UNITED STATES

SECURITIES AND EXCHANGE COMMISSION



WASHINGTON, D.C. 20549



FORM 20-F



(Mark One)



| |  ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------------



OR



| | x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
| | - | ------------------------------------------------------------------------------------



For the fiscal year ended December 31, 2014



OR



| |  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------



OR



| |  ̈ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
| | - | -------------------------------------------------------------------------------------------



Commission file number: 001-35505



Brookfield Property Partners L.P.

|                                                      
|------------------------------------------------------
|(Exact name of Registrant as specified in its charter)



|N/A                                            
|-----------------------------------------------
|                                               
|(Translation of Registrant’s name into English)



|Bermuda                                        
|-----------------------------------------------
|                                               
|(Jurisdiction of incorporation or organization)



|73 Front Street Hamilton, HM 12 Bermuda
|---------------------------------------
|                                       

(Address of principal executive office)



John Stinebaugh

Brookfield Property Partners L.P.

73 Front Street

Hamilton, HM 12

Bermuda

Tel: +441-294-3309



|                                                                                      
|--------------------------------------------------------------------------------------
|(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)



Securities registered or to be registered pursuant to Section 12(b)
of the Act.



|Title of each class                                |  | Name of each exchange on which registered    
|-------------------------------------------------- |  | ---------------------------------------------
|Limited Partnership UnitsLimited Partnership Units |  | New York Stock ExchangeToronto Stock Exchange



Securities registered or to be registered pursuant to Section 12(g)
of the Act.



None



Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act.



None



Indicate the number of outstanding shares of each of the issuer’s
classes of capital or common stock as of the close of the period covered by the annual report: 254,080,737 Limited Partnership
Units as of December 31, 2014.



Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.



|Yesx | No ̈
|---- | ---



If this report is an annual or transition report, indicate by
check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934.



|Yes ̈ | Nox
|---- | ---



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



|Yesx | No ̈
|---- | ---



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



|Yes ̈ | No ̈
|---- | ---



Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer”
in Rule 12b-2 of the Exchange Act. (Check one):



|Large accelerated filerx | Accelerated filer ̈ | Non-accelerated filer ̈
|------------------------ | ------------------ | ----------------------



Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing:



|U.S. GAAP ̈ | International Financial Reporting Standards as issued by the International Accounting Standards Board | x | Other  ̈
|---------- | ----------------------------------------------------------------------------------------------------- | - | -------



If “Other” has been checked in response to the previous
question, indicate by check mark which financial statement item the registrant has elected to follow.



|Item 17 ̈ | Item 18 ̈
|-------- | --------



If this is an annual report, indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



|Yes ̈ | Nox
|---- | ---













Table of Contents



|                                                  |                                                       | Page
|------------------------------------------------- | ----------------------------------------------------- | ----
|                                                  |                                                       |     
|INTRODUCTION AND USE OF CERTAIN TERMS             | 5                                                    
|                                                  |                                                      
|SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS | 7                                                    
|                                                  |                                                       |     
|PART I                                            |                                                       | 8   
|                                                  |                                                       |     
|ITEM 1.                                           | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS | 8   
|                                                  |                                                       |     
|ITEM 2.                                           | OFFER STATISTICS AND EXPECTED TIMETABLE               | 8   
|                                                  |                                                       |     
|ITEM 3.                                           | KEY INFORMATION                                       | 8   
|                                                  |                                                       |     
|3.A.                                              | SELECTED FINANCIAL DATA                               | 8   
|                                                  |                                                       |     
|3.B.                                              | CAPITALIZATION AND INDEBTEDNESS                       | 8   
|                                                  |                                                       |     
|3.C.                                              | REASONS FOR THE OFFER AND USE OF PROCEEDS             | 8   
|                                                  |                                                       |     
|3.D.                                              | RISK FACTORS                                          | 8   
|                                                  |                                                       |     
|ITEM 4.                                           | INFORMATION ON THE COMPANY                            | 29  
|                                                  |                                                       |     
|4.A.                                              | HISTORY AND DEVELOPMENT OF THE COMPANY                | 29  
|                                                  |                                                       |     
|4.B.                                              | BUSINESS OVERVIEW                                     | 30  
|                                                  |                                                       |     
|4.C.                                              | ORGANIZATIONAL STRUCTURE                              | 40  
|                                                  |                                                       |     
|4.D.                                              | PROPERTY, PLANTS AND EQUIPMENT                        | 44  
|                                                  |                                                       |     
|ITEM 4A.                                          | UNRESOLVED STAFF COMMENTS                             | 44  
|                                                  |                                                       |     
|ITEM 5.                                           | OPERATING AND FINANCIAL REVIEW AND PROSPECTS          | 45  
|                                                  |                                                       |     
|5.A.                                              | OPERATING RESULTS                                     | 45  
|                                                  |                                                       |     
|5.B.                                              | LIQUIDITY AND CAPITAL RESOURCES                       | 81  
|                                                  |                                                       |     
|5.C.                                              | RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.  | 82  
|                                                  |                                                       |     
|5.D.                                              | TREND INFORMATION                                     | 82  
|                                                  |                                                       |     
|5.E.                                              | OFF-BALANCE SHEET ARRANGEMENTS                        | 82  
|                                                  |                                                       |     
|5.F.                                              | TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS         | 82  
|                                                  |                                                       |     
|ITEM 6.                                           | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES            | 82  
|                                                  |                                                       |     
|6.A.                                              | DIRECTORS AND SENIOR MANAGEMENT                       | 82  
|                                                  |                                                       |     
|6.B.                                              | COMPENSATION                                          | 85  



2







|6.C.     | BOARD PRACTICES                                            | 85 
|-------- | ---------------------------------------------------------- | ---
|         |                                                            |    
|6.D.     | EMPLOYEES                                                  | 88 
|         |                                                            |    
|6.E.     | SHARE OWNERSHIP                                            | 88 
|         |                                                            |    
|ITEM 7.  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS          | 88 
|         |                                                            |    
|7.A.     | MAJOR SHAREHOLDERS                                         | 88 
|         |                                                            |    
|7.B.     | RELATED PARTY TRANSACTIONS                                 | 89 
|         |                                                            |    
|7.C.     | INTERESTS OF EXPERTS AND COUNSEL                           | 97 
|         |                                                            |    
|ITEM 8.  | FINANCIAL INFORMATION                                      | 98 
|         |                                                            |    
|8.A.     | CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION    | 98 
|         |                                                            |    
|8.B.     | SIGNIFICANT CHANGES                                        | 98 
|         |                                                            |    
|ITEM 9.  | THE OFFER AND LISTING                                      | 98 
|         |                                                            |    
|9.A.     | OFFER AND LISTING DETAILS                                  | 98 
|         |                                                            |    
|9.B.     | PLAN OF DISTRIBUTION                                       | 99 
|         |                                                            |    
|9.C.     | MARKETS                                                    | 99 
|         |                                                            |    
|9.D.     | SELLING SHAREHOLDERS                                       | 99 
|         |                                                            |    
|9.E.     | DILUTION                                                   | 99 
|         |                                                            |    
|9.F.     | EXPENSES OF THE ISSUE                                      | 99 
|         |                                                            |    
|ITEM 10. | ADDITIONAL INFORMATION                                     | 99 
|         |                                                            |    
|10.A.    | SHARE CAPITAL                                              | 99 
|         |                                                            |    
|10.B.    | MEMORANDUM AND ARTICLES OF ASSOCIATION                     | 99 
|         |                                                            |    
|10.C.    | MATERIAL CONTRACTS                                         | 119
|         |                                                            |    
|10.D.    | EXCHANGE CONTROLS                                          | 120
|         |                                                            |    
|10.E.    | TAXATION                                                   | 120
|         |                                                            |    
|10.F.    | DIVIDENDS AND PAYING AGENTS                                | 135
|         |                                                            |    
|10.G.    | STATEMENT BY EXPERTS                                       | 135
|         |                                                            |    
|10.H     | DOCUMENTS ON DISPLAY                                       | 135
|         |                                                            |    
|10.I.    | SUBSIDIARY INFORMATION                                     | 136
|         |                                                            |    
|ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 136
|         |                                                            |    
|ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES     | 136



3







|PART II                       |                                                                              | 136
|----------------------------- | ---------------------------------------------------------------------------- | ---
|                              |                                                                              |    
|ITEM 13.                      | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              | 136
|                              |                                                                              |    
|ITEM 14.                      | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 136
|                              |                                                                              |    
|ITEM 15.                      | CONTROLS AND PROCEDURES                                                      | 136
|                              |                                                                              |    
|ITEM 16.                      | [RESERVED]                                                                   | 137
|                              |                                                                              |    
|16.A.                         | AUDIT COMMITTEE FINANCIAL EXPERTS                                            | 137
|                              |                                                                              |    
|16.B.                         | CODE OF ETHICS                                                               | 137
|                              |                                                                              |    
|16.C.                         | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                       | 137
|                              |                                                                              |    
|16.D.                         | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                   | 137
|                              |                                                                              |    
|16.E.                         | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS       | 137
|                              |                                                                              |    
|16.F.                         | CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT                                 | 138
|                              |                                                                              |    
|16.G.                         | CORPORATE GOVERNANCE                                                         | 138
|                              |                                                                              |    
|16.H.                         | MINING SAFETY DISCLOSURE                                                     | 138
|                              |                                                                              |    
|PART III                      |                                                                              | 138
|                              |                                                                              |    
|ITEM 17.                      | FINANCIAL STATEMENTS                                                         | 138
|ITEM 18.                      | FINANCIAL STATEMENTS                                                         |    
|ITEM 19.                      | EXHIBITS                                                                     | 138
|                              |                                                                              |    
|SIGNATURES                    | 140                                                                         
|                              |                                                                             
|INDEX TO FINANCIAL STATEMENTS | F-1                                                                         



4







INTRODUCTION AND USE OF CERTAIN TERMS



We have prepared this
Form 20-F using a number of conventions, which you should consider when reading the information contained herein. Unless otherwise
indicated or the context otherwise requires, in this Form 20-F:



| | · | all operating and other statistical information
is presented as if we own 100% of each property in our portfolio, regardless of whether we own all of the interests in each property;
and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | all financial information is presented
in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board,
or IASB, other than certain non-IFRS financial measures which are defined under “Use of Non-IFRS Measures”.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In this Form 20-F,
unless the context suggests otherwise, references to “we”, “us” and “our” are to Brookfield
Property Partners L.P., the Property Partnership, the Holding Entities and the operating entities, each as defined below, taken
together. Unless the context suggests otherwise, in this Form 20-F references to:



| | · | an “affiliate” of any person
are to any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under
common control with such person;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “assets under management”
are to assets managed by us or by Brookfield on behalf of our third party investors, as well as our own assets, and also include
capital commitments that have not yet been drawn. Our calculation of assets under management may differ from that employed by other
asset managers and, as a result, this measure may not be comparable to similar measures presented by other asset managers;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “Australia” are to Australia
and New Zealand;
| | - | ---------------------------------------------



| | · | the “BPY General Partner”
are to the general partner of our company, which is Brookfield Property Partners Limited, an indirect wholly-owned subsidiary of
Brookfield Asset Management;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “Brookfield” are to Brookfield
Asset Management and any subsidiary of Brookfield Asset Management, other than us;
| | - | -----------------------------------------------------------------------------------------------------------------



| | · | “Brookfield Asset Management”
are to Brookfield Asset Management Inc.;
| | - | ----------------------------------------------------------------------



| | · | the “Class A Preferred Unitholder”
or “QIA” are to Qatar Investment Authority;
| | - | ------------------------------------------------------------------------------



| | · | the “Class A Preferred Units”
or “Preferred Equity Units” are to the Class A preferred limited partnership units of the Property Partnership that
are exchangeable for units of our company pursuant to the Preferred Unit Exchange Mechanism;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “our business” are to our
business of owning, operating and investing in commercial property, both directly and through our operating entities;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------



| | · | “commercial property” or “commercial
properties” are to commercial and other real property that generates or has the potential to generate income, including office,
retail, industrial, multifamily and triple net leased assets, but does not include, among other things, residential land development,
home building, construction, real estate advisory and other similar operations or services;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “our company”, “BPY”
or “our partnership” are to Brookfield Property Partners L.P., a Bermuda exempted limited partnership;
| | - | ---------------------------------------------------------------------------------------------------------------------------



| | · | “fully-exchanged basis”
                                                                                                            assume the exchange of all of the issued and outstanding securities that are exchangeable into our units, including the
                                                                                                            exchange of the issued and outstanding Redemption-Exchange Units in accordance with the Redemption-Exchange Mechanism, the
                                                                                                            exchange of                                                                                                             the
                                                                                                            issued                                                                                                                and
                                                                                                            outstanding                                                                                                             Class
                                                                                                            A Preferred                                                                                                             Units
                                                                                                            in accordance with the Preferred Unit Exchange Mechanism and the exchange of
                                                                                                            the issued and outstanding exchangeable limited partnership units of Brookfield Office Properties Exchange LP not
                                                                                                            held by us;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “Holding Entities” are to
the primary holding subsidiaries of the Property Partnership, from time to time, through which it indirectly holds all of our interests
in our operating entities;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “our limited partnership agreement”
are to the second amended and restated limited partnership agreement of our company entered into on August 8, 2013;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “Master Services Agreement”
are to the amended and restated master services agreement among the Service Recipients, the Service Providers, and certain other
subsidiaries of Brookfield Asset Management who are parties thereto;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “operating entities” are to
the entities in which the Holding Entities hold interests and that directly or indirectly hold our real estate assets other than
entities in which the Holding Entities hold interests for investment purposes only of less than 5% of the equity securities;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “our portfolio” are to the
commercial property assets in our office, retail, industrial, multifamily, hotel and triple net lease platforms, as applicable;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------



5







| | · | the “Preferred Unit Exchange Mechanism”
are to the mechanism by which the Preferred Unitholder may exchange the Class A Preferred Units for units of our company, as more
fully described in Item 10.B. “Additional Information - Memorandum and Articles of Association - Description of the
Property Partnership Limited Partnership Agreement - Redemption-Exchange Mechanism”;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the “Preferred Units” are
to the limited partnership units of the Property Partnership, including the Class A Preferred Units;
| | - | ------------------------------------------------------------------------------------------------------------------------------



| | · | the “Preferred Unitholders”
are to holders of Preferred Units;
| | - | --------------------------------------------------------------



| | · | the “Property Partnership”
or the “Operating Partnership” are to Brookfield Property L.P.;
| | - | ------------------------------------------------------------------------------------------



| | · | “Property Special LP” are
to Brookfield Property Special L.P., an indirect wholly-owned subsidiary of Brookfield Asset Management, which is the sole special
limited partner of the Property Partnership;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the “Redemption-Exchange Mechanism”
are to the mechanism by which Brookfield may request redemption of its Redemption-Exchange Units in whole or in part in exchange
for cash, subject to the right of our company to acquire such interests (in lieu of such redemption) in exchange for units of our
company, as more fully described in Item 10.B. “Additional Information - Memorandum and Articles of Association - Description
of the Property Partnership Limited Partnership Agreement - Redemption-Exchange Mechanism”;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the “Redemption-Exchange Units”
or “Redeemable/Exchangeable Partnership Units” are to the non-voting limited partnership interests in the Property
Partnership that are redeemable for cash, subject to the right of our company to acquire such interests (in lieu of such redemption)
in exchange for units of our company, pursuant to the Redemption-Exchange Mechanism;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the “Service Providers” are
to the subsidiaries of Brookfield Asset Management that provide services to us pursuant to our Master Services Agreement, and unless
the context otherwise requires, any other affiliate of Brookfield that is appointed from time to time to act as a service provider
pursuant to our Master Services Agreement or to whom any service provider has subcontracted for the provision of such services;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “Service Recipients” are to
our company, the Property Partnership, the Holding Entities and, at the option of the Holding Entities, any wholly-owned subsidiary
of a Holding Entity excluding any operating entity;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “Spin-off” are to the special
dividend of our units by Brookfield Asset Management on April 15, 2013 as described under Item 4.A. “Information on
the Company - History and Development of the Company”; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “our units”, “LP Units”
and “units of our company” are to the non-voting limited partnership units in our company and references to “our
unitholders” and “our limited partners” are to the holders of our units.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Historical Performance and Market Data



This Form 20-F contains
information relating to our business as well as historical performance and market data for Brookfield Asset Management and certain
of its operating platforms. When considering this data, you should bear in mind that historical results and market data may not
be indicative of the future results that you should expect from us.



Financial Information



The financial information
contained in this Form 20-F is presented in U.S. Dollars and, unless otherwise indicated, has been prepared in accordance with
IFRS. In this Form 20-F, all references to “$” are to U.S. Dollars, Canadian Dollars, Australian Dollars, British
Pounds, Euros, Brazilian Reais and Indian Rupees are identified as “C$”, “A$”, “NZ$”, “£”,
“€”, “R$” and “Rs”, respectively.



Use of Non-IFRS Measures



To measure our performance
against targets, we focus on net operating income, or NOI, funds from operation, or FFO, fair value changes, and net income and
equity attributable to unitholders. Some of these performance metrics do not have standardized meanings prescribed by IFRS and
therefore may differ from similar metrics used by other companies. We define each of these measures as follows:



| | · | NOI: revenues from our commercial and
hospitality operations of consolidated properties less direct property expenses.
| | - | ----------------------------------------------------------------------------------------------------------------------



| | · | FFO: 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, we include our proportionate share of the FFO of unconsolidated
partnerships and joint ventures and associates.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Fair value changes: increases or decreases
in the value of investment properties that is reflected in the consolidated statements of income.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------



| | · | Net Income Attributable to Unitholders:
net income attributable to holders of our general partnership units, or GP Units, Redemption-Exchange Units, special limited partnership
units of the Property Partnership, or Special LP Units, and exchangeable limited partnership units of Brookfield Office Properties
Exchange L.P., or Exchange LP. For the period prior to the Spin-off of our partnership on April 15, 2013, net income attributable
to unitholders represented net income attributable to Brookfield Asset Management.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



6







| | · | Equity Attributable to Unitholders: equity
attributable to holders of our GP Units, LP Units, Redemption-Exchange Units, Special LP Units and exchangeable limited partnership
units of Exchange LP, or Exchange LP Units.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOI is a key indicator of our ability to
increase cash flow from our operations. We seek to grow NOI through pro-active management and leasing of our properties. In evaluating
our performance, we also look at a subset of NOI, defined as “same-property NOI,” which excludes NOI that is earned
from assets recently acquired, disposed of, developed, or not of a recurring nature, and from opportunistic assets. Same-property
NOI allows us to segregate the performance of leasing and operating initiatives on the portfolio from the impact to performance
of investing activities and “one-time items”, which for the historical periods presented consist primarily of lease
termination income.



We also consider FFO
an important measure of our operating performance. FFO is a widely recognized measure that is frequently used by securities analysts,
investors and other interested parties in the evaluation of real estate entities, particularly those that own and operate income
producing properties. Our definition of FFO includes all of the adjustments that are outlined in the National Association of Real
Estate Investment Trusts, or NAREIT, definition of FFO, including the exclusion of gains (or losses) from the sale of investment
properties, the add back of any depreciation and amortization related to real estate assets and the adjustment for unconsolidated
partnerships and joint ventures. In addition to the adjustments prescribed by NAREIT, we also make adjustments to exclude any unrealized
fair value gains (or losses) that arise as a result of reporting under IFRS, and income taxes that arise as certain of our subsidiaries
are structured as corporations as opposed to real estate investment trusts, or REITs. These additional adjustments result in an
FFO measure that is similar to that which would result if our partnership was organized as a REIT that determined net income in
accordance with generally accepted accounting principles in the United States, or U.S. GAAP, which is the type of organization
on which the NAREIT definition is premised. Our FFO measure will differ from other organizations applying the NAREIT definition
to the extent of certain differences between the IFRS and U.S. GAAP reporting frameworks, principally related to the recognition
of lease termination income. Because FFO excludes fair value gains (losses), including equity accounted fair value gains (losses),
realized gains (losses) on the sale of investment properties, depreciation and amortization of real estate assets and income taxes,
it provides a performance measure that, when compared year-over-year, reflects the impact on operations from trends in occupancy
rates, rental rates, operating costs and interest costs, providing perspective not immediately apparent from net income. We reconcile
FFO to net income rather than cash flow from operating activities as we believe net income is the most comparable measure.



On pages 51 and 52   of this Form
20-F, we provide a reconciliation of NOI and FFO to net income (loss) for the periods presented. We urge you to review the
IFRS financial measures in this Form 20-F, including the financial statements, the notes thereto and the other
financial information contained herein, and not to rely on any single financial measure to evaluate our company.



SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS



This Form 20-F contains
“forward-looking information” within the meaning of Canadian provincial securities laws and applicable regulations
and “forward-looking statements” within the meaning of “safe harbor” provisions of the United States Private
Securities Litigation Reform Act of 1995. Forward-looking statements include statements that are predictive in nature, depend upon
or refer to future events or conditions, include statements regarding our operations, business, financial condition, expected financial
results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook, as well
as the outlook for North American and international economies for the current fiscal year and subsequent periods, and include words
such as “expects”, “anticipates”, “plans”, “believes”, “estimates”,
“seeks”, “intends”, “targets”, “projects”, “forecasts”, “likely”,
or negative versions thereof and other similar expressions, or future or conditional verbs such as “may”, “will”,
“should”, “would” and “could”.



Although we believe
that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information
are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements
and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control,
which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance
or achievement expressed or implied by such forward-looking statements and information.



Factors that could
cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not
limited to: risks incidental to the ownership and operation of real estate properties including local real estate conditions; the
impact or unanticipated impact of general economic, political and market factors in the countries in which we do business; the
ability to enter into new leases or renew leases on favorable terms; business competition; dependence on tenants’ financial
condition; the use of debt to finance our business; the behavior of financial markets, including fluctuations in interest and foreign
exchanges rates; uncertainties of real estate development or redevelopment; global equity and capital markets and the availability
of equity and debt financing and refinancing within these markets; risks relating to our insurance coverage; the possible impact
of international conflicts and other developments including terrorist acts; potential environmental liabilities; changes in tax
laws and other tax related risks; dependence on management personnel; illiquidity of investments; the ability to complete and effectively
integrate acquisitions into existing operations and the ability to attain expected benefits therefrom; operational and reputational
risks; catastrophic events, such as earthquakes and hurricanes; and other risks and factors detailed from time to time in our documents
filed with the securities regulators in Canada and the United States, as applicable.



We caution that the
foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements
or information, investors and others should carefully consider the foregoing factors and other uncertainties and potential events.
Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements or information,
whether written or oral, that may be as a result of new information, future events or otherwise.



7







PART I



| | ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
| | ------- | -----------------------------------------------------



Not applicable.



| | ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE
| | ------- | ---------------------------------------



Not applicable.



| | ITEM 3. | KEY INFORMATION
| | ------- | ---------------



3.A. SELECTED FINANCIAL DATA



The following tables present selected financial
data for our company as of and for the periods indicated:



|(US$ Millions, except per unit information) Year ended Dec. 31, |  | 2014 |       |  | 2013 |   |       | 2012 | 
|--------------------------------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- | 
|Total revenue                                                   |  | $    | 4,373 |  |      | $ | 4,287 |      | 
|Net income                                                      |  |      | 4,420 |  |      |   | 1,763 |      | 
|Net income attributable to our units                            |  |      | 1,154 |  |      |   | 118   |      | 
|Net income attributable to GP Units                             |  |      | 1     |  |      |   | -     |      | 
|Net income attributable to Brookfield Asset Management          |  |      | -     |  |      |   | 232   |      | 
|Net income per LP Unit(1)                                       |  |      | 5.59  |  |      |   | 1.41  |      | 
|Distributions per LP Unit                                       |  |      | 1.00  |  |      |   | 0.63  |      | 
|FFO(2)                                                          |  |      | 714   |  |      |   | 582   |      | 





| | (1) | Net income per LP Unit has been presented effective
for the period from the date of the Spin-off on April 15, 2013, as this is the date of legal entitlement of earnings to the LP
Units.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | FFO is a non-IFRS measure. See page 52 of this Form 20-F for a reconciliation of FFO to net income.
| | --- | ---------------------------------------------------------------------------------------------------





|(US$ Millions)                        |  | Dec. 31, 2014 |        |  | Dec. 31, 2013 |  
|------------------------------------- |  | ------------- | ------ |  | ------------- | -
|Investment properties                 |  | $             | 41,141 |  |               | $
|Equity accounted investments          |  |               | 10,356 |  |               |  
|Total assets                          |  |               | 65,575 |  |               |  
|Debt obligations                      |  |               | 27,006 |  |               |  
|Capital securities                    |  |               | 4,011  |  |               |  
|Total equity                          |  |               | 28,299 |  |               |  
|Equity attributable to Unitholders(1) |  |               | 20,208 |  |               |  



| | (1) | Refers to holders of our units, GP Units, Redemption-Exchange Units, Special LP Units and Exchange LP Units.
| | --- | ------------------------------------------------------------------------------------------------------------



3.B. CAPITALIZATION AND INDEBTEDNESS



Not applicable.



3.C. REASONS FOR THE OFFER AND USE OF PROCEEDS



Not applicable.



3.D. RISK FACTORS



Your holding of
units of our company will involve substantial risks. You should carefully consider the following factors in addition to the other
information set forth in this Form 20-F. If any of the following risks actually occur, our business, financial condition and results
of operations and the value of your units would likely suffer.



Risks Relating to Us and Our Company



Our company is a recently formed
partnership with limited separate operating history and the historical financial information included herein does not reflect the
financial condition or operating results we would have achieved during certain of the periods presented, and therefore may not
be a reliable indicator of our future financial performance.



Our company was formed
on January 3, 2013. Our limited operating history will make it difficult to assess our ability to operate profitably and make
distributions to unitholders. Although most of our assets and operations have been under Brookfield’s control prior to our
acquisition of such assets and operations, the historical financial statements included in this Form 20-F covering the periods
prior to our formation may not be indicative of our future financial condition or operating results. We urge you to carefully consider
the basis on which the historical financial information included herein for such periods was prepared and presented.



8







Our company relies on the Property
Partnership and, indirectly, the Holding Entities and our operating entities to provide us with the funds necessary to pay distributions
and meet our financial obligations.



Our company’s
sole direct investment is its managing general partnership interest in the Property Partnership, which owns all of the common shares
or equity interests, as applicable, of the Holding Entities, through which we hold all of our interests in the operating entities.
Our company has no independent means of generating revenue. As a result, we depend on distributions and other payments from the
Property Partnership and, indirectly, the Holding Entities and our operating entities to provide us with the funds necessary to
pay distributions on our units and to meet our financial obligations. The Property Partnership, the Holding Entities and our operating
entities are legally distinct from our company and they will generally be required to service their debt obligations before making
distributions to us or their parent entity, as applicable, thereby reducing the amount of our cash flow available to pay distributions
on our units, fund working capital and satisfy other needs. In addition, the Property Partnership is required to make distributions
to Preferred Unitholders before making distributions to us. Any other entities through which we may conduct operations in the future
will also be legally distinct from our company and may be restricted in their ability to pay dividends and distributions or otherwise
make funds available to our company under certain conditions.



We anticipate
that the only distributions our company will receive in respect of our managing general partnership interests in the Property Partnership
will consist of amounts that are intended to assist our company in making distributions to our unitholders in accordance with our
company’s distribution policy and to allow our company to pay expenses as they become due.



We may not be able to make distributions
to holders of our units in amounts intended or at all.



Our company intends
to make quarterly cash distributions in an amount currently anticipated to be approximately $1.06 per unit on an annualized basis.
However, despite our projections, there can be no assurance that we will be able to make such distributions or meet our target
growth rate range of 5% to 8% annually. Based on amounts received in distributions from our operating entities and our projected
operating cash flow from our direct investments, our proposed distributions would be significantly greater than such amounts.



Although we may use
distributions from our operating entities, the proceeds of sales of certain of our direct investments and/or borrowings to fund
any shortfall in distributions, we may not be able to do so on a consistent and sustainable basis. Our ability to make distributions
will depend on several other factors, some of which are out of our control, including, among other things, general economic conditions,
our results of operations and financial condition, the amount of cash that is generated by our operations and investments, restrictions
imposed by the terms of any indebtedness that is incurred to finance our operations and investments or to fund liquidity needs,
levels of operating and other expenses, and contingent liabilities, any or all of which could prevent us from meeting our anticipated
distribution levels. Finally, the BPY General Partner has sole authority to determine when and if our distributions will be made
in respect of our units, and there can be no assurance that the BPY General Partner will declare and pay the distributions on our
units as intended or at all.



We are subject to foreign currency
risk and our risk management activities may adversely affect the performance of our operations.



Some of our assets
and operations are in countries where the U.S. Dollar is not the functional currency. These operations pay distributions in
currencies other than the U.S. Dollar which we must convert to U.S. Dollars prior to making distributions on our units. A
significant depreciation in the value of such foreign currencies may have a material adverse effect on our business, financial
condition and results of operations.



When managing our
exposure to such market risks, we may use forward contracts, options, swaps, caps, collars and floors or pursue other strategies
or use other forms of derivative instruments. The success of any hedging or other derivative transactions that we enter into generally
will depend on our ability to structure contracts that appropriately offset our risk position. As a result, while we may enter
into such transactions in order to reduce our exposure to market risks, unanticipated market changes may result in poorer overall
investment performance than if the transaction had not been executed. Such transactions may also limit the opportunity for gain
if the value of a hedged position increases.



We are subject
to interest rate risk and a rise in interest rates may adversely affect us and the value of an investment in our units.



A number of our assets
are interest rate sensitive: increases in long-term interest rates will, absent all else, decrease the value of these assets by
reducing the present value of the cash flows expected to be produced by the asset. If interest rates were to rise, it may affect
the market perceived or actual value of our assets and/or distributions and consequently the market price of our units may decline
in value. Additionally, an increase in interest rates could decrease the amount buyers may be willing to pay for our properties,
thereby reducing the market value of our properties and limiting our ability to sell properties or to obtain mortgage financing
secured by our properties. Further, increased interest rates may effectively increase the cost of properties we acquire to the
extent we utilize leverage for those acquisitions and may result in a reduction in our acquisitions to the extent we reduce the
amount we offer to pay for properties, due to the effect of increased interest rates, to a price that sellers may not accept.



9







Our company is not, and does not
intend to become, regulated as an investment company under the U.S. Investment Company Act of 1940, or the Investment Company Act,
(and similar legislation in other jurisdictions) and if our company were deemed an “investment company” under the Investment
Company Act applicable restrictions would make it impractical for us to operate as contemplated.



The Investment Company
Act and the rules thereunder (and similar legislation in other jurisdictions) provide certain protections to investors and impose
certain restrictions on companies that are registered as investment companies. Among other things, such rules limit or prohibit
transactions with affiliates, impose limitations on the issuance of debt and equity securities and impose certain governance requirements.
Our company has not been and does not intend to become regulated as an investment company and our company intends to conduct its
activities so it will not be deemed to be an investment company under the Investment Company Act (and similar legislation in other
jurisdictions). In order to ensure that our company is not deemed to be an investment company, we may be required to materially
restrict or limit the scope of our operations or plans, we will be limited in the types of acquisitions that we may make and we
may need to modify our organizational structure or dispose of assets that we would not otherwise dispose of. Moreover, if anything
were to happen that would potentially cause our company to be deemed an investment company under the Investment Company Act, it
would be impractical for us to operate as intended, agreements and arrangements between and among us and Brookfield would be impaired
and our business, financial condition and results of operations would be materially adversely affected. Accordingly, we would be
required to take extraordinary steps to address the situation, such as the amendment or termination of our Master Services Agreement,
the restructuring of our company and the Holding Entities, the amendment of our limited partnership agreement or the termination
of our company, any of which would materially adversely affect the value of our units. In addition, if our company were deemed
to be an investment company under the Investment Company Act, it would be taxable as a corporation for U.S. federal income tax
purposes, and such treatment would materially adversely affect the value of our units. See Item 10.E. “Additional Information
- Taxation - U.S. Tax Considerations - Partnership Status of Our Company and the Property Partnership”.



Our company is a “foreign private
issuer” under U.S. securities laws and as a result is subject to disclosure obligations different from requirements applicable
to U.S. domestic registrants listed on the New York Stock Exchange, or NYSE.



Although our company
is subject to the periodic reporting requirement of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act,
the periodic disclosure required of foreign private issuers under the Exchange Act is different from periodic disclosure required
of U.S. domestic registrants. Therefore, there may be less publicly available information about us than is regularly published
by or about other public companies in the United States and our company is exempt from certain other sections of the Exchange Act
that U.S. domestic registrants would otherwise be subject to, including the requirement to provide our unitholders with information
statements or proxy statements that comply with the Exchange Act. In addition, insiders and large unitholders of our company are
not obligated to file reports under Section 16 of the Exchange Act and certain of the governance rules imposed by the NYSE
are inapplicable to our company.



Our company is a “SEC foreign
issuer” under Canadian securities regulations and is exempt from certain requirements of Canadian securities laws.



Although our company
is a reporting issuer in Canada, we are a “SEC foreign issuer” and exempt from certain Canadian securities laws relating
to continuous disclosure obligations and proxy solicitation as long as we comply with certain reporting requirements applicable
in the United States, provided that the relevant documents filed with the U.S. Securities and Exchange Commission, or the SEC,
are filed in Canada and sent to our company’s unitholders in Canada to the extent and in the manner and within the time required
by applicable U.S. requirements. Therefore, there may be less publicly available information in Canada about us than is regularly
published by or about other reporting issuers in Canada.



We may be subject to the risks commonly
associated with a separation of economic interest from control or the incurrence of debt at multiple levels within an organizational
structure.



Our ownership and
organizational structure is similar to structures whereby one company controls another company which in turn holds controlling
interests in other companies; thereby, the company at the top of the chain may control the company at the bottom of the chain even
if its effective equity position in the bottom company is less than a controlling interest. Brookfield is the sole shareholder
of the BPY General Partner and, as a result of such ownership of the BPY General Partner, Brookfield controls the appointment and
removal of the BPY General Partner’s directors and, accordingly, exercises substantial influence over us. In turn, we often
have a majority controlling interest or a significant influence in our investments. Even though Brookfield has an effective economic
interest in our business of approximately 68% as of the date of this Form 20-F as a result of its ownership of our units and the
Redemption-Exchange Units, over time Brookfield may reduce this economic interest while still maintaining its controlling interest,
and therefore Brookfield may use its control rights in a manner that conflicts with the economic interests of our other unitholders.
For example, despite the fact that our company has a conflicts policy in place which addresses the requirement for independent
approval and other requirements for transactions in which there is greater potential for a conflict of interest to arise, including
transactions with affiliates of Brookfield, because Brookfield exerts substantial influence over us, and, in turn, over our investments,
there is a greater risk of transfer of assets of our investments at non-arm’s length values to Brookfield and its affiliates.
In addition, debt incurred at multiple levels within the chain of control could exacerbate the separation of economic interest
from controlling interest at such levels, thereby creating an incentive to leverage our company and our investments. Any such increase
in debt would also make us more sensitive to declines in revenues, increases in expenses and interest rates, and adverse market
conditions. The servicing of any such debt would also reduce the amount of funds available to pay distributions to our company
and ultimately to our unitholders.



Risks Relating to Our Business



Our economic performance and the
value of our assets are subject to the risks incidental to the ownership and operation of real estate assets.



Our economic performance,
the value of our assets and, therefore, the value of our units are subject to the risks normally associated with the ownership
and operation of real estate assets, including but not limited to:



| | · | downturns and trends in the national,
regional and local economic conditions where our properties and other assets are located;
| | - | -------------------------------------------------------------------------------------------------------------------------------



| | · | the cyclical nature of the real estate
industry;
| | - | ------------------------------------------------



| | · | local real estate market conditions, such
as an oversupply of commercial properties, including space available by sublease, or a reduction in demand for such properties;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



10







| | · | changes in interest rates and the availability
of financing;
| | - | ------------------------------------------------------------



| | · | competition from other properties;
| | - | ----------------------------------



| | · | changes in market rental rates and our
ability to rent space on favorable terms;
| | - | --------------------------------------------------------------------------------



| | · | the bankruptcy, insolvency, credit deterioration
or other default of our tenants;
| | - | ---------------------------------------------------------------------------------



| | · | the need to periodically renovate, repair
and re-lease space and the costs thereof;
| | - | -----------------------------------------------------------------------------------



| | · | increases in maintenance, insurance and
operating costs;
| | - | --------------------------------------------------------



| | · | civil disturbances, earthquakes and other
natural disasters, or terrorist acts or acts of war which may result in uninsured or underinsured losses;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the decrease in the attractiveness of
our properties to tenants;
| | - | ----------------------------------------------------------------



| | · | the decrease in the underlying value of
our properties; and
| | - | -----------------------------------------------------------



| | · | certain significant expenditures, including
property taxes, maintenance costs, mortgage payments, insurance costs and related charges that must be made regardless of whether
a property is producing sufficient income to service these expenses.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We are dependent upon the economic
conditions of the markets where our assets are located.



We are affected by
local, regional, national and international economic conditions and other events and occurrences that affect the markets in which
we own assets. A protracted decline in economic conditions will cause downward pressure on our operating margins and asset values
as a result of lower demand for space.



Our properties are
largely located in North America, Europe, and Australia but also include a growing presence in China, Brazil and India. A prolonged
downturn in one or more of these economies or the economy of any other country where we own property would result in reduced demand
for space and number of prospective tenants and will affect the ability of our properties to generate significant revenue. If there
is an increase in operating costs resulting from inflation and other factors, we may not be able to offset such increases by increasing
rents.



Additionally, as part
of our strategy for our office property platform is to focus on markets underpinned by major financial, energy, technology, and
professional services businesses, a significant downturn in one or more of the industries in which these businesses operate would
also adversely affect our results of operations.



We face risks associated with the
use of debt to finance our business, including refinancing risk.



We incur debt in the
ordinary course of our business and therefore are subject to the risks associated with debt financing. In addition, our debt increased
substantially in 2014 in connection with our acquisition of the common shares of Brookfield Office Properties Inc., or Brookfield
Office Properties or BPO, as we entered into a $2.5 billion credit facility, or the BPY Credit Facility, to finance part of that
acquisition. The BPY Credit Facility has a term of two years, with a one year extension option for up to $1.5 billion of commitments
subject to the satisfaction of certain conditions. The risks associated with our debt financing, including the following, may adversely
affect our financial condition and results of operations:



| | · | cash flows may be insufficient to meet
required payments of principal and interest;
| | - | -----------------------------------------------------------------------------------



| | · | payments of principal and interest on
borrowings may leave insufficient cash resources to pay operating expenses;
| | - | -----------------------------------------------------------------------------------------------------------------



| | · | we may not be able to extend the BPY Credit
Facility for an additional year upon its two-year expiry date if we have not been successful in prepaying such debt and reducing
the commitments to $1.5 billion or less through our intended repayment plan;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | we may not be able to refinance indebtedness
on our properties at maturity due to business and market factors, including: disruptions in the capital and credit markets; the
estimated cash flows of our properties and other assets; the value of our properties and other assets; and financial, competitive,
business and other factors, including factors beyond our control; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | if refinanced, the terms of a refinancing
may not be as favorable as the original terms of the related indebtedness.
| | - | --------------------------------------------------------------------------------------------------------------------



Our operating entities
have a significant degree of leverage on their assets, which increased upon entering into the BPY Credit Facility. Highly leveraged
assets are inherently more sensitive to declines in revenues, increases in expenses and interest rates, and adverse market conditions.
A leveraged company’s income and net assets also tend to increase or decrease at a greater rate than would otherwise be the
case if money had not been borrowed. As a result, the risk of loss associated with a leveraged company, all other things being
equal, is generally greater than for companies with comparatively less debt.



11







We rely on our operating
entities to provide our company with the funds necessary to make distributions on our units and meet our financial obligations.
The leverage on our assets may affect the funds available to our company if the terms of the debt impose restrictions on the ability
of our operating entities to make distributions to our company. In addition, our operating entities will generally have to service
their debt obligations before making distributions to our company or their parent entity. The Property Partnership is also required
to make distributions to Preferred Unitholders before making distributions to us.



Leverage may
also result in a requirement for liquidity, which may force the sale of assets at times of low demand and/or prices for such assets.



In addition
to the BPY Credit Facility which provides for an aggregate of $2.5 billion in committed credit availability, we have a $1 billion
subordinated credit facility with Brookfield to supplement our liquidity. We may also incur indebtedness under future credit facilities
or other debt-like instruments, in addition to any asset-level indebtedness. We may also issue debt or debt-like instruments in
the market in the future, which may or may not be rated. Should such debt or debt-like instruments be rated, a credit downgrade
will have an adverse impact on the cost of such debt.



In addition, Brookfield
holds $1.25 billion of redeemable preferred shares of Brookfield BPY Holdings Inc., one of our Holding Entities. We have agreed
to use our commercially reasonable efforts to, as soon as reasonably practical, subject to any restrictions in the BPY Credit Facility,
issue debt or equity securities or borrow money from one or more financial institutions or other lenders, on terms reasonably acceptable
to us, in an aggregate amount sufficient to fund the redemption of $500 million of the preferred shares. The terms of any such
financing may be less favorable to us than the terms of the preferred shares.



If we are unable to
refinance our indebtedness on acceptable terms, or at all, we may need to dispose of one or more of our properties or other assets
upon disadvantageous terms. In addition, prevailing interest rates or other factors at the time of refinancing could increase our
interest expense, and if we mortgage property to secure payment of indebtedness and are unable to make mortgage payments, the mortgagee
could foreclose upon such property or appoint a receiver to receive an assignment of our rents and leases. This may adversely affect
our ability to make distributions or payments to our unitholders and lenders.



Restrictive covenants in our indebtedness
may limit management’s discretion with respect to certain business matters.



Instruments governing
any of our indebtedness or indebtedness of our operating entities or their subsidiaries may contain restrictive covenants limiting
our discretion with respect to certain business matters. These covenants could place significant restrictions on, among other things,
our ability to create liens or other encumbrances, to make distributions to our unitholders or make certain other payments, investments,
loans and guarantees and to sell or otherwise dispose of assets and merge or consolidate with another entity. These covenants could
also require us to meet certain financial ratios and financial condition tests. A failure to comply with any such covenants could
result in a default which, if not cured or waived, could permit acceleration of the relevant indebtedness.



If we are unable to manage our interest
rate risk effectively, our cash flows and operating results may suffer.



Advances under credit
facilities and certain property-level mortgage debt bear interest at a variable rate. We may incur further indebtedness in the
future that also bears interest at a variable rate or we may be required to refinance our debt at higher rates. In addition, though
we attempt to manage interest rate risk, there can be no assurance that we will hedge such exposure effectively or at all in the
future. Accordingly, increases in interest rates above that which we anticipate based upon historical trends would adversely affect
our cash flows.



We face potential adverse effects
from tenant defaults, bankruptcies or insolvencies.



A commercial tenant
may experience a downturn in its business, which could cause the loss of that tenant as a tenant or weaken its financial condition
and result in its inability to make rental payments when due or, for retail tenants, a reduction in percentage rent payable. If
a tenant defaults, we may experience delays and incur costs in enforcing our rights as landlord and protecting our investments.



We cannot evict a
tenant solely because of its bankruptcy. In addition, in certain jurisdictions where we own properties, a court may authorize a
tenant to reject and terminate its lease. In such a case, our claim against the tenant for unpaid, future rent would be subject
to a statutory cap that might be substantially less than the remaining rent owed under the lease. In any event, it is unlikely
that a bankrupt or insolvent tenant will pay the full amount it owes under a lease. The loss of rental payments from tenants and
costs of re-leasing would adversely affect our cash flows and results of operations. In the case of our retail properties, the
bankruptcy or insolvency of an anchor tenant or tenant with stores at many of our properties would cause us to suffer lower revenues
and operational difficulties, including difficulties leasing the remainder of the property. Significant expenses associated with
each property, such as mortgage payments, real estate taxes and maintenance costs, are generally not reduced when circumstances
cause a reduction in income from the property. In the event of a significant number of lease defaults and/or tenant bankruptcies,
our cash flows may not be sufficient to pay cash distributions to our unitholders and repay maturing debt or other obligations.



Reliance on significant tenants could
adversely affect our results of operations.



Many of our properties
are occupied by one or more significant tenants and, therefore, our revenues from those properties are materially dependent on
the creditworthiness and financial stability of those tenants. Our business would be adversely affected if any of those tenants
failed to renew certain of their significant leases, became insolvent, declared bankruptcy or otherwise refused to pay rent in
a timely fashion or at all. In the event of a default by one or more significant tenants, we may experience delays in enforcing
our rights as landlord and may incur substantial costs in protecting our investment and re-leasing the property. If a lease of
a significant tenant is terminated, it may be difficult, costly and time consuming to attract new tenants and lease the property
for the rent previously received.



12







Our inability to enter into renewal
or new leases with tenants on favorable terms or at all for all or a substantial portion of space that is subject to expiring leases
would adversely affect our cash flows and operating results.



Our properties generate
revenue through rental payments made by tenants of the properties. Upon the expiry of any lease, there can be no assurance that
the lease will be renewed or the tenant replaced. The terms of any renewal or replacement lease may be less favorable to us than
the existing lease. We would be adversely affected, in particular, if any major tenant ceases to be a tenant and cannot be replaced
on similar or better terms or at all. Additionally, we may not be able to lease our properties to an appropriate mix of tenants.
Retail tenants may negotiate leases containing exclusive rights to sell particular types of merchandise or services within a particular
retail property. These provisions may limit the number and types of prospective tenants for the vacant space in such properties.



Our competitors may adversely affect
our ability to lease our properties which may cause our cash flows and operating results to suffer.



Each segment of the
real estate industry is competitive. Numerous other developers, managers and owners of commercial properties compete with us in
seeking tenants and, in the case of our multifamily properties, there are numerous housing alternatives which compete with our
properties in attracting residents. Some of the properties of our competitors may be newer, better located or better capitalized.
These competing properties may have vacancy rates higher than our properties, which may result in their owners being willing to
make space available at lower prices than the space in our properties, particularly if there is an oversupply of space available
in the market. Competition for tenants could have an adverse effect on our ability to lease our properties and on the rents that
we may charge or concessions that we must grant, which may cause our cash flows and operating results to suffer.



Our ability to realize
our strategies and capitalize on our competitive strengths are dependent on the ability of our operating entities to effectively
operate our large group of commercial properties, maintain good relationships with tenants, and remain well-capitalized, and our
failure to do any of the foregoing would affect our ability to compete effectively in the markets in which we do business.



Our insurance may not cover some
potential losses or may not be obtainable at commercially reasonable rates, which could adversely affect our financial condition
and results of operations.



We maintain insurance
on our properties in amounts and with deductibles that we believe are in line with what owners of similar properties carry; however,
our insurance may not cover some potential losses or may not be obtainable at commercially reasonable rates in the future.



There also are certain
types of risks (such as war, environmental contamination such as toxic mold, and lease and other contract claims) that are either
uninsurable or not economically insurable. Should any uninsured or underinsured loss occur, we could lose our investment in, and
anticipated profits and cash flows from, one or more properties, and we would continue to be obligated to repay any recourse mortgage
indebtedness on such properties.



Possible terrorist activity could
adversely affect our financial condition and results of operations and our insurance may not cover some losses due to terrorism
or may not be obtainable at commercially reasonable rates.



Possible terrorist
attacks in the markets where our properties are located may result in declining economic activity, which could reduce the demand
for space at our properties, reduce the value of our properties and harm the demand for goods and services offered by our tenants.



Additionally, terrorist
activities could directly affect the value of our properties through damage, destruction or loss. Our office portfolio is concentrated
in large metropolitan areas, some of which have been or may be perceived to be subject to terrorist attacks. Many of our office
properties consist of high-rise buildings, which may also be subject to this actual or perceived threat. Our insurance may not
cover some losses due to terrorism or may not be obtainable at commercially reasonable rates.



We are subject to risks relating
to development and redevelopment projects.



On a strategic and
selective basis, we may develop and redevelop properties. The real estate development and redevelopment business involves significant
risks that could adversely affect our business, financial condition and results of operations, including the following:



| | · | we may not be able to complete construction
on schedule or within budget, resulting in increased debt service expense and construction costs and delays in leasing the properties;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | we may not have sufficient capital to
proceed with planned redevelopment or expansion activities;
| | - | -------------------------------------------------------------------------------------------------



| | · | we may abandon redevelopment or expansion
activities already under way, which may result in additional cost recognition;
| | - | ------------------------------------------------------------------------------------------------------------------------



| | · | we may not be able to obtain, or may experience
delays in obtaining, all necessary zoning, land-use, building, occupancy and other governmental permits and authorizations;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | we may not be able to lease properties
at all or on favorable terms, or occupancy rates and rents at a completed project might not meet projections and, therefore, the
project might not be profitable;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



13







| | · | construction costs, total investment amounts
and our share of remaining funding may exceed our estimates and projects may not be completed and delivered as planned; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | upon completion of construction, we may
not be able to obtain, or obtain on advantageous terms, permanent financing for activities that we have financed through construction
loans.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We are subject to risks that affect
the retail environment.



We are subject to
risks that affect the retail environment, including unemployment, weak income growth, lack of available consumer credit, industry
slowdowns and plant closures, low consumer confidence, increased consumer debt, poor housing market conditions, adverse weather
conditions, natural disasters and the need to pay down existing obligations. Any of these factors could negatively affect consumer
spending and adversely affect the sales of our retail tenants. This could have an unfavorable effect on our operations and our
ability to attract new retail tenants.



In addition, our retail
tenants face competition from retailers at other regional malls, outlet malls and other discount shopping centers, discount shopping
clubs, catalogue companies, and through internet sales and telemarketing. Competition of these types could reduce the percentage
rent payable by certain retail tenants and adversely affect our revenues and cash flows. Additionally, our retail tenants are dependent
on perceptions by retailers and shoppers of the safety, convenience and attractiveness of our retail properties. If retailers and
shoppers perceive competing properties and other retailing options such as the internet to be more convenient or of a higher quality,
our revenues may be adversely affected.



Some of our retail
lease agreements include a co-tenancy provision which allows the mall tenant to pay a reduced rent amount and, in certain instances,
terminate the lease, if we fail to maintain certain occupancy levels at the mall. In addition, certain of our tenants have the
ability to terminate their leases prior to the lease expiration date if their sales do not meet agreed upon thresholds. Therefore,
if occupancy, tenancy or sales fall below certain thresholds, rents we are entitled to receive from our retail tenants would be
reduced and our ability to attract new tenants may be limited.



The computation of
cost reimbursements from our retail tenants for common area maintenance, insurance and real estate taxes is complex and involves
numerous judgments including interpretation of lease terms and other tenant lease provisions. Most tenants make monthly fixed payments
of common area maintenance, insurance, real estate taxes and other cost reimbursements and, after the end of the calendar year,
we compute each tenant’s final cost reimbursements and issue a bill or credit for the full amount, after considering amounts
paid by the tenant during the year. The billed amounts could be disputed by the tenant or become the subject of a tenant audit
or even litigation. There can be no assurance that we will collect all or any portion of these amounts.



We are subject to risks associated
with the multifamily residential industry.



We are subject to
risks associated with the multifamily residential industry, including the level of mortgage interest rates which may encourage
tenants to purchase rather than lease and housing and governmental programs that provide assistance and rent subsidies to tenants.
If the demand for multifamily properties is reduced, income generated from our multifamily residential properties and the underlying
value of such properties may be adversely affected.



In addition, certain
jurisdictions regulate the relationship of an owner and its residential tenants. Commonly, these laws require a written lease,
good cause for eviction, disclosure of fees, and notification to residents of changed land use, while prohibiting unreasonable
rules, retaliatory evictions, and restrictions on a resident’s choice of landlords. Apartment building owners have been the
subject of lawsuits under various “Landlord and Tenant Acts” and other general consumer protection statutes for coercive,
abusive or unconscionable leasing and sales practices. If we become subject to litigation, the outcome of any such proceedings
may materially adversely affect us for long periods of time. A few jurisdictions may offer more significant protection to residential
tenants. In addition to state or provincial regulation of the landlord-tenant relationship, numerous towns and municipalities impose
rent control on apartment buildings. The imposition of rent control on our multifamily residential units could have a materially
adverse effect on our results of operations.



A business disruption may adversely
affect our financial condition and results of operations.



Our business is vulnerable
to damages from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism,
war and telecommunication failures. Any system failure or accident that causes interruptions in our operations could result in
a material disruption to our business. If we are unable to recover from a business disruption on a timely basis, our financial
condition and results of operations would be adversely affected. We may also incur additional costs to remedy damages caused by
such disruptions, which could adversely affect our financial condition and results of operations.



Because certain of our assets are
illiquid, we may not be able to sell these assets when appropriate or when desired.



Large commercial properties
like the ones that we own can be hard to sell, especially if local market conditions are poor. Such illiquidity could limit our
ability to diversify our assets promptly in response to changing economic or investment conditions.



Additionally, financial
difficulties of other property owners resulting in distressed sales could depress real estate values in the markets in which we
operate in times of illiquidity. These restrictions reduce our ability to respond to changes in the performance of our assets and
could adversely affect our financial condition and results of operations.



14







We face risks associated with property
acquisitions.



Competition from other
well-capitalized real estate investors, including both publicly traded real estate investment trusts and institutional investment
funds, may significantly increase the purchase price of, or prevent us from acquiring, a desired property. Acquisition agreements
will typically contain conditions to closing, including completion of due diligence to our satisfaction or other conditions that
are not within our control, which may not be satisfied. Acquired properties may be located in new markets where we may have limited
knowledge and understanding of the local economy, an absence of business relationships in the area or unfamiliarity with local
government and applicable laws and regulations. We may be unable to finance acquisitions on favorable terms or newly acquired properties
may fail to perform as expected. We may underestimate the costs necessary to bring an acquired property up to standards established
for its intended market position or we may be unable to quickly and efficiently integrate new acquisitions into our existing operations.
We may also acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to
unknown liabilities. Each of these factors could have an adverse effect on our results of operations and financial condition.



We do not control certain of our
operating entities, including General Growth Properties, Inc., or GGP, and Canary Wharf Group plc, or Canary Wharf, and therefore
we may not be able to realize some or all of the benefits that we expect to realize from those entities.



We do not have control
of certain of our operating entities, including GGP and Canary Wharf. Our interests in those entities subject us to the operating
and financial risks of their businesses, the risk that the relevant company may make business, financial or management decisions
that we do not agree with, and the risk that we may have differing objectives than the entities in which we have interests. Because
we do not have the ability to exercise control over those entities, we may not be able to realize some or all of the benefits that
we expect to realize from those entities. For example, we may not be able to cause such operating entities to make distributions
to us in the amount or at the time that we need or want such distributions. In addition, we rely on the internal controls and financial
reporting controls of the companies in which we invest and the failure of such companies to maintain effective controls or comply
with applicable standards may adversely affect us.



We do not have sole control over
the properties that we own with co-venturers, partners, fund investors or co-tenants or over the revenues and certain decisions
associated with those properties, which may limit our flexibility with respect to these investments.



We participate in
joint ventures, partnerships, funds and co-tenancies affecting many of our properties. Such investments involve risks not present
were a third party not involved, including the possibility that our co-venturers, partners, fund investors or co-tenants might
become bankrupt or otherwise fail to fund their share of required capital contributions. The bankruptcy of one of our co-venturers,
partners, fund investors or co-tenants could materially and adversely affect the relevant property or properties. Pursuant to bankruptcy
laws, we could be precluded from taking some actions affecting the estate of the other investor without prior court approval which
would, in most cases, entail prior notice to other parties and a hearing. At a minimum, the requirement to obtain court approval
may delay the actions we would or might want to take. If the relevant joint venture or other investment entity has incurred recourse
obligations, the discharge in bankruptcy of one of the other investors might result in our ultimate liability for a greater portion
of those obligations than would otherwise be required.



Additionally, our
co-venturers, partners, fund investors or co-tenants might at any time have economic or other business interests or goals that
are inconsistent with those of our company, and we could become engaged in a dispute with any of them that might affect our ability
to develop or operate a property. In addition, we do not have sole control of certain major decisions relating to these properties,
including decisions relating to: the sale of the properties; refinancing; timing and amount of distributions of cash from such
properties; and capital improvements. For example, when we participate with institutional investors in Brookfield-sponsored or
co-sponsored consortiums for asset acquisitions and as a partner in or alongside Brookfield-sponsored or co-sponsored partnerships,
there is often a finite term to the investment which could lead to the investment being sold prior to the date we would otherwise
choose.



In some instances
where we are the property manager for a joint venture, the joint venture retains joint approval rights over various material matters
such as the budget for the property, specific leases and our leasing plan. Moreover, in certain property management arrangements
the other venturer can terminate the property management agreement in limited circumstances relating to enforcement of the property
managers’ obligations. In addition, the sale or transfer of interests in some of our joint ventures and partnerships is subject
to rights of first refusal or first offer and some joint venture and partnership agreements provide for buy-sell or similar arrangements.
Such rights may be triggered at a time when we may not want to sell but we may be forced to do so because we may not have the financial
resources at that time to purchase the other party’s interest. Such rights may also inhibit our ability to sell an interest
in a property or a joint venture or partnership within our desired time frame or on any other desired basis.



We are subject to risks associated
with commercial property loans.



We have interests
in loans or participations in loans, or securities whose underlying performance depends on loans made with respect to a variety
of commercial real estate. Such interests are subject to normal credit risks as well as those generally not associated with traditional
debt securities. The ability of the borrowers to repay the loans will typically depend upon the successful operation of the related
real estate project and the availability of financing. Any factors that affect the ability of the project to generate sufficient
cash flow could have a material effect on the value of these interests. Such factors include, but are not limited to: the uncertainty
of cash flow to meet fixed obligations; adverse changes in general and local economic conditions, including interest rates and
local market conditions; tenant credit risks; the unavailability of financing, which may make the operation, sale, or refinancing
of a property difficult or unattractive; vacancy and occupancy rates; construction and operating costs; regulatory requirements,
including zoning, rent control and real and personal property tax laws, rates and assessments; environmental concerns; project
and borrower diversification; and uninsured losses. Security underlying such interests will generally be in a junior or subordinate
position to senior financing. In certain circumstances, in order to protect our interest, we may decide to repay all or a portion
of the senior indebtedness relating to the particular interests or to cure defaults with respect to such senior indebtedness.



15







We invest in mezzanine debt, which
can rank below other senior lenders.



We invest in mezzanine
debt interests in real estate companies and properties whose capital structures have significant debt ranking ahead of our investments.
Our investments will not always benefit from the same or similar financial and other covenants as those enjoyed by the debt ranking
ahead of our investments or benefit from cross-default provisions. Moreover, it is likely that we will be restricted in the exercise
of our rights in respect of our investments by the terms of subordination agreements with the debt ranking ahead of the mezzanine
capital. Accordingly, we may not be able to take the steps necessary to protect our investments in a timely manner or at all and
there can be no assurance that the rate of return objectives of any particular investment will be achieved. To protect our original
investment and to gain greater control over the underlying assets, we may elect to purchase the interest of a senior creditor or
take an equity interest in the underlying assets, which may require additional investment requiring us to expend additional capital.



We are subject to risks related to
syndicating or selling participations in our interests.



The strategy of the
finance funds in which we have interests depends, in part, upon syndicating or selling participations in senior interests, either
through capital markets collateralized debt obligation transactions or otherwise. If the finance funds cannot do so on terms that
are favorable to us, we may not generate the returns we anticipate.



We face risks relating to the legal
aspects of mortgage loans and may be subject to liability as a lender.



Certain interests
acquired by us are subject to risks relating to the legal aspects of mortgage loans. Depending upon the applicable law governing
mortgage loans (which laws may differ substantially), we may be adversely affected by the operation of law (including state or
provincial law) with respect to our ability to foreclose mortgage loans, the borrower’s right of redemption, the enforceability
of assignments of rents, due on sale and acceleration clauses in loan instruments, as well as other creditors’ rights provided
in such documents. In addition, we may be subject to liability as a lender with respect to our negotiation, administration, collection
and/or foreclosure of mortgage loans. As a lender, we may also be subject to penalties for violation of usury limitations, which
penalties may be triggered by contracting for, charging or receiving usurious interest. Bankruptcy laws may delay our ability to
realize on our collateral or may adversely affect the priority thereof through doctrines such as equitable subordination or may
result in a restructuring of the debt through principles such as the “cramdown” provisions of applicable bankruptcy
laws.



We have significant interests in
public companies, and changes in the market prices of the stock of such public companies, particularly during times of increased
market volatility, could have a negative impact on our financial condition and results of operations.



We hold significant
interests in public companies, and changes in the market prices of the stock of such public companies could have a material impact
on our financial condition and results of operations. Global securities markets have been highly volatile, and continued volatility
may have a material negative impact on our consolidated financial position and results of operations.



We have significant interests in
Brookfield-sponsored real estate funds, and poor investment returns in these funds could have a negative impact on our financial
condition and results of operations.



We have, and expect
to continue to have in the future, significant interests in Brookfield-sponsored real estate funds, and poor investment returns
in these funds, due to either market conditions or underperformance (relative to their competitors or to benchmarks), would negatively
affect our financial condition and results of operations. In addition, interests in such funds are subject to the risks inherent
in the ownership and operation of real estate and real estate-related businesses and assets generally.



Our ownership of underperforming
real estate properties involves significant risks and potential additional liabilities.



We hold interests
in certain real estate properties with weak financial conditions, poor operating results, substantial financial needs, negative
net worth or special competitive problems, or that are over-leveraged. Our ownership of underperforming real estate properties
involves significant risks and potential additional liabilities. Our exposure to such underperforming properties may be substantial
in relation to the market for those interests and distressed assets may be illiquid and difficult to sell or transfer. As a result,
it may take a number of years for the fair value of such interests to ultimately reflect their intrinsic value as perceived by
us.



We face risks relating to the jurisdictions
of our operations.



We own and operate
commercial properties in a number of jurisdictions, including but not limited to North America, Europe, Australia, China, Brazil
and India. Our operations are subject to significant political, economic and financial risks, which vary by jurisdiction, and may
include:



| | · | changes in government policies or personnel;
| | - | --------------------------------------------



| | · | restrictions on currency transfer or convertibility;
| | - | ----------------------------------------------------



| | · | changes in labor relations;
| | - | ---------------------------



| | · | political instability and civil unrest;
| | - | ---------------------------------------



16







| | · | fluctuations in foreign exchange rates;
| | - | ---------------------------------------



| | · | challenges of complying with a wide variety
of foreign laws including corporate governance, operations, taxes and litigation;
| | - | -----------------------------------------------------------------------------------------------------------------------------



| | · | differing lending practices;
| | - | ----------------------------



| | · | differences in cultures;
| | - | ------------------------



| | · | changes in applicable laws and regulations
that affect foreign operations;
| | - | --------------------------------------------------------------------------



| | · | difficulties in managing international
operations;
| | - | --------------------------------------------------



| | · | obstacles to the repatriation of earnings
and cash; and
| | - | -------------------------------------------------------



| | · | breach or repudiation of important contractual
undertakings by governmental entities and expropriation and confiscation of assets and facilities for less than fair market value.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We are subject to possible health
and safety and environmental liabilities and other possible liabilities.



As an owner and manager
of real property, we are subject to various laws relating to environmental matters. We could be liable under these laws for the
costs of removal and remediation of certain hazardous substances or wastes present in our buildings, released or deposited on or
in our properties or disposed of at other locations. These costs could be significant and reduce cash available for our business
which could have an adverse effect on our business, financial condition and results of operations. The failure to remove or remediate
such substances could adversely affect our ability to sell our properties or our ability to borrow using real estate as collateral
and could potentially result in claims or other proceedings against us, which could have an adverse effect on our business, financial
condition and results of operations. Environmental laws and regulations can change rapidly and we may become subject to more stringent
environmental laws and regulations in the future. Compliance with more stringent environmental laws and regulations could have
an adverse effect on our business, financial condition or results of operations.



The ownership and
operation of our assets carry varying degrees of inherent risk or liability related to worker health and safety and the environment,
including the risk of government imposed orders to remedy unsafe conditions and potential civil liability. Compliance with health,
safety and environmental standards and the requirements set out in our licenses, permits and other approvals are important to our
business. We have incurred and will continue to incur significant capital and operating expenditures to comply with health, safety
and environmental standards and to obtain and comply with licenses, permits and other approvals and to assess and manage potential
liability exposure. Nevertheless, we may be unsuccessful in obtaining or maintaining an important license, permit or other approval
or become subject to government orders, investigations, inquiries or other proceedings (including civil claims) relating to health,
safety and environmental matters. The occurrence of any of these events or any changes, additions to, or more rigorous enforcement
of, health, safety and environmental standards, licenses, permits or other approvals could have a significant impact on our operations
and/or result in material expenditures. As a consequence, no assurance can be given that additional environmental and workers’
health and safety issues relating to presently known or unknown matters will not require unanticipated expenditures, or result
in fines, penalties or other consequences (including changes to operations) material to our business and operations.



Negative publicity could damage our
reputation and business.



Our ability to attract and retain tenants,
investors and employees is impacted by our reputation and negative publicity can expose us to litigation and regulatory action
could damage our reputation, adversely affect our ability to attract and retain tenants and employees, and divert management’s
attention from day-to-day operations. Significant harm to our reputation can also arise from employee misconduct, unethical behavior,
environmental matters, litigation or regulatory outcomes, failing to deliver minimum or required standards of safety, service and
quality, compliance failures, unintended disclosure of confidential information and the activities of our tenants and counterparties,
including vendors.



We may suffer reputational harm or
a significant loss resulting from fraud, other illegal acts and inadequate or failed internal processes or systems.



We may suffer a significant
loss resulting from fraud, other illegal acts and inadequate or failed internal processes or systems. We operate in different markets
and rely on our employees to follow our policies and processes as well as applicable laws in their activities. Risk of illegal
acts or failed systems is managed through our infrastructure, controls, systems, policies and people, complemented by central groups
focusing on enterprise-wide management of specific operational risks such as fraud, trading, outsourcing, and business disruption,
as well as people and systems risks. Failure to adequately manage these risks could result in direct or indirect financial loss,
reputational impact, regulatory censure or failure in the management of other risks such as credit or market risk.



There is an increasing
global focus on the implementation and enforcement of anti-bribery and corruption legislation, and this focus has heightened the
risks that we face in this area, particularly as we expand our operations globally. We are subject to a number of laws and regulations
governing payments and contributions to public officials or other third parties, including restrictions imposed by the U.S. Foreign
Corrupt Practices Act and similar laws in non-U.S. jurisdictions, such as the UK Bribery Act and the Canadian Corruption of Foreign
Public Officials Act. Different laws that are applicable to us may contain conflicting provisions, making our compliance more difficult.
The policies and procedures we have implemented to protect against non-compliance with anti-bribery and corruption legislation
may be inadequate. If we fail to comply with these laws and regulations, we could be exposed to claims for damages, financial penalties,
reputational harm, incarceration of our employees, restrictions on our operations and other liabilities, which could negatively
affect our operating results and financial condition. In addition, we may be subject to successor liability for violations under
these laws or other acts of bribery committed by companies in which we or our funds invest.



17







Instances of bribery,
fraud, accounting irregularities and other improper, illegal or corrupt practices can be difficult to detect, and fraud and other
deceptive practices can be widespread in certain jurisdictions. We invest in emerging market countries that may not have established
stringent anti-bribery and corruption laws and regulations, or where existing laws and regulations may not be consistently enforced.
For example, we invest in jurisdictions that are perceived to have materially higher levels of corruption according to international
rating standards, such as China, India and Brazil. Due diligence on investment opportunities in these jurisdictions is frequently
more challenging because consistent and uniform commercial practices in such locations may not have developed or do not meet international
standards. Bribery, fraud, accounting irregularities and corrupt practices can be especially difficult to detect in such locations.



We may be subject to litigation.



In the ordinary course
of our business, we may be subject to litigation from time to time. The outcome of any such proceedings may materially adversely
affect us and may continue without resolution for long periods of time. Any litigation may consume substantial amounts of our management’s
time and attention, and that time and the devotion of these resources to litigation may, at times, be disproportionate to the amounts
at stake in the litigation.



The acquisition, ownership
and disposition of real property expose us to certain litigation risks which could result in losses, some of which may be material.
Litigation may be commenced with respect to a property we have acquired in relation to activities that took place prior to our
acquisition of such property. In addition, at the time of disposition of an individual property, a potential buyer may claim that
it should have been afforded the opportunity to purchase the asset or alternatively that such buyer should be awarded due diligence
expenses incurred or statutory damages for misrepresentation relating to disclosures made, if such buyer is passed over in favor
of another as part of our efforts to maximize sale proceeds. Similarly, successful buyers may later sue us under various damage
theories, including those sounding in tort, for losses associated with latent defects or other problems. We may also be exposed
to litigation resulting from the activities of our tenants or their customers.



Climate change may adversely impact
our operations and markets.



There is growing concern
from members of the scientific community and the general public that an increase in global average temperatures due to emissions
of greenhouse gases and other human activities have or will cause significant changes in weather patterns and increase the frequency
and severity of climate stress events. Climate change, including the impact of global warming, creates physical and financial risk.
Physical risks from climate change include an increase in sea level and changes in weather conditions, such as an increase in intense
precipitation and extreme heat events, as well as tropical and non-tropical storms.



We own buildings in
coastal locations that may be particularly susceptible to climate stress events or adverse localized effects of climate change,
such as sea-level rise and increased storm frequency or intensity. The occurrence of one or more natural disasters, such as hurricanes,
fires, floods, and earthquakes (whether or not caused by climate change), could cause considerable damage to our properties, disrupt
our operations and negatively impact our financial performance. To the extent these events result in significant damage to or closure
of one or more of our buildings, our operations and financial performance could be adversely affected through lost tenants and
an inability to lease or re-lease the space. In addition, these events could result in significant expenses to restore or remediate
a property, increases in fuel (or other energy) prices or a fuel shortage and increases in the costs of insurance if they result
in significant loss of property or other insurable damage.



Risks Relating to Our Relationship with
Brookfield



Brookfield exercises substantial
influence over us and we are highly dependent on the Service Providers.



Brookfield is the
sole shareholder of the BPY General Partner. As a result of its ownership of the BPY General Partner, Brookfield is able to control
the appointment and removal of the BPY General Partner’s directors and, accordingly, exercise substantial influence over
us. In addition, the Service Providers, wholly-owned subsidiaries of Brookfield Asset Management, provide management services to
us pursuant to our Master Services Agreement. Our company and the Property Partnership do not currently have any senior management
and depend on the management and administration services provided by the Service Providers. Brookfield personnel and support staff
who provide services to us are not required to have as their primary responsibility the management and administration of our company
or the Property Partnership or to work exclusively for either our company or the Property Partnership. Any failure to effectively
manage our business or to implement our strategy could have a material adverse effect on our business, financial condition and
results of operations.



Brookfield has no obligation to source
acquisition opportunities for us and we may not have access to all acquisitions of commercial properties that Brookfield identifies.



Our ability to grow
will depend in part on Brookfield identifying and presenting us with acquisition opportunities. Pursuant to the Relationship Agreement,
Brookfield Asset Management has identified our company as the primary entity through which Brookfield Asset Management will own
and operate its commercial property businesses on a global basis. However, Brookfield has no obligation to source acquisition opportunities
specifically for us. In addition, Brookfield has not agreed to commit to us any minimum level of dedicated resources for the pursuit
of acquisitions of commercial property other than as contemplated by our Master Services Agreement. There are a number of factors
that could materially and adversely impact the extent to which acquisition opportunities are made available to us by Brookfield.



18







For example:



| | · | Brookfield will only recommend acquisition
opportunities that it believes are suitable for us;
| | - | ----------------------------------------------------------------------------------------------



| | · | the same professionals within Brookfield’s
organization who are involved in acquisitions of commercial property have other responsibilities within Brookfield’s broader
asset management business. Limits on the availability of such individuals will likewise result in a limitation on the availability
of acquisition opportunities for us;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Brookfield may consider certain assets
or operations that have both infrastructure related characteristics and commercial property related characteristics to be infrastructure
and not commercial property;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Brookfield may not consider an acquisition
of commercial property that comprises part of a broader enterprise to be suitable for us, unless the primary purpose of such acquisition,
as determined by Brookfield acting in good faith, is to acquire the underlying commercial property;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | legal, regulatory, tax and other commercial
considerations will be an important factor in determining whether an opportunity is suitable for us; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------



| | · | in addition to structural limitations,
the determination of whether a particular acquisition is suitable for us is highly subjective and is dependent on a number of factors
including our liquidity position at the time, the risk profile of the opportunity, its fit with the balance of our business and
other factors.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The departure of some or all of Brookfield’s
professionals could prevent us from achieving our objectives.



We depend on the diligence,
skill and business contacts of Brookfield’s professionals and the information and opportunities they generate during the
normal course of their activities. Our success will depend on the continued service of these individuals, who are not obligated
to remain employed with Brookfield. Brookfield has experienced departures of key professionals in the past and may do so in the
future, and we cannot predict the impact that any such departures will have on our ability to achieve our objectives. The departure
of a significant number of Brookfield’s professionals for any reason, or the failure to appoint qualified or effective successors
in the event of such departures, could have a material adverse effect on our ability to achieve our objectives. Our limited partnership
agreement and our Master Services Agreement do not require Brookfield to maintain the employment of any of its professionals or
to cause any particular professionals to provide services to us or on our behalf.



Control of our company may be transferred
directly or indirectly to a third party without unitholder consent.



The BPY General Partner
may transfer its general partnership interest in our company to a third party, including in a merger or consolidation or in a transfer
of all or substantially all of its assets, without the consent of our unitholders. Furthermore, at any time, the sole shareholder
of the BPY General Partner may sell or transfer all or part of its shares in the BPY General Partner without the approval of our
unitholders. If a new owner were to acquire ownership of the BPY General Partner and to appoint new directors or officers of its
own choosing, it would be able to exercise substantial influence over our policies and procedures and exercise substantial influence
over our management, our distributions and the types of acquisitions that we make. Such changes could result in our company’s
capital being used to make acquisitions in which Brookfield has no involvement or that are substantially different from our targeted
acquisitions. Additionally, we cannot predict with any certainty the effect that any transfer in the ownership of the BPY General
Partner would have on the trading price of our units or our ability to raise capital or make investments in the future, because
such matters would depend to a large extent on the identity of the new owner and the new owner’s intentions with regards
to us. As a result, the future of our company would be uncertain and our financial condition and results of operations may suffer.



Our Master Services Agreement and
our other arrangements with Brookfield do not impose on Brookfield any fiduciary duties to act in the best interests of our unitholders.



Our Master Services
Agreement and our other arrangements with Brookfield do not impose on Brookfield any duty (statutory or otherwise) to act in the
best interests of the Service Recipients, nor do they impose other duties that are fiduciary in nature. As a result, the BPY General
Partner, a wholly-owned subsidiary of Brookfield Asset Management, in its capacity as our general partner, has the sole authority
to enforce the terms of such agreements and to consent to any waiver, modification or amendment of their provisions, subject to
approval by the independent directors in accordance with our conflicts policy.



The Bermuda Limited
Partnership Act 1883, under which our company and the Property Partnership were established, does not impose statutory fiduciary
duties on a general partner of a limited partnership in the same manner that corporate statutes, such as theCanada Business
Corporations Act, impose fiduciary duties on directors of a corporation. In general, under applicable Bermudian legislation,
a general partner has certain limited duties to its limited partners, such as the duty to render accounts, account for private
profits and not compete with the partnership in business. In addition, Bermuda common law recognizes that a general partner owes
a duty of utmost good faith to its limited partners. These duties are, in most respects, similar to duties imposed on a general
partner of a limited partnership under U.S. and Canadian law. However, to the extent that the BPY General Partner owes any fiduciary
duties to our company and our unitholders, these duties have been modified pursuant to our limited partnership agreement as a matter
of contract law. We have been advised by counsel that such modifications are not prohibited under Bermuda law, subject to typical
qualifications as to enforceability of contractual provisions, such as the application of general equitable principles. This is
similar to Delaware law which expressly permits modifications to the fiduciary duties owed to partners, other than an implied contractual
covenant of good faith and fair dealing.



19







Our limited partnership
agreement contains various provisions that modify the fiduciary duties that might otherwise be owed to our company and our unitholders,
including when conflicts of interest arise. For example, the agreement provides that the BPY General Partner and its affiliates
do not have any obligation under our limited partnership agreement, or as a result of any duties stated or implied by law or equity,
including fiduciary duties, to present business or investment opportunities to our company, the Property Partnership, any Holding
Entity or any other holding entity established by us. It also allows affiliates of the BPY General Partner to engage in activities
that may compete with us or our activities. In addition, the agreement permits the BPY General Partner to take into account the
interests of third parties, including Brookfield, when resolving conflicts of interest. The agreement prohibits our limited partners
from advancing claims that otherwise might raise issues as to compliance with fiduciary duties or applicable law. These modifications
to the fiduciary duties are detrimental to our unitholders because they restrict the remedies available for actions that might
otherwise constitute a breach of fiduciary duty and permit conflicts of interest to be resolved in a manner that is not in the
best interests of our company or the best interests of our unitholders. See Item 7.B. “Major Shareholders and Related
Party Transactions - Related Party Transactions - Relationship with Brookfield - Conflicts of Interest and Fiduciary Duties”.



Our organizational and ownership
structure, as well as our contractual arrangements with Brookfield, may create significant conflicts of interest that may be resolved
in a manner that is not in the best interests of our company or the best interests of our unitholders.



Our organizational
and ownership structure involves a number of relationships that may give rise to conflicts of interest between us and our unitholders,
on the one hand, and Brookfield, on the other hand. In certain instances, the interests of Brookfield may differ from the interests
of our company and our unitholders, including with respect to the types of acquisitions made, the timing and amount of distributions
by us, the reinvestment of returns generated by our operations, the use of leverage when making acquisitions and the appointment
of outside advisors and Service Providers, including as a result of the reasons described under Item 7.B. “Major Shareholders
and Related Party Transactions - Related Party Transactions - Relationship with Brookfield”.



In addition, the Service
Providers, affiliates of Brookfield, provide management services to us pursuant to our Master Services Agreement. Pursuant to our
Master Services Agreement, we pay a base management fee to the Service Providers equal to $12.5 million per quarter subject
to an annual escalation by a specified inflation factor. Additionally, the Property Partnership pays a quarterly equity enhancement
distribution to Property Special LP of 0.3125% of the amount by which the company’s total capitalization value at the end
of each quarter exceeds its total capitalization value determined immediately following the Spin-off, subject to certain adjustments.
Property Special LP also receives incentive distributions based on an amount by which quarterly distributions on the limited partnership
units of the Property Partnership exceed specified target levels as set forth in the Property Partnership’s limited partnership
agreement. For a further explanation of the equity enhancement and incentive distributions, together with examples of how such
amounts are calculated, see Item 10.B. “Additional Information - Memorandum and Articles of Association - Description
of the Property Partnership Limited Partnership Agreement - Distributions”. This relationship may give rise to conflicts
of interest between us and our unitholders, on the one hand, and Brookfield, on the other, as Brookfield’s interests may
differ from the interests of our company and our unitholders.



The BPY General Partner,
the sole shareholder of which is Brookfield, has sole authority to determine whether our company will make distributions and the
amount and timing of these distributions. The arrangements we have with Brookfield may create an incentive for Brookfield to take
actions that would have the effect of increasing distributions and fees payable to it, which may be to the detriment of our company
and our unitholders. For example, because the equity enhancement distribution is calculated based on our company’s total
capitalization, it may create an incentive for Brookfield to increase or maintain our company’s total capitalization over
the near-term when other actions may be more favorable to our company or our unitholders. Similarly, Brookfield may take actions
to increase our distributions in order to ensure Brookfield is paid incentive distributions in the near-term when other investments
or actions may be more favorable to our company or our unitholders. Also, through Brookfield’s ownership of our units and
the Redemption-Exchange Units of the Property Partnership, it has an effective economic interest in our business of approximately
68% as of the date of this Form 20-F and therefore may be incented to increase distributions payable to unitholders and thereby
to Brookfield. Finally, the management fee is payable to the Service Providers, which are controlled by Brookfield, irrespective
of our actual performance.



Our arrangements with Brookfield
were effectively determined by Brookfield in the context of the Spin-off and may contain terms that are less favorable than those
which otherwise might have been obtained from unrelated parties.



The terms of our arrangements
with Brookfield were effectively determined by Brookfield in the context of the Spin-off. These terms, including terms relating
to compensation, contractual or fiduciary duties, conflicts of interest and Brookfield’s ability to engage in outside activities,
including activities that compete with us, our activities and limitations on liability and indemnification, may be less favorable
than those which otherwise might have resulted if the negotiations had involved unrelated parties. The transfer agreements under
which our assets and operations were acquired from Brookfield do not contain representations and warranties or indemnities relating
to the underlying assets and operations. Under our limited partnership agreement, persons who acquire our units and their transferees
will be deemed to have agreed that none of those arrangements constitutes a breach of any duty that may be owed to them under our
limited partnership agreement or any duty stated or implied by law or equity.



20







The BPY General Partner may be unable
or unwilling to terminate our Master Services Agreement.



Our Master Services
Agreement provides that the Service Recipients may terminate the agreement only if: (i) any of the Service Providers defaults
in the performance or observance of any material term, condition or covenant contained in the agreement in a manner that results
in material harm to the Service Recipients and the default continues unremedied for a period of 60 days after written notice of
the breach is given to such Service Provider; (ii) any of the Service Providers engages in any act of fraud, misappropriation
of funds or embezzlement against any Service Recipient that results in material harm to the Service Recipients; (iii) any of the
Service Providers is grossly negligent in the performance of its obligations under the Master Services Agreement and such gross
negligence results in material harm to the Service Recipients; or (iv) upon the happening of certain events relating to the
bankruptcy or insolvency of each of the Service Providers. The BPY General Partner cannot terminate the agreement for any other
reason, including if any of the Service Providers or Brookfield experiences a change of control, and there is no fixed term to
the agreement. In addition, because the BPY General Partner is a wholly-owned subsidiary of Brookfield Asset Management, it may
be unwilling to terminate our Master Services Agreement, even in the case of a default. If the Service Providers’ performance
does not meet the expectations of investors, and the BPY General Partner is unable or unwilling to terminate our Master Services
Agreement, the market price of our units could suffer. Furthermore, the termination of our Master Services Agreement would terminate
our company’s rights under the Relationship Agreement. See “Relationship Agreement” under Item 7.B. “Major
Shareholders and Related Party Transactions - Related Party Transactions - Relationship with Brookfield”.



The liability of the Service Providers
is limited under our arrangements with them and we have agreed to indemnify the Service Providers against claims that they may
face in connection with such arrangements, which may lead them to assume greater risks when making decisions relating to us than
they otherwise would if acting solely for their own account.



Under our Master Services
Agreement, the Service Providers have not assumed any responsibility other than to provide or arrange for the provision of the
services described in our Master Services Agreement in good faith and will not be responsible for any action that the BPY General
Partner takes in following or declining to follow their advice or recommendations. In addition, under our limited partnership agreement,
the liability of the BPY General Partner and its affiliates, including the Service Providers, is limited to the fullest extent
permitted by law to conduct involving bad faith, fraud, gross negligence or willful misconduct or, in the case of a criminal matter,
action that was known to have been unlawful. The liability of the Service Providers under our Master Services Agreement is similarly
limited. In addition, we have agreed to indemnify the Service Providers to the fullest extent permitted by law from and against
any claims, liabilities, losses, damages, costs or expenses incurred by an indemnified person or threatened in connection with
our operations, investments and activities or in respect of or arising from our Master Services Agreement or the services provided
by the Service Providers, except to the extent that the claims, liabilities, losses, damages, costs or expenses are determined
to have resulted from the conduct in respect of which such persons have liability as described above. These protections may result
in the Service Providers tolerating greater risks when making decisions than otherwise would be the case, including when determining
whether to use leverage in connection with acquisitions. The indemnification arrangements to which the Service Providers are parties
may also give rise to legal claims for indemnification that are adverse to our company and our unitholders.



Risks Relating to our Units



The price of our units may fluctuate
significantly and you could lose all or part of the value of your units.



The market price of
our units may fluctuate significantly and you could lose all or part of the value of your units. Factors that may cause the price
of our units to vary include:



| | · | changes in our financial performance and
prospects and Brookfield’s financial performance and prospects, or in the financial performance and prospects of companies
engaged in businesses that are similar to us or Brookfield;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the termination of our Master Services
Agreement or the departure of some or all of Brookfield’s professionals;
| | - | ---------------------------------------------------------------------------------------------------------------



| | · | changes in laws or regulations, or new
interpretations or applications of laws and regulations, that are applicable to us;
| | - | --------------------------------------------------------------------------------------------------------------------------



| | · | sales of our units by our unitholders,
including by Brookfield and/or other significant holders of our units;
| | - | -------------------------------------------------------------------------------------------------------------



| | · | general economic trends and other external
factors, including those resulting from war, incidents of terrorism or responses to such events;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------



| | · | speculation in the press or investment
community regarding us or Brookfield or factors or events that may directly or indirectly affect us or Brookfield;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | our ability to raise capital on favorable
terms; and
| | - | ----------------------------------------------------



| | · | a loss of any major funding source.
| | - | -----------------------------------



Securities markets
in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies
or partnerships. Any broad market fluctuations may adversely affect the trading price of our units.



Our company may issue additional
units in the future in lieu of incurring indebtedness which may dilute existing holders of our units or our company may issue securities
that have rights and privileges that are more favorable than the rights and privileges accorded to holders of our units.



Our company may issue
additional securities, including units and options, rights, warrants and appreciation rights relating to partnership securities
for any purpose and for such consideration and on such terms and conditions as the BPY General Partner may determine. The BPY General
Partner’s board of directors will be able to determine the class, designations, preferences, rights, powers and duties of
any additional partnership securities, including any rights to share in our company’s profits, losses and distributions,
any rights to receive partnership assets upon a dissolution or liquidation of our company and any redemption, conversion and exchange
rights. The BPY General Partner may use such authority to issue additional units or additional securities exchangeable for our
units, such as the Class A Preferred Units, which would dilute existing holders of our units, or to issue securities with rights
and privileges that are more favorable than those of our units. You will not have any right to consent to or otherwise approve
the issuance of any such securities or the terms on which any such securities may be issued.



21







Future sales or issuances of our
units in the public markets, or the perception of such sales, could depress the market price of our units.



The sale or issuance
of a substantial number of our units or other equity-related securities in the public markets, or the perception that such sales
could occur, could depress the market price of our units and impair our ability to raise capital through the sale of additional
equity securities. Although Brookfield intends to maintain a significant interest in our company, Brookfield expects its interests
in the Property Partnership to be reduced over time through mergers, treasury issuances or secondary sales which could also depress
the market price of our units. We cannot predict the effect that future sales or issuances of units, other equity-related securities,
or the limited partnership units of the Property Partnership would have on the market price of our units.



Our unitholders do not have a right
to vote on partnership matters or to take part in the management of our company.



Under our limited
partnership agreement, our unitholders are not entitled to vote on matters relating to our company, such as acquisitions, dispositions
or financing, or to participate in the management or control of our company. In particular, our unitholders do not have the right
to remove the BPY General Partner, to cause the BPY General Partner to withdraw from our company, to cause a new general partner
to be admitted to our partnership, to appoint new directors to the BPY General Partner’s board of directors, to remove existing
directors from the BPY General Partner’s board of directors or to prevent a change of control of the BPY General Partner.
In addition, except as prescribed by applicable laws, our unitholders’ consent rights apply only with respect to certain
amendments to our limited partnership agreement. As a result, unlike holders of common stock of a corporation, our unitholders
will not be able to influence the direction of our company, including its policies and procedures, or to cause a change in its
management, even if they are dissatisfied with our performance. Consequently, our unitholders may be deprived of an opportunity
to receive a premium for their units in the future through a sale of our company and the trading price of our units may be adversely
affected by the absence or a reduction of a takeover premium in the trading price.



Our company is a Bermuda exempted
limited partnership and it may not be possible for our investors to serve process on or enforce U.S. or Canadian judgments against
us.



Our company is a Bermuda
exempted limited partnership and a substantial portion of our assets are located outside the United States and Canada. In addition,
certain of the directors of the BPY General Partner and certain members of the senior management team who will be principally responsible
for providing us with management services reside outside of the United States and Canada. As a result, it may be difficult or impossible
for U.S. or Canadian investors to effect service of process within the United States or Canada upon us or our directors and executive
officers, or to enforce, against us or these persons, judgments obtained in the U.S. or Canadian courts predicated upon the civil
liability provisions of U.S. federal securities laws or Canadian securities laws. We believe that there is doubt as to the enforceability
in Bermuda, in original actions or in actions to enforce judgments of U.S. or Canadian courts, of claims predicated solely upon
U.S. federal securities laws or Canadian securities laws. See Item 10.B. “Additional Information - Memorandum and Articles
of Association - Description of Our Units and Our Limited Partnership Agreement - Our Units”.



Risks Relating to Taxation



General



We participate in transactions and
make tax calculations for which the ultimate tax determination may be uncertain.



We participate in
many transactions and make tax calculations during the course of our business for which the ultimate tax determination is uncertain.
While we believe we maintain provisions for uncertain tax positions that appropriately reflect our risk, these provisions are made
using estimates of the amounts expected to be paid based on a qualitative assessment of several factors. It is possible that liabilities
associated with one or more transactions may exceed our provisions due to audits by, or litigation with, relevant taxing authorities
which may materially affect our financial condition and results of operations.



Changes in tax law and practice may
have a material adverse effect on the operations of our company, the Holding Entities, and our operating entities and, as a consequence,
the value of our assets and the net amount of distributions payable to our unitholders.



Our structure, including
the structure of the Holding Entities and our operating entities, is based on prevailing taxation law and practice in the local
jurisdictions in which we operate. Any change in tax legislation (including in relation to taxation rates) and practice in these
jurisdictions could adversely affect these entities, as well as the net amount of distributions payable to our unitholders. Taxes
and other constraints that would apply to our operating entities in such jurisdictions may not apply to local institutions or other
parties, and such parties may therefore have a significantly lower effective cost of capital and a corresponding competitive advantage
in pursuing such acquisitions.



Our company’s ability to make
distributions depends on it receiving sufficient cash distributions from its underlying operations, and we cannot assure unitholders
that we will be able to make cash distributions to them in amounts that are sufficient to fund their tax liabilities.



Our Holding Entities
and operating entities may be subject to local taxes in each of the relevant territories and jurisdictions in which they operate,
including taxes on income, profits or gains and withholding taxes. As a result, our company’s cash available for distribution
is indirectly reduced by such taxes, and the post-tax return to our unitholders is similarly reduced by such taxes. We intend for
future acquisitions to be assessed on a case-by-case basis and, where possible and commercially viable, structured so as to minimize
any adverse tax consequences to our unitholders as a result of making such acquisitions.



22







In general, a unitholder
that is subject to income tax in Canada or the United States must include in income its allocable share of our company’s
items of income, gain, loss, and deduction (including, so long as it is treated as a partnership for tax purposes, our company’s
allocable share of those items of the Property Partnership) for each of our company’s fiscal years ending with or within
such unitholder’s tax year. See Item 10.E. “Taxation”. However, the cash distributed to a unitholder may
not be sufficient to pay the full amount of such unitholder’s tax liability in respect of its investment in our company,
because each unitholder’s tax liability depends on such unitholder’s particular tax situation and the tax treatment
of the underlying activities or assets of our company. If our company is unable to distribute cash in amounts that are sufficient
to fund our unitholders’ tax liabilities, each of our unitholders will still be required to pay income taxes on its share
of our company’s taxable income.



Our unitholders may be subject to
non-U.S., state and local taxes and return filing requirements as a result of owning our units.



Based on our expected
method of operation and the ownership of our operating entities indirectly through corporate Holding Entities, we do not expect
any unitholder, solely as a result of owning our units, to be subject to any additional income taxes imposed on a net basis or
additional tax return filing requirements in any jurisdiction in which we conduct activities or own property. However, our method
of operation and current structure may change, and there can be no assurance that our unitholders, solely as a result of owning
our units, will not be subject to certain taxes, including non-U.S., state and local income taxes, unincorporated business taxes
and estate, inheritance or intangible taxes imposed by the various jurisdictions in which we do business or own property now or
in the future, even if our unitholders do not reside in any of these jurisdictions. Consequently, our unitholders may also be required
to file non-U.S., state and local income tax returns in some or all of these jurisdictions. Further, our unitholders may be subject
to penalties for failure to comply with these requirements. It is the responsibility of each unitholder to file all U.S. federal,
non-U.S., state and local tax returns that may be required of such unitholder.



Our unitholders may be exposed to
transfer pricing risks.



To the extent that
our company, the Property Partnership, the Holding Entities or our operating entities enter into transactions or arrangements with
parties with whom they do not deal at arm’s length, including Brookfield, the relevant tax authorities may seek to adjust
the quantum or nature of the amounts received or paid by such entities if they consider that the terms and conditions of such transactions
or arrangements differ from those that would have been made between persons dealing at arm’s length. This could result in
more tax (and penalties and interest) being paid by such entities, and therefore the return to investors could be reduced. For
Canadian tax purposes, a transfer pricing adjustment may in certain circumstances result in additional income being allocated to
a unitholder with no corresponding cash distribution or in a dividend being deemed to be paid by a Canadian-resident to a non-arm’s
length non-resident, which deemed dividend is subject to Canadian withholding tax.



The BPY General Partner
believes that the base management fee and any other amount that is paid to the Service Providers will be commensurate with the
value of the services being provided by the Service Providers and comparable to the fees or other amounts that would be agreed
to in an arm’s length arrangement. However, no assurance can be given in this regard.



If the relevant tax
authority were to assert that an adjustment should be made under the transfer pricing rules to an amount that is relevant to the
computation of the income of the Property Partnership or our company, such assertion could result in adjustments to amounts of
income (or loss) allocated to our unitholders by our company for tax purposes. In addition, we might also be liable for transfer
pricing penalties in respect of transfer pricing adjustments unless reasonable efforts were made to determine, and use, arm’s
length transfer prices. Generally, reasonable efforts in this regard are only considered to be made if contemporaneous documentation
has been prepared in respect of such transactions or arrangements that support the transfer pricing methodology.



The U.S. Internal Revenue Service,
or IRS, or Canada Revenue Agency, or CRA, may not agree with certain assumptions and conventions that we use to comply with applicable
U.S. and Canadian federal income tax laws or to report income, gain, loss, deduction, and credit to our unitholders.



We will apply certain
assumptions and conventions to comply with applicable tax laws and to report income, gain, deduction, loss, and credit to a unitholder
in a manner that reflects such unitholder’s beneficial ownership of partnership items, taking into account variation in ownership
interests during each taxable year because of trading activity. A successful IRS or CRA challenge to such assumptions or conventions
could adversely affect the amount of tax benefits available to our unitholders and could require that items of income, gain, deduction,
loss, or credit, including interest deductions, be adjusted, reallocated or disallowed in a manner that adversely affects our unitholders.
See Item 10.E. “Taxation”.



United States



If our company or the Property Partnership
were to be treated as a corporation for U.S. federal income tax purposes, the value of our units might be adversely affected.



The value of our units
to our unitholders will depend in part on the treatment of our company and the Property Partnership as partnerships for U.S. federal
income tax purposes. However, in order for our company to be treated as a partnership for U.S. federal income tax purposes, under
present law, 90% or more of our company’s gross income for every taxable year must consist of qualifying income, as defined
in Section 7704 of the U.S. Internal Revenue Code of 1986, as amended, or the U.S. Internal Revenue Code, and our company
must not be required to register, if it were a U.S. corporation, as an investment company under the Investment Company Act and
related rules. Although the BPY General Partner intends to manage our affairs so that our company will not need to be registered
as an investment company if it were a U.S. corporation and so that it will meet the 90% test described above in each taxable year,
our company may not meet these requirements, or current law may change so as to cause, in either event, our company to be treated
as a corporation for U.S. federal income tax purposes. If our company (or the Property Partnership) were treated as a corporation
for U.S. federal income tax purposes, adverse U.S. federal income tax consequences could result for our unitholders and our company
(or the Property Partnership, as applicable), as described in greater detail in Item 10.E. “Taxation — U.S. Tax
Considerations — Partnership Status of Our Company and the Property Partnership”.



23







The failure of certain of our operating
entities (or certain of their subsidiaries) to qualify as real estate investment trusts under U.S. federal income tax rules generally
would have adverse tax consequences which could result in a material reduction in cash flow and after-tax return for our unitholders
and thus could result in a reduction of the value of our units.



Certain of our operating
entities (and certain of their subsidiaries), including operating entities in which we do not have a controlling interest, intend
to qualify for taxation as REITs for U.S. federal income tax purposes. However, no assurance can be provided that any such entity
will qualify as a REIT. An entity’s ability to qualify as a REIT depends on its satisfaction of certain asset, income, organizational,
distribution, shareholder ownership, and other requirements on a continuing basis. No assurance can be provided that the actual
results of operations for any particular entity in a given taxable year will satisfy such requirements. If any such entity were
to fail to qualify as a REIT in any taxable year, it would be subject to U.S. federal income tax, including any applicable alternative
minimum tax, on its net taxable income at regular corporate rates, and distributions would not be deductible by it in computing
its taxable income. Any such corporate tax liability could be substantial and could materially reduce the amount of cash available
for distribution to our company, which in turn would materially reduce the amount of cash available for distribution to our unitholders
or investment in our business and could have an adverse impact on the value of our units. Unless entitled to relief under certain
U.S. federal income tax rules, any entity which so failed to qualify as a REIT would also be disqualified from taxation as a REIT
for the four taxable years following the year during which it ceased to qualify as a REIT.



We may be subject to U.S. “backup”
withholding tax or other U.S. withholding taxes if any unitholder fails to comply with U.S. tax reporting rules or if the IRS or
other applicable state or local taxing authority does not accept our withholding methodology, and such excess withholding tax cost
will be an expense borne by our company and, therefore, by all of our unitholders on a pro rata basis.



We may become subject
to U.S. backup withholding tax or other U.S. withholding taxes with respect to any U.S. or non-U.S. unitholder who fails to timely
provide our company (or the applicable clearing agent or other intermediary) with an IRS Form W-9 or IRS Form W-8, as the case
may be, or if the withholding methodology we use is not accepted by the IRS or other applicable state or local taxing authority.
See Item 10.E “Taxation — U.S. Tax Considerations — Administrative Matters — Withholding and Backup Withholding”.
To the extent that any unitholder fails to timely provide the applicable form (or such form is not properly completed), or should
the IRS or other applicable state or local taxing authority not accept our withholding methodology, our company might treat such
U.S. backup withholding taxes or other U.S. withholding taxes as an expense, which would be borne indirectly by all of our unitholders
on a pro rata basis. As a result, our unitholders that fully comply with their U.S. tax reporting obligations may bear a share
of such burden created by other unitholders that do not comply with the U.S. tax reporting rules.



Tax-exempt organizations may face
certain adverse U.S. tax consequences from owning our units.



The BPY General Partner
intends to use commercially reasonable efforts to structure our activities to avoid generating income connected with the conduct
of a trade or business (which income generally would constitute “unrelated business taxable income”, or UBTI, to the
extent allocated to a tax-exempt organization). However, no assurance can be provided that we will not generate UBTI in the future.
In particular, UBTI includes income attributable to debt-financed property, and we are not prohibited from financing the acquisition
of property with debt. The potential for income to be characterized as UBTI could make our units an unsuitable investment for a
tax-exempt organization, as addressed in greater detail in Item 10.E. “Taxation — U.S. Tax Considerations —
Consequences to U.S. Holders — U.S. Taxation of Tax-Exempt U.S. Holders of Our Units”.



If our company were engaged in a
U.S. trade or business, non-U.S. persons would face certain adverse U.S. tax consequences from owning our units.



Based on our organizational
structure, as well as our expected income and assets, the BPY General Partner currently believes that our company is unlikely to
earn income treated as effectively connected with a U.S. trade or business, including effectively connected income attributable
to the sale of a “United States real property interest”, as defined in the U.S. Internal Revenue Code. If our company
were deemed to be engaged in a U.S. trade or business, or to realize gain from the sale or other disposition of a U.S. real property
interest, Non-U.S. Holders (as defined in Item 10.E “Taxation — U.S. Tax Considerations”) generally would be
required to file U.S. federal income tax returns and could be subject to U.S. federal withholding tax at the highest marginal U.S.
federal income tax rates applicable to ordinary income. See Item 10.E “Taxation — U.S. Tax Considerations — Consequences
to Non-U.S. Holders”.



To meet U.S. federal income tax and
other objectives, our company and the Property Partnership may invest through U.S. and non-U.S. Holding Entities that are treated
as corporations for U.S. federal income tax purposes, and such Holding Entities may be subject to corporate income tax.



To meet U.S. federal
income tax and other objectives, our company and the Property Partnership may invest through U.S. and non-U.S. Holding Entities
that are treated as corporations for U.S. federal income tax purposes, and such Holding Entities may be subject to corporate income
tax. Consequently, items of income, gain, loss, deduction, or credit realized in the first instance by our operating entities will
not flow, for U.S. federal income tax purposes, directly to the Property Partnership, our company, or our unitholders, and any
such income or gain may be subject to a corporate income tax, in the U.S. or other jurisdictions, at the level of the Holding Entity.
Any such additional taxes may adversely affect our company’s ability to maximize its cash flow.



24







Our unitholders taxable in the United
States may be viewed as holding an indirect interest in an entity classified as a “passive foreign investment company”
for U.S. federal income tax purposes.



U.S. holders may face
adverse U.S. tax consequences arising from the ownership of a direct or indirect interest in a “passive foreign investment
company”, or PFIC. Based on our organizational structure, as well as our expected income and assets, the BPY General Partner
currently believes that one or more of our current Holding Entities and operating entities are likely to be classified as PFICs.
In addition, we may in the future acquire certain investments or operating entities through one or more Holding Entities treated
as corporations for U.S. federal income tax purposes, and such future Holding Entities or other companies in which we acquire an
interest may be treated as PFICs. In general, gain realized by U.S. Holders from the sale of stock of a PFIC is subject to tax
at ordinary income rates, and an interest charge generally applies. Alternatively, U.S. Holders making certain elections with respect
to their direct or indirect interest in a PFIC may be required to recognize taxable income prior to the receipt of cash relating
to such income. The adverse consequences of owning an interest in a PFIC, as well as the availability of certain tax elections
for mitigating these adverse consequences, are described in greater detail in Item 10.E. “Taxation — U.S. Tax
Considerations — Consequences to U.S. Holders — Passive Foreign Investment Companies”. You should consult an
independent tax adviser regarding the implication of the PFIC rules for an investment in our units.



Tax gain or loss from the disposition
of our units could be more or less than expected.



If a sale of our units
by a unitholder is taxable in the United States, the unitholder will recognize gain or loss for U.S. federal income tax purposes
equal to the difference between the amount realized and the unitholder’s adjusted tax basis in such units. Prior distributions
to a unitholder in excess of the total net taxable income allocated to such unitholder will have decreased such unitholder’s
tax basis in our units. Therefore, such excess distributions will increase a unitholder’s taxable gain or decrease such unitholder’s
taxable loss when our units are sold, and may result in a taxable gain even if the sale price is less than the original cost. A
portion of the amount realized, whether or not representing gain, could be ordinary income to such unitholder.



Our partnership structure involves
complex provisions of U.S. federal income tax law for which no clear precedent or authority may be available. The tax characterization
of our partnership structure is also subject to potential legislative, judicial, or administrative change and differing interpretations,
possibly on a retroactive basis.



The U.S. federal income
tax treatment of our unitholders depends in some instances on determinations of fact and interpretations of complex provisions
of U.S. federal income tax law for which no clear precedent or authority may be available. Unitholders should be aware that the
U.S. federal income tax rules, particularly those applicable to partnerships, are constantly under review by the Congressional
tax-writing committees and other persons involved in the legislative process, the IRS, the U.S. Treasury Department and the courts,
frequently resulting in changes which could adversely affect the value of our units or cause our company to change the way it conducts
its activities. For example, changes to the U.S. federal tax laws and interpretations thereof could make it more difficult or impossible
for our company to be treated as a partnership that is not taxable as a corporation for U.S. federal income tax purposes, change
the character or treatment of portions of our company’s income, reduce the net amount of distributions available to our unitholders,
or otherwise affect the tax considerations of owning our units. In addition, our company’s organizational documents and agreements
permit the BPY General Partner to modify our limited partnership agreement, without the consent of our unitholders, to address
such changes. These modifications could have a material adverse impact on our unitholders. See Item 10.E. “Taxation
— U.S. Tax Considerations — Administrative Matters — New Legislation or Administrative or Judicial Action”.



Our company’s delivery of required
tax information for a taxable year may be subject to delay, which could require a unitholder who is a U.S. taxpayer to request
an extension of the due date for such unitholder’s income tax return.



Our company has agreed
to use commercially reasonable efforts to provide U.S. tax information (including IRS Schedule K-1 information needed
to determine a unitholder’s allocable share of our company’s income, gain, losses, and deductions) no later than 90 days
after the close of each calendar year. However, providing this U.S. tax information to our unitholders will be subject to
delay in the event of, among other reasons, the late receipt of any necessary tax information from lower-tier entities. It is therefore
possible that, in any taxable year, a unitholder will need to apply for an extension of time to file such unitholder’s tax
returns. See Item 10.E “Taxation — U.S. Tax Considerations — Administrative Matters — Information
Returns”.



The sale or exchange of 50% or more
of our units will result in the constructive termination of our partnership for U.S. federal income tax purposes.



Our partnership will
be considered to have been terminated for U.S. federal income tax purposes if there is a sale or exchange of 50% or more of our
units within a 12-month period. A constructive termination of our partnership would, among other things, result in the closing
of its taxable year for U.S. federal income tax purposes for all of our unitholders and could result in the possible acceleration
of income to certain of our unitholders and certain other consequences that could adversely affect the value of our units. However,
the BPY General Partner does not expect a constructive termination, should it occur, to have a material impact on the computation
of the future taxable income generated by our company for U.S. federal income tax purposes. See Item 10.E. “Taxation
— U.S. Tax Considerations — Administrative Matters — Constructive Termination”.



25







Under the Foreign Account Tax Compliance
provisions of the Hiring Incentives to Restore Employment Act of 2010, commonly known as “FATCA”, certain payments
made or received by our company may be subject to a 30% federal withholding tax, unless certain requirements are met.



Under FATCA, a 30%
withholding tax may apply to certain payments of U.S.-source income made to our company, the Property Partnership, the Holding
Entities, or the operating entities, or by our company to a unitholder, unless certain requirements are met, as described in greater
detail in Item 10.E “Taxation — U.S. Tax Considerations — Administrative Matters — Foreign Account Tax
Compliance”. The 30% withholding tax may also apply to certain payments made on or after January 1, 2017 that are attributable
to U.S.-source income or that constitute gross proceeds from the disposition of property that could produce U.S.-source dividends
or interest. To ensure compliance with FATCA, information regarding certain unitholders’ ownership of our units may be reported
to the IRS or to a non-U.S. governmental authority. Unitholders should consult their own tax advisers regarding the consequences
under FATCA of an investment in our units.



Canada



If any of the non-Canadian subsidiaries
in which the Property Partnership directly invests earns income that is characterized as “foreign accrual property income”,
or FAPI, as defined in the Income Tax Act (Canada), or, together with the regulations thereunder, the Tax Act, our unitholders
may be required to include amounts allocated from our company in computing their income for Canadian federal income tax purposes
even though there may be no corresponding cash distribution.



Any non-resident subsidiaries
in which the Property Partnership directly invests are expected to be “foreign affiliates” and “controlled foreign
affiliates”, each as defined in the Tax Act, collectively referred to herein as CFAs, of the Property Partnership. If any
CFA of the Property Partnership or any direct or indirect subsidiary thereof that is itself a CFA of the Property Partnership,
or an Indirect CFA, earns income that is characterized as FAPI in a particular taxation year of the CFA or Indirect CFA, the FAPI
allocable to the Property Partnership must be included in computing the income of the Property Partnership for Canadian federal
income tax purposes for the fiscal period of the Property Partnership in which the taxation year of that CFA or Indirect CFA that
earned the FAPI ends, whether or not the Property Partnership actually receives a distribution of that FAPI. Our company will include
its share of such FAPI of the Property Partnership in computing its income for Canadian federal income tax purposes and our unitholders
will be required to include their proportionate share of such FAPI allocated from our company in computing their income for Canadian
federal income tax purposes. As a result, our unitholders may be required to include amounts in their income for Canadian federal
income tax purposes even though they have not and may not receive an actual cash distribution of such amounts. The Tax Act contains
anti-avoidance rules to address certain foreign tax credit generator transactions, or the Foreign Tax Credit Generator Rules. Under
the Foreign Tax Credit Generator Rules, the “foreign accrual tax,” as defined in the Tax Act, applicable to a particular
amount of FAPI included in the Property Partnership’s income in respect of a particular CFA of the Property Partnership may
be limited in certain specified circumstances.



Our unitholders may be required to
include imputed amounts in their income for Canadian federal income tax purposes in accordance with section 94.1 of the Tax Act.



Section 94.1 of the
Tax Act contains rules relating to investments in entities that are not resident or deemed to be resident in Canada for purposes
of the Tax Act or not situated in Canada, other than a CFA of the taxpayer, or Non-Resident Entities, that could in certain circumstances
cause income to be imputed to our unitholders for Canadian federal income tax purposes, either directly or by way of allocation
of such income imputed to our company or to the Property Partnership. See Item 10.E. “Taxation — Canadian Federal
Income Tax Considerations”.



Our unitholders’ foreign tax
credits for Canadian federal income tax purposes will be limited if the Foreign Tax Credit Generator Rules apply in respect of
the foreign “business income tax” or “non-business income tax”, each as defined in the Tax Act, paid by
our company or the Property Partnership to the government of a foreign country.



Under the Foreign Tax
Credit Generator Rules, the foreign “business-income tax” or “non-business-income tax” for Canadian federal
income tax purposes for any taxation year may be limited in certain circumstances. If the Foreign Tax Credit Generator Rules apply,
the allocation to a unitholder of foreign “business income tax” or “non-business income tax” paid by our
company or the Property Partnership, and therefore, such unitholder’s foreign tax credits for Canadian federal income tax
purposes, will be limited. See Item 10.E. “Taxation—Canadian Federal Income Tax Considerations”.



Unitholders who are not resident
in Canada or deemed to be resident in Canada for purposes of the Tax Act and who do not use or hold and are not deemed to use or
hold our units in connection with a business carried on in Canada, or non-resident limited partners, may be subject to Canadian
federal income tax with respect to any Canadian source business income earned by our company or the Property Partnership if our
company or the Property Partnership were considered to carry on business in Canada.



If our company or the
Property Partnership were considered to carry on a business in Canada for purposes of the Tax Act, non-resident limited partners
would be subject to Canadian federal income tax on their proportionate share of any Canadian source business income earned or considered
to be earned by our company, subject to the potential application of the safe harbour rule in section 115.2 of the Tax Act and
any relief that may be provided by any relevant income tax treaty or convention.



The BPY General Partner
intends to manage the affairs of our company and the Property Partnership, to the extent possible, so that they do not carry on
business in Canada and are not considered or deemed to carry on business in Canada for purposes of the Tax Act. Nevertheless, because
the determination of whether our company or the Property Partnership is carrying on business and, if so, whether that business
is carried on in Canada, is a question of fact that is dependent upon the surrounding circumstances, the Canada Revenue Agency,
or CRA, might contend successfully that either or both of our company and the Property Partnership carries on business in Canada
for purposes of the Tax Act.



If our company or the
Property Partnership is considered to carry on business in Canada or is deemed to carry on business in Canada for purposes of the
Tax Act, non-resident limited partners that are corporations would be required to file a Canadian federal income tax return for
each taxation year in which they are a non-resident limited partner regardless of whether relief from Canadian taxation is available
under an applicable income tax treaty or convention. Non-resident limited partners who are individuals would only be required to
file a Canadian federal income tax return for any taxation year in which they are allocated income from our company from carrying
on business in Canada that is not exempt from Canadian taxation under the terms of an applicable income tax treaty or convention.



26







Non-resident limited partners may
be subject to Canadian federal income tax on capital gains realized by our company or the Property Partnership on dispositions
of “taxable Canadian property”, as defined in the Tax Act.



