the condensed consolidated financial statements.

        5

Brookfield Property Partners L.P.

Condensed Consolidated Statements of Cash Flows

Unaudited		Three Months Ended Mar. 31,
(US$ Millions)	Note	2021		2020
Operating activities
Net income (loss)		$	731	$	(373)
Share of equity accounted (earnings) losses, net of distributions		(155)		141
Fair value (gains) losses, net	25	(640)		310
Deferred income tax expense	13	79		136
Depreciation and amortization	23	68		87
Working capital and other		916		72
		999		373
Financing activities
Debt obligations, issuance		2,477		3,952
Debt obligations, repayments		(3,353)		(3,362)
Capital securities redeemed		(1)		—
Preferred equity issued		—		279
Non-controlling interests, issued		748		89
Non-controlling interests, purchased		—		(29)
Repayment of lease liabilities		(6)		(4)
Limited partnership units, repurchased		(18)		(101)
Class A shares of Brookfield Property REIT Inc., repurchased		—		(18)
Distributions to non-controlling interests in operating subsidiaries		(736)		(122)
Preferred distributions		(11)		(7)
Distributions to limited partnership unitholders		(145)		(146)
Distributions to redeemable/exchangeable and special limited partnership unitholders		(152)		(144)
Distributions to holders of Brookfield Office Properties Exchange LP units		(1)		(1)
Distributions to holders of FV LTIP units of the Operating Partnership		(1)		—
Distributions to holders of Class A shares of Brookfield Property REIT Inc.		(13)		(20)
		(1,212)		366
Investing activities
Acquisitions
Investment properties		(582)		(583)
Property, plant and equipment		(27)		(63)
Equity accounted investments		(104)		(89)
Financial assets and other		(424)		(390)
Dispositions
Investment properties		198		201
Property, plant and equipment		—		2
Equity accounted investments		67		51
Financial assets and other		370		499
Restricted cash and deposits		(112)		13
		(614)		(359)
Cash and cash equivalents
Net change in cash and cash equivalents during the period		(827)		380
Effect of exchange rate fluctuations on cash and cash equivalents held in foreign currencies		(11)		(42)
Balance, beginning of period		2,473		1,438
Balance, end of period		$	1,635	$	1,776
Supplemental cash flow information
Cash paid for:
Income taxes, net of refunds received		$	19	$	21
Interest (excluding dividends on capital securities)		$	546	$	827

See accompanying notes to the condensed consolidated financial statements.

        6

Brookfield Property Partners L.P.

Notes to the Condensed Consolidated Financial Statements

NOTE 1. ORGANIZATION AND NATURE OF THE BUSINESS

Brookfield Property Partners L.P. (“BPY” or the “partnership”) was formed as a limited partnership under the laws of Bermuda, pursuant to a limited partnership agreement dated January 3, 2013, as amended and restated on August 8, 2013. BPY is a subsidiary of Brookfield Asset Management Inc. (“Brookfield Asset Management” or the “parent company”) and is the primary entity through which the parent company and its affiliates own, operate, and invest in commercial and other income producing property on a global basis.

The partnership’s sole direct investments are a 49% managing general partnership units (“GP Units” or “GP”) interest in Brookfield Property L.P. (the “operating partnership”) and an interest in BP US REIT LLC, which hold the partnership’s interest in commercial and other income producing property operations. The GP Units provide the partnership with the power to direct the relevant activities of the operating partnership.

The partnership’s limited partnership units (“BPY Units” or “LP Units”) are listed and publicly traded on the Nasdaq Stock Market (“Nasdaq”) and the Toronto Stock Exchange (“TSX”) under the symbols “BPY” and “BPY.UN”, respectively.

The registered head office and principal place of business of the partnership is 73 Front Street, 5th Floor, Hamilton HM 12, Bermuda.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a)Statement of compliance

The interim condensed consolidated financial statements of the partnership and its subsidiaries have been prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”). Accordingly, certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB, have been omitted or condensed.

These condensed consolidated financial statements as of and for the three months ended March 31, 2021 were approved and authorized for issue by the Board of Directors of the partnership on May 6, 2021.

b)Basis of presentation

The interim condensed consolidated financial statements are prepared using the same accounting policies and methods as those used in the consolidated financial statements for the year ended December 31, 2020, except for accounting standards adopted as identified in Note 2(c) below. Consequently, the information included in these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the partnership’s annual report on Form 20-F for the year ended December 31, 2020.

The interim condensed consolidated financial statements are unaudited and reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented in accordance with IFRS. The results reported in these interim condensed consolidated financial statements should not necessarily be regarded as indicative of results that may be expected for the entire year.

The interim condensed consolidated financial statements are prepared on a going concern basis and have been presented in U.S. Dollars rounded to the nearest million unless otherwise indicated.

c)Adoption of Accounting Standards:

i) Covid-19-Related Rent Concessions beyond June 30 2021, Amendment to IFRS 16 – Leases (“IFRS 16 Amendment”)

The partnership adopted the IFRS 16 Amendment as of January 1, 2021 in advance of its April 1, 2021 mandatory effective date. The IFRS 16 Amendment provides the partnership as lessee only with an extension to the scope of the exemption from assessing whether rent concessions related to COVID-19 meeting certain conditions are lease modifications. Such qualifying rent concessions are accounted for as if they are not lease modifications, generally resulting in the effects of rent abatements being recognized as variable lease payments. The partnership has applied the practical expedient to all such qualifying rent concessions. The adoption of the IFRS 16 Amendment did not have a material impact on the results of the partnership.

ii) Interest Rate Benchmark Reform-Phase 2, Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16 (“IBOR Phase 2 Amendments”)

The partnership adopted the IBOR Phase 2 Amendments as of January 1, 2021, its mandatory effective date. The IBOR Phase 2 Amendments provide additional guidance to address issues that will arise during the transition of benchmark interest rates. The IBOR Phase 2 Amendments primarily relate to the modification of financial instruments where the basis for determining the contractual cash flows changes as a result of IBOR reform, allowing for prospective application of the applicable benchmark interest rate, and to the application of hedge accounting, providing an exception such that changes in the formal designation and documentation of hedge accounting relationships that are needed to reflect the changes required by IBOR reform do not result in the discontinuation of hedge accounting or the designation of new hedging relationships. The partnership is progressing through its transition plan to address the impact and effect required changes as a result of amendments to the contractual terms of IBOR referenced floating-rate borrowings, interest rate swaps, interest rate caps, and to update hedge designations. The adoption did not have a significant impact on the partnership’s financial reporting.

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d)Critical judgements and estimates in applying accounting policies

The preparation of the partnership’s interim condensed consolidated financial statements in accordance with IAS 34 requires the use of certain critical accounting estimates and assumptions. It also requires management to exercise judgment in applying the partnership’s accounting policies. The accounting policies and critical estimates and assumptions have been set out in Note 2, Summary of Significant Accounting Policies, to the partnership’s consolidated financial statements for the year ended December 31, 2020 and have been consistently applied in the preparation of the interim condensed consolidated financial statements as of and for the three months ended March 31, 2021.

Prior to the end of the first quarter of 2020, there was a global outbreak of a new strain of coronavirus, COVID-19, which prompted certain responses from global government authorities across the various geographies in which the partnership owns and operates investment properties (“global economic shutdown” or “the shutdown”). Such responses included mandatory temporary closure of, or imposed limitations on, the operations of certain non-essential properties and businesses including office properties and retail malls and associated businesses which operate within these properties such as retailers and restaurants. In addition, shelter-in-place mandates and severe travel restrictions have had a significant adverse impact on consumer spending and demand in the near term. These negative economic indicators, restrictions and closure have created significant estimation uncertainty in the determination of the fair value of investment properties as of March 31, 2021. Due to uncertainty surrounding COVID-19, the volatility of current markets, pace and size of government policy responses and the lack of private market transactions, for the current period, we undertook a process to assess the appropriateness of the discount and terminal capitalization rates considering changes to property-level cash flows and any risk premium inherent in such cash flow changes as well as the current cost of capital and capital spreads. In addition, we reviewed and adjusted our cash flow models with a view of risk and long-term value.

Judgment is applied when determining whether indicators of impairment exist when assessing the carrying values of the partnership’s property, plant and equipment and intangible assets for potential impairment as a result of COVID-19. Consideration is given to a combination of factors, including but not limited to forecasts of revenues and expenses, valuations of assets, and projections of market trends and economic environments.

NOTE 3. INVESTMENT PROPERTIES

The following table presents a roll forward of the partnership’s investment property balances, all of which are considered Level 3 within the fair value hierarchy, for the three months ended March 31, 2021 and the year ended December 31, 2020:

	Three months ended Mar. 31, 2021						Year ended Dec. 31, 2020
(US$ Millions)	Commercial properties		Commercial developments		Total		Commercial properties		Commercial developments		Total
Balance, beginning of period	$	70,294	$	2,316	$	72,610	$	71,565	$	3,946	$	75,511
Changes resulting from:
Property acquisitions	157		12		169		647		108		755
Capital expenditures	207		199		406		1,140		857		1,997
Property dispositions(1)	(127)		(344)		(471)		(2,339)		(21)		(2,360)
Fair value gains (losses), net	444		29		473		(1,607)		219		(1,388)
Foreign currency translation	(111)		6		(105)		322		(44)		278
Transfer between commercial properties and commercial developments	52		(52)		—		2,709		(2,709)		—
Reclassifications to assets held for sale and other changes	(121)		—		(121)		(2,143)		(40)		(2,183)
Balance, end of period(2)	$	70,795	$	2,166	$	72,961	$	70,294	$	2,316	$	72,610

(1)Property dispositions represent the fair value on date of sale.

(2)Includes right-of-use commercial properties and commercial developments of $730 million and $22 million, respectively, as of March 31, 2021 (December 31, 2020 - $729 million and $10 million). Current lease liabilities of $33 million (December 31, 2020 - $35 million) have been included in accounts payable and other liabilities and non-current lease liabilities of $725 million (December 31, 2020 - $712 million) have been included in other non-current liabilities.

The partnership determines the fair value of each commercial property based upon, among other things, rental income from current leases and assumptions about rental income from future leases reflecting market conditions at the applicable balance sheet dates, less future cash outflows in respect of such leases. Investment property valuations are generally completed by undertaking one of two accepted income approach methods, which include either: i) discounting the expected future cash flows, generally over a term of 10 years including a terminal value based on the application of a capitalization rate to estimated year 11 cash flows; or ii) undertaking a direct capitalization approach whereby a capitalization rate is applied to estimated current year cash flows. Where there has been a recent market transaction for a specific property, such as an acquisition or sale of a partial interest, the partnership values the property on that basis. In determining the appropriateness of the methodology applied, the partnership considers the relative uncertainty of the timing and amount of expected cash flows and the impact such uncertainty would have in arriving at a reliable estimate of fair value. The partnership prepares these valuations considering asset and market specific factors, as well as observable transactions for similar assets. The determination of fair value requires the use of estimates, which are internally determined and compared with market data, third-party reports and research as well as observable conditions. Except for the impacts of the shutdown which are discussed below, there are currently no other known trends, events or uncertainties that the partnership reasonably believes could have a sufficiently pervasive impact across the partnership’s businesses to materially affect the methodologies or assumptions utilized to determine the estimated fair values reflected in this report. Discount rates and capitalization rates are inherently uncertain and may be impacted by, among other things, movements in interest rates in the geographies and markets in which the assets are located. Changes in estimates of

        8

discount and capitalization rates across different geographies and markets are often independent of each other and not necessarily in the same direction or of the same magnitude. Further, impacts to the partnership’s fair values of commercial properties from changes in discount or capitalization rates and cash flows are usually inversely correlated. Decreases (increases) in the discount rate or capitalization rate result in increases (decreases) of fair value. Such decreases (increases) may be mitigated by decreases (increases) in cash flows included in the valuation analysis, as circumstances that typically give rise to increased interest rates (e.g., strong economic growth, inflation) usually give rise to increased cash flows at the asset level. Refer to the table below for further information on valuation methods used by the partnership for its asset classes.

Commercial developments are also measured using a discounted cash flow model, net of costs to complete, as of the balance sheet date. Development sites in the planning phases are measured using comparable market values for similar assets.

