Revenue Resilient, But Values Drop At Brookfield’s $62B Property Division
Brookfield Property Partners saw its revenue tick up slightly in the third quarter, but a decline in the value of investments in its funds and its global office portfolio pushed its overall real estate value down.
Total revenue at BPP rose from $2.43B in the third quarter of 2023 to $2.47B in Q3 this year, results for the division showed. Net operating income rose from $1.17B to $1.22B.
But fair value losses on its $62B portfolio of assets meant the overall value decline on its portfolio rose from $5M in Q3 2023 to $125M in Q3 2024.
The value of BPP's investment in its funds declined by $296M in the quarter, while offices declined by $149M. Retail, by contrast, rose in value by $99M. BPP said the increase primarily came from an uplift in value of a department store chain it owns. It did not specify which one, but in December 2020, it teamed up with Simon Property to buy JCPenney from bankruptcy.
The division’s overall real estate assets dropped in value from $82B to $62B during the quarter because BPP reclassified $20B of units it owns in its fourth opportunity fund as assets held for sale. Those units will be transferred to Brookfield Wealth Solutions, a wealth management unit owned by BPP parent company Brookfield Corp.
BPP’s office portfolio was valued at $20B at the end of the quarter. About $1B of those are development projects. It also holds 125 assets across the world totalling 72M SF with average occupancies of between 85% and 88%, the results showed. Those assets include a share in Brookfield Place in Manhattan and Canary Wharf in London.
Its retail portfolio includes 103 malls and urban retail properties in the U.S. totalling 106M SF and valued at $19B at the end of the quarter. That portfolio is between 94% and 96% leased.
BPP has $6.9B of debt maturing this year and $11.3B maturing next year, the company said.
It has total debt obligations of $69B, of which $62B is secured. The remainder is unsecured and corporate debt. About half of the secured debt is fixed-rate, with an average interest rate of 4.72%. The other half is variable-rate, with an average interest rate of 8%. About $19B of the company's debt relates to assets held for sale.
BPP said it had suspended contractual payment on 4% of its nonrecourse mortgages.