A non-resident limited
partner will be subject to Canadian federal income tax on its proportionate share of capital gains realized by our company or the
Property Partnership on the disposition of “taxable Canadian property”, other than “treaty protected property”,
as defined in the Tax Act. “Taxable Canadian property” includes, but is not limited to, property that is used or held
in a business carried on in Canada and shares of corporations resident in Canada that are not listed on a “designated stock
exchange” if more than 50% of the fair market value of the shares is derived from certain Canadian properties during the
60-month period immediately preceding the disposition. Property of our company and the Property Partnership generally will be “treaty-protected
property” to a non-resident limited partner if the gain from the disposition of the property would, because of an applicable
income tax treaty or convention, be exempt from tax under the Tax Act. Our company and the Property Partnership are not expected
to realize capital gains or losses from dispositions of “taxable Canadian property”. However, no assurance can be given
in this regard. Non-resident limited partners will be required to file a Canadian federal income tax return in respect of a disposition
of “taxable Canadian property” by our company or the Property Partnership unless the disposition is an “excluded
disposition” for the purposes of section 150 of the Tax Act. However, non-resident limited partners that are corporations
will still be required to file a Canadian federal income tax return in respect of a disposition of “taxable Canadian property”
that is an “excluded disposition” if tax would otherwise be payable under Part I of the Tax Act by such non-resident
limited partners in respect of the disposition but is not because of an applicable income tax treaty or convention (otherwise than
in respect of a disposition of “taxable Canadian property” that is “treaty-protected property” of the corporation).
In general, an “excluded disposition” is a disposition of property by a taxpayer in a taxation year where: (i) the
taxpayer is a non-resident of Canada at the time of the disposition; (ii) no tax is payable by the taxpayer under Part I of
the Tax Act for the taxation year; (iii) the taxpayer is not liable to pay any amounts under the Tax Act in respect of any
previous taxation year (other than certain amounts for which the CRA holds adequate security); and (iv) each “taxable
Canadian property” disposed of by the taxpayer in the taxation year is either: (A) “excluded property” (as
defined in subsection 116(6) of the Tax Act); or (B) property in respect of the disposition of which a certificate under subsections
116(2), (4) or (5.2) of the Tax Act has been issued by the CRA. Non-resident limited partners should consult their own
tax advisors with respect to the requirements to file a Canadian federal income tax return in respect of a disposition of “taxable
Canadian property” by our company or the Property Partnership.



Non-resident limited partners may
be subject to Canadian federal income tax on capital gains realized on the disposition of our units if our units are “taxable
Canadian property”.



Any capital gain arising
from the disposition or deemed disposition of our units by a non-resident limited partner will be subject to taxation in Canada,
if, at the time of the disposition or deemed disposition, our units are “taxable Canadian property” of the non-resident
limited partner, unless our units are “treaty-protected property” to such non-resident limited partner. In general,
our units will not constitute “taxable Canadian property” of any non-resident limited partner at the time of disposition
or deemed disposition, unless (a) at any time in the 60-month period immediately preceding the disposition or deemed disposition,
more than 50% of the fair market value of our units was derived, directly or indirectly (excluding through a corporation, partnership
or trust, the shares or interests in which were not themselves “taxable Canadian property”), from one or any combination
of: (i) real or immovable property situated in Canada; (ii) “Canadian resource property”, as defined in the
Tax Act; (iii) “timber resource property”, as defined in the Tax Act; and (iv) options in respect of or interests
in, or for civil law rights in, such property, whether or not such property exists, or (b) our units are otherwise deemed
to be “taxable Canadian property”. Since our company’s assets will consist principally of units of the Property
Partnership, our units would generally be “taxable Canadian property” at a particular time if the units of the Property
Partnership held by our company derived, directly or indirectly (excluding through a corporation, partnership or trust, the shares
or interests in which were not themselves “taxable Canadian property”) more than 50% of their fair market value from
properties described in (i) to (iv) above, at any time in the 60-month period preceding the particular time. Even if our units
constitute “taxable Canadian property”, units of our company will be “treaty protected property” if the
gain on the disposition of our units is exempt from tax under the Tax Act under the terms of an applicable income tax treaty or
convention. It is not expected that our units will constitute “taxable Canadian property” of any non-resident limited
partner at any time but no assurance can be given in this regard. If our units constitute “taxable Canadian property”,
non-resident limited partners will be required to file a Canadian federal income tax return in respect of a disposition of our
units unless the disposition is an “excluded disposition” (as discussed above). If our units constitute “taxable
Canadian property”, non-resident limited partners should consult their own tax advisors with respect to the requirement to
file a Canadian federal income tax return in respect of a disposition of our units.



Non-resident limited partners may
be subject to Canadian federal income tax reporting and withholding tax requirements on the disposition of “taxable Canadian
property”.



Non-resident limited
partners who dispose of “taxable Canadian property”, other than “excluded property” and certain other property
described in subsection 116(5.2) of the Tax Act (or who are considered to have disposed of such property on the disposition of
such property by our company or the Property Partnership) are obligated to comply with the procedures set out in section 116 of
the Tax Act and obtain a certificate pursuant to the Tax Act. In order to obtain such certificate, the non-resident limited partner
is required to report certain particulars relating to the transaction to the CRA not later than 10 days after the disposition occurs.
Our units are not expected to be “taxable Canadian property” and neither our company nor the Property Partnership is
expected to dispose of property that is “taxable Canadian property”, but no assurance can be given in these regards.



27









Payments of dividends or interest
(other than interest exempt from Canadian federal withholding tax) by residents of Canada to the Property Partnership will be subject
to Canadian federal withholding tax and we may be unable to apply a reduced rate taking into account the residency or entitlement
to relief under an applicable income tax treaty or convention of our unitholders.



Our company and the
Property Partnership will be deemed to be a non-resident person in respect of certain amounts paid or credited or deemed to be
paid or credited to them by a person resident or deemed to be resident in Canada, including dividends or interest. Dividends or
interest (other than interest exempt from Canadian federal withholding tax) paid or deemed to be paid by a person resident or deemed
to be resident in Canada to the Property Partnership will be subject to withholding tax under Part XIII of the Tax Act at the rate
of 25%. However, the CRA’s administrative practice in similar circumstances is to permit the rate of Canadian federal withholding
tax applicable to such payments to be computed by looking through the partnership and taking into account the residency of the
partners (including partners who are resident in Canada) and any reduced rates of Canadian federal withholding tax that any non-resident
limited partners may be entitled to under an applicable income tax treaty or convention, provided that the residency status and
entitlement to treaty benefits can be established. In determining the rate of Canadian federal withholding tax applicable to amounts
paid by the Holding Entities to the Property Partnership, we expect the Holding Entities to look-through the Property Partnership
and our company to the residency of the partners of our company (including partners who are residents of Canada) and to take into
account any reduced rates of Canadian federal withholding tax that non-resident limited partners may be entitled to under an applicable
income tax treaty or convention in order to determine the appropriate amount of Canadian federal withholding tax to withhold from
dividends or interest paid to the Property Partnership. However, there can be no assurance that the CRA will apply its administrative
practice in this context. If the CRA’s administrative practice is not applied and the Holding Entities withhold Canadian
federal withholding tax from applicable payments on a look-through basis, the Holding Entities may be liable for additional amounts
of Canadian federal withholding tax plus any associated interest and penalties. Under the Canada-United States Tax Convention (1980),
or the Treaty, in certain circumstances a Canadian resident payer is required to look-through fiscally transparent partnerships,
such as our company and the Property Partnership, to the residency and Treaty entitlements of their partners and to take into account
the reduced rates of Canadian federal withholding tax that such partners may be entitled to under the Treaty.



While the BPY General
Partner expects the Holding Entities to look-through our company and the Property Partnership in determining the rate of Canadian
federal withholding tax applicable to amounts paid or deemed to be paid by the Holding Entities to the Property Partnership, we
may be unable to accurately or timely determine the residency of our unitholders for purposes of establishing the extent to which
Canadian federal withholding taxes apply or whether reduced rates of withholding tax apply to some or all of our unitholders. In
such a case, the Holding Entities will withhold Canadian federal withholding tax from all payments made to the Property Partnership
that are subject to Canadian federal withholding tax at the rate of 25%. Canadian resident unitholders will be entitled to claim
a credit for such taxes against their Canadian federal income tax liability, but non-resident limited partners will need to take
certain steps to receive a refund or credit in respect of any such Canadian federal withholding taxes withheld equal to the difference
between the withholding tax at a rate of 25% and the withholding tax at the reduced rate they are entitled to under an applicable
income tax treaty or convention. See Item 10.E. “Taxation — Canadian Federal Income Tax Considerations”
for further detail. Investors should consult their own tax advisors concerning all aspects of Canadian federal withholding taxes.



Our units may or may not continue
to be “qualified investments” under the Tax Act for registered plans.



Provided that our units
are listed on a “designated stock exchange”, as defined in the Tax Act (which currently includes the NYSE and the Toronto
Stock Exchange, or the TSX), our units will be “qualified investments” under the Tax Act for a trust governed by a
registered retirement savings plan, or RRSP, deferred profit sharing plan, registered retirement income fund, or RRIF, registered
education savings plan, registered disability savings plan, and tax-free savings account, or TFSA. However, there can be no assurance
that our units will be listed or continue to be listed on a “designated stock exchange”. There can also be no assurance
that tax laws relating to “qualified investments” will not be changed. Taxes may be imposed in respect of the acquisition
or holding of non-qualified investments by such registered plans and certain other taxpayers and with respect to the acquisition
or holding of “prohibited investments”, as defined in the Tax Act, by a RRSP, RRIF or TFSA.



Our units will not
be a “prohibited investment” for a trust governed by a RRSP, RRIF or TFSA, provided that the holder of the TFSA or
the annuitant under the RRSP or RRIF, as the case may be, deals at arm’s length with our company for purposes of the Tax
Act and does not have a “significant interest”, as defined in the Tax Act for purposes of the prohibited investment
rules, in our company. Unitholders who intend to hold our units in a RRSP, RRIF or TFSA should consult with their own tax advisors
regarding the application of the foregoing prohibited investment rules having regard to their particular circumstances.



The Canadian federal income tax consequences
to you could be materially different in certain respects from those described in this Form 20-F if our company or the Property
Partnership is a “SIFT partnership”, as defined in the Tax Act.



Under the rules in
the Tax Act applicable to a “SIFT partnership”, or the SIFT Rules, certain income and gains earned by a “SIFT
partnership” will be subject to income tax at the partnership level at a rate similar to a corporation and allocations of
such income and gains to its partners will be taxed as a dividend from a “taxable Canadian corporation”, as defined
in the Tax Act. In particular, a “SIFT partnership” will be required to pay a tax on the total of its income from businesses
carried on in Canada, income from “non-portfolio properties”, as defined in the Tax Act (other than taxable dividends),
and taxable capital gains from dispositions of “non-portfolio properties”. “Non-portfolio properties” include,
among other things, equity interests or debt of corporations, trusts or partnerships that are resident in Canada, and of non-resident
persons or partnerships the principal source of income of which is one or any combination of sources in Canada (other than an “excluded
subsidiary entity”, as defined in the Tax Act), that are held by the “SIFT partnership” and have a fair market
value that is greater than 10% of the equity value of such entity, or that have, together with debt or equity that the “SIFT
partnership” holds of entities affiliated (within the meaning of the Tax Act) with such entity, an aggregate fair market
value that is greater than 50% of the equity value of the “SIFT partnership”. The tax rate that is applied to the above
mentioned sources of income and gains is set at a rate equal to the “net corporate income tax rate” plus the “provincial
SIFT tax rate”, each as defined in the Tax Act.



28







A partnership will
be a “SIFT partnership” throughout a taxation year if at any time in the taxation year (i) it is a “Canadian
resident partnership”, as defined in the Tax Act, (ii) “investments”, as defined in the Tax Act, in the partnership
are listed or traded on a stock exchange or other public market, and (iii) it holds one or more “non-portfolio properties”.
For these purposes, a partnership will be a “Canadian resident partnership” at a particular time if (a) it is a “Canadian
partnership”, as defined in the Tax Act, at that time, (b) it would, if it were a corporation, be resident in Canada (including,
for greater certainty, a partnership that has its central management and control located in Canada), or (c) it was formed under
the laws of a province. A “Canadian partnership” for these purposes is a partnership all of whose members are resident
in Canada or are partnerships that are “Canadian partnerships”.



Under the SIFT Rules,
our partnership and the Property Partnership could each be a “SIFT partnership” if it is a “Canadian resident
partnership”. However, the Property Partnership would not be a “SIFT partnership” if our partnership is a “SIFT
partnership” regardless of whether the Property Partnership is a “Canadian resident partnership” on the basis
that the Property Partnership would be an “excluded subsidiary entity”.



Our company and the
Property Partnership will be a “Canadian resident partnership” if the central management and control of these partnerships
is located in Canada. This determination is a question of fact and is expected to depend on where the BPY General Partner is located
and exercises central management and control of the partnerships. The BPY General Partner will take appropriate steps so that the
central management and control of these entities is not located in Canada such that the SIFT Rules should not apply to our company
or to the Property Partnership at any relevant time. However, no assurance can be given in this regard. If our company or the Property
Partnership is a “SIFT partnership”, the Canadian federal income tax consequences to our unitholders could be materially
different in certain respects from those described in Item 10.E. “Taxation — Canadian Federal Income Tax Considerations”.
In addition, there can be no assurance that the SIFT Rules will not be revised or amended in the future such that the SIFT Rules
will apply to our company or to the Property Partnership.



| | ITEM 4. | INFORMATION ON THE COMPANY
| | ------- | --------------------------



4.A. HISTORY AND DEVELOPMENT OF THE
COMPANY



Our company was established
on January 3, 2013 as a Bermuda exempted limited partnership registered under the Bermuda Limited Partnership Act 1883, as amended,
and the Bermuda Exempted Partnerships Act 1992, as amended. Our company’s head and registered office is 73 Front Street,
5th Floor, Hamilton HM 12, Bermuda, and our company’s telephone number is +441 294 3309.



Our company was established
by Brookfield Asset Management as its primary vehicle to own and operate certain commercial property operations, including office,
retail, industrial, multifamily and other assets, on a global basis. Our partnership’s limited partnership units are listed
on the NYSE and the TSX under the symbols “BPY” and “BPY.UN”, respectively.



On April 15, 2013,
Brookfield Asset Management completed a spin-off of its commercial property operations to our partnership which was effected by
way of a special dividend of units of our partnership to holders of Brookfield Asset Management’s Class A and B limited voting
shares. Each holder of the shares received one partnership unit for approximately every 17.42 shares, representing 44.7% of the
limited partnership interest in our partnership, with Brookfield Asset Management retaining units of our partnership, Redemption-Exchange
Units, and a 1% general partner interest in the Property Partnership through Property Special LP, which was then known as Brookfield
Property GP L.P. Our general partner is an indirect wholly owned subsidiary of Brookfield Asset Management. In addition, wholly
owned subsidiaries of Brookfield Asset Management provide management services to us pursuant to our Master Services Agreement.



Although Brookfield
intends to maintain a significant interest in our company, Brookfield expects its interest to be reduced over time through mergers,
treasury issuances or secondary sales.



On August 8, 2013,
we effected a restructuring pursuant to which the Property Partnership’s limited partnership agreement was amended to make
our company the managing general partner of the Property Partnership and to make Property Special LP, the former general partner
of the Property Partnership, a special limited partner of the Property Partnership. This change was made in order to simplify our
governance structure and to more clearly delineate our company’s governance rights in respect of the Property Partnership.
As a result, the voting agreement between our company and Brookfield, which required Brookfield to exercise certain of its voting
rights in respect of the Property Partnership’s former general partner as directed by our company, was terminated and related
changes were made to our limited partnership agreement and the Master Services Agreement. Because Brookfield is a party to these
agreements, all of the amendments were approved by a special committee of independent directors of the BPY General Partner and
the former general partner of the Property Partnership. The economic interests of our company and Brookfield in the Property Partnership
were not affected by these changes. See Item 10.B “Memorandum and Articles of Association - Description of Our Units and
Our Limited Partnership Agreement” and “Memorandum and Articles of Association - Description of the Property Partnership
Limited Partnership Agreement”.



In November 2013,
we acquired additional shares and warrants of GGP for total consideration of $1.4 billion. As a result of the acquisition, our
fully-diluted ownership interest in GGP was increased to 32%, assuming the exercise of all of the outstanding warrants, or approximately
28% on an undiluted basis. Prior to this transaction, Brookfield Asset Management managed a 43% fully-diluted interest in GGP on
behalf of a consortium that was formed to invest in the recapitalization of GGP in March 2010. As part of the consortium, our fully-diluted
interest in GGP was 25%. In November 2013, we acquired interests in GGP from certain consortium members, as well as all of the
interests in GGP that were distributed to Brookfield in payment of its carried interest entitlement of approximately $529 million,
as manager of the consortium. In total, our company acquired 53 million shares of GGP and warrants to acquire an additional 26
million shares, as well as 1.1 million common shares of Rouse Properties, Inc., or Rouse. The acquisition was funded through the
issuance of $435 million of our units to institutional investors and $996 million of Redemption-Exchange Units to Brookfield. Following
the equity issuances, Brookfield’s interest in our company (on a fully exchanged basis) decreased from approximately 92%
to approximately 89%.



29







On June 9, 2014, pursuant
to a plan of arrangement, or the Arrangement, we completed the acquisition of all of the common shares of Brookfield Office Properties
that we did not already own. The Arrangement followed our successful offer, or the Offer, to acquire common shares of Brookfield
Office Properties. Under each of the Offer and the Arrangement, shareholders of Brookfield Office Properties were able to elect
to receive, for each Brookfield Office Properties common share, one of our units or $20.34 in cash, subject to pro-ration. Pursuant
to the Offer, which commenced on February 12, 2014, we acquired approximately 89% of the common shares of Brookfield Office Properties
on a fully diluted basis. As a result of the Offer and the Arrangement, we now own 100% of the issued and outstanding common shares
of Brookfield Office Properties. These shares were delisted from the TSX and the NYSE on June 10, 2014 and June 20, 2014, respectively.
In connection with the Offer and the Arrangement, we issued units of our company (and Exchange LP issued Exchange LP Units which
are exchangeable into our units at any time), decreasing Brookfield’s interest in our company (on a fully exchanged basis)
from approximately 89% to approximately 68%.



On December 4, 2014,
the Property Partnership issued $1.8 billion of Class A Preferred Units to the Class A Preferred Unitholder. Assuming the exchange
of the Class A Preferred Units and Redemption-Exchange Units in accordance with the Preferred Unit Exchange Mechanism and the Redemption-Exchange
Mechanism, respectively, the Class A Preferred Unitholder will own an approximate 9% interest in our company.



In December 2014,
a joint venture owned 50% by our company and 50% by the Class A Preferred Unitholder, or the Canary JV, made a final cash offer
for the acquisition of the ordinary shares of Songbird Estates plc, or Songbird, the parent company of Canary Wharf, for £3.50
per share. The Canary JV acquired more than 90% of the outstanding Songbird shares and has commenced a procedure to squeeze out
the remaining Songbird shareholders. In addition, in February 2015, the Canary JV made a cash offer for the acquisition of the
shares of Canary Wharf not owned by Songbird for £6.45 per share. In connection with this offer, the Canary JV acquired or
agreed to acquire more than 90% of the outstanding Canary Wharf shares and has commenced a procedure to squeeze out the remaining
Canary Wharf shareholders. These squeeze out procedures are expected to be completed in April 2015, after which the Canary JV will
own all of the outstanding shares of Songbird and Canary Wharf.



4.B.      BUSINESS
OVERVIEW



Overview of our Business



Our company is Brookfield
Asset Management’s primary, public entity to make investments in the real estate industry. We are a globally-diversified
owner and operator of high-quality properties that typically generate stable and sustainable cash flows over the long term. With
approximately 14,000 employees involved in Brookfield Asset Management’s real estate businesses around the globe, we have
built operating platforms in the office, retail, industrial, multifamily, hotel and triple net lease sectors. We leverage these
operating platforms to enhance the cash flow and value of these assets, including through active asset management and by executing
development and redevelopment projects.



Our portfolio is comprised
of high-quality properties, including:



| | · | Interests in 244 office properties totaling
112 million square feet primarily located in the world’s leading commercial markets such as New York, London, Los Angeles,
Washington, D.C., Sydney, Toronto, Houston, Calgary and Perth;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Interests in 164 regional malls containing
over 154 million square feet in the United States and Brazil, including 100 high quality malls in the United States;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Interests in over 27,800 multifamily units;
| | - | -------------------------------------------



| | · | Interests in approximately 44 million
square feet of industrial space, primarily consisting of modern logistics assets in the United States and Europe, with an additional
14 million square feet currently under construction;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Eleven hotel assets with 8,700 rooms;
and
| | - | -----------------------------------------



| | · | The real estate for more than 300 automotive
dealerships across North America leased on a triple net basis.
| | - | -----------------------------------------------------------------------------------------------------------



In addition, we have
a 19 million square foot office development pipeline, an over $600 million retail mall redevelopment pipeline (on a proportionate
basis) and a land portfolio with the potential to build 54 million square feet of industrial properties.



Our portfolio totals
$66 billion of assets, supported by $20 billion of partnership capital. The charts below present a breakdown of our equity capital
attributable to unitholders by operating platform and geography as at December 31, 2014:



30











Information regarding
the revenues attributable to each of our operating platforms is presented as at December 31, 2014 and December 31, 2013 and for
the years ended December 31, 2014, 2013 and 2012 in Note 38 to the audited consolidated financial statements included elsewhere
in this Form 20-F.



Our diversified portfolio
of high-quality assets has a stable cash flow profile with growth potential. As a result of the marking-to-market of rents upon
lease expiry, escalation provisions in leases and increases in occupancy, our existing assets should generate strong same-property
growth without significant capital investment. Furthermore, we expect to earn between 8% to 11% unlevered pre-tax returns on construction
costs for our development and redevelopment projects. With this cash flow profile, our goal is to pay an attractive annual distribution
to our unitholders and to grow our distribution by 5% to 8% per annum.



Overall, we seek to
earn leveraged after-tax returns of 12% to 15% on our invested capital. These returns will be comprised of current cash flow that
is generated by our assets and capital appreciation. Some of the capital appreciation will be reflected in the fair value gains
that flow through our income statement as a result of our revaluation of investment properties in accordance with IFRS. The remainder
of the capital appreciation will be realized in future periods to the extent we are able to successfully execute development and
redevelopment projects as well as other value creation strategies. From time to time, we will convert some or all of these unrealized
gains to cash through asset sales, joint ventures or refinancings.



Our Business Strategy



Our strategy is to
be the leading globally-diversified owner and operator of commercial properties. Due to the cyclical nature of the real estate
industry, we believe that a real estate portfolio diversified by property type and geography will generate more stable cash flow
and will perform more consistently over time. Furthermore, since property valuations fluctuate considerably based on market sentiment
and other factors, we believe that the flexibility to shift capital to sectors and geographies that are out of favor will enable
us to earn premium returns on the capital that we invest.



We are currently targeting
investments across our various operating platforms. In summary, our strategy is to acquire high-quality assets on a value basis,
utilize our operating platforms to add value through pro-active management and recycle capital for re-investment in new opportunities.



Acquire assets on a value basis



| | · | Through our operating platforms around
the globe, we receive real-time information regarding market conditions and opportunities, which helps us identify the investments
that offer the best risk-adjusted returns.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Our teams in each of the regions that
we target have developed strong local relationships and partnerships. Through these local networks, we originate proprietary transactions
that are generally priced at more favorable valuations than competitive processes.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Brookfield has a long history of leading
multi-faceted transactions such as recapitalizations. We utilize our structuring expertise to execute these types of transactions,
whereby we can acquire high quality assets at a discount to their intrinsic value.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Leverage our operating platforms
to enhance value



| | · | Within our operating platforms, we pursue
opportunities to maximize revenues in each market, such as optimizing tenant relationships to increase occupancy and raise rents.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | We also identify opportunities to redevelop
our existing assets that offer premium risk-adjusted returns.
| | - | ---------------------------------------------------------------------------------------------------------



| | · | Finally, we make add-on acquisitions that
can be integrated into our operating platforms.
| | - | -----------------------------------------------------------------------------------------



31







Develop “best-in-class”
properties at a discount to asset valuations



| | · | In markets where asset valuations are
at a premium to development cost, we selectively pursue development projects that offer attractive risk-adjusted returns.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Our development strategy is relatively
low risk. Before investing a material amount of capital, we generally meet prudent pre-leasing hurdles. We bring in capital partners
on a project-specific basis in order to mitigate risk and manage our cash flow profile. Finally, we monetize land parcels in order
to reduce our investment in land.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Recycle capital from stabilized properties
for re-investment



| | · | Once we have stabilized an asset, we will
consider a full or partial sale in order to recycle capital from these assets, which effectively have low costs of capital, for
re-investment in new opportunities with higher rates of return.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | For core assets, our preference is to
sell down interests in assets to institutional investors, which enables us to preserve our operating platforms and earn incremental
fee income.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Finance on a non-recourse basis with
investment grade metrics



| | · | Similar to other Brookfield Asset Management-sponsored
entities, we predominantly utilize asset-level debt. We size the non-recourse debt with investment grade metrics in order to provide
broad access to capital throughout market cycles and optimize our cost of capital.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | In order to mitigate risk, we generally
raise debt financing in local currency, and our debt portfolio is largely fixed rate through issuance of fixed coupon debt or use
of interest rate derivatives.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | We seek to ladder maturities in order
to reduce refinancing risk.
| | - | -----------------------------------------------------------------



For opportunistic
transactions, our strategy is to pursue acquisitions through private funds and/or consortium arrangements with institutional investors
in order to manage our level of exposure to these higher risk investments. Brookfield Asset Management has a strong track record
of leading such consortiums and partnerships.



Competitive Strengths



We believe that a
number of competitive strengths differentiate us from other commercial real estate companies.



| | · | Global Scale. With approximately
14,000 employees involved in Brookfield Asset Management’s real estate business globally, we have operating platforms with
scale in each of our targeted sectors and geographies. With the real-time information that we receive regarding market conditions
and opportunities, we are well-positioned to opportunistically originate transactions that offer the highest risk-adjusted returns.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Sector and Geographic Diversification.
With a portfolio of assets in the office, retail, industrial, multifamily, hotel and triple net lease sectors located primarily
in North America, Europe and Australia, with a growing presence in Brazil, China and India, we have diversified cash flows that
increase stability and over time should lower our cost of capital. As a result of this diversity, combined with Brookfield Asset
Management’s sponsorship and its strong institutional relationships, we believe that we should have access to capital across
market cycles. This should enable us to take advantage of attractive opportunities as they arise.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Superior Record of Executing Transactions.
Brookfield Asset Management has a long track record of leading multi-faceted transactions, such as the recapitalization of GGP,
whereby it utilized its structuring capabilities to invest in high-quality assets on a value basis. Additionally, Brookfield Asset
Management has demonstrated an ability to develop “best-in-class” assets in markets where asset valuations are in excess
of development costs, earning attractive returns on equity.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Strong Organic Cash Flow Growth.
As a result of escalation provisions in a majority of our leases, the marking-to-market of rents as long-term leases expire and
our ability to increase occupancy/permanent occupancy primarily in our office and retail sectors, we have a strong foundation for
organic cash flow growth. We will have flexibility to utilize this incremental cash flow to increase our distribution to unitholders
or fund other growth initiatives.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Attractive Portfolio of Development/Redevelopment
Opportunities. Within our office, retail and industrial platforms we have a portfolio of development and redevelopment
opportunities that offer premium returns on invested capital. We will seek to capture the value of this pipeline through a combination
of investment of capital to build-out such projects and sell-downs to partners at values that reflect the development value that
has been created.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Relationship with Brookfield Asset
Management. As Brookfield Asset Management's flagship public commercial property entity, we are the primary vehicle through
which it invests in real estate on a global basis. As a result, our unitholders benefit from Brookfield Asset Management’s
global presence, operating experience, execution capabilities and relationships. Furthermore, with Brookfield Asset Management’s
substantial liquidity and strong relationships with banks and institutional investors, we may be able to participate in attractive
investments that we could not have executed on a stand-alone basis.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



32







Development of our Business



Brookfield Asset Management
and its predecessor companies have been active in various facets of the real estate business since the 1920s. Canadian Arena Corporation,
the predecessor company to Brookfield Office Properties, built the Montreal Forum in 1924 to provide facilities for hockey and
other sporting and cultural events and its earnings were derived principally from the ownership of the Montreal Forum and the Montreal
Canadiens of the National Hockey League until the sale of the hockey franchise in 1978.



In 1976, Brookfield
expanded its real estate interests by acquiring a controlling interest in one of Canada's largest public real estate companies.
The steady escalation in commercial property values over the next ten years enabled the capital base to expand. Brookfield took
advantage of falling real estate values during the recession of the early 1990s to upgrade and expand its directly owned commercial
property portfolio. In 2003, Brookfield made its first investment outside of North America in the United Kingdom. Brookfield further
expanded outside of North America in 2007 by making property investments in Australia. In 2014, Brookfield further broadened
its geographic reach with investments in China and India.



The accumulation of
our portfolio of assets was completed through various corporate and property purchases, including the following acquisitions (with
the square footage described as at the time of such initial acquisitions):



| | · | BCE Developments - 7 million
square feet. In 1990, Brookfield acquired a 50% interest in a portfolio of office properties in Toronto, Denver and Minneapolis
from BCE Developments. In 1994, this interest was increased to 100%. Brookfield Place, our flagship office complex in Toronto,
was acquired in this transaction.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Olympia & York U.S.A.
- 14.7 million square feet. In 1996, Brookfield acquired a 46% interest in World Financial Properties LP, the corporation formed
from the bankruptcy of Olympia & York, USA which included three of the four towers of Brookfield Place New York (formerly,
World Financial Center), One Liberty Plaza and 245 Park Avenue in Manhattan. We subsequently increased our interest in this entity
to 100%.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Trizec Western Canada -
3.5 million square feet. In 2000, Brookfield acquired a portfolio of Calgary properties, including the Bankers Hall complex.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------



| | · | United
Kingdom - 8.8 million square feet. In 2003, Brookfield acquired a 9% interest in Canary Wharf, marking its entry into
the United Kingdom real estate market. Canary Wharf owned and operated 8.8 million square feet of office and retail properties
at that time and had one million square feet of office space under construction. Brookfield’s interest in Canary Wharf was
increased to 22% in 2010. We expect our interest in Canary Wharf to be increased to 50% upon completion of the ongoing acquisitions
of Songbird and Canary Wharf by the Canary JV.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | O&Y Properties/O&Y REIT
- 11.6 million square feet. In 2005, Brookfield acquired O&Y Properties Corporation and the assets and liabilities of O&Y
Real Estate Investment Trust with other partners and continues to own a direct 25% interest in a portfolio of high-quality office
properties in Toronto, Ottawa, and Calgary with a consortium of investors.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Trizec Properties/Trizec Canada
- 26 million square feet. In 2006, Brookfield acquired Trizec Properties, Inc. and Trizec Canada Inc.’s portfolio of 58 office
properties in New York, Washington, D.C., Los Angeles and Houston in a joint venture with a partner.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Brazil- 2.5 million square feet. In 2007, Brookfield’s retail property fund in Brazil acquired five high-quality shopping
centers in São Paulo and Rio de Janeiro.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Australia- 6.2 million
square feet. In 2007, Brookfield acquired Multiplex Limited and Multiplex Property Trust, or collectively Multiplex, an Australian
commercial property owner and developer. Multiplex's assets included approximately $3.6 billion of core office and retail properties
within nine funds and a $3 billion high-quality office portfolio.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | General
Growth Properties, Inc. - 160 million square feet. In 2009, Brookfield led the recapitalization of GGP, the second largest
mall owner in the United States with 166 malls. In January 2012, GGP spun-off Rouse, which at the time of the spin-off held a
portfolio of 30 malls.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Hammerson Portfolio - 0.9
million square feet. In 2012, Brookfield Office Properties acquired the Hammerson portfolio in the City of London for $871 million.
The portfolio included four operating assets totaling 884,000 square feet and two development sites which could accommodate approximately
1.4 million square feet of density.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Multifamily Portfolio–
In partnership with institutional investors, we acquired interests in over 27,800 value-add multifamily units, primarily in 2013
and 2014, including a 4,000-unit multi-family portfolio in Manhattan.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Industrial Portfolio - In
partnership with institutional investors, we made three major industrial acquisitions that have created a leading international
industrial property platform. In North America, we acquired Verde Realty in December 2012 and Industrial Developments International
Inc., or IDI, in October 2013. In Europe, we acquired Gazeley Limited (formerly EZW Gazeley Limited), or Gazeley, in June 2013.
Combined, our industrial portfolio comprises approximately 44 million square feet of operating and 54 million square feet of development
potential.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



33







| | · | Asia- In October 2013,
we announced an agreement to invest, along with our institutional partners, up to $750 million in China Xintiandi, or CXTD, a wholly-owned
entity of Hong Kong-listed developer Shui On Land. CXTD owns a world class portfolio of retail and office properties in Shanghai.
In November 2014, we acquired, along with our institutional partners, a 60% interest in Candor Office Parks, a 15 million square
foot portfolio of high-quality office parks in India. In March 2015, we acquired the remaining 40% equity interest.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | MPG Office Trust, Inc.-
8.6 million square feet. During the fourth quarter of 2013, we completed the acquisition of MPG Office Trust, Inc. in Los Angeles
with institutional partners and created a $1.1 billion fund. Brookfield Office Properties and its institutional partners now own
seven Class A office properties totaling 12.8 million square feet in the downtown Los Angeles market.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Brookfield Office Properties
- In 2014, pursuant to a tender offer and a second stage plan of arrangement, we acquired all of the common shares of Brookfield
Office Properties that we did not already own. We now own 100% of the issued and outstanding common shares of Brookfield Office
Properties. At the completion of the second stage plan of arrangement, BPO owned 114 properties totaling 85 million square feet.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Triple Net Lease Portfolio
- In October 2014, we acquired, along with our institutional partners, Capital Automotive L.P., or CARS, to create our triple net
lease business. The acquisition included a 15.6 million square foot portfolio of real estate that has been triple net leased with
approximately 300 automotive dealerships.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Hotel
Portfolio- In addition to our ownership of the Atlantis in the Bahamas and the Hard Rock Hotel & Casino in Las Vegas
and our interest in the hotel assets of a mixed-use portfolio in Australia, in 2014 we made further investments in the hotel sector
when we acquired an interest in five hotel assets with 1,800 rooms in the United States.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Operating Platforms



Our business is organized
in three operating platforms, with assets as of December 31, 2014 as set forth in the diagram below. The capital invested in these
operating platforms is through a combination of: direct investment; investments in asset level partnerships or joint venture arrangements;
participation in private equity funds and consortiums; and the ownership of shares in other public companies. Combining both publicly-listed
and private institutional capital provides a competitive advantage in flexibility and access to capital to fund growth.





| | (1) | Represents assets and capital related to our operating
segments and excludes corporate assets and obligations.
| | --- | --------------------------------------------------------------------------------------------------------------



Office Platform



Brookfield Property
Partners is a global leader in the development, ownership and management of premier office properties. Our office holdings primarily
consist of Brookfield Office Properties, of which we own 100% of its common equity. Our office portfolio (excluding the assets
of Canary Wharf) consists of 244 properties comprising 112 million square feet under management and a total of 19 million square
feet of development potential. Our properties are primarily located in commercial business districts in some of the world's leading
cities, including New York, London, Los Angeles, Washington, D.C., Sydney, Toronto, Houston, Calgary and Perth.



34







Within our office
platform, we remain focused on the following strategic priorities:



| | · | Realizing value from our properties through
proactive leasing and select redevelopment and repositioning initiatives to convert assets to higher yielding (or cash flow generating)
properties;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Managing capital prudently, by utilizing
conservative financing structures, including the disposition of select mature or non-core assets; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



| | · | Advancing development projects to create
“best-in-class” new stock in premium locations.
| | - | ----------------------------------------------------------------------------------------



Our core office portfolio
occupancy stands at 92.1% leased at December 31, 2014 and reflects average in-place net rent of $30.37 compared to average market
net rent of $36.94, allowing for 22% potential to capture on higher rents on the upcoming expiration of leases.



Another important
characteristic of our office portfolio is the strong credit quality of our tenants. We focus on tenant credit quality in order
to ensure the long-term sustainability of rental revenues through economic cycles. The following list shows major tenants in our
office portfolio by leased area and their respective credit ratings and lease commitments as at December 31, 2014.



|Tenant                             |  | Primary Location                                                         |  | Credit Rating(1) |  | Exposure (%)(2) |     
|---------------------------------- |  | ------------------------------------------------------------------------ |  | ---------------- |  | --------------- | ----
|Government and Government Agencies |  | Various                                                                  |  | AAA/AA+          |  |                 | 8.2 
|CIBC World Markets(3)              |  | Calgary/Houston/Midtown NY/Toronto                                       |  | A+               |  |                 | 2.0 
|Suncor Energy Inc.                 |  | Calgary/Houston                                                          |  | BBB+             |  |                 | 1.8 
|Morgan Stanley                     |  | Denver/Downtown NY/Toronto                                               |  | A-               |  |                 | 1.7 
|Bank of Montreal                   |  | Calgary/Toronto                                                          |  | A+               |  |                 | 1.6 
|Bank of America/Merrill Lynch      |  | Denver/Downtown NY/Los Angeles/Toronto/Washington, D.C.                  |  | A-               |  |                 | 1.5 
|Royal Bank of Canada               |  | Boston/Calgary/Denver/Downtown NY/LA/Toronto/Vancouver/ Washington, D.C. |  | AA-              |  |                 | 1.4 
|JPMorgan Chase & Co.               |  | Denver/ Houston/Los Angeles/Midtown NY                                   |  | A                |  |                 | 1.2 
|PricewaterhouseCoopers             |  | Calgary/Houston/Los Angeles/Perth/Sydney                                 |  | Not Rated        |  |                 | 1.2 
|Commonwealth Bank                  |  | Melbourne/Sydney                                                         |  | AA-              |  |                 | 1.0 
|Total                              |  |                                                                          |  |                  |  |                 | 21.6

| | (1) | From Standard & Poor’s Rating Services, Moody’s Investment Services, Inc. or
DBRS Limited.
| | --- | ------------------------------------------------------------------------------------------

| | (2) | Exposure is a percentage of total leasable square feet and excludes tenants in India.
| | --- | -------------------------------------------------------------------------------------

| | (3) | CIBC World Markets leases 1.1 million square feet at 300 Madison Avenue in New York, of which
they sublease 925,000 square feet to PricewaterhouseCoopers LLP and approximately 100,000 square feet to Sumitomo Corporation of
America.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Another important
strategy for our office platform is to sign long-term leases in order to mitigate risk, reduce our overall re-tenanting costs and
ensure stable and sustainable cash flows. As at December 31, 2014, the average lease term of our office platform was 7.6 years,
compared to 7.3 years at December 31, 2013. We typically commence discussions with tenants regarding their space requirements well
in advance of the contractual expiration.



A portion of our office
platform is owned through joint venture, partnership, consortium or other arrangements with institutional partners. Prospectively,
as we recycle capital, our preference is to sell down interests in assets to institutional partners and to continue to manage the
assets on behalf of ourselves and the investors. We believe that this strategy enables us to enhance returns on our capital through
associated fees, which represent an important area of growth. These types of transactions allow us to earn the following categories
of fees:



| | · | Asset Management. Stable
base fee for providing regular, ongoing services.
| | - | --------------------------------------------------------------------------



| | · | Transaction. Development,
redevelopment and leasing activities conducted on behalf of these funds.
| | - | --------------------------------------------------------------------------------------------------



| | · | Performance. Earned when
certain predetermined benchmarks are exceeded. Performance fees, which can add considerably to fee revenue, typically arise later
in a partnership’s life cycle and are therefore not fully reflected in current results.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our development pipeline
is a significant component of value of our office platform, and we expect this pipeline to contribute significantly to earnings
and provide attractive returns on capital upon stabilization. As at December 31, 2014, we held interests in centrally located office
development sites with total development potential of over 19 million square feet in the United States, Canada, Australia and Europe.



35







The following table
summarizes all office development projects in our portfolio by geographic location as at December 31, 2014:



|(Sq. ft. in 000’s) |  | Number of sites |  | Owned interest (%) |     |   | Total |  |        | Proportionate
                                         at subsidiary- level(1) |  |  | Proportionatetounitholders(2) |  |  | Proportionate(3) |       
|------------------ |  | --------------- |  | ------------------ | --- | - | ----- |  | ------ | ------------------------------------------------------------------------------ |  |  | ----------------------------- |  |  | ---------------- | ------
|United States      |  | 8               |  |                    | 91  | % |       |  | 10,049 |                                                                                |  |  | 9,173                         |  |  |                  | 9,173 
|Canada             |  | 7               |  |                    | 84  | % |       |  | 5,832  |                                                                                |  |  | 4,906                         |  |  |                  | 4,906 
|Europe(4)          |  | 4               |  |                    | 84  | % |       |  | 2,331  |                                                                                |  |  | 1,952                         |  |  |                  | 1,952 
|Australia          |  | 1               |  |                    | 100 | % |       |  | 366    |                                                                                |  |  | 366                           |  |  |                  | 366   
|Brazil             |  | 1               |  |                    | 100 | % |       |  | 681    |                                                                                |  |  | 681                           |  |  |                  | 681   
|                   |  | 21              |  |                    | 89  | % |       |  | 19,259 |                                                                                |  |  | 17,078                        |  |  |                  | 17,078

| | (1) | Reflects our partnership’s interests before considering non-controlling interests in operating
subsidiaries.
| | --- | ------------------------------------------------------------------------------------------------------------

| | (2) | Reflects our partnership’s interests before considering non-controlling interests in subsidiaries,
including Brookfield Canada Office Properties.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Reflects our partnership’s interests attributable to holders of our units, net of non-controlling
interests described in note (2) above.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Does not include developments held through our interest
in Canary Wharf.
| | --- | ------------------------------------------------------------------------



We classify our office
development sites into three categories: (i) active development, (ii) active planning and (iii) held for development. Of the approximately
19.3 million square feet in our office development pipeline, 5.1 million square feet are in the active development stage, 5.6 million
square feet are in the active planning stage and 8.6 million square feet are held for future development. With all of our development
sites, we proceed with construction when our risk adjusted return hurdles and preleasing targets have been met.



The following table
provides additional detail on our active development pipeline and certain projects in the active planning stage:



|                                           |  | Square feet                  |       |  |                                     |         |                    |  |    | Cost     |  |    | Construction Loan | 
|------------------------------------------ |  | ---------------------------- | ----- |  | ----------------------------------- | ------- | ------------------ |  | -- | -------- |  | -- | ----------------- | 
|(Millions, except where noted)             |  | under construction(in 000’s) |       |  | Expected date of cash stabilization |         | Percent pre-leased |  |    | Total(1) |  |    | To- date          | 
|Active developments:                       |  |                              |       |  |                                     |         |                    |  |    |          |  |    |                   | 
|Manhattan
    West (platform), New York(2) |  |                              | ―     |  |                                     | ―       |                    |  | ―  |          |  | $  | 680               | 
|Manhattan West (residential), New York     |  |                              | 586   |  |                                     | Q4 2018 |                    |  | ―  |          |  | $  | 520               | 
|Brookfield Place Tower 2, Perth            |  |                              | 366   |  |                                     | Q1 2016 |                    |  | 52 | %        |  | A$ | 338               | 
|1 London Wall Place,
    London(3)         |  |                              | 505   |  |                                     | Q3 2019 |                    |  | 61 | %        |  | £  | 192               | 
|Bay Adelaide East, Toronto                 |  |                              | 980   |  |                                     | Q2 2017 |                    |  | 69 | %        |  | C$ | 463               | 
|Giroflex, São Paulo                        |  |                              | 681   |  |                                     | Q1 2018 |                    |  | ―  |          |  | R$ | 642               | 
|Brookfield Place East Tower, Calgary       |  |                              | 1,400 |  |                                     | Q3 2018 |                    |  | 71 | %        |  | C$ | 799               | 
|Principal Place (commercial),
    London   |  |                              | 621   |  |                                     | Q4 2019 |                    |  | 69 | %        |  | £  | 379               | 
|                                           |  |                              | 5,139 |  |                                     |         |                    |  |    |          |  |    |                   | 

| | (1) | Net of NOI earned during stabilization.
| | --- | ---------------------------------------

| | (2) | Represents the platform upon which the five million square foot Manhattan West development will
be constructed.
| | --- | ---------------------------------------------------------------------------------------------------------------

| | (3) | Cost and construction loan information is provided on a proportionate basis and at our 50% ownership.
| | --- | -----------------------------------------------------------------------------------------------------



Retail Platform



As at December 31,
2014, our retail platform is primarily comprised of our 33% ownership interest in GGP on a fully-diluted basis, our 34% ownership
interest in Rouse, and interests in retail assets in Brazil. As at December 31, 2014, our retail portfolio consisted of interests
in 164 well-located, high-quality regional malls encompassing approximately 154 million square feet of retail space in the United
States and Brazil, as well as seven urban retail locations with an additional one million square feet of space in select target
locations across the United States.



Our primary objective
is to be an owner and operator of best-in-class malls that provide an outstanding environment and experience for our communities,
retailers, employees and consumers. The strategy for our retail platform includes:



| | · | Increasing the permanent occupancy of
our regional mall portfolio by converting temporary leases to permanent leases and leasing vacant space;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



| | · | Renewing or replacing expiring leases
at greater rental rates;
| | - | --------------------------------------------------------------



| | · | Actively recycling capital through the
disposition of strip centers and lower quality regional malls and investing in whole or partial interests in high-quality regional
malls and anchor pads; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Continuing to execute on our existing
redevelopment projects and seeking additional opportunities within our portfolio for redevelopment.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



In 2014 our retail
properties reported a combined average of $529 in tenant sales per square foot. During this same period, the spread between the
rent paid on expiring leases and the rent commencing under new leases on a suite-to-suite basis in our retail portfolio increased
by 15%, demonstrating our strong same-store growth potential.



36







As at December 31,
2014, our retail portfolio consisted of interests in 157 regional malls totaling approximately 151.6 million square feet throughout
the United States with total regional mall gross leasable area allocated as follows: southwest and southeast region (29%), pacific
and mountain region (27%), northeast and mideast region (23%) and east and west north central region (21%). Our U.S. retail portfolio
is highly concentrated with 100 high quality regional malls, representing approximately 20% of the high quality malls in the United
States. Regional malls in our portfolio include Ala Moana in Honolulu, Fashion Show in Las Vegas, the Natick Collection in Natick,
Massachusetts (Boston), Tysons Galleria in Washington, D.C., Park Meadows in Lone Tree (Denver) and Water Tower Place in Chicago.
A significant number of these regional malls are either the only mall in their market or a part of a cluster of malls that receive
high consumer traffic.



Our portfolio also
includes seven malls totaling over 2.6 million square feet in Brazil, five of which are located in São Paulo and two of
which are located in Rio de Janeiro. These properties are mostly concentrated in premier locations in densely populated urban areas
and thereby have leading positions in their respective markets. These properties include the Rio Sul Shopping Center in Rio de
Janeiro and the Shopping Pátio Paulista and Shopping Pátio Higienópolis in São Paulo.



Competition within
the retail sector is strong. We compete for tenants and visitors to our malls with other malls in close proximity. In order to
maintain and increase our malls’ competitive position within its marketplace we focus on the following:



| | · | Strategically arrange the physical location
of the merchants within each mall to enforce a merchandising strategy that promotes cross-shopping and maximizes sales;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Introduce new concepts to the mall which
may include restaurants, theaters, new retailers;
| | - | ------------------------------------------------------------------------------------------



| | · | Implement marketing campaigns to attract
people to the mall; and
| | - | ----------------------------------------------------------------



| | · | Invest capital to maintain and improve
the malls’ aesthetics and infrastructure, including major redevelopments to further establish the malls as a destination.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



We believe the high
quality of our regional malls enable us to compete effectively for retailers and consumers.



The following list
reflects the ten largest tenants in our retail portfolio as at December 31, 2014. The largest tenant in our portfolio accounted
for approximately 3.6% of minimum rents, tenant recoveries and other.



|Tenant                           |  | DBA                                                      |  | Exposure (%)(1) |     
|-------------------------------- |  | -------------------------------------------------------- |  | --------------- | ----
|L Brands, Inc.                   |  | Victoria's Secret, Bath & Body Works, PINK               |  |                 | 3.6 
|The Gap, Inc.                    |  | Gap, Banana Republic, Old Navy                           |  |                 | 2.7 
|Foot Locker, Inc.                |  | Footlocker, Champs Sports, Footaction USA                |  |                 | 2.7 
|Forever 21, Inc.                 |  | Forever 21                                               |  |                 | 2.1 
|Abercrombie & Fitch Stores, Inc. |  | Abercrombie, Abercrombie & Fitch, Hollister, Gilly Hicks |  |                 | 2.0 
|Signet Jewelers Limited          |  | Zales, Gordon’s, Kay, Jared                              |  |                 | 1.8 
|American Eagle Outfitters, Inc.  |  | American Eagle, Aerie                                    |  |                 | 1.6 
|Express, Inc.                    |  | Express, Express Men                                     |  |                 | 1.5 
|Genesco Inc.                     |  | Journeys, Lids, Underground Station, Johnston & Murphy   |  |                 | 1.5 
|LVMH                             |  | Louis Vuitton, Sephora                                   |  |                 | 1.3 
|Total                            |  |                                                          |  |                 | 20.8

(1)Exposure is a percentage
of minimum rents and tenants recoveries.



We develop and redevelop
retail properties on a selective basis to enhance the quality of our portfolio, when we believe attractive risk-adjusted returns
can be earned. Our strategy is to identify opportunities to invest capital to expand our Class A malls, which are often irreplaceable
due to urban density and permitting challenges. We seek to acquire big boxes that are contiguous to our malls and divide them into
in-line space on which we earn significantly greater rent. We will invest capital in Class B malls when we believe that we can
upgrade these malls to Class B+ or Class A. As of December 31, 2014, the redevelopment projects in the United States include the
300,000 square foot expansion of Ala Moana Center in Hawaii. The total anticipated cost of all redevelopment projects is over $600
million on a proportionate basis. As of December 31, 2014, we had incurred costs of over $200 million in connection with these
redevelopment projects on a proportionate basis. We anticipate generating pretax unlevered returns of 8% to 10% on these projects.



Other Segments



Industrial



In the last two years,
we built one of the largest industrial real estate platforms in the United States and Europe by acquiring three companies with
high-quality assets and combining them to create Brookfield Logistics Properties. Our industrial platform is currently comprised
of 44 million square feet of premier modern logistics assets, 14 million square feet currently under construction and 54 million
square feet of development potential. Our industrial strategy is to acquire older generation logistics properties that we can redevelop
into state-of-the-art product. We also seek to selectively develop projects in supply constrained markets that are critical to
the global supply chain. We leverage our long track record of successfully entitling land in these markets and our global relationships
with retailers and other logistics companies to negotiate anchor leases to support such projects. Our land bank is comprised of
well-located sites near major markets and transport routes in North America, Europe, the Middle East and China.



37







Multifamily



At December 31, 2014,
we owned over 27,800 residential apartments throughout North America. The majority of these apartments are managed by Fairfield
Residential Company LLC, or Fairfield, which is 65% owned by Brookfield Asset Management. Fairfield is one of the largest vertically-integrated
multifamily real estate companies in the United States and is a leading provider of acquisition, development, construction, renovation
and property-management services. We aim to selectively develop Class A properties in high growth, supply-constrained markets.
Due to institutional demand for these types of properties, acquisition opportunities are scarce. During the fourth quarter of 2014
we acquired a portfolio of approximately 4,000 multifamily units in Manhattan. We leverage our long track record of successfully
entitling land for development of multifamily properties and managing construction in order to maximize returns. We also seek opportunities
to redevelop well-located, older assets. We target Class B assets that we can acquire at a significant discount to replacement
cost. We typically invest $6,000 to $10,000 per door to upgrade apartments and common areas with amenities that are in demand in
today's market. We seek to earn an attractive return on this capital by raising rents, which are still a significant discount to
new product.



Hotel



In addition to our
ownership of the Atlantis in the Bahamas and the Hard Rock Hotel & Casino in Las Vegas and our interest in the hotel assets
of a mixed-use portfolio in Australia, in 2014 we made further investments in the hotel sector when we acquired an interest in
five hotel assets with 1,800 rooms in the United States.



Triple Net Lease



In October 2014, we
acquired, along with our institutional partners, CARS to create our triple net lease business. The acquisition included a 15.6
million square foot portfolio of real estate that has been triple net leased with approximately 300 automotive dealerships.



Distribution Policy



Our distribution policy
is to retain sufficient cash flow within our operations to cover tenant improvements, leasing costs and other sustaining capital
expenditures and to pay out substantially all remaining cash flow. In order to finance development projects, acquisitions and other
investments, we plan to raise external capital. We believe that a payout ratio of 80% of our FFO should accomplish this objective.
We have invested a substantial amount of capital in development and redevelopment projects primarily in our office and retail platforms.
Once we realize stabilized cash flow from these initiatives, we expect the growth in our payout to meet its target range of 5%
to 8% per annum.



We established our initial distribution
level and our targeted distribution growth rate based on projections of the amount of FFO that we will generate in the short to
medium term. These projections reflected the in-place cash flow of all of our investments and our capital investment plans. In
a number of our operating entities, we are retaining operating cashflow for reinvestment. As a result, we are required to finance,
in the short term, payment of our distributions to our unitholders. To maintain our distributions at the current level, we have
a number of alternatives available to us, including (a) using borrowings under our committed revolving credit facilities; (b) electing
to accrue and/or waive distributions to be made in respect of the Redemption-Exchange Units that are held by Brookfield Asset Management
in accordance with the Property Partnership’s limited partnership agreement; (c) paying off all or a portion of the fees
owed to the Service Providers pursuant to the Master Services Agreement through the issuance of our units and/or Redemption-Exchange
Units; (d) paying of any equity enhancement distributions to Property Special LP through the issuance of Redemption-Exchange Units;
and (e) utilizing distributions from other operating entities from cash flow from operations, asset sales and/or refinancings.
We are not a passive investor and we typically hold positions of control or significant influence over assets in which we invest,
enabling us to influence distributions from those assets.



On February 3, 2015,
the Board of Directors of the BPY General Partner increased the annual distribution on our units to $1.06 per unit. Despite our
projections and the alternative methods available to maintain our distribution level, there can be no assurance that we will be
able to maintain an annual distribution of $1.06 per unit or meet our target growth rate. Based on amounts received in distributions
from our operating entities and our projected operating cash flow from our direct investments, our proposed distributions are significantly
greater than such amounts.



Additionally, our
ability to make distributions will depend on a number of factors, some of which are out of our control, including, among other
things, general economic conditions, our results of operations and financial condition, the amount of cash that is generated by
our operations and investments, restrictions imposed by the terms of any indebtedness that is incurred to finance our operations
and investments or to fund liquidity needs, levels of operating and other expenses, and contingent liabilities. Furthermore, the
Property Partnership, the Holding Entities and our operating entities are legally distinct from our company and they will generally
be required to service their debt and other obligations, such as distributions to Preferred Unitholders, before making distributions
to us or their parent entity as applicable, thereby reducing the amount of our cash flow available to pay distributions on our
units, fund working capital and satisfy other needs.



Competition and Marketing



The nature and extent
of competition we face varies from property to property and platform to platform. Our direct competitors include other publicly-traded
office, retail, industrial, multifamily, hotel and t and operating companies; private real estate companies and funds; commercial
property developers and other owners of real estate that engage in similar businesses.



38







We believe the principal
factors that our tenants consider in making their leasing decisions include: rental rates; quality, design and location of properties;
total number and geographic distribution of properties; management and operational expertise; and financial position of the landlord.
Based on these criteria, we believe that the size and scope of our operating platforms, as well as the overall quality and attractiveness
of our individual properties, enable us to compete effectively for tenants in our local markets. Our marketing efforts focus on
emphasizing these competitive advantages and leveraging our relationship with Brookfield Asset Management. We benefit from using
the “Brookfield” name and the “Brookfield” logo in connection with our marketing activities as Brookfield
Asset Management has a strong reputation throughout the global real estate industry.



Governmental, Legal and Arbitration
Proceedings



Our company has not
been since its formation and is not currently subject to any material governmental, legal or arbitration proceedings which may
have or have had a significant impact on our company’s financial position or profitability nor is our company aware of any
such proceedings that are pending or threatened.



We are occasionally
named as a party in various claims and legal proceedings which arise during the normal course of our business. We review each of
these claims, including the nature of the claim, the amount in dispute or claimed and the availability of insurance coverage. Although
there can be no assurance as to the resolution of any particular claim, we do not believe that the outcome of any claims or potential
claims of which we are currently aware will have a material adverse effect on us.



Regulation



Our business is subject
to a variety of federal, state, provincial and local laws and regulations relating to the ownership and operation of real property,
including the following:



| | · | We are subject to various laws relating
to environmental matters. We could be liable under these laws for the costs of removal and remediation of certain hazardous substances
or wastes existing in, or released or deposited on or in our properties or disposed of at other locations.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | We must comply with regulations under
building codes and human rights codes that generally require that public buildings be made accessible to disabled persons.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | We must comply with laws and regulations
concerning zoning, design, construction and similar matters, including regulations which impose restrictive zoning and density
requirements.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | We are also subject to state, provincial
and local fire and life safety requirements.
| | - | -------------------------------------------------------------------------------------



These laws and regulations
may change and we may become subject to more stringent laws and regulations in the future. Compliance with more stringent laws
and regulations could have an adverse effect on our business, financial condition or results of operations. We have established
policies and procedures for environmental management and compliance, and we have incurred and will continue to incur significant
capital and operating expenditures to comply with health, safety and environmental laws and to obtain and comply with licenses,
permits and other approvals and to assess and manage potential liability exposure.



Environmental Protection



We are committed to
continuous improvement of our environmental performance. Sustainability is a priority for our tenants, and, as landlords, our goal
is to exceed their expectations. We know that shrinking the environmental footprint in our buildings, and cutting back on energy,
water and waste will have a positive effect on the financial performance of our assets.



Our company intends
to build all future office developments to a LEED Gold standard or local equivalent. The LEED Green Building Rating System is an
internationally accepted scorecard for sustainable sites, water efficiency, energy and atmosphere, materials and resources, and
indoor environmental quality. Within our office portfolio, 67 properties are LEED certified or equivalent.



We continue to expand
and enhance the features, systems and programs that foster energy efficiency in our existing office buildings, as well as the health
and safety of all of our tenants, employees and the community. We perform regular, comprehensive environmental reviews and upgrades
at our office properties and endeavor to maximize energy efficiency at every office building.



Our goal is to be
responsible stewards of our resources, and good citizens in all that we do. We are an active contributor in the communities where
we conduct business. We are proud of the commitment we have made to corporate social responsibility. The initiatives we undertake
and the investments we make in building our company are guided by our core set of values around sustainable development, as we
create a culture and organization that can be successful today and in the future.



39







4.C.  ORGANIZATIONAL STRUCTURE



Organizational Chart









The chart above represents
a simplified summary of our organizational structure as of December 31, 2014. “GP Interest” denotes a general partnership
interest and “LP Interest” denotes a limited partnership interest. Certain subsidiaries through which Brookfield Asset
Management holds units of our company have been omitted. This chart should be read in conjunction with the explanation of our ownership
and organizational structure below.



40







| | (1) | As of December 31, 2014, public holders own units of our company representing an 82%
                                                                                  limited partnership interest in our company, and Brookfield owns the remaining units of our company, representing an 18%
                                                                                  limited partnership interest in our company. Assuming the exchange of the Redemption-Exchange Units in accordance with the
                                                                                  Redemption-Exchange Mechanism and the exchange of the issued and outstanding Exchange LP Units not held by us, Brookfield has
                                                                                  a                                                                                   68%
                                                                                  interest in                                                                                                            our
                                                                                  company.                                                                                            On a
                                                                                  fully-exchanged                                                                                                    basis,
                                                                                  public                                                                                           holders
                                                                                  (excluding the                                                                                                   Class A
                                                                                  Preferred                                                                                          Unitholder) would
                                                                                  own                                                                                                    units of our
                                                                                  company                                                                                   representing a 30% interest in our
                                                                                  company, the
                                                                                  Class A Preferred Unitholder would own units of our company representing a 9% interest in our company and Brookfield would
                                                                                  own the remaining units of our company, representing a 61% interest in our company. Our company’s sole direct
                                                                                  investment is an approximately 37% interest in the Property Partnership through our company’s ownership of managing
                                                                                  general partnership units of the Property Partnership, or Managing General Partner Units. Brookfield also has an
                                                                                  approximately 63% interest in the Property Partnership through Brookfield’s ownership of Redemption-Exchange Units. On
                                                                                  a fully-exchanged basis, our company would directly own 99% of the limited partnership interests in the Property
                                                                                  Partnership.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | The Property Partnership owns, directly or indirectly, all of the common shares or equity interests,
as applicable, of the Holding Entities. Brookfield holds $1.25 billion of redeemable preferred shares of Brookfield BPY Holdings Inc.,
or CanHoldco, which it received as partial consideration for causing the Property Partnership to directly acquire substantially
all of Brookfield Asset Management’s commercial property operations. In addition, Brookfield has subscribed for $5 million
of preferred shares of each of CanHoldco and four wholly-owned subsidiaries of other Holding Entities, which preferred shares will
be entitled to vote with the common shares of the applicable entity. Brookfield will have an aggregate of 3% of the votes to be
cast in respect of CanHoldco and 1% of the votes to be cast in respect of any of the other applicable entities. See Item 7.B. “Major
Shareholders and Related Party Transactions - Related Party Transactions - Relationship with Brookfield - Preferred Shares of Certain
Holding Entities”.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Certain of the operating entities and intermediate holding companies that are directly or indirectly
owned by the Holding Entities and that directly or indirectly hold our real estate assets are not shown on the chart. All percentages
listed represent our economic interest in the applicable entity or group of assets, which may not be the same as our voting interest
in those entities and groups of assets. All interests are rounded to the nearest one percent and are calculated as at December 31, 2014.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | Our interest in Brookfield Office Properties consists of 100% of its outstanding
common shares and outstanding voting preferred shares as well as interests in certain series of its preferred shares. Our aggregate
equity interest in Brookfield Canada Office Properties, a Canadian real estate investment trust that is listed on the TSX and
the NYSE, is approximately 83%, approximately 62% of which is held indirectly through Brookfield Office Properties.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Our Australian office platform consists of our economic interest in certain of our Australian
office properties not held through Brookfield Office Properties.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | Our European office platform includes our interest in 20 Canada Square in London, which
is not held through Brookfield Office Properties.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------



| | (7) | Our interest in Canary Wharf is held through the Canary JV.
| | --- | -----------------------------------------------------------



| | (8) | Other, as it relates to the Office segment, includes 100% ownership of an office development
in São Paulo, Brazil, our interest in an office building in the Faria Lima section of São Paulo, Brazil, as well
as office assets held in Brookfield-sponsored private funds in which we hold varying interests.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (9) | As at December 31, 2014, our interest in GGP consists of an interest in approximately 29% (35%
with our consortium partners) of the outstanding shares of common stock. We, and our consortium partners, also own warrants to
acquire additional shares of common stock, which warrants were “in-the-money” as at December 31, 2014. Assuming the
exercise of these warrants, we and our consortium partners would hold an aggregate of approximately 398 million shares of
GGP, representing approximately 41% of the outstanding shares of common stock of GGP. Of the 398 million shares that would
be held by our company and our consortium partners, 326 million common shares of GGP would be owned by our company, representing
approximately 33% of the outstanding shares of common stock of GGP (and 34% assuming that only our company, and none of our
consortium partners, exercised the warrants).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (10) | Rouse is a NYSE-listed company that GGP spun-out to its shareholders on January 12, 2012.
As at December 31, 2014, we had interests of approximately 34% of the outstanding shares of common stock of Rouse.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (11) | Our economic interest set forth above is reflected as a range because our industrial, multifamily,
hotel and triple net lease investments are held through Brookfield-sponsored private funds in which we hold varying interests.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following table
provides the percentage of voting securities owned, or controlled or directed, directly or indirectly, by us, and our economic
interest in our operating entities included in our organizational chart set out above under “- Organizational Chart”.



|Name                              |  | Economic Interest(1) |        |      | Voting Interest(1) | 
|--------------------------------- |  | -------------------- | ------ | ---- | ------------------ | 
|Office                            |  |                      |        |      |                    | 
|Brookfield Office Properties Inc. |  |                      | 100    | %    |                    | 
|Australia                         |  |                      | 100    | %    |                    | 
|Europe                            |  |                      | 100    | %    |                    | 
|Canary Wharf Group plc            |  |                      | 22     | %    |                    | 
|Brazil                            |  |                      | 100    | %    |                    | 
|Other                             |  |                      | 27%-83 | %    |                    | 
|Retail                            |  |                      |        |      |                    | 
|General Growth Properties, Inc.   |  |                      | 29     | %(5) |                    | 
|Rouse Properties, Inc.            |  |                      | 34     | %(6) |                    | 
|Brazil Retail Fund                |  |                      | 35     | %    |                    | 
|Other segments                    |  |                      |        |      |                    | 
|Industrial(7)                     |  |                      | 28%-30 | %    |                    | 
|Multifamily(7)                    |  |                      | 13%-52 | %    |                    | 
|Hotel(7)                          |  |                      | 15%-33 | %    |                    | 
|Triple Net Lease(7)               |  |                      | 26     | %    |                    | 



41







| | (1) | All interests are rounded to the nearest one percent and are calculated as at December 31, 2014.
| | --- | ------------------------------------------------------------------------------------------------



| | (2) | Our interest in Brookfield Office Properties consists of 100% of its outstanding common shares
and outstanding voting preferred shares. Our aggregate equity interest in Brookfield Canada Office Properties, a Canadian real
estate investment trust that is listed on the TSX and the NYSE, is approximately 83%, approximately 62% of which is held indirectly
through Brookfield Office Properties.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Our Australian office platform consists of our economic interest in certain of our Australian
office properties not held through Brookfield Office Properties. This economic interest is held in the form of participating loan
agreements with Brookfield, which are hybrid instruments comprising an interest bearing note, a total return swap, and an option
to acquire direct or indirect legal ownership in the properties. The participating loan interests provide the holding entities
(or their wholly owned subsidiaries) with an economic interest in the results of operations and changes in fair value of the properties.
Brookfield retains the legal title to the properties through a wholly-owned subsidiary that is not part of the business in order
to preserve existing financing arrangements. We have control or significant influence over the properties via the participating
loan interests. Accordingly, the assets, liabilities and results of the entities that have direct ownership of such properties
are consolidated or accounted for under the equity method by the holding entities (or their wholly owned subsidiaries).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | We hold our economic interest in these assets primarily through limited partnership interests
in Brookfield-sponsored private funds. By their nature, limited partnership interests do not have any voting rights.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | We, together with our consortium partners, control approximately 35% of the outstanding shares
of common stock of GGP. In addition, we are entitled to appoint three directors to GGP’s board of directors. We, and our
consortium partners, also own warrants to acquire additional shares of common stock of GGP, which warrants were “in-the-money”
as at December 31, 2014. Assuming the exercise of these warrants, we and our consortium partners would hold an aggregate of approximately
398 million shares of GGP, representing approximately 41% of the outstanding shares of common stock of GGP. Of the 398 million
shares that would be held by our company and our consortium partners, 326 million common shares of GGP would be owned by our
company, representing approximately 33% of the outstanding shares of common stock of GGP (and 34% assuming that only our company,
and none of our consortium partners, exercised the warrants).
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | As at December 31, 2014, we had interests of approximately 34% of the outstanding shares of
common stock of Rouse.
| | --- | ------------------------------------------------------------------------------------------------------------------



| | (7) | Our economic interest set forth above is reflected as a range because our industrial, multifamily,
hotel and triple net lease investments are primarily held through Brookfield-sponsored private funds in which we hold varying interests.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our Company



Our company was established
on January 3, 2013 as a Bermuda exempted limited partnership registered under the Bermuda Limited Partnership Act 1883, as amended,
and the Bermuda Exempted Partnerships Act of 1992, as amended. Our company’s head and registered office is 73 Front Street,
5th Floor, Hamilton HM 12, Bermuda, and our company’s telephone number is +441 294 3309.



In connection with
the Spin-off, we acquired from Brookfield Asset Management substantially all of its commercial property operations, including its
office, retail, multifamily and industrial assets. We are Brookfield’s flagship public commercial property entity and the
primary entity through which Brookfield Asset Management owns and operates these businesses on a global basis. We are positioned
to take advantage of Brookfield’s global presence, providing unitholders with the opportunity to benefit from Brookfield’s
operating experience, execution abilities and global relationships.



Property Partnership



Our company’s
sole direct investment is a managing general partnership interest in the Property Partnership. Our company serves as the managing
general partner of the Property Partnership and has sole authority for the management and control of the Property Partnership.



Our company owns a
direct 37% interest in the Property Partnership through ownership of Managing General Partner Units. Holders of our units other than Brookfield, including the Class A Preferred Unitholder,
hold the remaining economic interest in the Property Partnership. Brookfield’s interest in the Property Partnership includes
a special limited partnership interest held by Property Special LP, a wholly-owned subsidiary of Brookfield Asset Management, which
entitles it to receive equity enhancement distributions and incentive distributions from the Property Partnership. See Item 7.B.
“Major Shareholders and Related Party Transactions - Related Party Transactions - Relationship with Brookfield - Equity
Enhancement and Incentive Distributions”.



Our Service Providers



The Service Providers,
wholly-owned subsidiaries of Brookfield Asset Management, provide management services to us pursuant to our Master Services Agreement.
The senior management team that is principally responsible for providing us with management services include many of the same executives
that have successfully overseen and grown Brookfield’s global real estate business, including Richard B. Clark who is Senior
Managing Partner and Chief Executive Officer of Brookfield Asset Management’s global real estate group, or Brookfield Property
Group.



42







The BPY General Partner



The BPY General Partner,
a wholly-owned subsidiary of Brookfield Asset Management, has sole authority for the management and control of our company. Holders
of our units, in their capacities as such, may not take part in the management or control of the activities and affairs of our
company and do not have any right or authority to act for or to bind our company or to take part or interfere in the conduct or
management of our company. See Item 10.B. “Additional Information - Memorandum and Articles of Association - Description
of Our Units and Our Limited Partnership Agreement”.



Property Special LP



Property Special LP
is a special limited partner of the Property Partnership. The general partner of Property Special LP is Brookfield Asset Management.
Property Special LP is entitled to receive equity enhancement distributions and incentive distributions from the Property Partnership
as a result of its ownership of the Special LP Units. See Item 7.B. “Major Shareholders and Related Party Transactions
- Related Party Transactions”.



Holding Entities



Our company indirectly
holds its interests in our operating entities through the Holding Entities, most of which were formed in connection with the Spin-off.
The Property Partnership owns, directly or indirectly, all of the common shares or equity interests, as applicable, of the Holding
Entities. Brookfield holds $1.25 billion of redeemable preferred shares of one of our Holdings Entities, which it received as partial
consideration for causing the Property Partnership to directly acquire substantially all of Brookfield Asset Management’s
commercial property operations. In addition, Brookfield has subscribed for $5 million of preferred shares of each of CanHoldco
and four wholly-owned subsidiaries of other Holding Entities. See Item 7.B. “Major Shareholders and Related Party Transactions
- Related Party Transactions - Relationship with Brookfield - Preferred Shares of Certain Holding Entities”.



Operating Entities



Our business is
organized in three operating platforms: office, retail and other segments. The capital invested in these operating
platforms is through a combination of: direct investment; investments in asset level partnerships or joint venture
arrangements; sponsorship and participation in private equity funds; and the ownership of shares in other public companies.
Combining both publicly-listed and private institutional capital provides a competitive advantage in flexibility and access
to capital to fund growth.



Office Platform



Brookfield Office
Properties Inc.: Our U.S., Canadian and U.K. office properties and our economic interests in most of our Australian office
properties are held through our ownership of Brookfield Office Properties, a global pure-play office company that is incorporated
under the laws of Canada. Brookfield Office Properties owns all of its Canadian office properties through our approximately 83.3%
aggregate equity interest in Brookfield Canada Office Properties, a publicly-traded real estate investment trust formed under the
laws of Canada and listed on the TSX and the NYSE. As at December 31, 2014, Brookfield Office Properties’ portfolio
consisted of interests in 111 properties totaling 87 million square feet and interests in 19 million square feet of high quality,
centrally-located development sites. Brookfield has held an interest in Brookfield Office Properties and its predecessors for over
20 years.



Australia:
In addition to the office properties in Australia in which Brookfield Office Properties has an economic interest, we hold an economic
interest in office properties in Sydney, Canberra, Brisbane and New Zealand. As at December 31, 2014, this portfolio consisted
of seven office properties totaling approximately 1.8 million square feet. Brookfield acquired these office properties in 2007.



Europe: In
addition to the office properties in Europe in which Brookfield Office Properties has an interest, we own 100% of a 576,000 square
foot office property at 20 Canada Square, London. Brookfield acquired an interest in this office property in 2005.



Canary Wharf:
The remainder of our European office property operations consists of our interest in Canary Wharf. Brookfield acquired an initial
interest in Canary Wharf in 2003 and additional interests in 2010. We expect to increase our interest in Canary Wharf to 50% in
connection with the acquisitions of Songbird and Canary Wharf by the Canary JV.



Brazil: We
are currently actively developing an office tower and open-air mall situated in the Marginal district of São Paulo in Brazil.
Brookfield acquired an 80% interest in the development in September 2011 and we acquired the remaining 20% stake in May
2013. In addition, we acquired a fully-leased office property on Faria Lima in São Paulo in the third quarter of 2014.



Other: Other
investments include office assets in the United States held in our real estate opportunity funds.



Retail Platform



GGP: A substantial
portion of the properties in our retail platform are held through our approximately 29% interest in GGP, a NYSE-listed company
that is incorporated under the laws of Delaware. GGP is the second largest mall owner in the United States. The majority of
GGP’s properties rank among the highest quality U.S. retail assets. In late 2010, Brookfield successfully led GGP out
of Chapter 11 with a cornerstone investment. Brookfield and our company acquired a further interest in GGP in January 2011,
December 2012 and April and November 2013. We and the other members of the consortium hold an aggregate of approximately
311 million shares of GGP, representing approximately 35% of the outstanding shares of common stock of GGP. We, and our consortium
partners, also own warrants to acquire additional shares of common stock, which warrants were “in-the-money” as at
December 31, 2014. Assuming the exercise of these warrants, we and our consortium partners would hold an aggregate of approximately
398 million shares of GGP, representing approximately 41% of the outstanding shares of common stock of GGP as of December
31, 2014. Of the 398 million shares, 326 million common shares of GGP would be owned by our company, representing approximately
33% of the outstanding shares of common stock of GGP.



43







Rouse: On January 12,
2012, we and other members of Brookfield’s consortium acquired an approximately 37% interest in Rouse, a NYSE-listed company
that is incorporated under the laws of Delaware, that GGP spun-out to its shareholders. After giving effect to Rouse’s rights
offering in March 2012, we increased our holdings to approximately 36% of the outstanding shares of Rouse common stock and
further increased this position in April 2013 and November 2013. On January 13, 2014, Rouse completed an underwritten
public offering of 8,050,000 shares of its common stock, which decreased our ownership interest in Rouse. We currently hold approximately
34% of the outstanding shares of Rouse common stock. Rouse is one of the largest publicly-traded regional mall owner in the United States
based on square footage and owns and manages Class B regional malls in secondary and tertiary markets. As at December
31, 2014, Rouse owned and operated 36 retail properties totaling approximately 26 million square feet.



Brazil Retail Fund:
We hold an approximately 35% interest in the Brazil Retail Fund, a Brookfield-sponsored retail fund in Brazil. As at December 31,
2014, the Brazil Retail Fund’s portfolio consisted of seven malls totaling approximately 2.6 million square feet
in in São Paulo and Rio de Janeiro. Brookfield acquired an interest in the Brazil Retail Fund in 2006.



Other segments



The following investments
are held primarily through our interests in Brookfield-sponsored private funds:



Industrial:
As at December 31, 2014, our industrial portfolio consisted of interests in over 44 million square feet of industrial
space through our interests in 168 industrial properties in North America and Europe.



Multifamily:
As at December 31, 2014, our multifamily portfolio consisted of interests in over 27,800 multifamily units.



Hotels:As at
December 31, 2014, our hotel portfolio consisted of interests in eleven hotels with over 8,700 rooms in North America and Australia.



Triple
Net Lease:As at December 31, 2014, our triple net leased portfolio consisted of a 15.6 million square foot portfolio of
real estate that has been triple net leased with approximately 300 automotive dealerships.



4.D.  PROPERTY, PLANTS AND EQUIPMENT



See Item 4.B. “Information on
the Company - Business Overview” and Item 4.C. “Information on the Company - Organizational Structure - Operating
Entities”.



| | ITEM 4A. | UNRESOLVED STAFF COMMENTS
| | -------- | -------------------------



Not applicable.



44







| | ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS
| | ------- | --------------------------------------------



| | 5.A. | OPERATING RESULTS
| | ---- | -----------------



PART I – OBJECTIVES AND FINANCIAL HIGHLIGHTS

INTRODUCTION



This management’s discussion and analysis (“MD&A”)
of Brookfield Property Partners L.P. (“BPY” or our “partnership”) covers the financial position as of December
31, 2014 and December 31, 2013 and results of operations for the years ended December 31, 2014, 2013, and 2012. For the period
prior to the spin-off of our partnership on April 15, 2013, the financial results reflect Brookfield Asset Management Inc.’s
(“Brookfield Asset Management”) commercial property operations on a continuity of interest basis. Thereafter, the results
reflect our partnership’s actual results. The information in this MD&A should be read in conjunction with the audited
consolidated financial statements as at December 31, 2014 and December 31, 2013 and each of the years ended December 31, 2014,
2013, and 2012 (the “Financial Statements”) contained elsewhere in this Form 20-F.



In addition to historical
information, this MD&A contains forward-looking statements. Readers are cautioned that these forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking
statements. See “Special Note Regarding Forward-Looking Statements”.



BASIS OF PRESENTATION

Our sole material asset
is our 37% interest in Brookfield Property L.P. (the “Operating Partnership”). As we have the ability to direct its
activities pursuant to our rights as owners of the general partner units, we consolidate the Operating Partnership. Accordingly,
our Financial Statements reflect 100% of its assets, liabilities, revenues, expenses and cash flows, including non-controlling
interests therein, which capture the ownership interests of other third parties. We also discuss the results of operations on a
segment basis, consistent with how we manage our business. Our seven operating segments are organized into the following: i) Office,
ii) Retail, iii) Industrial, iv) Multifamily, v) Hotels, vi) Triple Net Lease, which includes Capital Automotive Real Estate Services
Inc. (“CARS”), which owns the real estate for more than 300 automotive dealerships across North America and leases
it on a triple net lease basis, and vii) Corporate. These segments are independently and regularly reviewed and managed by the
Chief Executive Officer, who is also known as the Chief Operating Decision Maker. For presentation purposes, the Industrial, Multifamily,
Hotels and Triple Net Lease segments have been combined in this MD&A.



Our partnership’s
equity interests include general partnership units (“GP Units”), publicly traded limited partnership 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”) and limited partnership
units of Brookfield Office Properties Exchange LP (“Exchange LP Units”). Holders of the GP Units, LP Units, Redeemable/Exchangeable
Partnership Units, Special LP Units, and Exchange LP Units will be collectively referred to throughout this MD&A as “Unitholders”.
The GP Units, LP Units, Redeemable/Exchangeable Partnership Units, Special LP Units and Exchange LP Units have the same economic
attributes in all respects, except that the Redeemable/Exchangeable Partnership Units provide Brookfield Asset Management the right
to request that its units be redeemed for cash consideration starting in April 2015. In the event that Brookfield Asset Management
exercises this right, our partnership has the right, at its sole discretion, to satisfy the redemption request with its LP Units,
rather than cash, on a one-for-one basis. As a result, Brookfield Asset Management, as holder of Redeemable/Exchangeable Partnership
Units, participates in earnings and distributions on a per unit basis equivalent to the per unit participation of the LP Units
of our partnership. However, given the redeemable feature referenced above, we present the Redeemable/Exchangeable Partnership
Units as a component of non-controlling interests. The Exchange LP Units are exchangeable at any time on a one-for-one basis, at
the option of the holder, for LP Units. As a result of this redemption feature, we present the Exchange LP Units as a component
of non-controlling interests.



This MD&A includes
financial data for the year ended December 31, 2014 and includes material information up to March 16, 2015. Financial data have
been prepared using accounting policies in accordance with International Financial Reporting Standard (“IFRS”) as issued
by the International Accounting Standards Board (“IASB”). Non-IFRS measures used in this MD&A are reconciled to
or calculated from such financial information. Unless otherwise specified, all operating and other statistical information is presented
as if we own 100% of each property in our portfolio, regardless of whether we own all of the interests in each property, excluding
information relating to our interests in Canary Wharf Group plc (“Canary Wharf”) and China Xintiandi (“CXTD”),
as these are accounted for as financial investments. We believe this is the most appropriate basis on which to evaluate the performance
of properties in the portfolio relative to each other and others in the market. All dollar references, unless otherwise stated,
are in millions of U.S. Dollars. Canadian Dollars (C$), Australian Dollars (A$), British Pounds (£), Euros (€), Brazilian
Reais (R$), and Indian Rupees (Rs) are identified where applicable.



Additional information
is available on our website at www.brookfieldpropertypartners.com, or on www.sedar.com or www.sec.gov.



CONTINUITY OF INTERESTS

On April 15, 2013, Brookfield
Asset Management completed a spin-off of its commercial property operations (the “Business”) to our partnership (the
“Spin-off”), which was effected by way of a special dividend of units of our partnership to holders of Brookfield Asset
Management’s Class A and B limited voting shares as of March 26, 2013. Brookfield Asset Management directly and indirectly
controlled the Business prior to the Spin-off and continues to control our partnership subsequent to the Spin-off through its interests
in our partnership. As a result of this continuing common control, there is insufficient substance to justify a change in the measurement
of the Business. Accordingly, our partnership has reflected the Business in its financial position and results of operations using
Brookfield Asset Management’s carrying values prior to the Spin-off.



45







To reflect the continuity
of interests, this MD&A provides comparative information of the Business for the periods prior to the Spin-off, as previously
reported by Brookfield Asset Management. The economic and accounting impact of contractual relationships created or modified in
conjunction with the Spin-off have been reflected prospectively from the date of the Spin-off and have not been reflected in the
results of operations or financial position of our partnership prior to April 15, 2013 as such items were in fact not created or
modified prior thereto. Accordingly, the financial information for the periods prior to April 15, 2013 is presented based on the
historical financial information for the contributed operations as previously reported by Brookfield Asset Management. For the
periods after the Spin-off, the results are based on the actual results of our partnership, including the adjustments associated
with the Spin-off and the execution of several new and amended agreements including management service and relationship agreements.
Certain of these new or amended agreements resulted in differences in the basis of accounting as recorded by Brookfield Asset Management
and as recorded by our partnership.



OVERVIEW OF OUR BUSINESS

Our partnership is Brookfield
Asset Management’s primary public entity to make investments in the real estate industry. We are a globally-diversified owner
and operator of high-quality properties that typically generate stable and sustainable cash flows over the long term. With approximately
14,000 employees involved in our real estate businesses around the globe, we have built operating platforms in the Office, Retail,
Industrial, Multifamily, Hotels and Triple Net Lease sectors. We leverage these operating platforms to enhance the cash flow and
value of our assets, including through active asset management and by executing development and redevelopment projects.



Our portfolio is comprised
of high-quality properties, including interests in:



| | · | 244 office properties totaling over 112
million square feet primarily located in the world’s leading commercial markets such as New York, London, Los Angeles, Washington,
D.C., Sydney, Toronto, Houston, Calgary and Perth;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | 164 regional malls containing over 154
million square feet in the United States, and Brazil; a substantial portion of our retail properties are held through our 29% interest
in General Growth Properties, Inc. (“GGP”) (33% on a fully diluted basis, assuming all outstanding warrants are exercised)
and our 34% interest in Rouse Properties, Inc. (“Rouse”);
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Over 44 million square feet of industrial
space across 168 industrial properties, primarily consisting of modern logistics assets in North America and Europe, with an additional
14 million square feet currently under construction;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Over 27,800 multifamily units across 89
properties across the United States and Canada;
| | - | ---------------------------------------------------------------------------------------

| | · | Eleven hotel assets with over 8,700 rooms
across North America and Australia; and
| | - | ---------------------------------------------------------------------------------

| | · | Over 300 properties that are leased to
automotive dealerships across North America on a triple net lease basis
| | - | --------------------------------------------------------------------------------------------------------------



In addition, we have a
19 million square foot office development pipeline, an over $600 million retail mall redevelopment pipeline (on a proportionate
basis) and a land portfolio with the potential to build 54 million square feet of industrial properties.



Our strategy is to be the
leading globally-diversified owner and operator of commercial properties. Due to the cyclical nature of the real estate industry,
we believe that a real estate portfolio diversified by property type and geography will perform consistently over time. Furthermore,
since property valuations fluctuate considerably based on market sentiment and other factors, we believe that the flexibility to
shift capital to sectors and geographies that are out of favor will enable us to earn premium returns on the capital that we invest.
As we grow our business, we will seek to acquire high-quality assets on a value basis, utilize our operating platforms to add value
through pro-active management and recycle capital for re-investment in new opportunities.



Our diversified portfolio
of high-quality assets has a stable cash flow profile with growth potential. As a result of the mark-to-market of rents upon lease
expiry, escalation provisions in leases and increases in occupancy, our existing assets should generate strong same-property net
operating income (“NOI”) growth without significant capital investment. Furthermore, we expect to earn between 8% and
11% unlevered, pre-tax returns on construction costs for our development and redevelopment projects. With this cash flow profile,
our goal is to pay an attractive annual distribution to our Unitholders and to grow our distribution by 5% to 8% per annum.



Overall, we seek to earn
leveraged after-tax returns of 12% to 15% on our invested capital. These returns will be comprised of current cash flow that is
generated by our assets and capital appreciation. Some of the capital appreciation will be reflected in the fair value gains that
flow through our income statement as a result of our revaluation of investment properties in accordance with IFRS. The remainder
of the capital appreciation will be realized in future periods to the extent we are able to successfully execute development and
redevelopment projects as well as other value creation strategies. From time to time, we will convert some or all of these unrealized
gains to cash through asset sales, joint ventures or refinancings.



PERFORMANCE MEASURES

We expect to generate returns
to Unitholders from a combination of cash flow earned from our operations and capital appreciation. Furthermore, if we are successful
in increasing cash flow earned from our operations we will be able to increase distributions to Unitholders to provide them with
an attractive current yield on their investment.



46







To measure our performance
against these targets, we focus on NOI, funds from operations (“FFO”), fair value changes, and net income and equity
attributable to Unitholders. Some of these performance metrics do not have standardized meanings prescribed by IFRS and therefore
may differ from similar metrics used by other companies. We define each of these measures as follows:



| | · | NOI: revenues from our commercial
and hospitality operations of consolidated properties less direct property expenses.
| | - | ----------------------------------------------------------------------------------------------------------------------

| | · | FFO: 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, we include our proportionate share of the
FFO of unconsolidated partnerships and joint ventures and associates.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Fair value changes: Increase or
decrease in the value of investment properties that is reflected in the consolidated statements of income.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------

| | · | Net income attributable to Unitholders:
net income attributable to holders of GP Units, LP Units, Redeemable/Exchangeable Partnership Units, Special LP Units and Exchange
LP Units. For the period prior to the Spin-off of our partnership on April 15, 2013, net income attributable to Unitholders represented
net income attributable to Brookfield Asset Management.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Equity attributable to Unitholders:
equity attributable to holders of GP Units, LP Units, Redeemable/Exchangeable Partnership Units, Special LP Units and Exchange
LP Units.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOI is a key indicator
of our ability to increase cash flow from our operations. We seek to grow NOI through pro-active management and leasing of our
properties. In evaluating our performance, we also look at a subset of NOI, defined as “same-property NOI,” which excludes
NOI that is earned from assets recently acquired, disposed of, developed, or not of a recurring nature, and from opportunistic
assets. Same-property NOI allows us to segregate the performance of leasing and operating initiatives on the portfolio from the
impact to performance of investing activities and “one-time items”, which for the historical periods presented consist
primarily of lease termination income.



We also consider FFO an
important measure of our operating performance. FFO is a widely recognized measure that is frequently used by securities analysts,
investors and other interested parties in the evaluation of real estate entities, particularly those that own and operate income
producing properties. Our definition of FFO includes all of the adjustments that are outlined in the National Association of Real
Estate Investment Trusts (“NAREIT”) definition of FFO, including the exclusion of gains (or losses) from the sale of
investment properties, the add back of any depreciation and amortization related to real estate assets and the adjustment for unconsolidated
partnerships and joint ventures. In addition to the adjustments prescribed by NAREIT, we also make adjustments to exclude any unrealized
fair value gains (or losses) that arise as a result of reporting under IFRS, and income taxes that arise as certain of our subsidiaries
are structured as corporations as opposed to real estate investment trusts (“REITs”). These additional adjustments
result in an FFO measure that is similar to that which would result if our partnership was organized as a REIT that determined
net income in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), which is
the type of organization on which the NAREIT definition is premised. Our FFO measure will differ from other organizations applying
the NAREIT definition to the extent of certain differences between the IFRS and U.S. GAAP reporting frameworks, principally related
to the recognition of lease termination income. Because FFO excludes fair value gains (losses), including equity accounted fair
value gains (losses), realized gains (losses) on the sale of investment properties, depreciation and amortization of real estate
assets and income taxes, it provides a performance measure that, when compared year-over-year, reflects the impact on operations
from trends in occupancy rates, rental rates, operating costs and interest costs, providing perspective not immediately apparent
from net income. We reconcile FFO to net income rather than cash flow from operating activities as we believe net income is the
most comparable measure.



We do not utilize net
income on its own as a key metric in assessing the performance of our business because, in our view, it does not provide a
consistent or complete measure of the ongoing performance of the underlying operations. Nevertheless, we recognize that
others may wish to utilize net income as a key measure and therefore provide a reconciliation of net income to NOI and FFO on
pages 51 and 52 in this Form 20-F.



In addition to reviewing
earnings performance, we also review initiatives and market conditions that contribute to changes in the fair value of our properties.
These value changes, combined with earnings, represent a total return on the equity attributable to Unitholders and form an important
component in measuring how we have performed relative to our targets.



We also consider the following
items to be important drivers of our current and anticipated financial performance:



| | · | Increases in occupancies by leasing vacant
space;
| | - | -------------------------------------------------

| | · | Increases in rental rates through maintaining
or enhancing the quality of our assets and as market conditions permit; and
| | - | -------------------------------------------------------------------------------------------------------------------------

| | · | Reductions in operating costs through
achieving economies of scale and diligently managing contracts.
| | - | -----------------------------------------------------------------------------------------------------



We also believe that key
external performance drivers include the availability of the following:



| | · | Debt capital at a cost and on terms conducive
to our goals;
| | - | -----------------------------------------------------------

| | · | Equity capital at a reasonable cost;
| | - | ------------------------------------

| | · | New property acquisitions that fit into
our strategic plan; and
| | - | ---------------------------------------------------------------

| | · | Investors for dispositions of peak value
or non-core assets.
| | - | ------------------------------------------------------------



47







PART II – FINANCIAL STATEMENTS ANALYSIS

REVIEW OF CONSOLIDATED FINANCIAL RESULTS

In this section, we review
our consolidated performance for the years ended December 31, 2014, 2013, and 2012 and our financial position as of December 31,
2014 and 2013. Further details on our results from operations and our financial positions are contained within the “Segment
Performance” section on page 55.



Summary Statement of Operating Results and
Key Metrics



|(US$ Millions) Year ended Dec. 31,                                                                      |  | 2014 |       |  | 2013 |   |       | 2012 | 
|------------------------------------------------------------------------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- | 
|Commercial property revenue                                                                             |  | $    | 3,038 |  |      | $ | 2,910 |      | 
|Hospitality revenue                                                                                     |  |      | 983   |  |      |   | 1,168 |      | 
|Investment and other revenue                                                                            |  |      | 352   |  |      |   | 209   |      | 
|Total revenue                                                                                           |  |      | 4,373 |  |      |   | 4,287 |      | 
|Direct commercial property expense                                                                      |  |      | 1,298 |  |      |   | 1,204 |      | 
|Direct hospitality expense                                                                              |  |      | 791   |  |      |   | 957   |      | 
|Interest expense                                                                                        |  |      | 1,258 |  |      |   | 1,088 |      | 
|Depreciation and amortization                                                                           |  |      | 148   |  |      |   | 162   |      | 
|Administration and other expense                                                                        |  |      | 404   |  |      |   | 317   |      | 
|Total expenses                                                                                          |  |      | 3,899 |  |      |   | 3,728 |      | 
|Fair value gains, net                                                                                   |  |      | 3,756 |  |      |   | 870   |      | 
|Share of net earnings from equity accounted investments                                                 |  |      | 1,366 |  |      |   | 835   |      | 
|Income before income taxes                                                                              |  |      | 5,596 |  |      |   | 2,264 |      | 
|Income tax expense                                                                                      |  |      | 1,176 |  |      |   | 501   |      | 
|Net income                                                                                              |  |      | 4,420 |  |      |   | 1,763 |      | 
|Net income attributable to non-controlling interests of others in operating subsidiaries and properties |  |      | 686   |  |      |   | 856   |      | 
|Net income attributable to Unitholders                                                                  |  | $    | 3,734 |  |      | $ | 907   |      | 
|                                                                                                        |  |      |       |  |      |   |       |      | 
|NOI                                                                                                     |  | $    | 1,932 |  |      | $ | 1,917 |      | 
|FFO                                                                                                     |  | $    | 714   |  |      | $ | 582   |      | 



Our basic and diluted net
income per unit attributable to Unitholders and weighted average units outstanding are calculated as follows:



|(US$ Millions, except per units information) Year ended Dec. 31, |  | 2014 |       |  | 2013 |   |       | 2012 | 
|---------------------------------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- | 
|Net income attributable to Unitholders – basic                   |  | $    | 3,734 |  |      | $ | 907   |      | 
|Dilutive effect of conversion of capital securities – corporate  |  |      | 30    |  |      |   | ―     |      | 
|Net income attributable to Unitholders – diluted                 |  |      | 3,764 |  |      |   | 907   |      | 
|                                                                 |  |      |       |  |      |   |       |      | 
|Weighted average number of units outstanding – basic             |  |      | 668.3 |  |      |   | 478.6 |      | 
|Conversion of capital securities – corporate                     |  |      | 40.8  |  |      |   | ―     |      | 
|Weighted average number of units outstanding – diluted           |  |      | 709.1 |  |      |   | 478.6 |      | 
|Net income attributable to Unitholders per unit – basic(1)       |  | $    | 5.59  |  |      | $ | 1.41  |      | 
|Net income attributable to Unitholders per unit – diluted(1)     |  | $    | 5.31  |  |      | $ | 1.41  |      | 

| | (1) | Net income attributable to Unitholders per unit has been presented effective for the period from the date of the Spin-off
on April 15, 2013, as this is the date of legal entitlement of earnings to the Unitholders. As a result, for 2013, net income attributable
to Unitholders per unit is calculated exclusive of the $232 million net income attributable to Brookfield Asset Management prior
to the date of the Spin-off.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Consolidated Performance and Analysis



2014 compared to 2013

For the year ended December
31, 2014, we reported net income of $4,420 million, of which $3,734 million is attributable to Unitholders. This compares to net
income of $1,763 million, of which $907 million is attributable to Unitholders in the prior year. Net income attributable to Unitholders
increased during the year ended December 31, 2014 mainly due to our increased ownership of Brookfield Office Properties Inc. (“BPO”)
which increased to 100% in the current year from 49% in the prior year, additional acquisition activity and valuation gains primarily
in our office and retail segments.



Commercial property
revenue was $3,038 million for the year ended December 31, 2014 compared to $2,910 million during the prior year. The
increase is primarily attributable to revenue from acquisitions in our office, multifamily and industrial segments, as well
as and the acquisition of CARS in the fourth quarter of 2014, which were partially offset by a major expiry at
Brookfield Place New York in October 2013 and dispositions of mature assets.



Hospitality revenue was
$983 million for the year ended December 31, 2014 compared to $1,168 million during the prior year. The decrease was related to
the deconsolidation of certain hotel assets in Australia as part of a re-organization in the prior year. Before considering the
impact of the deconsolidation, hospitality revenue decreased by $53 million which was primarily a result of the sale of the One&Only
Ocean Club in the Bahamas in the second quarter of 2014.



48







Direct commercial property
expense increased by $94 million for the year ended December 31, 2014 compared to the prior year due to acquisition activity in
our office and industrial segments. Direct hospitality expense decreased by $166 million, primarily as a result of the deconsolidation
of certain hotel assets. Before considering the impact of the deconsolidation, direct hospitality expense decreased by $69 million,
which was primarily a result of the sale of the One&Only Ocean Club as described above.



Investment and other revenue
increased by $143 million for the year ended December 31, 2014 as compared to the prior year. The increase is largely driven by
a realized gain on the repayment of a debt investment in Inmobiliaria Colonial SA (“Colonial”), a Spanish office company
in the second quarter of 2014. Additionally, we recorded gains from the completion of industrial developments in 2014 of $50 million
and income from our interest in preferred securities convertible into CXTD ordinary shares of $38 million in the current year.
This was offset by realized losses on foreign exchange forward contracts in the current year and a gain recognized from a loan
modification in the prior year. In addition, we recorded a $14 million dividend from our investment in Canary Wharf in 2013.



Interest expense increased
by $170 million for the year ended December 31, 2014 as compared to the prior year. This increase was primarily driven by additional
debt obligations as a result of acquisition and refinancing activity and the interest associated with the acquisition facility
used to acquire the remaining outstanding common shares of BPO in 2014.



Administration and other
expense increased by $87 million for the year ended December 31, 2014 compared to the prior year. The increase was primarily attributable
to $100 million of management fees and equity enhancement distributions paid by our partnership in the current period compared
to $36 million in the prior year. In addition, the increase is attributable to other corporate costs incurred following the Spin-off
of our partnership in April 2013 and expenses from subsidiaries acquired during the current period. This increase was partially
offset by the deconsolidation of management fees associated with our private funds.



Fair value gains of $3,756
million were recognized in the year ended December 31, 2014 as compared to $870 million in the same period in the prior year as
detailed in the table below. Commercial properties and developments increased in value by $3,070 million primarily related to our
U.S. office portfolio due to capitalization rate and discount rate compression as a result of improving market conditions and leasing
changes as a result of new and renewal leases signed during the year and outlook for future lease rates. Fair value gains on our
financial instruments and other were $686 million as compared to losses of $78 million in the prior year and include the appreciation
of our investments in Canary Wharf, GGP warrants and CXTD preferred shares and warrants.



The table below presents
further information of the fair value gains recorded during the years ended December 31, 2014 and 2013:



|(US$ Millions) Year ended Dec. 31, |  | 2014 |       |  | 2013 |  
|---------------------------------- |  | ---- | ----- |  | ---- | -
|Commercial properties              |  | $    | 2,781 |  |      | $
|Commercial developments            |  |      | 289   |  |      |  
|Financial instruments and other    |  |      | 686   |  |      |  
|Total fair value gains, net        |  | $    | 3,756 |  |      | $



Our share of net earnings
from equity accounted investments was $1,366 million for the year ended December 31, 2014, which represents an increase of $531
million compared to the prior year. Our investments in joint ventures earned $359 million during the year ended December 31, 2014,
which represents an increase of $25 million compared to the same period in the prior year. This increase is primarily attributable
to fair value gains on our equity accounted properties in New York City and Los Angeles in the current year and acquisition activity
in our industrial segment which was offset by the consolidation of several office assets, which were previously equity accounted.
We earned $1,007 million from associates for the year ended December 31, 2014, a $506 million increase compared with the prior
year primarily driven by our increased ownership in GGP and valuation gains within GGP’s portfolio as a result of continued
strength in its leasing activity and improving market conditions for Class A malls, which led to discount rate and terminal capitalization
rate compression compared to the prior year. In addition, at December 31, 2014, we performed a review to determine whether there
is any objective evidence that the investment in GGP is impaired or whether there is any indication that the impairment loss recognized
in 2013 of $249 million, or any portion thereof, may no longer exist. We reviewed the carrying value of our investment in GGP ($6,638
million, prior to taking into consideration any reversal of the impairment loss recorded in 2013) and compared this balance to
the fair value of our common shares of GGP based on the trading price of GGP common stock as of December 31, 2014 ($7,183 million).
Consequently, we estimated the recoverable amount of the investment in GGP to be the fair value of the common shares of GGP at
December 31, 2014 and determined that the impairment loss recognized in 2013 should be reversed. Accordingly, the consolidated
statements of income for 2014 include, within share of net earnings from equity accounted investments, the reversal of the full
$249 million impairment charge taken in the prior year, which resulted in a carrying value of the investment in common shares of
GGP of $6,887 million at December 31, 2014.



49







The components of earnings
from equity accounted investments for the years ended December 31, 2014 and 2013 are presented as follows:



|(US$ Millions) Year ended Dec. 31,                      |  | 2014 |       |  | 2013 |  
|------------------------------------------------------- |  | ---- | ----- |  | ---- | -
|Joint ventures                                          |  | $    | 359   |  |      | $
|Associates                                              |  |      | 1,007 |  |      |  
|Share of net earnings from equity accounted investments |  | $    | 1,366 |  |      | $



Income tax expense increased
to $1,176 million for the year ended December 31, 2014 compared with $501 million during the same period in the prior year. The
increase is mostly attributable to a change in state tax legislation which was substantively enacted during the first quarter of
2014 and resulted in an increase in our effective tax rate applicable to earnings from certain subsidiaries in the impacted jurisdictions,
and higher pre-tax income for the reasons noted above.



Net income attributable
to non-controlling interests of others in operating subsidiaries and properties declined by $170 million as a result of our acquisition
of the remaining common shares of BPO which we did not previously own. This acquisition reduced the weighted average non-controlling
interests’ share of net income from BPO to 13% from 51% for the year ended December 31, 2014. This decrease was offset by
higher net income for both periods compared to the prior year as discussed above.



2013 compared to 2012

For the year ended December
31, 2013, we reported net income of $1,763 million, of which $907 million is attributable to Unitholders. This compares to net
income of $2,640 million, of which $1,476 million is attributable to Unitholders in 2012. Net income attributable to Unitholders
decreased during the year ended December 31, 2013 mainly due to lower comparative valuation gains on our consolidated and equity
accounted investments and properties.



Commercial property revenue
increased by $52 million in 2013 compared to 2012. This increase was primarily due to acquisitions of multifamily assets and the
creation of our industrial platform with portfolio acquisitions in December 2012 and June and December 2013. Revenue in our office
segment declined by $22 million primarily as a result of a major expiry at Brookfield Place New York in the fourth quarter of 2013
and the reclassification of certain Australian assets to participating loan interests following our Spin-off in April 2013, which
was offset by property acquisitions in the United States and the United Kingdom.



Hospitality revenue in
2013 increased by $425 million compared to 2012 as a result of the inclusion of a full year of operating results of the Paradise
Island Holdings Limited (“Atlantis”) in the Bahamas, which was acquired in April 2012.



Compared to 2012, investment
and other revenue increased by $42 million in 2013, driven by a gain from the completion of an industrial development and a gain
recognized from a loan modification in our office segment. This increase was offset by lower dividends from our investment in Canary
Wharf (2013 – $14 million, 2012 – $40 million) and lower interest income in 2013 compared 2012, as a result of the
pay-off on a note receivable from Brookfield Residential Properties Inc. in the fourth quarter of 2012.



Direct commercial property
expense increased by $15 million in 2013 compared to 2012. The increase was primarily due to operating expenses associated with
property acquisitions within our office sector during the year, as well as a full year of operating results of Brookfield Place
Perth. Direct hospitality expense increased by $319 million in 2013 compared to 2012 as a result of the inclusion of a full year
of operating results following the acquisition of the Atlantis in April 2012.



Interest expense increased
by $68 million in 2013 compared to 2012 primarily due to interest expense associated with the acquisitions of multifamily and industrial
assets. Offsetting this increase, our office segment recorded a decrease in interest expense primarily related to refinancing activity
and lower interest rates on asset-level debt of assets acquired compared to assets sold, which was offset by property acquisitions
in the United States and the United Kingdom. Our retail segment also saw a decline as a result of asset dispositions and lower
interest rates on our Brazilian mall portfolio. In addition, we recorded an increase of $56 million of corporate-level interest
expense on our credit facilities, capital securities and preferred shares.



Administration and other
expense increased by $167 million in 2013 compared to 2012 primarily as a result of incremental expense associated with the Spin-off
of BPY, including management fees, which contributed $93 million of the total increase. The remaining increase primarily relates
to a contingent payment due to litigation against one of our subsidiaries associated with a defaulted loan in our office segment,
as well as transaction costs incurred as a result of property acquisitions in the office and industrial segments.



We recorded $870 million
of fair value gains in 2013 compared to $1,227 million in the prior year. This was primarily driven by our office segment which
recorded $806 million of fair value gains. In addition, we recorded $65 million of fair value gains in our retail segment related
to our Brazilian retail malls as a result of changes to leasing assumptions and the impact of capital expenditures and fair value
gains on our GGP warrants. We also recorded a gain of $181 million in our industrial segment, primarily related to the recognition
of the favorable purchase price of our U.S. industrial portfolio. This was offset by $182 million of fair value losses primarily
related to our consolidated hotel properties.



50









Our share of net earnings
from equity accounted investments was $835 million in 2013 compared to $1,235 million in 2012. Our retail segment recorded $488
million of net earnings from equity accounted investments, which was driven by operating income and fair valuation gains on our
interest in GGP. These gains were largely attributable to an increase in the valuation of Ala Moana Center and other redevelopment
projects, which was partially offset by an impairment of embedded goodwill. In the fourth quarter of 2013, management reviewed
the operating performance and financial condition of GGP, including the status of the redevelopment projects, to which a portion
of the embedded goodwill was ascribed on BPY’s initial investment in GGP. Management determined that, based on the fair value
gains recorded during 2013, a portion of the carrying value of the embedded goodwill ascribed to these redevelopment properties
was realized and management accordingly recognized an impairment loss of $249 million. Net earnings from equity accounted investments
in our office segment during the period were primarily attributable to operating income from our equity accounted investments in
the U.S. and Australia, as well as from 125 Old Broad Street in London prior to its consolidation in the fourth quarter of 2013
upon our acquisition of the remaining 50% interest in the asset. The remaining increase was primarily driven by increased values
on our equity accounted industrial portfolio.



Income tax expense increased
by $12 million in 2013 compared to 2012 as a result of $218 million of income tax expense at the corporate-level following the
Spin-off, which was largely offset by reduced income tax expense across our operating segments as a result of lower income before
income taxes.



Net income attributable
to non-controlling interest of others in operating subsidiaries and properties decreased by $308 million in 2013 compared to 2012
as a result of higher net income in the prior year for the reasons noted above.



NON-IFRS MEASURES

As described in the “Performance
Measures” section on page 46, our partnership uses non-IFRS measures to assess the performance of its operations. An
analysis of the measures and reconciliation to IFRS measures is included below.



Commercial property NOI
increased to $1,740 million for the year ended December 31, 2014 compared with $1,706 million during 2013. The increase was primarily
driven by new acquisitions across our portfolio offset by the major expiry at Brookfield Place New York in the fourth quarter of
2013.



Hospitality NOI decreased
to $192 million for the year ended December 31, 2014 compared to $211 million during the same period in the prior year following
the deconsolidation of hotel assets in Australia and the sale of the One&Only Ocean Club, offset by an increase of NOI at Atlantis
and Hard Rock Hotel and Casino.



The following table reconciles NOI to net income
for the years ended December 31, 2014, 2013, and 2012:



|(US$ Millions) Year ended Dec. 31,                                                                      |  | 2014 |        |   | 2013 |   |        | 2012 | 
|------------------------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- | 
|Commercial property revenue                                                                             |  | $    | 3,038  |   |      | $ | 2,910  |      | 
|Direct commercial property expense                                                                      |  |      | (1,298 | ) |      |   | (1,204 | )    | 
|Commercial property NOI                                                                                 |  |      | 1,740  |   |      |   | 1,706  |      | 
|Hospitality revenue                                                                                     |  |      | 983    |   |      |   | 1,168  |      | 
|Direct hospitality expense                                                                              |  |      | (791   | ) |      |   | (957   | )    | 
|Hospitality NOI                                                                                         |  |      | 192    |   |      |   | 211    |      | 
|Total NOI                                                                                               |  |      | 1,932  |   |      |   | 1,917  |      | 
|Investment and other revenue                                                                            |  |      | 352    |   |      |   | 209    |      | 
|Interest expense                                                                                        |  |      | (1,258 | ) |      |   | (1,088 | )    | 
|Depreciation and amortization                                                                           |  |      | (148   | ) |      |   | (162   | )    | 
|Administration and other expenses                                                                       |  |      | (404   | ) |      |   | (317   | )    | 
|Fair value gains, net                                                                                   |  |      | 3,756  |   |      |   | 870    |      | 
|Share of net earnings from equity accounted investments                                                 |  |      | 1,366  |   |      |   | 835    |      | 
|Income before income taxes                                                                              |  |      | 5,596  |   |      |   | 2,264  |      | 
|Income tax expense                                                                                      |  |      | (1,176 | ) |      |   | (501   | )    | 
|Net income                                                                                              |  |      | 4,420  |   |      |   | 1,763  |      | 
|Net income attributable to non-controlling interests of others in operating subsidiaries and properties |  |      | 686    |   |      |   | 856    |      | 
|Net income attributable to
    Unitholders                                                              |  | $    | 3,734  |   |      | $ | 907    |      | 



FFO increased to $714 million
for the year ended December 31, 2014 compared with $582 million during 2013. The increase was driven by the increased ownership
of both GGP and BPO in 2013 and 2014, respectively. The increase also reflects a gain realized on a debt investment in Colonial
in the second quarter and a gain on extinguishment of debt in our retail portfolio, as well as a fee recognized in connection with
the disposition of Heritage Plaza and development gains in our industrial portfolio. This increase was partially offset by higher
interest expense as a result of higher corporate-level debt, primarily as a result of the acquisition of BPO, and higher property
debt levels as a result of acquisition and refinancing activity during the year.



51









The following table reconciles
net income to FFO for the years ended December 31, 2014, 2013, and 2012:



|(US$ Millions) Year ended Dec. 31,                  |  | 2014 |        |   | 2013 |   |       | 2012 | 
|--------------------------------------------------- |  | ---- | ------ | - | ---- | - | ----- | ---- | 
|Net income                                          |  | $    | 4,420  |   |      | $ | 1,763 |      | 
|Add (deduct):                                       |  |      |        |   |      |   |       |      | 
|Fair value gains, net                               |  |      | (3,756 | ) |      |   | (870  | )    | 
|Share of equity accounted fair value gains, net     |  |      | (809   | ) |      |   | (400  | )    | 
|Depreciation and amortization of real-estate assets |  |      | 112    |   |      |   | 124   |      | 
|Income tax expense                                  |  |      | 1,176  |   |      |   | 501   |      | 
|Non-controlling interests in above items            |  |      | (429   | ) |      |   | (536  | )    | 
|FFO                                                 |  | $    | 714    |   |      | $ | 582   |      | 



Summary Statement of Financial Position and Key Metrics



|(US$ Millions, except per unit information)      |  | Dec. 31, 2014 |        |  | Dec. 31, 2013 |  
|------------------------------------------------ |  | ------------- | ------ |  | ------------- | -
|Investment properties:                           |  |               |        |  |               |  
|Commercial properties                            |  | $             | 37,789 |  |               | $
|Commercial developments                          |  |               | 3,352  |  |               |  
|Equity accounted investments                     |  |               | 10,356 |  |               |  
|Hotel operating assets                           |  |               | 2,478  |  |               |  
|Assets held for sale                             |  |               | 2,241  |  |               |  
|Cash and cash equivalents                        |  |               | 1,282  |  |               |  
|Total assets                                     |  |               | 65,575 |  |               |  
|Debt obligations                                 |  |               | 27,006 |  |               |  
|Liabilities associated with assets held for sale |  |               | 1,221  |  |               |  
|Total equity                                     |  |               | 28,299 |  |               |  
|Equity attributable to Unitholders               |  | $             | 20,208 |  |               | $
|Equity attributable to Unitholders per unit      |  | $             | 28.35  |  |               | $



As of December 31, 2014,
we had $65,575 million in total assets, compared with $52,446 million at December 31, 2013. This $13,129 million increase is primarily
due to an increase of $6,110 million in commercial properties which was primarily attributable to the acquisitions of the CARS
portfolio, office parks in India, a 4,000-unit multifamily portfolio located in New York City, office properties in São
Paulo and London, and additional interests in KPMG Tower in Sydney and Five Manhattan West in Midtown Manhattan, as well as the
recognition of valuation gains and capital spend on our assets. This was offset by the reclassification of certain office and multifamily
properties to assets held for sale, dispositions of our Mexican industrial portfolio, and office assets in London, Houston and
Denver, as well as the negative impact of foreign exchange.