In accordance with its policy, the partnership generally measures and records its commercial properties and developments using valuations prepared by management. However, for certain subsidiaries, the partnership relies on quarterly valuations prepared by external valuation professionals. Management compares the external valuations to the partnership’s internal valuations to review the work performed by the external valuation professionals. Additionally, a number of properties are externally appraised each year and the results of those appraisals are compared to the partnership’s internally prepared values.

2021 Conditions

Global Economic Shutdown

The COVID-19 pandemic has continued to cause disruption to business activities and supply chains as well as disrupted travel and adversely impacted local, regional, national and international economic conditions. As a result, future revenues and cash flows produced by these investment properties and our equity accounted investment properties continue to be more uncertain than normal. In response, the partnership has adjusted cash flow assumptions for its estimate of near-term disruption to cash flows to reflect collections, vacancy and assumptions with respect to new leasing activity. In addition, the partnership has continued to assess the appropriateness of the discount and terminal capitalization rates giving consideration to changes to property level cash flows and any risk premium inherent in such cash flow changes as well as the current cost of capital and credit spreads.

Valuation Metrics

The key valuation metrics for the partnership’s consolidated commercial properties are set forth in the following tables below on a weighted-average basis:

		Mar. 31, 2021					Dec. 31, 2020
Consolidated properties	Primary valuation method	Discount rate		Terminal capitalization rate		Investment horizon (years)	Discount rate		Terminal capitalization rate		Investment horizon (years)
Core Office
United States	Discounted cash flow	6.9	%	5.6	%	12	6.9	%	5.6	%	12
Canada	Discounted cash flow	5.9	%	5.2	%	10	5.9	%	5.2	%	10
Australia	Discounted cash flow	6.6	%	5.7	%	10	6.6	%	5.7	%	10
Europe	Discounted cash flow	5.2	%	3.8	%	10	5.2	%	3.8	%	10
Brazil	Discounted cash flow	7.6	%	7.0	%	10	7.6	%	7.0	%	10
Core Retail	Discounted cash flow	7.0	%	5.3	%	10	7.0	%	5.3	%	10
LP Investments- Office	Discounted cash flow	9.7	%	7.1	%	7	9.7	%	7.2	%	7
LP Investments- Retail	Discounted cash flow	8.6	%	7.0	%	10	8.7	%	7.0	%	10
Mixed-use	Discounted cash flow	7.3	%	5.2	%	10	7.3	%	5.2	%	10
Multifamily(1)	Direct capitalization	4.9	%	n/a		n/a	4.9	%	n/a		n/a
Triple Net Lease(1)	Direct capitalization	6.3	%	n/a		n/a	6.2	%	n/a		n/a
Student Housing(1)	Direct capitalization	4.9	%	n/a		n/a	4.9	%	n/a		n/a
Manufactured Housing(1)	Direct capitalization	4.6	%	n/a		n/a	4.8	%	n/a		n/a

(1)The valuation method used to value multifamily, triple net lease, student housing, and manufactured housing properties is the direct capitalization method. The rates presented as the discount rate relate to the overall implied capitalization rate. The terminal capitalization rate and investment horizon are not applicable.

        9

Fair Value Measurement

The following table presents the partnership’s investment properties measured at fair value in the condensed consolidated financial statements and the level of the inputs used to determine those fair values in the context of the hierarchy as defined in Note 2(i), Summary of Significant Accounting Policies: Fair value measurement, in the consolidated financial statements as of December 31, 2020:

	Mar. 31, 2021								Dec. 31, 2020
					Level 3								Level 3
(US$ Millions)	Level 1		Level 2		Commercial properties		Commercial developments		Level 1		Level 2		Commercial properties		Commercial developments
Core Office
United States	$	—	$	—	$	14,729	$	456	$	—	$	—	$	14,682	$	411
Canada	—		—		4,776		64		—		—		4,721		381
Australia	—		—		2,362		398		—		—		2,366		365
Europe	—		—		2,562		258		—		—		2,526		173
Brazil	—		—		294		—		—		—		309		—
Core Retail	—		—		20,043		—		—		—		20,324		—
LP Investments
LP Investments- Office	—		—		8,172		751		—		—		7,946		781
LP Investments- Retail	—		—		2,427		—		—		—		2,538		—
Hospitality	—		—		89		—		—		—		84		—
Mixed-Use	—		—		3,022		—		—		—		3,096		—
Multifamily	—		—		2,512		—		—		—		2,442
Triple Net Lease	—		—		3,742		—		—		—		3,719
Student Housing	—		—		2,828		239		—		—		2,757		205
Manufactured Housing	—		—		3,237		—		—		—		2,784		—
Total	$	—	$	—	$	70,795	$	2,166	$	—	$	—	$	70,294	$	2,316

Fair Value Sensitivity

The following table presents a sensitivity analysis to the impact of a 25 basis point movement of the discount rate and terminal capitalization or overall implied capitalization rate on fair values of the partnership’s commercial properties for the three months ended March 31, 2021, for properties valued using the discounted cash flow or direct capitalization method, respectively:

	Mar. 31, 2021
(US$ Millions)	Impact on fair value of commercial properties
Core Office
United States	750
Canada	223
Australia	169
Europe	156
Brazil	2
Core Retail	1,082
LP Investments
LP Investments- Office	392
LP Investments- Retail	145
Mixed-use	155
Multifamily	120
Triple Net Lease	143
Student Housing	125
Manufactured Housing	165
Total	$	3,627

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NOTE 4. EQUITY ACCOUNTED INVESTMENTS

The partnership has investments in joint arrangements that are joint ventures, and also has investments in associates. Joint ventures hold individual commercial properties, hotels, and portfolios of commercial properties and developments that the partnership owns together with co-owners where decisions relating to the relevant activities of the joint venture require the unanimous consent of the co-owners. Details of the partnership’s investments in joint ventures and associates, which have been accounted for in accordance with the equity method of accounting, are as follows:

			Proportion of ownership interests				Carrying value
(US$ Millions)	Principal activity	Principal place of business	Mar. 31, 2021		Dec. 31, 2020		Mar. 31, 2021		Dec. 31, 2020
Joint Ventures
Canary Wharf Joint Venture(1)	Property holding company	United Kingdom	50	%	50	%	$	3,569	$	3,440
Manhattan West, New York	Property holding company	United States	56	%	56	%	2,174		2,122
Ala Moana Center, Hawaii	Property holding company	United States	50	%	50	%	1,866		1,862
BPYU JV Pool A	Property holding company	United States	50	%	50	%	1,734		1,723
BPYU JV Pool B	Property holding company	United States	51	%	51	%	1,093		1,121
Fashion Show, Las Vegas	Property holding company	United States	50	%	50	%	834		835
Grace Building, New York	Property holding company	United States	50	%	50	%	699		676
BPYU JV Pool C	Property holding company	United States	50	%	50	%	683		692
BPYU JV Pool D	Property holding company	United States	48	%	48	%	546		548
Southern Cross East, Melbourne	Property holding company	Australia	50	%	50	%	428		433
The Grand Canal Shoppes, Las Vegas	Property holding company	United States	50	%	50	%	413		416
One Liberty Plaza, New York	Property holding company	United States	51	%	51	%	404		382
680 George Street, Sydney	Property holding company	Australia	50	%	50	%	382		375
The Mall in Columbia, Maryland	Property holding company	United States	50	%	50	%	298		298
Potsdamer Platz, Berlin	Property holding company	Germany	25	%	25	%	260		255
Brookfield D.C. Office Partners LLC ("D.C. Venture"), Washington, D.C.	Property holding company	United States	51	%	51	%	257		257
BPYU JV Pool G	Property holding company	United States	68	%	68	%	254		251
BPYU JV Pool F	Property holding company	United States	51	%	51	%	253		253
Shops at La Cantera, Texas	Property holding company	United States	50	%	50	%	250		249
Baybrook Mall, Texas	Property holding company	United States	51	%	51	%	250		251
Brookfield Brazil Retail Fundo de Investimento em Participaçõe (“Brazil Retail”)	Holding company	Brazil	46	%	46	%	229		251
Miami Design District, Florida	Property holding company	United States	22	%	22	%	227		238
Other(2)	Various	Various	15% - 55%		14% - 55%		2,538		2,510
							19,641		19,438
Associates
Various	Various	Various	31% -31%		16% - 31%		262		281
							262		281
Total							$	19,903	$	19,719

(1) Stork Holdco LP is the joint venture through which the partnership acquired Canary Wharf Group plc in London.

(2)Other joint ventures consists of approximately 37 joint ventures.

        11

The following table presents the change in the balance of the partnership’s equity accounted investments as of March 31, 2021 and December 31, 2020:

	Three months ended		Year ended
(US$ Millions)	Mar. 31, 2021		Dec. 31, 2020
Equity accounted investments, beginning of period	$	19,719	$	20,764
Additions(1)	104		522
Disposals and return of capital distributions	(67)		(108)
Share of net earnings (losses) from equity accounted investments	206		(749)
Distributions received	(51)		(618)
Foreign currency translation	(12)		107
Reclassification from (to) assets held for sale(2)	—		121
Other comprehensive income and other	4		(320)
Equity accounted investments, end of period	$	19,903	$	19,719

(1)The prior year includes $70 million related to the Atlantis resort due to deconsolidation of the investment in the third quarter of 2020 .

(2)The partnership’s interest in the Diplomat Resort and Spa (“Diplomat”) in Florida was reclassified from assets held for sale in the second quarter of 2020.

The key valuation metrics for the partnership’s commercial properties held within the partnership’s equity accounted investments are set forth in the table below on a weighted-average basis:

		Mar. 31, 2021					Dec. 31, 2020
Equity accounted investments	Primary valuation method	Discount rate		Terminal capitalization rate		Investment horizon (yrs)	Discount rate	Terminal capitalization rate		Investment horizon (yrs)
Core Office
United States	Discounted cash flow	6.4	%	4.7	%	11	6.4 %	4.7 %		11
Australia	Discounted cash flow	6.3	%	5.3	%	10	6.3 %	5.3 %		10
Europe	Discounted cash flow	5.6	%	4.7	%	10	5.6 %	4.7	%	10
Core Retail
United States	Discounted cash flow	6.4	%	4.9	%	10	6.3 %	4.9	%	10
LP Investments - Office	Discounted cash flow	6.0	%	5.3	%	10	6.0 %	5.3 %		10
LP Investments - Retail	Discounted cash flow	7.4	%	6.1	%	10	7.4 %	6.1 %		10
Multifamily(1)	Direct capitalization	4.3	%	n/a		n/a	4.3 %	n/a		n/a

(1)The valuation method used to value multifamily investments is the direct capitalization method. The rates presented as the discount rate relate to the overall implied capitalization rate. The terminal capitalization rate and investment horizon are not applicable.

Summarized financial information in respect of the partnership’s equity accounted investments is presented below:

(US$ Millions)	Mar. 31, 2021		Dec. 31, 2020
Non-current assets	$	77,759	$	77,818
Current assets	4,400		5,054
Total assets	82,159		82,872
Non-current liabilities	34,314		34,509
Current liabilities	6,252		5,886
Total liabilities	40,566		40,395
Net assets	41,593		42,477
Partnership’s share of net assets	$	19,903	$	19,719

	Three months ended Mar. 31,
(US$ Millions)		2021		2020
Revenue		$	1,024	$	1,243
Expenses		823		826
Income from equity accounted investments(1)		8		18
Income before fair value gains, net		209		435
Fair value gains (losses), net		210		(480)
Net income (loss)		419		(45)
Partnership’s share of net earnings (losses)		$	206	$	(36)

(1)Share of net earnings from equity accounted investments recorded by the partnership’s joint ventures and associates.

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NOTE 5. PROPERTY, PLANT AND EQUIPMENT

Property, plant, and equipment primarily consists of hospitality assets such as Center Parcs UK, a portfolio of extended-stay hotels in the U.S. and a hotel at International Financial Center (“IFC Seoul”).

The following table presents the useful lives of each hospitality asset by class:

Hospitality assets by class	Useful life (in years)
Building and building improvements	5 to 50+
Land improvements	15
Furniture, fixtures and equipment	3 to 10

In the first quarter of 2021, the partnership tested its property, plant and equipment for impairment and found no impairment indicators.

