Brookfield Office Properties Inc T.BPO.PR.Y

BPO story progressing nicely

[Spiderdon]

A couple encouraging developments this quarter, firstly the continued decline in equity associated with USA office in the Transitional Development portflio, without much change in overall equity value to BPY.  As you can see in the chart below USA office equity has dropped from 2.395B to 1.521B over the last 7 quarters with a corresponding reduction of 7 properties.  This is the only real trouble spot in the BPY portfolio with low occupancy at 76.4% and high loan/Value at 70.6%.  The 1.5B in equity now represents only 7% of the total 21.6B in BPY equity, there will likley be some write down of this equity value but it will have little impact on overall value and likely contribute positively to FFO as these properties have negative FFO.  When you exclude the USA office metrics from the total Transitional Development office portfolio the metrics improve dramatically, occupancy goes from 85% to 93% and loan to value from 59.62% to 49.95%, to do this exercise yourself yo will have to use the BN supplemental.  The second intresting development this quarter is the de-consolidation of BSREP IV.  This will reduce B/S debt by >19B and be a big step towards getting FCC and Debt/EBITDA ratios back in line with historical norms which is a catalyst for S&P to remove the negative outlook.  Each quarter there is incremental improvement as the story unfolds,  all BPO series remain compelling value with some greater than others.

USA Office
Transitional Development	Q1 2023	Q2 2023	Q3 2023	Q4 2023	Q1 2024	Q2 2024	Q3 2024
USA Office
USA Office Equity	2,395	2,170	1,831	1,730	1,664	1,635	1,521
USA Office Non-recourse Debt	4,276	4,386	4,397	4,427	4,409	4,268	3,652
Office Discount Rate	6%	8%	8.20%	8.30%	8.30%	8.40%	8.40%
Office Occupancy	79.40%	79.30%	77.50%	78.50%	77.70%	77.30%	76.40%
Office Loan/Value	64.10%	66.90%	70.60%	71.90%	72.60%	72.30%	70.60%
Number of Properties	48	48	46	45	45	44	41
Asset Value	6,671	6,556	6,228	6,157	6,073	5,903	5,173