The following table presents
the changes in commercial properties from December 31, 2013 to December 31, 2014:



|(US$ Millions)                            |  | Dec. 31, 2014 |       
|----------------------------------------- |  | ------------- | ------
|Commercial properties, beginning of year  |  | $             | 31,679
|Acquisitions                              |  |               | 8,080 
|Capital expenditures                      |  |               | 821   
|Dispositions                              |  |               | (2,512
|Fair value gains, net                     |  |               | 2,781 
|Reclassifications to assets held for sale |  |               | (2,173
|Foreign currency translation              |  |               | (1,026
|Other changes                             |  |               | 139   
|Commercial properties, end of year        |  | $             | 37,789



Commercial developments
consist of commercial property development sites, density rights and related infrastructure. The total fair value of development
land and infrastructure was $3,352 million at December 31, 2014, an increase of $878 million from the balance at December 31, 2013.
The increase is primarily attributable to capital expenditures and the recognition of valuation gains, primarily at our Manhattan
West, Brookfield Place Calgary and Brookfield Place Perth Tower 2 developments, offset by the negative impact of foreign exchange.



During the fourth quarter
of 2014, our partnership reclassified office properties, which include 1250 Connecticut Avenue, 650 Massachusetts, 77 K Street,
799 9th Street, 1400 K Street, 1200 K Street, Bethesda Crescent, Victor Building, all of which are located in Washington, D.C.,
Metropolitan Park East & West in Seattle and 151 Yonge in Toronto, as well as a multifamily portfolio of assets in Virginia
and Maryland, to assets held for sale as we intend to sell controlling interests in these properties to third parties in the next 12 months.



Equity accounted investments,
which includes our investments in GGP, Rouse and other income producing property, increased by $1,075 million since December 31,
2013 as a result of our share of net income from such investments, including valuation gains on our U.S. retail portfolio, acquisitions,
including the Diplomat Resort and Spa (“Diplomat”) and the inclusion of Republic Plaza which was deconsolidated as
a result of a sale of a 50% interest in the property and is now accounted for under the equity method. In addition, this increase
also reflects the $249 million impairment reversal discussed above. These increases were offset in part by dividends received from
GGP and Rouse during the period and the consolidation of Five Manhattan West following the acquisition of additional interests.
Subsequent to the acquisition of additional interests in Five Manhattan West, the property is no longer accounted for as an investment
in joint venture under the equity method of accounting.



52







The following table presents a roll-forward
of changes in our equity accounted investments:



|(US$ Millions)                                  |  | Dec. 31, 2014 |       
|----------------------------------------------- |  | ------------- | ------
|Equity accounted investments, beginning of year |  | $             | 9,281 
|Additions, net of disposals                     |  |               | 275   
|Share of net income                             |  |               | 1,366 
|Distributions received                          |  |               | (549  
|Foreign exchange                                |  |               | (44   
|Other                                           |  |               | 27    
|Equity accounted investments, end of year       |  | $             | 10,356



To fund the increase in
total assets, our debt obligations increased to $27,006 million as at December 31, 2014 from $21,640 million as at December 31,
2013. Contributing to this increase was a new $1,500 million acquisition facility and a $1,000 million credit facility put in place
in March 2014 to fund the acquisition of the remaining BPO common shares that were previously not owned by our partnership. These
facilities, collectively, replaced our existing bilateral credit facilities. At December 31, 2014, the balance drawn on all of
our credit facilities was $2,141 million compared with $496 million at December 31, 2013. In addition, we had drawn $570 million
on a $1,000 million credit facility with Brookfield Asset Management at December 31, 2014.



The following table presents
additional information on our partnership’s outstanding debt obligations:



|(US$ Millions)               |  | Dec. 31, 2014 |        |  | Dec. 31, 2013 |  
|---------------------------- |  | ------------- | ------ |  | ------------- | -
|Corporate borrowings         |  | $             | 3,881  |  |               | $
|Non-recourse borrowings:     |  |               |        |  |               |  
|Property-specific borrowings |  |               | 22,569 |  |               |  
|Subsidiary borrowings        |  |               | 556    |  |               |  
|Total debt obligations       |  |               | 27,006 |  |               |  
|Current                      |  |               | 3,127  |  |               |  
|Non-current                  |  |               | 23,879 |  |               |  
|Total debt obligations       |  | $             | 27,006 |  |               | $



The following table presents
the components used to calculate equity attributable to Unitholders per unit:



|(US$ Millions, except unit information)     |  | Dec. 31, 2014 |             |  | Dec. 31, 2013 |  
|------------------------------------------- |  | ------------- | ----------- |  | ------------- | -
|Total equity                                |  | $             | 28,299      |  |               | $
|Less:                                       |  |               |             |  |               |  
|Non-controlling interests                   |  |               | 8,091       |  |               |  
|Equity attributable to Unitholders          |  |               | 20,208      |  |               |  
|Total units outstanding                     |  |               | 712,743,649 |  |               |  
|Equity attributable to Unitholders per unit |  | $             | 28.35       |  |               | $



Equity attributable to
Unitholders was $20,208 million at December 31, 2014, an increase of $6,584 million from the balance at December 31, 2013. The
increase was primarily a result of the issuance of LP Units and Exchange LP Units to acquire additional interests in BPO. At December
31, 2014, we had a total of 712,743,649 units issued and outstanding compared with 540,070,228 units at December 31, 2013.



Equity attributable to
Unitholders per unit was $28.35 at December 31, 2014, an increase of $3.12 from December 31, 2013. The increase was primarily the
result of additional investments made and fair value gains recognized since year-end. The increase was partially offset by the
issuance of partnership units below carrying value to acquire additional interests in BPO.



Non-controlling interests
was $8,091 million at December 31, 2014, a decrease of $3,275 million from the balance at December 31, 2013. The decrease was primarily
a result of the acquisition of additional interests in BPO, in which our voting interest increased from 51% to 100%, which was
partially offset by new acquisitions during the period.



53









SUMMARY OF QUARTERLY RESULTS



|                                                                 |  | 2014 |       |  | 2013 |  
|---------------------------------------------------------------- |  | ---- | ----- |  | ---- | -
|(US$ Millions, except per unit information)                      |  | Q4   |       |  | Q3   |  
|Revenue                                                          |  | $    | 1,063 |  |      | $
|Direct operating costs                                           |  |      | 524   |  |      |  
|Net income                                                       |  |      | 1,595 |  |      |  
|Net income attributable
    to Unitholders(1)                    |  |      | 1,492 |  |      |  
|Net income attributable to Unitholders
    per unit – basic(2)   |  | $    | 2.09  |  |      | $
|Net income attributable
    to Unitholders per unit – diluted(2) |  | $    | 1.97  |  |      | $



| | (1) | Net income attributable to Unitholders in Q1 2013 is attributable to Brookfield Asset Management. For Q2 2013, $(97) million
of net income attributable to Unitholders is attributable to Brookfield Asset Management for the period prior to the date of the
Spin-off.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                        

| | (2) | Net income attributable to Unitholders per unit has been presented effective for the period from the date of the Spin-off
on April 15, 2013, as this is the date of legal entitlement of earnings to the Unitholders. In addition, for Q2 2013, net income
attributable to Unitholders per unit is calculated exclusive of $(97) million of net income attributable to Brookfield Asset Management
prior to the date of the Spin-off.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Revenue varies from quarter
to quarter due to acquisitions and dispositions of commercial and other income producing assets, changes in occupancy levels, as
well as new leases and renewals at market net rents. In addition, revenue also fluctuates as a result of changes in foreign exchange
rates and seasonality. Seasonality primarily affects our retail assets, wherein the fourth quarter exhibits stronger performance
in conjunction with the holiday season. Our hotel assets generally have stronger performance in the winter and spring months compared
to the summer and fall months. Our net income fluctuates largely due to fair value gains and losses in each given period.



The economic and accounting
impact of contractual relationships created or modified in conjunction with the Spin-off are reflected prospectively from the date
of the Spin-off on April 15, 2013 and accordingly have not been reflected in the results of operations of our partnership, as such
items were in fact not created or modified prior thereto. As a result, results from periods prior the Spin-off are not comparable
to results after the Spin-off.



54







SEGMENT PERFORMANCE

Our operations are organized
into seven operating segments, including our corporate activities. For purposes of this MD&A, we have combined the Industrial,
Multifamily, Hotels and Triple Net Lease results since a majority of these assets were acquired recently and would not be meaningful
on a stand-alone basis. The following table presents FFO by segment for comparison purposes:



|(US$ Millions) Year ended Dec. 31,                   |  | 2014 |      |   | 2013 |   |      | 2012 | 
|---------------------------------------------------- |  | ---- | ---- | - | ---- | - | ---- | ---- | 
|Office                                               |  | $    | 546  |   |      | $ | 376  |      | 
|Retail                                               |  |      | 460  |   |      |   | 308  |      | 
|Industrial, Multifamily, Hotels and Triple Net Lease |  |      | 57   |   |      |   | 45   |      | 
|Corporate                                            |  |      | (349 | ) |      |   | (147 | )    | 
|FFO                                                  |  | $    | 714  |   |      | $ | 582  |      | 



The following table presents
equity attributable to Unitholders by segment as of December 31, 2014 and 2013:



|(US$ Millions)                                       |  | Dec. 31, 2014 |        |   | Dec. 31, 2013 |  
|---------------------------------------------------- |  | ------------- | ------ | - | ------------- | -
|Office                                               |  | $             | 16,003 |   |               | $
|Retail                                               |  |               | 9,171  |   |               |  
|Industrial, Multifamily, Hotels and Triple Net Lease |  |               | 1,590  |   |               |  
|Corporate                                            |  |               | (6,556 | ) |               |  
|Equity attributable to Unitholders                   |  | $             | 20,208 |   |               | $



Office

Our office segment consists
of interests in 244 office properties totaling 112 million square feet, which are located primarily in the world’s leading
commercial markets such as New York, London, Los Angeles, Washington, D.C., Sydney, Toronto, Houston, Calgary, and Perth, among
others. The following table presents FFO and net income attributable to Unitholders in our office segment for the years ended December
31, 2014, 2013, and 2012:



|(US$ Millions) Year ended Dec. 31,     |  | 2014 |       |  | 2013 |   |     | 2012 | 
|-------------------------------------- |  | ---- | ----- |  | ---- | - | --- | ---- | 
|FFO                                    |  | $    | 546   |  |      | $ | 376 |      | 
|Net income attributable to Unitholders |  |      | 2,948 |  |      |   | 787 |      | 



FFO from our office segment
was $546 million for the year ended December 31, 2014 as compared to $376 million in 2013. The increase was primarily the result
of our increased ownership in BPO, which was 87% on a weighted average basis for 2014, compared to 49% for 2013. In addition, we
recognized a $43 million realized net gain on our investment in Colonial and a fee in connection with the disposition of Heritage
Plaza in Houston in the first quarter of 2014. During 2013, we also recorded an accrual of a contingent payment related to a litigation
settlement. These increases were partially offset by a major expiry at Brookfield Place New York in October 2013 and the negative
impact of foreign exchange. In addition, we received a $14 million dividend from our investment in Canary Wharf in 2013.



Compared to 2012, FFO declined
to $376 million in 2013 from $409 million. This decrease was primarily the result of the major expiry at Brookfield Place New York
noted above, which reduced FFO by $21 million during the fourth quarter of 2013, as well as a $40 million dividend from our investment
in Canary Wharf in 2012, compared to $14 million in 2013.



Net income attributable
to Unitholders for 2014 was $2,948 million compared to $787 million in 2013. The increase of $2,161 million was the result of our
increased ownership in BPO and higher fair value gains across our office portfolio, particularly in New York City. In addition,
we also recorded fair value gains on our investment in Canary Wharf as a result of the continued recovery in the London office
market. This increase was partially offset by higher income tax expense in the current year as a result of higher taxable income
and an increase in deferred tax liability as a result of a change in state tax legislation that resulted in an increase of our
effective tax rate applicable to future earnings from certain subsidiaries in the impacted jurisdictions.



Net income attributable
to Unitholders increased by $13 million from $774 million in 2012 to $787 million in 2013. This increase was primarily the result
of lower income taxes on our office portfolio, offset by lower valuation gains in 2013, as compared to 2012, and lower taxable
income, as discussed above.



55







The following table presents
key operating metrics for our office portfolio as at December 31, 2014 and 2013 and for the years ended December 31, 2014 and 2013:



|As at and for the year ended Dec. 31,      |  | Consolidated |        |   | Unconsolidated |  
|------------------------------------------ |  | ------------ | ------ | - | -------------- | -
|(US$ Millions, except where noted)         |  | 2014         |        |   | 2013           |  
|Total portfolio:                           |  |              |        |   |                |  
|NOI(1)                                     |  | $            | 1,380  |   |                | $
|Number of properties                       |  |              | 211    |   |                |  
|Leasable square feet (in thousands)        |  |              | 78,068 |   |                |  
|Occupancy                                  |  |              | 88.0   | % |                |  
|In-place net rents (per square foot)(2)(3) |  | $            | 27.76  |   |                | $
|Same property:                             |  |              |        |   |                |  
|NOI(3)                                     |  | $            | 1,101  |   |                | $
|Number of properties                       |  |              | 81     |   |                |  
|Leasable square feet (in thousands)        |  |              | 53,538 |   |                |  
|Occupancy                                  |  |              | 92.9   | % |                |  
|In-place net rents (per square foot)(3)    |  | $            | 28.20  |   |                | $

| | (1) | NOI for unconsolidated properties is presented on a
proportionate basis, representing the Unitholders’ interest in the property.
| | --- | --------------------------------------------------------------------------------------------------------------------------------

| | (2) | Excludes portfolio of office parks in India acquired
in the fourth quarter of 2014.
| | --- | -----------------------------------------------------------------------------------

| | (3) | Presented using normalized foreign exchange rates, using
the December 31, 2014 exchange rate.
| | --- | ---------------------------------------------------------------------------------------------



Same-property NOI for our
consolidated properties for the year ended December 31, 2014 compared with the prior year decreased by $83 million to $1,101 million.
This decrease was primarily the result of a major expiry at Brookfield Place New York in October 2013. Significant leasing progress
on this space has been made and large leases have been executed in the current year, which will contribute rental revenue in 2015
and 2016. This vacancy was partially offset by higher same-property NOI at our other U.S. and U.K. properties due to increased
occupancy and in-place net rents.



NOI from our consolidated
properties decreased to $1,380 million in 2014 from $1,431 million in 2013. This decrease was due to a major expiry noted above
and the disposition of mature, non-core properties in London, Denver, Houston, Washington, D.C., and New Zealand during the period.
In 2014, we acquired 85 consolidated properties comprised of 16.9 million leasable square feet which was primarily suburban office
space that did not contribute meaningfully to NOI.



NOI from our unconsolidated
properties, which is presented on a proportionate basis, increased by $45 million to $161 million in the year ended December 31,
2014, compared to $116 million in the prior year. This increase reflects our additional interests in BPO following the acquisition
of BPO, as well as higher rental income as a result of higher occupancy levels and rental rates at these properties.



The following table presents
certain key operating metrics related to leasing activity in our office segment:



|                                                        |  | Total portfolio year-to-date |       
|------------------------------------------------------- |  | ---------------------------- | ------
|(US$ millions, except where noted)                      |  | Dec. 31, 2014                |       
|Leasing activity (in thousands of square feet)          |  |                              |       
|New leases                                              |  |                              | 7,004 
|Renewal leases                                          |  |                              | 3,814 
|Total leasing activity                                  |  |                              | 10,818
|Average term (in years)                                 |  |                              | 7.6   
|Year-one leasing net rents (per square foot)(1)         |  | $                            | 31.05 
|Average leasing net rents (per square foot)(1)          |  |                              | 34.43 
|Expiring net rents (per square foot)(1)                 |  |                              | 25.74 
|Estimated market net rents for similar space(1)         |  |                              | 35.57 
|Tenant improvements and leasing costs (per square foot) |  | $                            | 73.14 





(1) Presented using normalized foreign exchange rates,
using the December 31, 2014 exchange rate.



For the year ended December
31, 2014, we leased over 10.8 million square feet at average in-place net rents approximately 34% higher than expiring net rents.
Approximately 65% of our leasing activity represented new leases. Our overall office portfolio’s in-place net rents are currently
21% below market net rents, which gives us confidence that we will be able to increase our NOI in the coming years, as we sign
new leases. For year ended December 31, 2014, tenant improvements and leasing costs related to leasing activity were $73.14 per
square foot, compared to $42.99 per square foot for in the prior year. This increase was due to a high percentage of leasing activity
associated with new leases that were concentrated in New York City where leasing costs tend to be higher.



We calculate net rent as
the annualized amount of cash rent receivable from leases on a per square foot basis including tenant expense reimbursements, less
operating expenses being incurred for that space, excluding the impact of straight-lining rent escalations or amortization of free
rent periods. This measure represents the amount of cash, on a per square foot basis, generated from leases in a given period.



56







The following table presents
our fair value gains from consolidated and unconsolidated investments attributable to our office segment:



|(US$ Millions) Year ended Dec. 31, |  | 2014 |       |  | 2013 |   |     | 2012 | 
|---------------------------------- |  | ---- | ----- |  | ---- | - | --- | ---- | 
|Fair value gains:                  |  |      |       |  |      |   |     |      | 
|Consolidated investments           |  | $    | 3,065 |  |      | $ | 806 |      | 
|Unconsolidated investments(1)      |  |      | 174   |  |      |   | 190 |      | 
|Total fair value gains             |  | $    | 3,239 |  |      | $ | 996 |      | 

(1) Fair value gains for unconsolidated investments
are presented on a proportionate basis, representing the Unitholders’ interest in the investments.



We recorded $3,239 million
fair value gains in 2014 compared to $996 million in 2013. This increase was primarily due to fair value gains in our U.S. and
U.K. office portfolios, as a result of discount and capitalization rate compression reflecting the improvements in the office markets
in these regions, and leasing changes, based on leases signed during the year. Also contributing to this increase were fair value
gains on our investment in Canary Wharf, reflecting continued improvements in the London office market.



In 2012, we recorded $1,127
million of fair value gains, compared to $996 million in 2013, as we recorded higher fair value gains on our Canadian office portfolio
in 2012 compared to 2013. This was offset by higher fair value gains on the U.S. and U.K. portfolios in 2013.



The key valuation metrics for commercial properties
in our office segment are as follows:



|                            |  | Dec. 31, 2014 |     |   | Dec. 31, 2013                | 
|--------------------------- |  | ------------- | --- | - | ---------------------------- | 
|                            |  | Discount rate |     |   | Terminal
capitalization
rate | 
|Consolidated properties(1): |  |               |     |   |                              | 
|United States               |  |               | 7.1 | % |                              | 
|Canada                      |  |               | 6.3 | % |                              | 
|Australia                   |  |               | 8.3 | % |                              | 
|Europe                      |  |               | 6.8 | % |                              | 
|Brazil(2)                   |  |               | 8.5 | % |                              | 
|Unconsolidated properties:  |  |               |     |   |                              | 
|United States               |  |               | 6.4 | % |                              | 
|Australia                   |  |               | 8.3 | % |                              | 

(1)
Excludes valuation metrics related to Candor Office Parks.

(2) In September 2014, we acquired a 51% interest in an office property in São Paulo, Brazil.



The following table provides
an overview of the financial position of our office segment as at December 31, 2014 and 2013:



|(US$ Millions)                                                               |  | Dec. 31, 2014 |        |  | Dec. 31, 2013 |  
|---------------------------------------------------------------------------- |  | ------------- | ------ |  | ------------- | -
|Investment properties:                                                       |  |               |        |  |               |  
|Commercial properties                                                        |  | $             | 28,531 |  |               | $
|Commercial developments                                                      |  |               | 2,640  |  |               |  
|Equity accounted investments                                                 |  |               | 2,061  |  |               |  
|Participating loan interests                                                 |  |               | 609    |  |               |  
|Investment in Canary Wharf                                                   |  |               | 1,265  |  |               |  
|Accounts receivable and other                                                |  |               | 1,216  |  |               |  
|Cash and cash equivalents                                                    |  |               | 620    |  |               |  
|Assets held for sale                                                         |  |               | 1,676  |  |               |  
|Total assets                                                                 |  |               | 38,618 |  |               |  
|Less:                                                                        |  |               |        |  |               |  
|Debt obligations                                                             |  |               | 14,402 |  |               |  
|Capital securities – fund subsidiaries                                       |  |               | 643    |  |               |  
|Accounts payable and other liabilities                                       |  |               | 3,040  |  |               |  
|Liabilities associated with assets held for sale                             |  |               | 825    |  |               |  
|Non-controlling interests of others in operating subsidiaries and properties |  |               | 3,705  |  |               |  
|Equity attributable to Unitholders                                           |  | $             | 16,003 |  |               | $



Equity attributable to
Unitholders increased by $8,093 million to $16,003 million at December 31, 2014 from $7,910 million at December 31, 2013. The increase
was primarily the result of the acquisition of the BPO common shares not previously owned by our partnership. The acquisition of
this interest amounted to $4,568 million and was paid for through a combination of the issuance of approximately 160 million LP
Units and Exchange LP Units for $3,030 million and cash consideration of $1,538 million and resulted in the reduction in non-controlling
interests. In addition, certain Canadian BPO shareholders had their shares redeemed directly by BPO. BPO acquired 22.5 million
of these common shares for consideration of $195 million in cash and 12.9 million Exchange LP Units valued at $263 million. These
shares were subsequently cancelled. The remaining increase in equity was a result of valuation gains recorded in the current year,
partially offset by the negative impact of foreign currency translation.



57









Commercial properties totaled
$28,531 million at December 31, 2014, compared to $26,767 million at December 31, 2013. This increase reflects fair value gains
and capital expenditures during the year, as well as acquisitions of assets in Sydney, New York and London, offset by the reclassification
of certain assets to assets held for sale, as discussed above, and the disposition of assets in Denver, Houston and London.



Commercial developments
increased by $799 million between December 31, 2013 and December 31, 2014 as a result of capital expenditures and the recognition
of valuation gains, offset by the negative impact of foreign exchange. Expenditures primarily related to our active developments,
including Manhattan West in New York, Bay Adelaide Centre East in Toronto, and Brookfield Places in Calgary and Perth, as well
as Principal Place in London and the Giroflex towers in São Paulo. In addition, we recorded increased associated borrowing
costs.



The following table summarizes the scope and
progress of active developments in our office segment as of December 31, 2014:





|                                           |  | Square
    feet                        |       |  |                                         |             |                          |  |    | Cost     |  |    | Construction
    Loan | 
|------------------------------------------ |  | -------------------------------------- | ----- |  | --------------------------------------- | ----------- | ------------------------ |  | -- | -------- |  | -- | --------------------- | 
|(Millions,
    except where noted)         |  | under
    
    construction (in 000’s) |       |  | Expected
    date of cash stabilization |             | Percent
     pre-
leased |  |    | Total(1) |  |    | To-
date              | 
|Active developments:                       |  |                                        |       |  |                                         |             |                          |  |    |          |  |    |                       | 
|Manhattan
    West (platform), New York(2) |  |                                        | ―     |  |                                         | ―           |                          |  | ―  |          |  | $  | 680                   | 
|Manhattan West
    (residential), New York |  |                                        | 586   |  |                                         | Q4 2018     |                          |  | ―  |          |  | $  | 520                   | 
|Brookfield Place
    Tower 2, Perth        |  |                                        | 366   |  |                                         | Q1 2016     |                          |  | 52 | %        |  | A$ | 338                   | 
|1 London Wall Place,
    London(3)         |  |                                        | 505   |  |                                         | Q3 2019     |                          |  | 61 | %        |  | £  | 192                   | 
|Bay Adelaide East,
    Toronto             |  |                                        | 980   |  |                                         | Q2 2017     |                          |  | 69 | %        |  | C$ | 463                   | 
|Giroflex, São
    Paulo                    |  |                                        | 681   |  |                                         | Q1 2018     |                          |  | ―  |          |  | R$ | 642                   | 
|Brookfield Place
    East Tower, Calgary   |  |                                        | 1,400 |  |                                         | Q3 2018     |                          |  | 71 | %        |  | C$ | 799                   | 
|Principal
    Place (commercial), London   |  |                                        | 621   |  |                                         | Q4
    2019 |                          |  | 69 | %        |  | £  | 379                   | 
|                                           |  |                                        | 5,139 |  |                                         |             |                          |  |    |          |  |    |                       | 



| | (1) | Net of NOI earned during stabilization.
| | --- | ---------------------------------------

| | (2) | Represents the platform upon which the five million square foot Manhattan West development will
be constructed.
| | --- | ---------------------------------------------------------------------------------------------------------------

| | (3) | Cost and construction loan information is presented on a proportionate basis at our 50% ownership
in this development.
| | --- | ----------------------------------------------------------------------------------------------------------------------



The following table presents
changes in our partnership’s equity accounted investments in the office segment from December 31, 2013 to December 31, 2014:



|(US$ Millions)                                  |  | Dec. 31, 2014 |      
|----------------------------------------------- |  | ------------- | -----
|Equity accounted investments, beginning of year |  | $             | 2,135
|Additions, net of disposals                     |  |               | (11  
|Share of net income                             |  |               | 271  
|Distributions received                          |  |               | (294 
|Foreign exchange                                |  |               | (34  
|Other                                           |  |               | (6   
|Equity accounted investments, end of year       |  | $             | 2,061



Equity accounted investments
decreased by $74 million to $2,061 million at December 31, 2014 compared to prior year-end. The decrease reflects distributions
of $294 million primarily related to the refinancing of the Grace Building in New York in the current year, and the consolidation
of Five Manhattan West following the acquisition of additional interests in the property in the first quarter of 2014. This was
partially offset by the addition to equity accounted investments of Republic Plaza in Denver following the disposition of a 50%
interest in the second quarter of 2014.



Our investment in Canary
Wharf increased by $238 million as a result of fair value gains of $319 million recognized during the year, offset by a weakening
of the British Pound against the U.S. Dollar.



At December 31, 2014, we
classified 1250 Connecticut Avenue, 650 Massachusetts Avenue, 77 K Street, 799 9th Street, 1400 K Street, 1200 K Street, Bethesda
Crescent and the Victor Building in Washington, D.C., as well as Metropolitan Park East & West in Seattle and 151 Yonge in
Toronto, to assets held for sale as we intend to sell controlling interests in these properties to third parties in the next 12
months.



Debt obligations decreased
from $14,733 million at December 31, 2013 to $14,402 million at December 31, 2014. This decrease is the result of the reclassification
of certain assets and associated property-level debt to assets held for sale, the impact of foreign exchange, and the repayment
of debt obligations as a result of dispositions of mature, non-core assets. This decrease was partially offset by the addition
of property-level debt related to asset acquisitions in São Paulo, London, Sydney, and New York and upfinancings of U.S.
and Australian properties and drawdowns on construction facilities for our active developments.



58









We also had $643 million
of capital securities – fund subsidiaries outstanding at December 31, 2014 (December 31, 2013 – $491 million). Capital
securities – fund subsidiaries represent the equity interests in Brookfield DTLA Holdings LLC (“DTLA”) held by
our co-investors in the fund, which have been classified as a liability, rather than as non-controlling interests, as the 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.



Reconciliation of Non-IFRS Measures –
Office

The key components of NOI in our office segment
are presented below:



|(US$ Millions) Year ended Dec. 31, |  | 2014 |        |   | 2013 |   |        | 2012 | 
|---------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- | 
|Commercial property revenue        |  | $    | 2,504  |   |      | $ | 2,463  |      | 
|Direct commercial property expense |  |      | (1,124 | ) |      |   | (1,032 | )    | 
|Total NOI                          |  | $    | 1,380  |   |      | $ | 1,431  |      | 



NOI to net income:



|(US$ Millions) Year ended Dec. 31,                      |  | 2014 |       |   | 2013 |   |       | 2012 | 
|------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | ---- | 
|Same-property NOI                                       |  | $    | 1,009 |   |      | $ | 1,097 |      | 
|Currency variance                                       |  |      | ―     |   |      |   | 28    |      | 
|NOI related to acquisitions and dispositions            |  |      | 336   |   |      |   | 263   |      | 
|NOI from opportunistic assets                           |  |      | 35    |   |      |   | 43    |      | 
|Total NOI                                               |  |      | 1,380 |   |      |   | 1,431 |      | 
|Investment and other revenue                            |  |      | 257   |   |      |   | 158   |      | 
|Interest expense                                        |  |      | (686  | ) |      |   | (670  | )    | 
|Depreciation and amortization on non-real estate assets |  |      | (18   | ) |      |   | (20   | )    | 
|Administration and other expense                        |  |      | (160  | ) |      |   | (161  | )    | 
|Fair value gains, net                                   |  |      | 3,065 |   |      |   | 806   |      | 
|Share of net earnings from equity accounted investments |  |      | 271   |   |      |   | 295   |      | 
|Income before income taxes                              |  |      | 4,109 |   |      |   | 1,839 |      | 
|Income tax expense                                      |  |      | (645  | ) |      |   | (207  | )    | 
|Net income                                              |  |      | 3,464 |   |      |   | 1,632 |      | 
|Net income attributable to non-controlling interests    |  |      | 516   |   |      |   | 845   |      | 
|Net income attributable to Unitholders                  |  | $    | 2,948 |   |      | $ | 787   |      | 



Net income to FFO:



|(US$ Millions) Year ended Dec. 31,              |  | 2014 |        |   | 2013 |   |       | 2012 | 
|----------------------------------------------- |  | ---- | ------ | - | ---- | - | ----- | ---- | 
|Net income                                      |  | $    | 3,464  |   |      | $ | 1,632 |      | 
|Add (deduct):                                   |  |      |        |   |      |   |       |      | 
|Fair value gains, net                           |  |      | (3,065 | ) |      |   | (806  | )    | 
|Share of equity accounted fair value gains, net |  |      | (174   | ) |      |   | (190  | )    | 
|Income tax expense                              |  |      | 645    |   |      |   | 207   |      | 
|Non-controlling interests in above items        |  |      | (324   | ) |      |   | (467  | )    | 
|FFO                                             |  | $    | 546    |   |      | $ | 376   |      | 



Retail

Our retail segment consists
of 164 regional malls containing 154 million square feet in the United States and Brazil; a substantial portion of our retail properties
are held through our 29% interest in GGP (33% on a fully-diluted basis, assuming all outstanding warrants are exercised) and our
34% interest in Rouse.



The following table presents
FFO and net income attributable to Unitholders in our retail segment for the years ended December 31, 2014, 2013, and 2012:



|(US$ Millions) Year ended Dec. 31,     |  | 2014 |       |  | 2013 |   |     | 2012 | 
|-------------------------------------- |  | ---- | ----- |  | ---- | - | --- | ---- | 
|FFO                                    |  | $    | 460   |  |      | $ | 308 |      | 
|Net income attributable to Unitholders |  |      | 1,566 |  |      |   | 467 |      | 



FFO earned in our retail
platform for the year ended December 31, 2014 was $460 million compared to $308 million in the prior year. This increase is primarily
the result of an increase in our ownership of GGP to 29% on a weighted average basis in the current year compared to 23% in 2013.
In addition, FFO increased as a result of positive same property sales and higher lease spreads, and income from our investment
in CXTD in 2014. This increase was partially offset by the disposition of our remaining Australian retail asset in the fourth quarter
of 2014, as well as the weakening of the Australian Dollar and Brazilian Real against the U.S. Dollar from the prior year.



The increase in FFO from
$260 million in 2012 to $308 million in 2013 was primarily the result of higher equity accounted income from our investment in
GGP, as a result of improved operating results at GGP. Same property NOI at GGP increased by 6.0% year-over-year and GGP benefited
from interest expense savings as a result of refinancing activity across its portfolio.



59







Net income attributable
to Unitholders increased by $1,099 million to $1,566 million in 2014 compared to $467 million in 2013. This increase was the result
of fair value gains on the Class A malls in the GGP portfolio as a result of positive leasing spreads and tightening discount and
capitalization rates owing to the strengthening market for these high-quality malls, as well as the reversal of $249 million of
impairment losses on our investment in GGP, as described above. In addition, we recorded fair value gains on the GGP warrants we
own, reflecting the 40% increase of GGP’s public share price during 2014.



Net income
attributable to Unitholders decreased by $332 million to $467 million in 2013 compared to $799 million in 2012. This decrease
was primarily the result of an impairment of our investment in GGP taken in 2013 as described in the “Consolidated
Performance and Analysis” section above.



The following table presents
key operating metrics in our retail portfolio as at December 31, 2014 and 2013 and for the year ended December 31, 2014 and 2013:



|As at and for the year ended Dec. 31,   |  | Consolidated |       |   | Unconsolidated |  
|--------------------------------------- |  | ------------ | ----- | - | -------------- | -
|(US$ Millions, except where noted)      |  | 2014         |       |   | 2013           |  
|NOI:                                    |  |              |       |   |                |  
|Total portfolio(1)                      |  | $            | 109   |   |                | $
|Same property(2)                        |  |              | 92    |   |                |  
|Total portfolio:                        |  |              |       |   |                |  
|Number of malls                         |  |              | 7     |   |                |  
|Leasable square feet (in thousands)(3)  |  |              | 2,640 |   |                |  
|Occupancy                               |  |              | 95.2  | % |                |  
|In-place net rents (per square foot)(2) |  | $            | 43.45 |   |                | $
|Tenant sales (per square foot)(2)       |  | $            | 650   |   |                | $

| | (1) | NOI for unconsolidated properties is presented on a
proportionate basis, representing the Unitholders’ interest in the investments.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------

| | (2) | Presented using normalized foreign exchange rates, using
the December 31, 2014 exchange rate.
| | --- | ---------------------------------------------------------------------------------------------

| | (3) | The unconsolidated properties do not include 1.1 million
square feet of urban retail space at December 31, 2014 (December 31, 2013 – nil).
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------



NOI on consolidated properties
increased by $3 million year-over-year to $109 million in 2014 due to higher income in our Brazilian portfolio as a result of rental
step-ups, which was offset by the disposition of properties in Australia and Brazil in the fourth quarter of 2014 and foreign exchange
losses. NOI on unconsolidated properties, which is presented on a proportionate basis, increased to $729 million, from $583 million
in the prior year, reflecting the increase in our ownership of GGP. On a same-property basis, NOI on unconsolidated properties
increased to $550 million from $526 million due to favorable lease spreads in the United States.



The results of our operations
are primarily driven by changes in occupancy and in-place rental rates. The following table presents new and renewal leases with
commencement dates in 2014 and 2015 compared to expiring leases for the prior tenant in the same suite, for leases where the downtime
between new and previous tenant is less than 24 months, among other metrics.



|                                               |  | Total portfolio year-to-date |      
|---------------------------------------------- |  | ---------------------------- | -----
|(US$ Millions, except where noted)             |  | Dec. 31, 2014                |      
|Number of leases                               |  |                              | 2,681
|Leasing activity (in thousands of square feet) |  |                              | 7,795
|Average term in years                          |  |                              | 6.2  
|Initial rent (per square foot)(1)              |  | $                            | 58.58
|Expiring rent (per square foot)(2)             |  |                              | 50.84
|Initial rent spread                            |  |                              | 7.74 
|% Change                                       |  |                              | 15.2 
|Tenant allowances and leasing costs            |  | $                            | 152  

(1) Represents initial rent over the term consisting
of base minimum rent and common area costs.

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



For the year ended December
31, 2014, we leased approximately 7.8 million square feet at initial rents approximately 15.2% higher than expiring net rents on
a suite-to-suite basis. Additionally, for the year ended December 31, 2014 tenant allowances and leasing costs related to leasing
activity was $152 million compared to $169 million in the prior year.



Our retail portfolio occupancy
rate at December 31, 2014 was 95.8%, down 10 basis from points from the occupancy rates at December 31, 2013. In our retail segment,
we use in-place rents as a measure of leasing performance. In-place rents are calculated on a cash basis and consist of base minimum
rent, plus reimbursements of common area costs, and real estate taxes. In-place rents increased to $54.71 at December 31, 2014
from $53.15 at December 31, 2013, primarily as a result of strong leasing activity across our U.S. and Brazilian mall portfolios.
At GGP, the same-store NOI increased by 4.5% during 2014 compared to the prior year and suite-to-suite lease spreads increased
by 18.3% for leases commencing in 2014 compared to the prior year at December 31, 2014.



60







The following table presents our fair value
gains from consolidated and unconsolidated investments in our retail segment:



|(US$ Millions) Year ended Dec. 31, |  | 2014 |       |  | 2013 |   |     | 2012 | 
|---------------------------------- |  | ---- | ----- |  | ---- | - | --- | ---- | 
|Fair value gains:                  |  |      |       |  |      |   |     |      | 
|Consolidated investments           |  | $    | 532   |  |      | $ | 65  |      | 
|Unconsolidated investments(1)      |  |      | 575   |  |      |   | 172 |      | 
|Total fair value gains             |  | $    | 1,107 |  |      | $ | 237 |      | 

| | (1) | Fair value gains for unconsolidated properties are presented on a proportionate basis, representing the Unitholders’
interest in the investments.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------



We reported fair value
gains of $1,107 million in our retail segment in 2014, compared to $237 million in the prior year. This increase relates to higher
fair values at GGP’s malls, driven by changes in projected property-level cash flows as a result of positive leasing spreads
and redevelopment activity. We also reversed a $249 million impairment loss on our investment in GGP during 2014 as a result of
an increase in the share price of GGP, as mentioned above. In addition, fair value gains also reflect gains on GGP warrants, as
noted above, and our investment in CXTD, as a result of increases to the underlying net asset value.



Fair value gains were $237
million in 2013, compared to $1,010 million in 2012. The decrease is attributable to the impairment on our investment in GGP, as
noted above, as well as lower fair value gains in our Brazilian and U.S. mall portfolios in 2013, as compared to 2012.



The key valuation metrics
of these properties in our retail segment are presented in the following table. The valuations are most sensitive to changes in
the discount rate and timing or variability of cash flows.



|                           |  | Dec.
    31, 2014 |     |   | Dec. 31, 2013                         | 
|-------------------------- |  | ----------------- | --- | - | ------------------------------------- | 
|                           |  | Discount
    Rate |     |   | Terminal
    
    capitalization rate | 
|Consolidated properties:   |  |                   |     |   |                                       | 
|Brazil                     |  |                   | 9.2 | % |                                       | 
|Australia(1)               |  |                   | n/a |   |                                       | 
|Unconsolidated properties: |  |                   |     |   |                                       | 
|United States              |  |                   | 7.4 | % |                                       | 

(1) The remaining Australian
retail asset was sold in December 2014.



Equity attributable to
Unitholders in the retail segment increased by $1,467 million between December 31, 2013 and December 31, 2014 due to the net income
attributable to Unitholders discussed above and our $157 million net investment in CXTD during 2014, which was partially offset
by dividends received from our investments in GGP and Rouse during the period.



The following table presents
an overview of the financial position of our retail segment as at December 31, 2014 and 2013:



|(US$ Millions)                                                               |  | Dec. 31, 2014 |        |  | Dec. 31, 2013 |  
|---------------------------------------------------------------------------- |  | ------------- | ------ |  | ------------- | -
|Investment properties                                                        |  | $             | 1,496  |  |               | $
|Equity accounted investments                                                 |  |               | 7,295  |  |               |  
|GGP warrants                                                                 |  |               | 1,394  |  |               |  
|Accounts receivable and other                                                |  |               | 778    |  |               |  
|Cash and cash equivalents                                                    |  |               | 60     |  |               |  
|Total assets                                                                 |  |               | 11,023 |  |               |  
|Less:                                                                        |  |               |        |  |               |  
|Debt obligations                                                             |  |               | 513    |  |               |  
|Accounts payable and other liabilities                                       |  |               | 155    |  |               |  
|Non-controlling interests of others in operating subsidiaries and properties |  |               | 1,184  |  |               |  
|Total equity attributable to Unitholders                                     |  | $             | 9,171  |  |               | $



Investment properties totaled
$1,496 million at December 31, 2014, a decrease of $407 million from the prior year-end. The decrease was a result of asset dispositions
in Brazil and Australia, the reduction of foreign exchange rates against the U.S. Dollar and valuation losses on our Brazilian
portfolio.



Equity accounted
investments increased by $852 million as a result of fair value gains on the U.S. mall portfolio and the reversal of the
impairment of the GGP investment in 2014, as noted in the “Consolidated Performance and Analysis” section
above. This increase was partially offset by dividends received from GGP and Rouse during the current period.



61







The following table presents
a roll-forward of our partnership’s equity accounted investments for the year ended December 31, 2014:



|(US$ Millions)                                  |  | Dec. 31, 2014 |      
|----------------------------------------------- |  | ------------- | -----
|Equity accounted investments, beginning of year |  | $             | 6,443
|Share of net income                             |  |               | 1,014
|Distributions received                          |  |               | (172 
|Other                                           |  |               | 10   
|Equity accounted investments, end of year       |  | $             | 7,295



The value of GGP warrants
increased as a result of the gains in GGP’s stock price during 2014 as noted above.



Debt obligations decreased by $181 million to
$513 million at December 31, 2014 from $694 million at December 31, 2013 as a result of debt repayments following the disposition
of properties in Australia and Brazil and lower foreign exchange rates.



Reconciliation of Non-IFRS Measures – Retail

The key components of NOI in our retail segment
are presented below:



|(US$ Millions) Year ended Dec. 31, |  | 2014 |     |   | 2013 |   |     | 2012 | 
|---------------------------------- |  | ---- | --- | - | ---- | - | --- | ---- | 
|Commercial property revenue        |  | $    | 137 |   |      | $ | 150 |      | 
|Direct commercial property expense |  |      | (28 | ) |      |   | (44 | )    | 
|Total NOI                          |  | $    | 109 |   |      | $ | 106 |      | 



NOI to net income:



|(US$ Millions) Year ended Dec. 31,                                                                      |  | 2014 |       |   | 2013 |   |     | 2012 | 
|------------------------------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- | - | --- | ---- | 
|Total NOI                                                                                               |  | $    | 109   |   |      | $ | 106 |      | 
|Investment and other revenue                                                                            |  |      | 46    |   |      |   | 8   |      | 
|Interest expense                                                                                        |  |      | (78   | ) |      |   | (71 | )    | 
|Administration and other expense                                                                        |  |      | (13   | ) |      |   | (1  | )    | 
|Fair value gains, net                                                                                   |  |      | 532   |   |      |   | 65  |      | 
|Share of net earnings from equity accounted investments                                                 |  |      | 1,014 |   |      |   | 487 |      | 
|Income before income taxes                                                                              |  |      | 1,610 |   |      |   | 594 |      | 
|Income tax expense                                                                                      |  |      | (10   | ) |      |   | (63 | )    | 
|Net income                                                                                              |  |      | 1,600 |   |      |   | 531 |      | 
|Net income attributable to non-controlling interests of others in operating subsidiaries and properties |  |      | 34    |   |      |   | 64  |      | 
|Net income attributable to Unitholders                                                                  |  | $    | 1,566 |   |      | $ | 467 |      | 



Net income to FFO:



|(US$ Millions) Year ended Dec. 31,              |  | 2014 |       |   | 2013 |   |      | 2012 | 
|----------------------------------------------- |  | ---- | ----- | - | ---- | - | ---- | ---- | 
|Net income                                      |  | $    | 1,600 |   |      | $ | 531  |      | 
|Add (deduct):                                   |  |      |       |   |      |   |      |      | 
|Fair value gains, net                           |  |      | (532  | ) |      |   | (65  | )    | 
|Share of equity accounted fair value gains, net |  |      | (575  | ) |      |   | (172 | )    | 
|Income tax expense                              |  |      | 10    |   |      |   | 63   |      | 
|Non-controlling interests in above items        |  |      | (43   | ) |      |   | (49  | )    | 
|FFO                                             |  | $    | 460   |   |      | $ | 308  |      | 



62







Industrial, Multifamily, Hotels and Triple
Net Lease

Our industrial, multifamily,
hotels and triple net lease segments are comprised of the following:



| | · | Over 44 million square feet of industrial
space across 168 industrial properties, primarily consisting of modern logistics assets in North America and Europe, with an additional
14 million square feet currently under construction;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Over 27,800 multifamily units across 89
properties in the United States and Canada;
| | - | -----------------------------------------------------------------------------------

| | · | Eleven hotel assets with over 8,700 rooms
in North America and Australia; and
| | - | -----------------------------------------------------------------------------

| | · | Over 300 properties that are leased to
automotive dealerships across North America on a triple net lease basis.
| | - | ---------------------------------------------------------------------------------------------------------------



The following table presents
NOI, FFO and net income attributable to Unitholders in our industrial, multifamily, hotels and triple net lease segments for the
years ended December 31, 2014, 2013, and 2012:



|(US$ Millions) Year ended Dec. 31,            |  | 2014 |     |  | 2013 |   |     | 2012 | 
|--------------------------------------------- |  | ---- | --- |  | ---- | - | --- | ---- | 
|NOI                                           |  | $    | 443 |  |      | $ | 380 |      | 
|FFO                                           |  |      | 57  |  |      |   | 45  |      | 
|Net income (loss) attributable to Unitholders |  |      | 84  |  |      |   | 18  |      | 



Over the past three years,
we have made significant investments in industrial, multifamily, hotels and triple net lease properties. These investments are
the primary driver of the improvements in NOI, FFO and net income (loss) attributable to Unitholders in each of the past three
years. These investments include the following:



| | · | Created an industrial platform with assets
in North America and Europe with the acquisitions of Verde Realty (“Verde”) in December 2012, Gazeley Limited (“Gazeley”)
in June 2013 and IDI Realty (“IDI”) in October 2013,
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The acquisition of over 24,000 value-add
multifamily units, primarily in 2013 and 2014, with plans to renovate the majority of those units and benefit from positive rent
spreads on the releasing of renovated units,
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Acquired an interest in ten hotel assets, totaling approximately 4,900
rooms across North America and Australia; and
| | - | --------------------------------------------------------------------------------------------------------------------

| | · | The acquisition of CARS, which owns the real estate for more than
300 automotive dealerships across North America and leases it on a triple net basis.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------



In addition to the contribution
from these investments, we also benefited from improved operating results at the Atlantis, which we acquired in April 2012, and
the Hard Rock Hotel & Casino, which we acquired in March 2011. The improvements at both properties were driven by higher group
bookings and better revenue management and cost control measures against a backdrop of economic recovery in the overall tourism
sector.



Contributing to the increase
in net income attributable to Unitholders were fair value gains, particularly related to the value-add multifamily portfolio and
our industrial assets in the U.S., U.K. and Germany, where we benefited from discount rate and capitalization rate compression
as a result of an improved economic environment.



Offsetting some of these
increases were the disposition of the One&Only Ocean Club in the Bahamas in the second quarter of 2014, as well as the disposition
of select mature assets within the multifamily and industrial portfolios throughout the period. In addition, during the fourth
quarter of 2014, we also disposed of our portfolio of Mexican industrial properties, which we acquired in connection with the Verde
transaction.



The following table presents
the contributions to fair value gains (losses) from consolidated and unconsolidated investments in our industrial, multifamily,
hotels and triple net lease segments:



|(US$ Millions) Year ended Dec. 31, |  | 2014 |     |  | 2013 |   |    | 2012 | 
|---------------------------------- |  | ---- | --- |  | ---- | - | -- | ---- | 
|Fair value gains (losses):         |  |      |     |  |      |   |    |      | 
|Consolidated investments           |  | $    | 159 |  |      | $ | (1 | )    | 
|Unconsolidated investments(1)      |  |      | 60  |  |      |   | 38 |      | 
|Total fair value gains             |  | $    | 219 |  |      | $ | 37 |      | 

| | (1) | Fair value gains for unconsolidated investments are presented on a proportionate basis, representing the Unitholders’
interest in the investments.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------



63







The key valuation metrics of our industrial,
multifamily, hotels and triple net lease properties are presented in the following table. The valuations are most sensitive to
changes in the discount rate and timing or variability of cash flows.



|                           |  | Dec. 31, 2014 |      |   | Dec. 31, 2013                     | 
|-------------------------- |  | ------------- | ---- | - | --------------------------------- | 
|                           |  | Discount rate |      |   | Terminal 
    capitalization rate | 
|Consolidated properties:   |  |               |      |   |                                   | 
|Industrial                 |  |               | 7.9  | % |                                   | 
|Multifamily(1)             |  |               | 5.4  | % |                                   | 
|Hotels                     |  |               | 10.2 | % |                                   | 
|Triple Net Lease(1)        |  |               | 6.6  | % |                                   | 
|Unconsolidated properties: |  |               |      |   |                                   | 
|Industrial                 |  |               | 7.2  | % |                                   | 
|Multifamily(1)             |  |               | 5.5  | % |                                   | 
|Hotels                     |  |               | 11.3 | % |                                   | 

| | (1) | The valuation method used to value multifamily and triple net lease 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.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following table presents
equity attributable to Unitholders in our industrial, multifamily, hotels and triple net lease segments:



|(US$ Millions)                                                               |  | Dec. 31, 2014 |        |  | Dec. 31, 2013 |  
|---------------------------------------------------------------------------- |  | ------------- | ------ |  | ------------- | -
|Investment properties                                                        |  | $             | 8,474  |  |               | $
|Hotel operating assets                                                       |  |               | 2,478  |  |               |  
|Equity accounted investments                                                 |  |               | 958    |  |               |  
|Loans and notes receivable                                                   |  |               | 127    |  |               |  
|Accounts receivable and other                                                |  |               | 768    |  |               |  
|Cash and cash equivalents                                                    |  |               | 442    |  |               |  
|Assets held for sale                                                         |  |               | 565    |  |               |  
|Total assets                                                                 |  |               | 13,812 |  |               |  
|Less:                                                                        |  |               |        |  |               |  
|Debt obligations                                                             |  |               | 8,210  |  |               |  
|Accounts payable and other liabilities                                       |  |               | 545    |  |               |  
|Liabilities associated with assets held for sale                             |  |               | 396    |  |               |  
|Non-controlling interests of others in operating subsidiaries and properties |  |               | 3,071  |  |               |  
|Equity attributable to Unitholders                                           |  | $             | 1,590  |  |               | $



The increase in investment
properties is primarily the result of our acquisition activity during the year, particularly the acquisition of CARS with $4,336
million of investment properties and the Manhattan multifamily portfolio with $1,045 million of investment properties in the fourth
quarter of 2014. Adding to these increases were the fair value gains recorded during the year, as noted above. These increases
were offset by the disposition of the Mexican industrial properties and certain mature assets in our multifamily portfolio. As
of December 31, 2014, we also included a portfolio of four multifamily assets with 2,523 units in Virginia and Maryland as assets
held for sale, as we expect the disposition of these assets to occur in the first quarter of 2015.



The increase in hotel operating
assets was the result of fair value uplifts, primarily at the Atlantis, as a result of improvements in the underlying operating
performance of the property. This increase was partially offset by the disposition of the One&Only Ocean Club during the second
quarter.



Equity accounted investments
increased during 2014 as a result of the acquisition of Diplomat as well as the acquisition of an additional four assets all of
which are accounted for under the equity method.



Debt obligations increased
due to the acquisition activity noted above, particularly related to debt on the CARS and Manhattan multifamily portfolios.



64







Reconciliation of Non-IFRS Measures - Industrial,
Multifamily, Hotels and Triple Net Lease

NOI to net income:



|(US$ Millions) Year ended Dec. 31,                                                                             |  | 2014 |      |   | 2013 |   |       | 2012 | 
|-------------------------------------------------------------------------------------------------------------- |  | ---- | ---- | - | ---- | - | ----- | ---- | 
|Commercial property revenue                                                                                    |  | $    | 397  |   |      | $ | 297   |      | 
|Hospitality revenue                                                                                            |  |      | 983  |   |      |   | 1,168 |      | 
|Direct commercial property expense                                                                             |  |      | (146 | ) |      |   | (128  | )    | 
|Direct hospitality expense                                                                                     |  |      | (791 | ) |      |   | (957  | )    | 
|Total NOI                                                                                                      |  | $    | 443  |   |      | $ | 380   |      | 
|Investment and other revenue                                                                                   |  |      | 65   |   |      |   | 37    |      | 
|Interest expense                                                                                               |  |      | (263 | ) |      |   | (215  | )    | 
|Administration and other expense                                                                               |  |      | (93  | ) |      |   | (58   | )    | 
|Depreciation and amortization                                                                                  |  |      | (130 | ) |      |   | (142  | )    | 
|Fair value gains (losses), net                                                                                 |  |      | 159  |   |      |   | (1    | )    | 
|Share of net earnings from equity accounted investments                                                        |  |      | 76   |   |      |   | 50    |      | 
|Income before income taxes                                                                                     |  |      | 257  |   |      |   | 51    |      | 
|Income tax (expense)/recovery                                                                                  |  |      | (6   | ) |      |   | (13   | )    | 
|Net income (loss)                                                                                              |  |      | 251  |   |      |   | 38    |      | 
|Net income (loss) attributable to non-controlling interests of others in operating subsidiaries and properties |  |      | 167  |   |      |   | 20    |      | 
|Net income (loss) attributable to Unitholders                                                                  |  | $    | 84   |   |      | $ | 18    |      | 



Net income to FFO:



|(US$ Millions) Year ended Dec. 31,                  |  | 2014 |      |   | 2013 |   |     | 2012 | 
|--------------------------------------------------- |  | ---- | ---- | - | ---- | - | --- | ---- | 
|Net income (loss)                                   |  | $    | 251  |   |      | $ | 38  |      | 
|Add (deduct):                                       |  |      |      |   |      |   |     |      | 
|Fair value gains (losses), net                      |  |      | (159 | ) |      |   | 1   |      | 
|Share of equity accounted fair value gains, net     |  |      | (60  | ) |      |   | (38 | )    | 
|Depreciation and amortization of real estate assets |  |      | 112  |   |      |   | 124 |      | 
|Income tax expense                                  |  |      | 6    |   |      |   | 13  |      | 
|Non-controlling interests in above items            |  |      | (93  | ) |      |   | (93 | )    | 
|FFO                                                 |  | $    | 57   |   |      | $ | 45  |      | 



Corporate

Certain amounts are allocated
to our corporate segment in our management reports as those activities should not be used to evaluate our segments’ operating
performance. FFO was a loss of $349 million for the year ended December 31, 2014 compared to a loss of $147 million in the prior
year. Interest expense for the year ended December 31, 2014 was $231 million, which is comprised of $139 million of interest expense
paid on capital securities and $92 million of interest expense on our credit facilities, which were primarily drawn on to fund
the acquisition of BPO. Administration and other expense for the year ended December 31, 2014 was $138 million which is comprised
of $50 million of asset management fees, $50 million of equity enhancement fees and $38 million of other corporate costs.



The following table presents
equity attributable to Unitholders at the corporate level:



|(US$ Millions)                         |  | Dec. 31, 2014 |        |   | Dec. 31, 2013 |  
|-------------------------------------- |  | ------------- | ------ | - | ------------- | -
|Accounts receivable and other          |  | $             | 162    |   |               | $
|Restricted cash                        |  |               | 1,800  |   |               |  
|Cash and cash equivalents              |  |               | 160    |   |               |  
|Total assets                           |  |               | 2,122  |   |               |  
|Debt obligations                       |  |               | 3,881  |   |               |  
|Capital securities                     |  |               | 3,368  |   |               |  
|Deferred tax liabilities               |  |               | 1,131  |   |               |  
|Accounts payable and other liabilities |  |               | 167    |   |               |  
|Non-controlling interests              |  |               | 131    |   |               |  
|Equity attributable to Unitholders     |  | $             | (6,556 | ) |               | $



The corporate balance sheet
includes corporate debt and capital securities from our partnership and BPO. The increase in corporate debt obligations is primarily
a result of the debt drawn to fund the cash portion of the tender offer and subsequent plan of arrangement to acquire BPO common
shares. Deferred tax liabilities primarily increased as a result of future taxes related to increases in the valuation of the common
shares and warrants of GGP.



65







On December 4, 2014, our
partnership issued $1,800 million of exchangeable preferred equity securities (“Preferred Equity Units”) to Qatar Investment
Authority (“QIA”). The Preferred Equity Units are exchangeable at the option of QIA into LP Units at a price of $25.70
per unit and were issued in three tranches of $600 million each, with an average dividend yield of 6.5% and maturities of seven,
ten and twelve years. After three years for the seven-year tranche and four years for the ten- and twelve-year tranches, our partnership
can effectively require the holder to exchange the Preferred Equity Units into LP Units as long as the LP Units are trading at
or above 125%, 130% and 135%, respectively, of the exchange price. Upon maturity, the Preferred Equity Units that remain outstanding
will be redeemed in exchange for LP Units valued at the 20-day, volume-weighted average trading price at such time. Brookfield
Asset Management has contingently agreed to acquire the seven-year and ten-year tranches of Preferred Equity Units from QIA for
the initial issuance price plus accrued and unpaid distributions and to exchange such units for Preferred Equity Units with terms
and conditions substantially similar to the twelve-year tranche to the extent that the market price of LP Units is less than 80%
of the exchange price at maturity. QIA will have the right to designate one member to the board of directors of our partnership.
At December 31, 2014, the $1,800 million of cash received from this issuance is recorded as restricted cash and allocated between
capital securities ($1,535 million) and equity ($265 million) to account for QIA’s option to convert these units to LP Units.



The change in non-controlling
interest is a result of our increased ownership in BPO to 100% from 49% at December 31, 2013. In addition, in connection with the
BPO acquisition, Brookfield Property Split Corp. (“BOP Split”), an indirect subsidiary of our partnership, issued capital
securities to certain shareholders of convertible BPO capital securities.



The following table provides additional information
on our outstanding capital securities – corporate:





|(US$ Millions, except where noted)   |  | Shares Outstanding |            |  | Cumulative Dividend Rate |  |      | Dec. 31, 2014 |  |   | Dec. 31, 2013 | 
|------------------------------------ |  | ------------------ | ---------- |  | ------------------------ |  | ---- | ------------- |  | - | ------------- | 
|Class A Preferred Equity Units:      |  |                    |            |  |                          |  |      |               |  |   |               | 
|Series 1                             |  |                    | 24,000,000 |  |                          |  | 6.25 | %             |  | $ | 524           | 
|Series 2                             |  |                    | 24,000,000 |  |                          |  | 6.50 | %             |  |   | 510           | 
|Series 3                             |  |                    | 24,000,000 |  |                          |  | 6.75 | %             |  |   | 501           | 
|Class B Junior Preferred Shares      |  |                    | 30,000,000 |  |                          |  | 5.75 | %             |  |   | 750           | 
|Class C Junior Preferred Shares      |  |                    | 20,000,000 |  |                          |  | 6.75 | %             |  |   | 500           | 
|BPO Class AAA Preferred Shares:      |  |                    |            |  |                          |  |      |               |  |   |               | 
|Series G(1)                          |  |                    | 3,350,000  |  |                          |  | 5.25 | %             |  |   | 85            | 
|Series H(1)                          |  |                    | 7,000,000  |  |                          |  | 5.75 | %             |  |   | 150           | 
|Series J(1)                          |  |                    | 7,000,000  |  |                          |  | 5.00 | %             |  |   | 150           | 
|Series K(1)                          |  |                    | 4,980,000  |  |                          |  | 5.20 | %             |  |   | 107           | 
|BOP Split Senior Preferred Shares:   |  |                    |            |  |                          |  |      |               |  |   |               | 
|Series 1                             |  |                    | 1,000,000  |  |                          |  | 5.25 | %             |  |   | 25            | 
|Series 2                             |  |                    | 1,000,000  |  |                          |  | 5.75 | %             |  |   | 22            | 
|Series 3                             |  |                    | 1,000,000  |  |                          |  | 5.00 | %             |  |   | 22            | 
|Series 4                             |  |                    | 1,000,000  |  |                          |  | 5.20 | %             |  |   | 22            | 
|Total capital securities – corporate |  |                    |            |  |                          |  |      |               |  | $ | 3,368         | 
|                                     |  |                    |            |  |                          |  |      |               |  |   |               | 
|Current                              |  |                    |            |  |                          |  |      |               |  | $ | 476           | 
|Non-current                          |  |                    |            |  |                          |  |      |               |  |   | 2,892         | 
|Total capital securities – corporate |  |                    |            |  |                          |  |      |               |  | $ | 3,368         | 



| | (1) | BPY and its subsidiaries own 1,050,000, 1,000,000, 1,000,000 and 1,020,000 shares of Series
G, Series H, Series J and Series K capital securities, respectively, which has been reflected as a reduction in outstanding shares
of each series of the BPO Class AAA Preferred Shares.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition, as at December
31, 2014, we had $25 million of preferred shares with a cumulative dividend rate of 5% outstanding. The preferred shares were issued
by various holding entities of our partnership.



Reconciliation of Non-IFRS Measures – Corporate

Net income to FFO:



|(US$ Millions) Year ended Dec. 31,       |  | 2014 |      |   | 2013 |   |      | 2012 | 
|---------------------------------------- |  | ---- | ---- | - | ---- | - | ---- | ---- | 
|Net income (loss)                        |  | $    | (895 | ) |      | $ | (438 | )    | 
|Add (deduct):                            |  |      |      |   |      |   |      |      | 
|Fair value losses, net                   |  |      | ―    |   |      |   | ―    |      | 
|Income tax expense                       |  |      | 515  |   |      |   | 218  |      | 
|Non-controlling interests in above items |  |      | 31   |   |      |   | 73   |      | 
|FFO                                      |  | $    | (349 | ) |      | $ | (147 | )    | 



66







PART III – RISKS AND UNCERTAINTIES

The financial results of
our business are impacted by the performance of our properties and various external factors influencing the specific sectors and
geographic locations in which we operate, including: macro-economic factors such as economic growth, changes in currency, inflation
and interest rates; regulatory requirements and initiatives; and litigation and claims that arise in the normal course of business.



Our property investments
are generally subject to varying degrees of risk depending on the nature of the property. These risks include changes in general
economic conditions (including the availability and costs of mortgage funds), local conditions (including an oversupply of space
or a reduction in demand for real estate in the markets in which we operate), the attractiveness of the properties to tenants,
competition from other landlords with competitive space and our ability to provide adequate maintenance at an economical cost.



Certain significant expenditures,
including property taxes, maintenance costs, mortgage payments, insurance costs and related charges, must be made regardless of
whether a property is producing sufficient income to service these expenses. Certain properties are subject to mortgages which
require substantial debt service payments. If we become unable or unwilling to meet mortgage payments on any property, losses could
be sustained as a result of the mortgagee’s exercise of its rights of foreclosure or sale. We believe the stability and long-term
nature of our contractual revenues effectively mitigates these risks.



We are affected by local,
regional, national and international economic conditions and other events and occurrences that affect the markets in which we own
assets. A protracted decline in economic conditions would cause downward pressure on our operating margins and asset values as
a result of lower demand for space.



Substantially all of our
properties are located in North America, Europe and Australia, with a growing presence in Brazil, China and India. A prolonged
downturn in the economies of these regions would result in reduced demand for space and number of prospective tenants and will
affect the ability of our properties to generate significant revenue. If there is an increase in operating costs resulting from
inflation and other factors, we may not be able to offset such increases by increasing rents.



We are subject to risks
that affect the retail environment, including unemployment, weak income growth, lack of available consumer credit, industry slowdowns
and plant closures, consumer confidence, increased consumer debt, poor housing market conditions, adverse weather conditions, natural
disasters and the need to pay down existing obligations. All of these factors could negatively affect consumer spending, and adversely
affect the sales of our retail tenants. This could have an unfavorable effect on our operations and our ability to attract new
retail tenants.



As owners of office, retail,
and industrial properties, lease rollovers also present a risk, as continued growth of rental income is dependent on strong leasing
markets to ensure expiring leases are renewed and new tenants are found promptly to fill vacancies. Refer to “Lease Rollover
Risk” below for further details.



For a more detailed description
of the risk factors facing our business, please refer to the section entitled “Item 3.D. Key Information - Risk Factors”
in our December 31, 2014 annual report on Form 20-F.



67







CREDIT RISK

Credit
risk arises from the possibility that tenants may be unable to fulfill their lease commitments. We mitigate this risk by ensuring
that our tenant mix is diversified and by limiting our exposure to any one tenant. We also maintain a portfolio that is diversified
by property type so that exposure to a business sector is lessened. Government and government agencies comprise 8.2% of our office
segment tenant base and, as at December 31, 2014, no one tenant comprises more than this.



The following list shows
the largest tenants by leasable area in our office portfolio and their respective credit ratings and exposure as at December 31,
2014:



|Tenant                             |  | Primary Location                                                                 |  | Credit Rating(1) |  | Exposure (%)(2)
|---------------------------------- |  | -------------------------------------------------------------------------------- |  | ---------------- |  | ---------------
|Government and Government Agencies |  | Various                                                                          |  | AAA/AA+          |  | 8.2%           
|CIBC World Markets(3)              |  | Calgary/Houston/Midtown NY/Toronto                                               |  | A+               |  | 2.0%           
|Suncor Energy Inc.                 |  | Calgary/Houston                                                                  |  | BBB+             |  | 1.8%           
|Morgan Stanley                     |  | Denver/Downtown NY/Toronto                                                       |  | A-               |  | 1.7%           
|Bank of Montreal                   |  | Calgary/Toronto                                                                  |  | A+               |  | 1.6%           
|Bank of America/Merrill Lynch      |  | Denver/Downtown NY/Los Angeles/Toronto/Washington, D.C.                          |  | A-               |  | 1.5%           
|Royal Bank of Canada               |  | Boston/Calgary/Denver/Downtown NY/LA/Toronto/Vancouver/
        Washington, D.C. |  | AA-              |  | 1.4%           
|JPMorgan Chase & Co.               |  | Denver/ Houston/Los Angeles/Midtown NY                                           |  | A                |  | 1.2%           
|PricewaterhouseCoopers             |  | Calgary/Houston/Los Angeles/Perth/Sydney                                         |  | Not Rated        |  | 1.2%           
|Commonwealth Bank                  |  | Melbourne/Sydney                                                                 |  | AA-              |  | 1.0%           
|Total                              |  |                                                                                  |  |                  |  | 21.6%          

| | (1) | From Standard & Poor’s Rating Services, Moody’s Investment Services, Inc. or
DBRS Limited.
| | --- | ------------------------------------------------------------------------------------------

| | (2) | Exposure is a percentage of total leasable square feet.
| | --- | -------------------------------------------------------

| | (3) | CIBC World Markets leases 1.1 million square feet at
300 Madison Avenue in New York, of which they sublease 925,000 square feet to PricewaterhouseCoopers LLP and approximately 100,000 square feet to Sumitomo
Corporation of America.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





The following list reflects
the largest tenants in our retail portfolio as at December 31, 2014. The largest ten tenants in our portfolio accounted for approximately
20.8% of minimum rents, tenant recoveries and other.



|Tenant                           |  | DBA                                                      |  |  |  | Exposure (%)(1)
|-------------------------------- |  | -------------------------------------------------------- |  |  |  | ---------------
|L Brands Inc.                    |  | Victoria's Secret, Bath & Body Works, PINK               |  |  |  | 3.6%           
|The Gap, Inc.                    |  | Gap, Banana Republic, Old Navy                           |  |  |  | 2.7%           
|Foot Locker, Inc.                |  | Footlocker, Champs Sports, Footaction USA                |  |  |  | 2.7%           
|Forever 21, Inc.                 |  | Forever 21                                               |  |  |  | 2.1%           
|Abercrombie & Fitch Stores, Inc. |  | Abercrombie, Abercrombie & Fitch, Hollister, Gilly Hicks |  |  |  | 2.0%           
|Signet Jewelers Limited          |  | Zales, Gordon’s, Kay, Jared                              |  |  |  | 1.8%           
|American Eagle Outfitters, Inc.  |  | American Eagle, Aerie                                    |  |  |  | 1.6%           
|Express, Inc.                    |  | Express, Express Men                                     |  |  |  | 1.5%           
|Genesco Inc.                     |  | Journeys, Lids, Underground Station, Johnston & Murphy   |  |  |  | 1.5%           
|LVMH                             |  | Louis Vuitton, Sephora                                   |  |  |  | 1.3%           
|Total                            |  |                                                          |  |  |  | 20.8%          

| | (1) | Exposure is a percentage of minimum rents and tenants recoveries.
| | --- | -----------------------------------------------------------------



LEASE ROLL-OVER RISK

Lease roll-over risk arises
from the possibility that we may experience difficulty renewing leases as they expire or in re-leasing space vacated by tenants
upon early lease expiry. We attempt to stagger the lease expiry profile so that we are not faced with disproportionate amounts
of space expiring in any one year. On average, approximately 9.1% of our office, retail and industrial leases mature annually up
to 2019. Our office, retail and industrial portfolio has a weighted average remaining lease life of approximately 6.2 years. We
further mitigate this risk by maintaining a diversified portfolio mix by geographic location and by pro-actively leasing space
in advance of its contractual expiry.



The following table sets
out lease expiries, by square footage, for our office, retail and industrial portfolios at December 31, 2014, including our unconsolidated
investments:



|(Sq. ft. in 
thousands) |  | Current |       |   | 2015 |  |       | 2016 |  |  | 2017  |   |  | 2018 |       |   | 2019 |  |       | 2020 |  |  | 2021  |   |  | 2022 and 
Beyond |       |   | Total | 
|----------------------- |  | ------- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | - |  | ---- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | - |  | ---------------- | ----- | - | ----- | 
|Office(1)               |  |         | 8,308 |   |      |  | 4,725 |      |  |  | 4,941 |   |  |      | 4,450 |   |      |  | 6,589 |      |  |  | 5,819 |   |  |                  | 5,520 |   |       | 
|Expiring %              |  |         | 10.5  | % |      |  | 6.0   | %    |  |  | 6.3   | % |  |      | 5.6   | % |      |  | 8.4   | %    |  |  | 7.4   | % |  |                  | 7.0   | % |       | 
|Retail(2)               |  |         | 2,753 |   |      |  | 7,674 |      |  |  | 7,187 |   |  |      | 6,966 |   |      |  | 6,447 |      |  |  | 6,461 |   |  |                  | 3,870 |   |       | 
|Expiring %              |  |         | 4.2   | % |      |  | 11.8  | %    |  |  | 11.0  | % |  |      | 10.7  | % |      |  | 9.9   | %    |  |  | 9.9   | % |  |                  | 5.9   | % |       | 
|Industrial              |  |         | 3,651 |   |      |  | 4,287 |      |  |  | 6,298 |   |  |      | 4,020 |   |      |  | 6,138 |      |  |  | 3,966 |   |  |                  | 4,122 |   |       | 
|Expiring %              |  |         | 8.3   | % |      |  | 9.7   | %    |  |  | 14.3  | % |  |      | 9.1   | % |      |  | 13.9  | %    |  |  | 9.0   | % |  |                  | 9.3   | % |       | 

(1)Excludes expiry profile of the Indian office portfolio acquired during Q4 2014.

(2)Represents regional malls only and excludes traditional anchor and specialty leasing agreements.



68







TAX RISK

We are subject to income
taxes in various jurisdictions, and our tax liabilities are dependent upon the distribution of income among these different jurisdictions.
Our effective income tax rate is influenced by a number of factors, including changes in tax law, tax treaties, interpretation
of existing laws, and our ability to sustain our reporting positions on examination. Changes in any of those factors could change
our effective tax rate, which could adversely affect our profitability and results of operations.



ENVIRONMENTAL RISKS

As an owner of real property,
we are subject to various federal, provincial, state and municipal laws relating to environmental matters. Such laws provide that
we could be liable for the costs of removing certain hazardous substances and remediating certain hazardous locations. The failure
to remove such substances or remediate such locations, if any, could adversely affect our ability to sell such real estate or to
borrow using such real estate as collateral and could potentially result in claims against us. We are not aware of any material
non-compliance with environmental laws at any of our properties nor are we aware of any pending or threatened investigations or
actions by environmental regulatory authorities in connection with any of our properties or any pending or threatened claims relating
to environmental conditions at our properties.



We will continue to make
the necessary capital and operating expenditures to ensure that we are compliant with environmental laws and regulations. Although
there can be no assurances, we do not believe that costs relating to environmental matters will have a materially adverse effect
on our business, financial condition or results of operations. However, environmental laws and regulations can change and we may
become subject to more stringent environmental laws and regulations in the future, which could have an adverse effect on our business,
financial condition or results of operations.



ECONOMIC RISK

Real estate is relatively
illiquid. Such illiquidity may limit our ability to vary our portfolio promptly in response to changing economic or investment
conditions. Also, financial difficulties of other property owners resulting in distressed sales could depress real estate values
in the markets in which we operate.



Our commercial properties
generate a relatively stable source of income from contractual tenant rent payments. Continued growth of rental income is dependent
on strong leasing markets to ensure expiring leases are renewed and new tenants are found promptly to fill vacancies. We are substantially
protected against short-term market conditions, as most of our leases are long-term in nature with an average term of over six
years.



INSURANCE RISK

We maintain insurance on
our properties in amounts and with deductibles that we believe are in line with what owners of similar properties carry. We maintain
all risk property insurance and rental value coverage (including coverage for the perils of flood, earthquake and weather catastrophe).



INTEREST RATE AND FINANCING RISK

We attempt to stagger the
maturities of our mortgage portfolio. We have an on-going need to access debt markets to refinance maturing debt as it comes due.
There is a risk that lenders will not refinance such maturing debt on terms and conditions acceptable to us or on any terms at
all. Our strategy to stagger the maturities of our mortgage portfolio attempts to mitigate our exposure to excessive amounts of
debt maturing in any one year.



Approximately 56% of our
outstanding debt obligations at December 31, 2014 are floating rate debt compared to 52% at December 31, 2013. This debt is subject
to fluctuations in interest rates. A 100 basis point increase in interest rates relating to our corporate and commercial floating
rate debt obligations would result in an increase in annual interest expense of approximately $156 million. A 100 basis point increase
in interest rates relating to fixed rate debt obligations due within one year would result in an increase in an annual interest
expense of approximately $3 million upon refinancing. In addition, we have exposure to interest rates within our equity accounted
investments. We have mitigated, to some extent, the exposure to interest rate fluctuations through interest rate derivative contracts.
See “Derivative Financial Instruments” below in this MD&A.



At December 31, 2014, our
consolidated debt to capitalization was 46% (December 31, 2013 – 44%). It is our view this level of indebtedness is conservative
given the cash flow characteristics of our properties and the fair value of our assets. Based on this, we believe that all debts
will be financed or repaid as they come due in the foreseeable future.



FOREIGN EXCHANGE RISK

As at and for the year
ended December 31, 2014, approximately 28% of our assets and 32% of our revenues originated outside the United States and consequently
are subject to foreign currency risk due to potential fluctuations in exchange rates between these currencies and the U.S. Dollar.
To mitigate this risk, we attempt to maintain a natural hedged position with respect to the carrying value of assets through debt
agreements denominated in local currencies and, from time to time, supplemented through the use of derivative contracts as discussed
under “Derivative Financial Instruments”.



69







The following table shows
the impact of a 10% decrease in foreign exchange rates on net income and other comprehensive income:









|                   |  | Dec.
    31, 2014                         |      
|------------------ |  | ----------------------------------------- | -----
|(Millions)         |  | Equity
    attributable to
unitholders(1) |      
|Canadian Dollar    |  | C$                                        | (223)
|Australian Dollar  |  | A$                                        | 2,668
|British Pound      |  | £                                         | 1,468
|Euro               |  | €                                         | 205  
|Brazilian Real     |  | R$                                        | 1,325
|New Zealand Dollar |  | NZ$                                       | 44   
|Indian Rupee       |  | Rs                                        | 6,104
|Total              |  |                                           |      



| | (1) | As of December 31, 2014, unitholders are defined as holders of the GP Units, LP Units, Redeemable/Exchangeable
Partnership Units, Special LP Units, and Exchange LP Units.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|                  |  | Dec. 31, 2013                       |      
|----------------- |  | ----------------------------------- | -----
|(Millions)        |  | Equityattributable tounitholders(1) |      
|Canadian Dollar   |  | C$                                  | 631  
|Australian Dollar |  | A$                                  | 1,716
|British Pound     |  | £                                   | 998  
|Euro              |  | €                                   | 161  
|Brazilian Real    |  | R$                                  | 1,046
|Total             |  |                                     |      



| | (1) | As of December 31, 2013, unitholders are defined as holders of the GP Units, LP Units, Redeemable/Exchangeable
Partnership Units, and Special LP Units.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------





|                  |  | Dec.
    31, 2012                   |      
|----------------- |  | ----------------------------------- | -----
|(Millions)        |  | Equityattributable tounitholders(1) |      
|Canadian Dollar   |  | C$                                  | 1,020
|Australian Dollar |  | A$                                  | 2,104
|British Pound     |  | £                                   | 785  
|Euro              |  | €                                   | 62   
|Brazilian Real    |  | R$                                  | 911  
|Total             |  |                                     |      



| | (1) | As of December 31, 2012, unitholders are defined as Brookfield Asset Management.
| | --- | --------------------------------------------------------------------------------



DERIVATIVE FINANCIAL INSTRUMENTS

We and our 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. We do not
use derivatives for speculative purposes. We and our 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, and Euro denominated 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; and
| | - | --------------------------------------------------------------------------------------------------------------------------

| | · | Interest rate caps to hedge interest rate
risk on certain variable rate debt;
| | - | -----------------------------------------------------------------------------



We also designate Canadian
Dollar financial liabilities of certain of our operating entities as hedges of our net investments in our Canadian operations.



70









Interest Rate Hedging

The following table provides
our 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 December 31, 2014 and 2013:



|(US$ Millions) |  | Hedging item                                     |  | Notional |       |  | Rates |  |                                                     | Maturity
    dates |  | Fair value                | 
|-------------- |  | ------------------------------------------------ |  | -------- | ----- |  | ----- |  | --------------------------------------------------- | ------------------ |  | ------------------------- | 
|Dec. 31, 2014  |  | Interest
    rate caps of US$ LIBOR debt         |  | $        | 3,174 |  |       |  | 2.5%
                                         - 5.8 | %                  |  | Jan. 2015
    - Oct. 2018 | 
|               |  | Interest rate swaps
    of US$ LIBOR debt        |  |          | 483   |  |       |  | 0.6%
                                         - 2.2 | %                  |  | Dec. 2015 - Nov. 2020     | 
|               |  | Interest rate swaps
    of £ LIBOR debt          |  |          | 204   |  |       |  | 1.1                                                 | %                  |  | Sep. 2017                 | 
|               |  | Interest rate swaps
    of A$ BBSW/BBSY debt     |  |          | 548   |  |       |  | 3.5%
                                         - 5.9 | %                  |  | Jan. 2016 - Jul. 2017     | 
|               |  | Interest rate swaps
    of € EURIBOR debt        |  |          | 150   |  |       |  | 0.3%
                                         - 1.4 | %                  |  | Oct. 2017 - Feb. 2021     | 
|               |  | Forecast fixed rate
    debt interest rate swaps |  |          | 1,995 |  |       |  | 2.3%
                                         - 5.1 | %                  |  | May 2025 - Jun. 2029      | 
|Dec. 31, 2013  |  | Interest rate swaps of fixed US$ debt            |  | $        | 1,505 |  |       |  | 2.3%
                                         - 4.7 | %                  |  | Jun. 2024 - Jun. 2026     | 
|               |  | Interest rate swaps of fixed C$ debt             |  |          | 47    |  |       |  | 2.8                                                 | %                  |  | Dec. 2024                 | 
|               |  | Interest rate swaps of US$ LIBOR debt            |  |          | 784   |  |       |  | 0.6%
                                         - 2.2 | %                  |  | May 2014 - Nov. 2020      | 
|               |  | Interest rate caps of US$ LIBOR debt             |  |          | 2,246 |  |       |  | 1.8%
                                         - 5.8 | %                  |  | Jan. 2014 - Oct. 2018     | 
|               |  | Interest rate swaps of £ LIBOR
    debt          |  |          | 222   |  |       |  | 1.1                                                 | %                  |  | Sep. 2017                 | 
|               |  | Interest rate swaps of A$ BBSW/BBSY
    debt     |  |          | 936   |  |       |  | 3.5%
                                         - 5.9 | %                  |  | Jan. 2014 - Jul. 2017     | 



For the year ended December
31, 2014 and 2013, the amount of hedge ineffectiveness recorded in interest expense in connection with our partnership’s
interest rate hedging activities was not significant.



Foreign Currency Hedging

Our partnership has derivatives
designated as net investment hedges of its investments in foreign subsidiaries. As of December 31, 2014, our partnership had hedged
a notional amount of £1,170 million (December 31, 2013 – £770 million) at rates between £0.59/$ and £0.65/$
using foreign currency forward contracts maturing between April 2015 and January 2016. In addition, as of December 31, 2014, our
partnership had hedged a notional amount of €353 million (December 31, 2013 – €550 million) at rates between €0.75/$
and €0.80/$ using foreign currency forward contracts maturing between January 2015 and June 2016. Our partnership had also
hedged, as of December 31, 2014, a notional amount of A$1,750 million (December 31, 2013 – A$535 million) at rates between
A$1.10/$ and A$1.27/$ maturing between April 2015 and March 2016.



The fair value of our partnership’s
outstanding foreign currency forwards designated as net investment hedges as of December 31, 2014 is a gain of $93 million (December
31, 2013 – loss of $27 million).



In addition, as of December
31, 2014, our partnership had designated C$900 million (December 31, 2013 – C$900 million) of Canadian Dollar financial liabilities
as hedges against our partnership’s net investment in Canadian operations.



Other Derivatives

The following table provides
a detail of our partnership’s other derivatives that have been entered into to manage financial risks as of December 31,
2014 and December 31, 2013:





|(US$ millions) |  | Derivative type      |  | Notional |       |  | Maturity dates |           | Rates |  |                                                       | Fair value
 (gain)/loss |  |   | Classification of gain/loss                 
|-------------- |  | -------------------- |  | -------- | ----- |  | -------------- | --------- | ----- |  | ----------------------------------------------------- | ----------------------- |  | - | --------------------------------------------
|Dec. 31, 2014  |  | Interest rate caps   |  | $        | 382   |  |                | Mar. 2016 |       |  | 3.65                                                  | %                       |  |   | $
                                         ―
|               |  | Interest rate caps   |  |          | 350   |  |                | Jul. 2017 |       |  | 3.25                                                  | %                       |  |   | ―                                           
|               |  | Interest rate caps   |  |          | 51    |  |                | Sep. 2015 |       |  | 2.81%
                                         - 3.01 | %                       |  |   | ―                                           
|               |  | Interest rate caps   |  |          | 13    |  |                | Oct. 2015 |       |  | 3.00                                                  | %                       |  |   | ―                                           
|               |  | Interest rate caps   |  |          | 34    |  |                | Jan. 2016 |       |  | 3.00                                                  | %                       |  |   | ―                                           
|               |  | Interest rate caps   |  |          | 75    |  |                | Feb. 2016 |       |  | 2.94                                                  | %                       |  |   | ―                                           
|               |  | Interest rate caps   |  |          | 74    |  |                | Mar. 2016 |       |  | 2.94                                                  | %                       |  |   | ―                                           
|               |  | Interest rate caps   |  |          | 68    |  |                | Jul. 2015 |       |  | 3.00                                                  | %                       |  |   | ―                                           
|Dec. 31, 2013  |  | Total return swap(1) |  | $        | 1     |  |                | ―         |       |  | ―                                                     |                         |  | $ | (5                                          
|               |  | Interest rate caps   |  |          | 400   |  |                | Mar. 2016 |       |  | 3.65                                                  | %                       |  |   | ―                                           
|               |  | Interest rate caps   |  |          | 882   |  |                | Apr. 2014 |       |  | 2.50                                                  | %                       |  |   | ―                                           
|               |  | Interest rate caps   |  |          | 2,270 |  |                | Apr. 2014 |       |  | 4.50                                                  | %                       |  |   | ―                                           



| | (1) | Relates to the total return swap on BPO’s shares in connection with its deferred share
unit plans which was settled for C$1.4 million during the second quarter of 2014. The total return swap is presented at fair value.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The other derivatives have
not been designated as hedges for accounting purposes.



71







RELATED PARTIES

In the normal course of
operations, our partnership enters into transactions with related parties on market terms. These transactions have been measured
at exchange value and are recognized in the consolidated financial statements.



The immediate parent of
our partnership is the BPY General Partner. The ultimate parent of our partnership is Brookfield Asset Management. Other related
parties of our partnership include our partnership’s and Brookfield Asset Management’s subsidiaries and operating entities.



The following table summarizes transactions
with related parties:



|(US$ Millions)                                         |  | Dec. 31, 2014 |       |  | Dec. 31, 2013 |  
|------------------------------------------------------ |  | ------------- | ----- |  | ------------- | -
|Participating loan interests                           |  | $             | 609   |  |               | $
|Loans and notes receivable(1)                          |  |               | 82    |  |               |  
|Receivables and other assets                           |  |               | 143   |  |               |  
|Debt obligations                                       |  |               | 570   |  |               |  
|Other liabilities                                      |  |               | 174   |  |               |  
|Capital securities held by Brookfield Asset Management |  |               | 1,250 |  |               |  
|Preferred shares held by Brookfield Asset Management   |  |               | 25    |  |               |  



|(US$ Millions) Year ended Dec. 31,                                 |  | 2014 |     |  | 2013 |   |     | 2012 | 
|------------------------------------------------------------------ |  | ---- | --- |  | ---- | - | --- | ---- | 
|Commercial property revenue(2)                                     |  | $    | 16  |  |      | $ | 7   |      | 
|Interest and other income                                          |  |      | 55  |  |      |   | 52  |      | 
|Interest expense on debt obligations                               |  |      | 17  |  |      |   | 12  |      | 
|Interest on capital securities held by Brookfield Asset Management |  |      | 82  |  |      |   | 56  |      | 
|Administration and other expense (3)                               |  |      | 187 |  |      |   | 277 |      | 

| | (1) | Includes $82 million receivable from Brookfield Asset Management upon the earlier of our partnership's
exercise of its option to convert its participating loan interests into direct ownership of the Australian portfolio or the maturity
of the participating loan interests.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Amounts received from Brookfield Asset Management and its subsidiaries for the rental of office
premises.
| | --- | ---------------------------------------------------------------------------------------------------------

| | (3) | Includes amounts paid to Brookfield Asset Management and its subsidiaries for management fees,
management fees associated with our private funds, and administrative services.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



72









Portfolio Listing

The following table presents details of our property portfolio as
of December 31, 2014:



|Office Property
    Portfolio(1) |  |                          |     |  |              | Assets Under Management |       |          | Proportionate at subsidiary-level(2) |  |         | Proportionate toUnitholders(3) |  |       | Proportionate to LPUnit holders(4) | 
|-------------------------------- |  | ------------------------ | --- |  | ------------ | ----------------------- | ----- | -------- | ------------------------------------ |  | ------- | ------------------------------ |  | ----- | ---------------------------------- | 
|Dec. 31, 2014 (Sq. ft. in 000’s) |  | Number
    of
properties |     |  | %
    Leased |                         |       | Leasable |                                      |  | Parking |                                |  | Total |                                    | 
|CONSOLIDATED PROPERTIES          |  |                          |     |  |              |                         |       |          |                                      |  |         |                                |  |       |                                    | 
|United States                    |  |                          |     |  |              |                         |       |          |                                      |  |         |                                |  |       |                                    | 
|Midtown New York                 |  |                          | 2   |  |              |                         | 95.7  | %        |                                      |  | 2,899   |                                |  |       | 41                                 | 
|Downtown New York                |  |                          | 7   |  |              |                         | 94.1  | %        |                                      |  | 12,890  |                                |  |       | 547                                | 
|Boston                           |  |                          | 1   |  |              |                         | 98.5  | %        |                                      |  | 796     |                                |  |       | 236                                | 
|Washington, D.C.                 |  |                          | 28  |  |              |                         | 87.5  | %        |                                      |  | 5,775   |                                |  |       | 3,261                              | 
|Los Angeles                      |  |                          | 22  |  |              |                         | 79.9  | %        |                                      |  | 10,114  |                                |  |       | 4,277                              | 
|San Diego                        |  |                          | 2   |  |              |                         | 58.1  | %        |                                      |  | 338     |                                |  |       | -                                  | 
|Houston                          |  |                          | 5   |  |              |                         | 93.1  | %        |                                      |  | 5,038   |                                |  |       | 1,189                              | 
|Denver                           |  |                          | 1   |  |              |                         | 64.8  | %        |                                      |  | 1,316   |                                |  |       | 581                                | 
|Seattle                          |  |                          | 2   |  |              |                         | 96.9  | %        |                                      |  | 699     |                                |  |       | 157                                | 
|San Francisco/San Jose           |  |                          | 39  |  |              |                         | 56.2  | %        |                                      |  | 1,733   |                                |  |       | 6                                  | 
|Dallas                           |  |                          | 6   |  |              |                         | 32.1  | %        |                                      |  | 457     |                                |  |       | -                                  | 
|                                 |  |                          | 115 |  |              |                         | 86.5  | %        |                                      |  | 42,055  |                                |  |       | 10,295                             | 
|Canada                           |  |                          |     |  |              |                         |       |          |                                      |  |         |                                |  |       |                                    | 
|Toronto                          |  |                          | 12  |  |              |                         | 93.1  | %        |                                      |  | 8,747   |                                |  |       | 1,850                              | 
|Calgary                          |  |                          | 8   |  |              |                         | 99.4  | %        |                                      |  | 5,634   |                                |  |       | 1,194                              | 
|Ottawa                           |  |                          | 6   |  |              |                         | 93.3  | %        |                                      |  | 1,743   |                                |  |       | 805                                | 
|Vancouver                        |  |                          | 1   |  |              |                         | 97.0  | %        |                                      |  | 582     |                                |  |       | 258                                | 
|Other                            |  |                          | 1   |  |              |                         | 100.0 | %        |                                      |  | 3       |                                |  |       | -                                  | 
|                                 |  |                          | 28  |  |              |                         | 95.4  | %        |                                      |  | 16,709  |                                |  |       | 4,107                              | 
|Australia and New Zealand        |  |                          |     |  |              |                         |       |          |                                      |  |         |                                |  |       |                                    | 
|Sydney                           |  |                          | 7   |  |              |                         | 98.7  | %        |                                      |  | 1,307   |                                |  |       | 421                                | 
|Melbourne                        |  |                          | 2   |  |              |                         | 100.0 | %        |                                      |  | 1,357   |                                |  |       | 333                                | 
|Brisbane                         |  |                          | 2   |  |              |                         | 85.8  | %        |                                      |  | 520     |                                |  |       | 70                                 | 
|Perth                            |  |                          | 3   |  |              |                         | 88.5  | %        |                                      |  | 1,536   |                                |  |       | 193                                | 
|New Zealand                      |  |                          | 3   |  |              |                         | 66.2  | %        |                                      |  | 277     |                                |  |       | 28                                 | 
|                                 |  |                          | 17  |  |              |                         | 92.8  | %        |                                      |  | 4,997   |                                |  |       | 1,045                              | 
|Europe                           |  |                          |     |  |              |                         |       |          |                                      |  |         |                                |  |       |                                    | 
|London                           |  |                          | 5   |  |              |                         | 82.7  | %        |                                      |  | 1,241   |                                |  |       | 57                                 | 
|                                 |  |                          | 5   |  |              |                         | 82.7  | %        |                                      |  | 1,241   |                                |  |       | 57                                 | 
|Brazil                           |  |                          |     |  |              |                         |       |          |                                      |  |         |                                |  |       |                                    | 
|São Paulo                        |  |                          | 1   |  |              |                         | 100.0 | %        |                                      |  | 276     |                                |  |       | 209                                | 
|                                 |  |                          | 1   |  |              |                         | 100.0 | %        |                                      |  | 276     |                                |  |       | 209                                | 
|India                            |  |                          |     |  |              |                         |       |          |                                      |  |         |                                |  |       |                                    | 
|NCR (Delhi region)               |  |                          | 33  |  |              |                         | 82.1  | %        |                                      |  | 9,741   |                                |  |       | -                                  | 
|Kolkata                          |  |                          | 12  |  |              |                         | 80.3  | %        |                                      |  | 3,048   |                                |  |       | -                                  | 
|                                 |  |                          | 45  |  |              |                         | 81.7  | %        |                                      |  | 12,789  |                                |  |       | -                                  | 
|Total Consolidated Properties    |  |                          | 211 |  |              |                         | 88.0  | %        |                                      |  | 78,067  |                                |  |       | 15,713                             | 
|                                 |  |                          |     |  |              |                         |       |          |                                      |  |         |                                |  |       |                                    | 
|UNCONSOLIDATED PROPERTIES        |  |                          |     |  |              |                         |       |          |                                      |  |         |                                |  |       |                                    | 
|United States                    |  |                          |     |  |              |                         |       |          |                                      |  |         |                                |  |       |                                    | 
|Midtown New York                 |  |                          | 2   |  |              |                         | 93.0  | %        |                                      |  | 3,344   |                                |  |       | 65                                 | 
|Washington, D.C.                 |  |                          | 1   |  |              |                         | 99.4  | %        |                                      |  | 385     |                                |  |       | 150                                | 
|Los Angeles                      |  |                          | 6   |  |              |                         | 78.8  | %        |                                      |  | 2,202   |                                |  |       | 389                                | 
|San Diego                        |  |                          | 1   |  |              |                         | 83.7  | %        |                                      |  | 124     |                                |  |       | -                                  | 
|San Francisco/San Jose           |  |                          | 1   |  |              |                         | 79.2  | %        |                                      |  | 289     |                                |  |       | -                                  | 
|Houston                          |  |                          | 1   |  |              |                         | 98.2  | %        |                                      |  | 1,135   |                                |  |       | 699                                | 
|Denver                           |  |                          | 3   |  |              |                         | 85.9  | %        |                                      |  | 1,909   |                                |  |       | 511                                | 
|Seattle                          |  |                          | 4   |  |              |                         | 60.0  | %        |                                      |  | 365     |                                |  |       | -                                  | 
|                                 |  |                          | 19  |  |              |                         | 87.5  | %        |                                      |  | 9,753   |                                |  |       | 1,814                              | 
|Australia and New Zealand        |  |                          |     |  |              |                         |       |          |                                      |  |         |                                |  |       |                                    | 
|Sydney                           |  |                          | 6   |  |              |                         | 98.7  | %        |                                      |  | 2,934   |                                |  |       | 472                                | 
|Melbourne                        |  |                          | 1   |  |              |                         | 96.2  | %        |                                      |  | 705     |                                |  |       | 273                                | 
|Canberra                         |  |                          | 1   |  |              |                         | 100.0 | %        |                                      |  | 176     |                                |  |       | 69                                 | 
|                                 |  |                          | 8   |  |              |                         | 98.3  | %        |                                      |  | 3,815   |                                |  |       | 814                                | 
|India                            |  |                          |     |  |              |                         |       |          |                                      |  |         |                                |  |       |                                    | 
|NCR (Delhi region)               |  |                          | 6   |  |              |                         | 21.6  | %        |                                      |  | 2,180   |                                |  |       | -                                  | 
|                                 |  |                          | 6   |  |              |                         | 21.6  | %        |                                      |  | 2,180   |                                |  |       | -                                  | 
|Total Unconsolidated Properties  |  |                          | 33  |  |              |                         | 81.0  | %        |                                      |  | 15,748  |                                |  |       | 2,628                              | 
|Total Office Properties          |  |                          | 244 |  |              |                         | 86.8  | %        |                                      |  | 93,815  |                                |  |       | 18,341                             | 

| | (1) | Does not include office assets held through our approximate 22% interest in Canary Wharf.
| | --- | -----------------------------------------------------------------------------------------

| | (2) | Reflects our partnership's interest before considering non-controlling interests in operating
subsidiaries.
| | --- | -----------------------------------------------------------------------------------------------------------

| | (3) | Reflects our partnership's interest before considering non-controlling interests in subsidiaries,
including Brookfield Canada Office Properties and Brookfield Prime Property Fund.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Reflects our partnership's proportionate interest net of non-controlling interests described
in note (3) above and the Redeemable/Exchangeable Partnership Units and Special LP Units held by Brookfield Asset Management and
Exchange LP Units.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



73







|Retail Property Portfolio(1)     |  |                          |     |  |              |  |      | Assets Under
    Management |  |  | Proportionate at subsidiary 
level(2) |  |  | Proportionate toUnitholders(3) |      |   | Proportionate toLP Unit holders(4) | 
|-------------------------------- |  | ------------------------ | --- |  | ------------ |  | ---- | --------------------------- |  |  | ------------------------------------- |  |  | ------------------------------ | ---- | - | ---------------------------------- | 
|Dec. 31, 2014 (Sq. ft. in 000’s) |  | Number
    of
properties |     |  | %
    Leased |  |      | Total                       |  |  | Owned
    %                           |  |  | Total                          |      |   | Total                              | 
|CONSOLIDATED PROPERTIES          |  |                          |     |  |              |  |      |                             |  |  |                                       |  |  |                                |      |   |                                    | 
|Brazil                           |  |                          |     |  |              |  |      |                             |  |  |                                       |  |  |                                |      |   |                                    | 
|Rio de Janeiro                   |  |                          | 2   |  |              |  | 95.3 | %                           |  |  | 961                                   |  |  |                                | 73.2 | % |                                    | 
|São Paulo                        |  |                          | 5   |  |              |  | 95.2 | %                           |  |  | 1,679                                 |  |  |                                | 53.6 | % |                                    | 
|Total Consolidated Properties    |  |                          | 7   |  |              |  | 95.2 | %                           |  |  | 2,640                                 |  |  |                                | 60.8 | % |                                    | 
|                                 |  |                          |     |  |              |  |      |                             |  |  |                                       |  |  |                                |      |   |                                    | 
|UNCONSOLIDATED PROPERTIES        |  |                          |     |  |              |  |      |                             |  |  |                                       |  |  |                                |      |   |                                    | 
|U.S. Properties                  |  |                          |     |  |              |  |      |                             |  |  |                                       |  |  |                                |      |   |                                    | 
|Northeast region                 |  |                          | 13  |  |              |  | 96.5 | %                           |  |  | 15,341                                |  |  |                                | 86.5 | % |                                    | 
|Mideast region                   |  |                          | 20  |  |              |  | 96.7 | %                           |  |  | 19,101                                |  |  |                                | 87.0 | % |                                    | 
|East North Central region        |  |                          | 21  |  |              |  | 94.4 | %                           |  |  | 21,099                                |  |  |                                | 87.4 | % |                                    | 
|West North Central region        |  |                          | 12  |  |              |  | 96.2 | %                           |  |  | 10,794                                |  |  |                                | 95.2 | % |                                    | 
|Southeast region                 |  |                          | 19  |  |              |  | 95.9 | %                           |  |  | 18,598                                |  |  |                                | 80.7 | % |                                    | 
|Southwest region                 |  |                          | 24  |  |              |  | 96.2 | %                           |  |  | 25,732                                |  |  |                                | 88.1 | % |                                    | 
|Mountain region                  |  |                          | 21  |  |              |  | 96.1 | %                           |  |  | 17,276                                |  |  |                                | 90.8 | % |                                    | 
|Pacific region                   |  |                          | 27  |  |              |  | 95.6 | %                           |  |  | 23,690                                |  |  |                                | 86.2 | % |                                    | 
|Total Unconsolidated Properties  |  |                          | 157 |  |              |  | 95.8 | %                           |  |  | 151,631                               |  |  |                                | 87.3 | % |                                    | 
|Total Retail Properties          |  |                          | 164 |  |              |  | 95.8 | %                           |  |  | 154,271                               |  |  |                                | 86.9 | % |                                    | 

| | (1) | Does not include non-regional malls.
| | --- | ------------------------------------

| | (2) | Reflects our partnership's interest before considering non-controlling interests of others in
operating subsidiaries.
| | --- | ---------------------------------------------------------------------------------------------------------------------

| | (3) | Reflects our partnership's interest net of non-controlling interests described in note (2) above.
| | --- | -------------------------------------------------------------------------------------------------

| | (4) | Reflects our partnership's proportionate interest net of non-controlling interests described
in note (3) above and the Redeemable/Exchangeable Partnership Units and Special LP Units held by Brookfield Asset Management and
Exchange LP Units.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Industrial Property Portfolio    |  |                          |     |  | Assets Under
    Management |  |        | Proportionate at subsidiarylevel(1) |  |  | Proportionate toUnitholders(2) |   |  | Proportionate toLP Unit  holders(3) |       
|-------------------------------- |  | ------------------------ | --- |  | --------------------------- |  | ------ | ----------------------------------- |  |  | ------------------------------ | - |  | ----------------------------------- | ------
|Dec. 31, 2014 (Sq. ft. in 000’s) |  | Number
    of
properties |     |  | Total                       |  |        | Owned
    %                         |  |  | Total                          |   |  | Total                               |       
|CONSOLIDATED PROPERTIES          |  |                          |     |  |                             |  |        |                                     |  |  |                                |   |  |                                     |       
|United States                    |  |                          |     |  |                             |  |        |                                     |  |  |                                |   |  |                                     |       
|Atlanta                          |  |                          | 1   |  |                             |  | 653    |                                     |  |  | 100.0                          | % |  |                                     | 653   
|Memphis                          |  |                          | 1   |  |                             |  | 430    |                                     |  |  | 100.0                          | % |  |                                     | 430   
|Cincinnati/Indianapolis          |  |                          | 4   |  |                             |  | 2,214  |                                     |  |  | 100.0                          | % |  |                                     | 2,214 
|Chicago                          |  |                          | 3   |  |                             |  | 957    |                                     |  |  | 100.0                          | % |  |                                     | 957   
|Texas Border                     |  |                          | 38  |  |                             |  | 4,715  |                                     |  |  | 100.0                          | % |  |                                     | 4,715 
|Los Angeles                      |  |                          | 7   |  |                             |  | 1,205  |                                     |  |  | 100.0                          | % |  |                                     | 1,205 
|Dallas                           |  |                          | 3   |  |                             |  | 958    |                                     |  |  | 100.0                          | % |  |                                     | 958   
|Pennsylvania, Maryland, Virginia |  |                          | 3   |  |                             |  | 1,202  |                                     |  |  | 100.0                          | % |  |                                     | 1,202 
|New Jersey                       |  |                          | 1   |  |                             |  | 343    |                                     |  |  | 100.0                          | % |  |                                     | 343   
|Houston, Austin, San Antonio     |  |                          | 12  |  |                             |  | 1,497  |                                     |  |  | 99.9                           | % |  |                                     | 1,495 
|South Florida                    |  |                          | 3   |  |                             |  | 449    |                                     |  |  | 100.0                          | % |  |                                     | 449   
|Central Florida                  |  |                          | 1   |  |                             |  | 386    |                                     |  |  | 100.0                          | % |  |                                     | 386   
|Other U.S.                       |  |                          | 1   |  |                             |  | 765    |                                     |  |  | 100.0                          | % |  |                                     | 765   
|                                 |  |                          | 78  |  |                             |  | 15,774 |                                     |  |  | 100.0                          | % |  |                                     | 15,772
|Mexico                           |  |                          |     |  |                             |  |        |                                     |  |  |                                |   |  |                                     |       
|Reynosa                          |  |                          | 1   |  |                             |  | 214    |                                     |  |  | 50.0                           | % |  |                                     | 107   
|                                 |  |                          | 1   |  |                             |  | 214    |                                     |  |  | 50.0                           | % |  |                                     | 107   
|Europe                           |  |                          |     |  |                             |  |        |                                     |  |  |                                |   |  |                                     |       
|Germany                          |  |                          | 13  |  |                             |  | 2,906  |                                     |  |  | 100.0                          | % |  |                                     | 2,906 
|France                           |  |                          | 16  |  |                             |  | 3,251  |                                     |  |  | 100.0                          | % |  |                                     | 3,251 
|Italy                            |  |                          | 4   |  |                             |  | 1,609  |                                     |  |  | 100.0                          | % |  |                                     | 1,609 
|Spain                            |  |                          | 2   |  |                             |  | 501    |                                     |  |  | 100.0                          | % |  |                                     | 501   
|Hungary                          |  |                          | 2   |  |                             |  | 338    |                                     |  |  | 100.0                          | % |  |                                     | 338   
|                                 |  |                          | 37  |  |                             |  | 8,605  |                                     |  |  | 100.0                          | % |  |                                     | 8,605 
|Total Consolidated Properties    |  |                          | 116 |  |                             |  | 24,593 |                                     |  |  | 99.6                           | % |  |                                     | 24,484
|                                 |  |                          |     |  |                             |  |        |                                     |  |  |                                |   |  |                                     |       
|UNCONSOLIDATED PROPERTIES        |  |                          |     |  |                             |  |        |                                     |  |  |                                |   |  |                                     |       
|United States                    |  |                          |     |  |                             |  |        |                                     |  |  |                                |   |  |                                     |       
|Atlanta                          |  |                          | 8   |  |                             |  | 3,786  |                                     |  |  | 30.0                           | % |  |                                     | 1,135 
|Memphis                          |  |                          | 7   |  |                             |  | 3,130  |                                     |  |  | 42.9                           | % |  |                                     | 1,343 
|Cincinnati/Indianapolis          |  |                          | 6   |  |                             |  | 2,609  |                                     |  |  | 33.3                           | % |  |                                     | 869   
|Chicago                          |  |                          | 6   |  |                             |  | 1,581  |                                     |  |  | 43.1                           | % |  |                                     | 681   
|Los Angeles                      |  |                          | 4   |  |                             |  | 1,621  |                                     |  |  | 38.4                           | % |  |                                     | 623   
|Dallas                           |  |                          | 6   |  |                             |  | 2,212  |                                     |  |  | 35.3                           | % |  |                                     | 781   
|Pennsylvania, Maryland, Virginia |  |                          | 1   |  |                             |  | 400    |                                     |  |  | 50.0                           | % |  |                                     | 200   
|New Jersey                       |  |                          | 2   |  |                             |  | 2,102  |                                     |  |  | 50.0                           | % |  |                                     | 1,051 
|South Florida                    |  |                          | 9   |  |                             |  | 1,080  |                                     |  |  | 36.8                           | % |  |                                     | 397   
|Other U.S.                       |  |                          | 1   |  |                             |  | 557    |                                     |  |  | 50.0                           | % |  |                                     | 278   
|                                 |  |                          | 50  |  |                             |  | 19,078 |                                     |  |  | 38.6                           | % |  |                                     | 7,358 
|Canada                           |  |                          |     |  |                             |  |        |                                     |  |  |                                |   |  |                                     |       
|Woodstock                        |  |                          | 2   |  |                             |  | 456    |                                     |  |  | 50.0                           | % |  |                                     | 228   
|                                 |  |                          | 2   |  |                             |  | 456    |                                     |  |  | 50.0                           | % |  |                                     | 228   
|Total Unconsolidated Properties  |  |                          | 52  |  |                             |  | 19,534 |                                     |  |  | 38.8                           | % |  |                                     | 7,586 
|Total Industrial Properties      |  |                          | 168 |  |                             |  | 44,127 |                                     |  |  | 72.7                           | % |  |                                     | 32,070

| | (1) | Reflects our partnership's interest before considering non-controlling interests of others in
operating subsidiaries.
| | --- | ---------------------------------------------------------------------------------------------------------------------

| | (2) | Reflects our partnership's interest before considering non-controlling interests of others in
subsidiaries, including IDI and Gazeley.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Reflects our partnership's proportionate interest net of non-controlling interests described
in note (3) above and the Redeemable/Exchangeable Partnership Units and Special LP Units held by Brookfield Asset Management and
Exchange LP Units.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



74









|Multifamily Property Portfolio  |  |                           |    |  | Assets Under
    Management |  |        | Proportionate at subsidiarylevel(1) |  |  | Proportionate toUnitholders(2) |   |  | Proportionate toLP Unit  holders(3) |       
|------------------------------- |  | ------------------------- | -- |  | --------------------------- |  | ------ | ----------------------------------- |  |  | ------------------------------ | - |  | ----------------------------------- | ------
|Dec. 31, 2014 (number of units) |  | Number
    of
 properties |    |  | Total                       |  |        | Owned
    %                         |  |  | Total                          |   |  | Total                               |       
|CONSOLIDATED PROPERTIES         |  |                           |    |  |                             |  |        |                                     |  |  |                                |   |  |                                     |       
|United States                   |  |                           |    |  |                             |  |        |                                     |  |  |                                |   |  |                                     |       
|Texas                           |  |                           | 6  |  |                             |  | 1,363  |                                     |  |  | 100.0                          | % |  |                                     | 1,363 
|North Carolina                  |  |                           | 19 |  |                             |  | 4,656  |                                     |  |  | 100.0                          | % |  |                                     | 4,656 
|Virginia                        |  |                           | 7  |  |                             |  | 3,288  |                                     |  |  | 100.0                          | % |  |                                     | 3,288 
|New York                        |  |                           | 6  |  |                             |  | 3,962  |                                     |  |  | 99.0                           | % |  |                                     | 3,922 
|Florida                         |  |                           | 2  |  |                             |  | 706    |                                     |  |  | 100.0                          | % |  |                                     | 706   
|South Carolina                  |  |                           | 7  |  |                             |  | 1,740  |                                     |  |  | 100.0                          | % |  |                                     | 1,740 
|Maryland                        |  |                           | 1  |  |                             |  | 348    |                                     |  |  | 100.0                          | % |  |                                     | 348   
|                                |  |                           | 48 |  |                             |  | 16,063 |                                     |  |  | 99.8                           | % |  |                                     | 16,023
|Canada                          |  |                           |    |  |                             |  |        |                                     |  |  |                                |   |  |                                     |       
|Ontario                         |  |                           | 2  |  |                             |  | 202    |                                     |  |  | 91.5                           | % |  |                                     | 185   
|                                |  |                           | 2  |  |                             |  | 202    |                                     |  |  | 91.5                           | % |  |                                     | 185   
|Total Consolidated Properties   |  |                           | 50 |  |                             |  | 16,265 |                                     |  |  | 99.7                           | % |  |                                     | 16,208
|                                |  |                           |    |  |                             |  |        |                                     |  |  |                                |   |  |                                     |       
|UNCONSOLIDATED PROPERTIES       |  |                           |    |  |                             |  |        |                                     |  |  |                                |   |  |                                     |       
|United States                   |  |                           |    |  |                             |  |        |                                     |  |  |                                |   |  |                                     |       
|Texas                           |  |                           | 8  |  |                             |  | 2,690  |                                     |  |  | 100.0                          | % |  |                                     | 2,690 
|North Carolina                  |  |                           | 2  |  |                             |  | 692    |                                     |  |  | 100.0                          | % |  |                                     | 692   
|Florida                         |  |                           | 7  |  |                             |  | 2,014  |                                     |  |  | 100.0                          | % |  |                                     | 2,014 
|Georgia                         |  |                           | 3  |  |                             |  | 1,038  |                                     |  |  | 100.0                          | % |  |                                     | 1,038 
|Washington                      |  |                           | 6  |  |                             |  | 1,409  |                                     |  |  | 100.0                          | % |  |                                     | 1,409 
|Colorado                        |  |                           | 4  |  |                             |  | 1,212  |                                     |  |  | 100.0                          | % |  |                                     | 1,212 
|Arizona                         |  |                           | 3  |  |                             |  | 1,298  |                                     |  |  | 100.0                          | % |  |                                     | 1,298 
|Nevada                          |  |                           | 1  |  |                             |  | 240    |                                     |  |  | 100.0                          | % |  |                                     | 240   
|Connecticut                     |  |                           | 2  |  |                             |  | 394    |                                     |  |  | 100.0                          | % |  |                                     | 394   
|California                      |  |                           | 1  |  |                             |  | 312    |                                     |  |  | 100.0                          | % |  |                                     | 312   
|Massachusetts                   |  |                           | 2  |  |                             |  | 304    |                                     |  |  | 100.0                          | % |  |                                     | 304   
|Total Unconsolidated Properties |  |                           | 39 |  |                             |  | 11,603 |                                     |  |  | 100.0                          | % |  |                                     | 11,603
|Total Multifamily Properties    |  |                           | 89 |  |                             |  | 27,868 |                                     |  |  | 99.8                           | % |  |                                     | 27,811

| | (1) | Reflects our partnership's interest before considering non-controlling interests of others in
operating subsidiaries and properties.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Reflects our partnership's interest net of non-controlling interests described in note (1) above.
| | --- | -------------------------------------------------------------------------------------------------

| | (3) | Reflects our partnership's proportionate interest net of non-controlling interests described
in note (3) above and the Redeemable/Exchangeable Partnership Units and Special LP Units held by Brookfield Asset Management and
Exchange LP Units.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Hotel Property Portfolio        |  |                              |    |  | Assets Under
    Management |  |       | Proportionate atsubsidiary level(1) |  |  | Proportionate toUnitholders(2) |   |  | Proportionate toLP Unit holders(3) |      
|------------------------------- |  | ---------------------------- | -- |  | --------------------------- |  | ----- | ----------------------------------- |  |  | ------------------------------ | - |  | ---------------------------------- | -----
|Dec. 31, 2014 (number of rooms) |  | Number
    of
    properties |    |  | Total                       |  |       | Owned
    %                         |  |  | Total                          |   |  | Total                              |      
|CONSOLIDATED PROPERTIES         |  |                              |    |  |                             |  |       |                                     |  |  |                                |   |  |                                    |      
|North America                   |  |                              | 2  |  |                             |  | 5,308 |                                     |  |  | 100.0                          | % |  |                                    | 5,308
|Total Consolidated Properties   |  |                              | 2  |  |                             |  | 5,308 |                                     |  |  | 100.0                          | % |  |                                    | 5,308
|                                |  |                              |    |  |                             |  |       |                                     |  |  |                                |   |  |                                    |      
|UNCONSOLIDATED PROPERTIES       |  |                              |    |  |                             |  |       |                                     |  |  |                                |   |  |                                    |      
|North America                   |  |                              | 5  |  |                             |  | 1,802 |                                     |  |  | 80.3                           | % |  |                                    | 1,446
|Australia                       |  |                              | 4  |  |                             |  | 1,594 |                                     |  |  | 100.0                          | % |  |                                    | 1,594
|Total Unconsolidated Properties |  |                              | 9  |  |                             |  | 3,396 |                                     |  |  | 89.5                           | % |  |                                    | 3,040
|Total Hotel Properties          |  |                              | 11 |  |                             |  | 8,704 |                                     |  |  | 95.9                           | % |  |                                    | 8,348

| | (1) | Reflects our partnership's interest before considering non-controlling interests of others in
operating subsidiaries.
| | --- | ---------------------------------------------------------------------------------------------------------------------

| | (2) | Reflects our partnership's interest net of non-controlling interests described in note (1) above.
| | --- | -------------------------------------------------------------------------------------------------

| | (3) | Reflects our partnership's proportionate interest net of non-controlling interests described
in note (3) above and the Redeemable/Exchangeable Partnership Units and Special LP Units held by Brookfield Asset Management and
Exchange LP Units.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Triple Net Lease Property Portfolio  |  |                          |     |  | Assets Under
    Management |  |        | Proportionate atsubsidiary level(1) |  |  | Proportionate toUnitholders(2) |   |  | Proportionate toLP Unit holders(3) |       
|------------------------------------ |  | ------------------------ | --- |  | --------------------------- |  | ------ | ----------------------------------- |  |  | ------------------------------ | - |  | ---------------------------------- | ------
|Dec. 31, 2014 (number of properties) |  | Number
    of
properties |     |  | Total                       |  |        | Owned
    %                         |  |  | Total                          |   |  | Total                              |       
|CONSOLIDATED PROPERTIES              |  |                          |     |  |                             |  |        |                                     |  |  |                                |   |  |                                    |       
|North America                        |  |                          | 304 |  |                             |  | 15,698 |                                     |  |  | 100.0                          | % |  |                                    | 15,698
|Total Consolidated Properties        |  |                          | 304 |  |                             |  | 15,698 |                                     |  |  | 100.0                          | % |  |                                    | 15,698
|                                     |  |                          |     |  |                             |  |        |                                     |  |  |                                |   |  |                                    |       
|Total Triple Net Lease Properties    |  |                          | 304 |  |                             |  | 15,698 |                                     |  |  | 100.0                          | % |  |                                    | 15,698

| | (1) | Reflects our partnership's interest before considering non-controlling interests of others in
operating subsidiaries.
| | --- | ---------------------------------------------------------------------------------------------------------------------

| | (2) | Reflects our partnership's interest net of non-controlling interests described in note (1) above.
| | --- | -------------------------------------------------------------------------------------------------

| | (3) | Reflects our partnership's proportionate interest net of non-controlling interests described
in note (3) above and the Redeemable/Exchangeable Partnership Units and Special LP Units held by Brookfield Asset Management and
Exchange LP Units.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



75









Critical Accounting Policies, Estimates and Judgments

The discussion and analysis
of our financial condition and results of operations is based upon the consolidated financial statements, which have been prepared
in accordance with IFRS. The preparation of the consolidated financial statements, in conformity with IFRS, requires management
to make estimates and assumptions that affect the carrying amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.