The following table presents the change to the components of the partnership’s hospitality assets for the three months ended March 31, 2021 and for the year ended December 31, 2020:

(US$ Millions)	Mar. 31, 2021		Dec. 31, 2020
Cost:
Balance at the beginning of period	$	5,575	$	7,246
Additions	30		164
Disposals	(4)		(75)
Foreign currency translation	—		142
Impact of deconsolidation due to loss of control and other(1)	(11)		(1,902)
	5,590		5,575
Accumulated fair value changes:
Balance at the beginning of period	488		1,343
Revaluation (losses) gains, net(2)(3)	—		(130)
Impact of deconsolidation due to loss of control and other(1)	—		(729)
Disposals	—		13
Provision for impairment(2)	—		(15)
Foreign currency translation	2		6
	490		488
Accumulated depreciation:
Balance at the beginning of period	(828)		(1,311)
Depreciation	(65)		(306)
Disposals	2		28
Foreign currency translation	(1)		(25)
Impact of deconsolidation due to loss of control and other(1)	1		786
	(891)		(828)
Total property, plant and equipment(4)	$	5,189	$	5,235

(1)The prior year includes the impact of deconsolidation of the Atlantis.

(2)The prior year impairment losses were recorded in revaluation losses, net in other comprehensive income and fair value (losses) gains, net in the income statement, which was a result of the impairment tests performed on each of the partnership’s hospitality investments from the impact of the shutdown as discussed above.

(3)The prior year revaluation (losses) gains, net includes $258 million of impairment losses offset by $128 million of revaluation gains.

(4)Includes right-of-use assets of $164 million (December 31, 2020 - $164 million).

NOTE 6. GOODWILL

Goodwill of $1,079 million at March 31, 2021 (December 31, 2020 - $1,080 million) is primarily attributable to Center Parcs UK of $830 million and IFC Seoul of $232 million (December 31, 2020 - $824 million and $240 million, respectively). The partnership performs a goodwill impairment test annually unless there are indicators of impairment identified during the year. In the first quarter of 2021, the partnership did not identify any impairment indicators.

NOTE 7. INTANGIBLE ASSETS

The partnership’s intangible assets are presented on a cost basis, net of accumulated amortization and accumulated impairment losses in the condensed consolidated balance sheets. These intangible assets primarily represent the trademark assets related to Center Parcs UK.

The trademark assets of Center Parcs UK had a carrying amount of $987 million as of March 31, 2021 (December 31, 2020 - $982 million). They have been determined to have an indefinite useful life as the partnership has the legal right to operate these trademarks exclusively in certain territories and in perpetuity. The business model of Center Parcs UK is not subject to technological obsolescence or commercial innovations in any material way.

        13

Intangible assets by class	Useful life (in years)
Trademarks	Indefinite
Other	4 to 7

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the asset may be impaired. Intangible assets with finite useful lives are amortized over their respective useful lives as listed above. Amortization expense is recorded as part of depreciation and amortization of non-real estate assets expense.

The following table presents the components of the partnership’s intangible assets as of March 31, 2021 and December 31, 2020:

(US$ Millions)	Mar. 31, 2021		Dec. 31, 2020
Cost	$	1,024	$	1,016
Accumulated amortization	(36)		(34)
Balance, end of period	$	988	$	982

The following table presents a roll forward of the partnership’s intangible assets for the three months ended March 31, 2021 and the year ended December 31, 2020:

(US$ Millions)	Mar. 31, 2021		Dec. 31, 2020
Balance, beginning of period	$	982	$	1,162
Acquisitions	—		6
Amortization	(3)		(12)
Impairment losses	—		(18)
Foreign currency translation	9		30
Impact of deconsolidation due to loss of control and other(1)	—		(186)
Balance, end of period	$	988	$	982

(1)The prior year includes the impact of the deconsolidation of Atlantis.

NOTE 8. OTHER NON-CURRENT ASSETS

The components of other non-current assets are as follows:

(US$ Millions)	Mar. 31, 2021		Dec. 31, 2020
Securities - FVTPL	$	2,067	$	1,612
Derivative assets	96		72
Securities - FVTOCI	85		86
Restricted cash	308		241
Inventory(1)	941		877
Other	285		289
Total other non-current assets	$	3,782	$	3,177

(1)Includes right-of-use inventory assets of $33 million (December 31, 2020 - $33 million)

Securities - FVTPL

Securities - FVTPL consists of its investment in convertible preferred units of a U.S. hospitality operating company. The preferred units earn a fixed cumulative dividend of 7.5% per annum compounding quarterly. Additionally, the partnership receives distributions in additional convertible preferred units of the U.S. hospitality operating company at 5.0% per annum compounding quarterly. The carrying value of these convertible preferred units at March 31, 2021 was $451 million (December 31, 2020 - $447 million).

Also included in Securities - FVTPL is the partnership’s investment in BSREP III, with a carrying value of the financial asset at March 31, 2021 of $853 million (December 31, 2020 - $756 million).

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NOTE 9. ACCOUNTS RECEIVABLE AND OTHER

The components of accounts receivable and other are as follows:

(US$ Millions)	Mar. 31, 2021		Dec. 31, 2020
Derivative assets	$	116	$	164
Accounts receivable(1) - net of expected credit loss of $122 million (December 31, 2020 - $114 million)	603		753
Restricted cash and deposits	347		292
Prepaid expenses	303		330
Other current assets	217		332
Total accounts receivable and other	$	1,586	$	1,871

(1)See Note 30, Related Parties, for further discussion

With respect to accounts receivable, the partnership recorded a $13 million (2020 - $31 million) loss allowance in commercial property operating expenses for the three months ended March 31, 2021. As of March 31, 2021, office rent collections have returned to pre-pandemic levels and the partnership has collected 86% of first quarter retail rents. While working to preserve profitability and cash flow, the partnership is also working with its tenants regarding requests for lease concessions and other forms of assistance, predominantly within the Core Retail segment. The partnership continues to make meaningful progress in its negotiations with national and local tenants to secure rental payments, despite a significant portion of the partnership’s tenants requesting rental assistance, whether in the form of deferral or rent abatement. As of March 31, 2021, in response to the COVID-19 pandemic, the partnership granted rent deferrals of 1% and rent abatements of 3% of 2021 retail rent. The rent abatements granted were considered lease modification and will be recognized prospectively over the remaining lease terms from the period the rent was abated. While the partnership anticipates that it may grant further rent concessions, such as the deferral or abatement of lease payments, such rent concession requests are evaluated on a case-by-case basis. Where tenants are expected to be able to meet their lease obligations after concessions have been granted, the allowance for expected credit losses includes only the portion of the expected abatements that is deemed attributable to the current period, considering the weighted average remaining lease terms. Not all requests for rent relief will be granted as the partnership does not intend to forgo its legally enforceable contractual rights that exist under its lease agreements.

NOTE 10. HELD FOR SALE

Non-current assets and groups of assets and liabilities which comprise disposal groups are presented as assets held for sale where the asset or disposal group isavailable for immediate sale in its present condition, and the sale is highly probable.

The following is a summary of the assets and liabilities that were classified as held for sale as of March 31, 2021 and December 31, 2020:

(US$ Millions)	Mar. 31, 2021		Dec. 31, 2020
Investment properties	$	181	$	481
Equity accounted investments	102		102
Accounts receivable and other assets	2		5
Assets held for sale	285		588
Debt obligations	113		380
Accounts payable and other liabilities	1		16
Liabilities associated with assets held for sale	$	114	$	396

The following table presents the change to the components of the assets held for sale for the three months ended March 31, 2021 and the year ended December 31, 2020:

(US$ Millions)	Mar. 31, 2021		Dec. 31, 2020
Balance, beginning of period	$	588	$	387
Reclassification to (from) assets held for sale, net	120		2,381
Disposals	(422)		(2,222)
Fair value adjustments	—		9
Foreign currency translation	—		20
Other	(1)		13
Balance, end of period	$	285	$	588

At December 31, 2020, assets held for sale included an office asset in Australia, a multifamily asset in the U.S., two malls in the U.S., a mall in Brazil and four triple net lease assets in the U.S.

In the first quarter of 2021, the partnership sold two malls in the U.S, a triple-net lease asset in the U.S., a plot of land in the U.S, and a multifamily asset in the U.S. for net proceeds of approximately $56 million.

At March 31, 2021, assets held for sale included four triple-net lease assets in the U.S, two multifamily assets in the U.S., a mall in Brazil, and an office asset in Australia, as the partnership intends to sell controlling interest in these assets to third parties in the next 12 months.

        15

NOTE 11. DEBT OBLIGATIONS

The partnership’s debt obligations include the following:

	Mar. 31, 2021				Dec. 31, 2020
(US$ Millions)	Weighted-average rate		Debt balance		Weighted-average rate		Debt balance
Unsecured facilities:
Brookfield Property Partners’ credit facilities	1.71	%	723		1.75	%	1,357
Brookfield Property Partners’ corporate bonds	4.14	%	1,915		4.14	%	1,890
Brookfield Property REIT Inc. term debt	2.86	%	3,966		2.90	%	3,976
Brookfield Property REIT Inc. senior secured notes	5.75	%	945		5.75	%	945
Brookfield Property REIT Inc. corporate facility	2.36	%	985		2.41	%	1,015
Brookfield Property REIT Inc. junior subordinated notes	1.66	%	206		1.66	%	206
Subsidiary borrowings	1.65	%	237		1.69	%	196
Secured debt obligations:
Funds subscription credit facilities(1)	2.51	%	373		2.51	%	315
Fixed rate	4.26	%	27,783		4.27	%	28,446
Variable rate	3.46	%	16,479		3.61	%	16,629
Deferred financing costs			(259)				(258)
Total debt obligations			$	53,353			$	54,717
Current			14,619				13,074
Non-current			38,621				41,263
Debt associated with assets held for sale			113				380
Total debt obligations			$	53,353			$	54,717

(1)Funds subscription credit facilities are secured by co-investors’ capital commitments.

The partnership generally believes that it will be able to either extend the maturity date, repay, or refinance the debt that is scheduled to mature in 2021-2022, however, approximately 2.7% of its debt obligations represent non-recourse mortgages where the partnership has suspended contractual payment. The partnership is currently engaging in modification or restructuring discussions with the respective creditors. These negotiations may, under certain circumstances, result in certain properties securing these loans being transferred to the lenders. During the first quarter of 2021, the partnership transferred two underperforming malls to the lender in the Core Retail segment.

Debt obligations include foreign currency denominated debt in the functional currencies of the borrowing subsidiaries. Debt obligations by currency are as follows:

	Mar. 31, 2021				Dec. 31, 2020
(Millions)	U.S. Dollars			Local currency	U.S. Dollars			Local currency
U.S. Dollars	$	36,545	$	36,545	$	37,413	$	37,413
British Pounds	6,926		£	5,025	6,809		£	4,981
Canadian Dollars	4,369		C$	5,488	4,408		C$	5,613
South Korean Won	2,022		₩	2,280,000	2,093		₩	2,280,000
Australian Dollars	1,462		A$	1,924	1,473		A$	1,914
Indian Rupee	1,800		Rs	131,403	2,257		Rs	164,753
Brazilian Reais	164		R$	935	180		R$	936
Chinese Yuan	25		C¥	162	22		C¥	143
Euros	299		€	255	320		€	262
Deferred financing costs	(259)				(258)
Total debt obligations	$	53,353			$	54,717

        16

The components of changes in debt obligations, including changes related to cash flows from financing activities, are summarized in the table below:

				Non-cash changes in debt obligations
(US$ Millions)	Dec. 31, 2020		Debt obligation issuance, net of repayments	Assumed by purchaser	Amortization of deferred financing costs and (premium) discount	Foreign currency translation	Other	Mar. 31, 2021
Debt obligations	$	54,717	(876)	(301)	6	(1)	(192)	$	53,353

NOTE 12. CAPITAL SECURITIES

The partnership has the following capital securities outstanding as of March 31, 2021 and December 31, 2020:

(US$ Millions)	Shares outstanding	Cumulative dividend rate		Mar. 31, 2021		Dec. 31, 2020
Operating Partnership Class A Preferred Equity Units:
Series 1	24,000,000	6.25	%	$	589	$	586
Series 2	24,000,000	6.50	%	557		555
Series 3	24,000,000	6.75	%	540		538
Brookfield Office Properties Inc. (“BPO”) Class B Preferred Shares:
Series 1(1)	3,600,000	70% of bank prime		—		—
Series 2(1)	3,000,000	70% of bank prime		—		—
Brookfield Property Split Corp. (“BOP Split”) Senior Preferred Shares:
Series 1	842,534	5.25	%	21		21
Series 2	556,746	5.75	%	11		11
Series 3	789,718	5.00	%	16		16
Series 4	594,994	5.20	%	12		12
BSREP II RH B LLC (“Manufactured Housing”) Preferred Capital	—	9.00	%	248		249
Rouse Properties L.P. (“Rouse”) Series A Preferred Shares	5,600,000	5.00	%	142		142
BSREP II Vintage Estate Partners LLC ("Vintage Estate") Preferred Shares	10,000	5.00	%	40		40
Capital Securities – Fund Subsidiaries				855		863
Total capital securities				$	3,031	$	3,033
Current				899		649
Non-current				2,132		2,384
Total capital securities				$	3,031	$	3,033

(1)BPO Class B Preferred Shares, Series 1 and 2 capital securities are owned by Brookfield Asset Management. BPO has an offsetting loan receivable against these securities earning interest at 95% of bank prime.