Our most critical accounting
policies are those that we believe are the most important in portraying our financial condition and results of operations, and
require the most subjectivity and estimates by our management.



Investment Properties

Investment properties include
commercial properties held to earn rental income and commercial developments that are being constructed or developed for future
use as commercial properties. Commercial properties and commercial developments are recorded at fair value, determined based on
available market evidence, at the balance sheet date. We determine the fair value of each investment property based upon, among
other things, rental income from current leases and assumptions about rental income from future leases reflecting market conditions
at the balance sheet date, less future cash flows (including rental payments and other outflows) in respect of such leases. Investment
property valuations are 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. Fair values are primarily determined by discounting the expected future cash flows as opposed
to the direct capitalization approach. In determining the appropriateness of the methodology applied, our 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. 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. Valuations of investment properties are most sensitive to changes in the discount rate and timing or variability
of cash flows.



Borrowing costs associated
with direct expenditures on properties under development or redevelopment are capitalized. Borrowing costs are also capitalized
on the purchase cost of a site or property acquired specifically for development or redevelopment in the short-term but only where
activities necessary to prepare the asset for development or redevelopment are in progress. The amount of borrowing costs capitalized
is determined first by reference to borrowings specific to the project, where relevant, and otherwise by applying a weighted average
cost of borrowings to eligible expenditures after adjusting for borrowings associated with other specific developments. Where borrowings
are associated with specific developments, the amount capitalized is the gross cost incurred on those borrowings less any incidental
investment income. Borrowing costs are capitalized from the commencement of the development until the date of practical completion.
The capitalization of borrowing costs is suspended if there are prolonged periods when development activity is interrupted. We
consider practical completion to have occurred when the property is capable of operating in the manner intended by management.
Generally, this occurs upon completion of construction and receipt of all necessary occupancy and other material permits. Where
we have pre-leased space as of or prior to the start of the development and the lease requires us to construct tenant improvements
which enhance the value of the property, practical completion is considered to occur on completion of such improvements.



Initial direct leasing
costs we incur in negotiating and arranging tenant leases are added to the carrying amount of investment properties.



Business Combinations

We account for business
combinations in which control is acquired under the acquisition method. We consider three criteria that include input, process
and output to assess whether acquired assets and assumed liabilities meet the definition of a business. The acquisition price is
the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments
issued in exchange for control of the acquiree. As a result, our partnership recognizes the acquiree’s identifiable assets
and assumed liabilities at their acquisition-date fair values, except for non-current assets classified as held-for-sale, which
are recognized at fair value less costs to sell. We also evaluate whether there are intangible assets acquired that have not previously
been recognized by the acquiree and recognizes them as identifiable intangible assets. The interests of non-controlling shareholders
in the acquiree are initially measured at their proportion of the net fair value of the identifiable assets and assumed liabilities
recognized.



To the extent that the
acquisition price exceeds the fair value of the net assets, the excess is recorded as goodwill. To the extent the fair value of
consideration paid is less than the fair value of net identifiable assets, the excess is recognized as a bargain purchase gain
in our partnership’s net income for the respective reporting period.



Where a business combination
is achieved in stages, previously held interests in the acquired entity are re-measured to fair value at the acquisition date,
which is the date control is obtained, and the resulting gain or loss, if any, is recognized in net income. Amounts arising from
interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are
reclassified to net income. Changes in our partnership’s ownership interest of an investee that do not result in a change
of control are accounted for as equity transactions and are recorded as a component of equity. Acquisition costs are recorded as
an expense in the reporting period as incurred.



76







In applying this policy,
judgment is applied in determining whether an acquisition meets the definition of a business combination or an asset acquisition
by considering the nature of the assets acquired and the processes applied to those assets, or if the integrated set of assets
and activities is capable of being conducted and managed for the purpose of providing a return to investors or other owners.



Basis of Accounting for Investees

We consolidate an investee
when we control the investee, with control existing if and only if we have power over the investee; exposure, or rights, to variable
returns from our involvement with the investee; and the ability to use our power over the investee to affect the amount of our
partnership’s returns. Whether we consolidate or equity account an investee may have a significant impact on the presentation
of our consolidated financial statements, especially as it relates to the consolidation of the operating partnership.



In determining if we have
power over an investee, we make judgments when identifying which activities of the investee are relevant in significantly affecting
returns of the investee and the extent of our existing rights that give it the current ability to direct the relevant activities
of the investee. We also make judgments as to the amount of potential voting rights which provides us or unrelated parties voting
powers, the existence of contractual relationships that provide us voting power, the ability to appoint directors and the ability
of other investors to remove us as a manager or general partner. We enter into voting agreements to provide our partnership with
the ability to contractually direct the relevant activities of the investee (formally referred to as “power” within
IFRS 10, Consolidated Financial Statements). In assessing if we have exposure, or rights, to variable returns from its involvement
with the investee we make judgments concerning whether returns from an investee are variable and how variable those returns are
on the basis of the substance of the arrangement, the size of those returns and the size of those returns relative to others, particularly
in circumstances where our voting interest differs from our ownership interest in an investee. In determining if we have the ability
to use our power over the investee to affect the amount of our returns we make judgments when it is an investor as to whether it
is a principal or agent and whether another entity with decision-making rights is acting as an agent for us. If we determine that
it is acting as an agent, as opposed to principal, we do not control the investee.



Revaluation Method Hotel Assets

We account for our investments
in hotel properties as property, plant and equipment under the revaluation model. Hotel properties are recognized initially at
cost or fair value if acquired in a business combination and subsequently carried at fair value at the balance sheet date less
any accumulated impairment and subsequent accumulated depreciation. Fair values are determined internally using discounted cash
flow models with inputs from available market evidence.



Revaluations of hotel properties
are performed annually at December 31, the end of the fiscal year, to ensure that the carrying amount does not differ significantly
from fair values. Where the carrying amount of an asset is increased as a result of a revaluation, the increase is recognized in
other comprehensive income and accumulated in equity within revaluation surplus, unless the increase reverses a previously recognized
revaluation loss recorded through prior period net income, in which case that portion of the increase is recognized in net income.
Where the carrying amount of an asset is decreased, the decrease is recognized in other comprehensive income to the extent of any
balance existing in revaluation surplus in respect of the asset, with the remainder of the decrease recognized in net income. Revaluation
gains are recognized in other comprehensive income, and are not subsequently recycled into profit or loss. The cumulative revaluation
surplus is transferred directly to retained earnings when the asset is derecognized.



In performing annual revaluations,
we first qualitatively assess whether there is any indication that the hotel properties may be impaired. If no indication is identified,
no impairment will be recorded. If we have identified indicators for impairment, the asset’s carrying amount (i.e., fair
value less any accumulated depreciation and impairment) is compared with the recoverable amount of the hotel properties, which
is determined as the higher of the estimated fair value less costs on disposal or the present value of expected future cash flows
generated from the use and eventual disposal of an asset. An impairment is taken if the recoverable amount is less than the carrying
amount of the assets and is accounted for in the same manner as a revaluation decrease as illustrated in previous paragraphs.



Canary Wharf

We have determined that,
notwithstanding our 22% common equity interest, we do not exercise significant influence over Canary Wharf as we are not able to
elect board members or otherwise influence the financial and operating decisions.



GGP

As of December 31, 2014,
we held an indirect 29% interest in GGP and were entitled to nominate three of the nine directors to GGP’s board and vote
all of our shares for those directors.



We account for our investment
in GGP following the equity method of accounting. The carrying value of our investment in GGP consists of our original cost of
the investment plus our share of the earnings of GGP, determined in accordance with our accounting policies under IFRS, less distributions
received from GGP. This includes our share of GGP’s unrealized fair value gains (losses) in respect of investment property,
which is determined in accordance with our accounting policy for valuation of investment properties. Accordingly, the variance
between the value of our investment in GGP based on the publicly-traded share price and the carrying value of the equity accounted
investment is the result of recording our share of the IFRS net earnings of GGP, which includes the cumulative unrealized fair
value gains arising from the significant fair value increases in the underlying investment properties.



We consider the guidance
in IAS 28, Investments in Associates and Joint Ventures (“IAS 28”) and IAS 36, Impairment of Assets (“IAS
36”) to determine if there are indicators of impairment, one of which is whether there is a significant or prolonged decline
in the fair value of an investment in an equity instrument below its cost. Accordingly, we consider whether the variance between
the value of the investment as determined using the publicly-traded share price and the carrying value is an indicator of impairment.



77







Our evaluation of whether
there are impairment indicators present includes consideration of a number of factors as required by IAS 36 including an evaluation
of the technological, market, economic and legal environment in which GGP operates; consideration of whether GGP was, or in the
near future is expected to be, in significant financial difficulty and an assessment of trends in actual net cash flows or operating
profit or loss of GGP. Further, with respect specifically to the variance between the value of the investment as determined using
the publicly-traded share price and the carrying value determined under IAS 28, we consider additional factors relative to this
variance. This includes an analysis of the original blended cost of our investment in GGP compared to the publicly-traded share
price over the period from acquisition dates through each reporting date; the trend in the share price of GGP as at each reporting
date up to and including the current date; and an assessment of the underlying cash flows that are expected to be derived from
the operating and redevelopment properties, including the significant recovery in property values contributing to the fair value
gains recorded by GGP.



Taxation

We apply judgment in determining
the tax rate applicable to our REIT operating entities and identifying the temporary differences related to such operating entities
with respect to which deferred income taxes are recognized. Deferred taxes related to temporary differences arising in our partnership’s
REIT operating entities, joint ventures and associates are measured based on the tax rates applicable to distributions received
by the investor entity on the basis that REITs can deduct dividends or distributions paid such that their liability for income
taxes is substantially reduced or eliminated for the year, and we intend that these entities will continue to distribute their
taxable income and continue to qualify as REITs for the foreseeable future.



We measure deferred income
taxes associated with our investment properties based on our specific intention with respect to each asset at the end of the reporting
period. Where we have a specific intention to sell a property in the foreseeable future, deferred taxes on the building portion
of the investment property are measured based on the tax consequences following from the disposition of the property. Otherwise,
deferred taxes are measured on the basis the carrying value of the investment property will be recovered substantially through
use. Judgment is required in determining the manner in which the carrying amount of each investment property will be recovered.



We also make judgments
with respect to the taxation of gains inherent in our investments in foreign subsidiaries and joint ventures. While we believe
that the recovery of our original investment in these foreign subsidiaries and joint ventures will not result in additional taxes,
certain unremitted gains inherent in those entities could be subject to foreign taxes depending on the manner of realization.



Revenue Recognition

For investment properties,
we account for our leases with tenants as operating leases as we have retained substantially all of the risks and benefits of ownership
of our investment properties. Revenue recognition under a lease commences when the tenant has a right to use the leased asset.
Generally, this occurs on the lease inception date or, where our partnership is required to make additions to the property in the
form of tenant improvements which enhance the value of the property, upon substantial completion of the improvements. The total
amount of contractual rents expected from operating leases is recognized on a straight-line basis over the term of the lease, including
contractual base rent and subsequent rent increases as a result of rent escalation clauses. A rent receivable, included within
the carrying amount of investment properties, is used to record the difference between the rental revenue recorded and the contractual
amount received.



Rent receivables and related
revenue also includes percentage participating rents and recoveries of operating expenses, including property and capital taxes.
Percentage participating rents are recognized when tenants' specified sales targets have been met. Operating expense recoveries
are recognized in the period that recoverable costs are chargeable to tenants.



With regards to hospitality
revenue, we recognize revenue on rooms, food and other revenue as services are provided. We recognize room revenue net of taxes
and levies. Advance deposits are deferred and included in accounts payable and other liabilities until services are provided to
the customer. We recognize the difference between gaming wins and losses from casino gaming activities as gaming revenue. We recognize
liabilities for funds deposited by patrons before gaming play occurs and for chips in the patrons’ possession, both of which
are included in accounts payable and other liabilities. Revenue and expenses from tour operations include the sale of travel and
leisure packages and are recognized on the day the travel package begins. Amounts collected in advance from guests are deferred
and included in accounts payable and other liabilities until such amounts are earned.



Financial Instruments

We classify our financial
instruments into categories based on the purpose for which the instrument was acquired or issued, its characteristics and our designation
of the instrument. The category into which we classify financial instruments determines its measurement basis (e.g., fair value,
amortized cost) subsequent to initial recognition. We hold financial instruments that represent secured debt and equity interests
in commercial properties that are measured at fair value. Estimation of the fair value of these instruments is subject to the estimates
and assumptions associated with the valuation of investment properties. When designating derivatives in cash flow hedging relationships,
we make assumptions about the timing and amount of forecasted transactions, including anticipated financings and refinancings.



Fair value is the amount
that willing parties would accept to exchange a financial instrument based on the current market for instruments with the same
risk, principal and remaining maturity. The fair value of interest bearing financial assets and liabilities is determined by discounting
the contractual principal and interest payments at estimated current market interest rates for the instrument. Current market rates
are determined by reference to current benchmark rates for a similar term and current credit spreads for debt with similar terms
and risk.



78







Use of Estimates

Our partnership makes estimates
and assumptions that affect carried amounts of assets and liabilities, disclosure of contingent assets and liabilities and the
reported amount of earnings for the period. Actual results could differ from estimates. The estimates and assumptions that are
critical to the determination of the amounts reported in the consolidated financial statements relate to the following:



(i)   Fair value
of investment property

Our 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
(including rental payments and other outflows) in respect of such leases. Where available, our partnership determines the fair
value of commercial properties based on recent sales of similar property in the same location and condition and subject to a similar
leasing profile. Where comparable current sales in an active market do not exist, our partnership considers information from a
variety of sources, including: i) discounted cash flows based on reliable estimates of future cash flows, supported by the terms
of existing lease and other contracts, and evidence such as current market rents for similar properties in the same location and
condition, using discount rates to reflect uncertainty in the amount and timing of the cash flows; ii) recent prices of similar
properties in less active markets, with adjustments to reflect any change in economic conditions since the date of the observed
transactions that occurred at those prices, including market rents and discount or capitalization rates; and iii) current prices
in an active market for properties of a different nature, condition or location, including differences in leasing and other contracts.



In certain cases, these
sources will suggest different conclusions about the fair value of an investment property. In such cases, our partnership considers
the reasons for any such differences in validating the most reliable estimate of fair value. Investment property valuations are
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. In determining the appropriateness of the methodology applied, our 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.



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. We do not measure or record our properties
prepared by external valuation professionals.



(ii)   Fair value
of financial instruments

We determine the
fair value of our warrants to acquire common shares of GGP using a Black-Scholes option pricing model wherein we are required to
make estimates and assumptions regarding expected future volatility of GGP’s shares and the term of the warrants.



We have certain financial
assets and liabilities with embedded participation features related to the values of investment properties whose fair values are
based on the fair values of the related properties.



We hold other financial
instruments that represent equity interests in investment property entities that are measured at fair value as these financial
instruments are designated as fair value through profit or loss or available-for-sale. Estimation of the fair value of these instruments
is also subject to the estimates and assumptions associated with investment properties.



The fair value of interest
rate caps is determined based on generally accepted pricing models using quoted market interest rates for the appropriate term.
Interest rate swaps are valued at the present value of estimated future cash flows and discounted based on applicable yield curves
derived from market interest rates.



Application of the effective
interest method to certain financial instruments involves estimates and assumptions about the timing and amount of future principal
and interest payments.



79







Future Accounting Policy Changes

The following are accounting
policies issued that our partnership expects to adopt in the future:



IFRS 9, Financial Instruments
(‘‘IFRS 9’’) will replace IAS 39, Financial Instruments: Recognition and Measurement (‘‘IAS
39’’). IFRS 9 introduces a logical approach for the classification of financial assets, which is driven by cash flow
characteristics and the business model in which an asset is held. This single, principle-based approach replaces existing rule-based
requirements that are generally considered to be overly complex and difficult to apply. The new model results in a single impairment
model being applied to all financial instruments, thereby removing a source of complexity associated with previous accounting requirements.
It also introduces a new, expected-loss impairment model that will require more timely recognition of expected credit losses. IFRS
9 is effective for annual periods beginning on or after January 1, 2018 and should be applied retrospectively. We are currently
evaluating the impact of IFRS 9 to our consolidated financial statements.



IAS 16, Property, Plant,
and Equipment (“IAS 16”) and IAS 38, Intangible Assets (“IAS 38”) were both amended by the IASB
as a result of clarifying the appropriate amortization method for intangible assets of service concession arrangements under IFRIC
12, Service Concession Arrangements (“SCA’s”). The IASB determined that the issue does not only relate
to SCA’s but all tangible and intangible assets that have finite useful lives. Amendments to IAS 16 prohibit entities from
using a revenue-based depreciation method for items of property, plant, and equipment. Similarly, the amendment to IAS 38 introduces
a rebuttable presumption that revenue is not an appropriate basis for the amortization of an intangible asset, with only limited
circumstances where the presumption can be rebutted. Guidance is also introduced to explain that expected future reductions in
selling prices could be indicative of a reduction of the future economic benefits embodied in an asset. The amendments apply prospectively
and are effective for annual periods beginning on or after January 1, 2016, with earlier application permitted. We are currently
evaluating the amendments to IAS 16 or IAS 38 to our consolidated financial statements.



IFRS 15, Revenue from
Contracts with Customers (“IFRS 15”) specifies how and when revenue should be recognized as well as requiring more
informative and relevant disclosures. This standard supersedes IAS 18, Revenue, IAS 11, Construction Contracts, and
a number of revenue-related interpretations. Application of the standard is mandatory and it applies to nearly all contracts with
customers: the main exceptions are leases, financial instruments and insurance contracts. IFRS 15 is effective for annual periods
beginning on or after January 1, 2017 with early application permitted, and should be applied retrospectively. We are currently
evaluating the impact of IFRS 15 to our consolidated financial statements.



IFRS 11,
Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations (“Amendments to IFRS 11”) was
amended by the IASB in May 2014. The objective of the amendments is to add new guidance to IFRS 11 on accounting for the acquisition
of an interest in a joint operation in which the activity of the joint operation constitutes a business, as defined in IFRS 3,
Business Combinations(“IFRS 3”). Acquirers of such interests are to apply the relevant principles on business
combination accounting in IFRS 3 and other standards, as well as disclosing the relevant information specified in these standards
for business combinations. The amendments to IFRS 11 are effective for annual periods beginning on or after January 1, 2016 and
should be applied prospectively. We are currently evaluating the impact of the Amendments to IFRS 11 to our consolidated financial
statements.



80







5.B.	LIQUIDITY AND CAPITAL RESOURCES



The capital of our
business consists of debt obligations, capital securities, preferred stock and equity. Our objective when managing this capital
is to maintain an appropriate balance between holding a sufficient amount of equity capital to support our operations and reducing
our weighted average cost of capital to improve our return on equity. As at December 31, 2014, capital totaled $59 billion compared
with $49 billion at December 31, 2013.



We attempt to maintain
a level of liquidity to ensure we are able to participate in investment opportunities as they arise and to better withstand sudden
adverse changes in economic circumstances. Our primary sources of liquidity include cash, undrawn committed credit facilities,
construction facilities, cash flow from operating activities and access to public and private capital markets. In addition, we
structure our affairs to facilitate monetization of longer-duration assets through financings and co-investor participations.



We seek to increase
income from our existing properties by maintaining quality standards for our properties that promote high occupancy rates and support
increases in rental rates while reducing tenant turnover and related costs, and by controlling operating expenses. Consequently,
we believe our revenue, along with proceeds from financing activities and divestitures, will continue to provide the necessary
funds to cover our short-term liquidity needs. However, material changes in the factors described above may adversely affect our
net cash flows.



Our principal liquidity
needs for the current year and for periods beyond include:



| | · | Recurring expenses;
| | - | -------------------

| | · | Debt service requirements;
| | - | --------------------------

| | · | Distributions to unitholders;
| | - | -----------------------------

| | · | Capital expenditures deemed mandatory, including
tenant improvements;
| | - | ---------------------------------------------------------------------

| | · | Development costs not covered under construction
loans;
| | - | -------------------------------------------------------

| | · | Investing activities which could include:
| | - | -----------------------------------------

| | o | Discretionary capital expenditures;
| | - | -----------------------------------

| | o | Property acquisitions;
| | - | ----------------------

| | o | Future developments; and
| | - | ------------------------

| | o | Repurchase of our units.
| | - | ------------------------



We plan to meet these
liquidity needs by accessing our group-wide liquidity of $5,203 million at December 31, 2014 as highlighted in the table below.
In addition, we have the ability to supplement this liquidity through cash generated from operating activities, asset sales, co-investor
interests and financing opportunities.



|(US$ Millions)                                                 |  | Dec. 31, 2014 |       |  | Dec. 31, 2013 |  
|-------------------------------------------------------------- |  | ------------- | ----- |  | ------------- | -
|Corporate cash and cash equivalents                            |  | $             | 73    |  |               | $
|Restricted cash related to issuance of preferred shares to QIA |  |               | 1,800 |  |               |  
|Available committed corporate credit facility                  |  |               | 130   |  |               |  
|Available subordinated credit facility                         |  |               | 399   |  |               |  
|Corporate liquidity                                            |  |               | 2,402 |  |               |  
|Proportionate cash retained at subsidiaries                    |  |               | 882   |  |               |  
|Proportionate availability under construction facilities       |  |               | 1,614 |  |               |  
|Proportionate availability under subsidiary credit facilities  |  |               | 305   |  |               |  
|Group-wide liquidity                                           |  | $             | 5,203 |  |               | $



We finance our assets
principally at the operating company level with asset-specific debt that generally has long maturities, few restrictive covenants
and with recourse only to the asset. We endeavor to maintain prudent levels of debt and strive to ladder our principal repayments
over a number of years.



The following table
summarizes our secured debt obligations on investment properties by contractual maturity over the next five years and thereafter:



|(US$ Millions, except where noted) |  | Dec. 31, 2014 |       
|---------------------------------- |  | ------------- | ------
|2015                               |  | $             | 1,710 
|2016                               |  |               | 3,909 
|2017                               |  |               | 4,547 
|2018                               |  |               | 2,087 
|2019                               |  |               | 2,365 
|Thereafter                         |  |               | 5,663 
|Deferred financing costs           |  |               | (159  
|Secured debt obligations           |  | $             | 20,122
|Loan to value (%)                  |  |               | 48.9  



81







Our
partnership’s operating subsidiaries are subject to limited covenants in respect of their corporate debt and are in
full compliance with all such covenants at December 31, 2014. The partnership’s operating subsidiaries are also in
compliance with all covenants and other capital requirements related to regulatory or contractual obligations of material
consequence to our partnership. Summaries of our debt profile for each of our segments are included elsewhere in this Form
20-F.



5.C.	RESEARCH AND DEVELOPMENT,
PATENTS AND LICENSES, ETC.



Not applicable.



5.D.	TREND INFORMATION



We will seek to increase
the cash flows from our office and retail property activities through continued leasing activity as described below. In particular,
we are operating below our historical office occupancy level in the United States, which provides the opportunity to expand cash
flows through higher occupancy. In addition, we believe that most of our markets have favorable outlooks, which we believe also
provides an opportunity for strong growth in lease rates. Our beliefs as to the opportunities for our partnership to increase its
occupancy levels, lease rates and cash flows are based on assumptions about our business and markets that management believes are
reasonable in the circumstances. There can be no assurance as to growth in occupancy levels, lease rates or cash flows. See “Special
Note Regarding Forward-Looking Statements”.



Transaction activity
is picking up across our global real estate markets and we are considering a number of different opportunities to acquire single
assets, development sites and portfolios at attractive returns. In our continued effort to enhance returns through capital reallocation,
we are also looking to divest all of, or a partial interest in, a number of mature assets to capitalize on existing market conditions.



Given the small amount
of new office and retail development that occurred over the last decade and the near total development halt during the global financial
crisis, we see an opportunity to advance our development inventory in the near term in response to demand we are seeing in our
major markets. In addition, we continue to reposition and redevelop existing retail properties, in particular, a number of the
highest performing shopping centers in the United States.



5.E.	OFF-BALANCE SHEET ARRANGEMENTS



We do not have any
off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that is material to investors.



5.F.	TABULAR DISCLOSURE OF CONTRACTUAL
OBLIGATIONS



The following table summarizes our significant
contractual obligations as of December 31, 2014:



|(US$ Millions)              |  |       |        |  | Payments due by period | 
|--------------------------- |  | ----- | ------ |  | ---------------------- | 
|Dec. 31, 2014               |  | Total |        |  | < 1 Year               | 
|Debt obligations:           |  |       |        |  |                        | 
|Property specific mortgages |  | $     | 24,335 |  |                        | 
|Other debt of subsidiaries  |  |       | 27     |  |                        | 
|Corporate borrowings        |  |       | 3,809  |  |                        | 
|Capital securities          |  |       | 4,011  |  |                        | 
|Lease obligations           |  |       | 1,736  |  |                        | 
|Commitments                 |  |       | 1,464  |  |                        | 
|                            |  |       |        |  |                        | 
|Interest expense(1):        |  |       |        |  |                        | 
|Long term debt              |  | $     | 5,123  |  |                        | 
|Capital securities          |  |       | 1,533  |  |                        | 
|Interest rate swaps         |  |       | 9      |  |                        | 

| | (1) | Represents aggregate interest expense expected to be paid over the term of the obligations. Variable interest rate payments
have been calculated based on current rates
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



ITEM 6 	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



6.A.	DIRECTORS AND SENIOR MANAGEMENT



Governance



As required by law,
our limited partnership agreement provides for the management and control of our company by a general partner rather than a board
of directors and officers. The BPY General Partner serves as our company’s general partner and has a board of directors.
The BPY General Partner has no executive officers. The BPY General Partner has sole responsibility and authority for the central
management and control of our company, which is exercised through its board of directors.



82







The following table
presents certain information concerning the current board of directors of the BPY General Partner:



|Name and Residence(1)                                      |  | Age |  | Position with the
        BPY General Partner |  | Principal Occupation                                                                         
|---------------------------------------------------------- |  | --- |  | --------------------------------------------- |  | ---------------------------------------------------------------------------------------------
|Jeffrey M. Blidner
        Toronto, Canada                 |  | 66  |  | Director                                      |  | Senior Managing Partner of Brookfield Asset Management                                       
|Soon Young Chang
        Dubai, United Arab Emirates       |  | 55  |  | Director                                      |  | Director of Dubai World; Senior Advisor of Investment Corporation of Dubai                   
|Omar Carneiro da Cunha(3)
        Rio de Janeiro, Brazil   |  | 68  |  | Director                                      |  | Senior Partner of Dealmaker Ltd. and BOND Consultoria Empresarial e Participacoes            
|Stephen DeNardo(2)
        Stamford, United States         |  | 61  |  | Director                                      |  | Managing Director and President and Chief Executive Officer of RiverOak Investment Corp., LLC
|Louis Joseph Maroun(2)(3)
        Warwick, Bermuda         |  | 64  |  | Director                                      |  | Chairman of Sigma Real Estate Advisors/Sigma Capital Corporation                             
|Lars Rodert(3)
        Genese, Belgium                     |  | 53  |  | Director                                      |  | Founder and Chief Executive Officer of ÖstVäst Capital Management                            
|Lisa M. Shalett
        Purchase, New York, USA            |  | 48  |  | Director                                      |  | Director                                                                                     
|José Ramón Valente
        Vías(2)
        Santiago, Chile |  | 52  |  | Director                                      |  | Partner and Executive Director of ECONSULT                                                   

| | (1) | The
                                         business address for each of the directors is 73 Front Street, Hamilton, HM 12, Bermuda.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Member of the audit committee. Mr. DeNardo is the
Chair of the audit committee and is the audit committee financial expert.
| | --- | ---------------------------------------------------------------------------------------------------------------------------



| | (3) | Member of the governance and nominating committee.
Mr. Maroun is the Chair of the governance and nominating committee.
| | --- | ----------------------------------------------------------------------------------------------------------------------



Set forth below is
biographical information for the BPY General Partner’s current directors.



Jeffrey M. Blidner.
Mr. Blidner is Chairman of the board of directors of Brookfield Property Partners and a Senior Managing Partner of Brookfield
Asset Management and is responsible for strategic planning and transaction execution. Mr. Blidner is also a director of a
number of Brookfield companies in Europe and Canada. Prior to joining Brookfield in 2000, Mr. Blidner was a senior partner
at Goodman & Carr LLP, a Toronto-based law firm. Mr. Blidner’s practice focused on merchant banking transactions,
public offerings, mergers and acquisitions, management buy-outs and private equity transactions. Mr. Blidner received his
LLB from Osgood Hall Law School and was called to the Bar in Ontario as a Gold Medalist.



Soon Young Chang.Dr. Chang is a member of the board of directors of Dubai World. Dr. Chang serves as Senior Advisor to the Investment Corporation
of Dubai, providing strategic counsel and lending his global perspective to the investment arm of the Dubai Government. Dr. Chang
is the founder and chairman of Midas International Asset Management Company, an international asset management fund which manages
over $5 billion. He is also a founding partner of Sentinel Advisor, a New York-based arbitrage fund. Dr. Chang has served as an
advisor to a variety of financial institutions, including Korea National Pension Corporation, Hyundai International Merchant Bank
and Templeton-Ssangyong Investment Trust Company. Dr. Chang received his Master’s and Doctoral degrees from the George Washington
University in the United States and has authored many books and articles on the subject of financial engineering.



Omar Carneiro
da Cunha. Mr. Cunha is a Senior Partner with Dealmaker Ltd., a consultancy and M&A advisory firm, with a focus in telecommunications,
information technology, oil & gas and retail, and has also been a Senior Partner of BOND Consultoria Empresarial e Participacoes
since 1994. He was the Chairman of “Bob’s”, a Brazilian fast food company, from 1995 to 2008, a director of the
Energisa Group since 1996, and a director of Grupo Libra since 2010. In 2005, Mr. Cunha was the Deputy Chairman and Chief Executive
Officer of VARIG Brazilian Airline. From 1995 to 1998, Mr. Cunha was the President of AT&T Brasil and a member of the Management
Committee of AT&T International. Prior to that, Mr. Cunha worked for 27 years in Brazil and abroad for the Royal Dutch/Shell
Group, and was President of Shell Brasil, Billiton Metals and Shell Quimica from 1991 to 1994. Mr. Cunha is currently a member
of the board of Cultura Inglesa S/A, Brookfield Incorporações and of the American Chamber of Commerce for Brazil.



Stephen DeNardo.
Mr. DeNardo is currently managing director and president and CEO of RiverOak Investment Corp., LLC and has held this position since
1999. From 1997 to 1999 he was Partner and Senior Vice President of ING Realty Partners, where he managed a $1 billion portfolio.
Prior to his employment with ING Realty Partners, he was President of ARES Realty Capital from 1991 to 1997, where he managed a
$5 billion portfolio of diversified debt and equity assets. Before joining ARES Realty Capital, he was a Partner at First Winthrop
Corporation. Mr. DeNardo has held a license as a Certified Public Accountant since 1978 and has a B.S. in Accounting from Fairleigh
Dickinson University.



83







Louis Joseph
Maroun. Mr. Maroun is the Founder and Chairman of Sigma Real Estate Advisors/Sigma Capital Corporation, which specializes
in international real estate advisory services. Prior to this role, Mr. Maroun was the Executive Chairman of ING Real Estate
Canada, and held executive positions in a number of real estate companies where he was responsible for overseeing operations, real
estate transactions, asset and property management, as well as many other related functions. Mr. Maroun also is on the board of
directors of Brookfield Renewable Energy Partners L.P., Summit Industrial Income REIT and ThermoCeramix Corp. Mr. Maroun graduated
from the University of New Brunswick in 1972 with a Bachelor’s degree, followed by a series of post graduate studies and
in January of 2007, after a long and successful career in investment real estate, Mr. Maroun was elected to the position of
Fellow of the Royal Institute of Chartered Surveyors.



Lars Rodert.
Mr. Rodert is the founder and CEO of ÖstVäst Capital Management, or OVCM. Mr. Rodert has 30 years of experience in global
investment industry. Prior to OVCM, Mr. Rodert spent 11 years as a Global Investment Manager for IKEA Treasury. Before joining
IKEA Mr. Rodert was with SEB Asset Management for 10 years as CIO and responsible for SEB Global Funds. Prior to SEB, Mr. Rodert
spent 10 years in North America with five years at Investment Bank Gordon Capital and five years as a partner with a private investment
holding company, Robur et. Securitas. Mr. Rodert holds a Master of Science Degree in Business and Economics from Stockholm University.



Lisa M. Shalett.
Ms. Shalett is a former Partner at Goldman Sachs, where she worked for 20 years. Over her career, she held a number of different
senior leadership roles in both revenue-producing and control functions, including Head of International Equities, COO of Global
Compliance, Legal and Internal Audit, and, most recently, Global Head of Brand Marketing and Digital Strategy in the Executive
Office, overseeing Goldman Sachs' corporate brand. She serves on the board of PerformLine, the Advisory Board of the Coach/K Fuqua
Center on Leadership and Ethics at Duke University, the Steering Committee of Kellogg's Center for Executive Women, and as an International
Selection Panelist for Endeavor. Ms. Shalett received a Master of Business Administration from Harvard Business School, and a Bachelor
of Arts, summa cum laude, in East Asian Studies from Harvard University.



José
Ramón Valente Vías. Mr. Valente is a partner and executive director of ECONSULT. Mr. Valente is the
representative in Chile of Fidelity Investments (U.S.A.) and was a founding partner and director of Duff and Phelps Rating Agency
in Chile, Argentina and Peru between 1989 and 2000. Mr. Valente was a Finance and Macroeconomics professor in Universidad de Chile
and Universidad Gabriela Mistral between 1989 and 1993. Mr. Valente is currently a member of the board of several companies, such
as Transelec Chile S.A., Indura S.A. and Cementos Bío Bío S.A. Mr. Valente is currently a director of the SEP (Public
Companies System of the Chilean State). Mr. Valente holds a Commercial Engineering degree from Universidad de Chile and Master
in Business Administration from the University of Chicago.



Additional Information About Directors
and Officers



Mr. Cunha was a director
of Varig S.A. - Viçăo Aérea Rio-Grandense from February 2005 to October 2005. On June 17, 2005, Varig S.A. -
Viçăo Aérea Rio-Grandense applied for a grant of judicial recovery with a view to restructuring payments to
its creditors. On August 20, 2010, Varig S.A. - Viçăo Aérea Rio-Grandense was declared bankrupt. The bankruptcy
proceedings are still underway.



Our Management



The Service Providers,
wholly-owned subsidiaries of Brookfield Asset Management, provide management services to us pursuant to our Master Services Agreement.
Brookfield has built its property platform through the integration of formative portfolio acquisitions and single asset transactions
over several decades and throughout all phases of the real estate investment cycle. The Service Providers’ investment and
asset management professionals are complemented by the depth of real estate investment and operational expertise throughout our
operating platforms which specialize in office, retail, multifamily and industrial assets, generating significant and stable
operating cash flows. Members of Brookfield’s senior management and other individuals from Brookfield’s global affiliates
are drawn upon to fulfill the Service Providers’ obligations to provide us with management services under our Master Services
Agreement.



The following table
presents certain information concerning the Chief Executive Officer and the Chief Financial Officer of our Service Providers:



|Name             |  | Age |  | Years of
        Experience |  | Years at
        Brookfield |  | Position
        with one of
        the Service
        Providers | 
|---------------- |  | --- |  | --------------------------- |  | --------------------------- |  | ------------------------------------------------------------------ | 
|Richard B. Clark |  | 57  |  | 33                          |  | 30                          |  | Chief Executive Officer                                            | 
|                 |  |     |  |                             |  |                             |  |                                                                    | 
|John Stinebaugh  |  | 48  |  | 26                          |  | 10                          |  | Chief Financial Officer                                            | 



Messrs. Clark and
Stinebaugh have substantial operational and transaction origination and execution expertise, having put together numerous consortiums,
partnerships and joint ventures for large multi-faceted transactions. They have also been integral in building and developing Brookfield’s
real property and infrastructure platforms. Set forth below is biographical information for Messrs. Clark and Stinebaugh.



Richard B. Clark.
Mr. Clark is the Chief Executive Officer of Brookfield Property Group. He was Chairman of Brookfield Office Properties’
Board of Directors from 2012 to 2014. Prior to that he was Chief Executive Officer of Brookfield Office Properties from 2002 to
2012 and was also the President from 2002 to 2011. He was President and Chief Executive Officer of Brookfield Office Properties’
U.S. operations from 2000-2002; and prior to that held senior management positions for Brookfield Office Properties and its predecessor
companies including Chief Operating Officer, Executive Vice President and Director of Leasing. Mr. Clark is currently also a Senior
Managing Partner of Brookfield Asset Management. Mr. Clark is on the Executive Committee of the Real Estate Roundtable, is
a board member of the Mental Health Association of New York City and is Chairman of the Board of the National Eating Disorders
Association. Mr. Clark sits on the board of directors of GGP and is Chairman and a director of Rouse.



84







John Stinebaugh.
Mr. Stinebaugh is the Chief Financial Officer of Brookfield Property Group. He was Chief Financial Officer of Brookfield’s
infrastructure group from 2007 to 2013. Prior to joining Brookfield, Mr. Stinebaugh was with Credit Suisse Securities (U.S.A.)
LLC where he was responsible for mergers and acquisitions and leveraged financings in the energy group. Mr. Stinebaugh is currently
a Managing Partner of Brookfield Asset Management. Mr. Stinebaugh graduated with a degree in economics from Harvard University
and received his Chartered Financial Analyst designation in 1995.



The directors and
officers of the BPY General Partner and our Service Providers and their associates, as a group, beneficially own, directly or indirectly,
or exercise control and direction over, our units representing in the aggregate less than 1% of our issued and outstanding units
on a fully exchanged basis.



6.B.	COMPENSATION



The BPY General Partner
pays each of its directors $100,000 per year for serving on its board of directors and various board committees. The BPY General
Partner pays the chair of the audit committee an additional $20,000 per year and pays the other members of the audit committee
an additional $10,000 per year for serving in such positions.



The BPY General Partner
does not have any employees. Our partnership has entered into a Master Services Agreement with the Service Providers pursuant to
which each Service Provider and certain other affiliates of Brookfield provide, or arrange for other Service Providers to provide,
day-to-day management and administrative services for our company, the Property Partnership and the Holding Entities. The fees
payable under the Master Service Agreement are set forth under Item 7.B “Major Shareholders and Related Party Transactions
- Related Party Transactions - Our Master Services Agreement - Management Fee”.



Pursuant to our Master
Services Agreement, members of Brookfield’s senior management and other individuals from Brookfield’s global affiliates
are drawn upon to fulfill obligations under the Master Services Agreement. However, these individuals, including the Brookfield
employees identified in the table under Item 6.A. “Directors, Senior Management and Employees - Directors and Senior Management
- Our Management”, will not be compensated by our company or the BPY General Partner. Instead, they will continue to be compensated
by Brookfield.



6.C.	BOARD PRACTICES



Board Structure, Practices and Committees



The structure, practices
and committees of the BPY General Partner’s board of directors, including matters relating to the size and composition of
the board of directors, the election and removal of directors, requirements relating to board action and the powers delegated to
board committees, are governed by the BPY General Partner’s bye-laws. The BPY General Partner’s board of directors
is responsible for supervising the management, control, power and authority of the BPY General Partner except as required by applicable
law or the bye-laws of the BPY General Partner. The following is a summary of certain provisions of those bye-laws that affect
our company’s governance.



Size, Independence and Composition
of the Board of Directors



The BPY General Partner’s
board of directors may consist of between 3 and 11 directors or such other number of directors as may be determined from time to
time by a resolution of the BPY General Partner’s shareholders and subject to its bye-laws. The board is currently set at
eight directors and a majority of the directors of the BPY General Partner’s board of directors are independent. In addition,
the BPY General Partner’s bye-laws provide that not more than 50% of the directors (as a group) or the independent directors
(as a group) may be residents of any one jurisdiction (other than Bermuda and any other jurisdiction designated by the board of
directors from time to time).



Pursuant to the investor
agreement between us and the Class A Preferred Unitholder dated December 4, 2014, the Class A Preferred Unitholder is entitled,
for so long as it owns an aggregate limited partnership interest in our company of at least 5% of our issued and outstanding units
on a fully-diluted basis, to designate one individual to the BPY General Partner’s board of directors. Such individual must
meet the standards of independence established by the NYSE and the TSX and be reasonably acceptable to the board of directors.
As of the date of this Form 20-F, the Class A Preferred Unitholder has not exercised this right.



Election and Removal of Directors



The BPY General Partner’s
board of directors is appointed by its shareholders and each of its current directors will serve until the earlier of his or her
death, resignation or removal from office. Any director designated by the Class A Preferred Unitholder may be removed or replaced
by the Class A Preferred Unitholder at any time. Vacancies on the board of directors may be filled and additional directors may
be added by a resolution of the BPY General Partner’s shareholders or a vote of the directors then in office. A director
may be removed from office by a resolution duly passed by the BPY General Partner’s shareholders. A director will be automatically
removed from the board of directors if he or she becomes bankrupt, insolvent or suspends payments to his or her creditors, or becomes
prohibited by law from acting as a director.





85







Action by the Board of Directors



The BPY General Partner’s
board of directors may take action in a duly convened meeting at which a quorum is present or by a written resolution signed by
all directors then holding office. The BPY General Partner’s board of directors will hold a minimum of four meetings per
year. When action is to be taken at a meeting of the board of directors, the affirmative vote of a majority of the votes cast is
required for any action to be taken. Depending on the size of the board of directors, each director shall be entitled to a number
of votes set forth in the bye-laws of the BPY General Partner such that any director designated by the Class A Preferred Unitholder
will have less than 10% of the aggregate number of votes that may be cast by all directors taken together.



Transactions Requiring Approval by
the Governance and Nominating Committee



The BPY General Partner’s
governance and nominating committee has approved a conflicts policy which addresses the approval and other requirements for transactions
in which there is greater potential for a conflict of interest to arise. These transactions include:



| | · | acquisitions by us from, and dispositions
by us to, Brookfield;
| | - | ---------------------------------------------------------------



| | · | the dissolution of our partnership or the
Property Partnership;
| | - | ---------------------------------------------------------------



| | · | any material amendment to our Master Services
Agreement, the Relationship Agreement, our limited partnership agreement or the Property Partnership’s limited partnership
agreement;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | any material service agreement or other
material arrangement pursuant to which Brookfield will be paid a fee, or other consideration other than any agreement or arrangement
contemplated by our Master Services Agreement;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | termination of, or any determinations regarding
indemnification under, our Master Services Agreement, our limited partnership agreement or the Property Partnership’s limited
partnership agreement; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | any other material transaction involving us and Brookfield
| | - | ----------------------------------------------------------



Our conflicts policy
requires the transactions described above to be approved by the BPY General Partner’s governance and nominating committee.
Pursuant to our conflicts policy, the BPY General Partner’s governance and nominating committee may grant approvals for any
of the transactions described above in the form of general guidelines, policies or procedures in which case no further special
approval will be required in connection with a particular transaction or matter permitted thereby. The conflicts policy can be
amended at the discretion of the BPY General Partner’s governance and nominating committee. See Item 7.B. “Major
Shareholders and Related Party Transactions - Related Party Transactions - Relationship with Brookfield - Conflicts of Interest
and Fiduciary Duties”.



Service Contracts



There are no service
contracts with directors that provide benefit upon termination of office or services.



Transactions in which a Director
has an Interest



A director who directly
or indirectly has an interest in a contract, transaction or arrangement with the BPY General Partner, our company or certain of
our affiliates is required to disclose the nature of his or her interest to the full board of directors. Such disclosure may generally
take the form of a general notice given to the board of directors to the effect that the director has an interest in a specified
company or firm and is to be regarded as interested in any contract, transaction or arrangement with that company or firm or its
affiliates. A director may participate in any meeting called to discuss or any vote called to approve the transaction in which
the director has an interest and no transaction approved by the board of directors will be void or voidable solely because the
director was present at or participates in the meeting in which the approval was given provided that the board of directors or
a board committee authorizes the transaction in good faith after the director’s interest has been disclosed or the transaction
is fair to the BPY General Partner and our company at the time it is approved.



Audit Committee



The BPY General Partner’s
board of directors is required to maintain an audit committee that operates pursuant to a written charter. The audit committee
is required to consist solely of independent directors and each member must be financially literate. Not more than 50% of the audit
committee members may be residents of any one jurisdiction (other than Bermuda and any other jurisdiction designated by the board
of directors from time to time).



The audit committee
is responsible for assisting and advising the BPY General Partner’s board of directors with respect to:



| | · | our accounting and financial reporting processes;
| | - | -------------------------------------------------



| | · | the integrity and audits of our financial
statements;
| | - | -----------------------------------------------------



| | · | our compliance with legal and regulatory
requirements; and
| | - | ----------------------------------------------------------



86







| | · | the qualifications, performance and independence
of our independent accountants.
| | - | --------------------------------------------------------------------------------



The audit committee
is responsible for engaging our independent auditors, reviewing the plans and results of each audit engagement with our independent
auditors, approving professional services provided by our independent accountants, considering the range of audit and non-audit
fees charged by our independent auditors and reviewing the adequacy of our internal accounting controls.



Governance and Nominating Committee



The BPY General Partner’s
board of directors is required to maintain at all times a governance and nominating committee that operates pursuant to a written
charter. The governance and nominating committee will consist solely of independent directors and not more than 50% of the governance
and nominating committee members may be residents of any one jurisdiction (other than Bermuda and any other jurisdiction designated
by the board of directors from time to time).



The governance and
nominating committee has approved a conflicts policy which addresses the approval and other requirements for transactions in which
there is a greater potential for a conflict of interest to arise. The governance and nominating committee may be required to approve
any such transactions. See “- Transactions Requiring Approval by the Governance and Nominating Committee”.



The governance and
nominating committee is responsible for approving the appointment by the sitting directors of a person to the office of director
and for recommending a slate of nominees for election as directors by the BPY General Partner’s shareholders. The governance
and nominating committee is responsible for assisting and advising the BPY General Partner’s board of directors with respect
to matters relating to the general operation of the board of directors, our company’s governance, the governance of the BPY
General Partner and the performance of its board of directors. The governance and nominating committee is responsible for reviewing
and making recommendations to the board of directors of the BPY General Partner concerning the remuneration of directors and committee
members and any changes in the fees to be paid pursuant to our Master Services Agreement.



Indemnification and Limitations on Liability



Our Limited Partnership Agreement



The laws of Bermuda
permit the partnership agreement of a limited partnership, such as our company, to provide for the indemnification of a partner,
the officers and directors of a partner and any other person against any and all claims and demands whatsoever, except to the extent
that the indemnification may be held by the courts of Bermuda to be contrary to public policy or to the extent that the laws of
Bermuda prohibit indemnification against personal liability that may be imposed under specific provisions of the laws of Bermuda.
The laws of Bermuda also permit a partnership to pay or reimburse an indemnified person’s expenses in advance of a final
disposition of a proceeding for which indemnification is sought. See Item 10.B. “Additional Information - Memorandum
and Articles of Association - Description of Our Units and Our Limited Partnership Agreement - Indemnification; Limitations on
Liability” for a description of the indemnification arrangements in place under our limited partnership agreement.



The BPY General Partner’s Bye-laws



The laws of Bermuda
permit the bye-laws of an exempted company, such as the BPY General Partner, to provide for the indemnification of its officers,
directors and shareholders and any other person designated by the company against any and all claims and demands whatsoever, except
to the extent that the indemnification may be held by the courts of Bermuda to be contrary to public policy or to the extent that
the laws of Bermuda prohibit indemnification against personal liability that may be imposed under specific provisions of Bermuda
law, such as the prohibition under the Bermuda Companies Act 1981 to indemnify liabilities arising from fraud or dishonesty. The
BPY General Partner’s bye-laws provide that, as permitted by the laws of Bermuda, it will pay or reimburse an indemnified
person’s expenses in advance of a final disposition of a proceeding for which indemnification is sought.



Under the BPY General
Partner’s bye-laws, the BPY General Partner is required to indemnify, to the fullest extent permitted by law, its affiliates,
directors, officers, resident representative, shareholders and employees, any person who serves on a governing body of the Property
Partnership or any of its subsidiaries and certain others against any and all losses, claims, damages, liabilities, costs or expenses
(including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all
claims, demands, actions, suits or proceedings, incurred by an indemnified person in connection with our company’s investments
and activities or in respect of or arising from their holding such positions, except to the extent that the claims, liabilities,
losses, damages, costs or expenses are determined to have resulted from the indemnified person’s bad faith, fraud or willful
misconduct, or in the case of a criminal matter, action that the indemnified person knew to have been unlawful. In addition, under
the BPY General Partner’s bye-laws: (i) the liability of such persons has been limited to the fullest extent permitted
by law and except to the extent that their conduct involves bad faith, fraud or willful misconduct, or in the case of a criminal
matter, action that the indemnified person knew to have been unlawful; and (ii) any matter that is approved by the independent
directors will not constitute a breach of any duties stated or implied by law or equity, including fiduciary duties. The BPY General
Partner’s bye-laws require it to advance funds to pay the expenses of an indemnified person in connection with a matter in
which indemnification may be sought until it is determined that the indemnified person is not entitled to indemnification.





87







Insurance





Our partnership has
obtained insurance coverage under which the directors of the BPY General Partner are insured, subject to the limits of the policy,
against certain losses arising from claims made against such directors by reason of any acts or omissions covered under the policy
in their respective capacities as directors of the BPY General Partner, including certain liabilities under securities laws. The
insurance applies in certain circumstances where we may not indemnify the BPY General Partner’s directors and officers for
their acts or omissions.



6.D.	EMPLOYEES



As at December 31,
2014, our operating entities had approximately 14,000 employees. Our company does not currently have any senior management who
carry out the management and activities of our company. The Service Providers, wholly-owned subsidiaries of Brookfield Asset Management,
provide management services to us pursuant to our Master Services Agreement.



6.E.	SHARE OWNERSHIP



Each of the directors
and officers of the BPY General Partner own less than 1% of our units.



ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



7.A.	MAJOR SHAREHOLDERS



As of the date of
this Form 20-F, there are 255,684,519 limited partnership units of our company outstanding. To our knowledge, as at the date
of this Form 20-F, no person or company, other than Brookfield, Future Fund Board of Guardians, or Future Fund, Partners Limited
and the Class A Preferred Unitholder, beneficially owns or controls or directs, directly or indirectly, more than 5% of our units.
See also the information contained in this Form 20-F under Item 10.B “Additional Information - Memorandum and Articles of
Association - Description of our Units and our Limited Partnership Agreement”.



As of March 11,
2015, 130,693 of our outstanding units were held by 1,371 holders of record in the United States, not including units of
our company held of record by DTC. As of March 11, 2015, DTC was the holder of record of 67,462,617 units.



As of March 11,
2015, 300,892 of our outstanding units were held by 4,274 holders of record in Canada, not including units of our
company held of record by CDS. As of March 11, 2015, CDS was the holder of record of 187,777,364 units.



The following table
presents information regarding the beneficial ownership of our company, as of March 11, 2015, by each person or entity that we
know beneficially owns 5% or more of our company.



|                                                                                                       |  | Units Outstanding |            
|------------------------------------------------------------------------------------------------------ |  | ----------------- | -----------
|Name and Address                                                                                       |  | Units Owned(1)    |            
|Brookfield Asset Management Inc. Suite 300, Brookfield Place, 181 Bay Street Toronto, Ontario, M5J 2T3 |  |                   | 482,797,859
|                                                                                                       |  |                   |            
|Future Fund Board of Guardians Level 43, 120 Collins Street Melbourne VIC 3000, Australia              |  |                   | 12,128,906 
|                                                                                                       |  |                   |            
|Manulife Financial Corporation 200 Bloor Street East Toronto, Ontario M4W 1E5                          |  |                   | 15,338,833 
|                                                                                                       |  |                   |            
|Partners Limited Suite 300, Brookfield Place, 181 Bay Street Toronto, Ontario, M5J 2T3                 |  |                   | 486,411,305
|                                                                                                       |  |                   |            
|Qatar Investment Authority Q-Tel Tower Diplomatic Area Street, West Bay Doha, Qatar                    |  |                   | 70,038,911 



| | (1) | Units Owned includes our limited partnership units, and for Brookfield Asset Management and
Partners Limited, also includes Redemption-Exchange Units, and for Brookfield Asset Management, also includes GP Units and Special
LP Units.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Brookfield beneficially owns 45,249,882 of our units, 138,875 GP Units, 432,649,105
                                                                                   Redemption-Exchange Units and 4,759,997 Special LP Units. Brookfield has a 68% interest in our company assuming the exchange
                                                                                   of the Redemption-Exchange Units and the Exchange LP Units not held by us, and a 61% interest in our company on a
                                                                                   fully-exchanged                                                                                    basis.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Based on information provided on the Schedule 13D filed with the SEC by Future Fund on November
12, 2013, as amended on April 2, 2014. On a fully-exchanged basis, the percentage beneficially owned by Future Fund would be less
than 2%. As disclosed in Future Fund’s Schedule 13D, Future Fund may be deemed to be the beneficial owner of units beneficially
owned by Brookfield and its affiliates, and Future Fund disclaims beneficial ownership of such units.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



88







| | (4) | Based on information provided on the Schedule 13G filed by Manulife on February 11, 2015. On
a fully-exchanged basis, the percentage beneficially owned by Manulife would be less than 2%.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Partners Limited is a corporation whose principal business mandate is to hold shares of Brookfield
Asset Management, directly or indirectly, for the long-term. Partners Limited’s holdings of our company include the Brookfield
Asset Management holdings noted above plus 3,613,446 of our units held directly by its subsidiary, Partners Value Fund Inc.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | Represents ownership on a fully-exchanged basis.
| | --- | ------------------------------------------------



Our major unitholders have the same voting rights as all other
holders of our units.



7.B.	RELATED PARTY TRANSACTIONS



RELATIONSHIP WITH BROOKFIELD



Brookfield Asset Management



Brookfield Asset Management
is a global alternative asset manager with approximately $200 billion in assets under management. It has over a 100-year history
of owning and operating assets with a focus on property, infrastructure, renewable power and private equity. Brookfield has a range
of public and private investment products and services. Brookfield Asset Management is listed on the NYSE under the symbol “BAM”,
on the TSX under the symbol “BAM.A” and on the NYSE Euronext under the symbol “BAMA”.



Brookfield believes
its operating experience is an essential differentiating factor in its past ability to generate significant risk-adjusted returns.
In addition, Brookfield has demonstrated particular expertise in sourcing and executing large-scale multi-faceted transactions
across a wide spectrum of real estate sectors and geographies.



As a global alternative
asset manager, Brookfield brings a strong and proven corporate platform supporting legal, tax, operations oversight, investor reporting,
portfolio administration and other client services functions. Brookfield’s management team is multi-disciplinary, comprising
investment and operations professionals, each with significant expertise in evaluating and executing investment opportunities and
investing on behalf of itself and institutional investors.



We are an affiliate
of Brookfield. We have entered into a number of agreements and arrangements with Brookfield in order to enable us to be established
as a separate entity and pursue our vision of being a leading owner and operator of high quality commercial real estate assets.
While we believe that our ongoing relationship with Brookfield provides us with a unique competitive advantage as well as access
to opportunities that would otherwise not be available to us, we operate very differently from an independent, stand-alone entity.
We describe below this relationship as well as potential conflicts of interest (and the methods for resolving them) and other material
considerations arising from our relationship with Brookfield.



Relationship Agreement



Our company, the Property
Partnership, the Holding Entities, the Service Providers and Brookfield Asset Management have entered into an agreement, referred
to as the Relationship Agreement, that governs aspects of the relationship among them. Pursuant to the Relationship Agreement,
Brookfield Asset Management has agreed that we will serve as the primary entity through which acquisitions of commercial property
will be made by Brookfield Asset Management and its affiliates on a global basis.



In the commercial
property industry, it is common for assets to be owned through consortiums and partnerships of institutional equity investors and
owner/operators such as ourselves. Accordingly, an integral part of our strategy is to pursue acquisitions through arrangements
with institutional investors, strategic partners or financial sponsors and to form partnerships to pursue acquisitions on a specialized
or global basis.



Brookfield Asset Management
has a strong track record of leading such consortiums and partnerships and actively managing underlying assets to improve performance.
Brookfield has also established and manages a number of private investment entities, managed accounts, joint ventures, consortiums,
partnerships and investment funds whose investment objectives include the acquisition of commercial property and Brookfield may
in the future establish similar funds. Nothing in the Relationship Agreement will limit or restrict Brookfield from establishing
or advising these or similar entities or limit or restrict any such entities from carrying out any investment. Brookfield Asset
Management has agreed that it will offer our company the opportunity to take up Brookfield’s share of any investment through
these consortium arrangements or by one of these entities that involves the acquisition of commercial property that is suitable
for us, subject to certain limitations.



Under the terms of
the Relationship Agreement, our company, the Property Partnership and the Holding Entities have acknowledged and agreed that Brookfield
carries on a diverse range of businesses worldwide, including the development, ownership and/or management of commercial property,
and investing (and advising on investing) in commercial property, or loans, debt instruments and other securities with underlying
collateral or exposure to commercial property and that except as explicitly provided in the Relationship Agreement, the Relationship
Agreement does not in any way limit or restrict Brookfield from carrying on its business.



89







Our ability to grow
depends in part on Brookfield identifying and presenting us with acquisition opportunities. Brookfield’s commitment to us
and our ability to take advantage of opportunities is subject to a number of limitations such as our financial capacity, the suitability
of the acquisition in terms of the underlying asset characteristics and its fit with our strategy, limitations arising from the
tax and regulatory regimes that govern our affairs and certain other restrictions. See Item 3.D. “Key Information -
Risk Factors - Risks Relating to Our Relationship with Brookfield”. Under the terms of the Relationship Agreement, our company,
the Property Partnership and the Holding Entities have acknowledged and agreed that, subject to providing us the opportunity to
participate on the basis described above, Brookfield may pursue other business activities and provide services to third parties
that compete directly or indirectly with us. In addition, Brookfield has established or advised, and may continue to establish
or advise, other entities that rely on the diligence, skill and business contacts of Brookfield’s professionals and the information
and acquisition opportunities they generate during the normal course of their activities. Our company, the Property Partnership
and the Holding Entities have acknowledged and agreed that some of these entities may have objectives that overlap with our objectives
or may acquire commercial property that could be considered appropriate acquisitions for us, and that Brookfield may have financial
incentives to assist those other entities over us. If any of the Service Providers determine that an opportunity is not suitable
for us, Brookfield may still pursue such opportunity on its own behalf. Our company, the Property Partnership and the Holding Entities
have further acknowledged and agreed that nothing in the Relationship Agreement will limit or restrict: (i) Brookfield’s
ability to make any investment recommendation or take any other action in connection with its public securities business; (ii) Brookfield
from investing in any loans or debt securities or from taking any action in connection with any loan or debt security notwithstanding
that the underlying collateral comprises or includes commercial property provided that the original purpose of the investment was
not to acquire a controlling interest in such property; or (iii) Brookfield from acquiring or holding an investment of less
than 5% of the outstanding shares of a publicly traded company or from carrying out any other investment in a company or real estate
portfolio where the underlying assets do not principally constitute commercial property. Due to the foregoing, we expect to compete
from time to time with other affiliates of Brookfield Asset Management or other third parties for access to the benefits that we
expect to realize from Brookfield Asset Management’s involvement in our business.



In the event of the
termination of our Master Services Agreement, the Relationship Agreement would also terminate, including Brookfield’s commitments
to provide us with acquisition opportunities, as described above.



Under the Relationship
Agreement, our company, the Property Partnership and the Holding Entities have agreed that none of Brookfield nor any affiliate,
director, officer, employee, contractor, agent, advisor, member, partner, shareholder or other representative of Brookfield, will
be liable to us for any claims, liabilities, losses, damages, costs or expenses (including legal fees) arising in connection with
the business, investments and activities in respect of or arising from the Relationship Agreement, except to the extent that the
claims, liabilities, losses, damages, costs or expenses are determined to have resulted from the person’s bad faith, fraud,
willful misconduct or gross negligence, or in the case of a criminal matter, action that the person knew to have been unlawful.
The maximum amount of the aggregate liability of Brookfield, or any of its affiliates, or of any director, officer, employee, contractor,
agent, advisor, member, partner, shareholder or other representative of Brookfield, will be equal to the amounts previously paid
in the two most recent calendar years by the Service Recipients pursuant to our Master Services Agreement.



Other Services



Brookfield may provide
services to our operating entities which are outside the scope of our Master Services Agreement under arrangements that are on
market terms and conditions and pursuant to which Brookfield will receive fees. The services that may be provided under these arrangements
include financial advisory, property management, facilities management, development, relocation services, construction activities,
marketing or other services.



Preferred Shares of Certain Holding
Entities



Brookfield holds $750
million of Class B and $500 million of Class C redeemable preferred shares of CanHoldco, one of our Holding Entities, which it
received as partial consideration for causing the Property Partnership to acquire substantially all of Brookfield Asset Management’s
commercial property operations. The Class B preferred shares are entitled to receive a cumulative preferential dividend equal to
5.75% of their redemption value as and when declared by the board of directors of CanHoldco until the fifth anniversary of their
issuance, after which the preferred shares will be entitled to receive a cumulative preferential dividend equal to 5.0% plus the
prevailing yield for 5-year U.S. Treasury Notes. CanHoldco may redeem the Class B preferred shares at any time and must redeem
all of the outstanding Class B preferred shares on the tenth anniversary of their issuance. Brookfield has a right of retraction
following the fifth anniversary of the issuance of the Class B preferred shares. The Class C preferred shares are entitled to receive
a cumulative preferential dividend equal to 6.75% of their redemption value as and when declared by the board of directors of CanHoldco.
CanHoldco may redeem the Class C preferred shares at any time and must redeem all of the outstanding Class C preferred shares on
the seventh anniversary of their issuance. Brookfield has a right of retraction following the third anniversary of the issuance
of the Class C preferred shares. The Class B and Class C preferred shares will be entitled to vote with the common shares of CanHoldco
and each class of preferred shares will have an aggregate of 1% of the votes to be cast in respect of CanHoldco. We have agreed
to use our commercially reasonable efforts to, as soon as reasonably practical, issue debt or equity securities or borrow money
from one or more financial institutions or other lenders, on terms reasonably acceptable to us, in an aggregate amount sufficient
to fund the redemption by CanHoldco of the Class C preferred shares. The terms of any such financing may be less favorable to us
than the terms of the Class C preferred shares.



In connection with
the issuance of the Class A Preferred Units, Brookfield has agreed with the Class A Preferred Unitholder that the Class A Preferred
Units will rank pari passuwith CanHoldco’s Class A senior preferred shares, Class B preferred shares and Class C
preferred shares in the payment of dividends, and that this will not prevent CanHoldco from redeeming its preferred shares except
in the event of a dissolution, liquidation or winding-up of CanHoldco, in which case the Class A Preferred Units will rank pari
passuwith CanHoldco’s preferred shares.



In addition, Brookfield
has provided $5 million of working capital to each of CanHoldco and four wholly-owned subsidiaries of other Holding Entities,
for a total of $25 million, through a subscription for preferred shares of such entities. These preferred shares are entitled to
receive a cumulative preferential cash dividend equal to 5% as and when declared by the board of directors of the applicable entity
and are redeemable at the option of the applicable entity, subject to certain limitations, at any time after the twentieth anniversary
of their issuance. The preferred shares will be entitled to vote with the common shares of the applicable entity and will have
an aggregate of 1% of the votes to be cast in respect of the applicable entity.



90







Redemption-Exchange Mechanism



At any time after
April 15, 2015, the holders of Redemption-Exchange Units of the Property Partnership will have the right to require the Property
Partnership to redeem all or a portion of the Redemption-Exchange Units for either (a) cash in an amount equal to the market
value of one of our units multiplied by the number of units to be redeemed (subject to certain adjustments) or (b) such other
amount of cash as may be agreed by the relevant holder and the Property Partnership, subject to our company’s right to acquire
such interests (in lieu of redemption) in exchange for our units. See Item 10.B. “Additional Information - Memorandum
and Articles of Association - Description of the Property Partnership Limited Partnership Agreement - Redemption-Exchange
Mechanism”. Taken together, the effect of the redemption right and the right of exchange is that the holders of Redemption-Exchange
Units will receive our units, or the value of such units, at the election of our company. Should we determine not to exercise our
right of exchange, cash required to fund a redemption of Redemption-Exchange Units will likely be financed by a public offering
of our units.



Registration Rights Agreement



Our company has entered
into a customary registration rights agreement with Brookfield pursuant to which we have agreed that, upon the request of Brookfield,
our company will file one or more registration statements to register for sale, under the U.S. Securities Act of 1933, as amended
or one or more prospectuses to qualify the distribution in Canada, any of our units held by Brookfield (including units of our
company acquired pursuant to the Redemption-Exchange Mechanism). Under the registration rights agreement, our company is not required
to file a U.S. registration statement or a Canadian prospectus unless Brookfield requests that units having a value of at least
$50 million be registered or qualified. In the registration rights agreement, we have agreed to pay expenses in connection with
such registration and sales, except for any underwriting discounts or commissions, which will be borne by the selling unitholder,
and to indemnify Brookfield for material misstatements or omissions in the registration statement and/or prospectus.



Equity Enhancement and Incentive Distributions



Property Special LP,
a wholly-owned subsidiary of Brookfield Asset Management, is entitled to receive equity enhancement distributions and incentive
distributions from the Property Partnership as a result of its ownership of the special limited partnership interest in the Property
Partnership. Property Special LP will receive quarterly equity enhancement distributions equal to 0.3125% of the amount by which
our company’s total capitalization value exceeds an initial reference value determined based on the market capitalization
immediately following the Spin-off, subject to certain adjustments. In addition, Property Special LP will receive incentive distributions
calculated in increments based on the amount by which quarterly distributions on the limited partnership units of the Property
Partnership exceed specified target levels as set forth in the Property Partnership’s limited partnership agreement.



We believe these arrangements
create an incentive for Brookfield to manage our company in a way that helps us achieve our goal of creating value for our unitholders
both through distributions and capital appreciation. For a further explanation of the equity enhancement and incentive distributions,
together with examples of how such amounts are calculated, see Item 10.B. “Additional Information - Memorandum and Articles
of Association - Description of the Property Partnership Limited Partnership Agreement - Distributions”.



Property Special LP
may, at its sole discretion, elect to reinvest equity enhancement distributions and incentive distributions in exchange for Redemption-Exchange
Units.



To the extent that
any Holding Entity or any operating entity pays to Brookfield any comparable performance or incentive distribution, the amount
of any future incentive distributions will be reduced in an equitable manner to avoid duplication of distributions.



General Partner Distributions



Pursuant to our limited
partnership agreement, the BPY General Partner is entitled to receive a general partner distribution equal to 0.2% of the total
distributions of our company.



Special Limited Partner Distributions



Pursuant to the limited
partnership agreement of the Property Partnership, Property Special LP is entitled to receive a distribution from the Property
Partnership equal to a share of the total distributions of the Property Partnership in proportion to Property Special LP’s
percentage interest in the Property Partnership which will be equal to 1% of the total distributions of the Property Partnership.
See Item 10.B. “Additional Information - Memorandum and Articles of Association - Description of the Property Partnership
Limited Partnership Agreement - Distributions”.



Credit Facility



On December 6, 2013,
we entered into a $500 million subordinated credit facility with Brookfield to supplement our liquidity. Under the facility,
we do not pay a commitment fee on any undrawn balance. The size of this facility was increased to $700 million in March 2014 and
to $1 billion in December 2014.



91









Indemnification Arrangements





Subject to certain
limitations, Brookfield and its directors, officers, agents, subcontractors, contractors, delegates, members, partners, shareholders
and employees generally benefit from indemnification provisions and limitations on liability that are included in our limited partnership
agreement, the BPY General Partner’s bye-laws, the Property Partnership’s limited partnership agreement, our Master
Services Agreement and other arrangements with Brookfield. See Item 7.B. “Major Shareholders and Related Party Transactions
- Related Party Transactions - Our Master Services Agreement”, Item 10.B. “Additional Information - Memorandum
and Articles of Association - Description of Our Units and Our Limited Partnership Agreement - Indemnification; Limitations of
Liability” and Item 10.B. “Additional Information - Memorandum and Articles of Association - Description
of the Property Partnership Limited Partnership Agreement - Indemnification; Limitations of Liability”.



Maturity of Class A Preferred Units



The Class A Preferred
Units are exchangeable at the option of the Class A Preferred Unitholder into our units at a price of $25.70 per unit and were
issued on December 4, 2014 in three tranches of $600 million each, with an average dividend yield of 6.5% and maturities of seven,
ten and twelve years. After three years for the seven-year tranche and four years for the ten- and twelve-year tranches, we can
effectively require a holder of Class A Preferred Units to exchange the Class A Preferred Units into our units as long as our units
are trading at or above 125%, 130% and 135%, respectively, of the exchange price. Upon maturity, the Class A Preferred Units that
remain outstanding will be redeemed in exchange for our units valued at the 20-day, volume-weighted average trading price at such
time. To the extent that the market price of our units is less than 80% of the exchange price at maturity, Brookfield has contingently
agreed to acquire the seven-year and ten-year tranches of Class A Preferred Units from the holder of Class A Preferred Units for
the initial issuance price plus accrued and unpaid distributions and to exchange such units for Preferred Units with terms and
conditions substantially similar to the twelve-year tranche. Brookfield has also agreed with the Class A Preferred Unitholder to
grant Brookfield the right to purchase all or any portion of the Class A Preferred Units held by the Class A Preferred Unitholder
a maturity, and to grant the Class A Preferred Unitholder the right to sell all or any portion of the Class A Preferred Unitholders
held by the Class A Preferred Unitholder at maturity, in each case at a price equal to the issue price for such Class A Preferred
Units plus accrued and unpaid dividends.



Conflicts of Interest and Fiduciary
Duties



Our organizational
and ownership structure and strategy involve a number of relationships that may give rise to conflicts of interest between our
company and our unitholders, on the one hand, and Brookfield, on the other hand. In particular, conflicts of interest could arise,
among other reasons, because:



| | · | in originating and recommending acquisition
opportunities, Brookfield has significant discretion to determine the suitability of opportunities for us and to allocate such
opportunities to us or to itself or third parties;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | because of the scale of typical commercial
property acquisitions and because our strategy includes completing acquisitions through consortium or partnership arrangements
with pension funds and other investors, we will likely make co-investments with Brookfield and Brookfield-sponsored funds or Brookfield-sponsored
or co-sponsored consortiums and partnerships involving third party investors to whom Brookfield will owe fiduciary duties, which
it does not owe to us;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the same professionals within Brookfield’s
organization who are involved in acquisitions that are suitable for us are responsible for the consortiums and partnerships referred
to above, as well as having other responsibilities within Brookfield’s broader asset management business. Limits on the availability
of such individuals will likewise result in a limitation on the availability of acquisition opportunities for us;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | there may be circumstances where Brookfield
will determine that an acquisition opportunity is not suitable for us because of the fit with our acquisition strategy, limits
arising due to regulatory or tax considerations, limits on our financial capacity or because of the immaturity of the target assets
and Brookfield is entitled to pursue the acquisition on its own behalf rather than offering us the opportunity to make the acquisition;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | where Brookfield has made an acquisition,
it may transfer it to us at a later date after the assets have been developed or we have obtained sufficient financing;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | our relationship with Brookfield involves
a number of arrangements pursuant to which Brookfield provides various services, access to financing arrangements and originates
acquisition opportunities, and circumstances may arise in which these arrangements will need to be amended or new arrangements
will need to be entered into;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | as certain of our arrangements with Brookfield
were effectively determined by Brookfield in the context of the Spin-off, they may contain terms that are less favorable than those
which otherwise might have been negotiated between unrelated parties;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Brookfield is generally entitled to share
in the returns generated by our operations, which could create an incentive for it to assume greater risks when making decisions
than it otherwise would in the absence of such arrangements;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Brookfield is permitted to pursue other
business activities and provide services to third parties that compete directly with our business and activities without providing
us with an opportunity to participate, which could result in the allocation of Brookfield’s resources, personnel and acquisition
opportunities to others who compete with us;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



92







| | · | Brookfield does not owe our company or our
unitholders any fiduciary duties, which may limit our recourse against it; and
| | - | -------------------------------------------------------------------------------------------------------------------------



| | · | the liability of Brookfield and its directors
is limited under our arrangements with them, and we have agreed to indemnify Brookfield and its directors against claims, liabilities,
losses, damages, costs or expenses which they may face in connection with those arrangements, which may lead them to assume greater
risks when making decisions than they otherwise would if such decisions were being made solely for its own account, or may give
rise to legal claims for indemnification that are adverse to the interests of our unitholders.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



See Item 3.D. “Key
Information - Risk Factors - Risks Relating to Our Relationship with Brookfield - Our organizational and ownership structure,
as well as our contractual arrangements with Brookfield, may create significant conflicts of interest that may be resolved in a
manner that is not in the best interests of our company or the best interests of our unitholders”.



With respect to transactions
in which there may be a conflict of interest, the BPY General Partner may be required to seek the prior approval of its governance
and nominating committee pursuant to a conflicts policy that has been approved by its governance and nominating committee. These
transactions include: (i) acquisitions by us from, and dispositions by us to, Brookfield; (ii) the dissolution of our
partnership or the Property Partnership; (iii) any material amendment to our Master Services Agreement, the Relationship Agreement,
our limited partnership agreement or the Property Partnership’s limited partnership agreement; (iv) any material service
agreement or other material arrangement pursuant to which Brookfield will be paid a fee, or other consideration other than any
agreement or arrangement contemplated by our Master Services Agreement; (v) termination of, or any determinations regarding
indemnification under, our Master Services Agreement, our limited partnership agreement or the Property Partnership’s limited
partnership agreement; and (vi) any other material transaction involving us and Brookfield. Pursuant to our conflicts policy,
the BPY General Partner’s governance and nominating committee may grant prior approvals for any of these transactions in
the form of general guidelines, policies or procedures in which case no further special approval will be required in connection
with a particular transaction or matter permitted thereby. In certain circumstances, these transactions may be related party transactions
for the purposes of, and subject to certain requirements of, Multilateral Instrument 61-101 - Protection of Minority Security Holders
in Special Transactions, or MI 61-101. MI 61-101 provides a number of circumstances in which a transaction between an issuer
and a related party may be subject to valuation and minority approval requirements. See “Canadian Securities Law Exemptions”
below for application of MI 61-101 to our company.



The conflicts policy
states that conflicts be resolved based on the principles of transparency, third-party validation and approvals. The policy recognizes
the benefit to us of our relationship with Brookfield and our intent to pursue a strategy that seeks to maximize the benefits from
this relationship. The policy also recognizes that the principal areas of potential application of the policy on an ongoing basis
are in connection with our acquisitions and our participation in Brookfield led consortiums and partnership arrangements, together
with any management or service arrangements entered into in connection therewith or the ongoing operations of the underlying operating
entities.



In general, the conflicts
policy provides that acquisitions that are carried out jointly by us and Brookfield, or in the context of a Brookfield-led or co-led
consortium or partnership be carried out on the basis that the consideration paid by us be no more, on a per share or proportionate
basis, than the consideration paid by Brookfield or other participants, as applicable. The policy also provides that any fees or
carried interest payable in respect of our proportionate investment, or in respect of an acquisition made solely by us, must be
credited in the manner contemplated by the Property Partnership’s limited partnership agreement, where applicable, or that
such fees or carried interest must either have been negotiated with another arm’s length participant or otherwise demonstrated
to be on market terms (or better). The policy generally provides that if the acquisition involves the purchase by us of an asset
from Brookfield, or the participation in a transaction involving the purchase by us and Brookfield of different assets, that a
fairness opinion or, in some circumstances, a valuation or appraisal by a qualified expert be obtained. These requirements provided
for in the conflicts policy are in addition to any disclosure, approval, or valuation requirements that may arise under applicable
law.



Our limited partnership
agreement contains various provisions that modify the fiduciary duties that might otherwise be owed to us and our unitholders.
These duties include the duties of care and loyalty. In the absence of provisions in our limited partnership agreement to the contrary,
the duty of loyalty would generally prohibit the BPY General Partner from taking any action or engaging in any transaction as to
which it has a conflict of interest. Our limited partnership agreement prohibits our limited partners from advancing claims that
otherwise might raise issues as to compliance with fiduciary duties or applicable law. For example, the agreement provides that
the BPY General Partner and its affiliates do not have any obligation under our limited partnership agreement, or as a result of
any duties stated or implied by law or equity, including fiduciary duties, to present business or investment opportunities to our
company, the Property Partnership, any Holding Entity or any other holding entity established by us. It also allows affiliates
of the BPY General Partner to engage in activities that may compete with us or our activities. In addition, the agreement permits
the BPY General Partner to take into account the interests of third parties, including Brookfield, when resolving conflicts of
interest.



These modifications
to the BPY General Partner board of director’s fiduciary duties are detrimental to our unitholders because they restrict
the remedies available for actions that might otherwise constitute a breach of fiduciary duty and permit conflicts of interest
to be resolved in a manner that is not always in the best interests of our company or the best interests of our unitholders. We
believe it is necessary to modify the fiduciary duties that might otherwise be owed to us and our unitholders, as described above,
due to our organizational and ownership structure and the potential conflicts of interest created thereby. Without modifying those
duties, the ability of the BPY General Partner to attract and retain experienced and capable directors and to take actions that
we believe are necessary for the carrying out of our business would be unduly limited due to their concern about potential liability.
See Item 3.D. “Key Information - Risk Factors - Risks Relating to Our Relationship with Brookfield - Our Master Services
Agreement and our other arrangements with Brookfield do not impose on Brookfield any fiduciary duties to act in the best interests
of our unitholders.”



93







Canadian Securities Law Exemptions



MI 61-101 provides
a number of circumstances in which a transaction between an issuer and a related party may be subject to valuation and minority
approval requirements. An exemption from such requirements is available when the fair market value of the transaction is not more
than 25% of the market capitalization of the issuer. Our company has been granted exemptive relief from the requirements of MI
61-101 that, subject to certain conditions, permits it to be exempt from the minority approval and valuation requirements for transactions
that would have a value of less than 25% of our market capitalization, if the indirect equity interest in our company, which is
held in the form of Redemption-Exchange Units, or in the form of non-voting Exchange LP Units, is included in the calculation of
our company’s market capitalization. As a result, the 25% threshold, above which the minority approval and valuation requirements
apply, is increased to include the approximate 63% indirect interest in our company held in the form of Redemption-Exchange Units.
See Item 7.B. “Major Shareholders and Related Party Transactions - Related Party Transactions - Relationship with
Brookfield - Conflicts of Interest and Fiduciary Duties” above and Item 10.B “Memorandum and Articles of Association
– Description of Our Units and Our Limited Partnership Agreement – Exchange LP Units and the Support Agreement”
below.



Although our company
is a reporting issuer in Canada, it is an “SEC foreign issuer” under Canadian securities regulations and exempt from
certain Canadian securities laws relating to continuous disclosure obligations and proxy solicitation as long as we comply with
certain reporting requirements applicable in the United States, provided that the relevant documents filed with the SEC are filed
in Canada and sent to our company’s unitholders in Canada to the extent and in the manner and within the time required by
applicable U.S. requirements. Therefore, there may be less publicly available information in Canada about us than is regularly
published by or about other reporting issuers in Canada. Our company has undertaken to the provincial and territorial securities
regulatory authorities in Canada that to the extent it complies with the foreign private issuer disclosure regime under U.S. securities
law:



| | · | our company will only rely on the exemptions
in Part 4 of National Instrument 71-102 - Continuous Disclosure and Other Exemptions Relating to Foreign Issuers;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | our company will not rely on any exemption
from the foreign private issuer disclosure regime;
| | - | ---------------------------------------------------------------------------------------------



| | · | our company will file its financial statements
pursuant to Part 4 of National Instrument 51-102 - Continuous Disclosure Obligations, or NI 51-102, except that our company does
not have to comply with the conditions in section 4.2 of NI 51-102 if it files such financial statements on or before the date
that it is required to file its Form 20-F with the SEC;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | our company will file an interim financial
report as set out in Part 4 of NI 51-102 and the management’s discussion and analysis as set out in Part 5 of NI 51-102 for
each period commencing on the first day of the financial year and ending nine, six, or three months before the end of the financial
year;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | our company will file a material change
report as set out in Part 7 of NI 51-102 in respect of any material change in the affairs of our company that is not reported or
filed by our company on SEC Form 6-K; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | our company will include in any prospectus
filed by our company financial statements or other information about any acquisition that would have been or would be a significant
acquisition for the purposes of Part 8 of NI 51-102 that our company has completed or has progressed to a state where a reasonable
person would believe that the likelihood of our company completing the acquisition is high if the inclusion of the financial statements
is necessary for the prospectus to contain full, true and plain disclosure of all materials facts relating to the securities being
distributed. The requirement to include financial statements or other information will be satisfied by including or incorporating
by reference (a) the financial statements or other information as set out in Part 8 of NI 51-102, or (b) satisfactory alternative
financial statements or other information, unless at least nine months of the operations of the acquired business or related businesses
are incorporated into our company’s current annual financial statements included or incorporated by reference in the prospectus.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



OUR MASTER SERVICES AGREEMENT



The Service Recipients
have entered into a Master Services Agreement pursuant to which the Service Providers have agreed to provide or arrange for other
Service Providers to provide management and administration services to our company and the other Service Recipients.



The following is a
summary of certain provisions of our Master Services Agreement and is qualified in its entirety by reference to all of the provisions
of the agreement. Because this description is only a summary of our Master Services Agreement, it does not necessarily contain
all of the information that you may find useful. We therefore urge you to review our Master Services Agreement in its entirety.
Our Master Services Agreement is available electronically on the website of the SEC atwww.sec.gov and on our SEDAR
profile atwww.sedar.com and is available to our unitholders as described under Item 10.C. “Additional
Information - Material Contracts” and Item 10.H. “Documents on Display”.



Appointment of the Service Providers
and Services Rendered



Under our Master Services
Agreement, the Service Recipients have appointed the Service Providers, as the Service Providers, to provide or arrange for the
provision by an appropriate Service Provider of the following services:



| | · | supervising the carrying out of all day-to-day
management, secretarial, accounting, banking, treasury, administrative, liaison, representative, regulatory and reporting functions
and obligations;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



94







| | · | providing overall strategic advice to the
Holding Entities including advising with respect to the expansion of their business into new markets;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------



| | · | supervising the establishment and maintenance
of books and records;
| | - | -------------------------------------------------------------------



| | · | identifying and recommending to the Holding
Entities acquisitions or dispositions from time to time and, where requested to do so, assisting in negotiating the terms of such
acquisitions or dispositions;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | recommending and, where requested to do
so, assisting in the raising of funds whether by way of debt, equity or otherwise, including the preparation, review or distribution
of any prospectus or offering memorandum in respect thereof and assisting with communications support in connection therewith;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | recommending to the Holding Entities suitable
candidates to serve on the boards of directors or the equivalent governing bodies of our operating entities;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | making recommendations with respect to the
exercise of any voting rights to which the Holding Entities are entitled in respect of our operating entities;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | making recommendations with respect to the
payment of dividends by the Holding Entities or any other distributions by the Service Recipients, including distributions by our
company to our unitholders;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | monitoring and/or oversight of the applicable
Service Recipient’s accountants, legal counsel and other accounting, financial or legal advisors and technical, commercial,
marketing and other independent experts, and managing litigation in which a Service Recipient is sued or commencing litigation
after consulting with, and subject to the approval of, the relevant board of directors or its equivalent;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | attending to all matters necessary for any
reorganization, bankruptcy proceedings, dissolution or winding up of a Service Recipient, subject to approval by the relevant board
of directors or its equivalent;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | supervising the making of all tax elections,
determinations and designations, the timely calculation and payment of taxes payable and the filing of all tax returns due, by
each Service Recipient;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | supervising the preparation of the Service
Recipients’ annual consolidated financial statements, quarterly interim financial statements and other public disclosure;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | making recommendations in relation to and
effecting the entry into insurance of each Service Recipient’s assets, together with other insurances against other risks,
including directors and officers insurance as the relevant Service Provider and the relevant board of directors or its equivalent
may from time to time agree;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | arranging for individuals to carry out the
functions of principal executive, accounting and financial officers for our company only for purposes of applicable securities
laws;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | providing individuals to act as senior officers
of the Holding Entities as agreed from time to time, subject to the approval of the relevant board of directors or its equivalent;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | providing advice, when requested, to the
Service Recipients regarding the maintenance of compliance with applicable laws and other obligations; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------



| | · | providing all such other services as may
from time to time be agreed with the Service Recipients that are reasonably related to the Service Recipient’s day-to-day
operations.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Service Providers’
activities are subject to the supervision of the board of directors or equivalent governing body of the BPY General Partner and
of each of the other Service Recipients, as applicable. The relevant governing body remains responsible for all investment and
divestment decisions made by the Service Recipient.



Any Service Provider
may, from time to time, appoint an affiliate of Brookfield to act as a new Service Provider under our Master Services Agreement,
effective upon the execution of a joinder agreement by the new Service Provider.



Management Fee



Pursuant to our Master
Services Agreement, we pay a base management fee to the Service Providers equal to $12.5 million per quarter subject to an annual
escalation by a specified inflation factor. For any quarter in which the BPY General Partner determines that there is insufficient
available cash to pay the base management fee as well as the next regular distribution on our units, the Service Recipients may
elect to pay all or a portion of the base management fee in our units or Redemption-Exchange Units, subject to certain conditions.



95







Reimbursement of Expenses and Certain
Taxes



We will also reimburse
the Service Providers for any out-of-pocket fees, costs and expenses incurred in the provision of the management and administration
services, including those of any third party. However, the Service Recipients are not required to reimburse the Service Providers
for the salaries and other remuneration of their management, personnel or support staff who carry out any services or functions
for such Service Recipients or overhead for such persons.



The relevant Service
Recipient will reimburse the Service Providers for all other out-of-pocket fees, costs and expenses incurred in connection with
the provision of the services including those of any third party. Such out-of-pocket fees, costs and expenses are expected to include,
among other things: (i) fees, costs and expenses relating to any debt or equity financing; (ii) fees, costs and expenses
incurred in connection with the general administration of any Service Recipient in respect of services; (iii) taxes, licenses
and other statutory fees or penalties levied against or in respect of a Service Recipient; (iv) amounts owed by the Service
Providers under indemnification, contribution or similar arrangements; (v) fees, costs and expenses relating to our financial
reporting, regulatory filings and investor relations and the fees, costs and expenses of agents, advisors and other persons who
provide services to or on behalf of a Service Recipient; and (vi) any other fees, costs and expenses incurred by the Service
Providers that are reasonably necessary for the performance by the Service Providers of their duties and functions under our Master
Services Agreement.



In addition, the Service
Recipients are required to pay all fees, costs and expenses incurred in connection with the investigation, acquisition, holding
or disposal of any asset or business that is made or that is proposed to be made by us. Such additional fees, expenses and costs
represent out-of-pocket costs associated with investment activities that will be undertaken pursuant to our Master Services Agreement.



The Service Recipients
are also required to pay or reimburse the Service Providers for all sales, use, value added, goods and services, harmonized sales,
withholding or other taxes or customs duties or other governmental charges levied or imposed by reason of our Master Services Agreement
or any agreement it contemplates, other than income taxes, corporation taxes, capital taxes or other similar taxes payable by the
Service Providers, which are personal to the Service Providers.



Assignment



Our Master Services
Agreement may not be assigned by the Service Providers without the prior written consent of our company except that (i) any
Service Provider may subcontract or arrange for the provision of services by another Service Provider, provided that the Service
Providers remain liable under the agreement, and (ii) any of the Service Providers may assign the agreement to an affiliate
or to a person that is its successor by way of merger, amalgamation or acquisition of the business of the Service Provider.



Termination



Our Master Services
Agreement continues in perpetuity until terminated in accordance with its terms. However, the Service Recipients may terminate
our Master Services Agreement upon written notice of termination from the BPY General Partner to the Service Providers if any of
the following occurs:



| | · | any of the Service Providers defaults in
the performance or observance of any material term, condition or covenant contained in the agreement in a manner that results in
material harm to the Service Recipients and the default continues unremedied for a period of 60 days after written notice
of the breach is given to such Service Provider;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | any of the Service Providers engages in
any act of fraud, misappropriation of funds or embezzlement against any Service Recipient that results in material harm to the
Service Recipients;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | any of the Service Providers is grossly
negligent in the performance of its obligations under the agreement and such gross negligence results in material harm to the Service
Recipients; or
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | certain events relating to the bankruptcy
or insolvency of each of the Service Providers.
| | - | -----------------------------------------------------------------------------------------



The Service Recipients
have no right to terminate for any other reason, including if any of the Service Providers or Brookfield experiences a change of
control. The BPY General Partner may only terminate our Master Services Agreement on behalf of our company with the prior unanimous
approval of the BPY General Partner’s independent directors.



Our Master Services
Agreement expressly provides that our Master Services Agreement may not be terminated by the BPY General Partner due solely to
the poor performance or the underperformance of any of our operations.



The Service Providers
may terminate our Master Services Agreement upon written notice of termination to the BPY General Partner if any Service Recipient
defaults in the performance or observance of any material term, condition or covenant contained in the agreement in a manner that
results in material harm to the Service Providers and the default continues unremedied for a period of 60 days after written
notice of the breach is given to the Service Recipient. The Service Providers may also terminate our Master Services Agreement
upon the occurrence of certain events relating to the bankruptcy or insolvency of the Service Recipients.





96







If our Master Services
Agreement is terminated, the Relationship Agreement and any of Brookfield Asset Management’s obligations under the Relationship
Agreement will also terminate.



Indemnification and Limitations on Liability



Under our Master Services
Agreement, the Service Providers have not assumed and do not assume any responsibility other than to provide or arrange for the
provision of the services called for thereunder in good faith and will not be responsible for any action that the Service Recipients
take in following or declining to follow the advice or recommendations of the Service Providers. In addition, under our Master
Services Agreement, the Service Providers and the related indemnified parties will not be liable to the Service Recipients for
any act or omission, except for conduct that involved bad faith, fraud, willful misconduct, gross negligence or in the case of
a criminal matter, conduct that the indemnified person knew was unlawful. The maximum amount of the aggregate liability of the
Service Providers or any of their affiliates, or of any director, officer, agent, subcontractor, contractor, delegate, member,
partner, shareholder, employee or other representative of the Service Providers or any of their affiliates, will be equal to the
amounts previously paid by the Service Recipients in respect of services pursuant to our Master Services Agreement in the two most
recent calendar years. The Service Recipients have agreed to indemnify the Service Providers, their affiliates, directors, officers,
agents, subcontractors, delegates, members, partners, shareholders and employees to the fullest extent permitted by law from and
against any claims, liabilities, losses, damages, costs or expenses (including legal fees) incurred by an indemnified person or
threatened in connection with our respective businesses, investments and activities or in respect of or arising from our Master
Services Agreement or the services provided by the Service Providers, except to the extent that the claims, liabilities, losses,
damages, costs or expenses are determined to have resulted from the indemnified person’s bad faith, fraud or willful misconduct,
gross negligence or in the case of a criminal matter, action that the indemnified person knew to have been unlawful.



Outside Activities



Our Master Services
Agreement does not prohibit the Service Providers or their affiliates from pursuing other business activities or providing
services to third parties that compete directly or indirectly with us.



VOTING AGREEMENTS



Our company and Brookfield
have determined that it is advisable for our company to have control over the entities through which we hold certain of our operating
entities, or the Specified Entities, including certain of our investments by private equity funds. Accordingly, our company has
entered into voting agreements to provide us with voting rights over the Specified Entities.



Pursuant to the voting
agreements, voting rights with respect to any of the Specified Entities will be voted in accordance with the direction of our company
or one of the Holding Entities with respect to certain matters, typically including: (i) the election of directors; (ii) any
sale of all or substantially all of its assets; (iii) any merger, amalgamation, consolidation, business combination or other
material corporate transaction, except in connection with any internal reorganization that does not result in a change of control;
(iv) any plan or proposal for a complete or partial liquidation or dissolution, or any reorganization or any case, proceeding
or action seeking relief under any existing laws or future laws relating to bankruptcy or insolvency; (v) any amendment to
its governing documents; or (vi) any commitment or agreement to do any of the foregoing.



INDEBTEDNESS OF DIRECTORS AND EXECUTIVE
OFFICERS



To the knowledge of
our company, no current or former director, officer or employee of our company, nor any associate or affiliate of any of them,
is or was indebted to our company at any time since its formation.



The aggregate indebtedness
to Brookfield Office Properties (one of our operating entities) or its subsidiaries of all officers, directors and employees and
former officers, directors and employees of Brookfield Office Properties and its subsidiaries is C$698,726. No loans have been
extended by Brookfield Office Properties since July 30, 2002 to directors, executives or senior officers of Brookfield Office
Properties. Richard B. Clark, the former CEO of Brookfield Office Properties, has an outstanding non-interest bearing loan
from Brookfield Office Properties of C$698,726. The largest amount outstanding of such loan during the 12 months ended December 31,
2014 was C$698,726. Mr. Clark’s securities purchased with the loan are held as security for the loan.



INTEREST OF MANAGEMENT AND OTHERS IN
MATERIAL TRANSACTIONS



Except as disclosed
in this Form 20-F, no director or senior officer of the BPY General Partner or the Service Providers or other insider of our company,
nor any associate or affiliate of the foregoing persons, has any existing or potential material conflict of interest with our company,
the Property Partnership or any of its subsidiaries or interest in any material transaction involving our company, the Property
Partnership or any of its subsidiaries.



7.C.	INTERESTS OF EXPERTS AND
COUNSEL



Not applicable.





97









ITEM 8.	FINANCIAL INFORMATION



8.A.	CONSOLIDATED STATEMENTS AND
OTHER FINANCIAL INFORMATION



See Item 18. “Financial Statements”.



8.B.	SIGNIFICANT CHANGES



In February 2015, the Board of Directors of the BPY General
Partner announced a 6% increase in our quarterly distribution from $0.25 to $0.265 per unit ($1.06 per unit on an annual basis).



In December 2014, the Canary JV made a final cash offer for
the acquisition of the ordinary shares of Songbird, the parent company of Canary Wharf, for £3.50 per share. The Canary JV
acquired more than 90% of the outstanding Songbird shares and has commenced a procedure to squeeze out the remaining Songbird shareholders.
In addition, in February 2015, the Canary JV made a cash offer for the acquisition of the shares of Canary Wharf not owned by Songbird
for £6.45 per share. In connection with this offer, the Canary JV acquired or agreed to acquire more than 90% of the outstanding
Canary Wharf shares and has commenced a procedure to squeeze out the remaining Canary Wharf shareholders. These squeeze out procedures
are expected to be completed in April 2015, after which the Canary JV will own all of the outstanding shares of Songbird and Canary
Wharf.



In March 2015, our partnership acquired the remaining 40% equity
interest in Candor Office Parks for total consideration of approximately $196 million.



ITEM 9.	THE OFFER AND LISTING



9.A.	OFFER AND LISTING DETAILS



The following table sets forth the annual
high and low prices for our units on the TSX and NYSE for the periods indicated since when-issued trading commenced on April 15,
2013:



|                             |  | Units on TSX |       |  | Units on NYSE | 
|---------------------------- |  | ------------ | ----- |  | ------------- | 
|                             |  | High         |       |  | Low           | 
|                             |  | (C$)         |       |  | (C$)          | 
|Year Ended December 31, 2013 |  |              | 24.70 |  |               | 
|Year Ended December 31, 2014 |  |              | 27.55 |  |               | 



The following table
sets forth the quarterly high and low prices for the Units on the TSX and NYSE for the periods indicated for the past two financial
years:





|                                     |  | Units on TSX |       |  | Units on NYSE | 
|------------------------------------ |  | ------------ | ----- |  | ------------- | 
|                                     |  | High         |       |  | Low           | 
|                                     |  | (C$)         |       |  | (C$)          | 
|April 15, 2013 to June 30, 2013      |  |              | 24.70 |  |               | 
|July 1, 2013 to September 30, 2013   |  |              | 22.25 |  |               | 
|October 1, 2013 to December 31, 2013 |  |              | 21.88 |  |               | 
|January 1, 2014 to March 31, 2014    |  |              | 22.26 |  |               | 
|April 1, 2014 to June 30, 2014       |  |              | 22.77 |  |               | 
|July 1, 2014 to September 30, 2014   |  |              | 23.90 |  |               | 
|October 1, 2014 to December 31, 2014 |  |              | 27.55 |  |               | 
|January 1, 2015 to March 11, 2015    |  |              | 33.12 |  |               | 



The following table
sets forth, for the periods indicated, the market price ranges and trading volumes of the Units on the TSX and NYSE for the most
recent six months:



|                            |  | Units on TSX |       |  | Units on NYSE | 
|--------------------------- |  | ------------ | ----- |  | ------------- | 
|                            |  | High         |       |  | Low           | 
|                            |  | (C$)         |       |  | (C$)          | 
|2014                        |  |              |       |  |               | 
|October                     |  |              | 25.78 |  |               | 
|November                    |  |              | 27.17 |  |               | 
|December                    |  |              | 27.55 |  |               | 
|                            |  |              |       |  |               | 
|2015                        |  |              |       |  |               | 
|January                     |  |              | 31.11 |  |               | 
|February                    |  |              | 33.12 |  |               | 
|March (March 1 to March 11) |  |              | 31.75 |  |               | 





98









9.B.	PLAN OF DISTRIBUTION



Not applicable.



9.C.	MARKETS



Our units are listed on the NYSE and TSX
under the symbols “BPY” and “BPY.UN”, respectively.



9.D.	SELLING SHAREHOLDERS



Not applicable.



9.E.	DILUTION



Not applicable.



9.F.	EXPENSES OF THE ISSUE



Not applicable.



ITEM 10.	ADDITIONAL INFORMATION



10.A.	SHARE CAPITAL



Not applicable.



10.B.	MEMORANDUM AND ARTICLES
OF ASSOCIATION



DESCRIPTION OF OUR UNITS AND OUR LIMITED PARTNERSHIP AGREEMENT



The following is a
description of the material terms of our units and our limited partnership agreement, and is qualified in its entirety by reference
to all of the provisions of our limited partnership agreement. Because this description is only a summary of the terms of our units
and our limited partnership agreement, it does not contain all of the information that you may find useful. For more complete information,
you should read our limited partnership agreement. The limited partnership agreement is available electronically on the website
of the SEC atwww.sec.gov and on our SEDAR profile atwww.sedar.com and is available to our holders
as described under Item 10.C. “Additional Information - Material Contracts” and Item 10.H. “Documents
on Display”.



Formation and Duration



Our company is a Bermuda
exempted limited partnership registered under the Bermuda Limited Partnership Act 1883 and the Bermuda Exempted Partnerships Act
1992. Our company has a perpetual existence and will continue as a limited liability partnership unless terminated or dissolved
in accordance with our limited partnership agreement. Our partnership interests consist of our units, which represent limited partnership
interests in our company, and any additional partnership interests representing limited partnership interests that we may issue
in the future as described below under “- Issuance of Additional Partnership Interests”.

Management



As required by law,
our limited partnership agreement provides for the management and control of our company by a general partner, the BPY General
Partner.



Nature and Purpose



Under our limited
partnership agreement, the purpose of our company is to: acquire and hold interests in the Property Partnership and, subject to
the approval of the BPY General Partner, interests in any other entity; engage in any activity related to the capitalization and
financing of our company’s interests in such entities; serve as the managing general partner of the Property Partnership
and execute and deliver, and perform the functions of a managing general partner of the Property Partnership specified in, the
limited partnership agreement of the Property Partnership; and engage in any other activity that is incidental to or in furtherance
of the foregoing and that is approved by the BPY General Partner and that lawfully may be conducted by a limited partnership organized
under the Bermuda Limited Partnership Act 1883, the Bermuda Exempted Partnerships Act 1992 and our limited partnership agreement.



Our Units



Our units are non-voting
limited partnership interests in our company. A holder of our units does not hold a share of a body corporate. As holders of units
of our company, holders will not have statutory rights normally associated with ownership of shares of a corporation including,
for example, the right to bring “oppression” or “derivative” actions. The rights of holders of units of
our company are based on our limited partnership agreement, amendments to which may be proposed only by or with the consent of
the BPY General Partner as described below under “- Amendment of Our Limited Partnership Agreement”.



99







Units of our company
represent a fractional limited partnership interest in our company and do not represent a direct investment in our company’s
assets and should not be viewed by investors as direct securities of our company’s assets. Holders of our units are not entitled
to the withdrawal or return of capital contributions in respect of our units, except to the extent, if any, that distributions
are made to such holders pursuant to our limited partnership agreement or upon the liquidation of our company as described below
under “- Liquidation and Distribution of Proceeds” or as otherwise required by applicable law. Except to the extent
expressly provided in our limited partnership agreement, a holder of our units does not have priority over any other holder of
our units, either as to the return of capital contributions or as to profits, losses or distributions.



Holders of our units
do not have the ability to call meetings of unitholders, and holders of our units are not entitled to vote on matters relating
to our company except as described below under “- No Management or Control; No Voting”. Any action that may be taken
at a meeting of unitholders may be taken without a meeting if written consent is solicited by or on behalf of the BPY General Partner
and it receives approval of not less than the minimum percentage of support necessary to authorize or take such action at a meeting
as described below under “- Meetings”.



Exchange LP Units and the Support Agreement



In connection with
the acquisition of Brookfield Office Properties, Canadian residents had the election to receive in exchange for their common shares
an Exchange LP Unit instead of our units, which allows for full or partial deferral of capital gains for Canadian federal income
tax purposes. Holders of Exchange LP Units are entitled to receive distributions economically equivalent to the distributions,
if any, paid from time to time by us on our units. Exchange LP Units are not transferrable, except upon the death of a holder.



Holders of Exchange
LP Units are entitled at any time to retract (i.e., to require Exchange LP to redeem) any or all Exchange LP Units held by them
and to receive in exchange one of our units, plus the full amount of all declared and unpaid distributions on the Exchange LP Units
and all distributions declared on one of our units that have not yet been declared or paid on the Exchange LP Units, or the Distribution
Amount, if any. Instead of Exchange LP redeeming the retracted units, we have a call right to purchase all but not less than all
of the units covered by the retraction request.



Exchange LP has the
right, commencing on the seventh anniversary of the initial take-up date of the Offer, to redeem all of the then outstanding Exchange
LP Units for a purchase price equal to one of our units for each outstanding Exchange LP Unit plus the Distribution Amount, if
any. The redemption date may be accelerated if certain conditions are met. As an alternative to Exchange LP exercising its redemption
right, we can require that each holder of Exchange LP Units sell all the Exchange LP Units held by such holder to us on the redemption
date upon payment by us to such holder of the purchase price for such Exchange LP Units.



Under the Support
Agreement between us and Exchange LP, we have covenanted that, so long as such Exchange LP Units not owned by us or our subsidiaries
are outstanding, we will, among other things: (a) not declare or pay any distribution on our units unless (i) on the same day Exchange
LP declares or pays, as the case may be, an equivalent distribution on the Exchange LP Units and (ii) Exchange LP has sufficient
money to pay such distribution; (b) take actions reasonably necessary to ensure that the declaration date, record date and payment
date for distributions on the Exchange LP Units are the same as those for any corresponding distributions on our units; (c) take
all actions reasonably necessary to enable Exchange LP to pay the liquidation amount, the retraction price or the redemption price
to the holders of the Exchange LP Units in the event of a liquidation, dissolution or winding up of Exchange LP, a retraction request
by a holder of Exchange LP Units or a redemption of Exchange LP Units, as the case may be.



The Support Agreement
also provides that, without the prior approval of Exchange LP and the holders of Exchange LP Units, we will not distribute our
units or rights to subscribe for our units or other property or assets to all or substantially all of our holders, change any of
the rights, privileges or other terms of our units, or change the then outstanding number of our units into a lesser or greater
number, unless the same or an equivalent distribution on, or change to, the Exchange LP Units is made simultaneously. In the event
of any proposed cash offer, share exchange offer, issuer bid, take-over bid or similar transaction affecting our units, we and
Exchange LP will use reasonable best efforts to take all actions necessary or desirable to enable holders of Exchange LP Units
to participate in such transaction to the same extent and on an economically equivalent basis as our holders.



The foregoing is a
summary of certain of the material terms of the Exchange LP Units, as set out in the limited partnership agreement of Exchange
LP, and the Support Agreement and is qualified in its entirety by reference to the full text of the limited partnership agreement
of Exchange LP and the Support Agreement, which are available electronically on the website of the SEC atwww.sec.gov
and on our SEDAR profile atwww.sedar.com .



Class A Preferred Units and Redemption-Exchange
Units



The Class A Preferred
Units and Redemption-Exchange Units are exchangeable into our units in accordance with the Preferred Unit Exchange Mechanism and
the Redemption-Exchange Mechanism, respectively.



Distribution Reinvestment Plan



We have a distribution
reinvestment plan for holders of our units resident in Canada. We may in the future expand our distribution reinvestment plan to
include holders of our units resident in the United States. The Property Partnership also has a distribution reinvestment
plan. Holders of our units who are not resident in Canada or the United States may participate in the distribution reinvestment
plan provided that there are not any laws or governmental regulations that may limit or prohibit them from doing so. The following
is a summary of the principal terms of our company’s distribution reinvestment plan.



100







Pursuant to the distribution
reinvestment plan, holders of our units can elect to have distributions paid on units held by them automatically reinvested in
additional units in accordance with the terms of the plan. Distributions to be reinvested in our units under the distribution reinvestment
plan are reduced by the amount of any applicable withholding tax.



Distributions due
to plan participants are paid to the plan agent for the benefit of the plan participants and, if a plan participant has elected
to have his or her distributions automatically reinvested, or applied, on behalf of such plan participant to the purchase of additional
units, such purchases will be made from our company on the distribution date at a price per unit calculated by reference to the
volume weighted average of the trading price for our units on the NYSE for the five trading days immediately preceding the date
the relevant distribution is paid by our company.



As soon as reasonably
practicable after each distribution payment date, a statement of account will be mailed to each participant setting out the amount
of the relevant cash distribution reinvested, the price of each unit purchased, the number of units purchased under the distribution
reinvestment plan on the distribution payment date and the total number of units, computed to four decimal places, held for the
account of the participant under the distribution reinvestment plan (or, in the case of beneficial holders, CDS Clearing and Depository
Services Inc., or CDS, will receive such statement on behalf of the beneficial holders participating in the plan). While our
company does not issue fractional units, a plan participant’s entitlement to units purchased under the distribution reinvestment
plan may include a fraction of a unit and such fractional units shall accumulate. A cash adjustment for any fractional units will
be paid by the plan agent upon the withdrawal from or termination by a plan participant of his or her participation in the distribution
reinvestment plan or upon termination of the distribution reinvestment plan at a price per unit based upon the closing price for
our units on the NYSE on the trading day immediately preceding such withdrawal or termination. A registered holder may, at any
time, obtain unit certificates for any number of whole units held for the participant’s account under the plan by notifying
the plan agent. Certificates for units acquired under the plan will not be issued to participants unless specifically requested.
Prior to pledging, selling or otherwise transferring units held for a participant’s account (except for sale of our units
through the plan agent), a registered holder must request that his or her units be electronically transferred to his or her brokerage
account or a unit certificate be issued. The automatic reinvestment of distributions under the plan will not relieve participants
of any income tax obligations applicable to such distributions. No brokerage commissions are payable in connection with the purchase
of our units under the distribution reinvestment plan and all administrative costs are borne by our company.



Unitholders can terminate
their participation in the distribution reinvestment plan by providing, or by causing to be provided, notice to the plan agent.
Such notice, if actually received by the plan agent no later than five business days prior to a record date, will have effect in
respect of the distribution to be made as of such date. Thereafter, distributions to such unitholders will be in cash. In addition,
unitholders may request that all or part of their units be sold. When our units are sold through the plan agent, a holder will
receive the proceeds less a handling charge and any brokerage trading fees. Our company is able to terminate the distribution reinvestment
plan, in its sole discretion, upon notice to the plan participants and the plan agent, but such action will have no retroactive
effect that would prejudice a participant’s interest. Our company is also able to amend, modify or suspend the distribution
reinvestment plan at any time in its sole discretion, provided that our company, through the plan agent, gives notice of any amendment,
modification or suspension to the distribution reinvestment plan that in our company’s opinion may materially prejudice participants.



The Property Partnership
has a corresponding distribution reinvestment plan in respect of distributions made to our company and to holders of the Redemption-Exchange
Units. Our company does not intend to reinvest distributions it receives from the Property Partnership in the Property Partnership’s
distribution reinvestment plan except to the extent that holders of our units elect to reinvest distributions pursuant to our distribution
reinvestment plan. Brookfield has advised our company that it may from time to time reinvest distributions it receives from us
in respect of our units or from the Property Partnership in respect of the Redemption-Exchange Units pursuant to the distribution
reinvestment plans of our company or the Property Partnership, as applicable. To the extent Brookfield reinvests distributions
it receives on our units, it will receive additional units of our company. To the extent Brookfield elects to reinvest distributions
it receives from the Property Partnership pursuant to the Property Partnership’s distribution reinvestment plan, it will
receive Redemption-Exchange Units. Such Redemption-Exchange Units received by Brookfield also would become subject to the Redemption-Exchange
Mechanism and may therefore result in Brookfield acquiring additional units of our company.



Issuance of Additional Partnership Interests



The BPY General Partner
has broad rights to cause our company to issue additional partnership interests and may cause us to issue additional partnership
interests (including new classes of partnership interests and options, rights, warrants and appreciation rights relating to such
interests) for any partnership purpose, at any time and on such terms and conditions as it may determine without the approval of
any limited partners. In connection with the issuance of the Class A Preferred Units by the Property Partnership, we are restricted
from issuing our units at a price per unit below the exchange price per unit of the Class A Preferred Units ($25.70) until June
2015. Any additional partnership interests may be issued in one or more classes, or one or more series of classes, with such designations,
preferences, rights, powers and duties (which may be senior to existing classes and series of partnership interests) as may be
determined by the BPY General Partner in its sole discretion, all without the approval of our limited partners.



Investments in Property Partnership



If and to the extent
that our company raises funds by way of the issuance of equity or debt securities, or otherwise, pursuant to a public offering,
private placement or otherwise, an amount equal to the proceeds will be invested in the Property Partnership, unless otherwise
agreed by us and the Property Partnership.



101









Capital Contributions



No partner has the
right to withdraw any or all of its capital contribution. The limited partners have no liability for further capital contributions
to our company. Each limited partner’s liability will be limited to the amount of capital such partner is obligated to contribute
to our company for its limited partner interest plus its share of any undistributed profits and assets, subject to certain exceptions.
See “- Limited Liability” below.



Distributions



Distributions to partners
of our company will be made only as determined by the BPY General Partner in its sole discretion. However, the BPY General Partner
will not be permitted to cause our company to make a distribution if it does not have sufficient cash on hand to make the distribution
(including as a result of borrowing), the distribution would render it insolvent, or if, in the opinion of the BPY General Partner,
the distribution would leave it with insufficient funds to meet any future or contingent obligations, or the distribution would
contravene the Bermuda Limited Partnership Act 1883. For greater certainty, our company, the Property Partnership or one or more
of the Holding Entities may (but none is obligated to) borrow money in order to obtain sufficient cash to make a distribution.
The amount of taxes withheld or paid by us in respect of our units held by limited partners or the BPY General Partner shall be
treated either as a distribution to such partner or as a general expense of our company as determined by the BPY General Partner
in its sole discretion.



The BPY General Partner
has sole authority to determine whether our company will make distributions and the amount and timing of these distributions. The
BPY General Partner has adopted a distribution policy pursuant to which our company intends to make quarterly cash distributions
in the amount currently anticipated to be approximately $1.06 per unit on an annualized basis. We are targeting an initial pay-out
ratio of approximately 80% of FFO. See Item 5.A. “Operating and Financial Review and Prospects - Operating Results”
for a discussion of FFO. We will initially pursue a distribution growth rate target in the range of 5% to 8% annually. Our company,
the Property Partnership or one or more Holding Entities may (but none is obligated to) borrow money in order to obtain sufficient
cash to make a distribution.



From time to time
our distributions may exceed the above percentages as a result of acquisitions that are attractive on a long-term cash flow and/or
return basis but are not immediately accretive to FFO. However, there can be no assurance that we will be able to make distributions
in the amounts discussed above or meet our target growth rate. Our company’s ability to make distributions will depend on
our company receiving sufficient distributions from the Property Partnership, which in turn will depend on the Property Partnership
receiving sufficient distributions from the Holding Entities, and we cannot assure you that our company will in fact make cash
distributions as intended. In particular, the amount and timing of distributions will depend upon a number of factors, including,
among others, our actual results of operations and financial condition, the amount of cash that is generated by our operations
and investments, restrictions imposed by the terms of any indebtedness that is incurred to leverage our operations and investments
or to fund liquidity needs, levels of operating and other expenses, contingent liabilities and other factors that the BPY General
Partner deems relevant.



Distributions made
by the Property Partnership will be madepro rata with respect to the Property Partnership’s managing general partnership
interest owned by us and those limited partnership interests owned by Brookfield. Our company’s ability to make distributions
will also be subject to additional risks and uncertainties, including those set forth in this Form 20-F under Item 3.D. “Key
Information - Risk Factors” and Item 5. “Operating and Financial Review and Prospects”. In particular, see
Item 3.D “Key Information - Risk Factors - We may not be able to make distributions to holders of our units in amounts
intended or at all” and “- Our organizational and ownership structure, as well as our contractual arrangements with
Brookfield, may create significant conflicts of interest that may be resolved in a manner that is not in the best interests of
our company or the best interests of our unitholders.” In addition, the BPY General Partner will not be permitted to cause
our company to make a distribution if we do not have sufficient cash on hand to make the distribution, if the distribution would
render our company insolvent or if, in the opinion of the BPY General Partner, the distribution would leave us with insufficient
funds to meet any future or contingent obligations.



Allocations of Income and Losses



Limited partners share
in the net profits and net losses of our company generally in accordance with their respective percentage interest in our company.



Net income and net
losses for U.S. federal income tax purposes will be allocated for each taxable year or other relevant period among our partners
using a monthly, quarterly or other permissible convention pro rata on a per unit basis, except to the extent otherwise required
by law or pursuant to tax elections made by our company. Each item of income, gain, loss and deduction so allocated to a partner
of our partnership generally will be the same source and character as though such partner had realized the item directly.



The income for Canadian
federal income tax purposes of our company for a given fiscal year will be allocated to each partner in an amount calculated by
multiplying such income by a fraction, the numerator of which is the sum of the distributions received by such partner with respect
to such fiscal year and the denominator of which is the aggregate amount of the distributions made by our company to partners with
respect to such fiscal year. To such end, any person who was a partner at any time during such fiscal year but who has transferred
all of their units before the last day of that fiscal year may be deemed to be a partner on the last day of such fiscal year for
the purposes of subsection 96(1) of the Tax Act. Generally, the source and character of items of income so allocated to a partner
with respect to a fiscal year of our company will be the same source and character as the distributions received by such partner
with respect to such fiscal year. The BPY General Partner may adjust allocations of items that would otherwise be made pursuant
to the terms of our limited partnership agreement to the extent necessary to avoid an adverse effect on our company’s limited
partners, subject to the approval of a committee of the board of directors of the BPY General Partner made up of independent directors.



102







If, with respect to
a given fiscal year, no distribution is made by our company or we have a loss for Canadian federal income tax purposes, one quarter
of the income, or loss, as the case may be, for Canadian federal income tax purposes of our company for such fiscal year, will
be allocated to the partners of record at the end of each calendar quarter ending in such fiscal year pro rata to their respective
percentage interests in our company, which in the case of the BPY General Partner shall mean 0.2%, and in the case of all of our
limited partners shall mean in the aggregate 99.8%, which aggregate percentage interest shall be allocated among the limited partners
in the proportion that the number of our units held at each such date by a limited partner is of the total number of our units
issued and outstanding at each such date. Generally, the source and character of such income or losses so allocated to a partner
at the end of each calendar quarter will be the same source and character as the income or loss earned or incurred by our company
in such calendar quarter.



Limited Liability



Assuming that a limited
partner does not participate in the control or management of our company or conduct the affairs of, sign or execute documents for
or otherwise bind our company within the meaning of the Bermuda Limited Partnership Act 1883 and otherwise acts in conformity with
the provisions of our limited partnership agreement, such partner’s liability under the Bermuda Limited Partnership Act 1883
and our limited partnership agreement will be limited to the amount of capital such partner is obligated to contribute to our company
for its limited partner interest plus its share of any undistributed profits and assets, except as described below.



If it were determined,
however, that a limited partner was participating in the control or management of our company or conducting the affairs of, signing
or executing documents for or otherwise binding our company (or purporting to do any of the foregoing) within the meaning of the
Bermuda Limited Partnership Act 1883 or the Bermuda Exempted Partnerships Act 1992, such limited partner would be liable as if
it were a general partner of our partnership in respect of all debts of our company incurred while that limited partner was so
acting or purporting to act. Neither our limited partnership agreement nor the Bermuda Limited Partnership Act 1883 specifically
provides for legal recourse against the BPY General Partner if a limited partner were to lose limited liability through any fault
of the BPY General Partner. While this does preclude a limited partner from seeking legal recourse, we are not aware of any precedent
for such a claim in Bermuda case law.



No Management or Control; No Voting



Our company’s
limited partners, in their capacities as such, may not take part in the management or control of the activities and affairs of
our company and do not have any right or authority to act for or to bind our company or to take part or interfere in the conduct
or management of our company. Limited partners are not entitled to vote on matters relating to our company, although holders of
units are entitled to consent to certain matters with respect to certain amendments to our limited partnership agreement and certain
matters with respect to the withdrawal of the BPY General Partner as described in further detail below. Each unit entitles the
holder thereof to one vote for the purposes of any approvals of holders of units.



Meetings



The BPY General Partner
may call special meetings of the limited partners at a time and place outside of Canada determined by the BPY General Partner on
a date not less than 10 days nor more than 60 days after the mailing of notice of the meeting. The limited partners do not have
the ability to call a special meeting. Only holders of record on the date set by the BPY General Partner (which may not be less
than 10 nor more than 60 days before the meeting) are entitled to notice of any meeting.



Written consents may
be solicited only by or on behalf of the BPY General Partner. Any such consent solicitation may specify that any written consents
must be returned to our company within the time period, which may not be less than 20 days, specified by the BPY General Partner.



For purposes of determining
holders of partnership interests entitled to provide consents to any action described above, the BPY General Partner may set a
record date, which may be not less than 10 nor more than 60 days before the date by which record holders are requested in
writing by the BPY General Partner to provide such consents. Only those holders of partnership interests on the record date established
by the BPY General Partner will be entitled to provide consents with respect to matters as to which a consent right applies.



Amendment of Our Limited Partnership
Agreement



Amendments to our
limited partnership agreement may be proposed only by or with the consent of the BPY General Partner. To adopt a proposed amendment,
other than the amendments that do not require limited partner approval discussed below, the BPY General Partner must seek approval
of a majority of our outstanding units required to approve the amendment, either by way of a meeting of the limited partners to
consider and vote upon the proposed amendment or by written approval.



Prohibited Amendments



No amendment may be
made that would:



| | 1. | enlarge the obligations of any limited partner without its consent, except that any amendment that
would have a material adverse effect on the rights or preferences of any class of partnership interests in relation to other classes
of partnership interests may be approved by at least a majority of the type or class of partnership interests so affected; or
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way
the amounts distributable, reimbursable or otherwise payable by our company to, the BPY General Partner or any of its affiliates
without the consent of the BPY General Partner, which may be given or withheld in its sole discretion.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



103







The provision of our
limited partnership agreement preventing the amendments having the effects described in clauses (1) and (2) above can
be amended upon the approval of the holders of at least 90% of the outstanding units.



No Limited Partner Approval



Subject to applicable
law, the BPY General Partner may generally make amendments to our limited partnership agreement without the approval of any limited
partner to reflect:



| | 1. | a change in the name of our company, the location of our registered office or our registered agent;
| | -- | ---------------------------------------------------------------------------------------------------



| | 2. | the admission, substitution or withdrawal of partners in accordance with our limited partnership
agreement;
| | -- | -----------------------------------------------------------------------------------------------------------



| | 3. | a change that the BPY General Partner determines is reasonable and necessary or appropriate for
our company to qualify or to continue our company’s qualification as an exempted limited partnership under the laws of Bermuda
or a partnership in which the limited partners have limited liability under the laws of any jurisdiction or is necessary or advisable
in the opinion of the BPY General Partner to ensure that our company will not be treated as an association taxable as a corporation
or otherwise taxed as an entity for tax purposes;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | an amendment that the BPY General Partner determines to be necessary or appropriate to address
certain changes in tax regulations, legislation or interpretation;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. | an amendment that is necessary, in the opinion of our counsel, to prevent our company or the BPY
General Partner or its directors or officers, from in any manner being subjected to the provisions of the Investment Company Act
or similar legislation in other jurisdictions;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. | an amendment that the BPY General Partner determines in its sole discretion to be necessary or
appropriate for the creation, authorization or issuance of any class or series of partnership interests or options, rights, warrants
or appreciation rights relating to partnership securities;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 7. | any amendment expressly permitted in our limited partnership agreement to be made by the BPY General
Partner acting alone;
| | -- | --------------------------------------------------------------------------------------------------------------------------



| | 8. | any amendment that the BPY General Partner determines in its sole discretion to be necessary or
appropriate to reflect and account for the formation by our company of, or its investment in, any corporation, partnership, joint
venture, limited liability company or other entity, as otherwise permitted by our limited partnership agreement;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 9. | a change in our company’s fiscal year and related changes; or
| | -- | -------------------------------------------------------------



| | 10. | any other amendments substantially similar to any of the matters described in (1) through
(9) above.
| | --- | ----------------------------------------------------------------------------------------------------



In addition, the BPY
General Partner may make amendments to our limited partnership agreement without the approval of any limited partner if those amendments,
in the discretion of the BPY General Partner:



| | 1. | do not adversely affect our company’s limited partners considered as a whole (including any
particular class of partnership interests as compared to other classes of partnership interests) in any material respect;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in
any opinion, directive, order, ruling or regulation of any governmental agency or judicial authority;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | are necessary or appropriate to facilitate the trading of our units or to comply with any rule,
regulation, guideline or requirement of any securities exchange on which our units are or will be listed for trading;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | are necessary or appropriate for any action taken by the BPY General Partner relating to splits
or combinations of units under the provisions of our limited partnership agreement; or
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. | are required to effect the intent expressed in this Form 20-F or the intent of the provisions of
our limited partnership agreement or are otherwise contemplated by our limited partnership agreement.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Opinion of Counsel and Limited Partner
Approval



The BPY General Partner
will not be required to obtain an opinion of counsel that an amendment will not result in a loss of limited liability to the limited
partners if one of the amendments described above under “- No Limited Partner Approval” should occur. No other amendments
to our limited partnership agreement will become effective without the approval of holders of at least 90% of our units, unless
our company obtains an opinion of counsel to the effect that the amendment will not (i) cause our company to be treated as
an association taxable as a corporation or otherwise taxable as an entity for tax purposes (provided that for U.S. tax purposes
the BPY General Partner has not made the election described below under “- Election to be Treated as a Corporation”),
or (ii) affect the limited liability under the Bermuda Limited Partnership Act 1883 of any of our company’s limited
partners.



104







In addition to the
above restrictions, any amendment that would have a material adverse effect on the rights or preferences of any type or class of
partnership interests in relation to other classes of partnership interests will also require the approval of the holders of at
least a majority of the outstanding partnership interests of the class so affected.



In addition, any amendment
that reduces the voting percentage required to take any action must be approved by the written consent or affirmative vote of limited
partners whose aggregate outstanding voting units constitute not less than the voting requirement sought to be reduced.



Sale or Other Disposition of Assets



Our limited partnership
agreement generally prohibits the BPY General Partner, without the prior approval of the holders of at least 662/3% of the voting power of our units, from causing our company to, among other things, sell, exchange or otherwise dispose
of all or substantially all of our assets in a single transaction or a series of related transactions. However, the BPY General
Partner, in its sole discretion, may mortgage, pledge, hypothecate or grant a security interest in all or substantially all of
our assets (including for the benefit of persons who are not our company or our company’s subsidiaries) without that approval.
The BPY General Partner may also sell all or substantially all of our assets under any forced sale of any or all of our assets
pursuant to the foreclosure or other realization upon those encumbrances without that approval.



Take-Over Bids



If, within 120 days
after the date of a take-over bid, as defined in the Securities Act (Ontario), the take-over bid is accepted by holders
of not less than 90% of our outstanding units, other than our units held at the date of the take-over bid by the offeror or any
affiliate or associate of the offeror, and the offeror acquires the units deposited or tendered under the take-over bid, the offeror
will be entitled to acquire our units not deposited under the take-over bid on the same terms as the units acquired under the take-over
bid.



Election to be Treated as a Corporation



If the BPY General
Partner determines in its sole discretion that it is no longer in our company’s best interests to continue as a partnership
for U.S. federal income tax purposes, the BPY General Partner may elect to treat our company as an association or as a publicly
traded partnership taxable as a corporation for U.S. federal (and applicable state) income tax purposes.



Termination and Dissolution



Our company will terminate
upon the earlier to occur of: (i) the date on which all of our company’s assets have been disposed of or otherwise realized
by us and the proceeds of such disposals or realizations have been distributed to partners; (ii) the service of notice by
the BPY General Partner, with the special approval of a majority of its independent directors, that in its opinion the coming into
force of any law, regulation or binding authority renders illegal or impracticable the continuation of our company; and (iii) at
the election of the BPY General Partner, if our company, as determined by the BPY General Partner, is required to register as an
“investment company” under the Investment Company Act or similar legislation in other jurisdictions.



Our partnership will
be dissolved upon the withdrawal of the BPY General Partner as the general partner of our partnership (unless a successor entity
becomes the general partner as described in the following sentence or the withdrawal is effected in compliance with the provisions
of our limited partnership agreement that are described below under “- Withdrawal of the BPY General Partner”) or the
date on which any court of competent jurisdiction enters a decree of judicial dissolution of our partnership or an order to wind-up
or liquidate the BPY General Partner without the appointment of a successor in compliance with the provisions of our limited partnership
agreement that are described below under “- Withdrawal of the BPY General Partner”. Our partnership will be reconstituted
and continue without dissolution if within 30 days of the date of dissolution (and provided a notice of dissolution has not been
filed with the Bermuda Monetary Authority), a successor general partner executes a transfer deed pursuant to which the new general
partner assumes the rights and undertakes the obligations of the general partner, but only if our partnership receives an opinion
of counsel that the admission of the new general partner will not result in the loss of limited liability of any limited partner.



Liquidation and Distribution of Proceeds



Upon our dissolution,
unless our company is continued as a new limited partnership, the liquidator authorized to wind-up our company’s affairs
will, acting with all of the powers of the BPY General Partner that the liquidator deems necessary or appropriate in its judgment,
liquidate our company’s assets and apply the proceeds of the liquidation first, to discharge our company’s liabilities
as provided in our limited partnership agreement and by law and thereafter to the partners pro rata according to the percentages
of their respective partnership interests as of a record date selected by the liquidator. The liquidator may defer liquidation
of our assets for a reasonable period of time or distribute assets to partners in kind if it determines that an immediate sale
or distribution of all or some of our company’s assets would be impractical or would cause undue loss to the partners.



Withdrawal of the BPY General Partner



The BPY General Partner
may withdraw as the general partner without first obtaining approval of our unitholders by giving written notice to the other partners,
and that withdrawal will not constitute a violation of our limited partnership agreement.





105







Upon the withdrawal
of a general partner, the holders of at least a majority of our units may select a successor to that withdrawing general partner.
If a successor is not selected, or is selected but an opinion of counsel regarding limited liability, tax matters and the Investment
Company Act (and similar legislation in other jurisdictions) cannot be obtained, our company will be dissolved, wound up and liquidated.
See “- Termination and Dissolution” above.



In the event of the
withdrawal of a general partner, where such withdrawal will violate our limited partnership agreement, a successor general partner
will have the option to purchase the general partnership interest of the departing general partner for a cash payment equal to
its fair market value. Under all other circumstances where a general partner withdraws, the departing general partner will have
the option to require the successor general partner to purchase the general partnership interest of the departing general partner
for a cash payment equal to its fair market value. In each case, this fair market value will be determined by agreement between
the departing general partner and the successor general partner. If no agreement is reached within 30 days of the general
partner’s departure, an independent investment banking firm or other independent expert selected by the departing general
partner and the successor general partner will determine the fair market value. If the departing general partner and the successor
general partner cannot agree upon an expert within 45 days of the general partner’s departure, then an expert chosen by agreement
of the experts selected by each of them will determine the fair market value.



If the option described
above is not exercised by either the departing general partner or the successor general partner, the departing general partner’s
general partnership interest will automatically convert into units pursuant to a valuation of those interests as determined by
an investment banking firm or other independent expert selected in the manner described in the preceding paragraph.



Transfer of the General Partnership
Interest



The BPY General Partner
may transfer all or any part of its general partnership interests without first obtaining approval of any unitholder. As a condition
of this transfer, the transferee must: (i) be an affiliate of the general partner of the Property Partnership (or the transfer
must be made concurrently with a transfer of the general partnership units of the Property Partnership to an affiliate of the transferee);
(ii) agree to assume the rights and duties of the BPY General Partner to whose interest that transferee has succeeded; (iii) agree
to assume and be bound by the provisions of our limited partnership agreement; and (iv) furnish an opinion of counsel regarding
limited liability, tax matters and the Investment Company Act (and similar legislation in other jurisdictions). Any transfer of
the general partnership interest is subject to prior notice to and approval of the relevant Bermuda regulatory authorities. At
any time, the members of the BPY General Partner may sell or transfer all or part of their shares in the BPY General Partner without
the approval of the unitholders.



Partnership Name



If the BPY General
Partner ceases to be the general partner of our partnership and our new general partner is not an affiliate of Brookfield, our
company will be required by our limited partnership agreement to change our name to a name that does not include “Brookfield”
and which could not be capable of confusion in any way with such name. Our limited partnership agreement explicitly provides that
this obligation shall be enforceable and waivable by the BPY General Partner notwithstanding that it may have ceased to be the
general partner of our partnership.



Transactions with Interested Parties



The BPY General Partner,
its affiliates and their respective partners, members, directors, officers, employees and shareholders, which we refer to as “interested
parties,” may become limited partners or beneficially interested in limited partners and may hold, dispose of or otherwise
deal with our units with the same rights they would have if the BPY General Partner was not a party to our limited partnership
agreement. An interested party will not be liable to account either to other interested parties or to our company, our company’s
partners or any other persons for any profits or benefits made or derived by or in connection with any such transaction.



Our limited partnership
agreement permits an interested party to sell investments to, purchase assets from, vest assets in and enter into any contract,
arrangement or transaction with our company, the Property Partnership, any of the Holding Entities, any operating entity or any
other holding entity established by our company and may be interested in any such contract, transaction or arrangement and shall
not be liable to account either to our company, the Property Partnership, any of the Holding Entities, any operating entity or
any other holding entity established by our company or any other person in respect of any such contract, transaction or arrangement,
or any benefits or profits made or derived therefrom, by virtue only of the relationship between the parties concerned, subject
to the bye-laws of the BPY General Partner.



Outside Activities of the BPY General
Partner; Conflicts of Interest



Under our limited
partnership agreement, the BPY General Partner is required to maintain as its sole activity the activity of acting as the general
partner of our partnership. The BPY General Partner is not permitted to engage in any business or activity or incur or guarantee
any debts or liabilities except in connection with or incidental to its performance as general partner or incurring, guaranteeing,
acquiring, owning or disposing of debt or equity securities of the Property Partnership, a Holding Entity or any other holding
entity established by our company.



Our limited partnership
agreement provides that each person who is entitled to be indemnified by our company (other than the BPY General Partner), as described
below under “- Indemnification; Limitation on Liability”, will have the right to engage in businesses of every type
and description and other activities for profit, and to engage in and possess interests in business ventures of any and every type
or description, irrespective of whether: (i) such businesses and activities are similar to our activities; or (ii) such
businesses and activities directly compete with, or disfavor or exclude, the BPY General Partner, our company, the Property Partnership,
any Holding Entity, any operating entity or any other holding entity established by us. Such business interests, activities and
engagements will be deemed not to constitute a breach of our limited partnership agreement or any duties stated or implied by law
or equity, including fiduciary duties, owed to any of the BPY General Partner, our company, the Property Partnership, any Holding
Entity, any operating entity and any other holding entity established by us (or any of their respective investors), and shall be
deemed not to be a breach of the BPY General Partner’s fiduciary duties or any other obligation of any type whatsoever of
the BPY General Partner. None of the BPY General Partner, our company, the Property Partnership, any Holding Entity, any operating
entity, any other holding entity established by us or any other person shall have any rights by virtue of our limited partnership
agreement or our partnership relationship established thereby or otherwise in any business ventures of any person who is entitled
to be indemnified by our company as described below under “- Indemnification; Limitation on Liability”.



106







The BPY General Partner
and the other indemnified persons described in the preceding paragraph do not have any obligation under our limited partnership
agreement or as a result of any duties stated or implied by law or equity, including fiduciary duties, to present business or investment
opportunities to our company, our limited partners, the Property Partnership, any Holding Entity, any operating entity or any other
holding entity established by our company. These provisions do not affect any obligation of an indemnified person to present business
or investment opportunities to our company, the Property Partnership, any Holding Entity, any operating entity or any other holding
entity established by our company pursuant to the Relationship Agreement or a separate written agreement between such persons.



Any conflicts of interest
and potential conflicts of interest that are approved by the BPY General Partner’s governance and nominating committee from
time to time will be deemed approved by all partners. Pursuant to our conflicts policy, by a majority vote, independent directors
may grant approvals for any of the transactions described above in the form of general guidelines, policies or procedures in which
case no further special approval will be required in connection with a particular transaction or matter permitted thereby. See
Item 7.B. “Major Shareholders and Related Party Transactions - Related Party Transactions - Relationship with Brookfield
- Conflicts of Interest and Fiduciary Duties”.



Indemnification; Limitations on Liability



Under our limited
partnership agreement, our company is required to indemnify to the fullest extent permitted by law the BPY General Partner and
any of its affiliates (and their respective officers, directors, agents, shareholders, partners, members and employees), any person
who serves on a governing body of the Property Partnership, a Holding Entity, operating entity or any other holding entity established
by our company and any other person designated by the BPY General Partner as an indemnified person, in each case, against all losses,
claims, damages, liabilities, costs or expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements
and other amounts arising from any and all claims, demands, actions, suits or proceedings, incurred by an indemnified person in
connection with our investments and activities or by reason of their holding such positions, except to the extent that the claims,
liabilities, losses, damages, costs or expenses are determined to have resulted from the indemnified person’s bad faith,
fraud or willful misconduct, or in the case of a criminal matter, action that the indemnified person knew to have been unlawful.
In addition, under our limited partnership agreement: (i) the liability of such persons has been limited to the fullest extent
permitted by law, except to the extent that their conduct involves bad faith, fraud or willful misconduct, or in the case of a
criminal matter, action that the indemnified person knew to have been unlawful; and (ii) any matter that is approved by the
independent directors of the BPY General Partner will not constitute a breach of our limited partnership agreement or any duties
stated or implied by law or equity, including fiduciary duties. Our limited partnership agreement requires us to advance funds
to pay the expenses of an indemnified person in connection with a matter in which indemnification may be sought until it is determined
that the indemnified person is not entitled to indemnification.



Accounts, Reports and Other Information



Under our limited
partnership agreement, within the time required by applicable laws and regulations, including any rules of any applicable securities
exchange, the BPY General Partner is required to prepare financial statements in accordance with IFRS or such other appropriate
accounting principles as determined from time to time and make publicly available as of a date selected by the BPY General Partner,
in its sole discretion, our company’s financial statements together with a statement of the accounting policies used in their
preparation, such information as may be required by applicable laws and regulations and such information as the BPY General Partner
deems appropriate. Our company’s annual financial statements must be audited by an independent accounting firm of international
standing. Our company’s quarterly financial statements may be unaudited and will be made available publicly as and within
the time period required by applicable laws and regulations, including any rules of any applicable securities exchange.



The BPY General Partner
is also required to use commercially reasonable efforts to prepare and send to the limited partners of our partnership on an annual
basis a Schedule K-1 (or equivalent). The BPY General Partner will, where reasonably possible, prepare and send information required
by the non-U.S. limited partners of our partnership for U.S. federal income tax reporting purposes. The BPY General Partner will
also use commercially reasonable efforts to supply information required by limited partners of our partnership for Canadian federal
income tax purposes.



Governing Law; Submission to Jurisdiction



Our limited partnership
agreement is governed by and will be construed in accordance with the laws of Bermuda. Under our limited partnership agreement,
each of our company’s partners (other than governmental entities prohibited from submitting to the jurisdiction of a particular
jurisdiction) will submit to the non-exclusive jurisdiction of any court in Bermuda in any dispute, suit, action or proceeding
arising out of or relating to our limited partnership agreement. Each partner waives, to the fullest extent permitted by law, any
immunity from jurisdiction of any such court or from any legal process therein and further waives, to the fullest extent permitted
by law, any claim of inconvenient forum, improper venue or that any such court does not have jurisdiction over the partner. Any
final judgment against a partner in any proceedings brought in a court in Bermuda will be conclusive and binding upon the partner
and may be enforced in the courts of any other jurisdiction of which the partner is or may be subject, by suit upon such judgment.
The foregoing submission to jurisdiction and waivers will survive the dissolution, liquidation, winding up and termination of our
company.





107









Transfers of Units



We are not required
to recognize any transfer of our units until certificates, if any, evidencing such units are surrendered for registration of transfer.
Each person to whom a unit is transferred (including any nominee holder or an agent or representative acquiring such unit for the
account of another person) will be admitted to our partnership as a partner with respect to the unit so transferred subject to
and in accordance with the terms of our limited partnership agreement. Any transfer of a unit will not entitle the transferee to
share in the profits and losses of our company, to receive distributions, to receive allocations of income, gain, loss, deduction
or credit or any similar item or to any other rights to which the transferor was entitled until the transferee becomes a partner
and a party to our limited partnership agreement.



By accepting a unit
for transfer in accordance with our limited partnership agreement, each transferee will be deemed to have:



| | · | executed our limited partnership agreement
and become bound by the terms thereof;
| | - | ---------------------------------------------------------------------------------



| | · | granted an irrevocable power of attorney
to the BPY General Partner or the liquidator of our company and any officer thereof to act as such partner’s agent and attorney-in-fact
to execute, swear to, acknowledge, deliver, file and record in the appropriate public offices: (i) all certificates, documents
and other instruments relating to the existence or qualification of our company as an exempted limited partnership (or a partnership
in which the limited partners have limited liability) in Bermuda and in all jurisdictions in which our company may conduct activities
and affairs or own property; any amendment, change, modification or restatement of our limited partnership agreement, subject to
the requirements of our limited partnership agreement; the dissolution and liquidation of our company; the admission or withdrawal
of any partner of our partnership or any capital contribution of any partner of our partnership; the determination of the rights,
preferences and privileges of any class or series of units or other partnership interests of our company, and any tax election
with any limited partner or general partner on behalf of our partnership or the partners; and (ii) subject to the requirements
of our limited partnership agreement, all ballots, consents, approvals, waivers, certificates, documents and other instruments
necessary or appropriate, in the sole discretion of the BPY General Partner or the liquidator of our company, to make, evidence,
give, confirm or ratify any voting consent, approval, agreement or other action that is made or given by our company’s partners
or is consistent with the terms of our limited partnership agreement or to effectuate the terms or intent of our limited partnership
agreement;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | made the consents and waivers contained
in our limited partnership agreement, including with respect to the approval of the transactions and agreements entered into in
connection with our formation and the Spin-off; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | ratified and confirmed all contracts, agreements,
assignments and instruments entered into on behalf of our company in accordance with our limited partnership agreement, including
the granting of any charge or security interest over the assets of our company and the assumption of any indebtedness in connection
with the affairs of our company.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The transfer of any
unit and the admission of any new partner to our partnership will not constitute any amendment to our limited partnership agreement.



Book-Based System



Our units may be represented
in the form of one or more fully registered unit certificates held by, or on behalf of, CDS, or the Depository Trust Company, or
DTC, as applicable, as custodian of such certificates for the participants of CDS or DTC, registered in the name of CDS or DTC
or their respective nominee, and registration of ownership and transfers of our units may be effected through the book-based system
administered by CDS or DTC as applicable.



DESCRIPTION OF THE PROPERTY PARTNERSHIP
LIMITED PARTNERSHIP AGREEMENT



The following is a
description of the material terms of the Property Partnership’s limited partnership agreement and is qualified in its entirety
by reference to all of the provisions of such agreement. You are not a limited partner of the Property Partnership and do not have
any rights under its limited partnership agreement. However, our company is the managing general partner of the Property Partnership
and is responsible for the management and control of the Property Partnership.



We have included a
summary of what we believe are the most important provisions of the Property Partnership’s limited partnership agreement
because we conduct our operations through the Property Partnership and the Holding Entities and our rights with respect to our
partnership interest in the Property Partnership are governed by the terms of the Property Partnership’s limited partnership
agreement. Because this description is only a summary of the terms of the agreement, it does not contain all of the information
that you may find useful. For more complete information, you should read the Property Partnership’s limited partnership agreement.
The agreement is available electronically on the website of the SEC atwww.sec.gov and on our SEDAR profile atwww.sedar.com and is available to our unitholders as described under Item 10.C. “Additional Information - Material
Contracts” and Item 10.H. “Documents on Display”.



Formation and Duration



The Property Partnership
is a Bermuda exempted limited partnership registered under the Bermuda Limited Partnership Act 1883 and the Bermuda Exempted Partnerships
Act 1992. The Property Partnership has a perpetual existence and will continue as a limited liability partnership unless our partnership
is terminated or dissolved in accordance with its limited partnership agreement.



108









Management



As required by law,
the Property Partnership’s limited partnership agreement provides for the management and control of the Property Partnership
by its managing general partner, our company.



Nature and Purpose



Under its limited
partnership agreement, the purpose of the Property Partnership is to: acquire and hold interests in the Holding Entities and, subject
to the approval of our company, any other entity; engage in any activity related to the capitalization and financing of the Property
Partnership’s interests in such entities; and engage in any other activity that is incidental to or in furtherance of the
foregoing and that is approved by our company and that lawfully may be conducted by a limited partnership organized under the Bermuda
Limited Partnership Act 1883, the Bermuda Exempted Partnerships Act 1992 and our limited partnership agreement.



Units



In connection with
the Spin-off, Class A limited partnership units of the Property Partnership were issued to our company, the Redemption-Exchange
Units were issued to certain wholly-owned subsidiaries of Brookfield Asset Management and the general partnership interests were
issued to Property Special LP (formerly known as Brookfield Property GP L.P.). On August 8, 2013, we effected a restructuring pursuant
to which: (i) all of the Class A limited partnership units of the Property Partnership were reclassified as Managing General Partner
Units; and (ii) all of the general partnership interests in the Property Partnership were reclassified as Special LP Units.



As of the date hereof,
the Property Partnership has four classes of units: Redemption-Exchange Units, Special LP Units, Managing General Partner Units
and Preferred Units. Holders of any class of Property Partnership units are not entitled to the withdrawal or return of capital
contributions in respect of their units, except to the extent, if any, that distributions are made to such holders pursuant to
the Property Partnership’s limited partnership agreement or upon the dissolution of the Property Partnership as described
below under “- Dissolution” or as otherwise required by applicable law. Holders of the Property Partnership’s
units are not entitled to vote on matters relating to the Property Partnership except as described below under “- No
Management or Control; No Voting”. Except to the extent expressly provided in the Property Partnership’s limited partnership
agreement, a holder of Property Partnership units will not have priority over any other holder of Property Partnership units, either
as to the return of capital contributions or as to profits, losses or distributions. Except with respect to the Class A Preferred
Units, the Property Partnership’s limited partnership agreement does not contain any restrictions on ownership of the Property
Partnership units. The units of the Property Partnership have no par or other stated value.



All of the outstanding
Redemption-Exchange Units and Special LP Units are held by certain wholly-owned subsidiaries of Brookfield Asset Management and
all of the outstanding Managing General Partner Units are held by our company. As of the date hereof, all of the outstanding Preferred
Units are held by the Class A Preferred Unitholder.



Issuance of Additional Partnership Interests



The Property Partnership
may issue additional partnership interests (including Managing General Partner Units, Preferred Units, Special LP Units and Redemption-Exchange
Units as well as new classes of partnership interests and options, rights, warrants and appreciation rights relating to such interests)
for any partnership purpose, at any time and on such terms and conditions as our company may determine without the approval of
any limited partners. Any additional partnership interests may be issued in one or more classes, or one or more series of classes,
with such designations, preferences, rights, powers and duties (which may be senior to existing classes and series of partnership
interests) as may be determined by our company in its sole discretion, all without the approval of our limited partners.



Redemption-Exchange Mechanism



At any time after
two years from April 15, 2013, the date of closing of the Spin-off, the holders of the Redemption-Exchange Units will have the
right to require the Property Partnership to redeem all or a portion of the Redemption-Exchange Units for cash, subject to our
company’s right to acquire such interests for our units as described below. Any such holder may exercise its right of redemption
by delivering a notice of redemption to the Property Partnership and our company.



A holder of Redemption-Exchange
Units who delivers a notice of redemption will receive, on the redemption-exchange date and subject to our company’s right
to acquire such interests (in lieu of redemption) in exchange for units of our company, either (a) cash in an amount equal
to the market value of one of our units (as determined by reference to the five day volume weighted average of the trading price
of our units on the principal stock exchange for our units based on trading volumes) multiplied by the number of units to be redeemed
or (b) such other amount of cash as may be agreed by such holder and the Property Partnership. Upon its receipt of the redemption
notice, our company will have a right to elect, at its sole discretion, to acquire all (but not less than all) Redemption-Exchange
Units presented to the Property Partnership for redemption in exchange for units of our company on a one-for-one basis. Upon a
redemption, the holder’s right to receive distributions with respect to the Redemption-Exchange Units so redeemed will cease.



The date of exchange
specified in any redemption notice may not be less than five business days nor more than twenty business days after the date upon
which the redemption notice is received by the Property Partnership and our company. At any time prior to the applicable redemption-exchange
date, any holder of Redemption-Exchange Units who delivers a redemption notice will be entitled to withdraw such redemption notice.



109







Brookfield’s
aggregate interest in our company is approximately 68% as of the date of this Form 20-F assuming the exchange of
the Redemption-Exchange Units and Exchange LP Units not held by us, and is currently approximately 61% on a fully-exchanged
basis.



Class A Preferred Units



The Class A Preferred
Units were issued to the Class A Preferred Unitholder on December 4, 2014 in three tranches of $600 million each, with an average
dividend yield of 6.5% and maturities of seven, ten and twelve years. In addition, a holder of the Class A Preferred Units is entitled
to receive an additional distribution, or excess distribution, in any quarter in which the greater of (i) the aggregate distributions
declared on an exchange number of our units and (ii) the aggregate distributions paid on an exchange number of the Redemption-Exchange
Units divided by an exchange ratio, exceeds the base distribution such holder is entitled to receive for such quarter. Pursuant
to the terms of the Class A Preferred Units, the Property Partnership shall not declare or pay dividends on its Managing General
Partner Units or Redemption-Exchange Units, or buy back such units, unless it has paid or also pays any arrears of dividends to
the holder of the Class A Preferred Units.



In connection with
the issuance of the Class A Preferred Units, our company has agreed to guarantee the obligation of the Property Partnership to
pay a liquidation amount in the event of the liquidation, dissolution or winding-up of the Property Partnership equal to the issue
price per Class A Preferred Unit together with all accrued and unpaid dividends. Such guarantee ranks junior to any indebtedness
of our company, pari passu with all obligations of our company in respect of any preferred partnership interested issued by our
company from time to time, and senior to all obligations of our company with respect of all other non-preferred partnership units
issued by our company from time to time.



Our company has entered
into an investor agreement with the Class A Preferred Unitholder in connection with the issuance of the Class A Preferred Units
pursuant to which we have agreed that, upon the request of a holder of the Class A Preferred Units, our company will file up to
four registration statements to register for sale, under the U.S. Securities Act of 1933, as amended or up to four prospectuses
to qualify the distribution in Canada, any of our units acquired pursuant to the Preferred Unit Exchange Mechanism. Our company
is not required to file a U.S. registration statement or a Canadian prospectus unless such holder requests that units having a
value of at least $50 million be registered or qualified. We have agreed to pay expenses in connection with such registration and
sales, except for any underwriting discounts or commissions, which will be borne by the selling unitholder, and to indemnify the
selling unitholder for material misstatements or omissions in the registration statement and/or prospectus.



Pursuant to the investor
agreement, the Class A Preferred Unitholder is also entitled, for so long as it owns an aggregate limited partnership interest
in our company of at least 5% of our issued and outstanding units on a fully-diluted basis, to designate one individual to the
BPY General Partner’s board of directors. Such individual must meet the standards of independence established by the NYSE
and the TSX and be reasonably acceptable to the board of directors.



The Class A Preferred
Unitholder is not entitled to transfer the Class A Preferred Units (or the units into which they are exchangeable) except in accordance
with the investor agreement. The investor agreement permits transfers to affiliates of the Class A Preferred Unitholder. In addition,
the restrictions on transfer in the investor agreement will be lifted in respect of one-third of the Class A Preferred Units of
each series (or the Units into which they are exchangeable) on each of the first, second and third anniversaries of the date of
the agreement. The rights under the investor agreement are only transferable to an affiliate of the Class A Preferred Unitholder.



Preferred Unit Exchange Mechanism



The Class A
Preferred Units are exchangeable at the option of a holder of such Class A Preferred Units into our units at an exchange
price of $25.70 per unit. After three years for the seven-year tranche and four years for the ten- and twelve-year tranches,
we can effectively require a holder of such Class A Preferred Units to exchange the Class A Preferred Units into our units as
long as our units are trading at or above 125%, 130% and 135%, respectively, of the exchange price. Upon maturity, the Class
A Preferred Units that remain outstanding will be redeemed in exchange for our units valued at the 20-day, volume-weighted
average trading price at such time. To the extent that the market price of our units is less than 80% of the exchange price
at maturity, Brookfield has contingently agreed to acquire the seven-year and ten-year tranches of Class A Preferred Units
from the holder of Class A Preferred Units for the initial issuance price plus accrued and unpaid distributions and to
exchange such units for Class A Preferred Units with terms and conditions substantially similar to the twelve-year
tranche.



Distributions



Distributions by the
Property Partnership will be made in the sole discretion of our company. However, our company will not be permitted to cause the
Property Partnership to make a distribution if the Property Partnership does not have sufficient cash on hand to make the distribution,
the distribution would render the Property Partnership insolvent or if, in the opinion of our company, the distribution would or
might leave the Property Partnership with insufficient funds to meet any future or contingent obligations, or the distribution
would contravene the Bermuda Limited Partnership Act 1883. For greater certainty, the Property Partnership or one or more of the
Holding Entities may (but none is obligated to) borrow money in order to obtain sufficient cash to make a distribution.



Except as set forth
below, prior to the dissolution of the Property Partnership, distributions of available cash (if any), including cash that has
been borrowed for such purpose, in any given quarter will be made by the Property Partnership as follows, referred to as the Regular
Distribution Waterfall:



| | · | first, 100% of any available cash to our
company until our company has been distributed an amount equal to our expenses and outlays for the quarter properly incurred;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



110







| | · | second, but only at such times as there
are no Preferred Units outstanding, to the extent distributions in respect of Redemption-Exchange Units have accrued in previous
quarters (as described in the next paragraph), 100% to all the holders of Redemption-Exchange Units pro rata in proportion to their
respective percentage interests (which will be calculated using Redemption-Exchange Units only) (which distribution will be treated
as having been made pursuant to the sixth and seventh provision below, as applicable) of all amounts that have been accrued in
previous quarters and not yet recovered to the holders of Redemption-Exchange Units;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | third, an equity enhancement distribution
of 100% of any available cash then remaining to Property Special LP until an amount equal to 0.3125% of the amount by which our
company’s total capitalization value exceeds the total capitalization value of our company determined immediately following
the Spin-off has been distributed to Property Special LP, provided that for any quarter in which our company determines that there
is insufficient cash to pay this equity enhancement distribution, our company may elect to pay all or a portion of this distribution
in Redemption-Exchange Units. This distribution for any quarter will be reduced by an amount equal to (i) fees in excess of the
base management fee of $12.5 million (plus the amount of any annual escalation by the specified inflation factor) that are payable
under our Master Services Agreement in such quarter plus (ii) the proportion of each cash payment in relation to such quarter made
by an Operating Entity to Brookfield, including any payment made in the form of a dividend, distribution or other profit entitlement,
which our company determines to be comparable to this equity enhancement distribution that is attributable to the amount that a
Service Recipient has committed and/or contributed at such time (either as debt or equity) to such Operating Entity (and, in the
case of a commitment, as set forth in the terms of the subscription agreement or other underlying documentation with respect to
such Operating Entity at or prior to such time), provided that the aggregate amount of any such payments under this clause (ii)
will not exceed an amount equal to 0.3125% of the amount the Service Recipient has so committed and/or contributed. The total capitalization
value of our company will be equal to the aggregate of the value of all of our outstanding units and the securities of other Service
Recipients that are not held by our company, the Property Partnership, the Holding Entities, the operating entities or any other
direct or indirect subsidiary of a Holding Entity, plus all outstanding third party debt (including, generally, debt owed to Brookfield
but not amounts owed under the Brookfield revolving credit facility that was in place at closing of the Spin-off) with recourse
against our company, the Property Partnership or a Holding Entity, less all cash held by such entities;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | fourth, 100% of any available cash then
remaining to holders of the Preferred Units, pro rata to their respective relative percentage of Preferred Units held (determined
by reference to the aggregate value of the issue price of the Preferred Units held by each such holder relative to the aggregate
value of the issue price of all Preferred Units outstanding), until an amount equal to all preferential distribution to which the
holders of the Preferred Units are entitled under the terms of the Preferred Units then outstanding (including any excess distribution
and any outstanding accrued and unpaid preferential distributions from prior periods) has been distributed in respect of each Preferred
Unit outstanding during such quarter;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | fifth, at any time that Preferred Units
are outstanding, 100% of any available cash then remaining to holders of Redemption-Exchange Units pro rata in proportion to their
respective percentage interests (which will be calculated using Redemption-Exchange Units only) (which distribution will be treated
as having been made pursuant to the sixth and seventh provision below, as applicable) all amounts that have been deferred in previous
quarters pursuant to the third provision above);
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | sixth, 100% of any available cash then remaining
to the owners of the Property Partnership’s partnership interests (other than owners of the Preferred Units), pro rata to
their percentage interests (the percentage interests as to any Preferred Unitholder shall be zero), until an amount equal to the
First Distribution Threshold, scheduled to be $0.275 per unit, has been distributed in respect of each partnership interest of
the Property Partnership during such quarter;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | seventh, 85% of any available cash then
remaining to the owners of the Property Partnership’s partnership interests (other than owners of the Preferred Units), pro
rata to their percentage interests (the percentage interests as to any Preferred Unitholder shall be zero), and an incentive distribution
of 15% to Property Special LP, until an amount equal to the Second Distribution Threshold, scheduled to be $0.30 per unit, has
been distributed in respect of each partnership interest of the Property Partnership (other than Preferred Units) during such quarter;
and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | thereafter; 75% of any available cash then
remaining to the owners of the Property Partnership’s partnership interests (other than owners of the Preferred Units), pro
rata to their percentage interests (the percentage interests as to any Preferred Unitholder shall be zero), and an incentive distribution
of 25% to Property Special LP.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In 2014, we paid $50
million of equity enhancement distributions and no incentive distributions to Property Special LP. Set forth below is an example
of how the equity enhancement and incentive distributions to be made to Property Special LP are calculated on a quarterly and annualized
basis. The figures used below are for illustrative purposes only and are not indicative of our company’s expectations.





111







|                                                                 |  |           |       |  | Quarterly    |   |        | Annualized     | 
|---------------------------------------------------------------- |  | --------- | ----- |  | ------------ | - | ------ | -------------- | 
|Illustrative Equity
    Enhancement Distribution     Calculation |  | Units (m) |       |  | Per Unit ($) |   |        | Total
    ($m) | 
|Initial
    capitalization(1)                                    |  |           |       |  |              |   |        |                | 
|Market value
    of our company’s units per unit                 |  |           |       |  |              | $ | 21.914 |                | 
|Our company’s
    units                                          |  |           | 82.2  |  |              |   |        |                | 
|Redemption-Exchange
    Units held by Brookfield(2)              |  |           | 386.1 |  |              |   |        |                | 
|Total units                                                      |  |           | 466.3 |  |              |   |        |                | 
|Total market value                                               |  |           |       |  |              |   |        |                | 
|                                                                 |  |           |       |  |              |   |        |                | 
|Preferred shares of
    holding entities held by Brookfield      |  |           |       |  |              |   |        |                | 
|Recourse
    debt, net of cash                                   |  |           |       |  |              |   |        |                | 
|Total
    capitalization                                         |  |           |       |  |              |   |        |                | 
|                                                                 |  |           |       |  |              |   |        |                | 
|Capitalization
    at illustrative quarter end(3)                |  |           |       |  |              |   |        |                | 
|Market value of our
    company’s units per unit                 |  |           |       |  |              | $ | 23.29  |                | 
|GP Units and LP Units                                            |  |           | 254.2 |  |              |   |        |                | 
|Exchange LP Units                                                |  |           | 21.1  |  |              |   |        |                | 
|Redemption-Exchange
    Units held by Brookfield(2)              |  |           | 437.4 |  |              |   |        |                | 
|Total units                                                      |  |           | 712.7 |  |              |   |        |                | 
|Total market value                                               |  |           |       |  |              |   |        |                | 
|Preferred shares of
    holding entities held by Brookfield      |  |           |       |  |              |   |        |                | 
|QIA preferred shares                                             |  |           |       |  |              |   |        |                | 
|Recourse
    debt, net of cash                                   |  |           |       |  |              |   |        |                | 
|Total
    capitalization                                         |  |           |       |  |              |   |        |                | 
|Increase
    in total capitalization                             |  |           |       |  |              |   |        |                | 
|                                                                 |  |           |       |  |              |   |        |                | 
|Days in quarter / year                                           |  |           |       |  |              |   |        |                | 
|Fraction of quarter
    / year(4)                                |  |           |       |  |              |   |        |                | 
|Equity enhancement distribution
    fee rate                     |  |           |       |  |              |   |        |                | 
|Gross
    equity enhancement distribution to Property Special LP |  |           |       |  |              |   |        |                | 
|Fee offsets(5)                                                   |  |           |       |  |              |   |        |                | 
|Net
    equity                                                   |  |           |       |  |              |   |        |                | 



(1)      For purposes of calculating
the equity enhancement distribution at each quarter end, the initial total capitalization against which the quarter end total capitalization
is measured will always be our company’s total capitalization immediately following the Spin-off. For purposes of calculating
the initial total capitalization, securities were valued based on their volume weighted average trading price on the principal
stock exchange (NYSE) for the 30 trading days commencing on April 15, 2013, the date of the spin off; provided that if a security
is not traded on a stock exchange, the fair market value of such security is determined by the BPY General Partner.



(2)      Includes (a) Redemption-Exchange
Units of the Property Partnership that are held by Brookfield and that are redeemable for cash or exchangeable for our company’s
units in accordance with the Redemption-Exchange Mechanism and (b) Special Limited Partnership Units held by Property Special LP.
For purposes of calculating total capitalization, the value of these securities is assumed to be equal to the value of our company’s
units.



(3)     Based on the number
of units, Exchange LP Units and Redemption-Exchange Units as of December 31, 2014. For purposes of calculating the quarter end
total capitalization, securities were valued based on their volume weighted average trading price on the principal stock exchange
(NYSE) for the preceding five trading days; provided that if a security is not traded on a stock exchange, the fair market value
of such security is determined by the BPY General Partner. For illustrative purposes only, the example above assumes a value of
$23.29 per unit.



(4)     The example above
assumes a full illustrative quarter and a full illustrative year. The equity enhancement distribution fee will be pro-rated for
any partial payment period.



(5)     The equity enhancement
distribution for any quarter will be reduced by an amount equal to (i) fees in excess of the base management fee of $12.5 million
(plus the amount of any annual escalation by the specified inflation factor) that are payable under the Master Services Agreement
in such quarter plus (ii) the proportion of each cash payment in relation to such quarter made by an operating entity to Brookfield,
including any payment made in the form of a dividend, distribution or other profit entitlement, which our company determines to
be comparable to the equity enhancement distribution that is attributable to the amount that a Service Recipient has committed
and/or contributed at such time (either as debt or equity) to such operating entity (and, in the case of a commitment, as set forth
in the terms of the subscription agreement or other underlying documentation with respect to such operating entity at or prior
to such time), provided that the aggregate amount of any such payments under this clause (ii) will not exceed an amount equal to
0.3125% of the amount the Service Recipient has so committed and/or contributed. For any quarter in which our company determines
that there is insufficient cash to pay the equity enhancement distribution, our company may elect to pay all or a portion of this
distribution in Redemption-Exchange Units.





112







|                                                                                                    |  |           |       |  | Quarterly    |   |       | Annualized | 
|--------------------------------------------------------------------------------------------------- |  | --------- | ----- |  | ------------ | - | ----- | ---------- | 
|Illustrative Incentive
    Distribution Calculation                                                 |  | Units (m) |       |  | Per Unit ($) |   |       | Total ($m) | 
|Illustrative
    distribution                                                                       |  |           |       |  |              | $ | 0.250 |            | 
|First distribution threshold                                                                        |  |           |       |  |              | $ | 0.275 |            | 
|Total
    units of Property Partnership(1)                                                          |  |           | 712.7 |  |              |   |       |            | 
|Total
    first distribution                                                                        |  |           |       |  |              |   |       |            | 
|Distribution in excess
    of first distribution threshold                                          |  |           |       |  |              | $ | -     |            | 
|Total
    units of Property Partnership(1)                                                          |  |           | 712.7 |  |              |   |       |            | 
|Second distribution
    to all partners                                                             |  |           |       |  |              |   |       |            | 
|15%
    incentive distribution to Property Special LP                                               |  |           |       |  |              |   |       |            | 
|Total
    second distribution                                                                       |  |           |       |  |              |   |       |            | 
|Distribution in excess
    of second distribution threshold                                         |  |           |       |  |              | $ | -     |            | 
|Total
    units of Property Partnership(1)                                                          |  |           | 712.7 |  |              |   |       |            | 
|Third distribution to
    all partners                                                              |  |           |       |  |              |   |       |            | 
|25%
    incentive distribution to Property Special LP                                               |  |           |       |  |              |   |       |            | 
|Total
    third distribution                                                                        |  |           |       |  |              |   |       |            | 
|Total
    distributions to partners of the Property Partnership (including incentive distributions) |  |           |       |  |              |   |       |            | 
|Total
    incentive distributions to Property Special LP                                            |  |           |       |  |              |   |       |            | 

(1)          Based
on the number of units on December 31, 2014. Includes (a) Managing General Partner Units of the Property Partnership held by our
company, (b) Redemption-Exchange Units of the Property Partnership that are held by Brookfield and that are redeemable for cash
or exchangeable for the company’s units in accordance with the Redemption-Exchange Mechanism and (c) Special Limited Partnership
Units of the Property Partnership held by Property Special LP.



The table below quantifies,
on a quarterly and annualized basis, all management fees and equity enhancement and incentive distributions that would be earned
based on the equity enhancement and incentive distribution examples set forth above. Other than the fixed base management fee,
the table below is for illustrative purposes only and is not indicative of our company’s expectations.



|                                |  | Quarterly |      |  | Annualized |  
|------------------------------- |  | --------- | ---- |  | ---------- | -
|Total Illustrative Amounts      |  | $m        |      |  | $m         |  
|Fixed base management fee(1)    |  | $         | 12.5 |  |            | $
|Equity enhancement distribution |  |           | 19.6 |  |            |  
|Incentive distribution          |  |           |      |  |            |  
|Total amounts                   |  | $         | 32.1 |  |            | $

(1)Pursuant to the
Master Services Agreement, we pay the Service Providers a fixed base management fee equal to $12.5 million per quarter subject
to an annual escalation by a specified inflation factor since January 1, 2014). For any quarter in which the BPY General Partner
determines that there is insufficient available cash to pay the base management fee as well as the next regular distribution on
our units, we may elect to pay all or a portion of the base management fee in our units or in limited partnership units of the
Property Partnership, subject to certain conditions.



If, prior to the dissolution
of the Property Partnership, except at any time that Preferred Units are outstanding, available cash in any quarter is not sufficient
to pay a distribution to the owners of all Property Partnership interests, pro rata to their percentage interest, then our company
may elect to pay the distribution at the then current level first to our company, in respect of the Managing General Partner Units
of the Property Partnership held by our company, and then to the holders of the Redemption-Exchange Units to the extent practicable,
and shall accrue any such deficiency for payment from available cash in future quarters as described above.



If, prior to the dissolution
of the Property Partnership, and subject to the terms of any Preferred Units then outstanding, available cash is deemed by our
company, in its sole discretion, to be (i) attributable to sales or other dispositions of the Property Partnership’s
assets, and (ii) representative of unrecovered capital, then such available cash shall be distributed to the partners of the
Property Partnership other than Preferred Unitholders in proportion to the unrecovered capital attributable to the Property Partnership
interests (other than Preferred Units) held by the partners until such time as the unrecovered capital attributable to each such
partnership interest is equal to zero. Thereafter, distributions of available cash made by the Property Partnership (to the extent
made prior to dissolution) will be made in accordance with the Regular Distribution Waterfall.



Upon the occurrence
of an event resulting in the dissolution of the Property Partnership, all cash and property of the Property Partnership in excess
of that required to discharge the Property Partnership’s liabilities will be distributed as follows: (i) to the extent
such cash and/or property is attributable to a realization event occurring prior to the event of dissolution, such cash and/or
property will be distributed in accordance with the Regular Distribution Waterfall and/or the distribution waterfall applicable
to unrecovered capital, (ii) only if there are no Preferred Units outstanding, the aggregate amount of distributions previously
deferred in respect of the Redemption-Exchange Units and not previously recovered and (iii) all other cash and/or property
will be distributed in the manner set forth below:



113







| | · | first, 100% to our company until our company
has received an amount equal to the excess of: (i) the amount of our outlays and expenses incurred during the term of the
Property Partnership; over (ii) the aggregate amount of distributions received by our company pursuant to the first tier of
the Regular Distribution Waterfall during the term of the Property Partnership;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | second, 100% to Property Special LP until
Property Special LP has received an amount equal to the fair market value of the equity enhancement distribution entitlement, as
determined by a qualified independent valuator in accordance with the Property Partnership’s limited partnership agreement,
provided that such amount may not exceed 2.5 times the aggregate equity enhancement distribution payments made to Property Special
LP during the immediately prior 24 months;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | third, 100% to holders of the Preferred
Units, pro rata to their respective relative percentage of Preferred Units held (determined by reference to the aggregate value
of the issue price of the Preferred Units held by each such holder relative to the aggregate value of the issue price of all Preferred
Units outstanding), until an amount equal to all preferential distribution to which the holders of the Preferred Units are entitled
in the event of dissolution, liquidation, or winding-up of the Property Partnership under the terms of the Preferred Units then
outstanding (including any outstanding accrued and unpaid preferential distributions from prior periods) has been distributed in
respect of each Preferred Unit outstanding;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | fourth, if there are Preferred Units outstanding,
an amount equal to the amount of cash or property held by the Property Partnership at such time, that is attributable to a realization
event occurring prior to a dissolution event and that has been deemed by our company, in its sole discretion, to be (i) attributable
to sales or other dispositions of the Property Partnership’s assets, and (ii) representative of unrecovered capital, shall
be distributed to the partners of the Property Partnership other than Preferred Unitholders in proportion to the unrecovered capital
attributable to the Property Partnership interests (other than Preferred Units) held by the partners until such time as the unrecovered
capital attributable to each such partnership interest is equal to zero, as if such distribution were a distribution occurring
prior to dissolution;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | fifth, if there are Preferred Units outstanding,
to holders of Redemption-Exchange Units pro rata in proportion to their respective percentage interests (which will be calculated
using Redemption-Exchange Units only), the aggregate amount of distributions previously deferred and not previously recovered;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | sixth, 100% to the partners of the Property
Partnership other than Preferred Unitholders, in proportion to their respective amounts of unrecovered capital in the Property
Partnership;.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | seventh, 100% to the owners of the Property
Partnership’s partnership interests other than Preferred Unitholders, pro rata to their percentage interests (the percentage
interest as to the Preferred Unitholders shall be zero), until an amount has been distributed in respect of each partnership interest
of the Property Partnership equal to the excess of: (i) the First Distribution Threshold for each quarter during the term
of the Property Partnership (subject to adjustment upon the subsequent issuance of additional partnership interests in the Property
Partnership); over (ii) the aggregate amount of distributions made in respect of a partnership interest of Property Partnership
other than Preferred Units pursuant to the sixth tier of the Regular Distribution Waterfall during the term of the Property Partnership
(subject to adjustment upon the subsequent issuance of additional partnership interests in the Property Partnership);
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | eighth, 85% to the owners of the Property
Partnership’s partnership interests other than Preferred Unitholders, pro rata to their percentage interests (the percentage
interest as to the Preferred Unitholders shall be zero), and 15% to Property Special LP, until an amount has been distributed in
respect of each partnership interest of the Property Partnership equal to the excess of: (i) the Second Distribution Threshold
less the First Distribution Threshold for each quarter during the term of the Property Partnership (subject to adjustment upon
the subsequent issuance of additional partnership interests in the Property Partnership); over (ii) the aggregate amount of
distributions made in respect of a partnership interest of the Property Partnership pursuant to the seventh tier of the Regular
Distribution Waterfall during the term of the Property Partnership (subject to adjustment upon the subsequent issuance of additional
partnership interests in the Property Partnership); and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | thereafter, 75% to the owners of the Property
Partnership’s partnership interests other than Preferred Unitholders, pro rata to their percentage interests, and 25% to
Property Special LP.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Each partner’s
percentage interest is determined by the relative portion of all outstanding partnership interests held by that partner from time
to time and is adjusted upon and reflects the issuance of additional partnership interests of the Property Partnership. In addition,
the unreturned capital attributable to each of our partnership interests, as well as certain of the distribution thresholds set
forth above, may be adjusted pursuant to the terms of the limited partnership agreement of the Property Partnership so as to ensure
the uniformity of the economic rights and entitlements of: (i) the previously outstanding Property Partnership’s partnership
interests; and (ii) the subsequently-issued Property Partnership’s partnership interests.



The limited partnership
agreement of the Property Partnership provides that, to the extent that any Holding Entity or any operating entity pays to Brookfield
any comparable performance or incentive distribution, the amount of any incentive distributions paid to Property Special LP in
accordance with the distribution entitlements described above will be reduced in an equitable manner to avoid duplication of distributions.



114







Property Special LP
may elect, at its sole discretion, to reinvest equity enhancement distributions and incentive distributions in Redemption-Exchange
Units.



No Management or Control; No Voting



The Property Partnership’s
limited partners, in their capacities as such, may not take part in the management or control of the activities and affairs of
the Property Partnership and do not have any right or authority to act for or to bind the Property Partnership or to take part
or interfere in the conduct or management of the Property Partnership. Limited partners are not entitled to vote on matters relating
to the Property Partnership, although holders of units are entitled to consent to certain matters as described below under “- Amendment
of the Property Partnership Limited Partnership Agreement”, “- Opinion of Counsel and Limited Partner Approval”,
and “- Withdrawal of the Managing General Partner” which may be effected only with the consent of the holders of the
percentages of outstanding units of the Property Partnership specified below. For purposes of any approval required from holders
of the Property Partnership’s units, if holders of Redemption-Exchange Units are entitled to vote, they will be entitled
to one vote per unit held subject to a maximum number of votes equal to 49% of the total voting power of all units of the Property
Partnership then issued and outstanding. Each unit entitles the holder thereof to one vote for the purposes of any approvals of
holders of units.



Meetings



Our company may call
special meetings of the limited partners of the Property Partnership at a time and place outside of Canada determined by us on
a date not less than 10 days nor more than 60 days after the mailing of notice of the meeting. Special meetings of the limited
partners may also be called by limited partners owning 50% or more of the outstanding partnership interests of the class or classes
for which a meeting is proposed. For this purpose, our partnership interests outstanding do not include partnership interests owned
by our company or Brookfield. Only holders of record on the date set by our company (which may not be less than 10 days nor more
than 60 days, before the meeting) are entitled to notice of any meeting.



Amendment of the Property Partnership
Limited Partnership Agreement



Amendments to the
Property Partnership’s limited partnership agreement may be proposed only by or with the consent of our company. To adopt
a proposed amendment, other than the amendments that do not require limited partner approval discussed below, our company must
seek approval of a majority of the Property Partnership’s outstanding units required to approve the amendment, either by
way of a meeting of the limited partners to consider and vote upon the proposed amendment or by written approval. For this purpose,
the Redemption-Exchange Units will not constitute a separate class and will vote together with the other outstanding limited partnership
units of the Property Partnership.



For purposes of any
approval required from holders of the Property Partnership’s units, if holders of Redemption-Exchange Units are entitled
to vote, they will be entitled to one vote per unit held subject to a maximum number of votes equal to 49% of the total voting
power of all units of the Property Partnership then issued and outstanding.



Prohibited Amendments



No amendment may be
made that would:



| | 1. | enlarge the obligations of any limited partner of the Property Partnership without its consent, except that any amendment that
would have a material adverse effect on the rights or preferences of any class of partnership interests in relation to other classes
of partnership interests may be approved by at least a majority of the type or class of partnership interests so affected; or
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable,
reimbursable or otherwise payable by the Property Partnership to Property Special LP or any of its affiliates without the consent
of Property Special LP which may be given or withheld in its sole discretion.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The provision of the
Property Partnership’s limited partnership agreement preventing the amendments having the effects described in clauses (1) or
(2) above can be amended upon the approval of the holders of at least 90% of the outstanding limited partnership units of
the Property Partnership.



No Limited Partner Approval



Subject to applicable
law, our company may generally make amendments to the Property Partnership’s limited partnership agreement without the approval
of any limited partner to reflect:



| | 1. | a change in the name of the Property Partnership, the location of the Property Partnership’s
registered office or the Property Partnership’s registered agent;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | the admission, substitution, withdrawal or removal of partners in accordance with the limited partnership
agreement of the Property Partnership;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------



115







| | 3. | a change that our company determines is reasonable and necessary or appropriate for the Property
Partnership to qualify or to continue its qualification as an exempted limited partnership under the laws of Bermuda or a partnership
in which the limited partners have limited liability under the laws of any jurisdiction or is necessary or advisable in the opinion
of our company to ensure that the Property Partnership will not be treated as an association taxable as a corporation or otherwise
taxed as an entity for tax purposes;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | an amendment that our company determines to be necessary or appropriate to address certain changes
in tax regulations, legislation or interpretation;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. | an amendment that is necessary, in the opinion of counsel, to prevent the Property Partnership
or our company or its directors or officers, from in any manner being subjected to the provisions of the Investment Company Act
or similar legislation in other jurisdictions;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. | an amendment that our company determines in its sole discretion to be necessary or appropriate
for the creation, authorization or issuance of any class or series of partnership interests or options, rights, warrants or appreciation
rights relating to partnership interests;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 7. | any amendment expressly permitted in the Property Partnership’s limited partnership agreement
to be made by our company acting alone;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------



| | 8. | any amendment that our company determines in its sole discretion to be necessary or appropriate
to reflect and account for the formation by the Property Partnership of, or its investment in, any corporation, partnership, joint
venture, limited liability company or other entity, as otherwise permitted by the Property Partnership’s limited partnership
agreement;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 9. | a change in the Property Partnership’s fiscal year and related changes;
| | -- | -----------------------------------------------------------------------



| | 10. | any amendment concerning the computation or allocation of specific items of income, gain, expense
or loss among the partners that, in the sole discretion of our company, is necessary or appropriate to: (i) comply with the
requirements of applicable law; (ii) reflect the partners’ interests in the Property Partnership; or (iii) consistently
reflect the distributions made by the Property Partnership to the partners pursuant to the terms of the limited partnership agreement
of the Property Partnership;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 11. | any amendment that our company determines in its sole discretion to be necessary or appropriate
to address any statute, rule, regulation, notice, or announcement that affects or could affect the U.S. federal income tax treatment
of any allocation or distribution related to any interest of our company in the profits of the Property Partnership; or
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 12. | any other amendments substantially similar to any of the matters described in (1) through
(11) above.
| | --- | -----------------------------------------------------------------------------------------------------



In addition, our company
may make amendments to the Property Partnership’s limited partnership agreement without the approval of any limited partner
if those amendments, in the discretion of our company:



| | 1. | do not adversely affect the Property Partnership’s limited partners considered as a whole
(including any particular class of partnership interests as compared to other classes of partnership interests) in any material
respect;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in
any opinion, directive, order, ruling or regulation of any governmental agency or judicial authority;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | are necessary or appropriate for any action taken by our company relating to splits or combinations
of units under the provisions of the Property Partnership’s limited partnership agreement; or
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | are required to effect the intent expressed in the final registration statement and prospectus
of our company filed in connection with the Spin-off or the intent of the provisions of the Property Partnership’s limited
partnership agreement or are otherwise contemplated by the Property Partnership’s limited partnership agreement.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Opinion of Counsel and Limited Partner
Approval



Our company will not
be required to obtain an opinion of counsel that an amendment will not result in a loss of limited liability to the limited partners
if one of the amendments described above under “- No Limited Partner Approval” should occur. Any other amendment to
the Property Partnership’s limited partnership agreement will only become effective either with the approval of at least
90% of the Property Partnership’s units or if an opinion of counsel is obtained to effect that the amendment will not (i) cause
the Property Partnership to be treated as an association taxable as a corporation or otherwise taxable as an entity for tax purposes
(provided that for U.S. tax purposes our company has not made the election described below under “- Election to be Treated
as a Corporation”), or (ii) affect the limited liability under the Bermuda Limited Partnership Act 1883 of any of the
Property Partnership’s limited partners.



In addition to the
above restrictions, any amendment that would have a material adverse effect on the rights or preferences of any type or class of
partnership interests in relation to other classes of partnership interests will also require the approval of the holders of at
least a majority of the outstanding partnership interests of the class so affected.



In addition, any amendment
that reduces the voting percentage required to take any action must be approved by the written consent or affirmative vote of limited
partners whose aggregate outstanding voting units constitute not less than the voting requirement sought to be reduced.



116







Sale or Other Disposition of Assets



The Property Partnership’s
limited partnership agreement generally prohibits our company, without the prior approval of the holders of a majority of the units
of the Property Partnership, from causing the Property Partnership to, among other things, sell, exchange or otherwise dispose
of all or substantially all of the Property Partnership’s assets in a single transaction or a series of related transactions,
including by approving on the Property Partnership’s behalf the sale, exchange or other disposition of all or substantially
all of the assets of the Property Partnership’s subsidiaries. However, our company, in its sole discretion, may mortgage,
pledge, hypothecate or grant a security interest in all or substantially all of the Property Partnership’s assets (including
for the benefit of persons who are not the Property Partnership or the Property Partnership’s subsidiaries) without that
approval. Our company may also sell all or substantially all of the Property Partnership’s assets under any forced sale of
any or all of the Property Partnership’s assets pursuant to the foreclosure or other realization upon those encumbrances
without that approval.



Election to be Treated as a Corporation



If our company determines
that it is no longer in the Property Partnership’s best interests to continue as a partnership for U.S. federal income tax
purposes, our company may elect to treat the Property Partnership as an association or as a publicly traded partnership taxable
as a corporation for U.S. federal (and applicable state) income tax purposes.



Dissolution



The Property Partnership
will dissolve and its affairs will be wound up upon the earlier to occur of: (i) the service of notice by our company, with
the approval of a majority of the members of the independent directors of the BPY General Partner, that in the opinion of our company
the coming into force of any law, regulation or binding authority renders illegal or impracticable the continuation of the Property
Partnership; (ii) the election of our company if the Property Partnership, as determined by our company, is required to register
as an “investment company” under the Investment Company Act or similar legislation in other jurisdictions; (iii) the
date that our company withdraws from the Property Partnership (unless a successor entity becomes the managing general partner of
the Property Partnership as described below under “- Withdrawal of the Managing General Partner”); (iv) the
date on which any court of competent jurisdiction enters a decree of judicial dissolution of the Property Partnership or an order
to wind-up or liquidate our company without the appointment of a successor in compliance with the provisions of the Property Partnership’s
limited partnership agreement that are described below under “- Withdrawal of the Managing General Partner”; and (v) the
date on which our company decides to dispose of, or otherwise realize proceeds in respect of, all or substantially all of the Property
Partnership’s assets in a single transaction or series of transactions.



The Property Partnership
will be reconstituted and continue without dissolution if within 30 days of the date of dissolution (and provided that a notice
of dissolution with respect to the Property Partnership has not been filed with the Bermuda Monetary Authority), a successor managing
general partner executes a transfer deed pursuant to which the new managing general partner assumes the rights and undertakes the
obligations of the original managing general partner, but only if the Property Partnership receives an opinion of counsel that
the admission of the new managing general partner will not result in the loss of limited liability of any limited partner of the
Property Partnership.



Withdrawal of the Managing General Partner



Our company may withdraw
as managing general partner of the Property Partnership without first obtaining approval of unitholders of the Property Partnership
by giving written notice, and that withdrawal will not constitute a violation of the limited partnership agreement.



Upon the withdrawal
of our company, the holders of at least a majority of outstanding units may select a successor to that withdrawing managing general
partner. If a successor is not selected, or is selected but an opinion of counsel regarding limited liability, tax matters and
the Investment Company Act (and similar legislation in other jurisdictions) cannot be obtained, the Property Partnership will be
dissolved, wound up and liquidated. See “- Dissolution” above.



Our company may not
be removed as managing general partner by the partners of the Property Partnership.



In the event of the
withdrawal of a managing general partner as a result of certain events relating to the bankruptcy, insolvency or dissolution of
that managing general partner, which withdrawal will violate the Property Partnership’s limited partnership agreement, a
successor managing general partner will have the option to purchase the Managing General Partner Units of the departing managing
general partner for a cash payment equal to its fair market value. Under all other circumstances where a managing general partner
withdraws, the departing managing general partner will have the option to require the successor managing general partner to purchase
the Managing General Partner Units of the departing managing general partner for a cash payment equal to its fair market value.
In each case, this fair market value will be determined by agreement between the departing managing general partner and the successor
managing general partner. If no agreement is reached within 30 days of the managing general partner’s departure, an independent
investment banking firm or other independent expert selected by the departing managing general partner and the successor managing
general partner will determine the fair market value. If the departing managing general partner and the successor managing general
partner cannot agree upon an expert within 45 days of the managing general partner’s departure, then an expert chosen
by agreement of the experts selected by each of them will determine the fair market value.



If the option described
above is not exercised by either the departing managing general partner or the successor managing general partner, the departing
managing general partner’s Managing General Partner Units will automatically convert into units pursuant to a valuation of
those interests as determined by an investment banking firm or other independent expert selected in the manner described in the
preceding paragraph.



117







Transfer of the Managing General Partner
Units



Our company may transfer
all or any part of its Managing General Partner Units without first obtaining approval of any unitholder of the Property Partnership.
As a condition of this transfer, the transferee must: (i) be an affiliate of the BPY General Partner (or the transfer must
be made concurrently with a transfer of the GP Units to an affiliate of the transferee); (ii) agree to assume the rights and
duties of the managing general partner to whose interest that transferee has succeeded; (iii) agree to assume the provisions
of the Property Partnership’s limited partnership agreement; and (iv) furnish an opinion of counsel regarding limited
liability, tax matters and the Investment Company Act (and similar legislation in other jurisdictions). Any transfer of the Managing
General Partner Units is subject to prior notice to and approval of the relevant Bermuda regulatory authorities. At any time, the
BPY General Partner may transfer all or any part of its general partnership interests in our company without the approval of our
unitholders as described under Item 10.B. “Memorandum and Articles of Association - Description of our Units and our
Limited Partnership Agreement - Transfer of the General Partnership Interest”.



Transactions with Interested Parties



Our company, its affiliates
and their respective partners, members, directors, officers, employees and shareholders, which we refer to as “interested
parties”, may become limited partners or beneficially interested in limited partners and may hold, dispose of or otherwise
deal with units of the Property Partnership with the same rights they would have if our company and the BPY General Partner were
not a party to the limited partnership agreement of the Property Partnership. An interested party will not be liable to account
either to other interested parties or to the Property Partnership, its partners or any other persons for any profits or benefits
made or derived by or in connection with any such transaction.



The limited partnership
agreement of the Property Partnership permits an interested party to sell investments to, purchase assets from, vest assets in
and enter into any contract, arrangement or transaction with our company, the Property Partnership, any of the Holding Entities,
any operating entity or any other holding entity established by the Property Partnership and may be interested in any such contract,
transaction or arrangement and shall not be liable to account either to the Property Partnership, any of the Holding Entities,
any operating entity or any other holding entity established by the Property Partnership or any other person in respect of any
such contract, transaction or arrangement, or any benefits or profits made or derived therefrom, by virtue only of the relationship
between the parties concerned, subject to the bye-laws of the BPY General Partner.



Outside Activities of the Managing General
Partner



In accordance with
our limited partnership agreement, our company is authorized to: (i) acquire and hold interests in the Property Partnership and,
subject to the approval of the BPY General Partner, interests in any other entity; (ii) engage in any activity related to the capitalization
and financing of our company’s interests in the Property Partnership and such other entities; (iii) serve as the managing
general partner of the Property Partnership and execute and deliver, and perform the functions of a managing general partner specified
in, the limited partnership agreement of the Property Partnership; and (iv) engage in any other activity that is incidental to
or in furtherance of the foregoing and that is approved by the BPY General Partner and that lawfully may be conducted by a limited
partnership organized under the Bermuda Limited Partnership Act 1883, the Bermuda Exempted Partnerships Act 1992 and our limited
partnership agreement.



The Property Partnership’s
limited partnership agreement provides that each person who is entitled to be indemnified by the Property Partnership, as described
below under “- Indemnification; Limitations on Liability”, will have the right to engage in businesses of every type
and description and other activities for profit, and to engage in and possess interests in business ventures of any and every type
or description, irrespective of whether: (i) such businesses and activities are similar to our activities; or (ii) such
businesses and activities directly compete with, or disfavor or exclude, the BPY General Partner, our company, the Property Partnership,
any Holding Entity, any operating entity, or any other holding entity established by the Property Partnership. Such business interests,
activities and engagements will be deemed not to constitute a breach of the Property Partnership’s limited partnership agreement
or any duties stated or implied by law or equity, including fiduciary duties, owed to any of the BPY General Partner, our company,
the Property Partnership, any Holding Entity, any operating entity, and any other holding entity established by the Property Partnership
(or any of their respective investors), and shall be deemed not to be a breach of our company’s fiduciary duties or any other
obligation of any type whatsoever of our company. None of the BPY General Partner, our company, the Property Partnership, any Holding
Entity, operating entity, any other holding entity established by the Property Partnership or any other person shall have any rights
by virtue of the Property Partnership’s limited partnership agreement or our partnership relationship established thereby
or otherwise in any business ventures of any person who is entitled to be indemnified by the Property Partnership as described
below under “- Indemnification; Limitations on Liability”.



Our company and the
other indemnified persons described in the preceding paragraph do not have any obligation under the Property Partnership’s
limited partnership agreement or as a result of any duties stated or implied by law or equity, including fiduciary duties, to present
business or investment opportunities to the Property Partnership, the limited partners of the Property Partnership, any Holding
Entity, operating entity, or any other holding entity established by the Property Partnership. These provisions do not affect any
obligation of such indemnified person to present business or investment opportunities to our company, the Property Partnership,
any Holding Entity, any operating entity or any other holding entity established by the Property Partnership pursuant to the Relationship
Agreement or any separate written agreement between such persons.



Accounts, Reports and Other Information



Under the Property
Partnership’s limited partnership agreement, our company is required to prepare financial statements in accordance with IFRS
or such other appropriate accounting principles as determined from time to time by our company, in its sole discretion.



118







Our company is also
required to use commercially reasonable efforts to prepare and send to the limited partners of the Property Partnership on an annual
basis a Schedule K-1 (or equivalent). Our company will also, where reasonably possible, prepare and send information required by
the non-U.S. limited partners of the Property Partnership for U.S. federal income tax reporting purposes.



Indemnification; Limitations on Liability



Under the Property
Partnership’s limited partnership agreement, it is required to indemnify to the fullest extent permitted by law the BPY General
Partner, our company and any of their respective affiliates (and their respective officers, directors, agents, shareholders, partners,
members and employees), any person who serves on a governing body of the Property Partnership, a Holding Entity, operating entity
or any other holding entity established by our company and any other person designated by its general partner as an indemnified
person, in each case, against all losses, claims, damages, liabilities, costs or expenses (including legal fees and expenses),
judgments, fines, penalties, interest, settlements and other amounts arising from any and all claims, demands, actions, suits or
proceedings, incurred by an indemnified person in connection with its business, investments and activities or by reason of their
holding such positions, except to the extent that the claims, liabilities, losses, damages, costs or expenses are determined to
have resulted from the indemnified person’s bad faith, fraud or willful misconduct, or in the case of a criminal matter,
action that the indemnified person knew to have been unlawful. In addition, under the Property Partnership’s limited partnership
agreement: (i) the liability of such persons has been limited to the fullest extent permitted by law, except to the extent
that their conduct involves bad faith, fraud or willful misconduct, or in the case of a criminal matter, action that the indemnified
person knew to have been unlawful; and (ii) any matter that is approved by the independent directors will not constitute a
breach of any duties stated or implied by law or equity, including fiduciary duties. The Property Partnership’s limited partnership
agreement requires it to advance funds to pay the expenses of an indemnified person in connection with a matter in which indemnification
may be sought until it is determined that the indemnified person is not entitled to indemnification.



Governing Law



The Property Partnership’s
limited partnership agreement is governed by and will be construed in accordance with the laws of Bermuda.



10.C.	MATERIAL CONTRACTS



The following are the only material contracts,
other than contracts entered into in the ordinary course of business, which have been entered into by us since our formation:



| | 1. | Support Agreement, dated March 19, 2014, between Brookfield Property Partners L.P. and Brookfield
Office Properties Exchange LP described under “Additional Information - Memorandum and Articles of Association - Description
of Our Units and Our Limited Partnership Agreement”;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Credit Agreement, dated March 18, 2014, by and among Brookfield Property Split Corp., Brookfield
Office Properties Exchange LP, Brookfield Property Partners L.P., Brookfield Property L.P., and the other borrowers and lenders
thereto described below;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Amended and Restated Master Purchase Agreement described under Item 4.A. “Information
on the Company - History and Development of the Company”;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | Amended and Restated Master Services Agreement by and among Brookfield Asset Management, the Service
Recipients and the Service Providers described under Item 7.B. “Major Shareholders and Related Party Transactions -
Related Party Transactions - Our Master Services Agreement”;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. | Relationship Agreement by and among Brookfield Asset Management, our company and the Service Providers
and others described under Item 7.B. “Major Shareholders and Related Party Transactions - Related Party Transactions
- Relationship with Brookfield - Relationship Agreement”;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. | Registration Rights Agreement between our company and Brookfield Asset Management described under
the heading Item 7.B. “Major Shareholders and Related Party Transactions - Related Party Transactions - Relationship
with Brookfield - Registration Rights Agreement”;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 7. | Acknowledgement of Termination of Voting Agreement by and among Brookfield Asset Management, Brookfield
Property General Partner Limited and our company dated August 8, 2013 described under Item 4.A. “History and Development
of the Company”;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 8. | Second Amended and Restated Limited Partnership Agreement of our partnership described under Item 10.B.
“Additional Information - Memorandum and Articles of Association - Description of Our Units and Our Limited Partnership Agreement”;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 9. | Second Amended and Restated Limited Partnership Agreement of the Property Partnership described
under Item 10.B. “Additional Information - Memorandum and Articles of Association - Description of the Property Partnership
Limited Partnership Agreement”;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10. | First Amendment to Second Amended and Restated Limited Partnership Agreement of the Property Partnership
described under Item 10.B. “Additional Information - Memorandum and Articles of Association - Description of the Property
Partnership Limited Partnership Agreement”;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



119







| | 11. | Arrangement Agreement between our company, Brookfield Office Properties Exchange LP, Brookfield
Property Split Corp. and Brookfield Office Properties Inc., dated as of April 24, 2014 described under Item 4.A. “History
and Development of the Company”;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 12. | Guarantee Agreement between our company and the Class A Preferred Unitholder dated December 4,
2014 described under Item 4.A. “History and Development of the Company”;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 13. | Investor Agreement between our company and the Class A Preferred Unitholder dated December 4, 2014
described under Item 4.A. “History and Development of the Company”; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 14. | Subscription Agreement among our company, the Property Partnership and the Class A Preferred Unitholder
dated December 4, 2014 described under Item 4.A. “History and Development of the Company”.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Copies of the agreements noted above are
available, free of charge, from the BPY General Partner and are available electronically on the website of the SEC atwww.sec.gov
and on our SEDAR profile atwww.sedar.com . Written requests for such documents should be directed to our Corporate
Secretary at 73 Front Street, 5th Floor, Hamilton HM 12, Bermuda.



BPY Credit Facility



On March 18, 2014
we entered into the BPY Credit Facility, consisting of a $1.5 billion term acquisition credit facility to fund the Offer, or the
Acquisition Credit Facility, and a $1 billion revolving facility to be used to replace our existing revolving credit facilities,
to fund a portion of the additional cash required to complete the Offer and any second-step transaction up to a limit of $365,508,000,
and for general corporate and operating purposes.



Borrowings under the
BPY Credit Facility are subject to certain customary conditions for loan facilities of this type. Interest under the BPY Credit
Facility is payable, at the option of borrowers thereunder, either at a base rate plus 1.25% or a LIBOR-based rate plus 2.25%.
The BPY Credit Facility has a term of two years, with a one-year extension at our option for up to $1.5 billion of commitments
subject to the satisfaction of certain conditions and the payment of extension fees. The BPY Credit Facility may be prepaid, in
whole or in part (subject to minimums and increments), at any time and without bonus or penalty. We will be required to reduce
the aggregate principal amount outstanding under the Acquisition Credit Facility to $500 million or less prior to the second anniversary
of the facility, and such reduction is required to exercise the one-year extension option. Subject to certain exceptions and limitations,
we are required to cause a specified percentage (based on the amount outstanding under the Acquisition Credit Facility) of the
net proceeds that we receive from certain future asset sales and debt issuances to be applied to repay the Acquisition Credit Facility.
Any portion of such net sale and financing proceeds that is not required to be repaid to the lenders in the first instance and
is not reinvested within a specified time period, must similarly be used to repay the Acquisition Credit Facility. Our operating
entities are subject to limited covenants in respect of their corporate debt and were in compliance with all such covenants as
of December 31, 2014. Our operating subsidiaries are also in compliance with all covenants and other capital requirements related
to regulatory or contractual obligations of material consequence to us.



10.D.	EXCHANGE CONTROLS



There are currently
no governmental laws, decrees, regulations or other legislation of Bermuda which restrict the import or export of capital or the
remittance of dividends, interest or other payments to non-residents of Bermuda holding our units.



10.E.	TAXATION



The following summary
discusses certain material U.S. and Canadian tax considerations related to the holding and disposition of our units as of the date
hereof. Prospective purchasers of our units are advised to consult their own tax advisers concerning the consequences under the
tax laws of the country of which they are resident or in which they are otherwise subject to tax of making an investment in our
units.



U.S. Tax Considerations



This summary discusses
certain material U.S. federal income tax considerations to unitholders relating to the receipt, holding and disposition of our
units as of the date hereof. This summary is based on provisions of the U.S. Internal Revenue Code, on the regulations promulgated
thereunder, or the U.S. Treasury Regulations, and on published administrative rulings, judicial decisions, and other applicable
authorities, all as in effect on the date hereof and all of which are subject to change at any time, possibly with retroactive
effect. This summary is necessarily general and may not apply to all categories of investors, some of whom may be subject to special
rules, including, without limitation, persons that own (directly or indirectly, applying certain attribution rules) 5% or more
of our units, dealers in securities or currencies, financial institutions or financial services entities, mutual funds, life insurance
companies, persons that hold our units as part of a straddle, hedge, constructive sale or conversion transaction with other investments,
persons whose units are loaned to a short seller to cover a short sale of units, persons whose functional currency is not the U.S. Dollar,
persons who have elected mark-to-market accounting, persons who hold our units through a partnership or other entity treated as
a pass-through entity for U.S. federal income tax purposes, persons for whom our units are not a capital asset, persons who are
liable for the alternative minimum tax and certain U.S. expatriates or former long-term residents of the United States. Tax-exempt
organizations are addressed separately below. The actual tax consequences of the ownership and disposition of our units will vary
depending on your individual circumstances.



120







For purposes of this
discussion, a “U.S. Holder” is a beneficial owner of one or more of our units that is for U.S. federal tax purposes:
(i) an individual citizen or resident of the United States; (ii) a corporation (or other entity treated as a corporation
for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the
District of Columbia; (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source;
or (iv) a trust (a) that is subject to the primary supervision of a court within the United States and all substantial
decisions of which one or more U.S. persons have the authority to control or (b) that has a valid election in effect under
applicable U.S. Treasury Regulations to be treated as a U.S. person.



A “Non-U.S. Holder”
is a beneficial owner of one or more of our units, other than a U.S. Holder or an entity classified as a partnership or other fiscally
transparent entity for U.S. federal tax purposes.



If a partnership holds
our units, the tax treatment of a partner of such partnership generally will depend upon the status of the partner and the activities
of our company. Partners of partnerships that hold our units should consult their own tax advisers.



This discussion
does not constitute tax advice and is not intended to be a substitute for tax planning. You should consult your own tax adviser
concerning the U.S. federal, state and local income tax consequences particular to your ownership and disposition of our units,
as well as any tax consequences under the laws of any other taxing jurisdiction.



Partnership Status of Our Company
and the Property Partnership



Each of our company
and the Property Partnership has made a protective election to be classified as a partnership for U.S. federal tax purposes. An
entity that is treated as a partnership for U.S. federal tax purposes incurs no U.S. federal income tax liability. Instead, each
partner is required to take into account its allocable share of items of income, gain, loss, deduction, or credit of our company
in computing its U.S. federal income tax liability, regardless of whether cash distributions are made. Distributions of cash by
a partnership to a partner generally are not taxable unless the amount of cash distributed to a partner is in excess of the partner’s
adjusted basis in its partnership interest.



An entity that would
otherwise be classified as a partnership for U.S. federal income tax purposes may nonetheless be taxable as a corporation if it
is a “publicly traded partnership”, unless an exception applies. Our company is publicly traded. However, an exception,
referred to as the “Qualifying Income Exception”, exists with respect to a publicly traded partnership if (i) at
least 90% of such partnership’s gross income for every taxable year consists of “qualifying income” and (ii) our
partnership would not be required to register under the Investment Company Act if it were a U.S. corporation. Qualifying income
includes certain interest income, dividends, real property rents, gains from the sale or other disposition of real property, and
any gain from the sale or disposition of a capital asset or other property held for the production of income that otherwise constitutes
qualifying income.



The BPY General Partner
intends to manage the affairs of our company and the Property Partnership so that our company will meet the Qualifying Income Exception
in each taxable year. Accordingly, the BPY General Partner believes that our company will be treated as a partnership and not as
a corporation for U.S. federal income tax purposes.



If our company fails
to meet the Qualifying Income Exception, other than a failure which is determined by the IRS to be inadvertent and which is cured
within a reasonable time after discovery, or if our company is required to register under the Investment Company Act, our company
will be treated as if it had transferred all of its assets, subject to liabilities, to a newly formed corporation, on the first
day of the year in which our company fails to meet the Qualifying Income Exception, in return for stock in such corporation, and
then distributed the stock to our unitholders in liquidation. This deemed contribution and liquidation generally would be tax-free
to a U.S. Holder, unless our company were to have liabilities in excess of the tax basis of its assets at such time. Thereafter,
our company would be treated as a corporation for U.S. federal income tax purposes.



If our company were
treated as a corporation in any taxable year, either as a result of a failure to meet the Qualifying Income Exception or otherwise,
our company’s items of income, gain, loss, deduction, or credit would be reflected only on our company’s tax return
rather than being passed through to our unitholders, and our company would be subject to U.S. corporate income tax and potentially
branch profits tax with respect to its income, if any, effectively connected with a U.S. trade or business. Moreover, under certain
circumstances, our company might be classified as a PFIC, for U.S. federal income tax purposes, and a U.S. Holder would be subject
to the rules applicable to PFICs discussed below. See “— Consequences to U.S. Holders — Passive Foreign Investment
Companies”. Subject to the PFIC rules, distributions made to U.S. Holders would be treated as taxable dividend income to
the extent of our company’s current or accumulated earnings and profits. Any distribution in excess of current and accumulated
earnings and profits would first be treated as a tax-free return of capital to the extent of a U.S. Holder’s adjusted tax
basis in its units. Thereafter, to the extent such distribution were to exceed a U.S. Holder’s adjusted tax basis in its
units, the distribution would be treated as gain from the sale or exchange of such units. The amount of a distribution treated
as a dividend could be eligible for reduced rates of taxation, provided certain conditions are met. In addition, interest and certain
other passive income received by our company with respect to U.S. investments generally would be subject to U.S. withholding tax
at a rate of 30% (although certain Non-U.S. Holders nevertheless might be entitled to certain treaty benefits in respect of their
allocable share of such income) and U.S. Holders would not be allowed a tax credit with respect to any such tax withheld. In addition,
the “portfolio interest” exemption would not apply to certain interest income of our company (although certain Non-U.S.
Holders nevertheless might be entitled to certain treaty benefits in respect of their allocable share of such income).



Based on the foregoing
consequences, the treatment of our company as a corporation could materially reduce a holder’s after-tax return and therefore
could result in a substantial reduction of the value of our units. If the Property Partnership were to be treated as a corporation
for U.S. federal income tax purposes, consequences similar to those described above would apply.



The remainder of this
summary assumes that our company and the Property Partnership will be treated as partnerships for U.S. federal tax purposes. We
expect that a substantial portion of the items of income, gain, deduction, loss, or credit realized by our company will be realized
in the first instance by the Property Partnership and allocated to our company for reallocation to our unitholders. Unless otherwise
specified, references in this section to realization of our company’s items of income, gain, loss, deduction, or credit include
a realization of such items by the Property Partnership (or other lower tier partnership) and the allocation of such items to our
company.



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Consequences to U.S. Holders



Holding of Our Units



Income and Loss.
If you are a U.S. Holder, you will be required to take into account, as described below, your allocable share of our company’s
items of income, gain, loss, deduction, and credit for each of our company’s taxable years ending with or within your taxable
year. Each item generally will have the same character and source as though you had realized the item directly. You must report
such items without regard to whether any distribution has been or will be received from our company. Our company intends to make
cash distributions to all unitholders on a quarterly basis in amounts generally expected to be sufficient to permit U.S. Holders
to fund their estimated U.S. tax obligations (including U.S. federal, state, and local income taxes) with respect to their allocable
shares of our company’s net income or gain. However, based upon your particular tax situation and simplifying assumptions
that our company will make in determining the amount of such distributions, and depending upon whether you elect to reinvest such
distributions pursuant to the distribution reinvestment plan, if available, your tax liability might exceed cash distributions
made to you, in which case any tax liabilities arising from your ownership of our units would need to be satisfied from your own
funds.



With respect to U.S.
Holders who are individuals, certain dividends paid by a corporation (including certain qualified foreign corporations) to our
company and that are allocable to such U.S. Holders may qualify for reduced rates of taxation. A qualified foreign corporation
includes a foreign corporation that is eligible for the benefits of specified income tax treaties with the United States. In addition,
a foreign corporation is treated as a qualified corporation with respect to its shares that are readily tradable on an established
securities market in the United States. Among other exceptions, U.S. Holders who are individuals will not be eligible for reduced
rates of taxation on any dividends if the payer is a PFIC for the taxable year in which such dividends are paid or for the preceding
taxable year. Dividends received by non-corporate U.S. Holders may be subject to an additional Medicare tax on unearned income
of 3.8% (see “—Medicare Tax” below). U.S. Holders that are corporations generally will not be entitled to a “dividends
received deduction” in respect of dividends paid by non-U.S. corporations in which our company (through the Property Partnership)
owns stock. You should consult your own tax adviser regarding the application of the foregoing rules in light of your particular
circumstances.



For U.S. federal income
tax purposes, your allocable share of our company’s items of income, gain, loss, deduction, or credit will be governed by
our limited partnership agreement if such allocations have “substantial economic effect” or are determined to be in
accordance with your interest in our company. Similarly, our company’s allocable share of items of income, gain, loss, deduction,
or credit of the Property Partnership will be governed by the limited partnership agreement of the Property Partnership if such
allocations have “substantial economic effect” or are determined to be in accordance with our interest in the Property
Partnership. The BPY General Partner believes that, for U.S. federal income tax purposes, such allocations should be given effect,
and the BPY General Partner intends to prepare and file tax returns based on such allocations. If the IRS were to successfully
challenge the allocations made pursuant to either our company’s limited partnership agreement or the limited partnership
agreement of the Property Partnership, then the resulting allocations for U.S. federal income tax purposes might be less favorable
than the allocations set forth in such agreements.



Basis. You will
have an initial tax basis in your units equal to the sum of (i) the amount of cash paid for our units (or, if you received your
units pursuant to the Spin-off, their fair market value on the date you received them pursuant to the Spin-off) and (ii) your share
of our company’s liabilities, if any. That basis will be increased by your share of our company’s income and by increases
in your share of our company’s liabilities, if any. That basis will be decreased, but not below zero, by distributions you
receive from our company, by your share of our company’s losses, and by any decrease in your share of our company’s
liabilities. Under applicable U.S. federal income tax rules, a partner in a partnership has a single, or “unitary”,
tax basis in his or her partnership interest. As a result, any amount you pay to acquire additional units (including through the
distribution reinvestment plan) will be averaged with the adjusted tax basis of units owned by you prior to the acquisition of
such additional units.



For purposes of the
foregoing rules, the rules discussed immediately below, and the rules applicable to a sale or exchange of our units, our company’s
liabilities generally will include our company’s share of any liabilities of the Property Partnership.



Limits on Deductions
for Losses and Expenses. Your deduction of your allocable share of our company’s losses will be limited to your tax basis
in our units and, if you are an individual or a corporate holder that is subject to the “at risk” rules, to the amount
for which you are considered to be “at risk” with respect to our company’s activities, if that is less than your
tax basis. In general, you will be at risk to the extent of your tax basis in our units, reduced by (i) the portion of that
basis attributable to your share of our company’s liabilities for which you will not be personally liable (excluding certain
qualified non-recourse financing) and (ii) any amount of money you borrow to acquire or hold our units, if the lender of those
borrowed funds owns an interest in our company, is related to you, or can look only to your units for repayment. Your at-risk amount
generally will increase by your allocable share of our company’s income and gain and decrease by distributions you receive
from our company and your allocable share of losses and deductions. You must recapture losses deducted in previous years to the
extent that distributions cause your at-risk amount to be less than zero at the end of any taxable year. Losses disallowed or recaptured
as a result of these limitations will carry forward and will be allowable to the extent that your tax basis or at-risk amount,
whichever is the limiting factor, subsequently increases. Upon the taxable disposition of our units, any gain recognized by you
can be offset by losses that were previously suspended by the at-risk limitation, but may not be offset by losses suspended by
the basis limitation. Any excess loss above the gain previously suspended by the at-risk or basis limitations may no longer be
used. You should consult your own tax adviser as to the effects of the at-risk rules.



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Limitations on Deductibility
of Organizational Expenses and Syndication Fees. In general, neither our company nor any U.S. Holder may deduct organizational
or syndication expenses. Similar rules apply to organizational or syndication expenses incurred by the Property Partnership. Syndication
fees (which would include any sales or placement fees or commissions) must be capitalized and cannot be amortized or otherwise
deducted.



Limitations on Interest
Deductions. Your share of our company’s interest expense is likely to be treated as “investment interest”
expense. For a non-corporate U.S. Holder, the deductibility of “investment interest” expense generally is limited to
the amount of such holder’s “net investment income”. Your share of our company’s dividend and interest
income will be treated as investment income, although “qualified dividend income” subject to reduced rates of tax in
the hands of an individual will only be treated as investment income if such individual elects to treat such dividend as ordinary
income not subject to reduced rates of tax. In addition, state and local tax laws may disallow deductions for your share of our
company’s interest expense.



Net investment income
includes gross income from property held for investment and amounts treated as portfolio income under the passive loss rules, less
deductible expenses, other than interest, directly connected with the production of investment income, but generally does not include
gains attributable to the disposition of property held for investment.



Deductibility of
Partnership Investment Expenditures by Individual Partners and by Trusts and Estates. Subject to certain exceptions, all miscellaneous
itemized deductions of an individual taxpayer, and certain of such deductions of an estate or trust, are deductible only to the
extent that such deductions exceed 2% of the taxpayer’s adjusted gross income. In addition, the otherwise allowable itemized
deductions of individuals whose gross income exceeds an applicable threshold amount are subject to reduction by an amount equal
to the lesser of (i) 3% of the excess of the individual’s adjusted gross income over the threshold amount and (ii) 80%
of the amount of the individual’s itemized deductions. The operating expenses of our company, including our company’s
allocable share of the base management fee or any other management fees, may be treated as miscellaneous itemized deductions subject
to the foregoing rule. Accordingly, if you are a non-corporate U.S. Holder, you should consult your own tax adviser regarding the
application of these limitations.



Treatment of Distributions



Distributions of cash
by our company generally will not be taxable to you to the extent of your adjusted tax basis (described above) in our units. Any
cash distributions in excess of your adjusted tax basis generally will be considered to be gain from the sale or exchange of our
units (described below). Such gain generally will be treated as capital gain and will be long-term capital gain if your holding
period for our units exceeds one year. A reduction in your allocable share of our liabilities, and certain distributions of marketable
securities by our company, if any, will be treated similar to cash distributions for U.S. federal income tax purposes.



Sale or Exchange of Our Units



You will recognize
gain or loss on the sale or taxable exchange of our units equal to the difference, if any, between the amount realized and your
tax basis in our units sold or exchanged. Your amount realized will be measured by the sum of the cash or the fair market value
of other property received plus your share of our company’s liabilities, if any.



Gain or loss recognized
by you upon the sale or exchange of our units generally will be taxable as capital gain or loss and will be long-term capital gain
or loss if our units were held for more than one year as of the date of such sale or exchange. Assuming you have not elected to
treat your share of our company’s investment in any PFIC as a “qualified electing fund”, gain attributable to
such investment in a PFIC would be taxable in the manner described below in “—Passive Foreign Investment Companies”.
In addition, certain gain attributable to “unrealized receivables” or “inventory items” could be characterized
as ordinary income rather than capital gain. For example, if our company were to hold debt acquired at a market discount, accrued
market discount on such debt would be treated as “unrealized receivables”. The deductibility of capital losses is subject
to limitations.



Each U.S. Holder who
acquires our units at different times and intends to sell all or a portion of our units within a year of the most recent purchase
should consult its own tax adviser regarding the application of certain “split holding period” rules to such sale and
the treatment of any gain or loss as long-term or short-term capital gain or loss.



Medicare Tax



U.S. Holders that are
individuals, estates, or trusts may be required to pay a 3.8% Medicare tax on the lesser of (i) the excess of such U.S. Holders’
“modified adjusted gross income” (or “adjusted gross income” in the case of estates and trusts) over certain
thresholds and (ii) such U.S. Holders’ “net investment income” (or “undistributed net investment income”
in the case of estates and trusts). Net investment income generally includes your allocable share of our company’s income,
as well as gain realized by you from a sale of our units. Special rules relating to the 3.8% Medicare tax may apply to dividends
and gain, if any, derived by U.S. Holders with respect to our company’s interest in a PFIC. See “— Consequences
to U.S. Holders — Passive Foreign Investment Companies”. U.S. Holders should consult their own tax advisers regarding
the implications of the 3.8% Medicare tax for the ownership and disposition of our units.



Foreign Tax Credit Limitations



If you are a U.S. Holder,
you generally will be entitled to a foreign tax credit with respect to your allocable share of creditable foreign taxes paid on
our company’s income and gain. Complex rules may, depending on your particular circumstances, limit the availability or use
of foreign tax credits. Gain from the sale of our company’s investments may be treated as U.S.-source gain. Consequently,
you may not be able to use the foreign tax credit arising from any foreign taxes imposed on such gain unless the credit can be
applied (subject to applicable limitations) against U.S. tax due on other income treated as derived from foreign sources. Certain
losses that our company incurs may be treated as foreign-source losses, which could reduce the amount of foreign tax credits otherwise
available.



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Section 754 Election



Our company and the
Property Partnership have each made the election permitted by Section 754 of the U.S. Internal Revenue Code, or the Section 754
Election. The Section 754 Election cannot be revoked without the consent of the IRS. The Section 754 Election generally
requires our company to adjust the tax basis in its assets, or inside basis, attributable to a transferee of our units under Section 743(b)
of the U.S. Internal Revenue Code to reflect the purchase price paid by the transferee for our units. This election does not apply
to a person who purchases units directly from us. For purposes of this discussion, a transferee’s inside basis in our company’s
assets will be considered to have two components: (i) the transferee’s share of our company’s tax basis in our
company’s assets, or common basis, and (ii) the adjustment under Section 743(b) of the U.S. Internal Revenue Code
to that basis. The foregoing rules would also apply to the Property Partnership.



Generally, a Section 754
Election would be advantageous to a transferee U.S. Holder if such holder’s tax basis in its units were higher than such
units’ share of the aggregate tax basis of our company’s assets immediately prior to the transfer. In that case, as
a result of the Section 754 Election, the transferee U.S. Holder would have a higher tax basis in its share of our company’s
assets for purposes of calculating, among other items, such holder’s share of any gain or loss on a sale of our company’s
assets. Conversely, a Section 754 Election would be disadvantageous to a transferee U.S. Holder if such holder’s tax
basis in its units were lower than such units’ share of the aggregate tax basis of our company’s assets immediately
prior to the transfer. Thus, the fair market value of our units may be affected either favorably or adversely by the election.



Whether or not the
Section 754 Election is made, if our units are transferred at a time when our company has a “substantial built-in loss”
in its assets, our company will be obligated to reduce the tax basis in the portion of such assets attributable to such units.



The calculations involved
in the Section 754 Election are complex, and the BPY General Partner advises that it will make such calculations on the basis
of assumptions as to the value of our company’s assets and other matters. Each U.S. Holder should consult its own tax adviser
as to the effects of the Section 754 Election.



Uniformity of Our Units



Because we cannot match
transferors and transferees of our units, we must maintain uniformity of the economic and tax characteristics of our units to a
purchaser of our units. In the absence of uniformity, we may be unable to comply fully with a number of U.S. federal income tax
requirements. A lack of uniformity can result from a literal application of certain U.S. Treasury regulations to our company’s
Section 743(b) adjustments, a determination that our company’s Section 704(c) allocations are unreasonable, or
other reasons. Section 704(c) allocations would be intended to reduce or eliminate the disparity between tax basis and the
value of our company’s assets in certain circumstances, including on the issuance of additional units. In order to maintain
the fungibility of all of our units at all times, we will seek to achieve the uniformity of U.S. tax treatment for all purchasers
of our units which are acquired at the same time and price (irrespective of the identity of the particular seller of our units
or the time when our units are issued by our company), through the application of certain tax accounting principles that the BPY
General Partner believes are reasonable for our company. However, the IRS may disagree with us and may successfully challenge our
application of such tax accounting principles. Any non-uniformity could have a negative impact on the value of our units.



Foreign Currency Gain or Loss



Our company’s
functional currency is the U.S. Dollar, and our company’s income or loss is calculated in U.S. Dollars. It is likely
that our company will recognize “foreign currency” gain or loss with respect to transactions involving non-U.S. Dollar
currencies. In general, foreign currency gain or loss is treated as ordinary income or loss. You should consult your own tax adviser
regarding the tax treatment of foreign currency gain or loss.



Passive Foreign Investment Companies



U.S. Holders may be
subject to special rules applicable to indirect investments in foreign corporations, including an investment through our company
in a PFIC. A PFIC is defined as any foreign corporation with respect to which (after applying certain look-through rules) either
(i) 75% or more of its gross income for a taxable year is “passive income” or (ii) 50% or more of its assets
in any taxable year (generally based on the quarterly average of the value of its assets) produce or are held for the production
of “passive income”. There are no minimum stock ownership requirements for PFICs. If you hold an interest in a foreign
corporation for any taxable year during which the corporation is classified as a PFIC with respect to you, then the corporation
will continue to be classified as a PFIC with respect to you for any subsequent taxable year during which you continue to hold
an interest in the corporation, even if the corporation’s income or assets would not cause it to be a PFIC in such subsequent
taxable year, unless an exception applies.



Subject to certain
elections described below, any gain on the disposition of stock of a PFIC owned by you indirectly through our company, as well
as income realized on certain “excess distributions” by such PFIC, would be treated as though realized ratably over
the shorter of your holding period of our units or our company’s holding period for the PFIC. Such gain or income generally
would be taxable as ordinary income, and dividends paid by the PFIC would not be eligible for the preferential tax rates for dividends
paid to non-corporate U.S. Holders. In addition, an interest charge would apply, based on the tax deemed deferred from prior years.



124







If you were to elect
to treat your share of our company’s interest in a PFIC as a “qualified electing fund”, such election a “QEF
Election”, for the first year you were treated as holding such interest, then in lieu of the tax consequences described in
the paragraph immediately above, you would be required to include in income each year a portion of the ordinary earnings and net
capital gains of the PFIC, even if not distributed to our company or to you. A QEF Election must be made by you on an entity-by-entity
basis. To make a QEF Election, you must, among other things, (i) obtain a PFIC annual information statement (through an intermediary
statement supplied by our company) and (ii) prepare and submit IRS Form 8621 with your annual income tax return. To the extent
reasonably practicable, we intend to timely provide you with information related to the PFIC status of each entity we are able
to identify as a PFIC, including information necessary to make a QEF Election with respect to each such entity. Any such election
should be made for the first year our company holds an interest in such entity or for the first year in which you hold our units,
if later.



Once you have made
a QEF Election for an entity, such election applies to any additional shares of interest in such entity acquired directly or indirectly,
including through additional units acquired after the QEF Election is made (such as units acquired under the distribution reinvestment
plan, if available). If you were to make a QEF Election after the first year that you were treated as holding an interest in a
PFIC, the adverse tax consequences relating to PFIC stock would continue to apply with respect to the pre-QEF Election period,
unless you were to make a “purging election”. The purging election would create a deemed sale of your previously held
share of our company’s interests in a PFIC. The gain recognized by the purging election would be subject to the special tax
and interest charge rules, which treat the gain as an excess distribution, as described above. As a result of the purging election,
you would have a new basis and holding period in your share of our company’s interests in the PFIC. U.S. Holders should consult
their own tax advisers as to the manner in which such direct inclusions could affect their allocable share of our company’s
income and their tax basis in our units and the advisability of making a QEF Election or a purging election.



U.S. Treasury
Regulations under Section 1411 of the U.S. Internal Revenue Code contain special rules for applying the 3.8% Medicare tax (as described
above under “— Medicare Tax”) to U.S. persons owning an interest in a PFIC. Under the special rules, if
you are a non-corporate U.S. Holder that has made a QEF Election with respect to our company’s interest in a PFIC, then
you are permitted to make a special election to treat your share of the ordinary earnings and net capital gains of the PFIC as
net investment income for purposes of the 3.8% Medicare tax. If you do not make the special election, you may be required to calculate
your basis in our units for purposes of the 3.8% Medicare tax in a manner that differs from the calculation of your basis in our
units for U.S. federal income tax purposes generally. You should consult your own tax adviser regarding the implications of
the special election, as well as the other implications of the 3.8% Medicare tax and the U.S. Treasury Regulations under Section
1411 of the U.S. Internal Revenue Code for your ownership and disposition of our units.