Cumulative preferred dividends on the BOP Split Senior Preferred Shares are payable quarterly, as and when declared by BOP Split. On April 6, 2021, BOP Split declared quarterly dividends payable for the BOP Split Senior Preferred Shares.

Capital securities includes $248 million at March 31, 2021 (December 31, 2020 - $249 million) of preferred equity interests held by a third party investor in Manufactured Housing which have been classified as a liability, rather than as a non-controlling interest, due to the fact the holders are entitled to distributions equal to their capital balance plus 9% annual return payable in monthly distributions until maturity in December 2025.

Capital securities also includes $142 million at March 31, 2021 (December 31, 2020 - $142 million) of preferred equity interests held by a third party investor in Rouse which have been classified as a liability, rather than as a non-controlling interest, due to the fact that the interests are mandatorily redeemable on or after November 12, 2025 for a set price per unit plus any accrued but unpaid distributions; distributions are capped and accrue regardless of available cash generated.

Capital securities also includes $40 million at March 31, 2021 (December 31, 2020 - $40 million) of preferred equity interests held by the partnership’s co-investor in Vintage Estate which have been classified as a liability, rather than as non-controlling interest, due to the fact that the preferred equity interests are mandatorily redeemable on April 26, 2023 for cash at an amount equal to the outstanding principal balance of the preferred equity plus any accrued but unpaid dividend.

The Capital Securities – Fund Subsidiaries includes $799 million at March 31, 2021 (December 31, 2020 - $807 million) of equity interests in Brookfield DTLA Holdings LLC (“DTLA”) held by co-investors in DTLA which have been classified as a liability, rather than as non-controlling interest, as holders of these interests can cause DTLA to redeem their interests in the fund for cash equivalent to the fair value of the interests on October 15, 2023, and on every fifth anniversary thereafter. Capital Securities – Fund Subsidiaries are measured at FVTPL.

        17

Capital Securities – Fund Subsidiaries also includes $56 million at March 31, 2021 (December 31, 2020 - $56 million) which represents the equity interests held by the partnership’s co-investor in the D.C. Venture which have been classified as a liability, rather than as non-controlling interest, due to the fact that on June 18, 2023, and on every second anniversary thereafter, the holders of these interests can redeem their interests in the D.C. Venture for cash equivalent to the fair value of the interests.

At March 31, 2021, capital securities includes $39 million (December 31, 2020 - $38 million) repayable in Canadian Dollars of C$49 million (December 31, 2020 - C$49 million).

Reconciliation of cash flows from financing activities from capital securities is shown in the table below:

					Non-cash changes on capital securities
(US$ Millions)	Dec. 31, 2020		Capital securities redeemed		Fair value changes		Foreign currency translation		Other		Mar. 31, 2021
Capital securities	$	3,033	$	(1)	$	10	$	(1)	$	(11)	$	3,031

NOTE 13. INCOME TAXES

The partnership is a flow-through entity for tax purposes and as such is not subject to Bermudian taxation. However, income taxes are recognized for the amount of taxes payable by the primary holding subsidiaries of the partnership (“Holding Entities”), any direct or indirect corporate subsidiaries of the Holding Entities and for the impact of deferred tax assets and liabilities related to such entities.

The components of income tax expense include the following:

	Three months ended Mar. 31,
(US$ Millions)		2021		2020
Current income tax		$	26	$	25
Deferred income tax		79		136
Income tax expense (benefit)		$	105	$	161

The partnership’s income tax expense decreased for the three months ended March 31, 2021 as compared to the same period in the prior year primarily due to tax benefits from an internal restructuring of subsidiaries. These tax benefits were partially offset by an increase in book income and other write-offs previously recognized in deferred tax assets.

NOTE 14. OTHER NON-CURRENT LIABILITIES

The components of other non-current liabilities are as follows:

(US$ Millions)	Mar. 31, 2021		Dec. 31, 2020
Accounts payable and accrued liabilities	$	573	$	437
Lease liabilities(1)	892		875
Derivative liabilities	253		272
Provisions	99		105
Deferred revenue	12		14
Total other non-current liabilities	$	1,829	$	1,703

(1)For the three months ended March 31, 2021, interest expense relating to total lease liabilities (see Note 15, Accounts Payable And Other Liabilities for the current portion) was $15 million (2020 - $14 million).

NOTE 15. ACCOUNTS PAYABLE AND OTHER LIABILITIES

The components of accounts payable and other liabilities are as follows:

(US$ Millions)	Mar. 31, 2021		Dec. 31, 2020
Accounts payable and accrued liabilities	$	1,856	$	2,094
Loans and notes payable(1)	2,013		1,062
Derivative liabilities	220		416
Deferred revenue	496		441
Lease liabilities(2)	41		43
Other liabilities	43		45
Total accounts payable and other liabilities	$	4,669	$	4,101

(1)See Note 30, Related Parties, for further discussion

(2)See Note 14, Other Non-Current Liabilities for further information on the interest expense related to these liabilities.

        18

NOTE 16. EQUITY

The partnership’s capital structure is comprised of seven classes of partnership units: GP Units, LP Units, redeemable/exchangeable partnership units of the operating partnership (“Redeemable/Exchangeable Partnership Units”), special limited partnership units of the operating partnership (“Special LP Units”), limited partnership units of Brookfield Office Properties Exchange LP (“Exchange LP Units”), FV LTIP units of the operating partnership (“FV LTIP Units”) and BPYU Units. In addition, the partnership issued Class A Cumulative Redeemable Perpetual Preferred Units, Series 1 in the first quarter of 2019, Class A Cumulative Redeemable Perpetual Preferred Units, Series 2 in the third quarter of 2019 and Class A Cumulative Redeemable Perpetual Preferred Units, Series 3 in the first quarter of 2020 (“Preferred Equity Units”).

a)General and limited partnership equity

GP Units entitle the holder to the right to govern the financial and operating policies of the partnership. The GP Units are entitled to a 1% general partnership interest.

LP Units entitle the holder to their proportionate share of distributions and are listed and publicly traded on the Nasdaq and the TSX. Each LP Unit entitles the holder thereof to one vote for the purposes of any approval at a meeting of limited partners, provided that holders of the Redeemable/Exchangeable Partnership Units that are exchanged for LP Units will only be entitled to a maximum number of votes in respect of the Redeemable/Exchangeable Partnership Units equal to 49% of the total voting power of all outstanding units.

The following table presents changes to the GP Units and LP Units from the beginning of the year:

	General partnership units		Limited partnership units
(Thousands of units)	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2021	Dec. 31, 2020
Outstanding, beginning of period	139	139	435,980	439,802
Exchange LP Units exchanged		—	53	169
BPYU Units exchanged	—		—	11,580
Distribution Reinvestment Program	—	—	123	998
Issued under unit-based compensation plan	—	—	1	—
LP Units issued	—	—	—	59,497
Repurchase of LP Units	—	—	—	(76,066)
Outstanding, end of period	139	139	436,157	435,980

b)Units of the operating partnership held by Brookfield Asset Management

Redeemable/Exchangeable Partnership Units

There were 451,365,017 and 451,365,017 Redeemable/Exchangeable Partnership Units outstanding at March 31, 2021 and December 31, 2020, respectively.

Special limited partnership units

Brookfield Property Special L.P. is entitled to receive equity enhancement distributions and incentive distributions from the operating partnership as a result of its ownership of the Special LP Units.

There were 4,759,997 Special LP Units outstanding at March 31, 2021 and December 31, 2020.

c)Limited partnership units of Brookfield Office Properties Exchange LP (“Exchange LP”)

The Exchange LP Units are exchangeable at any time on a one-for-one basis, at the option of the holder, subject to their terms and applicable law, for LP Units. An Exchange LP Unit provides a holder thereof with economic terms that are substantially equivalent to those of a LP Unit. Subject to certain conditions and applicable law, Exchange LP will have the right, commencing June 9, 2021, to redeem all of the then outstanding Exchange LP Units at a price equal to the 20-day volume-weighted average trading price of an LP Unit plus all declared, payable, and unpaid distributions on such units.

The following table presents changes to the Exchange LP Units from the beginning of the year:

	Limited Partnership Units of Brookfield Office Properties Exchange LP
(Thousands of units)	Mar. 31, 2021	Dec. 31, 2020
Outstanding, beginning of period	2,714	2,883
Exchange LP Units exchanged(1)	(53)	(169)
Outstanding, end of period	2,661	2,714

(1)Exchange LP Units that have been exchanged are held by an indirect subsidiary of the partnership. Refer to the Condensed Consolidated Statements of Changes in Equity for the impact of such exchanges on the carrying value of Exchange LP Units.

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d)FV LTIP Units

The partnership issued FV LTIP Units under the Brookfield Property Partners BPY FV LTIP Unit Plan to certain participants in the third quarter of 2019. Each FV LTIP unit will vest over a period of five years and is redeemable for LP Units, BPYU Units or a cash payment subject to a conversion adjustment. There were 1,874,166 and 1,899,661 FV LTIP Units outstanding at March 31, 2021 and December 31, 2020, respectively.

e)Class A shares of Brookfield Property REIT Inc.

BPYU Units were issued to former GGP Inc. (“GGP”) common shareholders who elected to receive BPYU Units as consideration, in connection with the August 28, 2018 closing of the partnership’s acquisition of all outstanding common shares of GGP not already owned by the partnership. Each BPYU Unit is structured to provide an economic return equivalent to an LP Unit. The holder of a BPYU Unit has the right, at any time, to request the unit be redeemed for cash equivalent to the value of an LP Unit. In the event the holder of a BPYU Unit exercises this right, the partnership has the right, at its sole discretion, to satisfy the redemption request with an LP Unit rather than cash. As a result, BPYU Units participate in earnings and distribution on a per unit basis equivalent to the per unit participation of LP Units. The partnership presents BPYU Units as a component of non-controlling interest.

The following table presents changes to the BPYU Units from the beginning of the year:

	Class A shares of Brookfield Property REIT Inc.
(Thousands of units)	Mar. 31, 2021	Dec. 31, 2020
Outstanding, beginning of period	39,127	64,025
BPYU Units exchanged(1)	—	(11,580)
Repurchases of BPYU Units	(842)	(13,396)
BPYU Units vested	377	84
Forfeitures	—	(6)
Outstanding, end of period(2)	38,662	39,127

(1)Represents BPYU Units that have been exchanged for LP Units. Refer to the Condensed Consolidated Statements of Changes in Equity for the impact of such exchanges on the carrying value of BPYU Units.

(2)In addition, there were 1,882,742 BPYU Units held in treasury as of March 31, 2021.

f)Preferred Equity Units

The partnership’s preferred equity consists of 7,360,000 Class A Cumulative Redeemable Perpetual Preferred Units, Series 1 at $25.00 per unit at a coupon rate of 6.5%, 10,000,000 Class A Cumulative Redeemable Perpetual Preferred Units, Series 2 at $25.00 per unit at a coupon rate of 6.375% and 11,500,000 Class A Cumulative Redeemable Perpetual Preferred Units, Series 3 at $25.00 per unit at a coupon rate of 5.75%. At March 31, 2021, Preferred Equity Units had a total carrying value of $699 million (December 31, 2020 - $699 million).

g)Distributions

Distributions made to each class of partnership units, including units of subsidiaries that are exchangeable into LP Units, are as follows:

	Three months ended Mar. 31,
(US$ Millions, except per unit information)		2021		2020
Limited Partners		$	145	$	146
Holders of:
Redeemable/Exchangeable Partnership Units		150		142
Special LP Units		2		2
Exchange LP Units		1		1
FV LTIP Units		1		—
BPYU Units		13		20
Total		$	312	$	311
Per unit(1)		$	0.3325	$	0.3325

(1)Per unit outstanding on the distribution record date.