In the case of a PFIC
that is a publicly traded foreign company, and in lieu of making a QEF Election, an election may be made to “mark to market”
the stock of such publicly traded foreign company on an annual basis. Pursuant to such an election, you would include in each year
as ordinary income the excess, if any, of the fair market value of such stock over its adjusted basis at the end of the taxable
year. The BPY General Partner currently believes it is possible that one or more of our existing or future operating entities will
qualify as PFICs that are publicly traded. However, there can be no assurance that a mark-to-market election will be available
for any such entity. You should consult your own tax adviser regarding the availability of the mark-to-market election with respect
to any PFIC in which you are treated as owning an interest through our company.



Based on our organizational
structure, as well as our company’s expected income and assets, the BPY General Partner currently believes that one or more
of our existing Holding Entities and operating entities are likely to be classified as PFICs. Moreover, we may in the future acquire
certain investments or operating entities through one or more Holding Entities treated as corporations for U.S. federal income
tax purposes, and such future Holding Entities or other companies in which we acquire an interest may be treated as PFICs. In addition,
in order to ensure that we satisfy the Qualifying Income Exception, we may decide to hold an existing or future operating entity
through a Holding Entity that would be classified as a PFIC. See “—Investment Structure” below.



A U.S. person who directly
or indirectly owns an interest in a PFIC may be required to file an annual report with the IRS, and the failure to file such report
could result in the imposition of penalties on such U.S. person and in the extension of the statute of limitations with respect
to federal income tax returns filed by such U.S. person. You should consult your own tax adviser regarding the PFIC rules, including
the foregoing filing requirements, as well as the advisability of making a QEF Election, a special election under the U.S. Treasury
Regulations under Section 1411 of the U.S. Internal Revenue Code, or a mark-to-market election, as applicable, with respect to
any PFIC in which you are treated as owning an interest through our company.



Investment Structure



To ensure that our
company meets the Qualifying Income Exception for publicly traded partnerships (discussed above) and complies with certain requirements
in its limited partnership agreement, we may structure certain investments through an entity classified as a corporation for U.S.
federal income tax purposes. Such investments will be structured as determined in the sole discretion of the BPY General Partner
generally to be efficient for our unitholders. However, because our unitholders will be located in numerous taxing jurisdictions,
no assurance can be given that any such investment structure will benefit all our unitholders to the same extent, and such an investment
structure might even result in additional tax burdens on some unitholders. As discussed above, if any such entity were a non-U.S.
corporation, it might be considered a PFIC. If any such entity were a U.S. corporation, it would be subject to U.S. federal net
income tax on its income, including any gain recognized on the disposition of its investments. In addition, if the investment were
to involve U.S. real property, gain recognized on the disposition of the investment by a corporation generally would be subject
to corporate level tax, whether the corporation were a U.S. or a non-U.S. corporation.





125







U.S. Withholding Taxes



Although each U.S.
Holder is required to provide us with an IRS Form W-9, we nevertheless may be unable to accurately or timely determine the tax
status of our investors for purposes of determining whether U.S. withholding applies to payments made by our company to some or
all of our unitholders. In such a case, payments made by our company to U.S. Holders might be subject to U.S. “backup”
withholding at the applicable rate or other U.S. withholding taxes. You would be able to treat as a credit your allocable share
of any U.S. withholding taxes paid in the taxable year in which such withholding taxes were paid and, as a result, you might be
entitled to a refund of such taxes from the IRS. In the event you transfer or otherwise dispose of some or all of your units, special
rules might apply for purposes of determining whether you or the transferee of such units were subject to U.S. withholding taxes
in respect of income allocable to, or distributions made on account of, such units or entitled to refunds of any such taxes withheld.
See below “Administrative Matters—Certain Effects of a Transfer of Units”. You should consult your own tax adviser
regarding the treatment of U.S. withholding taxes.



Transferor/Transferee Allocations



Our company may allocate
items of income, gain, loss, and deduction using a monthly or other convention, whereby any such items recognized in a given month
by our company are allocated to our unitholders as of a specified date of such month. As a result, if you transfer your units,
you might be allocated income, gain, loss, and deduction realized by our company after the date of the transfer. Similarly, if
you acquire additional units, you might be allocated income, gain, loss, and deduction realized by our company prior to your ownership
of such units.



Although Section 706
of the U.S. Internal Revenue Code generally governs allocations of items of partnership income and deductions between transferors
and transferees of partnership interests, it is not clear that our company’s allocation method complies with the requirements.
If our company’s convention were not permitted, the IRS might contend that our company’s taxable income or losses must
be reallocated among our unitholders. If such a contention were sustained, your tax liabilities might be adjusted to your detriment.
The BPY General Partner is authorized to revise our company’s method of allocation between transferors and transferees (as
well as among investors whose interests otherwise vary during a taxable period).



U.S. Federal Estate Tax Consequences



If our units are included
in the gross estate of a U.S. citizen or resident for U.S. federal estate tax purposes, then a U.S. federal estate tax might be
payable in connection with the death of such person. Individual U.S. Holders should consult their own tax advisers concerning the
potential U.S. federal estate tax consequences with respect to our units.



Certain Reporting Requirements



A U.S. Holder who invests
more than $100,000 in our company may be required to file IRS Form 8865 reporting the investment with such U.S. Holder’s
U.S. federal income tax return for the year that includes the date of the investment. You may be subject to substantial penalties
if you fail to comply with this and other information reporting requirements with respect to an investment in our units. You should
consult your own tax adviser regarding such reporting requirements.



U.S. Taxation of Tax-Exempt U.S. Holders
of Our Units



Income recognized by
a U.S. tax-exempt organization is exempt from U.S. federal income tax except to the extent of the organization’s UBTI. UBTI
is defined generally as any gross income derived by a tax-exempt organization from an unrelated trade or business that it regularly
carries on, less the deductions directly connected with that trade or business. In addition, income arising from a partnership
(or other entity treated as a partnership for U.S. federal income tax purposes) that holds operating assets or is otherwise engaged
in a trade or business generally will constitute UBTI. Notwithstanding the foregoing, UBTI generally does not include any dividend
income, interest income, certain other categories of passive income, or capital gains realized by a tax-exempt organization, so
long as such income is not “debt-financed”, as discussed below. The BPY General Partner currently believes that our
company should not be regarded as engaged in a trade or business, and anticipates that any operating assets held by our company
will be held through entities that are treated as corporations for U.S. federal income tax purposes.



The exclusion from
UBTI does not apply to income from “debt-financed property”, which is treated as UBTI to the extent of the percentage
of such income that the average acquisition indebtedness with respect to the property bears to the average tax basis of the property
for the taxable year. If an entity treated as a partnership for U.S. federal income tax purposes incurs acquisition indebtedness,
a tax-exempt partner in such partnership will be deemed to have acquisition indebtedness equal to its allocable portion of such
acquisition indebtedness. If any such indebtedness were used by our company or by the Property Partnership to acquire property,
such property generally would constitute debt-financed property, and any income from or gain from the disposition of such debt-financed
property allocated to a tax-exempt organization generally would constitute UBTI to such tax-exempt organization. In addition, even
if such indebtedness were not used either by our company or by the Property Partnership to acquire property but were instead used
to fund distributions to our unitholders, if a tax-exempt organization subject to taxation in the United States were to use such
proceeds to make an investment outside our company, the IRS might assert that such investment constitutes debt-financed property
to such unitholder with the consequences noted above. The BPY General Partner does not expect our company or the Property Partnership
to directly incur debt to acquire property, and the BPY General Partner does not believe that our company or the Property Partnership
will generate UBTI attributable to debt-financed property in the future. Moreover, the BPY General Partner intends to use commercially
reasonable efforts to structure the activities of our company and the Property Partnership, respectively, to avoid generating UBTI.
However, neither our company nor the Property Partnership is prohibited from incurring indebtedness, and no assurance can be provided
that neither our company nor the Property Partnership will generate UBTI attributable to debt-financed property in the future.
Tax-exempt U.S. Holders should consult their own tax advisers regarding the tax consequences of an investment in our units.



126









Consequences to Non-U.S. Holders



Based on our organizational
structure, as well as our company’s expected income and assets, the BPY General Partner currently believes that our company
is unlikely to earn income treated as effectively connected with a U.S. trade or business, including effectively connected income
attributable to the sale of a “United States real property interest”, as defined in the U.S. Internal Revenue Code.
Specifically, our company intends not to make an investment, whether directly or through an entity which would be treated as a
partnership for U.S. federal income tax purposes, if the BPY General Partner believes at the time of such investment that such
investment would generate income treated as effectively connected with a U.S. trade or business. If, as anticipated, our company
is not treated as engaged in a U.S. trade or business or as deriving income which is treated as effectively connected with a U.S.
trade or business, and provided that a Non-U.S. Holder is not itself engaged in a U.S. trade or business, then such Non-U.S. Holder
generally will not be subject to U.S. tax return filing requirements solely as a result of owning our units and generally will
not be subject to U.S. federal income tax on its allocable share of our company’s interest and dividends from non-U.S.-sources
or gain from the sale or other disposition of securities or real property located outside of the United States.



However, there can
be no assurance that the law will not change or that the IRS will not deem our company to be engaged in a U.S. trade or business.
If, contrary to the BPY General Partner’s expectations, our company is treated as engaged in a U.S. trade or business, then
a Non-U.S. Holder generally would be required to file a U.S. federal income tax return, even if no effectively connected income
were allocable to it. If our company were to have income treated as effectively connected with a U.S. trade or business, then a
Non-U.S. Holder would be required to report that income and would be subject to U.S. federal income tax at the regular graduated
rates. In addition, our company might be required to withhold U.S. federal income tax on such Non-U.S. Holder’s distributive
share of such income. A corporate Non-U.S. Holder might also be subject to branch profits tax at a rate of 30%, or at a lower treaty
rate, if applicable. Finally, if our company were treated as engaged in a U.S. trade or business, a portion of any gain realized
by a Non-U.S. Holder upon the sale or exchange of its units could be treated as income effectively connected with a U.S. trade
or business and therefore subject to U.S. federal income tax at the regular graduated rates.



In general, even if
our company is not engaged in a U.S. trade or business, and assuming you are not otherwise engaged in a U.S. trade or business,
you will nonetheless be subject to a withholding tax of 30% on the gross amount of certain U.S.-source income which is not effectively
connected with a U.S. trade or business. Income subjected to such a flat tax rate is income of a fixed or determinable annual or
periodic nature, including certain interest income. Such withholding tax may be reduced or eliminated with respect to certain types
of income under an applicable income tax treaty between the United States and your country of residence or under the “portfolio
interest” rules or other provisions of the U.S. Internal Revenue Code, provided that you provide proper certification as
to your eligibility for such treatment. Notwithstanding the foregoing, and although each Non-U.S. Holder is required to provide
us with an IRS Form W-8, we nevertheless may be unable to accurately or timely determine the tax status of our investors for purposes
of establishing whether reduced rates of withholding apply to some or all of our investors. In such a case, your allocable share
of distributions of U.S.-source interest income will be subject to U.S. withholding tax at a rate of 30%. Further, if you would
not be subject to U.S. tax based on your tax status or otherwise were eligible for a reduced rate of U.S. withholding, you might
need to take additional steps to receive a credit or refund of any excess withholding tax paid on your account, which could include
the filing of a non-resident U.S. income tax return with the IRS. Among other limitations applicable to claiming treaty benefits,
if you reside in a treaty jurisdiction which does not treat our company as a pass-through entity, you might not be eligible to
receive a refund or credit of excess U.S. withholding taxes paid on your account. In the event you transfer or otherwise dispose
of some or all of your units, special rules may apply for purposes of determining whether you or the transferee of such units are
subject to U.S. withholding taxes in respect of income allocable to, or distributions made on account of, such units or entitled
to refunds of any such taxes withheld. See “—Administrative Matters—Certain Effects of a Transfer of Units”.
You should consult your own tax adviser regarding the treatment of U.S. withholding taxes.



Special rules may apply
in the case of a Non-U.S. Holder subject to special rules, including, without limitation, any Non-U.S. Holder (i) that has
an office or fixed place of business in the United States; (ii) that is present in the United States for 183 days or more
in a taxable year; or (iii) that is (a) a former citizen or long-term resident of the United States, (b) a foreign
insurance company that is treated as holding a partnership interest in our company in connection with its U.S. business, (c) a
PFIC, or (d) a corporation that accumulates earnings to avoid U.S. federal income tax. You should consult your own tax adviser
regarding the application of these special rules.



Taxes in Other Jurisdictions



Based on our expected
method of operation and the ownership of our operating entities indirectly through corporate Holding Entities, we do not expect
any unitholder, solely as a result of owning our units, to be subject to any additional income taxes imposed on a net basis or
additional tax return filing requirements in any jurisdiction in which we conduct activities or own property. However, our method
of operation and current structure may change, and there can be no assurance that, solely as a result of owning our units, you
will not be subject to certain taxes, including non-U.S., state and local income taxes, unincorporated business taxes and estate,
inheritance or intangible taxes imposed by the various jurisdictions in which we do business or own property now or in the future,
even if you do not reside in any of these jurisdictions. Consequently, you may also be required to file non-U.S., state and local
income tax returns in some or all of these jurisdictions. Further, you may be subject to penalties for failure to comply with these
requirements. It is your responsibility to file all U.S. federal, state, local, and non-U.S. tax returns that may be required of
you.



Income or gain from
investments held by our company may be subject to withholding or other taxes in jurisdictions outside the United States, except
to the extent an income tax treaty applies. If you wish to claim the benefit of an applicable income tax treaty, you might be required
to submit information to one or more of our company, an intermediary, or a tax authority in such jurisdiction. You should consult
your own tax adviser regarding the U.S. federal, state, local, and non-U.S. tax consequences of an investment in our company.



127









Administrative Matters



Tax Matters Partner



The BPY General Partner
acts as our company’s “tax matters partner”. As the tax matters partner, the BPY General Partner has the authority,
subject to certain restrictions, to act on behalf of our company in connection with any administrative or judicial review of our
company’s items of income, gain, loss, deduction, or credit.



Information Returns



We have agreed to use
commercially reasonable efforts to furnish to you, within 90 days after the close of each calendar year, U.S. tax information (including
IRS Schedule K-1), which describes on a U.S. Dollar basis your share of our company’s income, gain, loss, and deduction
for our preceding taxable year. However, providing this U.S. tax information to our unitholders will be subject to delay in the
event of, among other reasons, the late receipt of any necessary tax information from lower-tier entities. It is therefore possible
that, in any taxable year, you will need to apply for an extension of time to file your tax returns. In preparing this U.S. tax
information, we will use various accounting and reporting conventions, some of which have been mentioned in the previous discussion,
to determine your share of income, gain, loss, and deduction. The IRS may successfully contend that certain of these reporting
conventions are impermissible, which could result in an adjustment to your income or loss.



Our company may be
audited by the IRS. Adjustments resulting from an IRS audit could require you to adjust a prior year’s tax liability and
result in an audit of your own tax return. Any audit of your tax return could result in adjustments not related to our company’s
tax returns, as well as those related to our company’s tax returns.



Tax Shelter Regulations and Related
Reporting Requirements



If we were to engage
in a “reportable transaction”, we (and possibly our unitholders) would be required to make a detailed disclosure of
the transaction to the IRS in accordance with regulations governing tax shelters and other potentially tax-motivated transactions.
A transaction may be a reportable transaction based upon any of several factors, including the fact that it is a type of tax avoidance
transaction publicly identified by the IRS as a “listed transaction” or “transaction of interest”, or that
it produces certain kinds of losses in excess of $2 million (or, in the case of certain foreign currency transactions, losses in
excess of $50,000). An investment in our company may be considered a “reportable transaction” if, for example, our
company were to recognize certain significant losses in the future. In certain circumstances, a unitholder who disposes of an interest
in a transaction resulting in the recognition by such holder of significant losses in excess of certain threshold amounts may be
obligated to disclose its participation in such transaction. Certain of these rules are unclear, and the scope of reportable transactions
can change retroactively. Therefore, it is possible that the rules may apply to transactions other than significant loss transactions.



Moreover, if we were
to participate in a reportable transaction with a significant purpose to avoid or evade tax, or in any listed transaction, you
might be subject to significant accuracy related penalties with a broad scope, for those persons otherwise entitled to deduct interest
on federal tax deficiencies, non-deductibility of interest on any resulting tax liability, and in the case of a listed transaction,
an extended statute of limitations. We do not intend to participate in any reportable transaction with a significant purpose to
avoid or evade tax, nor do we intend to participate in any listed transactions. However, no assurance can be provided that the
IRS will not assert that we have participated in such a transaction.



You should consult
your own tax adviser concerning any possible disclosure obligation under the regulations governing tax shelters with respect to
the disposition of our units.



Taxable Year



Our company uses the
calendar year as its taxable year for U.S. federal income tax purposes. Under certain circumstances which we currently believe
are unlikely to apply, a taxable year other than the calendar year may be required for such purposes.



Constructive Termination



Subject to the electing
large partnership rules described below, our company will be considered to have been terminated for U.S. federal income tax purposes
if there is a sale or exchange of 50% or more of our units within a 12-month period.



A constructive termination
of our company would result in the close of its taxable year for all unitholders. If a unitholder reports on a taxable year other
than a fiscal year ending on our company’s year-end, and the unitholder is otherwise subject to U.S. federal income tax,
the closing of our company’s taxable year may result in more than 12 months of our company’s taxable income or loss
being includable in such unitholder’s taxable income for the year of the termination. We would be required to make new tax
elections after a termination, including a new Section 754 Election. A constructive termination could also result in penalties
and other adverse tax consequences if we were unable to determine that the termination had occurred. Moreover, a constructive termination
might either accelerate the application of, or subject our company to, any tax legislation enacted before the termination.



Elective Procedures for Large Partnerships



The U.S. Internal Revenue
Code allows large partnerships to elect streamlined procedures for income tax reporting. This election would reduce the number
of items that must be separately stated on the IRS Schedules K-1 that are issued to our unitholders, and such IRS Schedules K-1
would have to be provided to holders on or before the first March 15 following the close of each taxable year. In addition,
this election would prevent our company from suffering a “technical termination” (which would close our company’s
taxable year and require that we make a new Section 754 Election) if, within a 12-month period, there were a sale or exchange
of 50% or more of our company’s total units. Despite the foregoing benefits, there are also costs and administrative burdens
associated with such an election. Consequently, as of this time, our company has not elected to be subject to the reporting procedures
applicable to large partnerships.



128







Withholding and Backup Withholding



For each calendar year,
we will report to you and to the IRS the amount of distributions that we pay, and the amount of tax (if any) that we withhold on
these distributions. The proper application to our company of the rules for withholding under Sections 1441 through 1446 of the
U.S. Internal Revenue Code (applicable to certain dividends, interest, and amounts treated as effectively connected with a U.S.
trade or business, among other items) is unclear. Because the documentation we receive may not properly reflect the identities
of unitholders at any particular time (in light of possible sales of our units), we may over-withhold or under-withhold with respect
to a particular unitholder. For example, we may impose withholding, remit such amount to the IRS and thus reduce the amount of
a distribution paid to a Non-U.S. Holder. It may be the case, however, that the corresponding amount of our income was not properly
allocable to such holder, and the appropriate amount of withholding should have been less than the actual amount withheld. Such
Non-U.S. Holder would be entitled to a credit against the holder’s U.S. federal income tax liability for all withholding,
including any such excess withholding. However, if the withheld amount were to exceed the holder’s U.S. federal income tax
liability, the holder would need to apply for a refund to obtain the benefit of such excess withholding. Similarly, we may fail
to withhold on a distribution, and it may be the case that the corresponding income was properly allocable to a Non-U.S. Holder
and that withholding should have been imposed. In such case, we intend to pay the under-withheld amount to the IRS, and we may
treat such under-withholding as an expense that will be borne indirectly by all unitholders on a pro rata basis (since we may be
unable to allocate any such excess withholding tax cost to the relevant Non-U.S. Holder).



Under the backup withholding
rules, you may be subject to backup withholding tax with respect to distributions paid unless: (i) you are an exempt recipient
and demonstrate this fact when required; or (ii) provide a taxpayer identification number, certify as to no loss of exemption
from backup withholding tax, and otherwise comply with the applicable requirements of the backup withholding tax rules. A U.S.
Holder that is exempt should certify such status on a properly completed IRS Form W-9. A Non-U.S. Holder may qualify as an exempt
recipient by submitting a properly completed IRS Form W-8. Backup withholding is not an additional tax. The amount of any backup
withholding from a payment to you will be allowed as a credit against your U.S. federal income tax liability and may entitle you
to a refund from the IRS, provided you supply the required information to the IRS in a timely manner.



If you do not timely
provide our company, or the applicable nominee, broker, clearing agent, or other intermediary, with IRS Form W-9 or IRS Form W-8,
as applicable, or such form is not properly completed, then our company may become subject to U.S. backup withholding taxes in
excess of what would have been imposed had our company or the applicable intermediary received properly completed forms from all
unitholders. For administrative reasons, and in order to maintain the fungibility of our units, such excess U.S. backup withholding
taxes, and if necessary similar items, may be treated by our company as an expense that will be borne indirectly by all unitholders
on a pro rata basis (e.g., since it may be impractical for us to allocate any such excess withholding tax cost to the unitholders
that failed to timely provide the proper U.S. tax forms).



Foreign Account Tax Compliance



FATCA imposes a 30%
withholding tax on “withholdable payments” made to a “foreign financial institution” or a “non-financial
foreign entity”, unless such financial institution or entity satisfies certain information reporting or other requirements.
Withholdable payments include certain U.S.-source income, such as interest, dividends, and other passive income. Beginning January
1, 2017, withholdable payments also include gross proceeds from the sale or disposition of property that can produce U.S.-source
interest or dividends. We intend to comply with FATCA, so as to ensure that the 30% withholding tax does not apply to any withholdable
payments received by our company, the Property Partnership, the Holding Entities, or the operating entities. Nonetheless, the 30%
withholding tax may apply to your allocable share of distributions attributable to withholdable payments, unless you properly certify
your FATCA status on IRS Form W-8 or IRS Form W-9 (or other applicable form) and satisfy any additional requirements under FATCA.



In compliance with
FATCA, information regarding certain unitholders’ ownership of our units may be reported to the IRS or to a non-U.S. governmental
authority. FATCA remains subject to modification by an applicable intergovernmental agreement between the United States and another
country, such as the agreement in effect between the United States and Bermuda for cooperation to facilitate the implementation
of FATCA, or by future U.S. Treasury Regulations or guidance. You should consult your own tax adviser regarding the consequences
under FATCA of an investment in our units.



Information Reporting with Respect to
Foreign Financial Assets



Under U.S. Treasury
Regulations, U.S. individuals that own “specified foreign financial assets” with an aggregate fair market value exceeding
either $50,000 on the last day of the taxable year or $75,000 at any time during the taxable year generally are required to file
an information report with respect to such assets with their tax returns. Significant penalties may apply to persons who fail to
comply with these rules. Specified foreign financial assets include not only financial accounts maintained in foreign financial
institutions, but also, unless held in accounts maintained by a financial institution, any stock or security issued by a non-U.S.
person, any financial instrument or contract held for investment that has an issuer or counterparty other than a U.S. person, and
any interest in a foreign entity. Upon the issuance of future U.S. Treasury Regulations, these information reporting requirements
may apply to certain U.S. entities that own specified foreign financial assets. The failure to report information required under
the current regulations could result in substantial penalties and in the extension of the statute of limitations with respect to
federal income tax returns filed by you. You should consult your own tax adviser regarding the possible implications of these U.S.
Treasury Regulations for an investment in our units.





129









Certain Effects of a Transfer of Units



Our company may allocate
items of income, gain, loss, deduction, and credit using a monthly or other convention, whereby any such items recognized in a
given month by our company are allocated to our unitholders as of a specified date of such month. The Property Partnership may
invest in debt obligations or other securities for which the accrual of interest or income thereon is not matched by a contemporaneous
receipt of cash. Any such accrued interest or other income would be allocated pursuant to such monthly or other convention. Consequently,
our unitholders may recognize income in excess of cash distributions received from our company, and any income so included by a
unitholder would increase the basis such unitholder has in our units and would offset any gain (or increase the amount of loss)
realized by such unitholder on a subsequent disposition of its units. In addition, U.S. withholding taxes generally would be withheld
by our company only on the payment of cash in respect of such accrued interest or other income, and, therefore, it is possible
that some unitholders would be allocated income which might be distributed to a subsequent unitholder, and such subsequent unitholder
would be subject to withholding at the time of distribution. As a result, the subsequent unitholder, and not the unitholder who
was allocated income, would be entitled to claim any available credit with respect to such withholding.



The Property Partnership
has invested and will continue to invest in certain Holding Entities and operating entities organized in non-U.S. jurisdictions,
and income and gain from such investments may be subject to withholding and other taxes in such jurisdictions. If any such non-U.S.
taxes were imposed on income allocable to a U.S. Holder, and such holder were thereafter to dispose of its units prior to the date
distributions were made in respect of such income, under applicable provisions of the U.S. Internal Revenue Code and U.S. Treasury
regulations, the unitholder to whom such income was allocated (and not the unitholder to whom distributions were ultimately made)
would, subject to other applicable limitations, be the party permitted to claim a credit for such non-U.S. taxes for U.S. federal
income tax purposes. Thus a unitholder may be affected either favorably or adversely by the foregoing rules. Complex rules may,
depending on a unitholder’s particular circumstances, limit the availability or use of foreign tax credits, and you are urged
to consult your own tax adviser regarding all aspects of foreign tax credits.



Nominee Reporting



Persons who hold an
interest in our company as a nominee for another person may be required to furnish to us:



| | a) | the name, address and taxpayer identification number of the beneficial owner and the nominee;
| | -- | ---------------------------------------------------------------------------------------------



| | b) | whether the beneficial owner is (1) a person that is not a U.S. person, (2) a foreign government, an international
organization, or any wholly owned agency or instrumentality of either of the foregoing, or (3) a tax-exempt entity;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | the amount and description of units held, acquired, or transferred for the beneficial owner; and
| | -- | ------------------------------------------------------------------------------------------------



| | d) | specific information including the dates of acquisitions and transfers, means of acquisitions and transfers, and acquisition
cost for purchases, as well as the amount of net proceeds from sales.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Brokers and financial
institutions may be required to furnish additional information, including whether they are U.S. persons and specific information
on units they acquire, hold, or transfer for their own account. A penalty of $100 per failure, up to a maximum of $1,500,000 per
calendar year, generally is imposed by the U.S. Internal Revenue Code for the failure to report such information to us. The nominee
is required to supply the beneficial owner of our units with the information furnished to us.



New Legislation or Administrative
or Judicial Action



The U.S. federal income
tax treatment of our unitholders depends, in some instances, on determinations of fact and interpretations of complex provisions
of U.S. federal income tax law for which no clear precedent or authority may be available. You should be aware that the U.S. federal
income tax rules, particularly those applicable to partnerships, are constantly under review (including currently) by the Congressional
tax-writing committees and other persons involved in the legislative process, the IRS, the U.S. Treasury Department and the courts,
frequently resulting in revised interpretations of established concepts, statutory changes, revisions to regulations and other
modifications and interpretations, any of which could adversely affect the value of our units and be effective on a retroactive
basis. For example, changes to the U.S. federal tax laws and interpretations thereof could make it more difficult or impossible
for our company to be treated as a partnership that is not taxable as a corporation for U.S. federal income tax purposes, change
the character or treatment of portions of our company’s income (including changes that recharacterize certain allocations
as potentially non-deductible fees), reduce the net amount of distributions available to our unitholders, or otherwise affect the
tax considerations of owning our units. Such changes could also affect or cause our company to change the way it conducts its activities
and adversely affect the value of our units.



Our company’s
organizational documents and agreements permit the BPY General Partner to modify our limited partnership agreement from time to
time, without the consent of our unitholders, to elect to treat our company as a corporation for U.S. federal tax purposes, or
to address certain changes in U.S. federal income tax regulations, legislation or interpretation. In some circumstances, such revisions
could have a material adverse impact on some or all of our unitholders.



THE FOREGOING DISCUSSION
IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX PLANNING. THE TAX MATTERS RELATING TO OUR COMPANY AND UNITHOLDERS ARE COMPLEX AND
ARE SUBJECT TO VARYING INTERPRETATIONS. MOREOVER, THE EFFECT OF EXISTING INCOME TAX LAWS, THE MEANING AND IMPACT OF WHICH IS UNCERTAIN,
AND OF PROPOSED CHANGES IN INCOME TAX LAWS WILL VARY WITH THE PARTICULAR CIRCUMSTANCES OF EACH UNITHOLDER, AND IN REVIEWING THIS
ANNUAL REPORT ON FORM 20-F THESE MATTERS SHOULD BE CONSIDERED. EACH UNITHOLDER SHOULD CONSULT ITS OWN TAX ADVISER WITH RESPECT
TO THE U.S. FEDERAL, STATE, LOCAL, AND OTHER TAX CONSEQUENCES OF ANY INVESTMENT IN OUR UNITS.



130







Canadian Federal Income Tax Considerations



The following is a
summary of the principal Canadian federal income tax consequences under the Tax Act of the holding and disposition of units in
our company generally applicable to a unitholder, who for purposes of the Tax Act and at all relevant times, holds our units as
capital property, deals at arm’s length with and is not affiliated with our company, the Property Partnership, the BPY General
Partner or their respective affiliates, or a Holder. Generally, our units will be considered to be capital property to a Holder,
provided that the Holder does not use or hold our units in the course of carrying on a business of trading or dealing in securities
and has not acquired them in one or more transactions considered to be an adventure or concern in the nature of trade.



This summary is not
applicable to a Holder: (i) that is a “financial institution”, as defined in the Tax Act for purposes of the “mark-to-market”
rules, (ii) that is a “specified financial institution”, as defined in the Tax Act, (iii) who makes or has
made a functional currency reporting election pursuant to section 261 of the Tax Act, (iv) an interest in which would be a
“tax shelter investment” as defined in the Tax Act or who acquires our units as a “tax shelter investment”
(and this summary assumes that no such persons hold our units), (v) who has, directly or indirectly, a “significant
interest”, as defined in subsection 34.2(1) of the Tax Act, in our company, or (vi) to whom any affiliate of our company
is a “foreign affiliate”, as defined in the Tax Act. Any such Holders should consult their own tax advisors with respect
to an investment in our units.



This summary is based
on the current provisions of the Tax Act, all specific proposals to amend the Tax Act publicly announced by or on behalf
of the Minister of Finance (Canada) prior to the date hereof, or the Tax Proposals, and the current published administrative and
assessing policies and practices of the CRA. This summary assumes that all Tax Proposals will be enacted in the form proposed but
no assurance can be given that the Tax Proposals will be enacted in the form proposed or at all. This summary does not otherwise
take into account or anticipate any changes in law, whether by judicial, administrative or legislative decision or action, or changes
in the CRA’s administrative and assessing policies and practices, nor does it take into account provincial, territorial or
foreign income tax legislation or considerations, which may differ significantly from those described herein. Holders should consult
their own tax advisors in respect of the provincial, territorial or foreign income tax consequences to them of holding and disposing
of our units.



This summary assumes
that neither our company nor the Property Partnership will be considered to carry on business in Canada. The BPY General Partner
intends to organize and conduct the affairs of each of these entities, to the extent possible, so that neither of these entities
should be considered to carry on business in Canada for purposes of the Tax Act. However, no assurance can be given in this regard.



This summary also assumes
that neither our company nor the Property Partnership is a “tax shelter”, as defined in the Tax Act, or “tax
shelter investment”. However, no assurance can be given in this regard.



This summary also assumes
that neither our company nor the Property Partnership will be a “SIFT partnership” at any relevant time for purposes
of the SIFT Rules on the basis that neither our company nor the Property Partnership will be a “Canadian resident partnership”
at any relevant time. However, there can be no assurance that the SIFT Rules will not be revised or amended such that the SIFT
Rules will apply.



This summary does not
address the deductibility of interest on money borrowed to acquire our units.



This summary is
of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular Holder,
and no representation with respect to the Canadian federal income tax consequences to any particular Holder is made. Consequently,
Holders are advised to consult their own tax advisors with respect to their particular circumstances. See also Item 3.D. “Risk
Factors — Risks Relating to Taxation.”



For purposes of the
Tax Act, all amounts relating to the acquisition, holding or disposition of our units must be expressed in Canadian dollars including
any distributions, adjusted cost base and proceeds of disposition. For purposes of the Tax Act, amounts denominated in a currency
other than the Canadian dollar generally must be converted into Canadian dollars using the rate of exchange quoted by the Bank
of Canada at noon on the date such amounts arose, or such other rate of exchange as is acceptable to the CRA.



Taxation of Canadian Resident Limited
Partners



The following is a
discussion of the consequences under the Tax Act to a Holder who, for purposes of the Tax Act and at all relevant times, is resident
or deemed to be resident in Canada, or a Canadian Limited Partner.



Computation of Income or Loss



Each Canadian Limited
Partner is required to include (or, subject to the “at-risk rules” discussed below, entitled to deduct) in computing
his or her income for a particular taxation year the Canadian Limited Partner’s pro rata share of the income (or loss) of
our company for its fiscal year ending in, or coincidentally with, the Canadian Limited Partner’s taxation year end, whether
or not any of that income is distributed to the Canadian Limited Partner in the taxation year and regardless of whether our units
were held throughout such year.



Our company will not
itself be a taxable entity and is not expected to be required to file an income tax return in Canada for any taxation year. However,
the income (or loss) of our company for a fiscal period for purposes of the Tax Act will be computed as if it were a separate person
resident in Canada and the unitholders will be allocated a share of that income (or loss) in accordance with our limited partnership
agreement. The income (or loss) of our company will include our company’s share of the income (or loss) of the Property Partnership
for a fiscal year determined in accordance with the Property Partnership’s limited partnership agreement. For this purpose,
our company’s fiscal year end and that of the Property Partnership will be December 31.



131







The income for tax
purposes of our company for a given fiscal year of our company will be allocated to each Canadian Limited Partner in an amount
calculated by multiplying such income that is allocable to unitholders by a fraction, the numerator of which is the sum of the
distributions received by such Canadian Limited Partner with respect to such fiscal year and the denominator of which is the aggregate
amount of the distributions made by our company to all unitholders with respect to such fiscal year.



If, with respect to
a given fiscal year, no distribution is made by us to our unitholders or our company has a loss for tax purposes, one quarter of
the income, or loss, as the case may be, for tax purposes of our company for such fiscal year that is allocable to unitholders,
will be allocated to our unitholders of record at the end of each calendar quarter ending in such fiscal year in the proportion
that the number of our units held at each such date by a unitholder is of the total number of units of our company that are issued
and outstanding at each such date. Generally, the source and character of such income or loss allocated to a unitholder at the
end of the each calendar quarter will be the same source and character as the income or loss earned or incurred by our company
in such calendar quarter.



The income of our company
as determined for purposes of the Tax Act may differ from its income as determined for accounting purposes and may not be matched
by cash distributions. In addition, for purposes of the Tax Act, all income (or losses) of our company and the Property Partnership
must be calculated in Canadian currency. Where our company (or the Property Partnership) holds investments denominated in U.S.
dollars or other foreign currencies, gains and losses may be realized by our company as a consequence of fluctuations in the relative
values of the Canadian and foreign currencies.



In computing the income
(or loss) of our company, deductions may be claimed in respect of reasonable administrative costs, interest and other expenses
incurred by us for the purpose of earning income, subject to the relevant provisions of the Tax Act. Our company may also deduct
from its income for the year a portion of the reasonable expenses, if any, incurred by our company to issue our units. The portion
of such issue expenses deductible by our company in a taxation year is 20% of such issue expenses, pro-rated where our company’s
taxation year is less than 365 days. Our company and the Property Partnership may be required to withhold and remit Canadian federal
withholding tax on any management or administration fees or charges paid or credited to a non-resident person, to the extent that
such management or administration fees or charges are deductible in computing our company’s or the Property Partnership’s
income from a source in Canada.



In general, a Canadian
Limited Partner’s share of any income (or loss) from our company from a particular source will be treated as if it were income
(or loss) of the Canadian Limited Partner from that source, and any provisions of the Tax Act applicable to that type of income
(or loss) will apply to the Canadian Limited Partner. Our company will invest in limited partnership units of the Property Partnership.
In computing our company’s income (or loss) under the Tax Act, the Property Partnership will itself be deemed to be a separate
person resident in Canada which computes its income (or loss) and allocates to its partners their respective share of such income
(or loss). Accordingly, the source and character of amounts included in (or deducted from) the income of Canadian Limited Partners
on account of income (or loss) earned by the Property Partnership generally will be determined by reference to the source and character
of such amounts when earned by the Property Partnership.



The characterization
by the CRA of gains realized by our company or the Property Partnership on the disposition of investments as either capital gains
or income gains will depend largely on factual considerations, and no conclusions are expressed herein.



A Canadian Limited
Partner’s share of taxable dividends received or considered to be received by our company in a fiscal year from a corporation
resident in Canada will be treated as a dividend received by the Canadian Limited Partner and will be subject to the normal rules
in the Tax Act applicable to such dividends, including the enhanced gross-up and dividend tax credit for “eligible dividends”,
as defined in the Tax Act, when the dividend received by the Property Partnership is designated as an “eligible dividend”.



Foreign taxes paid
by our company or the Property Partnership and taxes withheld at source on amounts paid or credited to our company or the Property
Partnership (other than for the account of a particular unitholder) will be allocated pursuant to the governing partnership agreement.
Each Canadian Limited Partner’s share of the “business-income tax” and “non-business-income tax”
paid to the government of a foreign country for a year will be creditable against its Canadian federal income tax liability to
the extent permitted by the detailed foreign tax credit rules contained in the Tax Act. Although the foreign tax credit rules
are designed to avoid double taxation, the maximum credit is limited. Because of this, and because of timing differences in recognition
of expenses and income and other factors, there is a risk of double taxation. Under the Foreign Tax Credit Generator Rules, the
foreign “business-income tax” or “non-business-income tax” allocated to a Canadian Limited Partner for
the purpose of determining such Canadian Limited Partner’s foreign tax credit for any taxation year may be limited in certain
circumstances, including where a Canadian Limited Partner’s share of the income of our company or the Property Partnership
under the income tax laws of any country (other than Canada) under whose laws the income of our company or the Property Partnership
is subject to income taxation, or the Relevant Foreign Tax Law, is less than the Canadian Limited Partner’s share of such
income for purposes of the Tax Act. For this purpose, a Canadian Limited Partner is not considered to have a lesser direct or indirect
share of the income of our company or the Property Partnership under the Relevant Foreign Tax Law than for the purposes of the
Tax Act solely because, among other reasons, of a difference between the Relevant Foreign Tax Law and the Tax Act in the manner
of computing the income of our company or the Property Partnership or in the manner of allocating the income of our company or
the Property Partnership because of the admission or withdrawal of a partner. No assurance can be given that the Foreign Tax Credit
Generator Rules will not apply to any Canadian Limited Partner. If the Foreign Tax Credit Generator Rules apply, the allocation
to a Canadian Limited Partner of foreign “business-income tax” or “non-business-income tax” paid by our
company or the Property Partnership, and therefore such Canadian Limited Partner’s foreign tax credits, will be limited.



132







Our company and the
Property Partnership will be deemed to be a non-resident person in respect of certain amounts paid or credited or deemed to be
credited to them by a person resident or deemed to be resident in Canada, including dividends or interest. Dividends or interest
(other than interest exempt from Canadian federal withholding tax) paid or deemed to be paid by a person resident or deemed to
be resident in Canada to the Property Partnership will be subject to withholding tax under Part XIII of the Tax Act at
the rate of 25%. However, the CRA’s administrative practice in similar circumstances is to permit the rate of Canadian federal
withholding tax applicable to such payments to be computed by looking through our partnership and taking into account the residency
of the partners (including partners who are resident in Canada) and any reduced rates of Canadian federal withholding tax that
any non-resident partners may be entitled to under an applicable income tax treaty or convention, provided that the residency status
and entitlement to the treaty benefits can be established. In determining the rate of Canadian federal withholding tax applicable
to amounts paid by the Holding Entities to the Property Partnership, we expect the Holding Entities to look-through the Property
Partnership and our company to the residency of the partners of our company (including partners who are residents of Canada) and
to take into account any reduced rates of Canadian federal withholding tax that non-resident partners may be entitled to under
an applicable income tax treaty or convention in order to determine the appropriate amount of Canadian federal withholding tax
to withhold from dividends or interest paid to the Property Partnership. However, there can be no assurance that the CRA will apply
its administrative practice in this context. Under the Treaty, in certain circumstances a Canadian resident payer is required to
look-through fiscally transparent partnerships, such as our company and the Property Partnership, to the residency and Treaty entitlements
of their partners and to take into account the reduced rates of Canadian federal withholding tax that such partners may be entitled
to under the Treaty.



If our company incurs
losses for tax purposes, each Canadian Limited Partner will be entitled to deduct in the computation of income for tax purposes
the Canadian Limited Partner’s pro rata share of any net losses for tax purposes of our company for its fiscal year
to the extent that the Canadian Limited Partner’s investment is “at-risk” within the meaning of the Tax Act.
The Tax Act contains “at-risk rules” which may, in certain circumstances, restrict the deduction of a limited
partner’s share of any losses of a limited partnership. The BPY General Partner does not anticipate that our company or the
Property Partnership will incur losses, but no assurance can be given in this regard. Accordingly, Canadian Limited Partners should
consult their own tax advisors for specific advice with respect to the potential application of the “at-risk rules”.



Section 94.1 of
the Tax Act contains rules relating to investments by a taxpayer in Non-Resident Entities that could, in certain circumstances,
cause income to be imputed to Canadian Limited Partners, either directly or by way of allocation of such income imputed to our
company or the Property Partnership. These rules would apply if it is reasonable to conclude, having regard to all the circumstances,
that one of the main reasons for the Canadian Limited Partner, our company or the Property Partnership acquiring or holding an
investment in a non-resident entity is to derive a benefit from “portfolio investments” in certain assets from which
the Non-Resident Entity may reasonably be considered to devise its value in such a manner that taxes under the Tax Act on
income, profits and gains from such assets for any year are significantly less than they would have been if such income, profits
and gains had been earned directly. In determining whether this is the case, section 94.1 of the Tax Act provides that
consideration must be given to, among other factors, the extent to which the income, profits and gains for any fiscal period are
distributed in that or the immediately following fiscal period. No assurance can be given that section 94.1 of the Tax Act
will not apply to a Canadian Limited Partner, our company or the Property Partnership. If these rules apply to a Canadian Limited
Partner, our company or the Property Partnership, income, determined by reference to a prescribed rate of interest plus 2% applied
to the “designated cost”, as defined in section 94.1 of the Tax Act, of the interest in the Non-Resident
Entity, will be imputed directly to the Canadian Limited Partner, to our company or to the Property Partnership and allocated to
the Canadian Limited Partner in accordance with the rules in section 94.1 of the Tax Act. The rules in section 94.1
of the Tax Act are complex and Canadian Limited Partners should consult their own tax advisors regarding the application of
these rules to them in their particular circumstances.



Dividends paid to the
Property Partnership by a CFA of the Property Partnership will be included in computing the income of the Property Partnership.
To the extent that any of the CFAs or Indirect CFAs earn income that is characterized as FAPI in a particular taxation year of
the CFA or Indirect CFA, the FAPI allocable to the Property Partnership under the rules in the Tax Act must be included in computing
the income of the Property Partnership for Canadian federal income tax purposes for the fiscal period of the Property Partnership
in which the taxation year of that CFA or Indirect CFA ends, whether or not the Property Partnership actually receives a distribution
of that FAPI. Our company will include its share of such FAPI of the Property Partnership in computing its income for Canadian
federal income tax purposes and Canadian Limited Partners will be required to include their proportionate share of such FAPI allocated
from our company in computing their income for Canadian federal income tax purposes. As a result, Canadian Limited Partners may
be required to include amounts in their income even though they have not and may not receive an actual cash distribution of such
amounts. If an amount of FAPI is included in computing the income of the Property Partnership for Canadian federal income tax purposes,
an amount may be deductible in respect of the “foreign accrual tax” applicable to the FAPI. Any amount of FAPI included
in income net of the amount of any deduction in respect of “foreign accrual tax” will increase the adjusted cost base
to the Property Partnership of its shares of the particular CFA in respect of which the FAPI was included. At such time as the
Property Partnership receives a dividend of this type of income that was previously included in the Property Partnership’s
income as FAPI, such dividend will effectively not be included in computing the income of the Property Partnership and there will
be a corresponding reduction in the adjusted cost base to the Property Partnership of the particular CFA shares. Under the Foreign
Tax Credit Generator Rules, the “foreign accrual tax” applicable to a particular amount of FAPI included in the Property
Partnership’s income in respect of a particular “foreign affiliate” of the Property Partnership may be limited
in certain specified circumstances, including where the direct or indirect share of the income of any member of the Property Partnership
(which is deemed for this purpose to include a Canadian Limited Partner) that is a person resident in Canada or a “foreign
affiliate” of such a person is, under a Relevant Foreign Tax Law, less than such member’s share of such income for
purposes of the Tax Act. No assurances can be given that the Foreign Tax Credit Generator Rules will not apply to the Property
Partnership. For this purpose, a Canadian Limited Partner is not considered to have a lesser direct or indirect share of the income
of the Property Partnership under the Relevant Foreign Tax Law than for purposes of the Tax Act solely because, among other reasons,
of a difference between the Relevant Foreign Tax Law and the Tax Act in the manner of computing the income of the Property Partnership
or in the manner of allocating the income of the Property Partnership because of the admission or withdrawal of a partner. If the
Foreign Tax Credit Generator Rules apply, the “foreign accrual tax” applicable to a particular amount of FAPI included
in the Property Partnership’s income in respect of a particular “foreign affiliate” of the Property Partnership
will be limited.





133









Disposition of Our Units



The disposition by
a Canadian Limited Partner of a unit of our company will result in the realization of a capital gain (or capital loss) by such
limited partner in the amount, if any, by which the proceeds of disposition of a unit, less any reasonable costs of disposition,
exceed (or are exceeded by) the adjusted cost base of such unit. In general, the adjusted cost base of a Canadian Limited Partner’s
units of our company will be equal to: (i) the actual cost of the units (excluding any portion thereof financed with limited
recourse indebtedness); plus (ii) the pro rata share of the income of our company allocated to the Canadian Limited Partner
for the fiscal years of our company ending before the relevant time; less (iii) the aggregate of the pro rata share of losses
of our company allocated to the Canadian Limited Partner (other than losses which cannot be deducted because they exceed the Canadian
Limited Partner’s “at-risk” amount) for the fiscal years of our company ending before the relevant time; and
less (iv) the Canadian Limited Partner’s distributions received from our company made before the relevant time. The adjusted
cost base of each of our units will be subject to the averaging provisions contained in the Tax Act.



Where a Canadian Limited
Partner disposes of all of its units of our company, it will no longer be a partner of our partnership. If, however, a Canadian
Limited Partner is entitled to receive a distribution from our company after the disposition of all such units, then the Canadian
Limited Partner will be deemed to dispose of the units at the later of: (i) the end of the fiscal year of our company during
which the disposition occurred; and (ii) the date of the last distribution made by our company to which the Canadian Limited
Partner was entitled. The pro rata share of the income (or loss) for tax purposes of our company for a particular fiscal year which
is allocated to a Canadian Limited Partner who has ceased to be a partner will generally be added (or deducted) in the computation
of the adjusted cost base of the Canadian Limited Partner’s units immediately prior to the time of the disposition. Canadian
Limited Partners should consult their own tax advisors for advice with respect to the specific tax consequences to them of
disposing of units of our company.



A Canadian Limited
Partner will realize a deemed capital gain if, and to the extent that, the adjusted cost base of the Canadian Limited Partner’s
units of our company is negative at the end of any of our fiscal years. In such a case, the adjusted cost base of the Canadian
Limited Partner’s units of our company will be nil at the beginning of our next fiscal year.



Taxation of Capital Gains and Capital
Losses



In general, one-half
of a capital gain realized by a Canadian Limited Partner must be included in computing such Canadian Limited Partner’s income
as a “taxable capital gain”, as defined in the Tax Act. One-half of a capital loss is deducted as an “allowable
capital loss”, as defined in the Tax Act, against “taxable capital gains” realized in the year and any remainder
may be deducted against net “taxable capital gains” in any of the three years preceding the year or any year following
the year to the extent and under the circumstances described in the Tax Act.



Special rules in the
Tax Act may apply to disallow the one-half treatment on all or a portion of a capital gain realized on a disposition of our units
to a tax-exempt person or a non-resident person. Canadian Limited Partners contemplating such a disposition should consult their
own tax advisors in this regard.



A Canadian Limited
Partner that is throughout the relevant taxation year a “Canadian-controlled private corporation”, as defined in the
Tax Act, may be liable to pay an additional refundable tax of 62/3% on its “aggregate investment income”,
as defined in the Tax Act, for the year, which is defined to include taxable capital gains. Canadian Limited Partners that are
individuals or trusts may be subject to the alternative minimum tax rules. Such Canadian Limited Partners should consult their
own tax advisors.



Eligibility for Investment



Provided that our units
are listed on a “designated stock exchange” (which currently includes the NYSE and the TSX), our units will be “qualified
investments” under the Tax Act for a trust governed by an RRSP, deferred profit sharing plan, RRIF, registered education
savings plan, registered disability savings plan, and TFSA. Taxes may be imposed in respect of the acquisition or holding of non-qualified
investments by such registered plans and certain other taxpayers and with respect to the acquisition or holding of “prohibited
investments” by an RRSP, RRIF or TFSA.



Our units will not
be a “prohibited investment” for a trust governed by a RRSP, RRIF or TFSA, provided that the holder of the TFSA or
the annuitant under the RRSP or RRIF, as the case may be, deals at arm’s length with our company for purposes of the Tax Act
and does not have a “significant interest”, as defined in the Tax Act for purposes of the prohibited investment
rules, in our company. Unitholders who intend to hold our units in a RRSP, RRIF or TFSA should consult with their own tax advisors
regarding the application of the foregoing prohibited investment rules having regard to their particular circumstances.



Alternative Minimum Tax



Canadian Limited Partners
that are individuals or trusts may be subject to the alternative minimum tax rules. Such Canadian Limited Partners should consult
their own tax advisors.



Taxation of Non-Canadian Limited
Partners



The following summary
generally applies to a Holder who, for purposes of the Tax Act, at all relevant times, is not, and is not deemed to be resident
in Canada and who does not use or hold and is not deemed to use or hold our units in connection with a business carried on, or
deemed to be carried on, in Canada, or a Non-Canadian Limited Partner.



134







The following summary
assumes that (i) our units are not and will not at any relevant time constitute “taxable Canadian property” of
any Non-Canadian Limited Partner, and (ii) our company and the Property Partnership will not dispose of property that is “taxable
Canadian property”. “Taxable Canadian property” includes, but is not limited to, property that is used or held
in a business carried on in Canada and shares of corporations that are not listed on a “designated stock exchange”
if more than 50% of the fair market value of the shares is derived from certain Canadian properties during the 60-month period
immediately preceding the disposition or deemed disposition. In general, our units will not constitute “taxable Canadian
property” of any Non-Canadian Limited Partner at the time of disposition or deemed disposition, unless (a) at any time
during the 60-month period immediately preceding the disposition or deemed disposition, more than 50% of the fair market value
of our units was derived, directly or indirectly (excluding through a corporation, partnership or trust, the shares or interests
in which were not themselves “taxable Canadian property”), from one or any combination of: (i) real or immovable
property situated in Canada; (ii) “Canadian resource property”; (iii) “timber resource property”;
and (iv) options in respect of, or interests in, or for civil law rights in, such property, whether or not such property exists,
or (b) our units are otherwise deemed to be “taxable Canadian property”. Since our company’s assets will
consist principally of units of the Property Partnership, our units would generally be “taxable Canadian property”
at a particular time if the units of the Property Partnership held by our company derived, directly or indirectly (excluding through
a corporation, partnership or trust, the shares or interests in which were not themselves “taxable Canadian property”),
more than 50% of their fair market value from properties described in (i) to (iv) above, at any time in the 60-month
period preceding the particular time. The BPY General Partner does not expect our units to be “taxable Canadian property”
of any Non-Canadian Limited Partner at any relevant time and does not expect our company or the Property Partnership to dispose
of “taxable Canadian property”. However, no assurance can be given in this regard. See also Item 3.D. “Risk
Factors — Risks Relating to Taxation.”



Special rules, which
are not discussed in this summary, may apply to a Non-Canadian Limited Partner that is an insurer carrying on business in Canada
and elsewhere.



Taxation of Income or Loss



A Non-Canadian Limited
Partner will not be subject to Canadian federal income tax under Part I of the Tax Act on its share of income from a business carried
on by our company (or the Property Partnership) outside Canada or the non-business-income earned by our company (or the Property
Partnership) from sources in Canada. However, a Non-Canadian Limited Partner may be subject to Canadian federal withholding tax
under Part XIII of the Tax Act, as described below. The BPY General Partner intends to organize and conduct the affairs of our
company and the Property Partnership, to the extent possible, such that Non-Canadian Limited Partners should not be considered
to be carrying on business in Canada solely by virtue of holding our units. However, no assurance can be given in this regard.



Our company and the
Property Partnership will be deemed to be a non-resident person in respect of certain amounts paid or credited or deemed to be
paid or credited to them by a person resident or deemed to be resident in Canada, including dividends or interest. Dividends or
interest (other than interest exempt from Canadian federal withholding tax) paid or deemed to be paid by a person resident or deemed
to be resident in Canada to the Property Partnership will be subject to withholding tax under Part XIII of the Tax Act at the rate
of 25%. However, the CRA’s administrative practice in similar circumstances is to permit the rate of Canadian federal withholding
tax applicable to such payments to be computed by looking through our partnership and taking into account the residency of the
partners (including partners who are resident in Canada) and any reduced rates of Canadian federal withholding tax that any non-resident
partners may be entitled to under an applicable income tax treaty or convention, provided that the residency status and entitlement
to the treaty benefits can be established. In determining the rate of Canadian federal withholding tax applicable to amounts paid
by Holding Entities to the Property Partnership, we expect the Holding Entities to look-through the Property Partnership and our
company to the residency of the partners of our company (including partners who are resident in Canada) and to take into account
any reduced rates of Canadian federal withholding tax that Non-Canadian Limited Partners may be entitled to under an applicable
income tax treaty or convention in order to determine the appropriate amount of Canadian federal withholding tax to withhold from
dividends or interest paid to the Property Partnership. However, there can be no assurance that the CRA would apply its administrative
practice in this context. Under the Treaty, in certain circumstances a Canadian resident payer is required to look-through fiscally
transparent partnerships, such as our company and the Property Partnership, to the residency and Treaty entitlements of their partners
and to take into account the reduced rates of Canadian federal withholding tax that such partners may be entitled to under the
Treaty.



10.F.	DIVIDENDS AND PAYING AGENTS



Not applicable.



10.G.	STATEMENT BY EXPERTS



Not applicable.



10.H	DOCUMENTS ON DISPLAY



Any statement in this
Form 20-F about any of our contracts or other documents is not necessarily complete. If the contract or document is filed as an
exhibit to the Form 20-F, the contract or document is deemed to modify the description contained in this Form 20-F. You must review
the exhibits themselves for a complete description of the contract or document.



Brookfield Asset Management
and our company are both subject to the information filing requirements of the Exchange Act, and accordingly are required to file
periodic reports and other information with the SEC. As a foreign private issuer under the SEC’s regulations, we file annual
reports on Form 20-F and furnish other reports on Form 6-K. The information disclosed in our reports may be less extensive than
that required to be disclosed in annual and quarterly reports on Forms 10-K and 10-Q required to be filed with the SEC by U.S.
issuers. Moreover, as a foreign private issuer, we are not subject to the proxy requirements under Section 14 of the Exchange
Act, and the BPY General Partner’s directors and our principal unitholders are not subject to the insider short swing profit
reporting and recovery rules under Section 16 of the Exchange Act. Our and Brookfield Asset Management’s SEC filings
are available at the SEC’s website atwww.sec.gov . You may also read and copy any document we or Brookfield
Asset Management files with the SEC at the public reference facilities maintained by the SEC at SEC Headquarters, Public Reference
Section, 100 F Street, N.E., Washington D.C. 20549. You may obtain information on the operation of the SEC’s public reference
facilities by calling the SEC at 1-800-SEC-0330.



135







In addition, Brookfield
Asset Management and our company are required by Canadian securities laws to file documents electronically with Canadian securities
regulatory authorities and these filings are available on our or Brookfield Asset Management’s SEDAR profile atwww.sedar.com
.. Written requests for such documents should be directed to our Corporate Secretary at 73 Front Street, 5th Floor, Hamilton HM
12, Bermuda.



10.I.	SUBSIDIARY INFORMATION



Not applicable.



ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK



See the information
contained in this Form 20-F under Item 5. “Operating and Financial Review and Prospects”.





ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES



Not applicable.



PART II





ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES



None.



ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
HOLDERS AND USE OF PROCEEDS



None.



ITEM 15.	CONTROLS AND PROCEDURES



Disclosure Controls and Procedures



As
of December 31, 2014, an evaluation of the effectiveness of our “disclosure controls and
procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) was carried out under the
supervision and with the participation of persons performing the functions of principal executive and principal financial
officers for us and our Service Providers. Based upon that evaluation, the persons performing the functions of principal executive and
principal financial officers for us have concluded that, as of December 31, 2014, our disclosure controls and procedures
were effective: (i) to ensure that information required to be disclosed by us in the reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s
rules and forms; and (ii) to ensure that information required to be disclosed by us in the reports that we file or
submit under the Exchange Act is accumulated and communicated to our management, including the persons performing the
functions of principal executive and principal financial officers for us, to allow timely decisions regarding required
disclosure.



It should be noted
that while our management, including persons performing the functions of principal executive and principal financial officers for
us, believe our disclosure controls and procedures provide a reasonable level of assurance that such controls and procedures are
effective, they do not expect that our disclosure controls and procedures or internal controls will prevent all error and all fraud.
A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met.



Management’s Annual Report on Internal Control Over
Financial Reporting



Our management
is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined
in Exchange Act Rules 13a−15(f). Under the supervision and with the participation of our management, including persons
performing the functions of principal executive and principal financial officers for us, we conducted an evaluation of the
effectiveness of our internal control over financial reporting as of December 31, 2014, based on the criteria established in
Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this assessment, our management concluded that our
internal control over financial reporting was effective as of December 31, 2014.



Our
management excluded from its design and assessment of internal control over financial reporting Candor Office Parks, CARS and
Manhattan Multi-family portfolio, which were acquired during 2014, and whose total assets, net assets, total revenues and net
income on a combined basis constitute approximately 10%, 9%, 2% and 0%, respectively, of the consolidated financial statement
amounts as of and for the year ended December 31, 2014.



Internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.





136









Report of Independent Registered Public Accounting Firm



The effectiveness of
our internal control over financial reporting as of December 31, 2014 has been audited by Deloitte LLP, Chartered Professional
Accountants, Chartered Accountants, who have also audited the financial statements of our company, as stated in their reports which
are included herein.



Changes in Internal Control



There was no change
in our internal control over financial reporting during the year ended December 31, 2014, that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.



ITEM 16.	[RESERVED]



16.A.	AUDIT COMMITTEE FINANCIAL
EXPERTS



The BPY General Partner’s
board of directors has determined that Stephen DeNardo possesses specific accounting and financial management expertise and that
he is an audit committee financial expert as defined by the SEC and is independent within the meaning of the rules of the NYSE.
The BPY General Partner’s board of directors has also determined that other members of the Audit Committee have sufficient
experience and ability in finance and compliance matters to enable them to adequately discharge their responsibilities.



16.B.	CODE OF ETHICS



On April 4, 2013,
the BPY General Partner adopted a Code of Conduct and Ethics, or the Code, that applies to the members of the board of directors
of the BPY General Partner, our company and any officers or employees of the BPY General Partner. The Code is reviewed and updated
annually. We have posted a copy of the Code on our website atwww.brookfieldpropertypartners.com .



16.C.	PRINCIPAL ACCOUNTANT FEES
AND SERVICES



The BPY General Partner
has retained Deloitte LLP to act as our company’s independent registered public accounting firm.



The table below summarizes
the fees for professional services rendered by Deloitte LLP for the audit of our annual financial statements for the periods ended
December 31, 2014 and 2013.



|                      |  | December 31, 2014 |        |  | December 31, 2013 | 
|--------------------- |  | ----------------- | ------ |  | ----------------- | 
|THOUSANDS             |  | USD               |        |  | %                 | 
|Audit fees(1)         |  | $                 | 6,281  |  |                   | 
|Audit-related fees(2) |  |                   | 12,259 |  |                   | 
|Tax fees(3)           |  |                   | 807    |  |                   | 
|Other(4)              |  |                   | 54     |  |                   | 
|Total                 |  | $                 | 19,401 |  |                   | 



(1)	Audit fees include
fees for services that would normally be provided by the external auditor in connection with statutory and regulatory filings or
engagements, including fees for services necessary to perform an audit or review in accordance with generally accepted auditing
standards. This category also includes services that generally only the external auditor reasonably can provide, including comfort
letters, statutory audits, attest services, consents and assistance with and review of certain documents filed with securities
regulatory authorities.



(2)	Audit-related fees
are for assurance and related services, such as due diligence services, that traditionally are performed by the external auditor.
More specifically, these services include, among others: employee benefit plan audits, accounting consultations and audits in connection
with acquisitions, attest services that are not required by statute or regulation, and consultation concerning financial accounting
and reporting standards.



(3)	Tax fees are principally
for assistance in tax return preparation and tax advisory services.



(4)	All other fees include
fees for assistance with corporate and social responsibility reporting.



The audit committee
of the BPY General Partner pre-approves all audit and non-audit services provided to our partnership by Deloitte LLP.



16.D.	EXEMPTIONS FROM THE LISTING
STANDARDS FOR AUDIT COMMITTEES



None.



16.E.	PURCHASES OF EQUITY SECURITIES
BY THE ISSUER AND AFFILIATED PURCHASERS



Under our normal course issuer bid,
our company may, during the twelve month period commencing June 18, 2014 and ending June 17, 2015, purchase on the TSX or
NYSE up to 11,549,010 of our units, representing approximately 5% of our issued and outstanding units. During the year ended
December 31, 2014, we purchased 222,557 of our units at an average price of $22.46 per unit.





137







16.F.	CHANGE IN REGISTRANT’S
CERTIFYING ACCOUNTANT



None.



16.G.	CORPORATE GOVERNANCE



Our corporate practices
are not materially different from those required of domestic limited partnerships under the NYSE Listing Standards.



16.H.	MINING SAFETY DISCLOSURE



Pursuant to Section
1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, issuers that are operators, or that have a subsidiary
that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with
the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions,
and mining-related fatalities under the regulation of the Federal Mine Safety and Health Administration, or the MSHA, under the
Federal Mine Safety and Health Act of 1977, as amended, or the Mine Act. During the fiscal year ended December 31, 2013, our company
did not have any mines in the United States subject to regulation by MSHA under the Mine Act.



PART III





ITEM 17.	FINANCIAL STATEMENTS



Not applicable.



ITEM 18.	FINANCIAL STATEMENTS



See the list of financial
statements beginning on page F-1 which are filed as part of the annual report on Form 20-F.



ITEM 19.	EXHIBITS



|Number |  | Description                                                                                                                                                                                                                                   
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | 
|1.1    |  | Certificate of registration of our company, registered as of January 3, 2013*                                                                                                                                                                 
|       | 
|1.3    |  | Second Amended and Restated Limited Partnership Agreement of our company, dated August 8, 2013****                                                                                                                                            
|       | 
|4.1    |  | Amended and Restated Master Purchase Agreement between our company and Brookfield Asset Management**                                                                                                                                          
|       | 
|4.2    |  | Amended and Restated Master Services Agreement by and among Brookfield Asset Management, the Service Recipients and the Service Providers, dated March 3, 2015**********                                                                      
|       | 
|4.3    |  | Second Amended and Restated Limited Partnership Agreement of the Property Partnership, dated August 8, 2013****                                                                                                                               
|       | 
|4.4    |  | Relationship Agreement among our company, the Property Partnership, the Holding Entities, the Service Providers and Brookfield Asset Management, dated April 15, 2013***                                                                      
|       | 
|4.5    |  | Registration Rights Agreement between our company and Brookfield Asset Management dated April 10, 2013***                                                                                                                                     
|       | 
|4.6    |  | Acknowledgement of Termination of Voting Agreement among Brookfield Asset Management, Brookfield Property General Partner Limited and our company, dated August 8, 2013****                                                                   
|       | 
|4.7    |  | Credit Agreement, dated March 18, 2014, by and among Brookfield Property Split Corp., Brookfield Office Properties Exchange LP, Brookfield Property Partners L.P., Brookfield Property L.P., and the other borrowers and lenders thereto******
|       | 
|4.8    |  | Support Agreement, dated March 19, 2014, between Brookfield Property Partners L.P. and Brookfield Office Properties Exchange LP******                                                                                                         
|       |  |                                                                                                                                                                                                                                               
|4.9    |  | First Amendment to Second Amended and Restated Limited Partnership Agreement of the Property Partnership dated December 4, 2014********                                                                                                       
|       |  |                                                                                                                                                                                                                                               
|4.10   |  | Arrangement Agreement between our company, Brookfield Office Properties Exchange LP, Brookfield Property Split Corp. and Brookfield Office Properties Inc., dated as of April 24, 2014*******                                                 





138











|4.11 |  | Guarantee Agreement between our company and the Class A Preferred Unitholder dated December 4, 2014********                                                                                                                       
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                                                                                                                   
|4.12 |  | Investor Agreement between our company and the Class A Preferred Unitholder dated December 4, 2014********                                                                                                                        
|     |  |                                                                                                                                                                                                                                   
|4.13 |  | Subscription Agreement among our company, the Property Partnership and the Class A Preferred Unitholder dated December 4, 2014********                                                                                            
|     |  |                                                                                                                                                                                                                                   
|4.14 |  | Refinancing Agreement among Brookfield Asset Management, our company and the Property Partnership dated December 4, 2014*********                                                                                                 
|     |  |                                                                                                                                                                                                                                   
|12.1 |  | Certification of Richard B. Clark, Chief Executive Officer, Brookfield Property Group LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**********                                                                    
|     |  |                                                                                                                                                                                                                                   
|12.2 |  | Certification of John Stinebaugh, Chief Financial Officer, Brookfield Property Group LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**********                                                                     
|     | 
|13.1 |  | Certification of Richard B. Clark, Chief Executive Officer, Brookfield Property Group LLC, pursuant to 18 U.S.C. Section 1350, as adopted to Section 906 of the Sarbanes Oxley Act of 2002**********                              
|     | 
|13.2 |  | Certification of John Stinebaugh, Chief Financial Officer, Brookfield Property Group LLC, pursuant to 18 U.S.C. Section 1350, as adopted to Section 906 of the Sarbanes Oxley Act of 2002**********                               
|     |  |                                                                                                                                                                                                                                   
|15.1 |  | Consent of Deloitte LLP, independent registered chartered accountants, relating to the incorporation of the consolidated financial statements of Brookfield Property Partners L.P. into this Annual Report on Form 20-F.**********
|     |  |                                                                                                                                                                                                                                   
|15.2 |  | Consent of Deloitte & Touche LLP relating to the incorporation of the consolidated financial statements of General Growth Properties, Inc. into this Annual Report on Form 20-F.**********                                        
|     |  |                                                                                                                                                                                                                                   
|15.3 |  | Consent of KPMG
    LLP relating to the financial statements of GGP/Homart II, L.L.C.**********                                                                                                                                   
|     |  |                                                                                                                                                                                                                                   
|15.4 |  | Consent of KPMG LLP relating to the financial
    statements of GGP-TRS, L.L.C.**********                                                                                                                                         



|*          | Filed as an exhibit to Amendment No. 1 to Registration Statement on Form 20-F on June 12, 2012 and incorporated herein by reference.   
|---------- | ---------------------------------------------------------------------------------------------------------------------------------------
|           |                                                                                                                                        
|**         | Filed as an exhibit to Amendment No. 6 to Registration Statement on Form 20-F on February 1, 2013 and incorporated herein by reference.
|           |                                                                                                                                        
|***        | Filed as an exhibit to Form 6-K on April 16, 2013 and incorporated herein by reference.                                                
|           |                                                                                                                                        
|****       | Filed as an exhibit to Form 6-K on August 8, 2013 and incorporated herein by reference.                                                
|           |                                                                                                                                        
|*****      | Filed as an exhibit to Form F-4 on January 24, 2014 and incorporated herein by reference.                                              
|           |                                                                                                                                        
|******     | Filed as an exhibit to Form 6-K on March 19, 2014 and incorporated herein by reference.                                                
|           |                                                                                                                                        
|*******    | Filed as an exhibit to Form 6-K on April 25, 2014 and incorporated herein by reference.                                                
|           |                                                                                                                                        
|********   | Filed as an exhibit to Form 6-K on December 4, 2014 and incorporated herein by reference.                                              
|           |                                                                                                                                        
|*********  | Filed as an exhibit to Brookfield Asset Management’s Schedule 13D/A filed on December 4, 2014 and incorporated herein by reference.    
|           |                                                                                                                                        
|********** | Filed herewith.                                                                                                                        



The registrant hereby agrees to furnish
to the SEC at its request copies of long-term debt instruments defining the rights of holders of outstanding long-term debt that
are not required to be filed herewith.



139







SIGNATURES



The registrant hereby certifies that it
meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual
report on its behalf.





| | BROOKFIELD PROPERTY PARTNERS L.P.,                                 
| | -------------------------------------------------------------------
| | by its general partner,BROOKFIELD PROPERTY
        PARTNERS LIMITED
| |                                                                    
| | By:                                                                
| |                                                                    
| |                                                                    





Date: March 16, 2015



140







Index to
Financial Statements



|                                                                                                                                                                                   | Page
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                                                                   |     
|Consolidated financial statements of Brookfield Property Partners L.P. as at December 31, 2014 and 2013 and for each of the years in the three-year period ended December 31, 2014 | F-2 
|                                                                                                                                                                                   |     
|Consolidated financial statements of General Growth Properties, Inc. as of December 31, 2014 and 2013 and for each of the years in the three-year period ended December 31, 2014   | F-59





F-1







Brookfield Property Partners L.P.



Consolidated financial statements

As at December 31, 2014 and 2013

and for the years ended December 31, 2014,
2013 and 2012



F-2







Report of Independent Registered Public Accounting Firm



To the Board of Directors and Unitholders of Brookfield Property
Partners L.P.



We have audited the accompanying consolidated
financial statements of Brookfield Property Partners L.P. and subsidiaries (the “Partnership”), which comprise
the consolidated balance sheets as at December 31, 2014 and December 31, 2013, and the consolidated statements of
income, consolidated statements of comprehensive income, consolidated statements of changes in equity, and consolidated
statements of cash flows for each of the years in the three year period ended December 31, 2014, and the notes to the
consolidated financial statements. Our audit also included the audit of a supplemental schedule of investment property
information (“the Schedule”) as at  December 31, 2014.



Management's Responsibility for the Consolidated Financial
Statements



Management is responsible for the preparation and fair presentation
of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.



Auditor's Responsibility



Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards
and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free from material misstatement.



An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation
of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements.



We believe that the audit evidence we have obtained in our audits
is sufficient and appropriate to provide a basis for our audit opinion.



Opinion



In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Partnership and subsidiariesas atDecember
31, 2014 and December 31, 2013, and their financial performance and their cash flows for each of the years in the three year
period ended December 31, 2014 in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board. Also, in our opinion, the Schedule, when considered in relation to the consolidated financial
statements taken as a whole, presents fairly in all material respects the information set forth therein.



Other Matter



We have also audited, in
accordance with the standards of the Public Company Accounting Oversight Board (United States), the Partnership’s
internal control over financial reporting as  at December 31, 2014, based on the criteria established in Internal Control
— Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and
our report dated March 16, 2015 expressed an unqualified opinion on the Partnership’s internal control over
financial reporting.



F-3







Report of Independent Registered Public Accounting Firm (continued)



/s/ Deloitte LLP



Chartered Professional Accountants, Chartered Accountants

Licensed Public Accountants



March 16, 2015

Toronto, Canada



F-4







Report of Independent Registered Public Accounting Firm



To the Board of Directors and Unitholders of Brookfield Property
Partners L.P.



We have audited the internal control over
financial reporting of Brookfield Property Partners L.P.and subsidiaries (the “Partnership”)as of
December 31, 2014, based on the criteria established in Internal Control—Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s Annual Report on
Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial
reporting at Candor Office Parks, Capital Automotive Real Estate Services Inc. and Manhattan Multi-Family portfolio, which
were acquired during 2014, and whose total assets, total net assets, total revenue and net income on a combined basis
constitute approximately 10%, 9%, 2% and 0% of the consolidated financial statement amounts, respectively, as
of and for the year ended December 31, 2014. Accordingly, our audit did not include the internal control over financial
reporting at Candor Office Parks, Capital Automotive Real Estate Services Inc. and Manhattan Multi-Family portfolio. The
Partnership's management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership's
internal control over financial reporting based on our audit.



We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.



A company's internal control over financial reporting is a process
designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing
similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with International Financial Reporting Standards as issued by the International Accounting Standards Board. A company's internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that
could have a material effect on the financial statements.



Because of the inherent limitations of internal control over
financial reporting, including the possibility of collusion or improper management override of controls, material misstatements
due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness
of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



In our opinion, the Partnership maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal
Control — Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission.



F-5







Report of Independent Registered Public Accounting Firm (continued)



We have also audited, in accordance with
Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United
States), the consolidated financial statements and the supplemental schedule of investment property information as of and for
the year ended December 31, 2014 of the Partnership and our report dated March 16, 2015 expressed an unqualified opinion
on those financial statements.



/s/ Deloitte LLP



Chartered Professional Accountants, Chartered Accountants

Licensed Public Accountants



March 16, 2015

Toronto, Canada



F-6







Brookfield Property Partners L.P.

Consolidated Balance Sheets



|(US$ Millions)                                                        |  | Note |       |  | Dec. 31, 2014 |   |        | Dec. 31, 2013 | 
|--------------------------------------------------------------------- |  | ---- | ----- |  | ------------- | - | ------ | ------------- | 
|Assets                                                                |  |      |       |  |               |   |        |               | 
|Non-current assets                                                    |  |      |       |  |               |   |        |               | 
|Investment properties                                                 |  |      | 7     |  |               | $ | 41,141 |               | 
|Equity accounted investments                                          |  |      | 9     |  |               |   | 10,356 |               | 
|Participating loan interests                                          |  |      | 11    |  |               |   | 609    |               | 
|Hotel assets                                                          |  |      | 12    |  |               |   | 2,478  |               | 
|Other non-current assets                                              |  |      | 13    |  |               |   | 4,017  |               | 
|Loans and notes receivable                                            |  |      | 14    |  |               |   | 209    |               | 
|                                                                      |  |      |       |  |               |   | 58,810 |               | 
|Current assets                                                        |  |      |       |  |               |   |        |               | 
|Loans and notes receivable                                            |  |      | 14    |  |               |   | 117    |               | 
|Accounts receivable and other                                         |  |      | 15    |  |               |   | 3,125  |               | 
|Cash and cash equivalents                                             |  |      |       |  |               |   | 1,282  |               | 
|                                                                      |  |      |       |  |               |   | 4,524  |               | 
|Assets held for sale                                                  |  |      | 16    |  |               |   | 2,241  |               | 
|Total assets                                                          |  |      |       |  |               | $ | 65,575 |               | 
|                                                                      |  |      |       |  |               |   |        |               | 
|Liabilities and equity                                                |  |      |       |  |               |   |        |               | 
|Non-current liabilities                                               |  |      |       |  |               |   |        |               | 
|Debt obligations                                                      |  |      | 17    |  |               | $ | 23,879 |               | 
|Capital securities                                                    |  |      | 18    |  |               |   | 3,535  |               | 
|Other non-current liabilities                                         |  |      |       |  |               |   | 646    |               | 
|Deferred tax liabilities                                              |  |      | 19    |  |               |   | 2,639  |               | 
|                                                                      |  |      |       |  |               |   | 30,699 |               | 
|Current liabilities                                                   |  |      |       |  |               |   |        |               | 
|Debt obligations                                                      |  |      | 17    |  |               |   | 3,127  |               | 
|Capital securities                                                    |  |      | 18    |  |               |   | 476    |               | 
|Accounts payable and other liabilities                                |  |      | 20    |  |               |   | 1,753  |               | 
|                                                                      |  |      |       |  |               |   | 5,356  |               | 
|Liabilities associated with assets held for sale                      |  |      | 16    |  |               |   | 1,221  |               | 
|Total liabilities                                                     |  |      |       |  |               |   | 37,276 |               | 
|                                                                      |  |      |       |  |               |   |        |               | 
|Equity                                                                |  |      |       |  |               |   |        |               | 
|Limited partners                                                      |  |      | 21    |  |               |   | 6,586  |               | 
|General partner                                                       |  |      | 21    |  |               |   | 5      |               | 
|Non-controlling interests attributable to:                            |  |      |       |  |               |   |        |               | 
|Redeemable/exchangeable and special limited partnership units         |  |      | 21,22 |  |               |   | 13,147 |               | 
|Limited partnership units of Brookfield Office Properties Exchange LP |  |      | 21,22 |  |               |   | 470    |               | 
|Interests of others in operating subsidiaries and properties          |  |      | 8,22  |  |               |   | 8,091  |               | 
|Total equity                                                          |  |      |       |  |               |   | 28,299 |               | 
|Total liabilities and equity                                          |  |      |       |  |               | $ | 65,575 |               | 



See accompanying notes to the consolidated financial statements.



F-7







Brookfield Property Partners L.P.

Consolidated Statements of Income





|(US$ Millions, except per unit information) Year ended Dec. 31,          |  | Note |    |  | 2014 |   |       | 2013 |  |   | 2012  | 
|------------------------------------------------------------------------ |  | ---- | -- |  | ---- | - | ----- | ---- |  | - | ----- | 
|Commercial property revenue                                              |  |      | 23 |  |      | $ | 3,038 |      |  | $ | 2,910 | 
|Hospitality revenue                                                      |  |      |    |  |      |   | 983   |      |  |   | 1,168 | 
|Investment and other revenue                                             |  |      | 24 |  |      |   | 352   |      |  |   | 209   | 
|Total revenue                                                            |  |      |    |  |      |   | 4,373 |      |  |   | 4,287 | 
|Direct commercial property expense                                       |  |      | 25 |  |      |   | 1,298 |      |  |   | 1,204 | 
|Direct hospitality expense                                               |  |      | 26 |  |      |   | 791   |      |  |   | 957   | 
|Interest expense                                                         |  |      |    |  |      |   | 1,258 |      |  |   | 1,088 | 
|Depreciation and amortization                                            |  |      | 27 |  |      |   | 148   |      |  |   | 162   | 
|Administration and other expense                                         |  |      | 28 |  |      |   | 404   |      |  |   | 317   | 
|Total expenses                                                           |  |      |    |  |      |   | 3,899 |      |  |   | 3,728 | 
|Fair value gains, net                                                    |  |      | 29 |  |      |   | 3,756 |      |  |   | 870   | 
|Share of net earnings from equity accounted investments                  |  |      | 9  |  |      |   | 1,366 |      |  |   | 835   | 
|Income before income taxes                                               |  |      |    |  |      |   | 5,596 |      |  |   | 2,264 | 
|Income tax expense                                                       |  |      | 19 |  |      |   | 1,176 |      |  |   | 501   | 
|Net income                                                               |  |      |    |  |      | $ | 4,420 |      |  | $ | 1,763 | 
|                                                                         |  |      |    |  |      |   |       |      |  |   |       | 
|Net income attributable to:                                              |  |      |    |  |      |   |       |      |  |   |       | 
|Limited partners(1)                                                      |  |      |    |  |      | $ | 1,154 |      |  | $ | 118   | 
|General partner(1)                                                       |  |      |    |  |      |   | 1     |      |  |   | ―     | 
|Brookfield Asset Management Inc.(2)                                      |  |      |    |  |      |   | ―     |      |  |   | 232   | 
|Non-controlling interests attributable to:                               |  |      |    |  |      |   |       |      |  |   |       | 
|Redeemable/exchangeable and special limited partnership units(1)         |  |      |    |  |      |   | 2,444 |      |  |   | 557   | 
|Limited partnership units of Brookfield Office Properties Exchange LP(1) |  |      |    |  |      |   | 135   |      |  |   | ―     | 
|Interests of others in operating subsidiaries and properties             |  |      |    |  |      |   | 686   |      |  |   | 856   | 
|                                                                         |  |      |    |  |      | $ | 4,420 |      |  | $ | 1,763 | 
|Net income per LP Unit:                                                  |  |      |    |  |      |   |       |      |  |   |       | 
|Basic(3)                                                                 |  |      | 21 |  |      | $ | 5.59  |      |  | $ | 1.41  | 
|Diluted(3)                                                               |  |      | 21 |  |      | $ | 5.31  |      |  | $ | 1.41  | 



| | (1) | For periods subsequent to April 15, 2013.
| | --- | -----------------------------------------

| | (2) | For periods prior to April 15, 2013.
| | --- | ------------------------------------

| | (3) | Net income per LP Unit has been presented effective for the period from the date of the Spin-off
on April 15, 2013, as this is the date of legal entitlement of earnings to the LP Unit holders.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



See accompanying notes to
the consolidated financial statements.



F-8







Brookfield Property Partners L.P.

Consolidated Statements of Comprehensive Income



|(US$ Millions) Year ended Dec. 31,                                       |  | Note |    |  | 2014 |   |       | 2013 |  |   | 2012  |  
|------------------------------------------------------------------------ |  | ---- | -- |  | ---- | - | ----- | ---- |  | - | ----- | -
|Net income                                                               |  |      |    |  |      | $ | 4,420 |      |  | $ | 1,763 |  
|Other comprehensive (loss) income                                        |  |      | 31 |  |      |   |       |      |  |   |       |  
|Items that may be reclassified to net income:                            |  |      |    |  |      |   |       |      |  |   |       |  
|Foreign currency translation                                             |  |      |    |  |      |   | (517  | )    |  |   | (819  | )
|Cash flow hedges                                                         |  |      |    |  |      |   | (162  | )    |  |   | 159   |  
|Available-for-sale securities                                            |  |      |    |  |      |   | 4     |      |  |   | ―     |  
|Equity accounted investments                                             |  |      |    |  |      |   | (84   | )    |  |   | 14    |  
|Items that will not be reclassified to net income:                       |  |      |    |  |      |   |       |      |  |   |       |  
|Revaluation surplus                                                      |  |      |    |  |      |   | 312   |      |  |   | 183   |  
|Total other comprehensive (loss) income                                  |  |      |    |  |      |   | (447  | )    |  |   | (463  | )
|Total comprehensive income                                               |  |      |    |  |      | $ | 3,973 |      |  | $ | 1,300 |  
|Comprehensive income attributable to:                                    |  |      |    |  |      |   |       |      |  |   |       |  
|Limited partners(1)                                                      |  |      |    |  |      |   |       |      |  |   |       |  
|Net income                                                               |  |      |    |  |      | $ | 1,154 |      |  | $ | 118   |  
|Other comprehensive (loss) income                                        |  |      |    |  |      |   | (135  | )    |  |   | (42   | )
|                                                                         |  |      |    |  |      |   | 1,019 |      |  |   | 76    |  
|General partner(1)                                                       |  |      |    |  |      |   |       |      |  |   |       |  
|Net income                                                               |  |      |    |  |      |   | 1     |      |  |   | ―     |  
|Other comprehensive (loss) income                                        |  |      |    |  |      |   | ―     |      |  |   | ―     |  
|                                                                         |  |      |    |  |      |   | 1     |      |  |   | ―     |  
|Brookfield Asset Management Inc.(2)                                      |  |      |    |  |      |   |       |      |  |   |       |  
|Net income                                                               |  |      |    |  |      |   | ―     |      |  |   | 232   |  
|Other comprehensive (loss) income                                        |  |      |    |  |      |   | ―     |      |  |   | (25   | )
|                                                                         |  |      |    |  |      |   | ―     |      |  |   | 207   |  
|Non-controlling interests                                                |  |      |    |  |      |   |       |      |  |   |       |  
|Redeemable/exchangeable and special limited partnership units(1)         |  |      |    |  |      |   |       |      |  |   |       |  
|Net income                                                               |  |      |    |  |      |   | 2,444 |      |  |   | 557   |  
|Other comprehensive (loss) income                                        |  |      |    |  |      |   | (285  | )    |  |   | (200  | )
|                                                                         |  |      |    |  |      |   | 2,159 |      |  |   | 357   |  
|Limited partnership units of Brookfield Office Properties Exchange LP(1) |  |      |    |  |      |   |       |      |  |   |       |  
|Net income                                                               |  |      |    |  |      |   | 135   |      |  |   | ―     |  
|Other comprehensive (loss) income                                        |  |      |    |  |      |   | (16   | )    |  |   | ―     |  
|                                                                         |  |      |    |  |      |   | 119   |      |  |   | ―     |  
|Interests of others in operating subsidiaries and properties(1)          |  |      |    |  |      |   |       |      |  |   |       |  
|Net income                                                               |  |      |    |  |      |   | 686   |      |  |   | 856   |  
|Other comprehensive (loss) income                                        |  |      |    |  |      |   | (11   | )    |  |   | (196  | )
|                                                                         |  |      |    |  |      |   | 675   |      |  |   | 660   |  
|Total comprehensive income                                               |  |      |    |  |      | $ | 3,973 |      |  | $ | 1,300 |  



| | (1) | For periods subsequent to April 15, 2013.
| | --- | -----------------------------------------

| | (2) | For periods prior to April 15, 2013.
| | --- | ------------------------------------



See accompanying notes to the consolidated financial statements.



F-9









Brookfield Property Partners L.P.

Consolidated Statements of Changes in Equity



|                                                            |  | Brookfield
    Asset Management Inc. |         |   | Limited
    partners                              |   |      | General
    partner                          |  |   | Non-controlling
    Interests |   |  |                       |      
|----------------------------------------------------------- |  | ------------------------------------ | ------- | - | ------------------------------------------------- | - | ---- | -------------------------------------------- |  | - | ----------------------------- | - |  | --------------------- | -----
|(US$ Millions)                                              |  | Equity                               |         |   | Accumulated
    other comprehensive (loss) income |   |      | Brookfield
     Asset Management Inc. equity |  |   | Capital                       |   |  | Retained
    earnings |      
|Balance as at Dec.
    31, 2013                             |  | $                                    | -       |   |                                                   | $ | -    |                                              |  | $ | -                             |   |  | $                     | 2,470
|Net income                                                  |  |                                      | -       |   |                                                   |   | -    |                                              |  |   | -                             |   |  |                       | -    
|Other comprehensive income
    (loss)                       |  |                                      | -       |   |                                                   |   | -    |                                              |  |   | -                             |   |  |                       | -    
|Total comprehensive income (loss)                           |  |                                      | -       |   |                                                   |   | -    |                                              |  |   | -                             |   |  |                       | -    
|Distributions                                               |  |                                      | -       |   |                                                   |   | -    |                                              |  |   | -                             |   |  |                       | -    
|Issuance / repurchase of interest in operating subsidiaries |  |                                      | -       |   |                                                   |   | -    |                                              |  |   | -                             |   |  |                       | 2,569
|Exchange of exchangeable units                              |  |                                      | -       |   |                                                   |   | -    |                                              |  |   | -                             |   |  |                       | 573  
|Balance as at Dec. 31, 2014                                 |  | $                                    | -       |   |                                                   | $ | -    |                                              |  | $ | -                             |   |  | $                     | 5,612
|                                                            |  |                                      |         |   |                                                   |   |      |                                              |  |   |                               |   |  |                       |      
|Balance as at Dec. 31, 2012                                 |  | $                                    | 12,956  |   |                                                   | $ | 207  |                                              |  | $ | 13,163                        |   |  | $                     | -    
|Net income                                                  |  |                                      | 232     |   |                                                   |   | -    |                                              |  |   | 232                           |   |  |                       | -    
|Other comprehensive income
    (loss)                       |  |                                      | -       |   |                                                   |   | (25  | )                                            |  |   | (25                           | ) |  |                       | -    
|Total comprehensive income (loss)                           |  |                                      | 232     |   |                                                   |   | (25  | )                                            |  |   | 207                           |   |  |                       | -    
|Contributions  and equity issuances of
     subsidiaries    |  |                                      | 147     |   |                                                   |   | -    |                                              |  |   | 147                           |   |  |                       | (8   
|Distributions                                               |  |                                      | (230    | ) |                                                   |   | -    |                                              |  |   | (230                          | ) |  |                       | -    
|Unit issuance / Reorganization                              |  |                                      | (13,105 | ) |                                                   |   | (182 | )                                            |  |   | (13,287                       | ) |  |                       | 2,478
|Balance as at Dec. 31, 2013                                 |  | $                                    | -       |   |                                                   | $ | -    |                                              |  | $ | -                             |   |  | $                     | 2,470
|                                                            |  |                                      |         |   |                                                   |   |      |                                              |  |   |                               |   |  |                       |      
|Balance as at Dec. 31, 2011                                 |  | $                                    | 11,405  |   |                                                   | $ | 150  |                                              |  | $ | 11,555                        |   |  | $                     | -    
|Net income                                                  |  |                                      | 1,476   |   |                                                   |   | -    |                                              |  |   | 1,476                         |   |  |                       | -    
|Other comprehensive income
    (loss)                       |  |                                      | -       |   |                                                   |   | 57   |                                              |  |   | 57                            |   |  |                       | -    
|Total comprehensive income (loss)                           |  |                                      | 1,476   |   |                                                   |   | 57   |                                              |  |   | 1,533                         |   |  |                       | -    
|Contributions  and equity issuances of  subsidiaries        |  |                                      | 600     |   |                                                   |   | -    |                                              |  |   | 600                           |   |  |                       | -    
|Distributions                                               |  |                                      | (525    | ) |                                                   |   | -    |                                              |  |   | (525                          | ) |  |                       | -    
|Balance as at Dec. 31, 2012                                 |  | $                                    | 12,956  |   |                                                   | $ | 207  |                                              |  | $ | 13,163                        |   |  | $                     | -    



See accompanying notes to
the consolidated financial statements, specifically Note 5, Acquisition of Brookfield Office Properties Inc., Note 18, Capital
Securities, and Note 21, Equity.



F-10







Brookfield Property Partners L.P.

Consolidated Statements of Cash Flows



|(US$ Millions) Year ended Dec. 31,                                                           |  | Note |    |  | 2014 |   |        | 2013 |  |   | 2012   |  
|-------------------------------------------------------------------------------------------- |  | ---- | -- |  | ---- | - | ------ | ---- |  | - | ------ | -
|Operating activities                                                                         |  |      |    |  |      |   |        |      |  |   |        |  
|Net income                                                                                   |  |      |    |  |      | $ | 4,420  |      |  | $ | 1,763  |  
|Share of equity accounted earnings, net of distributions                                     |  |      |    |  |      |   | (817   | )    |  |   | (599   | )
|Fair value (gains) losses, net                                                               |  |      | 29 |  |      |   | (3,756 | )    |  |   | (870   | )
|Deferred income tax expense                                                                  |  |      | 19 |  |      |   | 1,150  |      |  |   | 487    |  
|Depreciation and amortization                                                                |  |      | 27 |  |      |   | 148    |      |  |   | 162    |  
|Working capital and other                                                                    |  |      |    |  |      |   | (662   | )    |  |   | (522   | )
|                                                                                             |  |      |    |  |      |   | 483    |      |  |   | 421    |  
|Financing activities                                                                         |  |      |    |  |      |   |        |      |  |   |        |  
|Debt obligations, issuance                                                                   |  |      |    |  |      |   | 10,305 |      |  |   | 8,776  |  
|Debt obligations, repayments                                                                 |  |      |    |  |      |   | (6,564 | )    |  |   | (7,085 | )
|Capital securities issued                                                                    |  |      |    |  |      |   | 1,800  |      |  |   | 392    |  
|Capital securities redeemed                                                                  |  |      |    |  |      |   | ―      |      |  |   | (201   | )
|Non-controlling interests, issued                                                            |  |      |    |  |      |   | 2,444  |      |  |   | 1,128  |  
|Non-controlling interests, purchased                                                         |  |      |    |  |      |   | (1,733 | )    |  |   | ―      |  
|Distributions to non-controlling interests in operating subsidiaries                         |  |      |    |  |      |   | (1,134 | )    |  |   | (667   | )
|Contributions from Brookfield Asset Management Inc.                                          |  |      |    |  |      |   | ―      |      |  |   | 20     |  
|Distributions to Brookfield Asset Management Inc.                                            |  |      |    |  |      |   | ―      |      |  |   | (381   | )
|Distributions to limited partnership unitholders                                             |  |      |    |  |      |   | (203   | )    |  |   | (56    | )
|Distributions to redeemable/exchangeable and special limited partnership unitholders         |  |      |    |  |      |   | (437   | )    |  |   | (257   | )
|Distributions to holders of Brookfield Office Properties Exchange LP units                   |  |      |    |  |      |   | (23    | )    |  |   | ―      |  
|                                                                                             |  |      |    |  |      |   | 4,455  |      |  |   | 1,669  |  
|Investing activities                                                                         |  |      |    |  |      |   |        |      |  |   |        |  
|Investment properties and subsidiaries, proceeds of dispositions                             |  |      |    |  |      |   | 2,037  |      |  |   | 1,627  |  
|Investment properties and subsidiaries, investments                                          |  |      |    |  |      |   | (5,336 | )    |  |   | (3,202 | )
|Cash acquired in business combinations                                                       |  |      |    |  |      |   | 37     |      |  |   | 237    |  
|Investment in equity accounted investments                                                   |  |      |    |  |      |   | (517   | )    |  |   | (168   | )
|Proceeds from sale of equity accounted investments and participating loan notes              |  |      |    |  |      |   | 280    |      |  |   | ―      |  
|Financial assets, proceeds of dispositions                                                   |  |      |    |  |      |   | 1,195  |      |  |   | 495    |  
|Financial assets, acquisitions                                                               |  |      |    |  |      |   | (1,149 | )    |  |   | (583   | )
|Foreign currency hedges of net investments                                                   |  |      |    |  |      |   | 124    |      |  |   | (32    | )
|Other property, plant and equipment, proceeds of dispositions                                |  |      |    |  |      |   | 144    |      |  |   | ―      |  
|Other property, plant and equipment, investments                                             |  |      |    |  |      |   | (29    | )    |  |   | ―      |  
|Restricted cash and deposits                                                                 |  |      |    |  |      |   | (1,786 | )    |  |   | 4      |  
|                                                                                             |  |      |    |  |      |   | (5,000 | )    |  |   | (1,622 | )
|Cash and cash equivalents                                                                    |  |      |    |  |      |   |        |      |  |   |        |  
|Net change in cash and cash equivalents during the period                                    |  |      |    |  |      |   | (62    | )    |  |   | 468    |  
|Effect of exchange rate fluctuations on cash and cash equivalents held in foreign currencies |  |      |    |  |      |   | (24    | )    |  |   | 6      |  
|Balance, beginning of year                                                                   |  |      |    |  |      |   | 1,368  |      |  |   | 894    |  
|Balance, end of year                                                                         |  |      |    |  |      | $ | 1,282  |      |  | $ | 1,368  |  
|                                                                                             |  |      |    |  |      |   |        |      |  |   |        |  
|Supplemental cash flow information                                                           |  |      |    |  |      |   |        |      |  |   |        |  
|Cash paid for:                                                                               |  |      |    |  |      |   |        |      |  |   |        |  
|Income taxes                                                                                 |  |      |    |  |      | $ | 63     |      |  | $ | 114    |  
|Interest (excluding dividends on capital securities)                                         |  |      |    |  |      | $ | 1,154  |      |  | $ | 995    |  



See accompanying notes to
the consolidated financial statements.



F-11







NOTE 1.	Organization
and NATURE OF THE Business

| | a) | Overview 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 material asset
at December 31, 2014 is a 37% managing general partnership unit interest in Brookfield Property L.P. (the “operating partnership”),
which holds the partnership’s interest in commercial and other income producing property operations. Prior to August 8, 2013,
the partnership’s interest in the operating partnership was comprised solely of a limited partnership interest in class A
limited partnership units (the “Class A LP Units”) of the operating partnership. Effective August 8, 2013, the terms
of the Class A LP Units were amended and they were renamed managing general partner units (“GP Units”). 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 New York Stock Exchange (“NYSE”)
and the Toronto Stock Exchange (“TSX”) under the symbols ‘‘BPY’’ and ‘‘BPY.UN’’,
respectively.



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



NOTE 2.	Summary
of significant accounting policies

| | a) | Statement of compliance
| | -- | -----------------------

These consolidated financial statements
of the partnership and its subsidiaries have been prepared in accordance with International Financial Reporting Standards (“IFRS”)
as issued by the International Accounting Standards Board (“IASB”).



The consolidated financial statements were
approved and authorized for issue by the Board of Directors of the partnership on February 3, 2015.



| | b) | Continuity of interests
| | -- | -----------------------

On April 15, 2013, Brookfield Asset Management
completed a spin-off of its commercial property operations (the “Business”) to the partnership (the “Spin-off”),
which was effected by way of a special dividend of units of the partnership to holders of Brookfield Asset Management’s Class
A and B limited voting shares as of March 26, 2013 (See Note 3, The Spin-off, for further discussion). Brookfield Asset
Management directly and indirectly controlled the Business prior to the Spin-off and continues to control the partnership subsequent
to the Spin-off through its interests in the partnership. As a result of this continuing common control, there is insufficient
substance to justify a change in the measurement of the Business. Accordingly, the partnership has reflected the Business in its
financial position and results of operations using Brookfield Asset Management’s carrying values prior to the Spin-off.



To reflect the continuity of interests,
the consolidated financial statements provide comparative information of the Business for the periods prior to the Spin-off, as
previously reported by Brookfield Asset Management. The economic and accounting impact of contractual relationships created or
modified in conjunction with the Spin-off have been reflected prospectively from the date of the Spin-off and have not been reflected
in the results of operations or financial position of the partnership prior to April 15, 2013 as such items were in fact not created
or modified prior thereto. Accordingly, the financial information for the periods prior to April 15, 2013 is presented based on
the historical financial information for the contributed operations as previously reported by Brookfield Asset Management. For
the periods after the Spin-off, the results are based on the actual results of the partnership, including the adjustments associated
with the Spin-off and the execution of several new and amended agreements including management service and relationship agreements
(see Note 35, Related Parties, for further discussion). Accordingly, net income and comprehensive income not attributable
to interests of others in operating subsidiaries and properties has been allocated to the parent company prior to April 15, 2013
and allocated to the limited partners, the general partner, holders of the redeemable/exchangeable partnership units of the operating
partnership (“Redeemable/Exchangeable Partnership Units”), holders of the special limited partnership units of the
operating partnership (“Special LP Units”) (see Note 2(e)(i) for further discussion), and holders of the limited partnership
units of Brookfield Office Properties Exchange LP (“Exchange LP Units”) (see Note 5, Acquisition of Brookfield Office
Properties Inc., for further discussion) on and after April 15, 2013. Certain of these new or amended agreements resulted in
differences in the basis of accounting as recorded by Brookfield Asset Management and as recorded by the partnership.



| | c) | Recently adopted accounting standards
| | -- | -------------------------------------

In May 2013, the IASB issued IFRS Interpretations
Committee Interpretation (“IFRIC”) 21, Levies (“IFRIC 21”). The partnership adopted IFRIC 21 effective
January 1, 2014. IFRIC 21 addresses when an entity should recognize a liability to pay a government levy other than income taxes.
IFRIC 21 is an interpretation of International Accounting Standards (“IAS”) 37, Provisions, Contingent Liabilities
and Contingent Assets (“IAS 37”). IAS 37 sets out criteria for the recognition of a liability, one of which requires
an entity to have a present obligation as a result of a past event. IFRIC 21 clarifies that the obligating event that gives rise
to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. The adoption
of this guidance did not have any material impact on the partnership’s consolidated financial statements.



F-12







In May 2013, the IASB issued Recoverable
Amount Disclosures for Non-Financial Assets, which amends IAS 36, Impairment of Assets (“IAS 36”). The amendment
reduced the circumstances in which the recoverable amount of assets or cash-generating units is required to be disclosed, clarified
the required disclosures, and introduced an explicit disclosure requirement of the discount rate used where the recoverable amount
(based on fair value less costs of disposal) is determined using a present value technique. The partnership adopted this amendment
effective January 1, 2014. The adoption of this guidance did not have any material impact on the partnership’s consolidated
financial statements.



| | d) | Change in operating segments
| | -- | ----------------------------

In the second quarter, the partnership
realigned the organizational and governance structures of its businesses to align them more closely with the nature of the partnership’s
investments and reflect the impact of the acquisition of additional interests in Brookfield Office Properties Inc. (“Brookfield
Office Properties” or “BPO”). Such realignment gave rise to changes in how the partnership presents information
for financial reporting and management decision-making purposes and resulted in a change in the partnership’s reporting segments.
As a result of the fourth quarter acquisition of Capital Automotive Real Estate Services Inc. (“CARS”), which owns
the real estate for more than 300 automotive dealerships across North America and leases it on a triple net basis, the partnership
added an additional segment, Triple Net Lease. Consequently, as of December 31, 2014, the partnership’s operating segments
are organized into seven reportable segments: i) Office, ii) Retail, iii) Industrial, iv) Multifamily, v) Hotels, vi) Triple Net
Lease and, vii) Corporate. All prior period segment disclosures have been recast to reflect the changes in the partnership’s
operating segments. See Note
38, Segment Information, for further discussion.



| | e) | Basis of presentation
| | -- | ---------------------

These consolidated financial statements
have been prepared on a going concern basis and are presented in U.S. Dollars rounded to the nearest million unless otherwise indicated.
New accounting standards not yet effective for the current accounting period are described in Note 4, Future Accounting Policy
Changes.



| | (i) | Subsidiaries
| | --- | ------------

The consolidated financial statements include
the accounts of the partnership and its subsidiaries over which the partnership has control. Control exists when the partnership
has power over its investee, has exposure, or rights, to variable returns from its involvement with the investee and has the ability
to use its power over the investee to affect the amount of its returns. The partnership considers all relevant facts and circumstances
in assessing whether or not the partnership’s voting rights in the investee are sufficient to give it power over the investee.



Consolidation of a subsidiary begins on
the date on which the partnership obtains control over the subsidiary and ceases when the partnership loses control over the subsidiary.
Transactions that do not result in the partnership losing control of a subsidiary are accounted for as equity transactions and
recorded within components of equity. Income and expenses of a subsidiary acquired or disposed of during a reporting period are
consolidated only for the period when the partnership has control over the subsidiary. All accounts and transactions relating to
transactions among the partnership and its subsidiaries are eliminated in consolidation. In cases where a subsidiary reports under
a different accounting policy, adjustments are made to the financial statements of the subsidiary to present their account balances
in accordance with the partnership’s accounting policy.



Net income and loss and each component
of other comprehensive income are attributed to owners of the partnership and to non-controlling interests. Non-controlling interests
in the partnership’s operating subsidiaries and properties, the redeemable/exchangeable and special limited partnership units,
and Exchange LP Units (described in Note2(b)) are shown separately in equity on the consolidated balance sheets.



As part of the Spin-off and prior to August
8, 2013, the partnership entered into a voting agreement with Brookfield Asset Management under which the partnership was indirectly
assigned Brookfield Asset Management’s voting rights in Brookfield Property Special L.P. The partnership entered into similar
arrangements with various affiliates of Brookfield Asset Management, whereby the partnership effectively gained power over the
entities with respect to which voting agreements were put in place. Accordingly, the partnership consolidated the accounts of the
operating partnership and its subsidiaries prior to August 8, 2013.



F-13







On August 8, 2013, the partnership and
Brookfield Asset Management amended the partnership agreement for the operating partnership, to among other things make the partnership
the managing general partner of the operating partnership. As a result, the voting agreement between the partnership and Brookfield
Asset Management, which required Brookfield Asset Management to exercise certain of its voting rights in respect of the operating
partnership’s general partner as directed by the partnership, was terminated. The partnership did not amend any other voting
agreements previously entered into with various affiliates of Brookfield Asset Management, such that the partnership’s power
over the entities previously consolidated did not change. In conjunction with the amendment of the partnership agreement for the
operating partnership, the general partner interest in the operating partnership indirectly owned by Brookfield Asset Management
was exchanged for a special limited partnership interest in the operating partnership, and the limited partnership interest in
class A limited partnership units in the operating partnership held by the partnership was transferred for managing general partner
units. The managing general partner units provide the partnership with the power to direct the relevant activities of the operating
partnership. Accordingly, the partnership continued to consolidate the operating partnership and its subsidiaries following the
amendment to the partnership agreement for the operating partnership.



| | (ii) | Associates and joint ventures
| | ---- | -----------------------------

An associate is an entity over which the
partnership has significant influence. Significant influence is the power to participate in the financial and operating policy
decisions. The partnership is presumed to have significant influence when it holds 20 percent or more of the voting rights of an
investee, unless it can be clearly demonstrated that this is not the case. The partnership does not control its associates.



A joint arrangement is an arrangement in
which two or more parties have joint control which is the contractually agreed upon sharing of control where decisions about the
relevant activities require the unanimous consent of the parties sharing control. A joint venture is a joint arrangement where
the parties that have joint control have rights to the net assets of the arrangement. None of the parties involved have unilateral
control of a joint venture.



The partnership accounts for its interests
in joint ventures and associates using the equity method of accounting. Under the equity method, investment balances in a joint
venture or an associate are carried on the consolidated balance sheets at initial cost as adjusted for the partnership’s
proportionate share of profit or loss and other comprehensive income of the joint venture or associate. The partnership assesses
whether its balances of equity method investments are impaired at the end of each reporting period.



When the partnership transacts with a joint
venture or an associate, any profit or loss or account balance is eliminated only to the extent of the partnership’s proportionate
share and the remaining amounts are recognized in the partnership’s consolidated financial statements. Outstanding balances
between the partnership and jointly controlled entities are not eliminated on the balance sheet.



| | (iii) | Joint operations
| | ----- | ----------------

A joint operation is a joint arrangement
whereby the parties that have joint control of the arrangement have rights to assets and obligations for liabilities relating to
the arrangement. This usually results from direct interests in the assets and liabilities of an investee rather than through the
establishment of a separate legal entity. The partnership recognizes its assets, its liabilities and its share of revenues and
expenses of the joint operations in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses.



When the partnership sells or contributes
assets to a joint operation in which it is a joint operator, the partnership is considered to be conducting transactions with the
other parties to the joint operation, and any gain or loss resulting from the transactions is recognized in the partnership’s
consolidated financial statements only to the extent of the other parties’ interests in the joint operation. When the partnership
purchases an asset from a joint operation in which it is a joint operator, the partnership does not recognize its share of the
gain or loss until those assets are resold to a third party.



| | f) | Foreign currency translation and transactions
| | -- | ---------------------------------------------

The U.S. dollar is the functional currency
and presentation currency of the partnership. Each of the partnership’s subsidiaries, associates, joint ventures and joint
operations determine their own functional currency and presentation currency for their own financial reporting purposes.



Subsidiaries, associates or joint ventures
having a functional currency other than the U.S. dollar translate their carrying amounts of assets and liabilities when reporting
to the partnership at the rate of exchange prevailing as of the balance sheet date, and their revenues and expenses at average
exchange rates during the reporting period. Any gains or losses on foreign currency translation are recognized by the partnership
in other comprehensive income. On disposition or partial disposition of a foreign operation during the reporting period resulting
in the loss of control, the component of other comprehensive income due to accumulated foreign currency translation relating to
that foreign operation is reclassified to net income. On partial disposal of a foreign operation in which control is retained,
the proportionate share of the component of other comprehensive income or loss relating to that foreign operation is reclassified
to non-controlling interests in that foreign operation.



The partnership’s foreign currency
transactions are translated into the functional currency using exchange rates as of the date of the transactions. At the end of
each reporting period, foreign currency denominated monetary assets and liabilities are translated to the functional currency using
the exchange rate prevailing as of the balance sheet date and non-monetary assets and liabilities measured at fair value are translated
at the exchange rate prevailing as of the date when the fair value was determined. Any gain or loss from the translation of monetary
items is recognized in net income, except for those related to monetary liabilities qualified as hedges of the partnership’s
investment in foreign operations or intercompany loans with foreign operations for which settlement is neither planned nor likely
to occur in the foreseeable future, which are included in other comprehensive income.



| | g) | Cash and cash equivalents
| | -- | -------------------------

Cash and cash equivalents includes cash
on hand and all non-restricted highly liquid investments with original maturities of three months or less at the time of purchase.



F-14







| | h) | Investment properties
| | -- | ---------------------

Investment properties consists of commercial
properties which are principally held to earn rental income and commercial developments that are being constructed or developed
for future use as commercial properties. The partnership identifies most of its portfolio investments as investment properties,
which includes properties in its office, retail, industrial, multifamily and triple net lease segments. Investment properties are
measured initially at cost, or fair value if acquired in a business combination (see Note 2(r), Business Combinations, for
further discussion). The cost of commercial development properties includes direct development costs, realty taxes and borrowing
costs directly attributable to the development. The partnership elects the fair value model for all of its investment properties
and measures them at fair value subsequent to initial recognition on the consolidated balance sheet. As a result, impairment assessments
do not apply to investment properties.



Fair values of the investment properties
are primarily determined based on inputs from available market evidence as of the balance sheet date. Related fair value gains
and losses are recognized in net income in the period in which they arise.



Borrowing costs associated with direct
expenditures on properties under development or redevelopment are capitalized. Borrowing costs are also capitalized on those properties
acquired specifically for redevelopment in the short-term where activities necessary to prepare them for redevelopment are in progress.
The amount of borrowing costs capitalized is determined first by borrowings specific to a property where relevant, and then by
a weighted average cost of borrowings to eligible expenditures after adjusting for borrowings associated with other specific developments.
Where borrowings are associated with specific developments, the amount capitalized is the gross borrowing costs incurred less any
incidental investment income. Borrowing costs are capitalized from the commencement of the development until the date of practical
completion. The capitalization of borrowing costs is suspended if there are prolonged periods when development activity is interrupted.
The partnership considers practical completion to have occurred when the property is capable of operating in the manner intended
by management. Generally this occurs upon completion of construction and receipt of all necessary occupancy and other material
permits. Where the partnership has pre-leased space as of or prior to the start of the development and the lease requires the partnership
to construct tenant improvements which enhance the value of the property, practical completion is considered to occur on completion
of such improvements.



Initial direct leasing costs incurred by
the partnership in negotiating and arranging tenant leases are added to the carrying amount of investment properties.



| | i) | Assets 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 is available
for immediate sale in its present condition, and the sale is highly probable. For this purpose, a sale is highly probable if management
is committed to a plan to achieve the sale; there is an active program to find a buyer; the non-current asset or disposal group
is being actively marketed for sale at a price that is reasonable in relation to its current fair value; the sale is anticipated
to be completed within one year from the date of classification; and it is unlikely there will be significant changes to the plan
or that the plan will be withdrawn. Where an asset or disposal group is acquired with a view to resale, it is classified as a non-current
asset held for sale at the acquisition date only if the disposal is expected to take place within one year of the acquisition,
and it is highly probable that the other general requirements and specific conditions referred to above will be met within a short
period following the acquisition (usually within three months). Non-current assets held for sale and disposal groups that are not
investment properties are recorded at the lesser of carrying amount and fair value less costs to sell on the consolidated balance
sheet. Investment properties that are held for sale are recorded at fair value determined in accordance with IAS 40, Investment
Property.



Where a component of an entity has been
disposed of, or is classified as held for sale, and it represents a separate major line of business or geographical area of operations
or is a subsidiary acquired exclusively with a view to resale, the related results of operations and gain or loss on reclassification
or disposition are presented in discontinued operations.



| | j) | Hotel assets
| | -- | ------------

The partnership accounts for its investments
in hotel properties as property, plant and equipment under the revaluation model. Hotel properties are recognized initially at
cost or fair value if acquired in a business combination (see Note 2(r), Business Combinations, for further discussion)
and subsequently carried at fair value at the balance sheet date less any accumulated impairment and subsequent accumulated depreciation.
Fair values are determined internally using discounted cash flow models with inputs from available market evidence.



Revaluations of hotel properties are performed
annually at December 31, the end of the fiscal year, to ensure that the carrying amounts do not differ significantly from fair
values. Where the carrying amount of an asset is increased as a result of a revaluation, the increase is recognized in other comprehensive
income and accumulated in equity within revaluation surplus, unless the increase reverses a previously recognized revaluation loss
recorded through prior period net income, in which case that portion of the increase is recognized in net income. Where the carrying
amount of an asset is decreased, the decrease is recognized in other comprehensive income to the extent of any balance existing
in revaluation surplus in respect of the asset, with the remainder of the decrease recognized in net income. Revaluation gains
are recognized in other comprehensive income, and are not subsequently recycled into profit or loss. The cumulative revaluation
surplus is transferred directly to retained earnings when the asset is derecognized.



F-15







In performing annual revaluations, the
partnership first qualitatively assesses whether there is any indication that the hotel properties may be impaired. If no indication
is identified, no impairment will be recorded. If the partnership has identified indicators for impairment, the asset’s carrying
amount (i.e., fair value less any accumulated depreciation and impairment) is compared with the recoverable amount of the hotel
properties, which is determined as the higher of the estimated fair value less costs on disposal or the present value of expected
future cash flows generated from the use and eventual disposal of an asset. An impairment is taken if the recoverable amount is
less than the carrying amount of the assets and is accounted for in the same manner as a revaluation decrease as described above.



| | k) | Fair value measurement
| | -- | ----------------------

Fair value is 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,
regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair
value of an asset or a liability, the partnership takes into account the characteristics of the asset or liability and how market
participants would take those characteristics into account when pricing the asset or liability at the measurement date.



Inputs to fair value measurement techniques
are disaggregated into three hierarchical levels, which are directly based on the degree to which inputs to fair value measurement
techniques are observable by market participants:



| | · | Level 1 – Inputs are unadjusted,
quoted prices in active markets for identical assets or liabilities at the measurement date.
| | - | -----------------------------------------------------------------------------------------------------------------------------



| | · | Level 2 – Inputs (other than quoted
prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market
data at the measurement date and for the duration of the asset’s or liability’s anticipated life.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Level 3 – Inputs are unobservable
and reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement
date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs in determining
the estimate.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Fair value measurements are adopted by
the partnership to calculate the carrying amounts of various assets and liabilities.



| | l) | Loans and notes receivable
| | -- | --------------------------

Loans and notes receivable are carried
at amortized cost with interest income recognized following the effective interest method. Notes receivable purchased at a discount
are also carried at amortized cost with discounts amortized over the remaining expected life of the loan following the effective
interest method.



Loans are evaluated individually for impairment
given the unique nature and size of each loan. A loan is considered impaired when, based upon current information and events, it
is probable that the partnership will be unable to collect all amounts due for both principal and interest according to the contractual
terms of the loan agreement. For each collateralized loan, the partnership’s subsidiaries perform a quarterly review of all
collateral properties underlying the loan receivable. Impairment is measured based on the present value of expected future cash
flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.



| | m) | Intangible assets
| | -- | -----------------

Intangible assets acquired in a business
combination and recognized separately from goodwill are initially recognized at fair value at the acquisition date. The partnership’s
intangible assets are comprised primarily of trademarks and licensing agreements.



Subsequent to initial recognition, intangible
assets with a finite life are measured at cost less accumulated amortization and impairment losses. Amortization is calculated
on a straight-line basis over the estimated useful life of the intangible asset and is recognized in net income for the respective
reporting period. Intangible assets with an indefinite life are measured at cost as adjusted for subsequent impairment. Impairment
tests for all intangible assets are performed annually. Impairment losses previously taken may be subsequently reversed in net
income of future reporting periods.



| | n) | Goodwill
| | -- | --------

Goodwill represents the excess of the acquisition
price paid for a business combination over the fair value of the net identifiable tangible and intangible assets and liabilities
acquired. Upon initial recognition, goodwill is allocated to the cash-generating unit to which it relates. The partnership identifies
a cash-generating unit as the smallest identifiable group of assets that generates cash flows that are largely independent of the
cash inflows from other assets or group of assets.



The partnership evaluates the carrying
amount of goodwill annually or more often when events or circumstances indicate there may be an impairment. The partnership’s
goodwill impairment test is performed at the cash-generating unit level. If assets within a cash-generating unit or the cash-generating
unit are impaired, impairments are taken for those assets or the cash-generating unit before any goodwill impairment test is performed.
In assessing whether goodwill is impaired, the partnership assesses if the carrying value of a cash-generating unit, including
the allocated goodwill, exceeds its recoverable amount determined as the greater of the estimated fair value less costs to sell
and the present value of future cash flows expected from the cash-generating unit. Impairment losses then recognized first reduce
the carrying value of goodwill and any excess is allocated to the carrying amount of assets in the cash-generating unit. Any goodwill
impairment is charged to net income in the respective reporting period. Impairment losses on goodwill are not subsequently reversed.



F-16







On disposal of a subsidiary, any attributable
amount of goodwill is included in determination of the gain or loss on disposal.



| | o) | Financial instruments and hedge accounting
| | -- | ------------------------------------------

| | (i) | Classification and measurement
| | --- | ------------------------------

The partnership and its subsidiaries account
for financial instruments as summarized in the following table (excluding cash and cash equivalents):



|                                                                     | Classification        | Measurement basis
|-------------------------------------------------------------------- | --------------------- | -----------------
|Financial assets                                                     |                       |                  
|Participating loan interests                                         | Loans and receivables | Amortized cost(1)
|Loans and notes receivables                                          | Loans and receivables | Amortized cost(1)
|Other non-current assets:                                            |                       |                  
|Securities designated as fair value through profit or loss (“FVTPL”) | FVTPL                 | Fair value       
|Securities designated as available-for-sale (“AFS”)                  | AFS                   | Fair value       
|Derivative assets                                                    | FVTPL                 | Fair value       
|Accounts receivable and other                                        | Loans and receivables | Amortized cost   
|                                                                     |                       |                  
|Financial liabilities                                                |                       |                  
|Accounts payable                                                     | Other liabilities     | Amortized cost   
|Debt obligations                                                     | Other liabilities     | Amortized cost(1)
|Capital securities                                                   | Other liabilities     | Amortized cost(1)

| | (1) | Excluding embedded derivatives that are classified as FVTPL.
| | --- | ------------------------------------------------------------



Financial instruments carried at amortized
cost incur interest income or expense in each reporting period. The periodic interest income or expense of these financial instruments
includes the amortization of any premium or discount from original issuance or purchase. Transaction costs that are directly attributable
to the acquisition or issue of the financial instruments are capitalized as part of the initial measurement of such financial instrument
and amortized through interest income or expense in each reporting period. Transaction costs that are directly attributable to
the acquisition or issue of the financial instruments are capitalized as part of the initial measurement of such financial instrument
and amortized through interest income or expense in each reporting period.



Financial instruments carried at fair value
incur fair value gains or losses in each reporting period. Fair values of those financial instruments are determined by reference
to quoted bid or ask prices, as appropriate, and when unavailable, to the closing price of the most recent transaction of that
instrument. Fair values of certain financial instruments also incorporate significant use of unobservable inputs which reflect
the partnership’s market assumptions. Fair value gains and losses on AFS financial assets are recognized in other comprehensive
income and reclassified to net income upon sale or impairment. Fair value gains and losses on financial instruments designated
as FVTPL are recognized in fair value gains, net.



In addition, the partnership assesses the
issuance of debt and equity to determine the appropriate classification of each instrument. Equity instruments issued but meeting
the definition of a financial liability are presented within capital securities on the partnership’s consolidated balance
sheets.



| | (ii) | Impairment of financial instruments
| | ---- | -----------------------------------

Financial assets carried at amortized cost
are assessed for impairment at the end of each reporting period. The partnership first determines whether there are qualitative
indications that a financial asset may be impaired. If there is no objective evidence indicative of impairment, no impairment is
taken. If there is objective evidence of impairment, the amount of the recorded loss is measured as the difference between the
financial asset’s carrying amount and the present value of future cash flows from the financial asset, discounted at the
original effective interest rate. When impaired, the carrying amount of a financial asset is decreased directly or through an allowance
account and the amount of impairment loss is recognized in net income in the reporting period as incurred. In the case of AFS instruments,
when objective evidence of impairment exists, the cumulative loss in accumulated other comprehensive income is reclassified as
loss in net income in the reporting period.



| | (iii) | Derivatives and hedging
| | ----- | -----------------------

The partnership assesses each financial
instrument and other non-financial contracts for embedded derivatives. Derivative instruments are recorded in the consolidated
balance sheet at fair value, including those derivatives that are embedded in financial or non-financial contracts and which are
not closely related to the host contract. Changes in the fair value of derivative instruments, including embedded derivatives,
which are not designated as hedges for accounting purposes, are recognized in fair value gains, net or administration and other
expense consistent with the underlying nature and purpose of the derivative instrument. Extensions on loans or debts are accounted
for as a commitment of the lender, rather than being treated as embedded derivatives.



F-17







The partnership’s subsidiaries selectively
utilize derivative financial instruments to manage financial risks, including interest rate risk, commodity and foreign currency
risk. Fair values of derivative instruments are determined on a credit-adjusted basis.



The partnership applies hedge accounting
to certain derivative instruments designated as cash flow hedges, and to derivative and non-derivative financial instruments designated
as hedges of net investments in subsidiaries. Hedge accounting is discontinued prospectively when the hedge relationship is terminated
or no longer qualifies as a hedge, or when the hedging item is sold or terminated.



In a cash flow hedge, the effective portion
of the change in the fair value of the hedging derivative is recognized in other comprehensive income while the ineffective portion
is recognized in net income. Hedging gains and losses recognized in accumulated other comprehensive income are reclassified to
net income in the periods when the hedged item affects net income. Gains and losses on derivatives are immediately reclassified
to investment and other income or expense when the hedged item is sold or terminated or when it is determined that a hedged forecasted
transaction is no longer probable.



In a net investment hedging relationship,
the effective portion of foreign currency gains and losses on the hedging instruments is recognized in other comprehensive income
and the ineffective portion is recognized in net income. The amounts recorded in accumulated other comprehensive income are recognized
in net income, together with the related cumulative translation gain or loss, when there is a disposition or partial disposition
that results in the loss of control of the foreign subsidiary.



| | p) | Income taxes
| | -- | ------------

The partnership is a flow-through entity
for tax purposes and as such is not subject to Bermudian taxation. However, income tax expenses are recognized for taxes payable
by holding entities and their direct or indirect corporate subsidiaries.



Current income tax assets and liabilities
are measured at the amount expected to be paid to tax authorities by the holding entities in respect of the partnership or directly
by the partnership’s taxable subsidiaries, net of recoveries, based on the tax rates and laws enacted or substantively enacted
at the balance sheet date.



Deferred income tax liabilities are provided
for using the liability method on temporary differences between the tax basis used in the computation of taxable income and carrying
amounts of assets and liabilities in the consolidated financial statements. Deferred income tax assets are recognized for all deductible
temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that deductions,
tax credits and tax losses will be utilized. The carrying amounts of deferred income tax assets are reviewed at each balance sheet
date and reduced to the extent it is no longer probable that the income tax asset will be recovered. Deferred income tax assets
and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability
settled, based on the tax rates and laws that have been enacted or substantively enacted at the balance sheet date.



| | q) | Provisions
| | -- | ----------

A provision is a liability of uncertain
timing or amount. Provisions are recognized when the partnership has a present obligation (legal or constructive) as a result of
a past event, it is probable that the partnership will be required to settle the obligation and the amount can be reliably estimated.
Provisions are not recognized for future operating losses. Provisions are measured at the present value of the expenditures expected
to be required to settle the obligation using a discount rate that reflects current market assessments of the time value of money
and the risks specific to the obligation. Provisions are re-measured at each balance sheet date using the current discount rate.
The increase in the provision due to passage of time is recognized as interest expense.



| | r) | Business combinations
| | -- | ---------------------

The partnership accounts for business combinations
in which control is acquired under the acquisition method. The partnership considers three criteria that include input, process
and output to assess whether acquired assets and assumed liabilities meet the definition of a business. The acquisition price is
the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments
issued in exchange for control of the acquiree. As a result, the partnership recognizes the acquiree’s identifiable assets
and assumed liabilities at their acquisition-date fair values, except for non-current assets classified as held-for-sale, which
are recognized at fair value less costs to sell. The partnership also evaluates whether there are intangible assets acquired that
have not previously been recognized by the acquiree and recognizes them as identifiable intangible assets. The interests of non-controlling
shareholders in the acquiree are initially measured at their proportion of the net fair value of the identifiable assets and assumed
liabilities recognized.



To the extent that the acquisition price
exceeds the fair value of the net assets, the excess is recorded as goodwill. To the extent the fair value of consideration paid
is less than the fair value of net identifiable assets, the excess is recognized as a bargain purchase gain in the partnership’s
net income for the respective reporting period.



F-18







Where a business combination is achieved
in stages, previously held interests in the acquired entity are re-measured to fair value at the acquisition date, which is the
date control is obtained, and the resulting gain or loss, if any, is recognized in net income. Amounts arising from interests in
the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are reclassified
to net income. Changes in the partnership’s ownership interest of an investee that do not result in a change of control are
accounted for as equity transactions and are recorded as a component of equity. Acquisition costs are recorded as an expense in
the reporting period as incurred.



| | s) | Revenue recognition
| | -- | -------------------

| | (i) | Investment properties
| | --- | ---------------------

Revenue from investment properties is presented
within commercial property revenue on the consolidated statements of income. The partnership has retained substantially all of
the risks and benefits of ownership of its investment properties and therefore accounts for leases with its tenants as operating
leases. Revenue recognition under a lease commences when the tenant has a right to use the leased asset. Generally, this occurs
on the lease inception date or, where the partnership is required to make additions to the property in the form of tenant improvements
to enhance the value of the property, upon substantial completion of those improvements. The total amount of contractual rents
expected from operating leases is recognized on a straight-line basis over the term of the lease, including contractual base rent
and subsequent rent increases as a result of rent escalation clauses. A rent receivable, included within the carrying amount of
investment properties, is used to record the difference between the rental revenue recorded and the contractual amount received.



Rental
receivables and related revenue also includes percentage participating rents and recoveries of operating expenses, including property
and capital taxes. Percentage participating rents are recognized when tenants’ specified sales targets have been met. Operating
expense recoveries are recognized in the period that recoverable costs are chargeable to tenants. Where
a tenant is legally responsible for operating expenses and pays them directly in accordance with the terms of the lease, the partnership
does not recognize the expenses or any related recovery revenue.



| | (ii) | Hospitality revenue
| | ---- | -------------------

Revenue from hotel properties is presented
within hospitality revenue on the consolidated statements of income. Room, food and beverage and other revenues are recognized
as services are provided. The partnership recognizes room revenue net of taxes and levies. Advance deposits are deferred and included
as a liability until services are provided to the customer. The partnership recognizes net wins from casino gaming activities (the
difference between gaming wins and losses) as gaming revenue. The partnership recognizes liabilities for funds deposited by patrons
before gaming play occurs and for chips in the patrons’ possession, both of which are included in accounts payable and other
liabilities. Revenue and expenses from tour operations include the sale of travel and leisure packages and are recognized on the
first day the travel package is in use. Amounts collected in advance from guests are deferred as a liability until such amounts
are earned.



| | (iii) | Performance and management fee revenue
| | ----- | --------------------------------------

Fee revenue is presented on the consolidated
statements of income within investment and other revenue. Certain of the partnership’s operating subsidiaries are entitled
to management fees and performance fees from property management for third parties. The partnership recognizes management fees
as earned. The partnership recognizes performance fees in revenue when the amount receivable from its fund partners is determinable
at the end of a contractually specified term.



| | t) | Unit-based compensation
| | -- | -----------------------

The partnership and its subsidiaries issue
unit-based awards to certain employees and non-employee directors of certain subsidiaries. The cost of cash-settled unit-based
transactions, comprised of unit options, deferred share units and restricted share units, is measured as the fair value at the
grant date and expensed on a proportionate basis over the vesting period. The corresponding accrued liability is measured at each
reporting date at fair value with changes in fair value recognized in net income. The cost of equity-settled unit-based transactions,
comprised of unit options and restricted units, is determined as the fair value of the award on the grant date. The cost of equity-settled
unit-based transactions is recognized as each tranche vests and is recorded in contributed surplus as a component of equity.



As of June 9, 2014, the partnership established
certain unit-based awards plans in connection with the acquisition of BPO. The share options and restricted shares outstanding
under the pre-existing BPO share-based compensation plans were either redeemed for cash or replaced under these new option or unit
plans. The prior BPO plans were accounted for as equity-settled unit-based transactions. The terms of the new plans entitle holders
of unit options to redeem such options for 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. Consequently, the partnership is accounting for these new options plans as cash-settled
unit-based transactions, effective June 9, 2014, as described above (see Note 30, Unit-based Compensation).



| | u) | Redeemable/Exchangeable Partnership Units
| | -- | -----------------------------------------

Beginning on April 15, 2015,
the Redeemable/Exchangeable Partnership Units may, at the request of the holder, be redeemed in whole or in part, for cash in
an amount equal to the market value of one of the partnership’s units multiplied by the number of units to be
redeemed (subject to certain adjustments). This right is subject to the partnership’s right, at its sole discretion, to
elect to acquire any unit presented for redemption in exchange for one of the partnership’s units (subject to certain
customary adjustments). If the partnership elects not to exchange the Redeemable/Exchangeable Partnership Units for units of
the partnership, Redeemable/Exchangeable Partnership Units are required to be redeemed for cash. The Redeemable/Exchangeable
Partnership Units provide the holder the direct economic benefits and exposures to the underlying performance of the
operating partnership and accordingly to the variability of the distributions of the operating partnership, whereas
the partnership’s unitholders have indirect access to the economic benefits and exposures of the operating
partnership through direct ownership interest in the partnership which owned a direct interest in the Class A LP Units of the
operating partnership prior to August 8, 2013, and a managing general partnership interest on and subsequent to August 8,
2013 (see Note 1(a)). Accordingly, the Redeemable/Exchangeable Partnership Units have been presented within non-controlling
interests on the consolidated balance sheets. The Redeemable/Exchangeable Partnership Units do not entail a contractual
obligation on the part of the partnership to deliver cash and can be settled by the partnership, at its sole discretion, by
issuing a fixed number of its own equity instruments. Refer to Note 3, The Spin-off, for further discussion.



F-19







| | v) | Earnings per limited partnership unit
| | -- | -------------------------------------

The partnership calculates basic earnings
per unit by dividing net income attributable to limited partners by the weighted average number of limited partnership units outstanding
during the period. The partnership also calculates diluted earnings per unit by adjusting net income attributable to limited partners
and the weighted average number of limited partnership units outstanding to reflect the impact of dilutive financial instruments.
The calculation of diluted earnings per unit of the partnership includes the dilutive impact of securities issued by the partnership’s
subsidiaries that are convertible into units of the partnership.



| | w) | Critical judgments and estimates in applying accounting policies
| | -- | ----------------------------------------------------------------

The preparation of the partnership’s
consolidated financial statements requires management to make critical judgments, estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses that are not readily apparent from other sources, during the reporting period. These
estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual
results may differ from these estimates. Critical judgments and estimates made by management and utilized in the normal course
of preparing the partnership’s consolidated financial statements are outlined below.



| | (i) | Control
| | --- | -------

In determining whether the partnership
has power over an investee, the partnership makes judgments in identifying relevant activities that would significantly affect
the returns of an investee, in assessing the partnership’s voting rights or other contractual rights that would give it power
to unilaterally make decisions, and in assessing rights held by other stakeholders which might give them decision-making authority.
In assessing if the partnership has exposure or rights to variable returns from its involvement with the investee, the partnership
makes judgments concerning the variability of the returns from an investee based on the substance of the arrangement, the absolute
and relative size of those returns. In determining if the partnership has the ability to use its power to affect its returns in
an investee, the partnership makes judgments in assessing whether it is acting as a principal or agent in decision-making and whether
another entity with decision-making rights is acting as an agent for the partnership. Where other stakeholders have decision marking
authority, the partnership makes judgments as to whether its decision-making rights provide it with control, joint control or significant
influence over the investee.



In addition to the above, the partnership
makes judgments in respect of joint arrangements that are carried on through a separate vehicle in determining whether the partnership’s
interest represents an interest in the assets and liabilities of the arrangement (a joint operation) or in its net assets (a joint
venture).



| | (ii) | Common control transactions
| | ---- | ---------------------------

IFRS does not include specific measurement
guidance for transfers of businesses or subsidiaries between entities under common control. Accordingly, the partnership has developed
a policy to account for such transactions taking into consideration other guidance in the IFRS framework. The partnership’s
policy is to record assets and liabilities recognized as a result of transfers of businesses or subsidiaries between entities under
common control at the carrying value on the transferor’s financial statements. Differences between the carrying amount of
the consideration given or received, where the partnership is the transferor, and the carrying amount of the assets and liabilities
transferred are recorded directly in equity.



| | (iii) | Business combinations
| | ----- | ---------------------

Judgment is applied in determining whether
an acquisition is a business combination or an asset acquisition by considering the nature of the assets acquired and the processes
applied to those assets, or if the integrated set of assets and activities is capable of being conducted and managed for the purpose
of providing a return to investors or other owners.



| | (iv) | Investment properties
| | ---- | ---------------------

In applying relevant accounting policies,
judgment is made in determining whether certain costs are additions to the carrying amount of the property, in identifying the
point at which practical completion of the development property occurs, and in identifying borrowing costs directly attributable
to the carrying amount of the development property.



The critical assumptions and estimates
used when determining the fair value of investment properties are: the timing of rental income from future leases reflecting current
market conditions; assumptions of future cash flows in respect of current and future leases; maintenance and other capital expenditures;
discount rates; terminal capitalization rates; and terminal valuation dates. Properties under development are recorded at fair
value using a discounted cash flow model which includes estimates in respect of the timing and cost to complete the development.



F-20







| | (v) | Investments in Australia
| | --- | ------------------------

The partnership has an economic interest
in a portfolio of properties in Australia owned by Brookfield Asset Management in the form of participating loan agreements that
provide the partnership with an interest in the results of operations and changes in fair values of the properties in the Australian
portfolio. These participating loan interests are convertible by the partnership at any time into direct ownership interests in
either the properties in the Australian portfolio or the entities that have direct ownership of the property (the “property
subsidiaries”). The critical judgments made in the accounting for this investment relate to the partnership’s determination
that the economic interests held by the partnership in certain entities within the Australian portfolio represent controlling interests
in those entities, the determination of unit of account where related financial instruments have been entered into in contemplation
of each other, the identification of the terms of embedded derivatives within the partnership’s participating loan interests,
the recognition of certain amounts paid to the partnership’s parent as financial assets or equity transactions, and the measurement
of assets and liabilities recognized as a result of transactions with entities under common control.



As a result of these judgments, the partnership
has accounted for its interests in certain property subsidiaries as a controlling interest in a subsidiary or an equity accounted
interest in a jointly controlled entity. Interests in other properties and subsidiaries are accounted for as participating loan
notes that give rise to interest income reflecting the results of operations of the underlying property and gain or losses on an
embedded derivative that corresponds to the property’s change in fair value.



| | (vi) | Assets held for sale
| | ---- | --------------------

The partnership’s accounting policies
relating to assets held for sale are described in Note 2(i), Assets Held for Sale. In applying this policy, judgment is
applied in determining whether sale of certain assets is highly probable, which is a necessary condition for being presented within
assets held for sale.



| | (vii) | Revaluation of hotel assets
| | ----- | ---------------------------

When determining the carrying amounts under
the revaluation method, the partnership uses the following critical assumptions and estimates: the timing of forecasted revenues,
future sales prices and margins; future sales volumes; future regulatory rates; maintenance and other capital expenditures; discount
rates; terminal capitalization rates; terminal valuation dates; useful lives; and residual values.



| | (viii) | Income taxes
| | ------ | ------------

In applying relevant accounting policies,
judgments are made in determining the probability of whether deductions, tax credits and tax losses can be utilized. In addition,
the consolidated financial statements include estimates and assumptions for determining the future tax rates applicable to subsidiaries
and identifying the temporary differences that relate to each subsidiary. Deferred income tax assets and liabilities are measured
at the tax rates that are expected to apply during the period when the assets are realized or the liabilities settled, using the
tax rates and laws enacted or substantively enacted at the consolidated balance sheet dates. The partnership measures deferred
income taxes associated with its investment properties based on its specific intention with respect to each asset at the end of
the reporting period. Where the partnership has a specific intention to sell a property in the foreseeable future, deferred taxes
on the building portion of the investment property are measured based on the tax consequences following from the disposition of
the property. Otherwise, deferred taxes are measured on the basis that the carrying value of the investment property will be recovered
substantially through use. Judgment is required in determining the manner in which the carrying amount of each investment property
will be recovered.



The partnership also makes judgments with
respect to the taxation of gains inherent in its investments in foreign subsidiaries and joint ventures. While the partnership
believes that the recovery of its original investment in these foreign subsidiaries and joint ventures will not result in additional
taxes, certain unremitted gains inherent in those entities could be subject to foreign taxes depending on the manner of realization.



| | (ix) | Leases
| | ---- | ------

In applying its accounting policy for recognition
of lease revenue, the partnership makes judgments with respect to whether tenant improvements provided in connection with a lease
enhance the value of the leased property, which in turn is used to determine whether these amounts are treated as additions to
operating property and the point in time to recognize revenue under the lease. In addition, where a lease allows a tenant to elect
to take all or a portion of any unused tenant improvement allowance as a rent abatement, the partnership must exercise judgment
in determining the extent to which the allowance represents an inducement that is amortized as a reduction of lease revenue over
the term of the lease.



The
partnership also makes judgments in determining whether certain leases, in particular those tenant leases with long contractual
terms where the lessee is the sole tenant in a property and long-term ground leases where the partnership is lessor, are operating
or finance leases. The partnership has determined that all of its leases are operating leases. Where
operating costs are paid directly by tenants, the partnership exercises judgment in determining whether those costs are expenses
of the partnership or the tenant which impacts the extent to which operating costs recovery revenue is recognized.



F-21







| | (x) | Financial instruments
| | --- | ---------------------

The critical judgments inherent in the relevant
accounting policies relate to the classification of financial assets or financial liabilities, designation of financial instruments
as FVTPL, the assessment of the effectiveness of hedging relationships, the determination of whether the partnership has significant
influence over investees with which it has contractual relationships, and the identification of embedded derivatives subject to
fair value measurement in certain hybrid instruments.



Estimates and assumptions used in determining
the fair value of financial instruments are: equity and commodity prices; future interest rates; the credit risk of the partnership
and its counterparties; amount and timing of estimated future cash flows; discount rates and volatility utilized in option valuations.



The partnership holds other financial instruments
that represent equity interests in investment property entities that are measured at fair value as these financial instruments
are designated as FVTPL or AFS. Estimation of the fair value of these instruments is also subject to the estimates and assumptions
associated with investment properties. The fair value of interest rate caps is determined based on generally accepted pricing models
using quoted market interest rates for the appropriate term. Interest rate swaps are valued at the present value of estimated future
cash flows and discounted based on applicable yield curves derived from market interest rates.



| | (xi) | Indicators of impairment
| | ---- | ------------------------

Judgment is applied when determining whether
indicators of impairment exist when assessing the carrying values of the partnership’s assets for potential impairment.
Consideration is given to a combination of factors, including but not limited to forecasts of revenues and expenses, values derived
from publicly traded prices, and projections of market trends and economic environments.



| | (xii) | Other critical judgments
| | ----- | ------------------------

Other critical judgments utilized in the preparation
of the partnership’s consolidated financial statements are: assets’ recoverable amounts; assets’ net realizable
values; depreciation and amortization rates and assets’ useful lives; determination of assets held for sale and discontinued
operations; impairment of goodwill and intangible assets; the determination of functional currency; the likelihood and timing
of anticipated transactions for hedge accounting; and the selection of accounting policies, among others.



| | NOTE 3. | THE SPIN-OFF
| | ------- | ------------

Following the Spin-off, each holder of
the parent company’s shares received one BPY Unit for approximately every 17.42 shares, representing 44.7% of the
limited partnership interest in the partnership, with Brookfield Asset Management retaining BPY Units,
Redeemable/Exchangeable Partnership Units, and a 1% general partner interest in the operating partnership through Brookfield
Property GP L.P., an indirect wholly-owned subsidiary of Brookfield Asset Management, pursuant to the agreement dated April
10, 2013, as amended on August 8, 2013. The following describes the impact of those new or amended agreements that resulted
in changes to the basis of accounting for investments as recorded by Brookfield Asset Management and as recorded by the
partnership.



| | a) | Redeemable/Exchangeable Partnership Units
| | -- | -----------------------------------------

Prior to the Spin-off, Brookfield
Asset Management effected a reorganization so that the partnership’s commercial property operations, including its
office, retail, industrial, multifamily, hotel and other assets, located in the United States, Canada, Australia, Brazil and
Europe, that had historically been owned and operated, both directly and through its operating entities, by Brookfield
Asset Management, were acquired by the holding entities. The holding entities which were newly formed entities under the laws
of the Province of Ontario, the State of Delaware and Bermuda, were established to hold the partnership’s interest in
the Business, and the common shares of each of the holding entities are wholly-owned by the operating partnership.
In consideration, Brookfield Asset Management received (i) additional units of the partnership, (ii)
Redeemable/Exchangeable Partnership Units, representing an 81.8% limited partnership interest in the operating partnership at
Spin-off (62.6% as at December 31, 2014 – refer to Note 21(b)), and (iii) $1.25 billion of redeemable preferred shares
of one of the holding entities (see Note 18, Capital Securities, for further discussion). The Redeemable/Exchangeable
Partnership Units enable Brookfield Asset Management, at its request, to redeem the units in whole or in part in exchange for
cash, subject to the partnership’s first right to acquire such interest (in lieu of such redemption) in exchange for
limited partnership units of the partnership. The impact of the Redeemable/Exchangeable Partnership Units has not been
recorded in these consolidated financial statements prior to April 15, 2013, as the Redeemable/Exchangeable Partnership Units
were not in place prior thereto.



| | b) | Investments in Australia
| | -- | ------------------------

On the date of the Spin-off, the partnership
and Brookfield Asset Management entered into various agreements which resulted in the holding entities (or their wholly-owned subsidiaries)
having economic interests in referenced Brookfield Asset Management commercial and other real property in Australia. The interests
were acquired in the form of participating loan agreements with Brookfield Asset Management, which are hybrid instruments comprising
an interest bearing note, a total return swap, and an option to acquire direct or indirect legal ownership in the properties. The
participating loan interests provide the holding entities (or their wholly-owned subsidiaries) with an economic interest in the
results of operations and changes in fair value of the properties. Brookfield Asset Management retains the legal title to the properties
through a wholly-owned subsidiary that is not part of the Business in order to preserve existing financing arrangements. The partnership
has control or significant influence over the properties via the participating loan interests. Accordingly, the assets, liabilities
and results of the entities that have direct ownership of such properties are consolidated or accounted for under the equity method
by the holding entities (or their wholly-owned subsidiaries).



F-22







These consolidated financial statements reflect
the commercial and other real property interests in Australia owned by Brookfield Asset Management as direct ownership interests
prior to April 15, 2013 and reflect the impact of the participating loan agreements thereafter.



| | c) | Other arrangements with Brookfield Asset Management
| | -- | ---------------------------------------------------

The partnership entered into a Master Services
Agreement with affiliates of Brookfield Asset Management (the “service providers”), to provide management services
to the partnership. Pursuant to a Master Services Agreement, the partnership pays a base management fee to the service providers
equal to $12.5 million per quarter. Additionally, the operating partnership pays a quarterly equity enhancement distribution to
the Property Special LP of 0.3125% of the amount by which the partnership’s total capitalization value at the end of each
quarter exceeds its total capitalization value determined immediately following the Spin-off, subject to certain adjustments. The
Property Special LP also receives incentive distributions based on an amount by which quarterly distributions on the limited partnership
units of the operating partnership exceed specified target levels as set forth in the operating partnership’s limited partnership
agreement.



The impact of the above-mentioned arrangements
with Brookfield Asset Management has not been recorded in these consolidated financial statements prior to April 15, 2013, as such
arrangements were not in place prior thereto.



| | d) | Allocations by Brookfield Asset Management to the partnership
| | -- | -------------------------------------------------------------

Prior to April 15, 2013, the consolidated financial
statements included expenses of Brookfield Asset Management allocated to the partnership for certain functions provided by Brookfield
Asset Management, including but not limited to, general corporate expenses related to finance, legal, information technology, human
resources, communications, ethics and compliance, shared services, employee benefits and incentives and insurance. These expenses
were allocated to the results of operations on the basis of direct usage when identifiable, with the remainder allocated on the
basis of revenue, headcount or other measures. The partnership considers the basis on which the expenses were allocated to be a
reasonable reflection of the utilization of services provided to, or the benefit received, by the Business during the periods presented.
The allocations may not, however, reflect the expense the partnership would have incurred as an independent, publicly-traded company
for the periods presented. Subsequent to the Spin-off, the partnership performs these functions through the Master Services Agreement
with, among others, Brookfield Property Partners Limited (“BPY General Partner”), a wholly owned subsidiary of Brookfield
Asset Management (see Note 35, Related Parties, for further information), and such costs have been recorded in these consolidated
financial statements using actual amounts.



| | NOTE 4. | FUTURE ACCOUNTING POLICY CHANGES
| | ------- | --------------------------------

The following are accounting policies issued
that the partnership expects to adopt in the future:



IFRS 9, Financial Instruments (‘‘IFRS
9’’) will replace IAS 39, Financial Instruments: Recognition and Measurement (‘‘IAS 39’’).
IFRS 9 introduces a logical approach for the classification of financial assets, which is driven by cash flow characteristics and
the business model in which an asset is held. This single, principle-based approach replaces existing rule-based requirements that
are generally considered to be overly complex and difficult to apply. The new model results in a single impairment model being
applied to all financial instruments, thereby removing a source of complexity associated with previous accounting requirements.
It also introduces a new, expected-loss impairment model that will require more timely recognition of expected credit losses. IFRS
9 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted and should be applied retrospectively.
The partnership is currently evaluating the impact of IFRS 9 to its consolidated financial statements.



IAS 16, Property, Plant, and Equipment
(“IAS 16”) and IAS 38, Intangible Assets (“IAS 38”) were both amended by the IASB as a result of
clarifying the appropriate amortization method for intangible assets of service concession arrangements under IFRIC 12, Service
Concession Arrangements (“SCA’s”). The IASB determined that the issue does not only relate to SCA’s
but all tangible and intangible assets that have finite useful lives. Amendments to IAS 16 prohibit entities from using a revenue-based
depreciation method for items of property, plant, and equipment. Similarly, the amendment to IAS 38 introduces a rebuttable presumption
that revenue is not an appropriate basis for the amortization of an intangible asset, with only limited circumstances where the
presumption can be rebutted. Guidance is also introduced to explain that expected future reductions in selling prices could be
indicative of a reduction of the future economic benefits embodied in an asset. The amendments apply prospectively and are effective
for annual periods beginning on or after January 1, 2016, with earlier application permitted. The partnership is currently evaluating
the impact of the amendments to IAS 16 and IAS 38 to its consolidated financial statements.



IFRS 15, Revenue from Contracts with Customers
(“IFRS 15”) specifies how and when revenue should be recognized as well as requiring more informative and relevant
disclosures. This standard supersedes IAS 18, Revenue, IAS 11, Construction Contracts, and a number of revenue-related
interpretations. Application of the standard is mandatory and it applies to nearly all contracts with customers: the main exceptions
are leases, financial instruments and insurance contracts. IFRS 15 is effective for annual periods beginning on or after January
1, 2017 with early application permitted, and should be applied retrospectively. The partnership is currently evaluating the impact
of IFRS 15 to its consolidated financial statements.



F-23







IFRS 11, Joint Arrangements:
Accounting for Acquisitions of Interests in Joint Operations (“Amendments to IFRS 11”) was amended by the IASB
in May 2014. The objective of the amendments is to add new guidance to IFRS 11 on accounting for the acquisition of an interest
in a joint operation in which the activity of the joint operation constitutes a business, as defined in IFRS 3, Business Combinations
(“IFRS 3”). Acquirers of such interests are to apply the relevant principles on business combination accounting in
IFRS 3 and other standards, as well as disclosing the relevant information specified in these standards for business combinations.
These Amendments to IFRS 11 are effective for annual periods beginning on or after January 1, 2016 and should be applied prospectively.
The partnership is currently evaluating the impact of the Amendments to IFRS 11 to its consolidated financial statements.



| | NOTE 5. | ACQUISITION OF BROOKFIELD OFFICE PROPERTIES INC.
| | ------- | ------------------------------------------------

As of December 31, 2013, the partnership’s
interest in Brookfield Office Properties consisted of 49% of its outstanding common shares and 97% of its outstanding voting preferred
shares. On February 12, 2014, the partnership and its indirect subsidiaries, Brookfield Office Properties Exchange LP (“Exchange
LP”) and Brookfield Property Split Corp. (“BOP Split”, and collectively with BPY and Exchange LP, the “Purchasers”),
announced the commencement of the tender offer to acquire any or all of the common shares of Brookfield Office Properties that
they did not already own (the “Offer”). Under the Offer, Brookfield Office Properties shareholders were able to elect
to receive one LP Unit or $20.34 in cash for each BPO common share tendered, subject in each case to pro-ration based on a maximum
number of LP Unit and maximum cash consideration equating to approximately 67% and 33%, respectively, of the total number of BPO
common shares subject to the Offer. BOP Split was incorporated as a wholly-owned subsidiary of Brookfield BPY Holdings Inc., a
primary holding subsidiary of the partnership, to acquire common stock of BPO under the Offer and was established as a preferred
share issuer.



Immediately after completion of the Offer,
the Purchasers owned 92% of the outstanding BPO common shares. In June 2014, the Purchasers completed a subsequent acquisition
of all the remaining BPO common shares by way of a plan of arrangement (the “Arrangement”) under Canadian corporate
law. Under the Arrangement, holders of BPO securities received the following consideration:



| | a) | Common Shares
| | -- | -------------

Pursuant to the terms of the Offer and Arrangement,
BPO shareholders were able to receive either one LP Unit or $20.34 in cash for each BPO common share held, subject to pro-ration.
Canadian BPO shareholders were given the option to receive, in lieu of LP Units, limited partnership units of Exchange LP (“Exchange
LP Units”). Shareholders electing to receive LP Units, or Exchange LP Units, received one limited partnership unit for each
BPO common share tendered (or deemed tendered). Exchange LP Units are exchangeable at any time on a one-for-one basis, at the option
of the holder, for LP Units, subject to certain terms and applicable law. An Exchange LP Unit provides a holder thereof with economic
terms which are substantially equivalent to those of a LP Unit.



| | b) | Preferred Shares
| | -- | ----------------

Holders of outstanding BPO Class AAA Preference
Shares, Series G, Series H, Series J, and Series K (collectively, the “BPO Convertible Preference Shares”), were given
the option to elect either:



| | i. | to exchange their BPO Convertible Preference Shares for BOP Split senior preferred shares (“BOP
Split Senior Preferred Shares”), subject to minimum listing requirements and a maximum of 1,000,000 BOP Split Senior Preferred
Shares issued per series, pro-rated, or
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ii. | to continue holding their BPO Convertible Preference Shares, the conditions of which were modified
in order to provide for the BPO Convertible Preference Shares to be exchangeable into BPY Units rather than convertible into BPO
common shares.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | Class A Voting Preferred Shares
| | -- | -------------------------------

All Class A Series A and B voting preference
shares of BPO, other than those held by the Purchasers or their subsidiaries, were redeemed by BPO for cash.



Under IFRS 10, Consolidated Financial Statements,
the buy-out of a non-controlling interest by a parent is accounted for as an equity transaction. As a result of the Offer and Arrangement,
BPY owns 100% of the issued and outstanding common shares of BPO. Prior to the Arrangement, BPO was consolidated by BPY. Subsequent
to the Arrangement, BPY continues to consolidate BPO. In addition, and in accordance with IAS 32, Financial Instruments: Presentation(“IAS 32”), transaction costs associated with such a transaction are accounted for as a deduction from equity in
the consolidated financial statements. As a result, the partnership deducted approximately $25 million from equity for the year
ended December 31, 2014.



The acquisition of the remaining common shares
in BPO, paid for through a combination of the issuance of approximately 160 million BPY Units and Exchange LP Units with a value
of $3,030 million and cash consideration of $1,538 million, resulted in a reduction in non-controlling interests of $5,074 million.
In addition, certain Canadian BPO shareholders had their shares redeemed directly by BPO. BPO acquired 22.5 million of these common
shares for consideration of $195 million in cash and 12.9 million Exchange LP Units valued at $263 million. The acquired BPO shares
were subsequently cancelled.



F-24







| | NOTE 6. | ACQUISITIONS
AND Business COMBINATIONS
| | ------- | --------------------------------------

The partnership completed the following
acquisitions during the year ended December 31, 2014, all of which were accounted for as business combinations in accordance
with IFRS 3.



In December 2014, the partnership acquired
100% of the equity in Moor Place in London for $334 million.



In November 2014, the partnership
acquired equity interests in a portfolio of six high quality office parks in India (“Candor Office Parks”) for a
total consideration of $304 million which was funded with $94 million in cash from the partnership and $210 million  from the
issuance of non-controlling interests to certain institutional investors through funds sponsored by Brookfield Asset
Management. Upon the initial acquisition of its interest, the partnership did not have the current ability to appoint the
directors necessary to exercise power over the activities of the Candor Office Parks entities and, accordingly, initially
accounted for them as investments in associates using the equity method. In December 2014, the partnership entered into an
agreement with the manager of the entities that gave it the ability to appoint the directors necessary to exercise control
over four of the entities and joint control over the remaining two entities. The acquisition of control in December is
accounted for as a business combination and the equity accounted investments in the entities over which control was acquired
were measured at fair value at that date. As control of the Candor Office Parks entities was acquired near the balance sheet
date, at the date the consolidated financial statements were approved for issuance the partnership had not finalized its
valuation of the investment properties and other assets acquired and debt obligations, deferred tax and other liabilities
assumed. Also, the partnership had not completed its evaluation of certain payments made in connection with the business
combination to determine if they represent consideration for the transaction or should be accounted for separately from the
transaction. Accordingly, the measurement of the consideration paid, assets, liabilities and non-controlling interests have
been recognized on provisional basis and may be adjusted retrospectively in future reporting periods in accordance with IFRS
3.



In October 2014, the partnership acquired 91%
of the voting equity interest in CARS for consideration of $1,184 million which was funded with $334 million in cash from the partnership
and $850 million in the issuance of non-controlling interests through funds sponsored by Brookfield
Asset Management. At the date the partnership’s consolidated financial statements were approved for issuance, the valuation
of investment properties, debt obligations, deferred income taxes and contingent consideration were still under evaluation by the
partnership. Accordingly, they have been accounted for on a provisional basis and may be adjusted retrospectively in future periods
in accordance with IFRS 3.



In addition, in October 2014, the partnership
acquired 99% of the voting equity interests in a portfolio of six multifamily residential properties located in New York City for
a total consideration of $1,056 million which was funded with $98 million in cash from the partnership, $220 million in the issuance
of non-controlling interests through funds sponsored by Brookfield Asset Management, and $738
million of debt financing.



In June 2014, the partnership acquired an additional
50% interest in KPMG Tower in Sydney for a net purchase price of approximately $130 million bringing its ownership in the property
to 100%. The acquisition of the additional interest in KPMG Tower is accounted for as a business combination and KPMG Tower has
been consolidated by the partnership since the acquisition date. Prior to the acquisition date, KPMG Tower was accounted for as
an investment in joint operations.



In January 2014, the partnership purchased
an additional 23.6% interest in Five Manhattan West (previously known as 450 West 33rd Street) for a net purchase price
of $57 million, which includes cash consideration of $50 million and the settlement of a $7 million loan receivable. As a result,
the partnership’s ownership in Five Manhattan West increased to 98.6%. The partnership has consolidated Five Manhattan West
as a result of the business combination since the acquisition date, prior to which it was accounted for as an investment in joint
venture under the equity method of accounting.



F-25







The following table summarizes the impact of
significant acquisitions during the year ended December 31, 2014 that resulted in consolidation:



|(US$ Millions)                         |  | Candor
    Office
    Parks |      |   | CARS |  |        | Manhattan
    Multi- family |  |  | Moor  Place |   |  | KPMG  Tower |     |  | Five Manhattan
     West |  |     | Other
    BusinessCombinations(1) |  |  | Total |  
|-------------------------------------- |  | --------------------------- | ---- | - | ---- |  | ------ | --------------------------- |  |  | ----------- | - |  | ----------- | --- |  | ------------------------ |  | --- | --------------------------------- |  |  | ----- | -
|Cash and cash equivalents              |  | $                           | ―    |   |      |  | 15     |                             |  |  | 15          |   |  |             | ―   |  |                          |  | ―   |                                   |  |  | ―     |  
|Accounts receivable and other          |  |                             | 100  |   |      |  | 6      |                             |  |  | 9           |   |  |             | 2   |  |                          |  | ―   |                                   |  |  | 57    |  
|Investment properties                  |  |                             | 785  |   |      |  | 4,313  |                             |  |  | 1,044       |   |  |             | 332 |  |                          |  | 130 |                                   |  |  | 653   |  
|Total assets                           |  |                             | 885  |   |      |  | 4,334  |                             |  |  | 1,068       |   |  |             | 334 |  |                          |  | 130 |                                   |  |  | 710   |  
|Less:                                  |  |                             |      |   |      |  |        |                             |  |  |             |   |  |             |     |  |                          |  |     |                                   |  |  |       |  
|Accounts payable and other liabilities |  |                             | (179 | ) |      |  | (50    | )                           |  |  | (9          | ) |  |             | ―   |  |                          |  | ―   |                                   |  |  | (2    | )
|Debt obligations                       |  |                             | (193 | ) |      |  | (2,980 | )                           |  |  | ―           |   |  |             | ―   |  |                          |  | ―   |                                   |  |  | (462  | )
|Non-controlling
    interests(2)       |  |                             | (209 | ) |      |  | (120   | )                           |  |  | (3          | ) |  |             | ―   |  |                          |  | ―   |                                   |  |  | (4    | )
|Net assets acquired                    |  | $                           | 304  |   |      |  | 1,184  |                             |  |  | 1,056       |   |  |             | 334 |  |                          |  | 130 |                                   |  |  | 242   |  
|                                       |  |                             |      |   |      |  |        |                             |  |  |             |   |  |             |     |  |                          |  |     |                                   |  |  |       |  
|Consideration(3)(4)                    |  | $                           | 304  |   |      |  | 1,184  |                             |  |  | 1,056       |   |  |             | 334 |  |                          |  | 130 |                                   |  |  | 57    |  
|                                       |  |                             |      |   |      |  |        |                             |  |  |             |   |  |             |     |  |                          |  |     |                                   |  |  |       |  
|Transaction costs                      |  | $                           | 5    |   |      |  | 9      |                             |  |  | 7           |   |  |             | 4   |  |                          |  | ―   |                                   |  |  | ―     |  

| | (1) | Includes seven acquisitions of 53 properties completed during the year.
| | --- | -----------------------------------------------------------------------

| | (2) | Includes non-controlling interests recognized on business combinations measured as the proportionate
share of fair value of the assets, liabilities, and contingent liabilities on the date of acquisition.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Consideration for the acquisition of Five Manhattan West is before considering the existing
investment in joint venture accounted for under the equity method of accounting.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Includes consideration paid with funds received from issuance of non-controlling interests
                                                                              to certain institutional investors in funds sponsored by Brookfield Asset Management.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In the period from each acquisition date to
December 31, 2014, the partnership recorded revenue and net income in connection with these acquisitions of approximately $143
million and $51 million, respectively. If the acquisitions had occurred on January 1, 2014, the partnership’s total revenue
and net income would have been $4,848 million and $4,569 million, respectively, for the year ended December 31, 2014.



Acquisition-related costs, which primarily
relate to legal and consulting fees, are expensed as incurred in accordance with IFRS 3 and included in administration and other
expense on the consolidated statements of income.



| | NOTE 7. | iNVESTMENT PROPERTIES
| | ------- | ---------------------

The following table presents a roll forward
of investment property balances for the years ended December 31, 2014 and 2013:



|                                          |  | Year
    ended Dec. 31, 2014 |        |   | Year ended
    Dec. 31, 2013 |  
|----------------------------------------- |  | ---------------------------- | ------ | - | ---------------------------- | -
|(US$ Millions)                            |  | Commercial
    Properties    |        |   | Commercial
    Developments  |  
|Balance, beginning of year                |  | $                            | 31,679 |   |                              | $
|Additions resulting from:                 |  |                              |        |   |                              |  
|Property acquisitions                     |  |                              | 8,080  |   |                              |  
|Capital expenditures                      |  |                              | 821    |   |                              |  
|Property dispositions(1)                  |  |                              | (2,512 | ) |                              |  
|Fair value gains, net                     |  |                              | 2,781  |   |                              |  
|Reclassifications of assets held for sale |  |                              | (2,173 | ) |                              |  
|Change in presentation on Spin-off(2)     |  |                              | ―      |   |                              |  
|Change in basis of presentation(3)        |  |                              | ―      |   |                              |  
|Foreign currency translation              |  |                              | (1,026 | ) |                              |  
|Other changes                             |  |                              | 139    |   |                              |  
|Balance, end of year                      |  | $                            | 37,789 |   |                              | $

| | (1) | Property dispositions represent the carrying value on date of sale.
| | --- | -------------------------------------------------------------------

| | (2) | Certain investment properties have been reclassified to equity accounted investments and participating loan interests to
reflect the accounting impact of contractual relationships created or modified in conjunction with the Spin-off.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Due to the reorganization of ownership interests between the partnership and Brookfield Asset Management in 2013, certain
operating and development assets have been reclassified to/from equity accounted investments, as they were held through entities
that the partnership previously consolidated and are now equity accounted investments.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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 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. 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. See table below for further information on what valuation method the
partnership uses for its asset classes.



F-26







Where available, the partnership determines
the fair value of commercial properties based on recent sales of similar properties in the same location and condition and subject
to a similar leasing profile. Where comparable current sales in an active market do not exist, the partnership considers information
from a variety of sources, including: i) either of the two accepted income approaches described above; ii) recent prices of similar
properties in less active markets, with adjustments to reflect any change in economic conditions since the date of the observed
transactions that occurred at those prices, including market rents and discount or capitalization rates; and iii) current prices
in an active market for properties of a different nature, condition or location, including differences in leasing and other contracts.
In certain cases, these sources will suggest different conclusions about the fair value of an investment property. In such cases,
the partnership considers the reasons for any such differences in validating the most reliable estimate of fair value. Giving consideration
to the unique characteristics of each property, the most reliable estimate of fair value is generally derived by one of the two
accepted income approaches.



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
measures and records its commercial properties and developments using valuations prepared by management. The partnership does not
measure or record its properties based on valuations prepared by external valuation professionals.



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



|                        |  |                          |  | Dec.
    31, 2014 |     |   | Dec. 31,
    2013                | 
|----------------------- |  | ------------------------ |  | ----------------- | --- | - | -------------------------------- | 
|Consolidated Properties |  | Primary valuation method |  | Discount
    Rate |     |   | Terminal
    Capitalization Rate | 
|                        |  |                          |  |                   |     |   |                                  | 
|Office(1)               |  |                          |  |                   |     |   |                                  | 
|United States           |  | Discounted cash flow     |  |                   | 7.1 | % |                                  | 
|Canada                  |  | Discounted cash flow     |  |                   | 6.3 | % |                                  | 
|Australia               |  | Discounted cash flow     |  |                   | 8.3 | % |                                  | 
|Europe                  |  | Discounted cash flow     |  |                   | 6.8 | % |                                  | 
|Brazil                  |  | Discounted cash flow     |  |                   | 8.5 | % |                                  | 
|Retail                  |  |                          |  |                   |     |   |                                  | 
|Brazil                  |  | Discounted cash flow     |  |                   | 9.2 | % |                                  | 
|Australia(2)            |  | Discounted cash flow     |  |                   | n/a |   |                                  | 
|Industrial              |  | Discounted cash flow     |  |                   | 7.9 | % |                                  | 
|Multifamily(3)          |  | Direct capitalization    |  |                   | 5.4 | % |                                  | 
|Triple Net Lease(3)     |  | Direct capitalization    |  |                   | 6.6 | % |                                  | 

| | (1) | Excludes valuation metrics related to Candor Office
Parks.
| | --- | ----------------------------------------------------------

| | (2) | The partnership disposed of its remaining Australian
retail asset during the fourth quarter of 2014.
| | --- | ----------------------------------------------------------------------------------------------------

| | (3) | The valuation method used to value multifamily and triple net lease 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.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                               |  |                          |  | Dec.
    31, 2014 |     |   | Dec. 31,
    2013                | 
|------------------------------ |  | ------------------------ |  | ----------------- | --- | - | -------------------------------- | 
|Equity AccountedInvestments(1) |  | Primary valuation method |  | Discount
    Rate |     |   | Terminal
    Capitalization Rate | 
|                               |  |                          |  |                   |     |   |                                  | 
|Office                         |  |                          |  |                   |     |   |                                  | 
|United States                  |  | Discounted cash flow     |  |                   | 6.4 | % |                                  | 
|Australia                      |  | Discounted cash flow     |  |                   | 8.3 | % |                                  | 
|Retail                         |  |                          |  |                   |     |   |                                  | 
|United States                  |  | Discounted cash flow     |  |                   | 7.4 | % |                                  | 
|Industrial                     |  | Discounted cash flow     |  |                   | 7.2 | % |                                  | 
|Multifamily(2)                 |  | Direct capitalization    |  |                   | 5.5 | % |                                  | 

| | (1) | See Note 9 for further discussion on the partnership’s
equity accounted investments.
| | --- | ------------------------------------------------------------------------------------

| | (2) | 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.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Operating properties with a fair value of approximately
$7.6 billion (2013 — $6.2 billion) are situated on land held under leases or other agreements largely expiring after the
year 2065. Investment properties do not include any properties held under operating leases.



F-27







The following table presents the partnership’s
investment properties 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.



|(US$ Millions)          |  |         |   |  |         |   |   |         | 
|----------------------- |  | ------- | - |  | ------- | - | - | ------- | 
|As at Dec. 31, 2014     |  | Level 1 |   |  | Level 2 |   |   | Level 3 | 
|Investment properties:  |  |         |   |  |         |   |   |         | 
|Commercial properties   |  | $       | ― |  |         | $ | ― |         | 
|Commercial developments |  |         | ― |  |         |   | ― |         | 
|Total                   |  | $       | ― |  |         | $ | ― |         | 



|(US$ Millions)          |  |         |   |  |         |   |   |         | 
|----------------------- |  | ------- | - |  | ------- | - | - | ------- | 
|As at Dec. 31, 2013     |  | Level 1 |   |  | Level 2 |   |   | Level 3 | 
|Investment properties:  |  |         |   |  |         |   |   |         | 
|Commercial properties   |  | $       | ― |  |         | $ | ― |         | 
|Commercial developments |  |         | ― |  |         |   | ― |         | 
|Total                   |  | $       | ― |  |         | $ | ― |         | 



There were no transfers between Level 1 and
Level 2 during the years ended December 31, 2014, 2013, and 2012. Investment properties with a fair value of $36.6 billion (2013
― $29.4 billion) are pledged as security for property debt.



During the year ended December 31, 2014, the
partnership capitalized a total of $881 million (2013 — $490 million) of costs related to development properties. Included
in this amount is $778 million (2013 — $420 million) of construction and related costs and $103 million (2013 — $70
million) of borrowing costs capitalized. The weighted average interest rate used for the capitalization of borrowing costs to development
properties for the year ended December 31, 2014 is 5.9% (2013 — 5.4%).



| | NOTE 8. | INVESTMENTS IN SUBSIDIARIES
| | ------- | ---------------------------

The following table presents the partnership’s
material subsidiaries as of December 31, 2014 and 2013:



|                                                                    |  | Jurisdiction of |  | Economic interest |     |   | Voting interest | 
|------------------------------------------------------------------- |  | --------------- |  | ----------------- | --- | - | --------------- | 
|                                                                    |  | formation       |  | Dec.
    31, 2014 |     |   | Dec. 31, 2013   | 
|Holding entities                                                    |  |                 |  |                   |     |   |                 | 
|Brookfield
    Property L.P.(1)                                     |  | Bermuda         |  |                   | 37  | % |                 | 
|Brookfield BPY Retail Holdings II Inc.                              |  | Ontario         |  |                   | 37  | % |                 | 
|BPY Bermuda Holdings Limited                                        |  | Bermuda         |  |                   | 37  | % |                 | 
|BPY Bermuda Holdings II Limited                                     |  | Bermuda         |  |                   | 37  | % |                 | 
|Brookfield BPY Holdings Inc.                                        |  | Ontario         |  |                   | 37  | % |                 | 
|Real estate entities                                                |  |                 |  |                   |     |   |                 | 
|Brookfield Office Properties Inc.                                   |  | Canada          |  |                   | 100 | % |                 | 
|Brookfield BPY Holdings (Australia) ULC                             |  | Canada          |  |                   | 100 | % |                 | 
|DS4 Holdings Limited                                                |  | Barbados        |  |                   | 100 | % |                 | 
|Brookfield Brazil
    Retail Fundo de Investimento em Participaçoes |  | Brazil          |  |                   | 35  | % |                 | 

| | (1) | BPY holds all managing general partner units of Brookfield Property L.P. and therefore has the power to direct the relevant
activities and affairs of Brookfield Property L.P. The managing general partner units represent 37% and 19% of the total number
of Brookfield Property L.P. units at December 31, 2014 and 2013, respectively.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | As at December 31, 2014, the partnership owns 100% of BPO. As at December 31, 2013, the partnership’s
indirect interest in BPO consisted of 49.2% of the outstanding common shares and 97.2% of the outstanding voting preferred shares,
together representing an aggregate voting interest of approximately 50.5%.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | This entity holds economic interest in certain of our Australian properties not held through BPO. This economic interest
is held in the form of participating loan agreements with Brookfield Asset Management.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | The partnership holds its economic interest in these assets primarily through limited partnership interests in Brookfield
Asset Management-sponsored private funds. By their nature, limited partnership interests do not have any voting rights. The partnership
has entered into voting agreements to provide the partnership with the ability to contractually direct the relevant activities
of the investees.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-28







The table below shows details of
non-wholly owned subsidiaries of the partnership that have material non-controlling interests:



|                                                                |  |                           |  | Proportion
    of economic interests held by non- controlling interests |        |     | Non-controlling
    interests | 
|--------------------------------------------------------------- |  | ------------------------- |  | ----------------------------------------------------------------------- | ------ | --- | ----------------------------- | 
|(US$ Millions)                                                  |  | Jurisdiction of formation |  | Dec.
    31, 2014                                                       |        |     | Dec. 31, 2013                 | 
|Brookfield Office Properties Inc.                               |  | Canada                    |  |                                                                         | ―      | (1) |                               | 
|Brookfield Brazil Retail Fundo de Investimento em Participaçoes |  | Brazil                    |  |                                                                         | 65     | %   |                               | 
|IDI Realty, LLC                                                 |  | U.S.                      |  |                                                                         | 72     | %   |                               | 
|BSREP Europe Holdings L.P.                                      |  | Cayman Islands            |  |                                                                         | 69     | %   |                               | 
|BREF ONE, LLC                                                   |  | U.S.                      |  |                                                                         | 67     | %   |                               | 
|Capital Automotive LP                                           |  | U.S.                      |  |                                                                         | 74     | %   |                               | 
|BSREP India Office Holdings Pte. Ltd.                           |  | Singapore                 |  |                                                                         | 81     | %   |                               | 
|BSREP CXTD Holdings L.P.                                        |  | Cayman Islands            |  |                                                                         | 69     | %   |                               | 
|BSREP UA Holdings LLC                                           |  | U.S.                      |  |                                                                         | 70     | %   |                               | 
|Other                                                           |  | Various                   |  |                                                                         | 18%-87 | %   |                               | 
|Total                                                           |  |                           |  |                                                                         |        |     |                               | 

| | (1) | Includes non-controlling interests in BPO subsidiaries which vary from 1.0% - 50.0%.
| | --- | ------------------------------------------------------------------------------------



Summarized financial information in respect of each of the partnership’s
subsidiaries that has non-controlling interests is set out below. The summarized financial information below represents amounts
before intercompany eliminations.



|                                                                |  |                |       |  |                    |   |        |                     |  |   |                         |  |  | Equity attributable to     |       
|--------------------------------------------------------------- |  | -------------- | ----- |  | ------------------ | - | ------ | ------------------- |  | - | ----------------------- |  |  | -------------------------- | ------
|(US$ Millions) Dec. 31, 2014                                    |  | Current
assets |       |  | Non-current
assets |   |        | Current
liabilities |  |   | Non-current
liabilities |  |  | Non-
controlling interests |       
|Brookfield Office Properties Inc.                               |  | $              | 2,829 |  |                    | $ | 31,576 |                     |  | $ | 3,961                   |  |  | $                          | 14,908
|Brookfield Brazil Retail Fundo de Investimento em Participaçoes |  |                | 87    |  |                    |   | 1,545  |                     |  |   | 27                      |  |  |                            | 594   
|IDI Realty, LLC                                                 |  |                | 148   |  |                    |   | 1,777  |                     |  |   | 105                     |  |  |                            | 694   
|BSREP Europe Holdings L.P.                                      |  |                | 170   |  |                    |   | 803    |                     |  |   | 130                     |  |  |                            | 297   
|BREF ONE, LLC                                                   |  |                | 313   |  |                    |   | 2,270  |                     |  |   | 173                     |  |  |                            | 1,727 
|Capital Automotive LP                                           |  |                | 27    |  |                    |   | 4,340  |                     |  |   | 370                     |  |  |                            | 2,994 
|BSREP India Office Holdings Pte. Ltd.                           |  |                | 132   |  |                    |   | 785    |                     |  |   | ―                       |  |  |                            | 377   
|BSREP CXTD Holdings L.P.                                        |  |                | 21    |  |                    |   | 603    |                     |  |   | 3                       |  |  |                            | ―     
|BSREP UA Holdings LLC                                           |  |                | 26    |  |                    |   | 1,055  |                     |  |   | 11                      |  |  |                            | 738   
|Total                                                           |  | $              | 3,753 |  |                    | $ | 44,754 |                     |  | $ | 4,780                   |  |  | $                          | 22,329



|                                                                |  |                |       |  |                    |   |        |                     |  |   |                         |  |  | Equity attributable to     |       
|--------------------------------------------------------------- |  | -------------- | ----- |  | ------------------ | - | ------ | ------------------- |  | - | ----------------------- |  |  | -------------------------- | ------
|(US$ Millions) Dec. 31, 2013                                    |  | Current
assets |       |  | Non-current
assets |   |        | Current
liabilities |  |   | Non-current
liabilities |  |  | Non-
controlling
interests |       
|Brookfield Office Properties Inc.                               |  | $              | 1,237 |  |                    | $ | 29,654 |                     |  | $ | 3,364                   |  |  | $                          | 13,709
|Brookfield Brazil Retail Fundo de Investimento em Participaçoes |  |                | 115   |  |                    |   | 1,936  |                     |  |   | 38                      |  |  |                            | 749   
|IDI Realty, LLC                                                 |  |                | 75    |  |                    |   | 1,895  |                     |  |   | 125                     |  |  |                            | 773   
|BSREP Europe Holdings L.P.                                      |  |                | 43    |  |                    |   | 652    |                     |  |   | 61                      |  |  |                            | 281   
|BREF ONE, LLC                                                   |  |                | 602   |  |                    |   | 2,243  |                     |  |   | 2,294                   |  |  |                            | ―     
|Total                                                           |  | $              | 2,072 |  |                    | $ | 36,380 |                     |  | $ | 5,882                   |  |  | $                          | 15,512



|                                                                |  |         |       |  | Attributable
    to non-controlling interests |   |     | Attributable
    to owners of the partnership | 
|--------------------------------------------------------------- |  | ------- | ----- |  | --------------------------------------------- | - | --- | --------------------------------------------- | 
|(US$ Millions) Year ended Dec. 31, 2014                         |  | Revenue |       |  | Net
    income
    (loss)                     |   |     | Total
    comprehensive income                | 
|Brookfield Office Properties Inc.                               |  | $       | 2,372 |  |                                               | $ | 204 |                                               | 
|Brookfield Brazil Retail Fundo de Investimento em Participaçoes |  |         | 129   |  |                                               |   | (60 | )                                             | 
|IDI Realty, LLC                                                 |  |         | 110   |  |                                               |   | 88  |                                               | 
|BSREP Europe Holdings L.P.                                      |  |         | 88    |  |                                               |   | 99  |                                               | 
|BREF ONE, LLC                                                   |  |         | 783   |  |                                               |   | (58 | )                                             | 
|Capital Automotive LP                                           |  |         | 58    |  |                                               |   | 14  |                                               | 
|BSREP India Office Holdings Pte. Ltd.                           |  |         | ―     |  |                                               |   | (4  | )                                             | 
|BSREP CXTD Holdings L.P.                                        |  |         | ―     |  |                                               |   | 97  |                                               | 
|BSREP UA Holdings LLC                                           |  |         | 21    |  |                                               |   | ―   |                                               | 
|Total                                                           |  | $       | 3,561 |  |                                               | $ | 380 |                                               | 



F-29







|                                                                |  |         |       |  | Attributable
    to non-controlling interests |   |     | Attributable
    to owners of the partnership | 
|--------------------------------------------------------------- |  | ------- | ----- |  | --------------------------------------------- | - | --- | --------------------------------------------- | 
|(US$ Millions) Year ended Dec. 31, 2013                         |  | Revenue |       |  | Net income
    (loss)                         |   |     | Total
    comprehensive income                | 
|Brookfield Office Properties Inc.                               |  | $       | 2,304 |  |                                               | $ | 131 |                                               | 
|Brookfield Brazil Retail Fundo de Investimento em Participaçoes |  |         | 142   |  |                                               |   | 39  |                                               | 
|IDI Realty, LLC                                                 |  |         | 83    |  |                                               |   | 107 |                                               | 
|BSREP Europe Holdings L.P.                                      |  |         | 46    |  |                                               |   | 38  |                                               | 
|BREF ONE, LLC                                                   |  |         | 862   |  |                                               |   | (72 | )                                             | 
|Total                                                           |  | $       | 3,437 |  |                                               | $ | 243 |                                               | 



|                                                                |  |         |       |  | Attributable
    to non-controlling interests |   |     | Attributable
    to owners of the partnership | 
|--------------------------------------------------------------- |  | ------- | ----- |  | --------------------------------------------- | - | --- | --------------------------------------------- | 
|(US$ Millions) Year ended Dec. 31, 2012                         |  | Revenue |       |  | Net income
    (loss)                         |   |     | Total
    comprehensive income                | 
|Brookfield Office Properties Inc.                               |  | $       | 2,195 |  |                                               | $ | 181 |                                               | 
|Brookfield Brazil Retail Fundo de Investimento em Participaçoes |  |         | 143   |  |                                               |   | 196 |                                               | 
|IDI Realty, LLC                                                 |  |         | 2     |  |                                               |   | ―   |                                               | 
|BREF ONE, LLC                                                   |  |         | 573   |  |                                               |   | 14  |                                               | 
|Total                                                           |  | $       | 2,913 |  |                                               | $ | 391 |                                               | 



Certain of the partnership’s subsidiaries
are subject to restrictions over the extent to which they can remit funds to the partnership in the form of cash dividends, or
repayment of loans and advances as a result of borrowing arrangements, regulatory restrictions and other contractual requirements.



| | NOTE 9. | 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 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/Voting Rights Held by the
    Partnership |        |   | Carrying value    | 
|--------------------------------------- |  | ---------------------------- |  | ------------------------------- |  | ------------------------------------------------------------------------------- | ------ | - | ----------------- | 
|(US$ Millions)                          |  | Principal Activity           |  | Principal Place
    of Business |  | Dec.
    31,
    2014                                                           |        |   | Dec. 31,
    2013 | 
|Joint Ventures                          |  |                              |  |                                 |  |                                                                                 |        |   |                   | 
|245 Park Avenue, New York               |  | Property holding company     |  | United States                   |  |                                                                                 | 51     | % |                   | 
|Grace Building, New York                |  | Property holding company     |  | United States                   |  |                                                                                 | 50     | % |                   | 
|Five Manhattan
    West, New York(1)    |  | Property holding company     |  | United States                   |  |                                                                                 | n/a    |   |                   | 
|E&Y Centre, Sydney                      |  | Property holding company     |  | Australia                       |  |                                                                                 | 50     | % |                   | 
|Republic Plaza(2)                       |  | Property holding company     |  | United States                   |  |                                                                                 | 50     | % |                   | 
|Other                                   |  | Various                      |  | Various                         |  |                                                                                 | 12%-83 | % |                   | 
|                                        |  |                              |  |                                 |  |                                                                                 |        |   |                   | 
|Associates                              |  |                              |  |                                 |  |                                                                                 |        |   |                   | 
|General Growth Properties, Inc. (“GGP”) |  | Real Estate Investment Trust |  | United States                   |  |                                                                                 | 29     | % |                   | 
|Rouse Properties, Inc. (“Rouse”)        |  | Real Estate Investment Trust |  | United States                   |  |                                                                                 | 34     | % |                   | 
|Diplomat Resort and Spa (“Diplomat”)    |  | Property holding company     |  | United States                   |  |                                                                                 | 90     | % |                   | 
|Other                                   |  | Various                      |  | Various                         |  |                                                                                 | 23%-49 | % |                   | 
|                                        |  |                              |  |                                 |  |                                                                                 |        |   |                   | 
|Total equity accounted
    investments  |  |                              |  |                                 |  |                                                                                 |        |   |                   | 

| | (1) | See Note 6, Acquisitions and Business Combinations, for further discussion.
| | --- | ---------------------------------------------------------------------------

| | (2) | At December 31, 2013, Republic Plaza was consolidated and presented at fair value within investment
properties on the consolidated balance sheet as the partnership’s ownership of the property, through BPO, was 100%. See below
for further discussion.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In the third quarter of 2014, the partnership,
through funds sponsored by Brookfield Asset Management, acquired a 90% interest in Diplomat, which is located in Hollywood, Florida,
for an equity contribution of approximately $210 million. Neither the partnership nor Brookfield Asset Management have control
over Diplomat, as the investment was made through a third-party managed investment fund and the third party manager has approval
rights over certain relevant activities. As a result, the partnership, through indirect subsidiaries, accounts for its investment
in Diplomat as an equity accounted investment.



F-30







In April 2014, BPO sold 50% of its interest
in Republic Plaza, which is located in Denver, Colorado, through the establishment of a 50/50 joint venture partnership for approximately
$98 million, net of assumed debt. Republic Plaza was previously consolidated within investment properties on the consolidated balance
sheet. BPO continues to retain joint control of the resulting joint venture in accordance with IFRS 11, Joint Arrangements,
and as of the sale date, recorded and presented Republic Plaza as an equity accounted investment on the consolidated balance sheet
at $98 million. BPO has retained management and leasing responsibilities at Republic Plaza.



The fair value of the common shares of GGP
held by the partnership based on the trading price of GGP common stock as of December 31, 2014 is $7,183 million (December 31,
2013 – $5,125 million). The fair value of the common shares of Rouse held by the partnership based on the trading price of
Rouse common stock as of December 31, 2014 is $359 million (December 31, 2013 – $430 million). There are no quoted market
prices for the partnership’s other equity accounted investments.



At December 31, 2014, the partnership performed
a review to determine whether there is any objective evidence that the investment in GGP is impaired or whether there is any indication
that the impairment loss recognized in 2013 of $249 million, or any portion thereof, may no longer exist. Management reviewed the
carrying value of the partnership’s investment in GGP ($6,638 million, prior to taking into consideration any reversal of
the impairment loss recorded in 2013) and compared this balance to the fair value of the common shares of GGP held by the partnership
based on the published trading price of GGP common stock as of December 31, 2014 ($7,183 million). Consequently, management estimated
the recoverable amount of the investment in GGP to be the fair value of the common shares of GGP at December 31, 2014 and determined
that the impairment loss recognized in 2013 should be reversed. Accordingly, the consolidated statements of income for 2014 include,
within share of net earnings from equity accounted investments, the reversal of the full $249 million impairment charge taken in
the prior year, which resulted in a carrying value of the investment in common shares of GGP of $6,887 million at December 31,
2014.



The following table presents the change in the balance of the partnership’s
equity accounted investments as of December 31, 2014 and 2013:



|(US$ Millions)                                  |  | Dec. 31, 2014 |        |   | Dec. 31, 2013 |  
|----------------------------------------------- |  | ------------- | ------ | - | ------------- | -
|Equity accounted investments, beginning of year |  | $             | 9,281  |   |               | $
|Additions, net of disposals                     |  |               | 275    |   |               |  
|Acquisitions through business combinations      |  |               | ―      |   |               |  
|Share of net income                             |  |               | 1,366  |   |               |  
|Distributions received                          |  |               | (549   | ) |               |  
|Foreign exchange                                |  |               | (44    | ) |               |  
|Change in basis of presentation(1)              |  |               | ―      |   |               |  
|Other                                           |  |               | 27     |   |               |  
|Equity accounted investments, end of year       |  | $             | 10,356 |   |               | $

| | (1) | Reflects certain equity accounted investments that were reclassified to participating loan notes
to reflect the Spin-off (see Note 3). In addition, reflects changes in the ownership interests in GGP and Rouse as a result of
the Spin-off; prior to the Spin-off, certain fund investors were controlled and consolidated by Brookfield Asset Management.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following tables present the gross assets
and liabilities of the partnership’s equity accounted investments as of December 31, 2014 and 2013:



|(US$ Millions) Dec. 31, 2014 |  | Current
assets |       |  | Non-current
assets |   |        | Current
liabilities |  |   | Non-current
liabilities |  |  | Net assets |       
|---------------------------- |  | -------------- | ----- |  | ------------------ | - | ------ | ------------------- |  | - | ----------------------- |  |  | ---------- | ------
|Joint Ventures               |  |                |       |  |                    |   |        |                     |  |   |                         |  |  |            |       
|245 Park Avenue, New York    |  | $              | 30    |  |                    | $ | 2,167  |                     |  | $ | 13                      |  |  | $          | 795   
|Grace Building, New York     |  |                | 47    |  |                    |   | 1,930  |                     |  |   | 19                      |  |  |            | 882   
|E&Y Centre, Sydney           |  |                | 3     |  |                    |   | 441    |                     |  |   | 9                       |  |  |            | ―     
|Republic Plaza               |  |                | 33    |  |                    |   | 487    |                     |  |   | 24                      |  |  |            | 270   
|Other                        |  |                | 1,017 |  |                    |   | 2,952  |                     |  |   | 806                     |  |  |            | 1,078 
|                             |  |                | 1,130 |  |                    |   | 7,977  |                     |  |   | 871                     |  |  |            | 3,025 
|Associates                   |  |                |       |  |                    |   |        |                     |  |   |                         |  |  |            |       
|GGP                          |  |                | 1,108 |  |                    |   | 40,631 |                     |  |   | 830                     |  |  |            | 17,985
|Rouse                        |  |                | 107   |  |                    |   | 2,823  |                     |  |   | 76                      |  |  |            | 1,618 
|Diplomat                     |  |                | 18    |  |                    |   | 610    |                     |  |   | 34                      |  |  |            | 360   
|Other                        |  |                | 158   |  |                    |   | 1,585  |                     |  |   | 472                     |  |  |            | 584   
|                             |  |                | 1,391 |  |                    |   | 45,649 |                     |  |   | 1,412                   |  |  |            | 20,547
|Total                        |  | $              | 2,521 |  |                    | $ | 53,626 |                     |  | $ | 2,283                   |  |  | $          | 23,572



F-31







|(US$ Millions) Dec. 31, 2013  |  | Current
assets |       |  | Non-current
assets |   |        | Current
liabilities |  |   | Non-current
liabilities |  |  | Net assets |       
|----------------------------- |  | -------------- | ----- |  | ------------------ | - | ------ | ------------------- |  | - | ----------------------- |  |  | ---------- | ------
|Joint Ventures                |  |                |       |  |                    |   |        |                     |  |   |                         |  |  |            |       
|245 Park Avenue, New York     |  | $              | 20    |  |                    | $ | 2,057  |                     |  | $ | 14                      |  |  | $          | 791   
|Grace Building, New York      |  |                | 15    |  |                    |   | 1,742  |                     |  |   | 369                     |  |  |            | ―     
|Five Manhattan West, New York |  |                | 59    |  |                    |   | 666    |                     |  |   | 464                     |  |  |            | ―     
|E&Y Centre, Sydney            |  |                | 2     |  |                    |   | 473    |                     |  |   | 2                       |  |  |            | ―     
|Other                         |  |                | 283   |  |                    |   | 3,007  |                     |  |   | 97                      |  |  |            | 1,378 
|                              |  |                | 379   |  |                    |   | 7,945  |                     |  |   | 946                     |  |  |            | 2,169 
|Associates                    |  |                |       |  |                    |   |        |                     |  |   |                         |  |  |            |       
|GGP                           |  |                | 1,132 |  |                    |   | 38,332 |                     |  |   | 754                     |  |  |            | 17,303
|Rouse                         |  |                | 99    |  |                    |   | 2,449  |                     |  |   | 66                      |  |  |            | 1,455 
|Other                         |  |                | 85    |  |                    |   | 955    |                     |  |   | 559                     |  |  |            | 18    
|                              |  |                | 1,316 |  |                    |   | 41,736 |                     |  |   | 1,379                   |  |  |            | 18,776
|Total                         |  | $              | 1,695 |  |                    | $ | 49,681 |                     |  | $ | 2,325                   |  |  | $          | 20,945



Summarized financial information in respect of the partnership’s
equity accounted investments for the years ended December 31, 2014, 2013 and 2012 is  set out below:



|                              |  | Year
    ended Dec. 31, 2014 |      
|----------------------------- |  | ---------------------------- | -----
|(US$ Millions)                |  | Revenue                      |      
|Joint Ventures                |  |                              |      
|245 Park Avenue, New York     |  | $                            | 149  
|Grace Building, New York      |  |                              | 106  
|E&Y Centre, Sydney            |  |                              | 43   
|Five Manhattan West, New York |  |                              | 4    
|Republic Plaza                |  |                              | 30   
|Other                         |  |                              | 231  
|                              |  |                              | 563  
|Associates                    |  |                              |      
|GGP                           |  |                              | 3,188
|Rouse                         |  |                              | 304  
|Diplomat                      |  |                              | 41   
|Other                         |  |                              | 161  
|                              |  |                              | 3,694
|Total                         |  | $                            | 4,257



|                              |  | Year ended Dec.
    31, 2013 |      
|----------------------------- |  | ---------------------------- | -----
|(US$ Millions)                |  | Revenue                      |      
|Joint Ventures                |  |                              |      
|245 Park Avenue, New York     |  | $                            | 145  
|Grace Building, New York      |  |                              | 100  
|Five Manhattan West, New York |  |                              | 48   
|Bourke Place Trust, Sydney    |  |                              | 11   
|Darling Park Complex, Sydney  |  |                              | 26   
|E&Y Centre, Sydney            |  |                              | 44   
|Other                         |  |                              | 189  
|                              |  |                              | 563  
|Associates                    |  |                              |      
|GGP                           |  |                              | 3,079
|Rouse                         |  |                              | 263  
|Other                         |  |                              | 496  
|                              |  |                              | 3,838
|Total                         |  | $                            | 4,401



F-32







|                              |  | Year ended
    Dec. 31, 2012 |      
|----------------------------- |  | ---------------------------- | -----
|(US$ Millions)                |  | Revenue                      |      
|Joint Ventures                |  |                              |      
|245 Park Avenue, New York     |  | $                            | 144  
|Grace Building, New York      |  |                              | 100  
|Five Manhattan West, New York |  |                              | 51   
|Bourke Place Trust, Sydney    |  |                              | 5    
|Darling Park Complex, Sydney  |  |                              | 106  
|E&Y Centre, Sydney            |  |                              | 45   
|Other                         |  |                              | 315  
|                              |  |                              | 766  
|Associates                    |  |                              |      
|GGP                           |  |                              | 3,102
|Rouse                         |  |                              | 258  
|Other                         |  |                              | 548  
|                              |  |                              | 3,908
|Total                         |  | $                            | 4,674



Certain of the partnership’s investment
in joint ventures and associates are subject to restrictions over the extent to which they can remit funds to the partnership in
the form of the cash dividends or repayments of loans and advances as a result of borrowing arrangements, regulatory restrictions
and other contractual requirements.



| | NOTE 10. | INVESTMENTS IN JOINT OPERATIONS
| | -------- | -------------------------------

The partnership’s interests in the following
properties are subject to joint control and, accordingly, the partnership has recorded its share of the assets, liabilities, revenues,
and expenses of the properties in these consolidated financial statements:



|Name of entity and name of property               |  | Principal Activity   |  | Place of incorporation and
principal place of business |  | Dec. 31, 2014(1) |    |   | Dec. 31, 2013(1) | 
|------------------------------------------------- |  | -------------------- |  | ------------------------------------------------------ |  | ---------------- | -- | - | ---------------- | 
|Brookfield Place - Retail & Parking               |  | Property             |  | Toronto                                                |  |                  | 56 | % |                  | 
|Brookfield Place III                              |  | Development property |  | Toronto                                                |  |                  | 54 | % |                  | 
|Exchange Tower                                    |  | Property             |  | Toronto                                                |  |                  | 50 | % |                  | 
|First Canadian Place(2)                           |  | Property             |  | Toronto                                                |  |                  | 25 | % |                  | 
|151 Yonge Street                                  |  | Property             |  | Toronto                                                |  |                  | 25 | % |                  | 
|2 Queen Street East                               |  | Property             |  | Toronto                                                |  |                  | 25 | % |                  | 
|Bankers Hall                                      |  | Property             |  | Calgary                                                |  |                  | 50 | % |                  | 
|Bankers Court                                     |  | Property             |  | Calgary                                                |  |                  | 50 | % |                  | 
|Bankers West Parkade                              |  | Development property |  | Calgary                                                |  |                  | 50 | % |                  | 
|Suncor Energy Centre                              |  | Property             |  | Calgary                                                |  |                  | 50 | % |                  | 
|Fifth Avenue Place                                |  | Property             |  | Calgary                                                |  |                  | 50 | % |                  | 
|Place de Ville I                                  |  | Property             |  | Ottawa                                                 |  |                  | 25 | % |                  | 
|Place de Ville II                                 |  | Property             |  | Ottawa                                                 |  |                  | 25 | % |                  | 
|Jean Edmonds Towers                               |  | Property             |  | Ottawa                                                 |  |                  | 25 | % |                  | 
|300 Queen Street                                  |  | Development property |  | Ottawa                                                 |  |                  | 25 | % |                  | 
|KPMG Tower(3)                                     |  | Property             |  | Sydney                                                 |  |                  | ―  |   |                  | 
|World Square Retail(3)                            |  | Property             |  | Sydney                                                 |  |                  | 50 | % |                  | 
|52 Goulburn Street(3)                             |  | Property             |  | Sydney                                                 |  |                  | 50 | % |                  | 
|235 St Georges Terrace(3)                         |  | Property             |  | Perth                                                  |  |                  | 50 | % |                  | 
|108 St Georges Terrace(3)                         |  | Property             |  | Perth                                                  |  |                  | 50 | % |                  | 
|Shopping Patio Paulista                           |  | Property             |  | São Paulo                                              |  |                  | 60 | % |                  | 
|Shopping Patio Paulista - Expansion               |  | Development property |  | São Paulo                                              |  |                  | 44 | % |                  | 
|Shopping Mogi                                     |  | Property             |  | São Paulo                                              |  |                  | 63 | % |                  | 
|Shopping Patio Higienópolis                       |  | Property             |  | São Paulo                                              |  |                  | 25 | % |                  | 
|Shopping Patio Higienópolis - Expansion           |  | Development property |  | São Paulo                                              |  |                  | 32 | % |                  | 
|Shopping Patio Higienópolis - Co-Invest           |  | Development property |  | São Paulo                                              |  |                  | 5  | % |                  | 
|Shopping Patio Higienópolis Expansion - Co-Invest |  | Property             |  | São Paulo                                              |  |                  | 6  | % |                  | 
|Brookfield Brazil Higienópolis                    |  | Property             |  | São Paulo                                              |  |                  | 11 | % |                  | 
|Shopping Raposo                                   |  | Property             |  | São Paulo                                              |  |                  | 60 | % |                  | 
|West Shopping                                     |  | Property             |  | São Paulo                                              |  |                  | 45 | % |                  | 
|Shopping Cidade                                   |  | Property             |  | Belo Horizonte                                         |  |                  | ―  |   |                  | 

| | (1) | Represents ownership in   these properties before non-controlling interests in
                                                                                                subsidiaries.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | First Canadian Place in Toronto is subject to a ground
lease with respect to 50% of the land on which the property is situated. At the expiry of the ground lease, the other land owner
will have the option to acquire, for a nominal amount, an undivided 50% beneficial interest in the property.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | The partnership exercises joint control over these jointly controlled assets through a participating loan agreement with
Brookfield Asset Management that is convertible by the partnership at any time into a direct equity interest in the entities that
have a direct co-ownership interest in the underlying assets.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-33







NOTE 11. Participating
loan interests

Participating loan interests represent interests
in certain properties in Australia that do not provide the partnership with control over the entity that owns the underlying property
and are accounted for as loans and receivables and held at amortized cost on the consolidated balance sheets. The instruments,
which are receivable from a wholly-owned subsidiary of Brookfield Asset Management, have contractual maturity dates of September
26, 2020 and February 1, 2023, subject to the partnership’s prior right to convert into direct ownership interests in the
underlying commercial properties, and have contractual interest rates that vary with the results of operations of those properties.



The outstanding principal of the participating loan interests relates
to the following properties:



|(US$ Millions)                     |  |                        |     |   |               |   |     |               | 
|---------------------------------- |  | ---------------------- | --- | - | ------------- | - | --- | ------------- | 
|Name of Property                   |  | Participation Interest |     |   | Dec. 31, 2014 |   |     | Dec. 31, 2013 | 
|Darling Park Complex, Sydney       |  |                        | 30  | % |               | $ | 155 |               | 
|IAG House, Sydney                  |  |                        | 50  | % |               |   | 103 |               | 
|NAB House, Sydney(1)               |  |                        | ―   |   |               |   | ―   |               | 
|Bourke Place Trust, Melbourne      |  |                        | 43  | % |               |   | 168 |               | 
|Jessie Street, Sydney              |  |                        | 100 | % |               |   | 153 |               | 
|Fujitsu Centre, Sydney(2)          |  |                        | ―   |   |               |   | ―   |               | 
|Infrastructure House, Canberra     |  |                        | 100 | % |               |   | 30  |               | 
|Total participating loan interests |  |                        |     |   |               | $ | 609 |               | 

| | (1) | During the first quarter of 2014, BPO sold its 25% participating interest in NAB House in Sydney
for approximately $105 million in net proceeds.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | During the second quarter of 2014, the partnership sold its participating interest in Fujitsu Centre
for approximately $33 million in net proceeds.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------



Included in the balance of participating loan interests is an embedded
derivative representing the partnership’s right to participate in the changes in the fair value of the referenced properties.
The embedded derivative is measured at fair value with changes in fair value reported through earnings in fair value gains, net
on the consolidated statements of income. As of December 31, 2014, the carrying value of the embedded derivative is $43 million
(December 31, 2013 – $56 million).



For the year ended December 31, 2014, the partnership
recognized interest income on the participating loan interests of $50 million (2013 – $40 million; 2012 – nil) and
fair value gains on the associated embedded derivative of $38 million (2013 – $19 million; 2012 – nil).



Summarized financial information in respect
of the properties underlying the partnership’s investment in participating loan interests is set out below:



|(US$ Millions)          |  | Dec. 31, 2014 |       |  | Dec. 31, 2013 |  
|----------------------- |  | ------------- | ----- |  | ------------- | -
|Non-current assets      |  | $             | 2,050 |  |               | $
|Current assets          |  |               | 35    |  |               |  
|Total assets            |  |               | 2,085 |  |               |  
|Non-current liabilities |  |               | 821   |  |               |  
|Current liabilities     |  |               | 20    |  |               |  
|Total liabilities       |  |               | 841   |  |               |  
|Net assets              |  | $             | 1,244 |  |               | $



|(US$ Millions) Year ended Dec. 31, |  | 2014 |     |  | 2013 |   |     | 2012 | 
|---------------------------------- |  | ---- | --- |  | ---- | - | --- | ---- | 
|Revenue                            |  | $    | 197 |  |      | $ | 237 |      | 
|Expenses                           |  |      | 95  |  |      |   | 116 |      | 
|Earnings before fair value gains   |  |      | 102 |  |      |   | 121 |      | 
|Fair value gains, net              |  |      | 51  |  |      |   | 59  |      | 
|Net earnings                       |  | $    | 153 |  |      | $ | 180 |      | 



NOTE 12. HOTEL
ASSETS

Consolidated hotel assets primarily consist
of the partnership’s hotel properties received as part of the acquisitions of Paradise Island Holdings Limited (“Atlantis”)
and BREF HR, LLC (“Hard Rock Hotel and Casino”). Hotel assets are presented on a cost basis, net of accumulated fair
value changes and accumulated depreciation. Accumulated fair value changes include unrealized revaluations of hotel assets using
the revaluation method, which are recorded in revaluation surplus as a component of equity, as well as unrealized impairment losses
recorded in net income. The partnership determines the fair value of these assets on an annual basis as of December 31 by discounting
the expected future cash flows using internal valuations. The partnership also obtained valuations prepared by external valuation
professionals as at December 31, 2014 to assist in determining fair value, but external valuations are not necessarily indicative
of fair value, and accordingly are used as another data point for management to ultimately conclude on the fair value estimate
determined. The hotel operating assets are pledged as collateral for the property debt at their respective properties.



F-34







Significant unobservable inputs (Level 3) are
utilized when determining the fair value of hotel properties. The significant Level 3 inputs include the discount rate, terminal
capitalization rate, and investment horizon. Key valuation assumptions included a weighted average discount rate of 10.2% (2013
– 10.5%), terminal capitalization rate of 7.4% (2013 – 7.6%), and investment horizon of 7 years (2013 – 7 years).



The following table presents the change to the components of the
partnership’s hotel assets from the beginning of the year:



|(US$ Millions)                     |  | Dec. 31, 2014 |       |   | Dec. 31, 2013 |  
|---------------------------------- |  | ------------- | ----- | - | ------------- | -
|Cost:                              |  |               |       |   |               |  
|Balance, beginning of the period   |  | $             | 2,569 |   |               | $
|Net additions (dispositions)       |  |               | (139  | ) |               |  
|Foreign exchange translation       |  |               | ―     |   |               |  
|Change in basis of presentation(1) |  |               | ―     |   |               |  
|                                   |  |               | 2,430 |   |               |  
|Accumulated fair value changes:    |  |               |       |   |               |  
|Balance, beginning of the period   |  |               | 129   |   |               |  
|Increase from revaluation          |  |               | 302   |   |               |  
|Provision for impairment           |  |               | (5    | ) |               |  
|Disposals                          |  |               | ―     |   |               |  
|                                   |  |               | 426   |   |               |  
|Accumulated depreciation:          |  |               |       |   |               |  
|Balance, beginning of the period   |  |               | (266  | ) |               |  
|Depreciation                       |  |               | (112  | ) |               |  
|Change in basis of presentation(1) |  |               | ―     |   |               |  
|                                   |  |               | (378  | ) |               |  
|Total hotel assets                 |  | $             | 2,478 |   |               | $

| | (1) | Certain hotel assets in Australia, which are held through an entity which was previously consolidated
by the partnership through September 29, 2013, have been reclassified to equity accounted investments as of December 31, 2013.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTE 13. OTHER
NON-CURRENT ASSETS

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



|(US$ Millions)                                      |  | Dec. 31, 2014 |       |  | Dec. 31, 2013 |  
|--------------------------------------------------- |  | ------------- | ----- |  | ------------- | -
|Securities designated as FVTPL                      |  | $             | 1,929 |  |               | $
|Derivative assets                                   |  |               | 1,424 |  |               |  
|Securities designated as available-for-sale (“AFS”) |  |               | 143   |  |               |  
|Goodwill                                            |  |               | 78    |  |               |  
|Other                                               |  |               | 443   |  |               |  
|Total other non-current assets                      |  | $             | 4,017 |  |               | $



| | a) | Securities designated as FVTPL
| | -- | ------------------------------

Securities designated as FVTPL primarily
includes the partnership’s 22% common equity interest in Canary Wharf Group plc (“Canary Wharf”), a
privately held commercial property investment and development company in the United Kingdom, and a $500 million investment in
convertible preferred equity of China Xintiandi (“CXTD”), an entity whose common equity is wholly-owned by Hong
Kong listed developer Shui On Land Limited (“SOL”), and which was made by an indirect subsidiary of the
partnership, in which the partnership holds an approximate 31% interest.



CXTD owns SOL’s portfolio of retail and
office properties in Shanghai. The convertible preferred equity in CXTD allows the partnership to elect to convert its investment
into a 21% common equity interest in CXTD. Subsequent to the fifth anniversary of the initial investment, SOL has the ability to
redeem the partnership’s investment at its discretion through either a cash settlement or by issuing SOL equities with, in
either case, a value equivalent to the value of the equity interest in CXTD. In addition to the convertible preference shares,
SOL also issued, and the partnership subscribed for, 415 million warrants. These warrants provide the partnership with the option
of subscribing for one ordinary share of SOL for each warrant.



The partnership has determined that it does
not exercise significant influence over these aforementioned entities except CXTD. While the partnership owns more than 20% of
the voting power over CXTD and exercises significant influence over the entity, the partnership’s preferred equity interest
does not give the partnership an interest in the earnings associated with an ownership interest until exercise of the conversion
option. As a result, the partnership has elected to account for its investment in CXTD as a financial instrument at FVTPL.



| | b) | Derivative assets
| | -- | -----------------

Derivative assets primarily include the carrying
amount of warrants to purchase shares of common stock of GGP with a carrying amount of $1,394 million (December 31, 2013 –
$868 million). The fair value of the GGP warrants as of December 31, 2014 was determined using a Black-Scholes option pricing model,
assuming a 2.9 year term (December 31, 2013 – 3.9 year term), 51% volatility (December 31, 2013 – 51% volatility),
and a risk free interest rate of 1.01% (December 31, 2013 – 1.49%).



F-35







| | c) | Securities designated as AFS
| | -- | ----------------------------

Securities designated as AFS represent the
partnership’s retained equity interests in 1625 Eye Street in Washington, D.C. and Heritage Plaza in Houston, both property
holding companies, that it previously controlled and in which it retained a non-controlling interest following disposition of these
properties to third parties. The partnership continues to manage these properties on behalf of the acquirer but does not exercise
significant influence over the relevant activities of the properties. Included in securities designated as AFS are $106 million
of securities pledged as security for a loan payable to the issuer in the amount of $92 million (December 31, 2013 – $92
million) recognized in other non-current financial liabilities.



| | d) | Goodwill
| | -- | --------

Goodwill is attributable to a portfolio premium
recognized in connection with the historical purchase of the partnership’s Brazilian retail assets. At the time of purchase,
the fair value of the portfolio as a whole exceeded that of all portfolio assets. The partnership performs a goodwill impairment
test annually by assessing if the carrying value of the cash-generating unit, including the allocated goodwill, exceeds its recoverable
amount determined as the greater of the estimated fair value less costs to sell or the value in use.



In the third quarter of 2014, the partnership
assessed the local economic environment as well as other market conditions and concluded that the carrying amount of the retail
asset portfolio in São Paulo, Brazil exceeded its recoverable amount. Consequently, management recognized an impairment
loss on goodwill in the retail segment of approximately $33 million, which has been recorded in the consolidated statements of
income. As a result of the impairment charge and a $9 million decrease attributable to foreign currency translation, the resulting
carrying value of goodwill as of December 31, 2014 is $78 million.



| | e) | Other
| | -- | -----

Other primarily includes the partnership’s
finite-lived intangible assets which are presented on a cost basis, net of accumulated amortization and accumulated impairment
losses in the consolidated balance sheets. These intangible assets primarily represent the trademark and licensing assets acquired
as part of the acquisitions of Atlantis and Hard Rock Hotel and Casino. 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.



The following table presents a roll forward
of the partnership’s intangible assets:



|(US$ Millions)                |  | Dec. 31, 2014 |     |   | Dec. 31, 2013 |  
|----------------------------- |  | ------------- | --- | - | ------------- | -
|Cost                          |  | $             | 409 |   |               | $
|Accumulated amortization      |  |               | (61 | ) |               |  
|Accumulated impairment losses |  |               | (41 | ) |               |  
|Intangible assets             |  | $             | 307 |   |               | $



NOTE 14. LOANS
AND NOTES RECEIVABLE

Loans and notes receivable primarily represents
investments in debt instruments secured by commercial and other income producing real property. Loans and notes receivable are
financial assets that are carried at amortized cost on the consolidated balance sheets with interest income recognized following
the effective interest method on the consolidated statements of income. A loan is considered impaired when, based upon current
information and events, it is probable that the partnership will be unable to collect all amounts due for both principal and interest
according to the contractual terms of the loan agreement. Loans are evaluated individually for impairment given the unique nature
and size of each loan. On a quarterly basis, the partnership’s subsidiaries perform a quarterly review of all collateral
properties underlying the loans receivable for each collateralized loan. There is no impairment of loans and notes receivable for
the year ended December 31, 2014.



NOTE 15. ACCOUNTS
RECEIVABLE AND OTHER

The components of accounts receivable and other are as follows:



|(US$ Millions)                      |  | Dec. 31, 2014 |       |  | Dec. 31, 2013 |  
|----------------------------------- |  | ------------- | ----- |  | ------------- | -
|Accounts receivable(1)              |  | $             | 478   |  |               | $
|Restricted cash and deposits(2)     |  |               | 2,121 |  |               |  
|Other current assets                |  |               | 526   |  |               |  
|Total accounts receivable and other |  | $             | 3,125 |  |               | $

| | (1) | See Note 35, Related Parties, for further discussion.
| | --- | -----------------------------------------------------

| | (2) | Restricted cash and deposits include $1,800 million of cash received from the issuance of the
exchangeable preferred securities to the Qatar Investment Authority (“QIA”) that included restrictions requiring that
it first be used to finance the acquisition of a particular investment.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Restricted cash and deposits are considered
restricted when they are subject to contingent rights of third parties that prevent the assets’ use for current purposes.



F-36







NOTE 16. Assets
Held for sale

During the fourth quarter of 2014, the partnership
reclassified office properties, which include 1250 Connecticut Avenue, 650 Massachusetts, 77 K Street, 799 9th Street, 1400 K Street,
1200 K Street, Bethesda Crescent, and Victor Building all of which are located in Washington, D.C., Metropolitan Park East &
West in Seattle and 151 Yonge in Toronto, as well as a portfolio of multifamily assets in Virginia and Maryland, to assets held
for sale as it intends to sell controlling interests in these properties to third parties in the next 12 months.



|(US$ Millions)                                   |  | Dec. 31, 2014 |       |  | Dec. 31, 2013 |  
|------------------------------------------------ |  | ------------- | ----- |  | ------------- | -
|Assets                                           |  |               |       |  |               |  
|Investment properties                            |  | $             | 2,173 |  |               | $
|Accounts receivables and other assets            |  |               | 68    |  |               |  
|Assets held for sale                             |  |               | 2,241 |  |               |  
|Liabilities                                      |  |               |       |  |               |  
|Debt obligations                                 |  |               | 1,165 |  |               |  
|Accounts payable and other liabilities           |  |               | 56    |  |               |  
|Liabilities associated with assets held for sale |  | $             | 1,221 |  |               | $



NOTE 17.	Debt
obligations

The partnership’s debt obligations include the following:



|                                                        |  | Dec. 31, 2014          |      |   | Dec. 31, 2013 |  
|------------------------------------------------------- |  | ---------------------- | ---- | - | ------------- | -
|(US$ Millions)                                          |  | Weighted-
Average Rate |      |   | Debt Balance  |  
|Unsecured facilities                                    |  |                        |      |   |               |  
|Brookfield Office Properties’ revolving facility        |  |                        | 1.86 | % |               | $
|Brookfield Office Properties’ senior unsecured notes    |  |                        | 4.17 | % |               |  
|Brookfield Property Partners’ credit facilities         |  |                        | 2.68 | % |               |  
|Brookfield Canada Office Properties’ revolving facility |  |                        | 2.73 | % |               |  
|                                                        |  |                        |      |   |               |  
|Funds subscription credit facility                      |  |                        | 1.88 | % |               |  
|Subsidiary borrowings                                   |  |                        | 4.45 | % |               |  
|                                                        |  |                        |      |   |               |  
|Secured debt obligations                                |  |                        |      |   |               |  
|Fixed rate                                              |  |                        | 5.18 | % |               |  
|Variable rate                                           |  |                        | 4.38 | % |               |  
|Total debt obligations                                  |  |                        |      |   |               | $
|                                                        |  |                        |      |   |               |  
|Current                                                 |  |                        |      |   |               | $
|Non-current                                             |  |                        |      |   |               |  
|Debt associated with assets held for sale               |  |                        |      |   |               |  
|Total debt obligations                                  |  |                        |      |   |               | $



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



|                       |  | Dec. 31, 2014 |        |  | Dec. 31, 2013  |   
|---------------------- |  | ------------- | ------ |  | -------------- | --
|(US$ Millions)         |  | U.S. Dollars  |        |  | Local Currency |   
|U.S. Dollars           |  | $             | 21,490 |  |                | $ 
|Canadian Dollars       |  |               | 2,682  |  |                | C$
|Australian Dollars     |  |               | 1,848  |  |                | A$
|Brazilian Reais        |  |               | 707    |  |                | R$
|British Pounds         |  |               | 971    |  |                | £ 
|Euros                  |  |               | 280    |  |                | € 
|Indian Rupee           |  |               | 193    |  |                | Rs
|Total debt obligations |  | $             | 28,171 |  |                |   



F-37







NOTE 18. cAPITAL
sECURITIES

The partnership has the following capital securities
outstanding as of December 31, 2014 and December 31, 2013:



|(US$ Millions, except where noted)     |  | Shares Outstanding |            |  | Cumulative
Dividend Rate |  |      | Dec. 31, 2014 |  |   | Dec. 31, 2013 | 
|-------------------------------------- |  | ------------------ | ---------- |  | ------------------------ |  | ---- | ------------- |  | - | ------------- | 
|Class A Preferred Equity Units:        |  |                    |            |  |                          |  |      |               |  |   |               | 
|Series 1                               |  |                    | 24,000,000 |  |                          |  | 6.25 | %             |  | $ | 524           | 
|Series 2                               |  |                    | 24,000,000 |  |                          |  | 6.50 | %             |  |   | 510           | 
|Series 3                               |  |                    | 24,000,000 |  |                          |  | 6.75 | %             |  |   | 501           | 
|Class B Junior Preferred Shares        |  |                    | 30,000,000 |  |                          |  | 5.75 | %             |  |   | 750           | 
|Class C Junior Preferred Shares        |  |                    | 20,000,000 |  |                          |  | 6.75 | %             |  |   | 500           | 
|BPO Class AAA Preferred Shares:        |  |                    |            |  |                          |  |      |               |  |   |               | 
|Series G(1)                            |  |                    | 3,350,000  |  |                          |  | 5.25 | %             |  |   | 85            | 
|Series H(1)                            |  |                    | 7,000,000  |  |                          |  | 5.75 | %             |  |   | 150           | 
|Series J(1)                            |  |                    | 7,000,000  |  |                          |  | 5.00 | %             |  |   | 150           | 
|Series K(1)                            |  |                    | 4,980,000  |  |                          |  | 5.20 | %             |  |   | 107           | 
|BOP Split Senior Preferred Shares:     |  |                    |            |  |                          |  |      |               |  |   |               | 
|Series 1                               |  |                    | 1,000,000  |  |                          |  | 5.25 | %             |  |   | 25            | 
|Series 2                               |  |                    | 1,000,000  |  |                          |  | 5.75 | %             |  |   | 22            | 
|Series 3                               |  |                    | 1,000,000  |  |                          |  | 5.00 | %             |  |   | 22            | 
|Series 4                               |  |                    | 1,000,000  |  |                          |  | 5.20 | %             |  |   | 22            | 
|Capital Securities – Fund Subsidiaries |  |                    | ―          |  |                          |  | ―    |               |  |   | 643           | 
|Total capital securities               |  |                    |            |  |                          |  |      |               |  | $ | 4,011         | 
|                                       |  |                    |            |  |                          |  |      |               |  |   |               | 
|Current                                |  |                    |            |  |                          |  |      |               |  | $ | 476           | 
|Non-current                            |  |                    |            |  |                          |  |      |               |  |   | 3,535         | 
|Total capital securities               |  |                    |            |  |                          |  |      |               |  | $ | 4,011         | 

| | (1) | BPY and its subsidiaries own 1,050,000, 1,000,000, 1,000,000, and 1,020,000 shares of Series
G, Series H, Series J, and Series K capital securities as of December 31, 2014, respectively, which has been reflected as a reduction
in outstanding shares of the BPO Class AAA Preferred Shares.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On December 4, 2014, the partnership issued
$1,800 million of exchangeable preferred equity securities (“Preferred Equity Units”) to QIA. The Preferred Equity
Units are exchangeable at the option of QIA into LP Units at a price of $25.70 per unit and were issued in three tranches of $600
million each, with an average dividend yield of 6.5% and maturities of seven, ten and twelve years. After three years for the seven-year
tranche and four years for the ten- and twelve-year tranches, the partnership can effectively require the holder to exchange the
Preferred Equity Units into LP Units as long as the LP Units are trading at or above 125%, 130% and 135%, respectively, of the
exchange price. Upon maturity, the Preferred Equity Units that remain outstanding will be redeemed in exchange for LP Units valued
at the 20-day, volume-weighted average trading price at such time. Brookfield Asset Management has contingently agreed to acquire
the seven-year and ten-year tranches of Preferred Equity Units from QIA for the initial issuance price plus accrued and unpaid
distributions and to exchange such units for Preferred Equity Units with terms and conditions 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. QIA will have the
right to designate one member to the board of directors of the partnership. The Preferred Equity Units have been accounted for
as a compound instrument comprised of (i) a financial liability representing the partnership’s obligations to redeem the
Preferred Equity Units at maturity for a variable number of BPY Units and (ii) an equity instrument representing QIA’s right
to convert the Preferred Equity Units to a fixed number of BPY Units. The cash proceeds received from issuing the Preferred Equity
Units were allocated between capital securities ($1,535 million) and limited partners’ equity ($265 million). The allocation
between capital securities and equity was based on first determining the liability component by discounting the cash flows associated
with these securities at market interest rates. The equity component was then assigned the residual amount after deducting from
the fair value of the instrument as a whole the amount separately determined for the liability component.



The $750 million of Class B Junior and $500
million of Class C Junior redeemable preferred shares of one of the holding entities that are held by Brookfield Asset Management
were issued as partial consideration for the Business acquired by the partnership. The Class B preferred shares are entitled to
receive a cumulative preferential dividend equal to 5.75% of their redemption value as and when declared by the Board of Directors
of the holding entity until the fifth anniversary of their issuance. After the fifth anniversary of their issuance the Class B
preferred shares will be entitled to receive a cumulative preferential dividend equal to 5.0% plus the prevailing yield for 5-year
U.S. Treasury Notes. The holding entity may redeem the Class B preferred shares at any time and must redeem all of the outstanding
Class B preferred shares on the tenth anniversary of their issuance. Brookfield Asset Management will have a right of retraction
following the fifth anniversary of the issuance of the Class B preferred shares. Pursuant to a retraction call right, the partnership
may redeem up to an aggregate maximum of $375 million, Class B preferred shares for LP Units. The number of LP Units to be delivered
is determined by dividing the amount of Class B preferred shares to be retracted by the greater of $2.00 and 95% of the 20-day volume-weighted
average trading price of LP Units.



The Class C preferred shares are entitled to
receive a cumulative preferential dividend equal to 6.75% of their redemption value as and when declared by the board of directors
of the holding entity. The holding entity may redeem the Class C preferred shares at any time and must redeem all of the outstanding
Class C preferred shares on the seventh anniversary of their issuance. Brookfield Asset Management will have a right of retraction
following the third anniversary of the issuance of the Class C preferred shares. The Class B and Class C preferred shares will
be entitled to vote with the common shares of the holding entity and each class of preferred shares will have an aggregate of 1%
of the votes to be cast in respect of the holding entity.



F-38







The terms of BPO’s Convertible Preference
Shares have been amended such that these shares are exchangeable into BPY Units and no longer convertible into BPO common shares.
As discussed previously, in connection with the Arrangement, holders of such securities were given the option, subject to an overall
limit of 1,000,000 shares per series and certain other conditions, to exchange their BPO Convertible Preference Shares for BOP
Split Senior Preferred Shares. Subsequent to the Arrangement, 1,000,000 such shares of each series were issued in exchange for
the same number of BPO Convertible Preference Shares, which are now held by BOP Split.



As stated in Note 5, Acquisition of Brookfield
Office Properties Inc., holders of outstanding BPO Convertible Preference Shares were given the option to elect to exchange
their BPO Convertible Preference shares for BOP Split Senior Preferred Shares. In accordance with IAS 32 and IAS 1, Presentation
of Financial Statements, the BOP Split Senior Preferred Shares are presented as current liabilities within capital securities
on the consolidated balance sheets as there is a contractual obligation to deliver cash as well as a retraction provision that
permits holders of each series of shares to retract the BOP Split Senior Preferred Shares at any time.



The holders of each series of the BOP Split
Senior Preferred Shares are each entitled to receive fixed cumulative preferential cash dividends, if, as and when declared by
the Board of Directors of BOP Split. Dividends on each series of the BOP Split Senior Preferred Shares are payable quarterly on
the last day of March, June, September and December in each year. The first dividend paid on the BOP Split Senior Preferred Shares
was for the full quarter ended September 30, 2014. On February 5, 2015 the Board of Directors of BOP Split declared quarterly dividends
payable for the BOP Split Senior Preferred Shares.



Cumulative preferred dividends on the BPO Convertible
Preference Shares and BOP Split Senior Preferred Shares are payable quarterly, as and when declared by the Board of Directors of
BPO and BOP Split. On February 5, 2015 the Boards of Directors of BPO and BOP Split declared quarterly dividends payable for the
BPO Convertible Preference Shares and BOP Split Senior Preferred Shares, respectively.



The Capital Securities – Fund Subsidiaries
represent the equity interests in Brookfield DTLA Holdings LLC (“DTLA”) held by co-investors in the fund 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 redemption amount.



Capital securities includes $473 million (December
31, 2013 – $518 million) repayable in Canadian Dollars of C$550 million (December 31, 2013 – C$550 million).