        20

h)Earnings per unit

The partnership’s net income per LP Unit and weighted average units outstanding are calculated as follows:

	Three months ended Mar. 31,
(US$ Millions, except unit information)		2021		2020
Net income (loss) attributable to limited partners		$	124	$	(228)
Income (loss) reallocation related to mandatorily convertible preferred shares		9		(17)
Less: Preferred unit dividends attributable to limited partners		(6)		(5)
Net income (loss) attributable to limited partners – basic		127		(250)
Dilutive effect of conversion of preferred shares and options		—		—
Net income (loss) attributable to limited partners – diluted		$	127	$	(250)
(in millions of units/shares)
Weighted average number of LP Units outstanding		436.0		440.7
Mandatorily convertible preferred shares		70.1		70.1
Weighted average number of LP Units - basic		506.1		510.8
Dilutive effect of the conversion of preferred shares and options(1)		—		—
Weighted average number of LP units outstanding - diluted		506.1		510.8

(1)There was no dilutive impact from options during the period as the average market price did not exceed the exercise price.

NOTE 17. NON-CONTROLLING INTERESTS

Non-controlling interests consists of the following:

(US$ Millions)	Mar. 31, 2021		Dec. 31, 2020
Redeemable/Exchangeable Partnership Units and Special LP Units(1)	$	12,242	$	12,249
Exchange LP Units(1)	72		73
FV LTIP Units(1)	51		52
BPYU Units(1)	1,039		1,050
Interests of others in operating subsidiaries and properties:
Preferred shares held by Brookfield Asset Management	15		15
Preferred equity of subsidiaries	3,001		3,000
Non-controlling interests in subsidiaries and properties	13,042		12,672
Total interests of others in operating subsidiaries and properties	16,058		15,687
Total non-controlling interests	$	29,462	$	29,111

(1)Each unit within these classes of non-controlling interest has economic terms substantially equivalent to those of an LP Unit. As such, income attributed to each unit or share of non-controlling interest is equivalent to that allocated to an LP Unit. The proportion of interests held by holders of the Redeemable/Exchangeable Units and Exchange LP Units changes as a result of issuances, repurchases and exchanges. Consequently, the partnership adjusted the relative carrying amounts of the interests held by limited partners and non-controlling interests based on their relative share of the equivalent LP Units. The difference between the adjusted value and the previous carrying amounts was attributed to current LP Units as ownership changes in the Condensed Consolidated Statement of Changes in Equity.

        21

Non-controlling interests of others in operating subsidiaries and properties consist of the following:

		Proportion of economic interests held by non-controlling interests
(US$ Millions)	Jurisdiction of formation	Mar. 31, 2021		Dec. 31, 2020		Mar. 31, 2021		Dec. 31, 2020
BPO(1)	Canada	—	%	—	%	$	4,807	$	4,758
BPR Retail Holdings LLC(2)	United States	—	%	—	%	1,503		1,537
BSREP II MH Holdings LLC(3)	United States	74	%	74	%	1,323		998
BSREP II PBSA Ltd.(3)	Bermuda	75	%	75	%	985		961
BSREP CARS Sub-Pooling LLC(3)	United States	74	%	74	%	822		889
Brookfield India Real Estate Trust(3)(4)	India	82	%	—	%	728		—
BSREP II Korea Office Holdings Pte. Ltd.(3)	United Kingdom	78	%	78	%	629		627
BSREP II Aries Pooling LLC(3)	United States	74	%	74	%	493		425
Center Parcs UK(3)	United States	73	%	73	%	470		550
Brookfield Fairfield Multifamily Value Add Fund III LP(3)	United States	70	%	70	%	411		365
BSREP II Retail Upper Pooling LLC(3)	South Korea	50	%	50	%	410		423
BSREP India Office Holdings Pte. Ltd.(3)	United States	67	%	67	%	146		323
Other	Various	33% - 76%		33% - 76%		3,331		3,831
Total						$	16,058	$	15,687

(1)Includes non-controlling interests in BPO subsidiaries which vary from 1% - 100%.

(2)Includes non-controlling interests in BPYU subsidiaries.

(3)Includes non-controlling interests representing interests held by other investors in Brookfield-sponsored real estate funds and holding entities through which the partnership participates in such funds. Also includes non-controlling interests in underlying operating entities owned by these funds.

(4)In the first quarter of 2021, BSREP I and BSREP II co-sponsored the launch of the Brookfield India Real Estate Trust (“India REIT”) initial public offering. The India REIT was seeded with three assets from an investment in BSREP I and an asset from an investment in BSREP II. BSREP I and BSREP II have an approximate 54% controlling interest in the India REIT. The partnership continues to consolidate its investment in the assets seeded into the India REIT, as the partnership retains a controlling interest via its investment in BSREP I and BSREP II.

NOTE 18. COMMERCIAL PROPERTY REVENUE

The components of commercial property revenue are as follows:

	Three months ended Mar. 31,
(US$ Millions)		2021		2020
Base rent		$	848	$	919
Straight-line rent		10		19
Lease termination		33		7
Other lease income(1)		159		197
Other revenue from tenants(2)		235		262
Total commercial property revenue		$	1,285	$	1,404

(1)Other lease income includes parking revenue and recovery of property tax and insurance expenses from tenants.

(2)Consists of recovery of certain operating expenses from tenants which are accounted for in accordance with IFRS 15, Revenue from Contracts with Customers.

As a result of the shutdown, certain of the partnership’s tenants, primarily in the Core Retail segment, requested rental assistance, in the form of either a deferral or rent reduction. Lease concessions granted in response to the shutdown are accounted for as a lease modification and are recognized prospectively over the remaining lease term when they become legally enforceable. In the current period, the partnership granted abatements of $36 million, primarily related to prior year rents in response to tenants impacted by the shutdown.

NOTE 19. HOSPITALITY REVENUE

The components of hospitality revenue are as follows:

	Three months ended Mar. 31,
(US$ Millions)		2021		2020
Room, food and beverage		$	53	$	276
Gaming, and other leisure activities		—		67
Other hospitality revenue		6		23
Total hospitality revenue		$	59	$	366

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NOTE 20. INVESTMENT AND OTHER REVENUE

The components of investment and other revenue are as follows:

	Three months ended Mar. 31,
(US$ Millions)		2021		2020
Investment income		$	25	$	23
Fee revenue		60		63
Dividend income		11		34
Interest income and other		10		10
Total investment and other revenue		$	106	$	130

NOTE 21. DIRECT COMMERCIAL PROPERTY EXPENSE

The components of direct commercial property expense are as follows:

	Three months ended Mar. 31,
(US$ Millions)		2021		2020
Property maintenance		$	182	$	174
Real estate taxes		157		157
Employee compensation and benefits		38		42
Lease expense(1)		3		4
Other(2)		106		103
Total direct commercial property expense		$	486	$	480

(1)Represents the operating expenses relating to variable lease payments not included in the measurement of the lease liability

(2)For the three months ended March 31, 2021, the partnership recorded a $13 million (2020 - $31 million) loss allowance in commercial property operating expenses.     

NOTE 22. DIRECT HOSPITALITY EXPENSE

The components of direct hospitality expense are as follows:

	Three months ended Mar. 31,
(US$ Millions)		2021		2020
Employee compensation and benefits		$	20	$	82
Cost of food, beverage, and retail goods sold		7		69
Maintenance and utilities		18		37
Marketing and advertising		6		20
Other		22		82
Total direct hospitality expense		$	73	$	290

NOTE 23. DEPRECIATION AND AMORTIZATION

The components of depreciation and amortization expense are as follows:

	Three months ended Mar. 31,
(US$ Millions)		2021		2020
Depreciation and amortization of real estate assets		$	45	$	69
Depreciation and amortization of non-real estate assets(1)		23		18
Total depreciation and amortization		$	68	$	87

(1)For the three months ended March 31, 2021, included $2 million (2020 - $2 million) of depreciation expense relating to right-of-use property, plant and equipment.

NOTE 24. GENERAL AND ADMINISTRATIVE EXPENSE

The components of general and administrative expense are as follows:

	Three months ended Mar. 31,
(US$ Millions)		2021		2020
Employee compensation and benefits		$	87	$	99
Management fees		51		24
Transaction costs		4		3
Other		71		70
Total general and administrative expense		$	213	$	196

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NOTE 25. FAIR VALUE GAINS (LOSSES), NET

The components of fair value gains (losses), net, are as follows:

	Three months ended Mar. 31,
(US$ Millions)		2021		2020
Commercial properties		$	444	$	(89)
Commercial developments		29		88
Incentive fees(1)		—		(6)
Financial instruments and other(2)		167		(303)
Total fair values gains (losses), net		$	640	$	(310)

(1)Represents incentive fees the partnership is obligated to pay to the general partner of the partnership’s various fund investments.

(2)For the three months ended March 31, 2021, primarily includes fair value gains on financial instruments.

NOTE 26. UNIT-BASED COMPENSATION

The partnership grants options to certain employees under its amended and restated BPY Unit Option Plan (“BPY Plan”). Pursuant to the BPY Plan, options may be settled for the in-the-money amount of the option in LP Units upon exercise. Consequently, options granted to employees under the BPY Plan are accounted for as an equity-based compensation agreement.

During the three months ended March 31, 2021, the partnership incurred $2 million (2020 - $6 million) of expense in connection with its unit-based compensation plans.

a)BPY Unit Option Plan

Awards under the BPY Plan (“BPY Awards”) generally vest 20% per year over a period of five years and expire 10 years after the grant date, with the exercise price set at the time such options were granted. Upon exercise of a vested BPY Award, the participant is entitled to receive LP Units or a cash payment equal to the amount by which the fair market value of an LP Unit at the date of exercise exceeds the exercise price of the BPY Award. Subject to a separate adjustment arising from forfeitures, the estimated expense is revalued every reporting period using the Black-Scholes model as a result of the cash settlement provisions of the plan for certain employees. In terms of measuring expected life of the BPY Awards with various term lengths and vesting periods, BPY will segregate each set of similar BPY Awards and, if different, exercise price, into subgroups and apply a weighted average within each group.

There were no BPY Awards granted during the period ended March 31, 2021.

i.Equity-settled BPY Awards

The change in the number of options outstanding under the equity-settled BPY Awards at March 31, 2021 and December 31, 2020 is as follows:

	Mar. 31, 2021			Dec. 31, 2020
	Number of options	Weighted average exercise price		Number of options	Weighted average exercise price
Outstanding, beginning of period	18,633,094	$	20.56	19,915,189	$	20.58
Granted	—	—		—	—
Exercised	(18,000)	16.80		—	—
Expired/forfeited	(189,228)	21.07		(1,282,095)	20.87
Outstanding, end of period	18,425,866	20.56		18,633,094	20.56
Exercisable, end of period	18,407,116	$	20.55	18,614,344	$	20.56

        24

The following table sets out details of options issued and outstanding at March 31, 2021 and December 31, 2020 under the equity-settled BPY Awards by expiry date:

	Mar. 31, 2021			Dec. 31, 2020
Expiry date	Number of options	Weighted average exercise price		Number of options	Weighted average exercise price
2021	—	$	—	—	$	—
2022	973,300	18.09		987,700	18.09
2023	1,090,420	16.80		1,108,420	16.80
2024	11,687,478	20.59		11,775,394	20.59
2025	1,884,341	25.18		1,923,706	25.18
2026	2,696,577	19.51		2,744,124	19.51
2027	93,750	22.92		93,750	22.92
2028	—	—		—	—
Total	18,425,866	$	20.56	18,633,094	$	20.56

ii.Cash-settled BPY Awards

The change in the number of options outstanding under the cash-settled BPY Awards at March 31, 2021 and December 31, 2020 is as follows:

	Mar. 31, 2021			Dec. 31, 2020
	Number of options	Weighted average exercise price		Number of options	Weighted average exercise price
Outstanding, beginning of period	573,690	$	21.75	603,891	$	21.55
Granted	—	—		—	—
Exercised	—	—		—	—
Expired/forfeited	—	—		(30,201)	18.09
Outstanding, end of period	573,690	21.75		573,690	21.75
Exercisable, end of period	573,690	$	21.75	573,690	$	21.75

The following table sets out details of options issued and outstanding at March 31, 2021 and December 31, 2020 under the cash-settled BPY Awards by expiry date:

	Mar. 31, 2021			Dec. 31, 2020
Expiry date	Number of options	Weighted average exercise price		Number of options	Weighted average exercise price
2021	—	$	—	—	$	—
2022	22,200	17.93		22,200	17.93
2023	28,800	16.80		28,800	16.80
2024	175,415	20.59		175,415	20.59
2025	213,038	25.18		213,038	25.18
2026	134,237	19.51		134,237	19.51
Total	573,690	$	21.75	573,690	$	21.75

b)Restricted BPY LP Unit Plan

The Brookfield Property Group Restricted BPY LP Unit Plan provides for awards to participants of LP Units purchased on the Nasdaq (“Restricted Units”). Under the Restricted BPY LP Unit Plan, units awarded generally vest over a period of five years, except as otherwise determined or for Restricted Units awarded in lieu of a cash bonus as elected by the participant, which may vest immediately. The estimated total compensation cost measured at grant date is evenly recognized over the vesting period of five years.

As of March 31, 2021, the total number of Restricted Units outstanding was 645,222 (December 31, 2020 - 523,573) with a weighted average exercise price of $19.15 (December 31, 2020 - $19.87).

c)Restricted BPY LP Unit Plan (Canada)

The Restricted BPY LP Unit Plan (Canada) is substantially similar to the Restricted BPY LP Unit Plan described above, except that it is for Canadian employees, there is a five-year hold period, and purchases of units are made on the TSX instead of the Nasdaq.

As of March 31, 2021, the total number of Canadian Restricted Units outstanding was 606,871 (December 31, 2020 - 482,464) with a weighted average exercise price of C$24.71 (December 31, 2020 - C$25.38).

        25

d)Restricted BPYU Unit Plan

The Restricted BPYU Unit Plan provides for awards to participants of BPYU Units purchased on the Nasdaq (“Restricted BPYU Units”). Under the Restricted BPYU Unit Plan, units awarded generally vest over a period of five years, except as otherwise determined or for Restricted BPYU Units awarded in lieu of a cash bonus as elected by the participant, which may vest immediately. The estimated total compensation cost measured at grant date is evenly recognized over the vesting period of five years.

As of March 31, 2021, the total number of Restricted BPYU Units outstanding was 3,510,710 (December 31, 2020 - 1,808,765) with a weighted average exercise price of $18.63 (December 31, 2020 - $18.82).

e)BPY FV LTIP Unit Plan

The partnership issued FV LTIP Units to certain participants. Each FV LTIP Unit will vest over a period of five years and is redeemable for LP Units, BPYU Units or a cash payment subject to a conversion adjustment.

As of March 31, 2021, the total number of FV LTIP Units was 1,874,166 (December 31, 2020 - 1,899,661) with a weighted average exercise price of $19.13 (December 31, 2020 -$19.12)

f)Deferred Share Unit Plan

In addition to the above, BPO has a deferred share unit plan. At March 31, 2021, BPO has 272,562 deferred share units (December 31, 2020 - 267,534) outstanding and vested.

g)GGP LTIP Plans

In connection with the GGP acquisition, the partnership issued options under the Brookfield Property Partners BPY Unit Option Plan (GGP) (“GGP Options”) and BPY AO LTIP Units of the operating partnership (“AO LTIP Options”) to certain participants. Each GGP Option will vest within ten years following the original grant date and is redeemable for LP Units or a cash payment equal to the amount by which the fair market value of an LP Unit at the date exceeds the exercise price of the BPY Option. Each AO LTIP will vest within ten years of its original grant date and is redeemable for LP Units or a cash payment subject to a conversion adjustment.

As of March 31, 2021, the total number of GGP Options outstanding was 131,872 (December 31, 2020 - 136,662) with a weighted average exercise price of $26.05 (December 31, 2020 - $26.05).

As of March 31, 2021, the total number of AO LTIP Options outstanding was 782,879 (December 31, 2020 - 1,079,069) with a weighted average exercise price of $22.53 (December 31, 2020 - $22.54).

        26

NOTE 27. OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) consists of the following:

	Three months ended Mar. 31,
(US$ Millions)		2021		2020
Items that may be reclassified to net income:
Foreign currency translation
Net unrealized foreign currency translation (losses) gains in respect of foreign operations		$	(90)	$	(1,173)
Gains on hedges of net investments in foreign operations, net of income taxes for the three months ended Mar. 31, 2021 of nil (2020 – nil)		20		819
		(70)		(354)
Cash flow hedges
Gains (losses) on derivatives designated as cash flow hedges, net of income taxes for the three months ended Mar. 31, 2021 of $(3) million (2020 – $(1) million)		54		(154)
		54		(154)
Equity accounted investments
Share of unrealized foreign currency translation (losses) gains in respect of foreign operations		(1)		—
Gains (losses) on derivatives designated as cash flow hedges		24		(69)
		23		(69)
Items that will not be reclassified to net income:
Unrealized gains on securities - FVTOCI, net of income taxes for the three months ended Mar. 31, 2021 of $(10) million (2020 – $22 million)		—		22
Share of revaluation (deficit) on equity accounted investments		—		(21)
Revaluation (deficit), net of income taxes for the three months ended Mar. 31, 2021 of nil (2020 – $(39) million)		—		(96)
		—		(95)
Total other comprehensive income (loss)		$	7	$	(672)

NOTE 28. OBLIGATIONS, GUARANTEES, CONTINGENCIES AND OTHER

In the normal course of operations, the partnership and its consolidated entities execute agreements that provide for indemnification and guarantees to third parties in transactions such as business dispositions, business acquisitions, sales of assets and sales of services.

Certain of the partnership’s operating subsidiaries have also agreed to indemnify their directors and certain of their officers and employees. The nature of substantially all of the indemnification undertakings prevent the partnership from making a reasonable estimate of the maximum potential amount that it could be required to pay third parties as the agreements do not specify a maximum amount and the amounts are dependent upon the outcome of future contingent events, the nature and likelihood of which cannot be determined at this time. Historically, neither the partnership nor its consolidated subsidiaries have made significant payments under such indemnification agreements.

The partnership and its operating subsidiaries may be contingently liable with respect to litigation and claims that arise from time to time in the normal course of business or otherwise.

During 2013, Brookfield Asset Management announced the final close on the $4.4 billion Brookfield Strategic Real Estate Partners (“BSREP”) fund, a global private fund focused on making opportunistic investments in commercial property. The partnership, as lead investor, committed approximately $1.3 billion to the fund. As of March 31, 2021, there remained approximately $160 million of uncontributed capital commitments.

In April 2016, Brookfield Asset Management announced the final close on the $9.0 billion second BSREP fund to which the partnership had committed $2.3 billion as lead investor. As of March 31, 2021, there remained approximately $920 million of uncontributed capital commitments.

In November 2017, Brookfield Asset Management announced the final close on the $2.9 billion fifth Brookfield Real Estate Finance Fund (“BREF”) to which the partnership had committed $400 million. As of March 31, 2021, there remained approximately $175 million of uncontributed capital commitments.

In September 2018, Brookfield Asset Management announced the final close on the $1.0 billion third Brookfield Fairfield U.S. Multifamily Value Add Fund (“VAMF”) to which the partnership had committed $300 million. As of March 31, 2021, there remained approximately $140 million of uncontributed capital commitments.

In January 2019, Brookfield Asset Management announced the final close on the $15.0 billion third BSREP fund to which the partnership has committed $1.0 billion. As of March 31, 2021, there remained approximately $453 million of uncontributed capital commitments.

        27

In October of 2020, Brookfield Asset Management announced the final close on the €619 million ($726 million) Brookfield European Real estate Partnership fund to which the partnership has committed €100 million ($117 million). As of March 31, 2021, there remained approximately €91 million ($107 million) of uncontributed capital commitments.

The partnership maintains insurance on its properties in amounts and with deductibles that it believes are in line with what owners of similar properties carry. The partnership maintains all risk property insurance and rental value coverage (including coverage for the perils of flood, earthquake and named windstorm). The partnership does not conduct its operations, other than those of equity accounted investments, through entities that are not fully or proportionately consolidated in these financial statements, and has not guaranteed or otherwise contractually committed to support any material financial obligations not reflected in these financial statements.

NOTE 29. FINANCIAL INSTRUMENTS

a)Derivatives and hedging activities

The partnership and its operating entities use derivative and non-derivative instruments to manage financial risks, including interest rate, commodity, equity price and foreign exchange risks. The use of derivative contracts is governed by documented risk management policies and approved limits. The partnership does not use derivatives for speculative purposes. The partnership and its operating entities use the following derivative instruments to manage these risks:

•foreign currency forward contracts to hedge exposures to Canadian Dollar, Australian Dollar, British Pound, Euro, Chinese Yuan, Brazilian Real, Indian Rupee and South Korean Won denominated net investments in foreign subsidiaries and foreign currency denominated financial assets;

•interest rate swaps to manage interest rate risk associated with planned refinancings and existing variable rate debt;

•interest rate caps to hedge interest rate risk on certain variable rate debt; and

•cross-currency swaps to manage interest rate and foreign currency exchange rates on existing variable rate debt.

There have been no material changes to the partnership’s financial risk exposure or risk management activities since December 31, 2020. Please refer to Note 33, Financial Instruments in the December 31, 2020 annual report on Form 20-F for a detailed description of the partnership’s financial risk exposure and risk management activities.

Interest Rate Hedging

The following table provides the partnership’s outstanding derivatives that are designated as cash flow hedges of variability in interest rates associated with forecasted fixed rate financings and existing variable rate debt as of March 31, 2021 and December 31, 2020:

(US$ Millions)	Hedging item	Notional		Rates	Maturity dates	Fair value
Mar. 31, 2021	Interest rate caps of US$ LIBOR debt	$	9,470	2.5% - 5.5%	Apr. 2021 - Feb. 2023	$	—
	Interest rate swaps of US$ LIBOR debt	2,380		1.0% - 2.6%	Nov. 2022 - Feb. 2024	(93)
	Interest rate caps of £ LIBOR debt	3,224		2.0% - 2.5%	Jun. 2021 - Jan. 2022	—
	Interest rate caps of € EURIBOR debt	114		1.3%	Apr. 2021	—
	Interest rate caps of C$ LIBOR debt	240		2.0%	Oct. 2021	—
	Interest rate swaps of AUD BBSW/BBSY debt	442		0.8% - 1.6%	Apr. 2023 - Feb. 2026	—
Dec. 31, 2020	Interest rate caps of US$ LIBOR debt	$	8,371	2.5% - 5.5%	May. 2021 - Sep. 2023	$	—
	Interest rate swaps of US$ LIBOR debt	2,380		1.0% -2.6%	Nov. 2022 - Feb. 2024	(112)
	Interest rate caps of £ LIBOR debt	3,198		2.0% - 2.5%	Jan. 2021 - Jan. 2022	—
	Interest rate caps of € EURIBOR debt	119		1.3%	Apr. 2021	—
	Interest rate caps of C$ LIBOR debt	189		3.0%	Oct. 2021 - Oct. 2022	—
	Interest rate swaps of AUD BBSW/BBSY debt	447		0.8% - 1.6%	Apr. 2023 - Apr. 2024	(11)

For the three months ended March 31, 2021, the amount of hedge ineffectiveness recorded in earnings in connection with the partnership’s interest rate hedging activities was nil (2020 - nil).

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Foreign Currency Hedging

The following table provides the partnership’s outstanding derivatives that are designated as net investments of foreign subsidiaries or foreign currency cash flow hedges as of March 31, 2021 and December 31, 2020:

(US$ Millions)	Hedging item		Notional	Rates	Maturity dates	Fair value
Mar. 31, 2021	Net investment hedges	€	109	€0.81/$ - €0.88/$	Sep. 2021 - Feb. 2023	$	6
	Net investment hedges	£	2,088	£0.72/$ - £0.86/$	Jun. 2021 - Mar. 2023	(25)
	Net investment hedges	A$	616	A$1.29/$ - A$1.52/$	Jun. 2021 - Jul. 2022	11
	Net investment hedges	C¥	827	C¥6.70/$ - C¥7.22/$	Jun. 2021 - Sep. 2022	(9)
	Net investment hedges	C$	95	C$1.26/$ - C$1.27/$	Jun. 2021 - Mar. 2023	(1)
	Net investment hedges	R$	160	R$5.51/$	Jun. 2021	1
	Net investment hedges	₩	720,095	₩1,095.50/$ - ₩1,209.90/$	Jun. 2021 - Mar. 2023	(15)
	Net investment hedges	Rs	36,471	Rs76.28/$ - Rs78.18/$	Jun. 2021 - Jul. 2022	(4)
	Net investment hedges	£	90	£0.89/€ - £0.93/€	Apr. 2021 - Apr. 2021	—
	Cross currency swaps of C$ LIBOR debt	C$	2,400	C$0.81/$ - C$1.70/$	Oct. 2021 - Jan. 2027	86
Dec. 31, 2020	Net investment hedges	€	—	€0.87/$ - €0.88/$	Sep. 2021 - Sep. 2021	$	1
	Net investment hedges	£	201	£0.50/$ - £1.08/$	Mar. 2021 - Dec. 2021	5
	Net investment hedges	A$	240	A$1.34/$ - A$1.52/$	Jun. 2021 - Dec. 2021	3
	Net investment hedges	C¥	813	C¥4.02/$ - C¥7.43/$	Mar. 2021 - Sep. 2021	(11)
	Net investment hedges	R$	620	R$5.20/$ - R$5.20/$	Mar. 2021 - Mar. 2021	(3)
	Net investment hedges	₩	720,095	₩914.84/$ - ₩1,169.58/$	Mar. 2021 - Jun. 2022	(54)
	Net investment hedges	Rs	4,703	Rs76.28/$	Jun. 2021	(2)
	Net investment hedges	£	90	£0.89/€ - £0.93/€	Apr. 2021 - Apr. 2021	—
	Cross currency swaps of C$ LIBOR debt	C$	2,400	C$0.81/$ - C$1.70/$	Oct. 2021 - Jan. 2027	66

For the three months ended March 31, 2021 and 2020, the amount of hedge ineffectiveness recorded in earnings in connection with the partnership’s foreign currency hedging activities was not significant.

Other Derivatives

The following table presents details of the partnership’s other derivatives, not designated as hedges for accounting purposes, that have been entered into to manage financial risks as of March 31, 2021 and December 31, 2020:

(US$ Millions)	Derivative type	Notional		Rates	Maturity dates	Fair value
Mar. 31, 2021	Interest rate caps	$	3,582	3.5% - 5.0%	Aug. 2021 - Feb. 2027	$	—
	Interest rate swaps on forecasted fixed rate debt	1,285		2.8% - 6.4%	Jun. 2021 - Jun. 2028	(193)
	Interest rate swaps of US$ debt	1,746		0.8% - 5.1%	Jun. 2021 - Mar. 2024	(24)
Dec. 31, 2020	Interest rate caps	$	3,560	3.0% - 5.0%	Jan. 2021 - Feb. 2027	$	—
	Interest rate swaps on forecasted fixed rate debt	1,285		2.7% - 6.4%	Mar. 2021 - Jun. 2030	(308)
	Interest rate swaps of US$ debt	1,746		0.8% - 5.1%	Jun. 2021 - Mar. 2024	(32)
	Interest rate swaptions	350		2.0%	Mar. 2031 - Mar. 2031	—

For the three months ended March 31, 2021, the partnership recognized fair value gains, net of nil (2020 - losses of $52 million), respectively, related to the settlement of certain forward starting interest rate swaps that have not been designated as hedges.

        29

b)Measurement and classification of financial instruments

Classification and Measurement

The following table outlines the classification and measurement basis, and related fair value for disclosures, of the financial assets and liabilities in the interim condensed consolidated financial statements:

		Mar. 31, 2021				Dec. 31, 2020
(US$ Millions)	Classification and measurement basis	Carrying value		Fair value		Carrying value		Fair value
Financial assets
Loans and notes receivable	Amortized cost	$	266	$	266	$	216	$	216
Other non-current assets
Securities - FVTPL	FVTPL	2,067		2,067		1,612		1,612
Derivative assets	FVTPL	96		96		72		72
Securities - FVTOCI	FVTOCI	85		85		86		86
Restricted cash	Amortized cost	308		308		241		241
Current assets
Securities - FVTPL	FVTPL	—		—		107		107
Derivative assets	FVTPL	116		116		164		164
Accounts receivable(1)	Amortized cost	605		605		758		674
Restricted cash	Amortized cost	347		347		292		292
Cash and cash equivalents	Amortized cost	1,635		1,635		2,473		2,473
Total financial assets		$	5,525	$	5,525	$	6,021	$	5,937
Financial liabilities
Debt obligations(2)	Amortized cost	$	53,353	$	53,432	$	54,717	$	54,897
Capital securities	Amortized cost	2,176		2,176		2,170		2,170
Capital securities - fund subsidiaries	FVTPL	855		855		863		863
Other non-current liabilities
Accounts payable	Amortized cost	573		573		437		437
Derivative liabilities	FVTPL	253		253		272		272
Accounts payable and other liabilities
Accounts payable and other(3)	Amortized cost	1,857		1,857		2,110		2,110
Loans and notes payable	Amortized cost	2,015		2,015		1,062		1,062
Derivative liabilities	FVTPL	220		220		416		416
Total financial liabilities		$	61,302	$	61,381	$	62,047	$	62,227

(1)Includes other receivables associated with assets classified as held for sale on the condensed consolidated balance sheet in the amount of $2 millionand $5 million as of March 31, 2021 and December 31, 2020, respectively.

(2)Includes debt obligations associated with assets classified as held for sale on the condensed consolidated balance sheet in the amount of $113 millionand $380 million as of March 31, 2021 and December 31, 2020, respectively.

(3)Includes accounts payable and other liabilities associated with assets classified as held for sale on the condensed consolidated balance sheet in the amount of $1 million and $16 million as of March 31, 2021 and December 31, 2020, respectively.

Fair Value Hierarchy

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). Fair value measurement establishes a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Quoted market prices (unadjusted) in active markets represent a Level 1 valuation. When quoted market prices in active markets are not available, the partnership maximizes the use of observable inputs within valuation models. When all significant inputs are observable, either directly or indirectly, the valuation is classified as Level 2. Valuations that require the significant use of unobservable inputs are considered Level 3, which reflect the partnership’s market assumptions and are noted below. This hierarchy requires the use of observable market data when available.

        30

The following table outlines financial assets and liabilities measured at fair value in the consolidated financial statements and the level of the inputs used to determine those fair values in the context of the hierarchy as defined above:

	Mar. 31, 2021								Dec. 31, 2020
(US$ Millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Financial assets
Securities - FVTPL	—		132		1,935		2,067		—		123		1,596		1,719
Securities - FVTOCI	—		—		85		85		—		—		86		86
Derivative assets	—		212		—		212		—		236		—		236
Total financial assets	$	—	$	344	$	2,020	$	2,364	$	—	$	359	$	1,682	$	2,041
Financial liabilities
Capital securities - fund subsidiaries	$	—	$	—	$	855	$	855	$	—	$	—	$	863	$	863
Derivative liabilities	—		473		—		473		—		688		—		688
Total financial liabilities	$	—	$	473	$	855	$	1,328	$	—	$	688	$	863	$	1,551

There were no transfers between levels during the three months ended March 31, 2021 and the year ended December 31, 2020.

The following table presents the change in the balance of financial assets and financial liabilities accounted for at fair value categorized as Level 3 as of March 31, 2021 and December 31, 2020:

	Mar. 31, 2021				Dec. 31, 2020
(US$ Millions)	Financial assets		Financial liabilities		Financial assets		Financial liabilities
Balance, beginning of period	$	1,682	$	863	$	1,371	$	922
Acquisitions		312		—		324		—
Dispositions		(41)		—		(10)		—
Fair value gains, net and OCI		67		(8)		(3)		(59)
Other		—		—		—		—
Balance, end of period	$	2,020	$	855	$	1,682	$	863

NOTE 30. RELATED PARTIES

In the normal course of operations, the partnership enters into transactions with related parties. These transactions have been measured at exchange value and are recognized in the consolidated financial statements. The immediate parent of the partnership is Brookfield Property Partners Limited. The ultimate parent of the partnership is Brookfield Asset Management. Other related parties of the partnership include Brookfield Asset Management’s subsidiaries and operating entities, certain joint ventures and associates accounted for under the equity method, as well as officers of such entities and their spouses.

The partnership has a management agreement with its service providers, wholly-owned subsidiaries of Brookfield Asset Management. Pursuant to a Master Services Agreement, the partnership pays a base management fee (“base management fee”), to the service providers equal to 0.5% of the total capitalization of the partnership, subject to an annual minimum of $50 million plus annual inflation adjustments. The amount of the equity enhancement distribution is reduced by the amount by which the base management fee is greater than $50 million per annum, plus annual inflation adjustments (“equity enhancement adjustment”).

	Three months ended Mar. 31,
(US$ Millions)		2021		2020
Base fee amount at 0.125% of current capitalization		$	30	$	16
Fee on increased market capitalization (.3125%)		38		4
Total calculated fees		68		20
Less credits:
Equity enhancement adjustment		(16)		(2)
Creditable operating payments and other adjustments		(11)		(12)
Total fee, subject to minimum adjusted for inflation		41		6
Total fee, by component:
Base fee		30		6
Equity enhancement adjustment		11		—
Total fee		$	41	$	6

In connection with the issuance of preferred equity units of the operating partnership to a third party in the fourth quarter of 2014, Brookfield Asset Management contingently agreed to acquire the seven-year and ten-year tranches of preferred equity units from the holder for the initial issuance price plus accrued and unpaid distributions and to exchange such units for preferred equity units with terms and conditions

        31

substantially similar to the twelve-year tranche to the extent that the market price of the LP Units is less than 80% of the exchange price at maturity.

On January 4, 2021, Brookfield Asset Management announced a proposal to acquire 100% of the LP Units that it does not already own. On April 1, 2021, Brookfield Asset Management and the partnership reached an agreement, refer to Note 33, Subsequent Events, for further detail.

During the year ended December 31, 2020, we issued 9,416,816 LP units at $11.36 per unit, 2,696,841 LP units at $12.00 per unit, 5,967,063 LP units at $12.65 per unit, 13,392,277 LP Units at $13.92 per unit, and 18,715,912 Redeemable/Exchangeable Partnership Units at $12.00 per unit to Brookfield Asset Management.

The following table summarizes transactions with related parties:

(US$ Millions)	Mar. 31, 2021	Dec. 31, 2020
Balances outstanding with related parties:
Net (payables)/receivables within equity accounted investments	(393)	(91)
Loans and notes receivable	8	50
Receivables and other assets	59	59
Deposit payable to Brookfield Asset Management(1)	(1,695)	(754)
Property-specific debt obligations	(78)	—
Loans and notes payable and other liabilities	(351)	(313)
Preferred shares held by Brookfield Asset Management	(15)	(15)

(1)As of March 31, 2021, a $1,695 million on-demand deposit was payable to Brookfield Asset Management, provided for in the deposit agreement between the partnership and Brookfield Asset Management. The deposit agreement provides for a deposit limit of $2.0 billion. Subsequent to quarter-end, the deposit limit was increased to $3.0 billion.

	Three months ended Mar. 31,
(US$ Millions)		2021		2020
Transactions with related parties:
Commercial property revenue(1)		$	8	$	7
Management fee income		7		10
Interest expense on debt obligations		5		7
General and administrative expense(2)		65		38
Construction costs(3)		50		118
Incentive fees		—		6

(1)Amounts received from Brookfield Asset Management and its subsidiaries for the rental of office premises.

(2)Includes amounts paid to Brookfield Asset Management and its subsidiaries for management fees, management fees associated with the partnership’s investments in private funds, and administrative services.

(3)Includes amounts paid to Brookfield Asset Management and its subsidiaries for construction costs of development properties.

NOTE 31. SUBSIDIARY PUBLIC ISSUERS

BOP Split was incorporated for the purpose of being an issuer of preferred shares and owning a portion of the partnership’s investment in BPO common shares. Pursuant to the terms of a Plan of Arrangement, holders of outstanding BPO Class AAA Preferred Shares Series G, H, J and K, which were convertible into BPO common shares, were able to exchange their shares for BOP Split Senior Preferred Shares, subject to certain conditions. The BOP Split Senior Preferred shares are listed on the TSX and began trading on June 11, 2014. All shares issued by BOP Split are retractable by the holders at any time for cash.

In connection with an internal restructuring completed in July 2016, the partnership and certain of its related entities agreed to guarantee all of BPO’s Class AAA Preferred Shares and all of BPO’s debt securities issued pursuant to BPO’s indenture dated December 8, 2009.

In April 2018, the partnership formed two subsidiaries, Brookfield Property Finance ULC and Brookfield Property Preferred Equity Inc. to act as issuers of debt and preferred securities, respectively. The partnership and certain of its related entities have agreed to guarantee securities issued by these entities.

        32

The following table provides consolidated summary financial information for the partnership, BOP Split, BPO, Brookfield Property Finance ULC, Brookfield Property Preferred Equity Inc. and the holding entities:

(US$ Millions) For the three months ended Mar. 31, 2021	Brookfield Property Partners L.P.		BOP Split		BPO		Brookfield Property Preferred Equity Inc.		Brookfield Property Finance ULC		Holding entities(2)		Additional holding entities and eliminations(3)		Consolidating adjustments(4)		Brookfield Property Partners L.P consolidated
Revenue	$	—	$	47	$	94	$	—	$	20	$	137	$	76	$	1,076	$	1,450
Net income attributable to unitholders(1)	130		278		271		—		(26)		266		182		(835)		266
For the three months ended Mar. 31, 2020
Revenue	$	—	$	64	$	39	$	—	$	15	$	200	$	4	$	1,578	$	1,900
Net income attributable to unitholders(1)	(244)		56		27		—		112		(486)		(73)		122		(486)

(1)Includes net income attributable to LP Units, GP Units, Redeemable/Exchangeable Partnership Units, Special LP Units, Exchange LP Units, FV LTIP Units and BPYU Units.

(2)Includes the operating partnership, Brookfield BPY Holdings Inc., Brookfield BPY Retail Holdings II Inc., BPY Bermuda Holdings Limited, and BPY Bermuda Holdings II Limited.

(3)Includes BPY Bermuda Holdings IV Limited, BPY Bermuda Holdings V Limited and BPY Bermuda Holdings VI Limited, which serve as guarantors for BPO but not BOP Split, net of intercompany balances and transactions with other holding entities.

(4)Includes elimination of intercompany transactions and balances necessary to present the partnership on a consolidated basis.

(US$ Millions)  As of Mar. 31, 2021	Brookfield Property Partners L.P.		BOP Split		BPO		Brookfield Property Preferred Equity Inc.		Brookfield Property Finance ULC		Holding entities(2)		Additional holding entities and eliminations(3)		Consolidating adjustments(4)		Brookfield Property Partners L.P consolidated
Current assets	$	—	$	580	$	125	$	—	$	1,702	$	8,928	$	187	$	(8,209)	$	3,313
Non-current assets	12,593		30,386		23,505		—		205		37,923		2,141		(2,677)		104,076
Assets held for sale	—		—		—		—		—		—		—		285		285
Current liabilities	—		3,598		1,418		—		335		8,069		1,335		5,432		20,187
Non-current liabilities	—		4,601		3,978		—		1,593		12,969		399		21,962		45,502
Liabilities associated with assets held for sale	—		—		—		—		—		—		—		114		114
Preferred equity	699		—		—		—		—		—		—		—		699
Equity attributable to interests of others in operating subsidiaries and properties	—		—		2,839		—		—		—		—		13,219		16,058
Equity attributable to unitholders(1)	$	11,894	$	22,767	$	15,395	$	—	$	(21)	$	25,813	$	594	$	(51,328)	$	25,114

(1)Includes net income attributable to LP Units, GP Units, Redeemable/Exchangeable Partnership Units, Special LP Units, Exchange LP Units, FV LTIP Units and BPYU Units.

(2)Includes the operating partnership, Brookfield BPY Holdings Inc., Brookfield BPY Retail Holdings II Inc., BPY Bermuda Holdings Limited, and BPY Bermuda Holdings II Limited.

(3)Includes BPY Bermuda Holdings IV Limited, BPY Bermuda Holdings V Limited and BPY Bermuda Holdings VI Limited, which serve as guarantors for BPO but not BOP Split, net of intercompany balances and transactions with other holding entities.

(4)Includes elimination of intercompany transactions and balances necessary to present the partnership on a consolidated basis.

        33

(US$ Millions)  As of Dec. 31, 2020	Brookfield Property Partners L.P.		BOP Split		BPO		Brookfield Property Preferred Equity Inc.		Brookfield Property Finance ULC		Holding entities(2)		Additional holding entities and eliminations(3)		Consolidating adjustments(4)		Brookfield Property Partners L.P consolidated
Current assets	$	—	$	545	$	171	$	—	$	1,457	$	8,780	$	196	$	(6,728)	$	4,421
Non-current assets	12,628		30,137		23,542		—		438		38,142		2,227		(4,172)		102,942
Assets held for sale	—		—		—		—		—		—		—		588		588
Current liabilities	—		3,595		678		—		336		7,587		1,356		4,272		17,824
Non-current liabilities	—		4,542		5,270		—		1,571		13,499		531		22,795		48,208
Liabilities associated with assets held for sale	—		—		—		—		—		—		—		396		396
Preferred equity	699		—		—		—		—		—		—		—		699
Equity attributable to interests of others in operating subsidiaries and properties	—		—		2,686		—		—		—		—		13,001		15,687
Equity attributable to unitholders(1)	$	11,929	$	22,545	$	15,079	$	—	$	(12)	$	25,836	$	536	$	(50,776)	$	25,137

(1)Includes net income attributable to LP Units, GP Units, Redeemable/Exchangeable Partnership Units, Special LP Units, Exchange LP Units, FV LTIP Units and BPYU Units.

(2)Includes the operating partnership, Brookfield BPY Holdings Inc., Brookfield BPY Retail Holdings II Inc., BPY Bermuda Holdings Limited, and BPY Bermuda Holdings II Limited.

(3)Includes BPY Bermuda Holdings IV Limited, BPY Bermuda Holdings V Limited and BPY Bermuda Holdings VI Limited, which serve as guarantors for BPO but not BOP Split, net of intercompany balances and transactions with other holding entities.

(4)Includes elimination of intercompany transactions and balances necessary to present the partnership on a consolidated basis.

NOTE 32. SEGMENT INFORMATION

a)Operating segments

IFRS 8, Operating Segments, requires operating segments to be determined based on internal reports that are regularly reviewed by the chief operating decision maker (“CODM”) for the purpose of allocating resources to the segment and to assessing its performance. The partnership’s operating segments are organized into four reportable segments: i) Core Office, ii) Core Retail, iii) LP Investments and iv) Corporate. This is consistent with how the partnership presents financial information to the CODM and investors. These segments are independently and regularly reviewed and managed by the Chief Executive Officer, who is considered the CODM.

b)Basis of measurement

The CODM measures and evaluates the performance of the partnership’s operating segments based on funds from operations (“FFO”). This performance metric does not have standardized meanings prescribed by IFRS and therefore may differ from similar metrics used by other companies and organizations. Management believes that while not an IFRS measure, FFO is the most consistent metric to measure the partnership’s financial statements and for the purpose of allocating resources and assessing its performance.

The partnership defines FFO as net income, prior to fair value gains, net, depreciation and amortization of real estate assets, and income taxes less non-controlling interests of others in operating subsidiaries and properties share of these items. When determining FFO, the partnership also includes its proportionate share of the FFO of unconsolidated partnerships and joint ventures and associates.

c)Reportable segment measures

The following summaries present certain financial information regarding the partnership’s operating segments for the three months ended March 31, 2021 and 2020:

(US$ Millions)	Total revenue				FFO
Three months ended Mar. 31,	2021		2020		2021		2020
Core Office	$	530	$	530	$	123	$	121
Core Retail	364		444		95		188
LP Investments	555		924		(6)		49
Corporate	1		2		(125)		(84)
Total	$	1,450	$	1,900	$	87	$	274

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The following summaries presents the detail of total revenue from the partnership’s operating segments for the three months ended March 31, 2021 and 2020:

(US$ Millions)	Lease revenue		Other revenue from tenants		Hospitality revenue		Investment and other revenue		Total revenue
Three months ended Mar. 31, 2021
Core Office	$	377	$	108	$	1	$	44	$	530
Core Retail	267		65		—		32		364
LP Investments	405		63		58		29		555
Corporate	—		—		—		1		1
Total	$	1,049	$	236	$	59	$	106	$	1,450

(US$ Millions)	Lease revenue		Other revenue from tenants		Hospitality revenue		Investment and other revenue		Total revenue
Three months ended Mar. 31, 2020
Core Office	$	369	$	115	$	7	$	39	$	530
Core Retail	296		75		—		73		444
LP Investments	478		71		359		16		924
Corporate	—		—		—		2		2
Total	$	1,143	$	261	$	366	$	130	$	1,900

The following summary presents information about certain consolidated balance sheet items of the partnership, on a segmented basis, as of March 31, 2021 and December 31, 2020:

	Total assets				Total liabilities
(US$ Millions)	Mar. 31, 2021		Dec. 31, 2020		Mar. 31, 2021		Dec. 31, 2020
Core Office	$	37,009	$	36,547	$	17,436	$	17,439
Core Retail	30,774		31,466		17,049		17,429
LP Investments	39,542		39,609		24,660		25,076
Corporate	349		329		6,658		6,484
Total	$	107,674	$	107,951	$	65,803	$	66,428

The following summary presents a reconciliation of FFO to net income for the three months ended March 31, 2021 and 2020:

	Three months ended Mar. 31,
(US$ Millions)		2021		2020
FFO(1)		$	87	$	274
Depreciation and amortization of real estate assets		(45)		(69)
Fair value gains, net		640		(310)
Share of equity accounted income - non-FFO		76		(250)
Income tax expense		(105)		(161)
Non-controlling interests of others in operating subsidiaries and properties – non-FFO		(387)		30
Net (loss) income attributable to unitholders(2)		266		(486)
Non-controlling interests of others in operating subsidiaries and properties		465		113
Net (loss) income		$	731	$	(373)

(1)FFO represents interests attributable to GP Units, LP Units, Exchange LP Units, Redeemable/Exchangeable Partnership Units, Special LP Units, FV LTIP Units and BPYU Units. The interests attributable to Exchange LP Units, Redeemable/Exchangeable Partnership Units, Special LP Units, FV LTIP Units and BPYU Units are presented as non-controlling interests in the consolidated statements of income.

(2)Includes net income attributable to GP Units, LP Units, Exchange LP Units, Redeemable/Exchangeable Partnership Units, Special LP Units, FV LTIP Units and BPYU Units. The interests attributable to Exchange LP Units, Redeemable/Exchangeable Partnership Units, Special LP Units, FV LTIP Units and BPYU Units are presented as non-controlling interests in the consolidated statements of income.

NOTE 33. SUBSEQUENT EVENTS

In April 2021, the deposit agreement dated February 2019 between the partnership and Brookfield Asset Management was amended such that the deposit limit provided for in the agreement was increased from $2.0 billion to $3.0 billion.

On January 4, 2021, Brookfield Asset Management announced a proposal to acquire 100% of the LP Units that it does not already own. On April 1, 2021, Brookfield Asset Management and the partnership reached an agreement to acquire all of the limited partnership units of the partnership for a price of $18.17 per LP Unit, or $6.5 billion in total value. The agreement provides that each holder of LP Units can elect to

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receive consideration per LP Unit of a combination of (i) 0.3979 class A limited voting shares of Brookfield Asset Management (“Brookfield Shares”), (ii) $18.17 in cash, and/or (iii) 0.7268 preferred units of a subsidiary of our partnership with a liquidation preference of $25.00 per unit (“New Preferred Units”), subject in each case to pro-ration based on a maximum of 59.3 million Brookfield Shares (approximately 42% of the total value of the LP Units), maximum cash consideration of $3.27 billion (approximately 50% of the total value of the LP Units), and a maximum value of $500 million in New Preferred Units (approximately 8% of the total value of the LP Units). If holders of LP Units collectively elect to receive in excess of $500 million in New Preferred Units, the amount of New Preferred Units can increase to a maximum of $1 billion, offset against the maximum amount of Brookfield Shares. The maximum amount of cash consideration would not be affected. The independent members of the board of directors of the BPY General Partner unanimously approved the transaction and recommended that unitholders of the partnership do the same.

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