The redemption terms of the outstanding BPO
Class AAA Preferred Shares are as follows:



|                                |  | Redemption Date(1) |  | Redemption Price(1,2) |                                                                                             |  | BPO’s Option(3) |                   | Holder’s Option(4)
|------------------------------- |  | ------------------ |  | --------------------- | ------------------------------------------------------------------------------------------- |  | --------------- | ----------------- | ------------------
|BPO Class AAA Preferred Shares: |  |                    |  |                       |                                                                                             |  |                 |                   |                   
|Series G                        |  | June 30, 2011      |  |                       | $ 25.00                                                                                     |  |                 | June 30, 2011     |                   
|Series H                        |  | December 31, 2011  |  |                       | C$ 25.00                                                                                    |  |                 | December 31, 2011 |                   
|Series J                        |  | June 30, 2010      |  |                       | C$ 25.00                                                                                    |  |                 | June 30, 2010     |                   
|Series K                        |  | December 31, 2012  |  |                       | C$
                                                                                   25.33 |  |                 | December 31, 2012 |                   

| | (1) | Subject to applicable law and rights of BPO, BPO may, on or after the dates specified above,
redeem BPO Class AAA Preferred Shares Series K at a price of C$26.00 if redeemed during the 12 months commencing December 31, 2012
and decreasing by C$0.33 each 12-month period thereafter to a price per share of C$25.00 if redeemed on or after December 31, 2015
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Subject to applicable law and rights of BPO, BPO may purchase BPO Class AAA Preferred Shares
for cancellation at the lowest price or prices at which, in the opinion of the Board of Directors of BPO, such shares are obtainable.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Subject to applicable law and, if required, other regulatory approvals, BPO may, on or after
the dates specified above, convert the Class AAA, Series G, H, J and K into LP Units. The Class AAA, Series H, J and K preferred
shares may be converted into that number of LP Units determined by dividing the then-applicable redemption price by the greater
of C$2.00 (Series G - US$2.00) or 95% of the weighted average trading price of LP Units at such time.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Subject to applicable law, the partnership’s call rights and BPO’s right to redeem
or find substitute purchasers, the holder may, on or after the dates specified above and on specified dates thereafter, convert
Class AAA, Series G, H, J and K preferred shares into that number of LP Units determined by dividing the then-applicable redemption
price by the greater of C$2.00 (Series G - US$2.00) or 95% of the weighted average trading price of LP Units at such time.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-39







The redemption terms
of the outstanding BOP Split Senior Preferred Shares are as follows:



|                                   |  | Redemption
    Date(2) |  | Redemption
    Price |                                                                        |  | BPY’s
    Option |                   | Holder’s
    Option
|---------------------------------- |  | ---------------------- |  | -------------------- | ---------------------------------------------------------------------- |  | ---------------- | ----------------- | -------------------
|BOP Split Senior Preferred Shares: |  |                        |  |                      |                                                                        |  |                  |                   |                    
|Series
    1(1)                    |  | June 30, 2014          |  |                      | $
                                                               25.00 |  |                  | June 30, 2014     |                    
|Series
    2(1)                    |  | December 31, 2014      |  |                      | C$
                                                    25.00           |  |                  | December 31, 2014 |                    
|Series
    3(1)                    |  | June 30, 2014          |  |                      | C$ 25.00                                                               |  |                  | June 30, 2014     |                    
|Series
    4(1)                    |  | December 31, 2015      |  |                      | C$ 25.33                                                               |  |                  | December 31, 2015 |                    

| | (1) | Subject
                                         to the terms of any shares ranking prior to the BOP Split Senior Preferred Shares applicable
                                         law and provisions described in the Arrangement, the partnership, at its option, may
                                         at any time redeem all, or from time to time any part, of the then outstanding BOP Split
                                         Senior Preferred Shares for cash as follows: the Series 1 at a price of US$25.33, if
                                         redeemed before June 30, 2014, and US$25.00 if redeemed on or after June 30, 2014; the
                                         Series 2 at a price of C$25.33, if redeemed before December 31, 2014, and C$25.00 if
                                         redeemed on or after December 31, 2014; the Series 3 at a price of C$25.25, if redeemed
                                         before June 30, 2014, and C$25.00 if redeemed on or after June 30, 2014; the Series 4
                                         at a price of C$25.67, if redeemed before December 31, 2014, and C$25.33 if redeemed
                                         on or after December 31, 2014, but before December 31, 2015, and C$25.00 if redeemed
                                         on or after December 31, 2015.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Subject
                                         to applicable law and certain provisions, the partnership may acquire for cancelling
                                         all or any part of the BOP Split Senior Preferred Shares outstanding from time to time
                                         at the lowest price at which in the opinion of the directors of the partnership such
                                         shares are available.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTE
19.	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.



|(US$ Millions)                   |  | Dec. 31, 2014 |        |   | Dec. 31, 2013 |  
|-------------------------------- |  | ------------- | ------ | - | ------------- | -
|Deferred income tax assets:      |  |               |        |   |               |  
|Non-capital losses (Canada)      |  | $             | 106    |   |               | $
|Capital losses (Canada)          |  |               | 85     |   |               |  
|Net operating losses (U.S.)      |  |               | 89     |   |               |  
|Non-capital losses (foreign)     |  |               | 14     |   |               |  
|Deferred financing costs         |  |               | 49     |   |               |  
|Foreign currency                 |  |               | 39     |   |               |  
|Other                            |  |               | 32     |   |               |  
|                                 |  |               | 414    |   |               |  
|Deferred income tax liabilities: |  |               |        |   |               |  
|Properties                       |  |               | (2,110 | ) |               |  
|Investments in associates        |  |               | (902   | ) |               |  
|Other                            |  |               | (41    | ) |               |  
|                                 |  | $             | (3,053 | ) |               | $
|Net deferred tax liability       |  |               | (2,639 | ) |               |  



The changes in deferred
tax balances are presented as follows:





|                           |  |               |        |   | Recognized in |   |    |        | 
|-------------------------- |  | ------------- | ------ | - | ------------- | - | -- | ------ | 
|(US$ Millions)             |  | Dec. 31. 2013 |        |   | Reclass       |   |    | Income | 
|Deferred tax assets        |  | $             | 312    |   |               | $ | (4 | )      | 
|Deferred tax liabilities   |  |               | (1,844 | ) |               |   | 4  |        | 
|Net deferred tax liability |  | $             | (1,532 | ) |               | $ | ―  |        | 





|(US$ Millions)             |  | Dec. 31. 2012 |        |   | Reclass |   |   | Income |  |   | Equity(1) |   |  | OCI |     |   | Dec. 31. 2013 |  
|-------------------------- |  | ------------- | ------ | - | ------- | - | - | ------ |  | - | --------- | - |  | --- | --- | - | ------------- | -
|Deferred tax assets        |  | $             | 348    |   |         | $ | ― |        |  | $ | 5         |   |  | $   | (1  | ) |               | $
|Deferred tax liabilities   |  |               | (1,321 | ) |         |   | ― |        |  |   | (492      | ) |  |     | (76 | ) |               |  
|Net deferred tax liability |  | $             | (973   | ) |         | $ | ― |        |  | $ | (487      | ) |  | $   | (77 | ) |               | $



| | (1) | Equity
                                         category during the period ended December 31, 2013 primarily relates to adjustments made
                                         to the partnership’s equity related to the tax restructuring which occurred as
                                         part of the Spin-off.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
aggregate amount of gross temporary differences associated with investments and interests in joint arrangements in subsidiaries
for which deferred tax liabilities have not been recognized as of December 31, 2014 is approximately $7 billion (2013 - $4 billion).



The
deferred tax assets not recognized are as follows:



|(US$ Millions)                         |  | Dec. 31, 2014 |     |  | Dec. 31, 2013 |  
|-------------------------------------- |  | ------------- | --- |  | ------------- | -
|Deferred income tax assets:            |  |               |     |  |               |  
|Net operating losses (U.S.)            |  | $             | 73  |  |               | $
|Net operating losses (foreign)         |  |               | 731 |  |               |  
|Net deferred tax assets not recognized |  | $             | 804 |  |               | $



F-40







The
holding entities and their Canadian subsidiaries have deferred tax assets of $106 million (December 31, 2013 –
$103 million) related to non-capital losses that expire over the next 20 years, and $85 million (December 31, 2013 –
$100 million) related to capital losses that have no expiry. The holding entities and their U.S. subsidiaries have deferred
tax assets of $89 million (December 31, 2013 – $69 million) related to non-capital losses that expire over the next
20 years. The holding entities and their foreign subsidiaries, mainly in the United Kingdom and Brazil have deferred tax
assets of $14 million (December 31, 2013 – $6 million) related to non-capital losses which do not expire. The holding
entities, their U.S. subsidiaries, and foreign subsidiaries have deferred tax assets which have not been recognized of $804
million (December 31, 2013 – $473 million) related to net operating losses, the majority of which have no
expiry.



The major components
of income tax expense include the following:



|(US$ Millions) Year ended Dec. 31, |  | 2014 |       |  | 2013 |   |     | 2012 | 
|---------------------------------- |  | ---- | ----- |  | ---- | - | --- | ---- | 
|Current income tax expense         |  | $    | 26    |  |      | $ | 14  |      | 
|Deferred income tax expense        |  |      | 1,150 |  |      |   | 487 |      | 
|Income tax expense                 |  | $    | 1,176 |  |      | $ | 501 |      | 



The
increase in income tax expense for the year ended December 31, 2014 compared to the prior year ended December 31, 2013 primarily
relates to an increase in income due to fair value gains recognized during the period, an increase resulting from a change in
legislation (which affects the rate at which some of the partnership’s temporary differences will be taxed), and an increase
in deferred taxes relating to transactions undertaken in connection with the purchase of additional interests in BPO.



|(US$ Millions, except where noted) Year ended Dec. 31,       |  | 2014 |    |   | 2013 |  |    | 2012 | 
|------------------------------------------------------------ |  | ---- | -- | - | ---- |  | -- | ---- | 
|Statutory income tax rate                                    |  |      | 26 | % |      |  | 29 | %    | 
|Increase (decrease) in rate resulting from:                  |  |      |    |   |      |  |    |      | 
|Portion of income not subject to tax                         |  |      | ―  |   |      |  | (3 | )    | 
|International operations subject to different tax rates      |  |      | (7 | ) |      |  | (5 | )    | 
|Non-controlling interests in income of flow-through entities |  |      | (4 | ) |      |  | (6 | )    | 
|Change in basis of accounting of investments in associates   |  |      | ―  |   |      |  | 6  |      | 
|Change in legislation                                        |  |      | 4  |   |      |  | ―  |      | 
|Other                                                        |  |      | 2  |   |      |  | 1  |      | 
|Effective income tax rate                                    |  |      | 21 | % |      |  | 22 | %    | 



As
the partnership is not subject to tax, the 2014 analysis used the applicable Canadian blended Federal and Provincial tax rate
as the statutory income tax rate. In 2013, the analysis used a blended statutory rate for jurisdictions where the holding entities
and any direct or indirect corporate subsidiaries of such holding entities operate. In 2012, the analysis used the applicable
Canadian blended Federal and Provincial tax rate of Brookfield Asset Management as the statutory income tax rate since the information
for periods prior to the Spin-off is presented in accordance with the continuity of interests.



NOTE
20.	aCCOUNTS PAYABLE AND OTHER LIABILITIES

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



|(US$ Millions)                               |  | Dec. 31, 2014 |       |  | Dec. 31, 2013 |  
|-------------------------------------------- |  | ------------- | ----- |  | ------------- | -
|Accounts payable and accrued liabilities     |  | $             | 1,592 |  |               | $
|Other liabilities                            |  |               | 161   |  |               |  
|Total accounts payable and other liabilities |  | $             | 1,753 |  |               | $



Included
in accounts payable and other liabilities are derivative liabilities with a carrying amount of $161 million at December 31, 2014
(December 31, 2013 – $128 million).



NOTE 21.	eQUITY

The
partnership’s capital structure is comprised of five classes of partnership units: GP
Units and LP Units, Redeemable/Exchangeable Partnership Units, Special LP Units, and Exchange LP Units. Prior to the Spin-off,
equity otherwise not attributable to interests of others in operating subsidiaries and properties had been allocated to Brookfield
Asset Management.



| | 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, equity enhancement distributions and incentive distributions from the operating partnership.
The managing general partner of BPY is Brookfield Property Partners Limited (the “general partner”), a wholly-owned
subsidiary of Brookfield Asset Management.



F-41







LP
Units entitle the holder to their proportionate share of distributions and are listed and publicly traded on the NYSE 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)                                                                       |  | Dec. 31, 2014             |     |  | Dec. 31,2013              | 
|Outstanding, beginning of year                                                             |  |                           | 139 |  |                           | 
|Issued on Spin-off                                                                         |  |                           | ―   |  |                           | 
|Issued on November 1, 2013 for the acquisition of incremental interest in GGP              |  |                           | ―   |  |                           | 
|Issued on March 20, April 1, and June 9 2014 for the acquisition of incremental BPO shares |  |                           | ―   |  |                           | 
|Exchange LP Units exchanged                                                                |  |                           | ―   |  |                           | 
|Distribution Reinvestment Program                                                          |  |                           | ―   |  |                           | 
|Repurchases of LP Units                                                                    |  |                           |     |  |                           | 
|Outstanding, end of year                                                                   |  |                           | 139 |  |                           | 



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



Redeemable/Exchangeable
Partnership Units

The
Redeemable/Exchangeable Partnership Units are non-voting limited partnership interests in the operating partnership and have the
same economic attributes in all respects as the LP Units. Beginning on April 15, 2015, the Redeemable/Exchangeable Partnership
Units may, at the option of the holder, be redeemed in whole or in part, for cash in an amount equal to the market value of one
of the LP Units multiplied by the number of units to be redeemed (subject to certain adjustments). This right is subject to the
partnership’s right, at its sole discretion, to elect to acquire any unit presented for redemption in exchange for one LP
Unit (subject to certain customary adjustments). If the partnership elects not to exchange the Redeemable/Exchangeable Partnership
Units for LP Units, the Redeemable/Exchangeable Partnership Units are required to be redeemed for cash. The Redeemable/Exchangeable
Partnership Units provide the holder the direct economic benefits and exposures to the underlying performance of the partnership
and accordingly to the variability of the distributions of the operating partnership, whereas the partnership’s unitholders
have indirect access to the economic benefits and exposures of the operating partnership through direct ownership interest in
the partnership which owns a direct interest in the managing general partner units of the operating partnership.



The following table
presents changes to the Redeemable/Exchangeable Partnership Units from the beginning of the year:



|                                                                               |  | Redeemable/Exchangeable Partnership Units |        
|------------------------------------------------------------------------------ |  | ----------------------------------------- | -------
|(Thousands of units)                                                           |  | Dec. 31, 2014                             |        
|Outstanding, beginning of year                                                 |  |                                           | 432,649
|Issued on Spin-off                                                             |  |                                           | ―      
|Issued on November 15, 2013 for the acquisition of incremental interest in GGP |  |                                           | ―      
|Outstanding, end of year                                                       |  |                                           | 432,649



Special limited
partnership units

Prior
to August 8, 2013, Property Special LP held 1% of the general partner units of the operating partnership and as part of
the reorganization effected on August 8, 2013, these units were converted into 1% Special LP Units. This reorganization was
done in order to simplify the partnership’s governance structure and to more clearly delineate the
partnership’s governance rights in respect of the operating partnership. Property Special LP is entitled to
receive equity enhancement distributions and incentive distributions from the Property Partnership as a result of its
ownership of the Special LP Units.



There
were 4,759,997 Special LP Units outstanding at December 31, 2014 and 2013.



| | c) | Limited
                                         partnership units of Brookfield Office Properties Exchange LP
| | -- | --------------------------------------------------------------------------------------------------------------

Exchange
LP Units were issued in March, April and June 2014 to certain Canadian holders of common shares of BPO who elected to receive
such units for BPO common shares tendered in the Offer or the Arrangement by such shareholders. 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 on the seventh anniversary of the completion of the
Arrangement, 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.



F-42







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)                                                                       |  | Dec. 31, 2014                                                          |        
|Outstanding, beginning of year                                                             |  |                                                                        | ―      
|Issued on March 20, April 1, and June 9 2014 for the acquisition of incremental BPO shares |  |                                                                        | 48,126 
|Exchange LP Units exchanged (1)                                                            |  |                                                                        | (27,011
|Outstanding, end of year                                                                   |  |                                                                        | 21,115 

| | (1) | Approximately
                                         27 million Exchange LP Units issued for the acquisition of incremental BPO shares are
                                         held by an indirect subsidiary of the partnership.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | d) | Distributions
| | -- | -------------

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





|(US$ Millions, except per unit information) Year ended Dec. 31, |  | 2014 |      |  | 2013(1) |  
|--------------------------------------------------------------- |  | ---- | ---- |  | ------- | -
|General partner                                                 |  | $    | ―    |  |         | $
|Limited partners                                                |  |      | 203  |  |         |  
|Holders of:                                                     |  |      |      |  |         |  
|Redeemable/exchangeable partnership units                       |  |      | 432  |  |         |  
|Special limited partnership units                               |  |      | 5    |  |         |  
|Limited partnership units of Exchange LP                        |  |      | 23   |  |         |  
|Total distributions                                             |  |      | 663  |  |         |  
|Per unit(2)                                                     |  | $    | 1.00 |  |         | $



| | (1) | For
                                         the period from April 15, 2013, the date of the Spin-off, to December 31, 2013.
| | --- | ----------------------------------------------------------------------------------------------------------------------------

| | (2) | Per
                                         unit outstanding on the record date for each.
| | --- | ------------------------------------------------------------------------------------------



| | e) | Earnings
                                         per unit
| | -- | ----------------------------------------------------------

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



|(US$ Millions, except per unit information) Year ended Dec. 31, |  | 2014 |       |  | 2013(1) |  
|--------------------------------------------------------------- |  | ---- | ----- |  | ------- | -
|Net income attributable to limited partners – basic             |  | $    | 1,154 |  |         | $
|Dilutive effect of conversion of convertible preference shares  |  |      | 159   |  |         |  
|Net income attributable to limited partners – diluted           |  | $    | 1,313 |  |         | $
|                                                                |  |      |       |  |         |  
|Weighted average units outstanding – basic                      |  |      | 206.6 |  |         |  
|Dilutive effect of conversion of convertible preference shares  |  |      | 40.8  |  |         |  
|Weighted average units outstanding - diluted                    |  |      | 247.4 |  |         |  

| | (1) | Presented
                                         effective for the period from the Spin-off on April 15, 2013, as this is the date of
                                         legal entitlement of earnings to the holders of the LP Units (see Note 3, The Spin-Off)
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTE
22.	NON-CONTROLLING INTERESTS

Non-controlling interests
consists of the following:



|(US$ Millions)                                                     |  | Dec. 31, 2014 |        |  | Dec. 31, 2013 |  
|------------------------------------------------------------------ |  | ------------- | ------ |  | ------------- | -
|Redeemable/exchangeable and special limited partnership units      |  | $             | 13,147 |  |               | $
|Limited partnership units of Exchange LP                           |  |               | 470    |  |               |  
|Interest of others in operating subsidiaries and properties:       |  |               |        |  |               |  
|Preferred shares held by Brookfield Asset Management               |  |               | 25     |  |               |  
|Preferred equity of subsidiaries                                   |  |               | 1,649  |  |               |  
|Non-controlling interests in subsidiaries and properties           |  |               | 6,417  |  |               |  
|Total interests of others in operating subsidiaries and properties |  |               | 8,091  |  |               |  
|Total non-controlling interests                                    |  | $             | 21,708 |  |               | $



NOTE
23.	Commercial property revenue

The
components of commercial property revenue are as follows:



|(US$ Millions) Year ended Dec. 31, |  | 2014 |       |  | 2013 |   |       | 2012 | 
|---------------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- | 
|Base rent                          |  | $    | 2,700 |  |      | $ | 2,573 |      | 
|Straight-line rent                 |  |      | 106   |  |      |   | 107   |      | 
|Lease termination                  |  |      | 20    |  |      |   | 5     |      | 
|Other                              |  |      | 212   |  |      |   | 225   |      | 
|Total commercial property revenue  |  | $    | 3,038 |  |      | $ | 2,910 |      | 



F-43







NOTE
24.	INVESTMENT AND OTHER REVENUE

The components of
investment and other revenue are as follows:



|(US$ Millions) Year ended Dec. 31, |  | 2014 |     |  | 2013 |   |     | 2012 | 
|---------------------------------- |  | ---- | --- |  | ---- | - | --- | ---- | 
|Fee revenue                        |  | $    | 27  |  |      | $ | 50  |      | 
|Dividend income                    |  |      | 51  |  |      |   | 19  |      | 
|Interest income                    |  |      | 89  |  |      |   | 44  |      | 
|Participating loan interests       |  |      | 50  |  |      |   | 40  |      | 
|Other                              |  |      | 135 |  |      |   | 56  |      | 
|Total investment and other revenue |  | $    | 352 |  |      | $ | 209 |      | 



NOTE
25.	DIRECT COMMERCIAL PROPERTY EXPENSE

The components of
direct commercial property expense are as follows:



|(US$ Millions) Year ended Dec. 31,       |  | 2014 |       |  | 2013 |   |       | 2012 | 
|---------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- | 
|Employee compensation and benefits       |  | $    | 121   |  |      | $ | 98    |      | 
|Property maintenance                     |  |      | 650   |  |      |   | 587   |      | 
|Real estate taxes                        |  |      | 411   |  |      |   | 385   |      | 
|Ground rents                             |  |      | 40    |  |      |   | 33    |      | 
|Other                                    |  |      | 76    |  |      |   | 101   |      | 
|Total direct commercial property expense |  | $    | 1,298 |  |      | $ | 1,204 |      | 



The
partnership leases properties under operating leases generally with lease terms of between 1 and 15 years, with options to extend
up to a further 5 years. Minimum rental commitments under non-cancelable tenant operating leases are as follows:



|(US$ Millions)    |  | Dec. 31, 2014 |        |  | Dec. 31, 2013 |  
|----------------- |  | ------------- | ------ |  | ------------- | -
|Less than 1 year  |  | $             | 2,133  |  |               | $
|1-5 years         |  |               | 8,036  |  |               |  
|More than 5 years |  |               | 11,440 |  |               |  
|Total             |  | $             | 21,609 |  |               | $



Direct
commercial property expense for the year ended December 31, 2014 includes $35 million (2013 - $27 million) representing rent expenses
associated with operating leases for land on which certain of the partnership’s operating properties are situated. The partnership
does not have an option to purchase the leased land at the expiry of the lease periods. Future minimum lease payments under these
arrangements are as follows:



|(US$ Millions)    |  | Dec. 31, 2014 |       |  | Dec. 31, 2013 |  
|----------------- |  | ------------- | ----- |  | ------------- | -
|Less than 1 year  |  | $             | 31    |  |               | $
|1-5 years         |  |               | 129   |  |               |  
|More than 5 years |  |               | 1,576 |  |               |  
|Total             |  | $             | 1,736 |  |               | $



NOTE
26.	DIRECT HOSPITALITY EXPENSE

The components of
direct hospitality expense are as follows:



|(US$ Millions) Year ended Dec. 31,            |  | 2014 |     |  | 2013 |   |     | 2012 | 
|--------------------------------------------- |  | ---- | --- |  | ---- | - | --- | ---- | 
|Employee compensation and benefits            |  | $    | 266 |  |      | $ | 357 |      | 
|Marketing and advertising                     |  |      | 42  |  |      |   | 48  |      | 
|Cost of food, beverage, and retail goods sold |  |      | 113 |  |      |   | 80  |      | 
|Maintenance and utilities                     |  |      | 79  |  |      |   | 96  |      | 
|Other                                         |  |      | 291 |  |      |   | 376 |      | 
|Total direct hospitality expense              |  | $    | 791 |  |      | $ | 957 |      | 



NOTE
27.	depreciation and amortization

The components of
depreciation and amortization expense are as follows:



|(US$ Millions) Year ended Dec. 31,                      |  | 2014 |     |  | 2013 |   |     | 2012 | 
|------------------------------------------------------- |  | ---- | --- |  | ---- | - | --- | ---- | 
|Depreciation and amortization of real estate assets     |  | $    | 112 |  |      | $ | 124 |      | 
|Depreciation and amortization of non-real estate assets |  |      | 36  |  |      |   | 38  |      | 
|Total depreciation and amortization                     |  | $    | 148 |  |      | $ | 162 |      | 



F-44







NOTE
28.	administration and other expense

The components of
administration and other expense are as follows:



|(US$ Millions) Year ended Dec. 31,     |  | 2014 |     |  | 2013 |   |     | 2012 | 
|-------------------------------------- |  | ---- | --- |  | ---- | - | --- | ---- | 
|Employee compensation and benefits     |  | $    | 133 |  |      | $ | 133 |      | 
|Management fees                        |  |      | 100 |  |      |   | 36  |      | 
|Other                                  |  |      | 171 |  |      |   | 148 |      | 
|Total administration and other expense |  | $    | 404 |  |      | $ | 317 |      | 



NOTE
29.	fair value gains, net

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



|(US$ Millions) Year ended Dec. 31, |  | 2014 |       |  | 2013 |   |     | 2012 | 
|---------------------------------- |  | ---- | ----- |  | ---- | - | --- | ---- | 
|Investment properties              |  | $    | 3,070 |  |      | $ | 948 |      | 
|Financial instruments and other    |  |      | 686   |  |      |   | (78 | )    | 
|Total fair value gains, net        |  | $    | 3,756 |  |      | $ | 870 |      | 



NOTE
30.	Unit-based compensation

Immediately
following the Arrangement, options and other unit-based compensation awards outstanding at BPO as of the acquisition date were
redeemed for cash and/or exchanged for new unit-based compensation plans linked to interests in the partnership. In 2014, the
partnership has incurred $23 million (2013 - $9 million; 2012 - $11 million) of expense in connection with its unit-based compensation
plans.



| | a) | BPY
                                         Unit Option Plan
| | -- | -------------------------------------------------------------

Awards
under the BPY Unit Option 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 and generally equal to the market
price of an LP Unit on the NYSE on the last trading day preceding the grant date. Upon exercise of a vested BPY Award, the participant
is entitled to receive 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. 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.



As
of December 31, 2014, the total number of BPY Awards outstanding was 21,946,145 with a weighted average exercise price of $19.74.



During the year ended
December 31, 2014, 212,800 options were exercised and 87,680 options were forfeited.



The new unit-based
compensation plans established immediately following the Arrangement had the following consequences for BPO option holders:



| | i. | For
                                         holders of vested in-the-money BPO options: Each participant’s vested in-the-money
                                         BPO options were redeemed for a total cash payment of $92 million, which is equal to
                                         the in-the-money value of such options on the transaction closing date of June 9, 2014
                                         (the “Closing Date”);
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ii. | For
                                         holders of unvested in-the-money BPO options: Each participant was granted BPY Awards
                                         equivalent in number to the outstanding BPO options held prior to the Closing Date. The
                                         grant price was equal to the closing price of a BPY Unit on the NYSE on the last trading
                                         day prior to the Closing Date less the in-the-money amount of the exchanged BPO Options
                                         on the Closing Date. These BPY Awards have expiry dates and vesting terms consistent
                                         with the unvested BPO options exchanged;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iii. | For
                                         holders of out-of-the money BPO options: Each participant was granted BPY Awards equivalent
                                         in number to the outstanding out-of-the money BPO options (vested and unvested) held
                                         prior to the Closing Date. The exercise price was equal to the closing price of a BPY
                                         Unit on the NYSE on the last trading day prior to the Closing Date. These BPY Awards
                                         have a 10-year term and a 5-year vesting period;
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iv. | For
                                         participants receiving 2013 compensation: New unit-based compensation awards were granted
                                         on the Closing Date to participants related to 2013 performance. These BPY Awards have
                                         an exercise price equal to the closing price of an LP Unit on the NYSE on the last trading
                                         day prior to the Closing Date and a 10-year term and 5-year vesting period. Participants
                                         were given the option to receive a portion of their 2013 compensation in restricted LP
                                         Units (as discussed below).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-45







The partnership estimated
the fair value of the BPY Awards granted during the year using the Black-Scholes valuation model. The following assumptions were
utilized:



|                                                   |  |          |  | Dec. 31, 2014 |      
|-------------------------------------------------- |  | -------- |  | ------------- | -----
|LP Unit price on the date of measurement           |  | US$      |  |               | 22.87
|Weighted average fair value per option             |  | US$      |  |               | 3.28 
|Average term to exercise                           |  | In Years |  |               | 6.42 
|Unit price volatility                              |  | %        |  |               | 30   
|Liquidity discount                                 |  | %        |  |               | 25   
|Weighted average of expected annual dividend yield |  | %        |  |               | 6.5  
|Risk-free rate                                     |  | %        |  |               | 1.85 



The change in the
number of options outstanding under the BPY Awards for the year ended December 31, 2014 is as follows:



|                                 |  | Year ended Dec. 31, 2014 |           
|-------------------------------- |  | ------------------------ | ----------
|                                 |  | Number of
options        |           
|Outstanding, beginning of period |  |                          | ―         
|Exchanged into BPY Awards        |  |                          | 5,664,980 
|Granted                          |  |                          | 16,581,645
|Exercised                        |  |                          | (212,800  
|Expired/forfeited                |  |                          | (87,680   
|Outstanding, end of period       |  |                          | 21,946,145
|Exercisable, end of period       |  |                          | 2,370,370 



The following table
sets out details of options issued and outstanding at December 31, 2014 under the BPY Awards by expiry date:



|            |  | Dec. 31, 2014      |           
|----------- |  | ------------------ | ----------
|Expiry date |  | Number of 
options |           
|2015        |  |                    | 251,200   
|2020        |  |                    | 473,600   
|2021        |  |                    | 666,400   
|2022        |  |                    | 2,145,700 
|2023        |  |                    | 1,894,080 
|2024        |  |                    | 16,515,165
|Total       |  |                    | 21,946,145



| | b) | Restricted
                                         BPY LP Unit Plan
| | -- | --------------------------------------------------------------------

The
Restricted BPY LP Unit Plan provides for awards to participants of LP Units purchased on the NYSE (“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 December 31, 2014, the total number of Restricted Units granted was 485,698 with a weighted average exercise price of $20.81.



| | 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 NYSE.



As
of December 31, 2014, the total number of Canadian Restricted Units granted was 19,410 with a weighted average exercise price
of C$22.14.





| | d) | Deferred Share Unit Plan
| | -- | ------------------------

In
addition, BPO has a deferred share unit plan, the terms of which were amended in connection with the Arrangement to substitute
LP Units for BPO common shares subject to such deferred shares. At December 31, 2014, BPO has 1,421,139 deferred share units (2013
– 1,426,460) outstanding and vested.



F-46







NOTE
31.	other comprehensive (LOSS) income

Other comprehensive
(loss) income consists of the following:





|(US$ Millions) Year ended Dec. 31,                                                                                                                              |  | 2014 |      |   | 2013 |   |      | 2012 | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---- | - | ---- | - | ---- | ---- | 
|Items that may be reclassified to net income:                                                                                                                   |  |      |      |   |      |   |      |      | 
|Foreign currency translation                                                                                                                                    |  |      |      |   |      |   |      |      | 
|Unrealized foreign currency translation (losses) gains in respect of foreign operations                                                                         |  | $    | (834 | ) |      | $ | (854 | )    | 
|Gains (losses) on hedges of net investments in foreign operations, net of income taxes of $51 million (2013 - $3 million; 2012 - $(1) million)(1)               |  |      | 317  |   |      |   | 35   |      | 
|                                                                                                                                                                |  |      | (517 | ) |      |   | (819 | )    | 
|Cash flow hedges                                                                                                                                                |  |      |      |   |      |   |      |      | 
|(Losses) gains  on derivatives designated as cash flow hedges, net  of income taxes of $(57) million (2013 - $45 million; 2012 - $(28) million)                 |  |      | (162 | ) |      |   | 148  |      | 
|Reclassification of gains on derivatives designated as cash flow hedges, net of income taxes of nil (2013 - $3 million; 2012 - $3 million)                      |  |      | ―    |   |      |   | 11   |      | 
|                                                                                                                                                                |  |      | (162 | ) |      |   | 159  |      | 
|Available-for-sale securities                                                                                                                                   |  |      |      |   |      |   |      |      | 
|Net change in unrealized gains (losses) on available-for-sale  securities, net of income taxes of nil (2013 - nil; 2012 - nil)                                  |  |      | 4    |   |      |   | ―    |      | 
|                                                                                                                                                                |  |      | 4    |   |      |   | ―    |      | 
|Equity accounted investments                                                                                                                                    |  |      |      |   |      |   |      |      | 
|Share of unrealized foreign currency translations (losses) gains in respect of foreign operations, net of income taxes of $nil (2013 - $11 million; 2012 - nil) |  |      | (84  | ) |      |   | 14   |      | 
|                                                                                                                                                                |  |      | (84  | ) |      |   | 14   |      | 
|Items that will not be reclassified to net income:                                                                                                              |  |      |      |   |      |   |      |      | 
|Revaluation surplus, net of income taxes of $1 million (2013 – nil; 2012 – nil)                                                                                 |  |      | 312  |   |      |   | 183  |      | 
|                                                                                                                                                                |  |      | 312  |   |      |   | 183  |      | 
|Total other comprehensive (loss) income                                                                                                                         |  | $    | (447 | ) |      | $ | (463 | )    | 



| | (1) | Unrealized
                                         gains (losses) on a number of hedges of net investments in foreign operations are with
                                         a related party.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTE
32.	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. A specific litigation, with a judgment amount of $51 million (A$63 million),
was being pursued against one of our subsidiaries related to security on a defaulted loan. The partnership settled this specific
litigation during the current period and the settlement was in line with the provision recorded of $22 million (A$27 million).



At
December 31, 2014, the partnership has commitments totaling approximately $337 million for the development of Manhattan West in
Midtown New York, approximately C$454 million for the development of Bay Adelaide East in Toronto and Brookfield Place East Tower
in Calgary, approximately A$154 million for the development of Brookfield Place Perth Tower 2 and approximately £411 million
for the development of London Wall Place and Principal Place Commercial in London.



During
2013, Brookfield Asset Management announced the final close on the $4.4 billion Brookfield Strategic Real Estate Partners
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 December 31, 2014, there remained approximately $200
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.



F-47







NOTE
33.	LIQUIDITY AND CAPITAL MANAGEMENT

The
capital of the partnership’s business consists of debt obligations, capital securities, preferred stock and equity. The
partnership’s objective when managing this capital is to maintain anappropriate balance between holding a sufficient
amount of equity capital to support its operations and reducing its weighted average cost of capital to improve its return on
equity. As at December 31, 2014, capital totaled $59 billion (December 31, 2013 – $49 billion).



The
partnership attempts to maintain a level of liquidity to ensure it is able to participate in investment opportunities as they
arise and to better withstand sudden adverse changes in economic circumstances. The partnership’s primary sources of liquidity
include cash, undrawn committed credit facilities, construction facilities, cash flow from operating activities and access to
public and private capital markets. In addition, the partnership structures its affairs to facilitate monetization of longer-duration
assets through financings and co-investor participations.



The
partnership seeks to increase income from its existing properties by maintaining quality standards for its properties that promote
high occupancy rates and support increases in rental rates while reducing tenant turnover and related costs, and by controlling
operating expenses. Consequently, the partnership believes its revenue, along with proceeds from financing activities and divestitures,
will continue to provide the necessary funds to cover its short-term liquidity needs. However, material changes in the factors
described above may adversely affect the partnership’s net cash flows.



The
partnership’s principal liquidity needs for the current year and for periods beyond include:



| | · | Recurring
                                         expenses;
| | - | ------------------------------------------------------------

| | · | Debt
                                         service requirements;
| | - | -------------------------------------------------------------------

| | · | Distributions
                                         to unitholders;
| | - | ----------------------------------------------------------------------

| | · | Capital
                                         expenditures deemed mandatory, including tenant improvements;
| | - | --------------------------------------------------------------------------------------------------------------

| | · | Development
                                         costs not covered under construction loans;
| | - | ------------------------------------------------------------------------------------------------

| | · | Investing
                                         activities which could include:
| | - | ----------------------------------------------------------------------------------

| | o | Discretionary
                                         capital expenditures;
| | - | ----------------------------------------------------------------------------

| | o | Property
                                         acquisitions;
| | - | ---------------------------------------------------------------

| | o | Future
                                         development; and
| | - | ----------------------------------------------------------------

| | o | Repurchase
                                         of the partnership’s units.
| | - | -------------------------------------------------------------------------------



Most
of the partnership’s borrowings are in the form of long-term asset-specific financings with recourse only to the specific
assets. Limiting recourse to specific assets ensures that poor performance within one area does not compromise the partnership’s
ability to finance the balance of its operations.



In
addition, the partnership may, from time to time, issue equity instruments, including, but not limited to, LP Units, Redeemable/Exchangeable
Partnership Units and Exchange LP Units, to the public and preferred equity in private placements in certain circumstances to
provide financing for significant transactions, such as the acquisition of the remaining common shares of BPO and the offer to
acquire the outstanding ordinary shares of Songbird Estates plc (“Songbird”).



The
partnership’s operating subsidiaries are subject to limited covenants in respect of their corporate debt and are in full
compliance with all such covenants at December 31, 2014. The partnership’s operating subsidiaries are also in compliance
with all covenants and other capital requirements related to regulatory or contractual obligations of material consequence to
the partnership.



The
partnership’s strategy is to satisfy its liquidity needs in respect of the partnership using the partnership’s cash
on hand, cash flows generated from operating activities and provided by financing activities, as well as proceeds from asset sales.
The operating subsidiaries of the partnership also generate liquidity by accessing capital markets on an opportunistic basis.



The
partnership’s principal liquidity needs for periods beyond the next year are for scheduled debt
maturities, distributions, recurring and non-recurring capital expenditures, development costs and potential property
acquisitions. The partnership plans to meet these needs with one or more of: cash flows from operations; construction loans;
creation of new funds; proceeds from sales of assets; proceeds from sale of non-controlling interests in subsidiaries and properties;
and credit facilities and refinancing opportunities.



F-48







The
table below present’s the partnership’s contractual obligations as of December 31, 2014:



|(US$ Millions)              |  |       |        |  | Payments due by period | 
|--------------------------- |  | ----- | ------ |  | ---------------------- | 
|Dec. 31, 2014               |  | Total |        |  | < 1 Year               | 
|Debt obligations:           |  |       |        |  |                        | 
|Property specific mortgages |  | $     | 24,335 |  |                        | 
|Other debt of subsidiaries  |  |       | 27     |  |                        | 
|Corporate borrowings        |  |       | 3,809  |  |                        | 
|Capital securities          |  |       | 4,011  |  |                        | 
|Lease obligations           |  |       | 1,736  |  |                        | 
|Commitments                 |  |       | 1,464  |  |                        | 
|                            |  |       |        |  |                        | 
|Interest expense:           |  |       |        |  |                        | 
|Long term debt              |  | $     | 5,123  |  |                        | 
|Capital securities          |  |       | 1,533  |  |                        | 
|Interest rate swaps         |  |       | 9      |  |                        | 

| | (1) | Represents
                                         aggregate interest expense expected to be paid over the term of the obligations. Variable
                                         interest rate payments have been calculated based on current rates.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTE
34.	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, and Euro, 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; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | interest rate caps to hedge
interest rate risk on certain variable rate debt.
| | - | -----------------------------------------------------------------------------



The
partnership also designates Canadian Dollar financial liabilities of certain of its operating entities as hedges of its net investments
in its Canadian operations.



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 December 31, 2014 and
2013:



|(US$ Millions) |  | Hedging item                                     |  | Notional |       |  | Rates |                 | Maturity
    dates |                           | Fair
    value |  
|-------------- |  | ------------------------------------------------ |  | -------- | ----- |  | ----- | --------------- | ------------------ | ------------------------- | -------------- | -
|Dec. 31, 2014  |  | Interest rate caps
    of US$ LIBOR debt         |  | $        | 3,174 |  |       | 2.5% - 5.8%     |                    | Jan. 2015
    - Oct. 2018 |                | $
|               |  | Interest rate swaps of US$ LIBOR
    debt        |  |          | 483   |  |       | 0.6% - 2.2%     |                    | Dec. 2015 - Nov. 2020     |                |  
|               |  | Interest rate swaps of £
    LIBOR debt          |  |          | 204   |  |       | 1.1%            |                    | Sep. 2017                 |                |  
|               |  | Interest rate swaps of A$ BBSW/BBSY
    debt     |  |          | 548   |  |       | 3.5% - 5.9%     |                    | Jan. 2016 - Jul. 2017     |                |  
|               |  | Interest rate swaps of €
    EURIBOR debt        |  |          | 150   |  |       | 0.3% - 1.4%     |                    | Oct. 2017 - Feb. 2021     |                |  
|               |  | Forecast
    fixed rate debt interest rate swaps |  |          | 1,995 |  |       | 2.3%
    - 5.1% |                    | May
    2025 - Jun. 2029  |                |  
|Dec. 31, 2013  |  | Interest rate swaps of fixed US$ debt            |  | $        | 1,505 |  |       | 2.3% - 4.7%     |                    | Jun. 2024 - Jun. 2026     |                | $
|               |  | Interest rate swaps of fixed C$ debt             |  |          | 47    |  |       | 2.8%            |                    | Dec. 2024                 |                |  
|               |  | Interest rate swaps of US$ LIBOR debt            |  |          | 784   |  |       | 0.6% - 2.2%     |                    | May 2014 - Nov. 2020      |                |  
|               |  | Interest rate caps of US$ LIBOR debt             |  |          | 2,246 |  |       | 1.8% - 5.8%     |                    | Jan. 2014 - Oct. 2018     |                |  
|               |  | Interest rate swaps of £ LIBOR debt              |  |          | 222   |  |       | 1.1%            |                    | Sep. 2017                 |                |  
|               |  | Interest
    rate swaps of A$ BBSW/BBSY debt     |  |          | 936   |  |       | 3.5% - 5.9%     |                    | Jan. 2014
    - Jul. 2017 |                |  



For
the year ended December 31, 2014 and 2013, the amount of hedge ineffectiveness recorded in interest expense in connection with
the partnership’s interest rate hedging activities was not significant.



Foreign
Currency Hedging

The
partnership has derivatives designated as net investment hedges of its investments in foreign subsidiaries. As of December 31,
2014, the partnership had hedged a notional amount of £1,170 million (December 31, 2013 – £770 million) at rates
between £0.59/$ and £0.65/$ using foreign currency forward contracts maturing between April 2015 and January 2016.
In addition, as of December 31, 2014, the partnership had hedged a notional amount of €353 million (December 31, 2013 –
€550 million) at rates between €0.75/$ and €0.80/$ using foreign currency forward contracts maturing between January
2015 and June 2016. The partnership had also hedged, as of December 31, 2014, a notional amount of A$1,750 million (December 31,
2013 – A$535 million) at rates between A$1.10/$ and A$1.27/$ maturing between April 2015 and March 2016.



The
fair value of the partnership’s outstanding foreign currency forwards designated as net investment hedges as of December
31, 2014 is a gain of $93 million (December 31, 2013 – loss of $27 million).



F-49









In
addition, as of December 31, 2014, the partnership had designated C$900 million (December 31, 2013 – C$900 million) of Canadian
Dollar financial liabilities as hedges against the partnership’s net investment in Canadian operations.



Other
Derivatives

The
following table provides a detail of the partnership’s other derivatives that have been entered into to manage financial
risks as of December 31, 2014 and December 31, 2013:





|(US$ millions) |  | Derivative type      |  | Notional |       |  | Maturity dates |           | Rates |               | Fair value
    (gain)/loss |   |   | Classification of gain/loss
|-------------- |  | -------------------- |  | -------- | ----- |  | -------------- | --------- | ----- | ------------- | -------------------------- | - | - | ---------------------------
|Dec. 31, 2014  |  | Interest rate caps   |  | $        | 382   |  |                | Mar. 2016 |       | 3.65%         |                            | $ | ― |                            
|               |  | Interest rate caps   |  |          | 350   |  |                | Jul. 2017 |       | 3.25%         |                            |   | ― |                            
|               |  | Interest rate caps   |  |          | 51    |  |                | Sep. 2015 |       | 2.81% - 3.01% |                            |   | ― |                            
|               |  | Interest rate caps   |  |          | 13    |  |                | Oct. 2015 |       | 3.00%         |                            |   | ― |                            
|               |  | Interest rate caps   |  |          | 34    |  |                | Jan. 2016 |       | 3.00%         |                            |   | ― |                            
|               |  | Interest rate caps   |  |          | 75    |  |                | Feb. 2016 |       | 2.94%         |                            |   | ― |                            
|               |  | Interest rate caps   |  |          | 74    |  |                | Mar. 2016 |       | 2.94%         |                            |   | ― |                            
|               |  | Interest rate caps   |  |          | 68    |  |                | Jul. 2015 |       | 3.00%         |                            |   | ― |                            
|Dec. 31, 2013  |  | Total return swap(1) |  | $        | 1     |  |                | ―         |       | ―             |                            | $ |   | (5)                        
|               |  | Interest rate caps   |  |          | 400   |  |                | Mar. 2016 |       | 3.65%         |                            |   | ― |                            
|               |  | Interest rate caps   |  |          | 882   |  |                | Apr. 2014 |       | 2.50%         |                            |   | ― |                            
|               |  | Interest rate caps   |  |          | 2,270 |  |                | Apr. 2014 |       | 4.50%         |                            |   | ― |                            



| | (1) | Relates
                                         to the total return swap on BPO’s shares in connection with its deferred share
                                         unit plans which was settled for C$1.4 million during the second quarter of 2014. The
                                         total return swap is presented at fair value.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
other derivatives have not been designated as hedges for accounting purposes.



| | b) | Measurement
                                         and classification of financial instruments
| | -- | ------------------------------------------------------------------------------------------------

Fair
value is the amount that willing parties would accept to exchange a financial instrument based on the current market for instruments
with the same risk, principal and remaining maturity. The fair value of interest bearing financial assets and liabilities is determined
by discounting the contractual principal and interest payments at estimated current market interest rates for the instrument.
Current market rates are determined by reference to current benchmark rates for a similar term and current credit spreads for
debt with similar terms and risk.



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 consolidated financial statements:



|                                            |  |                       |  |                       |  | Dec.
    31, 2014  |        |  | Dec.
    31, 2013 |  
|------------------------------------------- |  | --------------------- |  | --------------------- |  | ------------------ | ------ |  | ----------------- | -
|(US$ Millions)                              |  | Classification        |  | Measurement
    basis |  | Carrying
    value |        |  | Fair
    value    |  
|Financial assets                            |  |                       |  |                       |  |                    |        |  |                   |  
|Participating loan interests                |  | Loans and receivables |  | Amortized cost        |  | $                  | 609    |  |                   | $
|Loans and notes receivable                  |  | Loans and receivables |  | Amortized cost        |  |                    | 326    |  |                   |  
|Other non-current assets                    |  |                       |  |                       |  |                    |        |  |                   |  
|Securities designated as
    FVTPL          |  | FVTPL                 |  | Fair Value            |  |                    | 1,929  |  |                   |  
|Derivative assets                           |  | FVTPL                 |  | Fair Value            |  |                    | 1,424  |  |                   |  
|Securities designated as
    AFS            |  | AFS                   |  | Fair Value            |  |                    | 143    |  |                   |  
|Other receivables                           |  | Loans and receivables |  | Amortized cost        |  |                    | ―      |  |                   |  
|Accounts receivable and other               |  |                       |  |                       |  |                    |        |  |                   |  
|Other receivables                           |  | Loans and receivables |  | Amortized cost        |  |                    | 3,125  |  |                   |  
|Cash and cash equivalents                   |  | Loans and receivables |  | Amortized cost        |  |                    | 1,282  |  |                   |  
|Total financial
    assets                  |  |                       |  |                       |  | $                  | 8,838  |  |                   | $
|                                            |  |                       |  |                       |  |                    |        |  |                   |  
|Financial liabilities                       |  |                       |  |                       |  |                    |        |  |                   |  
|Debt obligations(1)                         |  | Other liabilities     |  | Amortized cost        |  | $                  | 28,171 |  |                   | $
|Capital securities                          |  | Other liabilities     |  | Amortized cost        |  |                    | 4,011  |  |                   |  
|Other non-current liabilities               |  |                       |  |                       |  |                    |        |  |                   |  
|Other
    non-current financial liabilities |  | Other liabilities     |  | Amortized
    cost(2) |  |                    | 646    |  |                   |  
|Accounts
    payable and other liabilities  |  | Other liabilities     |  | Amortized
    cost(3) |  |                    | 1,753  |  |                   |  
|Total financial
    liabilities             |  |                       |  |                       |  | $                  | 34,581 |  |                   | $

| | (1) | Includes
                                         debt obligations associated with assets held for sale in the amount of $1,165 million
                                         (2013 – nil).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Includes
                                         derivative liabilities measured at fair value of approximately $145 million and nil as
                                         of December 31, 2014 and December 31, 2013, respectively.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Includes
                                         derivative liabilities measured at fair value of approximately $161 million and $128
                                         million as of December 31, 2014 and December 31, 2013, respectively.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-50







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, 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.



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



|                                                       |  | Dec.
    31, 2014 |    |  | Dec.
    31, 2013 |  
|------------------------------------------------------ |  | ----------------- | -- |  | ----------------- | -
|(US$ Millions)                                         |  | Level
    1       |    |  | Level
    2       |  
|Financial assets                                       |  |                   |    |  |                   |  
|Participating
    loan interests – embedded derivative |  | $                 | ―  |  |                   | $
|Securities designated as FVTPL                         |  |                   | 18 |  |                   |  
|Securities designated as AFS                           |  |                   | ―  |  |                   |  
|Derivative assets                                      |  |                   | ―  |  |                   |  
|Total financial
    assets                             |  | $                 | 18 |  |                   | $
|                                                       |  |                   |    |  |                   |  
|Financial liabilities                                  |  |                   |    |  |                   |  
|Accounts
    payable and non-current other liabilities |  |                   | ―  |  |                   |  
|Total financial
    liabilities                        |  | $                 | ―  |  |                   | $



There
were no transfers between levels during the year ended December 31, 2014 and 2013. The following table presents the valuation
techniques and inputs of the partnership’s Level 2 assets and liabilities:





|Type of asset/liability            |  | Valuation technique                                                                                                                                                     
|---------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Foreign currency forward contracts |  | Discounted cash flow model - forward exchange rates (from observable forward exchange rates at the end of the reporting period) and discounted at a credit adjusted rate
|Interest rate contracts            |  | Discounted cash flow model - forward interest rates (from observable yield curves) and applicable credit spreads discounted at a credit adjusted rate                   



The table below presents
the valuation techniques and inputs of Level 3 assets:





|Type
    of asset/liability |  | Valuation
    technique(s) |  | Significant
    unobservable input(s)                                                                                                    |  | Relationship
    of unobservable input(s) to fair value                                                                                                                                                
|--------------------------- |  | -------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Investment in common shares |  | Net asset valuation        |  | (a) Forward exchange
        rates (from observable forward exchange rates at the end of the reporting period)
        (b) Discount rate |  | (a) Increased (decreases)
        in the forward exchange rate would increase (decrease) fair value
        (b) Decreases (increases)
        in the discount rate would increase (decrease) fair value
|Warrants                    |  | Black-Scholes model        |  | (a) Volatility                                                                                                                           |  | (a) Increases (decreases) in volatility would increase (decrease)
    fair value                                                                                                                       



The following table
presents the change in the balance of financial assets and financial liabilities classified as Level 3 as of December 31, 2014
and 2013:



|                              |  | Dec. 31, 2014    |       |   | Dec. 31, 2013         |  
|----------------------------- |  | ---------------- | ----- | - | --------------------- | -
|(US$ Millions)                |  | Financial Assets |       |   | Financial Liabilities |  
|Balance, beginning of year    |  | $                | 2,116 |   |                       | $
|Acquisitions                  |  |                  | 526   |   |                       |  
|Dispositions                  |  |                  | (12   | ) |                       |  
|Fair value gains, net and OCI |  |                  | 775   |   |                       |  
|Other                         |  |                  | ―     |   |                       |  
|Balance, end of year          |  | $                | 3,385 |   |                       | $



F-51







| | c) | Market
                                         risk
| | -- | ----------------------------------------------------

Interest rate
risk

The
partnership faces interest rate risk on its variable rate financial assets and liabilities. In addition, there is interest rate
risk associated with the partnership's fixed rate debt due to the expected requirement to refinance such debt in the year of maturity.
The following table outlines the impact on interest expense of a 100 basis point increase or decrease in interest rates on the
partnership's variable rate assets and liabilities and fixed rate debt maturing within one year:



|(US$ Millions)                               |  | Dec. 31, 2014 |     |  | Dec. 31, 2013 |  
|-------------------------------------------- |  | ------------- | --- |  | ------------- | -
|Variable rate property debt                  |  | $             | 156 |  |               | $
|Fixed rate property debt due within one year |  |               | 3   |  |               |  
|Total                                        |  | $             | 159 |  |               | $



The
partnership manages interest rate risk by primarily entering into fixed rate operating property debt and staggering the maturities
of its mortgage portfolio over a 10-year horizon when the market permits. The partnership also makes use of interest rate derivatives
to manage interest rate risk on specific variable rate debts and on anticipated refinancing of fixed rate debt.



Foreign
currency risk

The
partnership is structured such that its foreign operations are primarily conducted by entities with a functional currency which
is the same as the economic environment in which the operations take place. As a result, the net income impact of currency risk
associated with financial instruments is limited as its financial assets and liabilities are generally denominated in the functional
currency of the subsidiary that holds the financial instrument. However, the partnership is exposed to foreign currency risk on
the net assets of its foreign currency denominated operations. The partnership's exposures to foreign currencies and the sensitivity
of net income and other comprehensive income, on a pre-tax basis, to a 10% change in the exchange rates relative to the U.S. dollar
is summarized below:





|                   |  | Dec. 31, 2014                       |      
|------------------ |  | ----------------------------------- | -----
|(Millions)         |  | Equityattributable tounitholders(1) |      
|Canadian Dollar    |  | C$                                  | (223)
|Australian Dollar  |  | A$                                  | 2,668
|British Pound      |  | £                                   | 1,468
|Euro               |  | €                                   | 205  
|Brazilian Real     |  | R$                                  | 1,325
|New Zealand Dollar |  | NZ$                                 | 44   
|Indian Rupee       |  | Rs                                  | 6,104
|Total              |  |                                     |      



| | (1) | As
                                         of December 31, 2014, unitholders are defined as holders of the GP Units, LP Units, Redeemable/Exchangeable
                                         Partnership Units, Special LP Units, and Exchange LP Units.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                  |  | Dec. 31, 2013                         |      
|----------------- |  | ------------------------------------- | -----
|(Millions)        |  | Equity
attributable to
unitholders(1) |      
|Canadian Dollar   |  | C$                                    | 631  
|Australian Dollar |  | A$                                    | 1,716
|British Pound     |  | £                                     | 998  
|Euro              |  | €                                     | 161  
|Brazilian Real    |  | R$                                    | 1,046
|Total             |  |                                       |      

| | (1) | As
                                         of December 31, 2013, unitholders are defined as holders of the GP Units, LP Units, Redeemable/Exchangeable
                                         Partnership Units, Special LP Units, and Exchange LP Units.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                  |  | Dec. 31, 2012                         |      
|----------------- |  | ------------------------------------- | -----
|(Millions)        |  | Equity
attributable to
unitholders(1) |      
|Canadian Dollar   |  | C$                                    | 1,020
|Australian Dollar |  | A$                                    | 2,104
|British Pound     |  | £                                     | 785  
|Euro              |  | €                                     | 62   
|Brazilian Real    |  | R$                                    | 911  
|Total             |  |                                       |      

| | (1) | As
                                         of December 31, 2012, unitholders are defined as Brookfield Asset Management.
| | --- | -------------------------------------------------------------------------------------------------------------------------



F-52







Equity
price risk

The
partnership faces equity price risk related to its indirect 22% common equity interest in Canary Wharf. A $1 increase or decrease
in Canary Wharf’s published net asset value would result in a $141 million gain or loss being recognized in fair value gains.



| | d) | Credit
                                         risk
| | -- | ----------------------------------------------------

The
partnership's maximum exposure to credit risk associated with financial assets is equivalent to the carrying value of each class
of financial asset as separately presented in loans and notes receivable, other non-current assets, accounts receivables and other,
and cash and cash equivalents.



Credit
risk arises on loans and notes receivables in the event that borrowers default on the repayment to the partnership. The partnership
mitigates this risk by attempting to ensure that adequate security has been provided in support of such loans and notes.



Credit
risk related to accounts receivable arises from the possibility that tenants may be unable to fulfill their lease commitments.
The partnership mitigates this risk through diversification, ensuring that borrowers meet minimum credit quality requirements
and by ensuring that its tenant mix is diversified and by limiting its exposure to any one tenant. The partnership maintains a
portfolio that is diversified by property type so that exposure to a business sector is lessened.



Currently
no one tenant represents more than 10% of operating property revenue.



The
majority of the partnership's trade receivables are collected within 30 days. The balance of accounts receivable and loans and
notes receivable past due is not significant.



NOTE
35.	related parties

In
the normal course of operations, the partnership enters into transactions with related parties on market terms. These transactions
have been measured at exchange value and are recognized in the consolidated financial statements.



The
immediate parent of the partnership is the general partner. The ultimate parent of the partnership is Brookfield Asset Management.
Other related parties of the partnership include the partnership’s and Brookfield Asset Management’s subsidiaries
and operating entities.



Since
the Spin-off, the partnership has had a management agreement with its service providers, wholly-owned subsidiaries of Brookfield
Asset Management. Pursuant to a Master Services Agreement, on a quarterly basis, the partnership pays a base management fee (“base
management fee”), to the service providers equal to $12.5 million per quarter. The base management fee for the year ended
December 31, 2014 was $50 million. The base management fee for the period from Spin-off through December 31, 2013 was $36 million.



Additionally,
the partnership pays a quarterly equity enhancement distribution to Special L.P., a wholly-owned subsidiary of Brookfield Asset
Management, of 0.3125% of the amount by which the operating partnership’s total capitalization value at the end of each
quarter exceeds its total capitalization value immediately following the Spin-off, subject to certain adjustments. For purposes
of calculating the equity enhancement distribution at each quarter-end, the capitalization of the partnership is equal to the
volume-weighted average of the closing prices of the partnership’s units on the NYSE (or other exchange or market where
the partnership’s units are principally traded) for each of the last five trading days of the applicable quarter multiplied
by the number of issued and outstanding units of the partnership on the last of those days (assuming full conversion of Brookfield
Asset Management’s interest in the partnership into units of the partnership), plus the amount of third-party debt, net
of cash, with recourse to the partnership and the operating partnership and certain holding entities held directly by the operating
partnership. The equity enhancement distribution for the year ended December 31, 2014 was $50 million. The equity enhancement
distribution for the period from Spin-off to December 31, 2013 was nil.



In connection with
the issuance of Preferred Equity Units to QIA, Brookfield Asset Management has contingently agreed to acquire the seven-year
and ten-year tranches of Preferred Equity Units from QIA for the initial issuance price plus accrued and unpaid distributions
and to exchange such units for Preferred Equity Units with terms and conditions 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.



The following table
summarizes transactions and balances with related parties:



|(US$ Millions)                                         |  | Dec. 31, 2014 |       |  | Dec. 31, 2013 |  
|------------------------------------------------------ |  | ------------- | ----- |  | ------------- | -
|Balances outstanding to (from) related parties:        |  |               |       |  |               |  
|Participating loan interests                           |  | $             | 609   |  |               | $
|Loans and notes receivable(1)                          |  |               | 82    |  |               |  
|Receivables and other assets                           |  |               | 143   |  |               |  
|Debt obligations                                       |  |               | 570   |  |               |  
|Other liabilities                                      |  |               | 174   |  |               |  
|Capital securities held by Brookfield Asset Management |  |               | 1,250 |  |               |  
|Preferred shares held by Brookfield Asset Management   |  |               | 25    |  |               |  



F-53









|(US$ Millions) Year ended Dec. 31,                                 |  | 2014 |     |  | 2013 |   |     | 2012 | 
|------------------------------------------------------------------ |  | ---- | --- |  | ---- | - | --- | ---- | 
|Transactions with related parties:                                 |  |      |     |  |      |   |     |      | 
|Commercial property revenue(2)                                     |  | $    | 16  |  |      | $ | 7   |      | 
|Interest and other income                                          |  |      | 55  |  |      |   | 52  |      | 
|Interest expense on debt obligations                               |  |      | 17  |  |      |   | 12  |      | 
|Interest on capital securities held by Brookfield Asset Management |  |      | 82  |  |      |   | 56  |      | 
|Administration and other expense (3)                               |  |      | 187 |  |      |   | 277 |      | 

| | (1) | Includes
                                         $82 million receivable from Brookfield Asset Management upon the earlier of the partnership's
                                         exercise of its option to convert its participating loan interests into direct ownership
                                         of the Australian portfolio or the maturity of the participating loan interests.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Amounts
                                         received from Brookfield Asset Management and its subsidiaries for the rental of office
                                         premises.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Includes
                                         amounts paid to Brookfield Asset Management and its subsidiaries for management fees,
                                         management fees associated with our private funds, and administrative services.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTE
36.	Subsidiary PUBLIC ISSUERS

BOP
Split was incorporated for the purpose of being an issuer of preferred shares and owning the Purchasers’ additional investment
in BPO common shares. Pursuant to the terms of the Arrangement, holders of outstanding BPO Convertible Preference 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.



The following table
provides consolidated summary financial information for the partnership, BOP Split, and the Holding Entities:



|(US$ Millions) Year ended
    Dec. 31, 2014   |  | Brookfield
    Property
    Partners
    L.P. |       |  | Brookfield
    Property
    Split Corp. |   |       | HoldingEntities(3) |  |   | Other
    Subsidiaries |  |  | ConsolidatingAdjustments(2) |       |  | Brookfield
    Property
    Partners L.P.
    Consolidated |  
|--------------------------------------------- |  | --------------------------------------------- | ----- |  | --------------------------------------- | - | ----- | ------------------ |  | - | ---------------------- |  |  | --------------------------- | ----- |  | ---------------------------------------------------------- | -
|Revenue                                       |  | $                                             | ―     |  |                                         | $ | ―     |                    |  | $ | 300                    |  |  | $                           | 4,374 |  |                                                            | $
|Net
    income attributable to unitholders(1) |  |                                               | 1,266 |  |                                         |   | 1,074 |                    |  |   | 3,737                  |  |  |                             | 2,363 |  |                                                            |  
|                                              |  |                                               |       |  |                                         |   |       |                    |  |   |                        |  |  |                             |       |  |                                                            |  
|For the year ended Dec. 31, 2013              |  |                                               |       |  |                                         |   |       |                    |  |   |                        |  |  |                             |       |  |                                                            |  
|Revenue                                       |  | $                                             | ―     |  |                                         | $ | ―     |                    |  | $ | 161                    |  |  | $                           | 4,287 |  |                                                            | $
|Net
    income attributable to unitholders(1) |  |                                               | 97    |  |                                         |   | ―     |                    |  |   | 907                    |  |  |                             | 746   |  |                                                            |  

| | (1) | Includes
                                         net income attributable to Limited Partners, General Partner, non-controlling interest
                                         - Redeemable/Exchangeable and Special Limited Partnership Units and non-controlling interest
                                         - Exchange LP Units.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Includes
                                         elimination of intercompany transactions and balances necessary to present the partnership
                                         on a consolidated basis.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Includes
                                         Brookfield Property L.P., Brookfield BPY Holdings Inc., Brookfield BPY Retail Holdings
                                         II Inc., BPY Bermuda Holdings Limited and BPY Bermuda Holdings II Limited.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(US$ Millions)
    As of Dec. 31, 2014                                                                  |  | Brookfield
    Property Partners L.P. |       |  | Brookfield
    Property Split Corp. |   |       | Holding
    Entities |  |   | Other
    Subsidiaries |  |  | Consolidating
    Adjustments |        |  | Brookfield
    Property Partners L.P. Consolidated |  
|------------------------------------------------------------------------------------------------------- |  | ------------------------------------- | ----- |  | ----------------------------------- | - | ----- | -------------------- |  | - | ---------------------- |  |  | ----------------------------- | ------ |  | -------------------------------------------------- | -
|Current assets                                                                                          |  | $                                     | ―     |  |                                     | $ | ―     |                      |  | $ | 177                    |  |  | $                             | 4,347  |  |                                                    | $
|Non-current assets                                                                                      |  |                                       | 7,427 |  |                                     |   | 5,759 |                      |  |   | 22,967                 |  |  |                               | 58,810 |  |                                                    |  
|Assets held for sale                                                                                    |  |                                       | ―     |  |                                     |   | ―     |                      |  |   | ―                      |  |  |                               | 2,241  |  |                                                    |  
|Current liabilities                                                                                     |  |                                       | ―     |  |                                     |   | ―     |                      |  |   | 564                    |  |  |                               | 4,792  |  |                                                    |  
|Non-current liabilities                                                                                 |  |                                       | ―     |  |                                     |   | 2,894 |                      |  |   | 2,369                  |  |  |                               | 25,436 |  |                                                    |  
|Liabilities
    associated with assets held for sale                                                    |  |                                       | ―     |  |                                     |   | ―     |                      |  |   | ―                      |  |  |                               | 1,221  |  |                                                    |  
|Equity
    attributable to non-controlling interests of others in operating subsidiaries and properties |  |                                       | ―     |  |                                     |   | ―     |                      |  |   | 5                      |  |  |                               | 8,086  |  |                                                    |  
|Equity
    attributable to unitholders(1)                                                               |  |                                       | 7,427 |  |                                     |   | 2,865 |                      |  |   | 20,206                 |  |  |                               | 25,863 |  |                                                    |  
|                                                                                                        |  |                                       |       |  |                                     |   |       |                      |  |   |                        |  |  |                               |        |  |                                                    |  
|As of Dec. 31, 2013                                                                                     |  |                                       |       |  |                                     |   |       |                      |  |   |                        |  |  |                               |        |  |                                                    |  
|Current assets                                                                                          |  | $                                     | ―     |  |                                     | $ | ―     |                      |  | $ | 6                      |  |  | $                             | 3,005  |  |                                                    | $
|Non-current assets                                                                                      |  |                                       | 2,590 |  |                                     |   | ―     |                      |  |   | 15,330                 |  |  |                               | 49,435 |  |                                                    |  
|Current liabilities                                                                                     |  |                                       | ―     |  |                                     |   | ―     |                      |  |   | 109                    |  |  |                               | 6,864  |  |                                                    |  
|Non-current liabilities                                                                                 |  |                                       | ―     |  |                                     |   | ―     |                      |  |   | 1,598                  |  |  |                               | 18,885 |  |                                                    |  
|Equity
    attributable to non-controlling interests of others in operating subsidiaries and properties |  |                                       | ―     |  |                                     |   | ―     |                      |  |   | 5                      |  |  |                               | 11,361 |  |                                                    |  
|Equity
    attributable to unitholders(1)                                                               |  |                                       | 2,590 |  |                                     |   | ―     |                      |  |   | 13,624                 |  |  |                               | 15,330 |  |                                                    |  

| | (1) | Includes
                                         net income attributable to Limited Partners, General Partner, non-controlling interest
                                         - Redeemable/Exchangeable and Special Limited Partnership Units and non-controlling interest
                                         - Exchange LP Units.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-54







NOTE
37.	PAYROLL EXPENSE

The
partnership has no employees or directors; therefore the partnership does not remunerate key management personnel. Key decision
makers of the partnership are all employees of Brookfield Asset Management, the ultimate parent company, who provide management
services under the Master Services Agreement.



Throughout
the year, the managing general partner in its capacity as the partnership’s general partner incurs director fees, a portion
of which are charged to the partnership in accordance with the limited partnership agreement. During the year ended December 31,
2014, the amount of director fees incurred were immaterial (2013 – immaterial, 2012 – n/a).



NOTE
38.	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. Prior to April 1, 2014, the partnership managed the business in the following operating segments: i) Office,
ii) Retail, iii) Multifamily, Industrial, and Hotels. As discussed in Note 2(d), the partnership realigned its operating segments
as a result of changes to the organizational structure of its businesses, following the acquisition of additional interests in
BPO and the acquisition of CARS. Accordingly, and as of December 31, 2014, the partnership has the following seven operating segments
that are independently and regularly reviewed and managed by the CODM: i) Office, ii) Retail, iii) Industrial, iv) Multifamily,
v) Hotels, vi) Triple Net Lease (which includes CARS), and vii) Corporate.



| | b) | Basis
                                         of measurement
| | -- | -------------------------------------------------------------

The
CODM measures and evaluates the performance of the partnership’s operating segments based on net operating income (“NOI”)
and funds from operations (“FFO”), and net income and equity attributable to unitholders. These performance metrics
do not have standardized meanings prescribed by IFRS and therefore may differ from similar metrics used by other companies and
organizations. The partnership defines these measures as follows:



| | i. | NOI:revenues from properties in the partnership’s commercial and hospitality operations
                                         less direct property expenses.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ii. | FFO: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/associates.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iii. | Net
                                         income attributable to unitholders: net income attributable to holders of GP Units,
                                         LP Units, Redeemable/Exchangeable Partnership Units, Special LP Units and Exchange LP
                                         Units. For the period prior to the Spin-off of the partnership on April 15, 2013, net
                                         income attributable to unitholders represented net income attributable to Brookfield
                                         Asset Management.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iv. | Equity
                                         attributable to unitholders: equity attributable to holders of GP Units, LP Units,
                                         Redeemable/Exchangeable Partnership Units, Special LP Units and Exchange LP Units.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | Reportable
                                         segment measures
| | -- | --------------------------------------------------------------------

The
following summary presents information about certain consolidated balance sheet items of the partnership, on a segmented basis,
as of December 31, 2014 and 2013:



|                 |  | Total assets   |        |  | Total liabilities |   |        | Total equity attributable to unitholders | 
|---------------- |  | -------------- | ------ |  | ----------------- | - | ------ | ---------------------------------------- | 
|(US$ Millions)   |  | Dec. 31 , 2014 |        |  | Dec. 31, 2013     |   |        | Dec. 31 , 2014                           | 
|Office           |  | $              | 38,618 |  |                   | $ | 34,725 |                                          | 
|Retail           |  |                | 11,023 |  |                   |   | 9,492  |                                          | 
|Industrial       |  |                | 2,897  |  |                   |   | 2,759  |                                          | 
|Multifamily      |  |                | 2,870  |  |                   |   | 1,745  |                                          | 
|Hotels           |  |                | 3,678  |  |                   |   | 3,630  |                                          | 
|Triple Net Lease |  |                | 4,367  |  |                   |   | ―      |                                          | 
|Corporate        |  |                | 2,122  |  |                   |   | 95     |                                          | 
|Total            |  | $              | 65,575 |  |                   | $ | 52,446 |                                          | 



F-55







The following summaries
present certain financial information regarding our operating segments for the year ended December 31, 2014 and 2013.



|(US$ Millions)      |  | Total revenue |       |   | NOI  |   |       | FFO  | 
|------------------- |  | ------------- | ----- | - | ---- | - | ----- | ---- | 
|Year ended Dec. 31, |  | 2014          |       |   | 2013 |   |       | 2012 | 
|Office              |  | $             | 2,761 |   |      | $ | 2,621 |      | 
|Retail              |  |               | 183   |   |      |   | 158   |      | 
|Industrial          |  |               | 198   |   |      |   | 128   |      | 
|Multifamily         |  |               | 201   |   |      |   | 154   |      | 
|Hotels              |  |               | 988   |   |      |   | 1,220 |      | 
|Triple Net Lease    |  |               | 58    |   |      |   | ―     |      | 
|Corporate           |  |               | (16   | ) |      |   | 6     |      | 
|Total               |  | $             | 4,373 |   |      | $ | 4,287 |      | 



The following summary
presents a reconciliation of NOI and FFO to net income for the years ended December 31, 2014, 2013, and 2012:



|(US$ Millions) Year ended Dec. 31,                                                     |  | 2014 |        |   | 2013 |   |        | 2012 | 
|-------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- | 
|Commercial property revenue                                                            |  | $    | 3,038  |   |      | $ | 2,910  |      | 
|Hospitality revenue                                                                    |  |      | 983    |   |      |   | 1,168  |      | 
|Direct commercial property expense                                                     |  |      | (1,298 | ) |      |   | (1,204 | )    | 
|Direct hospitality expense                                                             |  |      | (791   | ) |      |   | (957   | )    | 
|NOI                                                                                    |  |      | 1,932  |   |      |   | 1,917  |      | 
|Investment and other revenue                                                           |  |      | 352    |   |      |   | 209    |      | 
|Share of equity accounted income - FFO                                                 |  |      | 557    |   |      |   | 435    |      | 
|Interest expense                                                                       |  |      | (1,258 | ) |      |   | (1,088 | )    | 
|Administration and other expense                                                       |  |      | (404   | ) |      |   | (317   | )    | 
|Depreciation and amortization of non-real estate assets                                |  |      | (36    | ) |      |   | (38    | )    | 
|Non-controlling interests of others in operating subsidiaries and properties in FFO    |  |      | (429   | ) |      |   | (536   | )    | 
|FFO (1)                                                                                |  |      | 714    |   |      |   | 582    |      | 
|Depreciation and amortization of real estate assets                                    |  |      | (112   | ) |      |   | (124   | )    | 
|Fair value gains, net                                                                  |  |      | 3,756  |   |      |   | 870    |      | 
|Share of equity accounted income - non-FFO                                             |  |      | 812    |   |      |   | 414    |      | 
|Share of equity accounted income - income taxes                                        |  |      | (3     | ) |      |   | (14    | )    | 
|Income tax expense                                                                     |  |      | (1,176 | ) |      |   | (501   | )    | 
|Non-controlling interests of others in operating subsidiaries and properties - non-FFO |  |      | (418   | ) |      |   | (453   | )    | 
|Non-controlling interests of others in operating subsidiaries in income tax expense    |  |      | 161    |   |      |   | 133    |      | 
|Net income attributable to unitholders(2)                                              |  |      | 3,734  |   |      |   | 907    |      | 
|Non-controlling interests of others in operating subsidiaries and properties           |  |      | 686    |   |      |   | 856    |      | 
|Net income                                                                             |  | $    | 4,420  |   |      | $ | 1,763  |      | 

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

| | (2) | Includes
                                         net income attributable to general partner, limited partners, non-controlling interest
                                         – redeemable/exchangeable and special limited partnership units, and non-controlling
                                         interest – Limited partnership Units of Brookfield Office Properties Exchange LP.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
following summary presents financial information by the partnership’s geographic regions in which it operates:



|               |  | Total revenue for the year ended Dec. 31, |       |  | Total non-current assets as at
Dec. 31, |  
|-------------- |  | ----------------------------------------- | ----- |  | --------------------------------------- | -
|(US$ Millions) |  | 2014                                      |       |  | 2013                                    |  
|United States  |  | $                                         | 2,952 |  |                                         | $
|Canada         |  |                                           | 505   |  |                                         |  
|Australia      |  |                                           | 388   |  |                                         |  
|Europe         |  |                                           | 347   |  |                                         |  
|Brazil         |  |                                           | 143   |  |                                         |  
|China          |  |                                           | 38    |  |                                         |  
|India          |  |                                           | ―     |  |                                         |  
|Total          |  | $                                         | 4,373 |  |                                         | $



NOTE
39.	SUBSEQUENT EVENTS

On
January 22, 2015, BPO, together with Canadian Office Fund partners, sold 151 Yonge Street in Toronto for C$154 million.



In
February 2015, the partnership’s Board of Directors (the “Board”) announced a 6% increase in the partnership’s
quarterly distribution from $0.25 to $0.265 per unit ($1.06 per unit on an annual basis). The Board also declared the quarterly
distribution of $0.265 per unit payable on March 31, 2015 to unitholders of record at the close of business on February 27, 2015.
Unitholders resident in the United States will receive payment in U.S. dollars and unitholders resident in Canada will receive
their distributions in Canadian dollars at the exchange rate on the record date, unless they elect otherwise.



F-56







In
December 2014, the partnership and QIA announced a joint bid (“Songbird Offer”) for the outstanding ordinary shares
of Songbird, which owns approximately 69% of Canary Wharf. On February 5, 2015, the Songbird offer became wholly unconditional.
The partnership and QIA also announced an offer (“Canary Wharf Offer”) for the entire issued and to be issued ordinary
share capital of Canary Wharf not owned by Songbird. The partnership has subsequently contributed its existing 22% interest in
Canary Wharf into a joint venture (“Bidco”) that is the bidder in both the Songbird Offer and Canary Wharf Offer.
On March 5, 2015, both the Songbird Offer and Canary Wharf Offer became compulsory to holders of the remaining outstanding ordinary
shares that have not yet accepted the offers.



In
March 2015, the partnership acquired the remaining 40% equity interest in Candor Office Parks for total consideration of approximately
$196 million.



F-57







SCHEDULE
III – SUPPLEMENTAL SCHEDULE OF INVESTMENT PROPERTY INFORMATION

The table below presents
the partnership’s number of commercial properties, the related fair value, debt obligations, weighted average year of acquisition
and weighted average year of construction by segment as of December 31, 2014.



|(US$ millions, except where noted) Dec. 31, 2014 |  | Number of
properties |     |  | Fairvalue(1) |   |        | Debt(2) |  |   | Weighted average year
of acquisition |  |  | Weighted average year
of construction(3) |     
|------------------------------------------------ |  | -------------------- | --- |  | ------------ | - | ------ | ------- |  | - | ------------------------------------ |  |  | ---------------------------------------- | ----
|Office                                           |  |                      |     |  |              |   |        |         |  |   |                                      |  |  |                                          |     
|United States                                    |  |                      | 107 |  |              | $ | 18,387 |         |  | $ | 8,567                                |  |  |                                          | 2004
|Canada                                           |  |                      | 29  |  |              |   | 4,444  |         |  |   | 1,999                                |  |  |                                          | 1999
|Australia                                        |  |                      | 17  |  |              |   | 3,102  |         |  |   | 1,773                                |  |  |                                          | 2009
|Europe                                           |  |                      | 5   |  |              |   | 1,539  |         |  |   | 906                                  |  |  |                                          | 2009
|Brazil                                           |  |                      | 1   |  |              |   | 271    |         |  |   | 101                                  |  |  |                                          | 2014
|India                                            |  |                      | 36  |  |              |   | 785    |         |  |   | 193                                  |  |  |                                          | 2014
|                                                 |  |                      | 195 |  |              |   | 28,528 |         |  |   | 13,539                               |  |  |                                          | 2004
|Retail                                           |  |                      |     |  |              |   |        |         |  |   |                                      |  |  |                                          |     
|Brazil                                           |  |                      | 7   |  |              | $ | 1,458  |         |  | $ | 513                                  |  |  |                                          | 2000
|                                                 |  |                      |     |  |              |   |        |         |  |   |                                      |  |  |                                          |     
|Industrial                                       |  |                      | 115 |  |              | $ | 1,435  |         |  | $ | 754                                  |  |  |                                          | 2012
|Multifamily                                      |  |                      | 50  |  |              | $ | 2,030  |         |  | $ | 1,378                                |  |  |                                          | 2013
|Triple Net Lease(4)                              |  |                      | 291 |  |              | $ | 4,292  |         |  | $ | 2,949                                |  |  |                                          | 2014
|Total                                            |  |                      | 658 |  |              | $ | 37,743 |         |  | $ | 19,133                               |  |  |                                          | 2003

| | (1) | Excludes
                                         development properties and land/parking lots with a fair value of $3,398 million.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------

| | (2) | Excludes debt related to
development properties and land in the amount of $988 million, unsecured and corporate facilities of $4,437 million and debt on
hotel assets of $2,448 million.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Weighted
                                         against the fair value of the properties at December 31, 2014.
| | --- | ----------------------------------------------------------------------------------------------------------------

| | (4) | Excludes
                                         land and parking lots.
| | --- | ------------------------------------------------------------------------



F-58







GENERAL GROWTH PROPERTIES, INC.



Consolidated financial statements of General
Growth Properties, Inc. as of December 31, 2014 and 2013 and for each of the three years in the period ended December 31, 2014



F-59







REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM



To the Board of Directors and Stockholders of

General Growth Properties, Inc.

Chicago, Illinois



We have audited the accompanying consolidated
balance sheets of General Growth Properties, Inc. and subsidiaries (the "Company") as of December 31, 2014 and 2013,
and the related consolidated statements of operations and comprehensive income (loss), equity, and cash flows for each of the three
years in the period ended December 31, 2014. Our audits also included the consolidated financial statement schedule of the Company
listed in the Index to Consolidated Financial Statements and Financial Statement Schedule at Item 15. These financial statements
and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion
on these financial statements and financial statement schedule based on our audits. We did not audit the financial statements of
GGP/Homart II L.L.C. and GGP TRS L.L.C., the Company's investments in which are accounted for by use of the equity method, for
the year ended December 31, 2012. The Company's equity of $9,315,000 in GGP/Homart II L.L.C.'s net income and the Company's equity
of $6,133,000 in GGP-TRS L.L.C.'s net income for the year ended December 31, 2012 are included in the accompanying financial statements.
The financial statements of GGP/Homart II L.L.C. and GGP TRS L.L.C. for the year ended December 31, 2012 were audited by other
auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for such companies
for that year, is based on the reports of the other auditors and the procedures that we considered necessary in the circumstances
with respect to the inclusion of the Company's equity method income in the accompanying consolidated financial statements taking
into consideration the basis adjustments of the equity method investments which resulted from the application of the acquisition
method of accounting in connection with the Company’s emergence from bankruptcy in 2010.



We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion.



In our opinion, based on our audits and
the reports of the other auditors, the consolidated financial statements present fairly, in all material respects, the financial
position of General Growth Properties, Inc. and subsidiaries as of December 31, 2014 and 2013, and the results of their operations
and their cash flows for each of the three years in the period ended December 31, 2014 in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects,
the information set forth therein.



We have also audited, in
accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal
control over financial reporting as of December 31, 2014, based on the criteria established in Internal Control-
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report
(not presented herein) dated March 2, 2015 expressed an unqualified opinion on the Company's internal control over financial
reporting.



/s/ Deloitte & Touche LLP



Chicago, Illinois

March 2, 2015



F-60







Independent Auditors' Report

The Members

GGP/Homart II L.L.C.:



We have audited the accompanying consolidated financial statements
of GGP/Homart II L.L.C. and its subsidiaries (the Company), which comprise the consolidated statements of operations and comprehensive
income, changes in capital, and cash flows for the year ended December 31, 2012, and the related notes to the consolidated financial
statements.



Management's Responsibility for the Financial Statements



Management is responsible for the preparation and fair presentation
of these consolidated financial statements in accordance with U.S. generally accepted accounting principles; this includes the
design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.



Auditors' Responsibility



Our responsibility is to express an opinion on these consolidated
financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the
United States of America and in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.



An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation
of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such
opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.



We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.



Opinion



In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the results of their operations and their cash flows for the year ended December
31, 2012, in accordance with U.S. generally accepted accounting principles.



/s/ KPMG LLP



Chicago, Illinois

February 28, 2013



F-61







Independent Auditors' Report



The Members

GGP-TRS L.L.C.:



We have audited the accompanying consolidated financial statements
of GGP-TRS L.L.C. and its subsidiaries (the Company), which comprise the related consolidated statements of operations, changes
in members' capital, and cash flows for the year ended December 31, 2012, and the related notes to the consolidated financial statements.



Management's Responsibility for the Financial Statements



Management is responsible for the preparation and fair presentation
of these consolidated financial statements in accordance with U.S. generally accepted accounting principles; this includes the
design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.



Auditors' Responsibility



Our responsibility is to express an opinion on these consolidated
financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the
United States of America and in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.



An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation
of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such
opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.



We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.



Opinion



In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the results of their operations and their cash flows for the year ended December
31, 2012, in accordance with U.S. generally accepted accounting principles.



/s/ KPMG LLP



Chicago, Illinois

February 28, 2013



F-62







GENERAL GROWTH PROPERTIES, INC.



(Dollars in thousands, except per share
amounts)



CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                                                                  |  | December 31,  2014 |            |   | December 31,  2013 |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ---------- | - | ------------------ | -
|Assets:                                                                                                                                                                                                           |  |                    |            |   |                    |  
|Investment in real estate:                                                                                                                                                                                        |  |                    |            |   |                    |  
|Land                                                                                                                                                                                                              |  | $                  | 4,244,607  |   |                    | $
|Buildings and equipment                                                                                                                                                                                           |  |                    | 18,028,844 |   |                    |  
|Less accumulated depreciation                                                                                                                                                                                     |  |                    | (2,280,845 | ) |                    |  
|Construction in progress                                                                                                                                                                                          |  |                    | 703,859    |   |                    |  
|Net property and equipment                                                                                                                                                                                        |  |                    | 20,696,465 |   |                    |  
|Investment in and loans to/from Unconsolidated Real Estate Affiliates                                                                                                                                             |  |                    | 2,604,762  |   |                    |  
|Net investment in real estate                                                                                                                                                                                     |  |                    | 23,301,227 |   |                    |  
|Cash and cash equivalents                                                                                                                                                                                         |  |                    | 372,471    |   |                    |  
|Accounts and notes receivable, net                                                                                                                                                                                |  |                    | 663,768    |   |                    |  
|Deferred expenses, net                                                                                                                                                                                            |  |                    | 184,491    |   |                    |  
|Prepaid expenses and other assets                                                                                                                                                                                 |  |                    | 813,777    |   |                    |  
|Total assets                                                                                                                                                                                                      |  | $                  | 25,335,734 |   |                    | $
|Liabilities:                                                                                                                                                                                                      |  |                    |            |   |                    |  
|Mortgages, notes and loans payable                                                                                                                                                                                |  | $                  | 15,998,289 |   |                    | $
|Investment in Unconsolidated Real Estate Affiliates                                                                                                                                                               |  |                    | 35,598     |   |                    |  
|Accounts payable and accrued expenses                                                                                                                                                                             |  |                    | 934,897    |   |                    |  
|Dividend payable                                                                                                                                                                                                  |  |                    | 154,694    |   |                    |  
|Deferred tax liabilities                                                                                                                                                                                          |  |                    | 21,240     |   |                    |  
|Tax indemnification liability                                                                                                                                                                                     |  |                    | —          |   |                    |  
|Junior subordinated notes                                                                                                                                                                                         |  |                    | 206,200    |   |                    |  
|Total liabilities                                                                                                                                                                                                 |  |                    | 17,350,918 |   |                    |  
|Redeemable noncontrolling interests:                                                                                                                                                                              |  |                    |            |   |                    |  
|Preferred                                                                                                                                                                                                         |  |                    | 164,031    |   |                    |  
|Common                                                                                                                                                                                                            |  |                    | 135,265    |   |                    |  
|Total redeemable noncontrolling interests                                                                                                                                                                         |  |                    | 299,296    |   |                    |  
|Commitments and Contingencies                                                                                                                                                                                     |  |                    | —          |   |                    |  
|                                                                                                                                                                                                                  |  |                    |            |   |                    |  
|Equity:                                                                                                                                                                                                           |  |                    |            |   |                    |  
|Common stock: 11,000,000,000 shares authorized, $0.01 par value, 968,340,597 issued, 884,912,012 outstanding as of December 31, 2014, and 966,998,908 issued  and 911,194,605 outstanding as of December 31, 2013 |  |                    | 9,409      |   |                    |  
|Preferred Stock:                                                                                                                                                                                                  |  |                    |            |   |                    |  
|500,000,000 shares authorized, $.01 par value, 10,000,000 shares issued and outstanding as of December 31, 2014 and December 31, 2013                                                                             |  |                    | 242,042    |   |                    |  
|Additional paid-in capital                                                                                                                                                                                        |  |                    | 11,351,625 |   |                    |  
|Retained earnings (accumulated deficit)                                                                                                                                                                           |  |                    | (2,822,740 | ) |                    |  
|Accumulated other comprehensive loss                                                                                                                                                                              |  |                    | (51,753    | ) |                    |  
|Common stock in treasury, at cost, 55,969,390 shares as of December 31, 2014 and 28,345,108 shares as of December 31, 2013                                                                                        |  |                    | (1,122,664 | ) |                    |  
|Total stockholders' equity                                                                                                                                                                                        |  |                    | 7,605,919  |   |                    |  
|Noncontrolling interests in consolidated real estate affiliates                                                                                                                                                   |  |                    | 79,601     |   |                    |  
|Total equity                                                                                                                                                                                                      |  |                    | 7,685,520  |   |                    |  
|Total liabilities and equity                                                                                                                                                                                      |  | $                  | 25,335,734 |   |                    | $



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



F-63







GENERAL GROWTH PROPERTIES, INC.



(Dollars in thousands, except per share
amounts)



CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)



|                                                                                                                                                                                                   |  | Year Ended December 31, |          
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ---------
|                                                                                                                                                                                                   |  | 2014                    |          
|Revenues:                                                                                                                                                                                          |  |                         |          
|Minimum rents                                                                                                                                                                                      |  | $                       | 1,583,695
|Tenant recoveries                                                                                                                                                                                  |  |                         | 739,411  
|Overage rents                                                                                                                                                                                      |  |                         | 51,611   
|Management fees and other corporate revenues                                                                                                                                                       |  |                         | 70,887   
|Other                                                                                                                                                                                              |  |                         | 89,955   
|Total revenues                                                                                                                                                                                     |  |                         | 2,535,559
|Expenses:                                                                                                                                                                                          |  |                         |          
|Real estate taxes                                                                                                                                                                                  |  |                         | 227,992  
|Property maintenance costs                                                                                                                                                                         |  |                         | 66,897   
|Marketing                                                                                                                                                                                          |  |                         | 23,455   
|Other property operating costs                                                                                                                                                                     |  |                         | 334,819  
|Provision for doubtful accounts                                                                                                                                                                    |  |                         | 8,055    
|Property management and other costs                                                                                                                                                                |  |                         | 155,093  
|General and administrative                                                                                                                                                                         |  |                         | 64,051   
|Provision for impairment                                                                                                                                                                           |  |                         | 5,278    
|Depreciation and amortization                                                                                                                                                                      |  |                         | 708,406  
|Total expenses                                                                                                                                                                                     |  |                         | 1,594,046
|Operating income                                                                                                                                                                                   |  |                         | 941,513  
|Interest income                                                                                                                                                                                    |  |                         | 28,613   
|Interest expense                                                                                                                                                                                   |  |                         | (699,285 
|Loss on foreign currency                                                                                                                                                                           |  |                         | (18,048  
|Warrant liability adjustment                                                                                                                                                                       |  |                         | —        
|Gains from changes in control of investment properties                                                                                                                                             |  |                         | 91,193   
|Loss on extinguishment of debt                                                                                                                                                                     |  |                         | —        
|Income (loss) before income taxes, equity in income of Unconsolidated Real Estate Affiliates, discontinued operations and allocation to noncontrolling interests                                   |  |                         | 343,986  
|Provision for income taxes                                                                                                                                                                         |  |                         | (7,253   
|Equity in income of Unconsolidated Real Estate Affiliates                                                                                                                                          |  |                         | 61,278   
|Income (loss) from continuing operations                                                                                                                                                           |  |                         | 398,011  
|Discontinued operations:                                                                                                                                                                           |  |                         |          
|Income (loss) from discontinued operations, including gains (losses) on dispositions                                                                                                               |  |                         | 137,989  
|Gain on extinguishment of tax indemnification liability                                                                                                                                            |  |                         | 77,215   
|Gain on extinguishment of debt                                                                                                                                                                     |  |                         | 66,679   
|Discontinued operations, net                                                                                                                                                                       |  |                         | 281,883  
|Net income (loss)                                                                                                                                                                                  |  |                         | 679,894  
|Allocation to noncontrolling interests                                                                                                                                                             |  |                         | (14,044  
|Net income (loss) attributable to General Growth Properties, Inc.                                                                                                                                  |  |                         | 665,850  
|Preferred Stock dividends                                                                                                                                                                          |  |                         | (15,936  
|Net income (loss) attributable to common stockholders                                                                                                                                              |  | $                       | 649,914  
|Basic Earnings (Loss) Per Share:                                                                                                                                                                   |  |                         |          
|Continuing operations                                                                                                                                                                              |  | $                       | 0.42     
|Discontinued operations                                                                                                                                                                            |  |                         | 0.32     
|Total basic earnings (loss) per share                                                                                                                                                              |  | $                       | 0.74     
|Diluted Earnings (Loss) Per Share:                                                                                                                                                                 |  |                         |          
|Continuing operations                                                                                                                                                                              |  | $                       | 0.39     
|Discontinued operations                                                                                                                                                                            |  |                         | 0.30     
|Total diluted earnings (loss) per share                                                                                                                                                            |  | $                       | 0.69     
|Comprehensive Income (Loss), Net:                                                                                                                                                                  |  |                         |          
|Net income (loss)                                                                                                                                                                                  |  | $                       | 679,894  
|Other comprehensive income (loss):                                                                                                                                                                 |  |                         |          
|Foreign currency translation (year ended December 31, 2013 includes reclassification of ($109.9 million) accumulated other comprehensive loss into Net income attributable to common stockholders) |  |                         | (13,604  
|Unrealized loss on available-for-sale securities                                                                                                                                                   |  |                         | (54      
|Other comprehensive income (loss)                                                                                                                                                                  |  |                         | (13,658  
|Comprehensive income (loss)                                                                                                                                                                        |  |                         | 666,236  
|Comprehensive income allocated to noncontrolling interests                                                                                                                                         |  |                         | (13,966  
|Comprehensive income (loss) attributable to General Growth Properties, Inc.                                                                                                                        |  |                         | 652,270  
|Preferred stock dividends                                                                                                                                                                          |  |                         | (15,936  
|Comprehensive income (loss), net, attributable to common stockholders                                                                                                                              |  | $                       | 636,334  



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



F-64







GENERAL GROWTH PROPERTIES, INC.



(Dollars in thousands, except per share
amounts)



CONSOLIDATED STATEMENTS OF EQUITY



|                                                                                     |  | Common
    Stock |       |   | Preferred
    Stock |   |         | Additional
    Paid-In Capital |  |   | Retained
    Earnings (Accumulated Deficit) |   |  | Accumulated
    
    Other Comprehensive Income (Loss) |            |   | Common
    Stock in Treasury |   |         | Noncontrolling
    Interests in Consolidated 
    Real Estate Affiliates |  |   | Total
    Equity |  
|------------------------------------------------------------------------------------ |  | ---------------- | ----- | - | ------------------- | - | ------- | ------------------------------ |  | - | ------------------------------------------- | - |  | ------------------------------------------------------ | ---------- | - | ---------------------------- | - | ------- | ------------------------------------------------------------------------ |  | - | ---------------- | -
|Balance at January 1, 2012                                                           |  | $                | 9,353 |   |                     | $ | —       |                                |  | $ | 10,405,318                                  |   |  | $                                                      | (1,883,569 | ) |                              | $ | (47,773 | )                                                                        |  | $ | —                |  
|Net loss                                                                             |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        | (481,233   | ) |                              |   |         |                                                                          |  |   |                  |  
|Distributions to noncontrolling interests in
    consolidated Real Estate Affiliates |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Restricted stock grants, net of forfeitures ((85,452)
    common shares)             |  |                  | (1    | ) |                     |   |         |                                |  |   | 8,888                                       |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Employee stock purchase program (98,076 common
    shares)                           |  |                  | 1     |   |                     |   |         |                                |  |   | 1,604                                       |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Stock option grants, net of forfeitures (617,842
    common shares)                  |  |                  | 6     |   |                     |   |         |                                |  |   | 19,853                                      |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Cash dividends reinvested (DRIP) in stock (3,111,365
    common shares)              |  |                  | 33    |   |                     |   |         |                                |  |   | 48,490                                      |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Other comprehensive loss                                                             |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        |            |   |                              |   | (39,581 | )                                                                        |  |   |                  |  
|Cash distributions declared ($0.42 per share)                                        |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        | (394,029   | ) |                              |   |         |                                                                          |  |   |                  |  
|Cash redemptions for common units in excess of
    carrying value                    |  |                  |       |   |                     |   |         |                                |  |   | (1,083                                      | ) |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Fair value adjustment for noncontrolling interest
    in Operating Partnership       |  |                  |       |   |                     |   |         |                                |  |   | (50,623                                     | ) |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Dividend for RPI Spin-off                                                            |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        | 26,044     |   |                              |   |         |                                                                          |  |   |                  |  
|Balance at December 31,
    2012                                                     |  | $                | 9,392 |   |                     | $ | —       |                                |  | $ | 10,432,447                                  |   |  | $                                                      | (2,732,787 | ) |                              | $ | (87,354 | )                                                                        |  | $ | —                |  
|Net income                                                                           |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        | 302,528    |   |                              |   |         |                                                                          |  |   |                  |  
|Issuance of Preferred Stock, net of issuance
    costs                               |  |                  |       |   |                     |   | 242,042 |                                |  |   |                                             |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Distributions to noncontrolling interests in
    consolidated Real Estate Affiliates |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Restricted stock grants, net of forfeitures (18,444
    common shares)               |  |                  | —     |   |                     |   |         |                                |  |   | 8,340                                       |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Employee stock purchase program (135,317 common
    shares)                          |  |                  | —     |   |                     |   |         |                                |  |   | 2,708                                       |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Stock option grants, net of forfeitures (344,670
    common shares)                  |  |                  | 3     |   |                     |   |         |                                |  |   | 35,995                                      |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Treasury stock purchases (28,345,108 common shares)                                  |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   | (566,863         | )
|Cash dividends reinvested (DRIP) in stock (28,852
    common shares)                 |  |                  | —     |   |                     |   |         |                                |  |   | 613                                         |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Other comprehensive loss before reclassification                                     |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        |            |   |                              |   | (60,680 | )                                                                        |  |   |                  |  
|Amounts reclassified from Accumulated Other Comprehensive
    Loss                   |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        |            |   |                              |   | 109,861 |                                                                          |  |   |                  |  
|Cash distributions declared ($0.51 per share)                                        |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        | (471,386   | ) |                              |   |         |                                                                          |  |   |                  |  
|Cash distributions on Preferred Stock                                                |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        | (14,078    | ) |                              |   |         |                                                                          |  |   |                  |  
|Fair value adjustment for noncontrolling interest
    in Operating Partnership       |  |                  |       |   |                     |   |         |                                |  |   | (3,173                                      | ) |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Common stock warrants                                                                |  |                  |       |   |                     |   |         |                                |  |   | 895,513                                     |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Balance at December 31,
    2013                                                     |  | $                | 9,395 |   |                     | $ | 242,042 |                                |  | $ | 11,372,443                                  |   |  | $                                                      | (2,915,723 | ) |                              | $ | (38,173 | )                                                                        |  | $ | (566,863         | )
|Net income                                                                           |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        | 665,850    |   |                              |   |         |                                                                          |  |   |                  |  
|Distributions to noncontrolling interests in
    consolidated Real Estate Affiliates |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Restricted stock grants, net of forfeitures (16,112
    common shares)               |  |                  | —     |   |                     |   | —       |                                |  |   | 2,496                                       |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Employee stock purchase program (138,446 common
    shares)                          |  |                  | 1     |   |                     |   |         |                                |  |   | 2,951                                       |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Stock option grants, net of forfeitures (1,164,945
    common shares)                |  |                  | 12    |   |                     |   |         |                                |  |   | 40,714                                      |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Treasury stock purchases (27,624,282 common shares)                                  |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   | (555,801         | )
|Cash dividends reinvested (DRIP) in stock (22,186
    common shares)                 |  |                  | 1     |   |                     |   | —       |                                |  |   | 505                                         |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Other comprehensive loss                                                             |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        |            |   |                              |   | (13,580 | )                                                                        |  |   |                  |  
|Cash distributions declared ($0.63 per share)                                        |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        | (556,931   | ) |                              |   |         |                                                                          |  |   |                  |  
|Cash distributions on Preferred Stock                                                |  |                  |       |   |                     |   |         |                                |  |   |                                             |   |  |                                                        | (15,936    | ) |                              |   |         |                                                                          |  |   |                  |  
|Fair value adjustment for noncontrolling interest
    in Operating Partnership       |  |                  |       |   |                     |   |         |                                |  |   | 3,169                                       |   |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Fair value adjustment for
    noncontrolling interest in GGPOP                       |  |                  |       |   |                     |   |         |                                |  |   | (70,653                                     | ) |  |                                                        |            |   |                              |   |         |                                                                          |  |   |                  |  
|Balance at December 31,
    2014                                                     |  | $                | 9,409 |   |                     | $ | 242,042 |                                |  | $ | 11,351,625                                  |   |  | $                                                      | (2,822,740 | ) |                              | $ | (51,753 | )                                                                        |  | $ | (1,122,664       | )



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



F-65







GENERAL GROWTH PROPERTIES, INC.



(Dollars in thousands, except per share
amounts)



CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                         |  | Year Ended December 31, |           
|---------------------------------------------------------------------------------------- |  | ----------------------- | ----------
|                                                                                         |  | 2014                    |           
|Cash Flows provided by Operating Activities:                                             |  |                         |           
|Net income (loss)                                                                        |  | $                       | 679,894   
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                         |           
|Equity in income of Unconsolidated Real Estate Affiliates                                |  |                         | (61,278   
|Distributions received from Unconsolidated Real Estate Affiliates                        |  |                         | 46,463    
|Provision for doubtful accounts                                                          |  |                         | 8,151     
|Depreciation and amortization                                                            |  |                         | 718,064   
|Amortization/write-off of deferred finance costs                                         |  |                         | 13,621    
|Accretion/write-off of debt market rate adjustments                                      |  |                         | 13,442    
|Amortization of intangibles other than in-place leases                                   |  |                         | 76,615    
|Straight-line rent amortization                                                          |  |                         | (48,935   
|Deferred income taxes                                                                    |  |                         | (5,615    
|Litigation loss                                                                          |  |                         | 17,854    
|(Gain) loss on dispositions, net                                                         |  |                         | (131,849  
|Gains from changes in control of investment properties                                   |  |                         | (91,193   
|Gain on extinguishment of debt                                                           |  |                         | (66,679   
|Provisions for impairment                                                                |  |                         | 5,278     
|Loss (gain) on foreign currency                                                          |  |                         | 18,048    
|Warrant liability adjustment                                                             |  |                         | —         
|Cash paid for extinguishment of tax indemnification liability                            |  |                         | (138,000  
|Gain on extinguishment of tax indemnification liability                                  |  |                         | (77,215   
|Net changes:                                                                             |  |                         |           
|Accounts and notes receivable                                                            |  |                         | (19,613   
|Prepaid expenses and other assets                                                        |  |                         | (28,966   
|Deferred expenses                                                                        |  |                         | (24,234   
|Restricted cash                                                                          |  |                         | (1,070    
|Accounts payable and accrued expenses                                                    |  |                         | 21,703    
|Other, net                                                                               |  |                         | 25,238    
|Net cash provided by operating activities                                                |  |                         | 949,724   
|Cash Flows (used in) provided by Investing Activities:                                   |  |                         |           
|Acquisition of real estate and property additions                                        |  |                         | (537,357  
|Development of real estate and property improvements                                     |  |                         | (624,829  
|Loans to joint venture partners                                                          |  |                         | (137,070  
|Proceeds from sales of investment properties and Unconsolidated Real Estate Affiliates   |  |                         | 361,183   
|Contributions to Unconsolidated Real Estate Affiliates                                   |  |                         | (130,500  
|Distributions received from Unconsolidated Real Estate Affiliates in excess of income    |  |                         | 387,234   
|Increase (decrease) in restricted cash                                                   |  |                         | 3,414     
|Net cash (used in) provided by investing activities                                      |  |                         | (677,925  
|Cash Flows used in Financing Activities:                                                 |  |                         |           
|Proceeds from refinancing/issuance of mortgages, notes and loans payable                 |  |                         | 2,401,407 
|Principal payments on mortgages, notes and loans payable                                 |  |                         | (1,760,032
|Deferred finance costs                                                                   |  |                         | (21,264   
|Net proceeds from issuance of Preferred Stock                                            |  |                         | —         
|Purchase of Warrants                                                                     |  |                         | —         
|Treasury stock purchases                                                                 |  |                         | (555,801  
|Cash distributions paid to common stockholders                                           |  |                         | (534,151  
|Cash distributions reinvested (DRIP) in common stock                                     |  |                         | 506       
|Cash distributions paid to preferred stockholders                                        |  |                         | (15,936   
|Cash distributions and redemptions paid to holders of common units                       |  |                         | (718      
|Other, net                                                                               |  |                         | 9,390     
|Net cash used in financing activities                                                    |  |                         | (476,599  
|Net change in cash and cash equivalents                                                  |  |                         | (204,800  
|Cash and cash equivalents at beginning of year                                           |  |                         | 577,271   
|Cash and cash equivalents at end of year                                                 |  | $                       | 372,471   



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



F-66







GENERAL GROWTH PROPERTIES, INC.



(Dollars in thousands, except per share
amounts)



CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)



|                                                                                        |  | Year Ended December 31, |         
|--------------------------------------------------------------------------------------- |  | ----------------------- | --------
|                                                                                        |  | 2014                    |         
|Supplemental Disclosure of Cash Flow Information:                                       |  |                         |         
|Interest paid                                                                           |  | $                       | 688,297 
|Interest capitalized                                                                    |  |                         | 16,665  
|Income taxes paid                                                                       |  |                         | 10,202  
|Accrued capital expenditures included in accounts payable and accrued expenses          |  |                         | 198,471 
|Settlement of Tax indemnification liability:                                            |  |                         |         
|Assets                                                                                  |  |                         | 106,743 
|Liability extinguished                                                                  |  |                         | (321,958
|Non-Cash Transactions:                                                                  |  |                         |         
|Notes receivable related to sale of investment property and Aliansce                    |  |                         | —       
|Gain on investment in Unconsolidated Real Estate Affiliates                             |  |                         | —       
|Amendment of warrant agreement                                                          |  |                         | —       
|Non-Cash Sale of Retail Property                                                        |  |                         |         
|Assets                                                                                  |  |                         | 21,426  
|Liabilities and equity                                                                  |  |                         | (21,426 
|Rouse Properties, Inc. Dividend:                                                        |  |                         |         
|Non-cash dividend for RPI Spin-off                                                      |  |                         | —       
|Non-Cash Distribution of RPI Spin-off:                                                  |  |                         |         
|Assets                                                                                  |  |                         | —       
|Liabilities and equity                                                                  |  |                         | —       
|Non-Cash Sale of Property to RPI:                                                       |  |                         |         
|Assets                                                                                  |  |                         | —       
|Liabilities and equity                                                                  |  |                         | —       
|Non-Cash Sale of Property to HHC:                                                       |  |                         |         
|Assets                                                                                  |  |                         | —       
|Liabilities and equity                                                                  |  |                         | —       
|Non-Cash Acquisition of The Oaks and Westroads                                          |  |                         |         
|Assets (Consolidated)                                                                   |  |                         | —       
|Liabilities and equity (Consolidated)                                                   |  |                         | —       
|Non-Cash Acquisition of Quail Springs—Refer to Note 3                                   |  |                         |         
|Non-Cash Sale of The Grand Canal Shoppes and The Shoppes at The Palazzo—Refer to Note 3 |  |                         |         
|Non-Cash Sale of Bayside Marketplace—Refer to Note 3                                    |  |                         |         



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



F-67







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(Dollars in thousands, except per share
amounts)



NOTE 1 ORGANIZATION



General Growth Properties, Inc. ("GGP"
or the "Company"), a Delaware corporation, was organized in July 2010 and is a self-administered and self-managed real
estate investment trust, referred to as a "REIT". GGP is the successor registrant, by merger, on November 9, 2010
to GGP, Inc. GGP, Inc. had filed for bankruptcy protection under Chapter 11 of Title 11 of the United States Code
("Chapter 11") in the Southern District of New York on April 16, 2009 and emerged from bankruptcy, pursuant
to a plan of reorganization (the "Plan") on November 9, 2010, the ("Effective Date"). In these notes,
the terms "we," "us" and "our" refer to GGP and its subsidiaries or, in certain contexts, GGP, Inc.
and its subsidiaries.



The Plan was based on the agreements (collectively,
as amended and restated, the "Investment Agreements") with REP Investments LLC, an affiliate of Brookfield Asset
Management Inc. (including certain of its affiliates, "Brookfield"), an affiliate of Fairholme Funds, Inc.
("Fairholme") and an affiliate of Pershing Square Capital Management, L.P. ("Pershing Square" and together
with Brookfield and Fairholme, the "Plan Sponsors"), pursuant to which GGP, Inc. would be divided into two companies,
GGP and The Howard Hughes Corporation ("HHC"), and the Plan Sponsors would invest in the Company's standalone emergence
plan. In addition, GGP, Inc. entered into an investment agreement with Teachers Retirement System of Texas ("Texas Teachers")
to purchase shares of GGP common stock. The Plan Sponsors also entered into an agreement with affiliates of the Blackstone Group
("Blackstone") whereby Blackstone subscribed for equity in GGP.



On the Effective Date, the Plan Sponsors,
Blackstone and Texas Teachers owned a majority of the outstanding common stock of GGP. In addition, 120 million warrants (the "Warrants")
to purchase our common stock were issued to the Plan Sponsors and Blackstone (Note 9).



GGP, through its subsidiaries and affiliates,
is an owner and operator of retail properties. As of December 31, 2014, we are the owner, either entirely or with joint venture
partners of 128 retail properties.



Substantially all of our business is conducted
through GGP Operating Partnership, LP ("GGPOP"), GGP Nimbus, LP ("GGPN") and GGP Limited Partnership ("GGPLP",
and together with GGPN the "Operating Partnerships"), subsidiaries of GGP. The Operating Partnerships own an interest
in the properties that are part of the consolidated financial statements of GGP. As of December 31, 2014, GGP held approximately
a 99% common equity ownership (without giving effect to the potential conversion of the Preferred Units, as defined below) of the
Operating Partnerships, while the remaining 1% was held by limited partners and certain previous contributors of properties to
the Operating Partnerships or their predecessors.



GGPOP is the general partner of, and owns
approximately 1.5% of the equity interest in, each Operating Partnership. GGPOP has common units of limited partnership ("Common
Units"), which are redeemable for cash or, at our option, shares of GGP common stock. It also has preferred units of limited
partnership interest ("Preferred Units"), of which, certain Preferred Units can be converted into Common Units and then
redeemed for cash or, at our option, shares of GGP common stock ("Convertible Preferred Units") (Note 11).



In addition to holding ownership interests
in various joint ventures, the Operating Partnerships generally conduct their operations through General Growth Management, Inc.
("GGMI"), General Growth Services, Inc. ("GGSI") and GGPLP REIT Services, LLC ("GGPRS"). GGMI
and GGSI are taxable REIT subsidiaries ("TRS"s), which provide management, leasing, tenant coordination, business development,
marketing, strategic partnership and other services for a majority of our Unconsolidated Real Estate Affiliates (defined below)
and for substantially all of our Consolidated Properties, as defined below. GGSI also serves as a contractor to GGMI for these
services. GGPRS generally provides financial, accounting, tax, legal, development, and other services to our Consolidated Properties.



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



F-68







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Principles of Consolidation and Basis
of Presentation



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



We operate in a single reportable segment
which includes the operation, development and management of retail and other rental properties, primarily regional malls. Our portfolio
is targeted to a range of market sizes and consumer tastes. Each of our operating properties is considered a separate operating
segment, as each property earns revenues and incurs expenses, individual operating results are reviewed and discrete financial
information is available. The Company's chief operating decision maker is comprised of a team of several members of executive management
who use Company NOI in assessing segment operating performance. We do not distinguish or group our consolidated operations based
on geography, size or type. Our operating properties have similar economic characteristics and provide similar products and services
to our tenants. There are no individual operating segments that are greater than 10% of combined revenue, Company NOI, or combined
assets. Company NOI excludes from NOI certain non-cash and non-comparable items such as straight-line rent and intangible asset
and liability amortization, which are a result of our emergence, acquisition accounting and other capital contribution or restructuring
events. Further, all material operations are within the United States and no customer or tenant comprises more than 10% of consolidated
revenues. As a result, the Company's operating properties are aggregated into a single reportable segment.



Reclassifications



Certain prior period amounts included in
the Consolidated Statements of Operations and Comprehensive Income (Loss) and related footnotes associated with properties we have
disposed of have been reclassified to discontinued operations for all periods presented (Note 4). Additionally, $18.4 million of
accrued interest related to the tax indemnification liability (Note 18) was reclassified from accounts payable and accrued expenses
to tax indemnification liability in our Consolidated Balance Sheets as of December 31, 2013, as presented herein. Also, $32.2
million of notes receivable was reclassified from acquisition of real estate and property additions to loans to joint venture partners
in our Consolidated Statements of Cash Flows for the year ended December 31, 2013.



Properties



Real estate assets are stated at cost less
any provisions for impairments. Expenditures for significant betterments and improvements are capitalized. Maintenance and repairs
are charged to expense when incurred. Construction and improvement costs incurred in connection with the development of new properties
or the redevelopment of existing properties are capitalized. Real estate taxes, interest costs, and internal costs associated with
leasing and development overhead incurred during construction periods are capitalized. Capitalization is based on qualified expenditures
and interest rates. Capitalized real estate taxes, interest costs, and internal costs associated with leasing and development overhead
are amortized over lives which are consistent with the related assets.



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



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



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



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



F-69







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



Acquisitions of Operating Properties
(Note 3)



Acquisitions of properties are accounted
for utilizing the acquisition method of accounting and, accordingly, the results of operations of acquired properties have been
included in the results of operations from the respective dates of acquisition. Estimates of future cash flows and other valuation
techniques are used to allocate the purchase price of acquired property between land, buildings and improvements, equipment, assumed
debt liabilities and identifiable intangible assets and liabilities such as amounts related to in-place tenant leases, acquired
above and below-market tenant and ground leases, and tenant relationships. No significant value had been ascribed to tenant relationships.



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



The estimated fair value of in-place tenant
leases includes lease origination costs (the costs we would have incurred to lease the property to the current occupancy level
of the property) and the lost revenues during the period necessary to lease-up from vacant to the current occupancy level. Such
estimates include the fair value of leasing commissions, legal costs and tenant coordination costs that would be incurred to lease
the property to this occupancy level. Additionally, we evaluate the time period over which such occupancy level would be achieved
and include an estimate of the net operating costs (primarily real estate taxes, insurance and utilities) incurred during the lease-up
period, which generally ranges up to one year. The fair value of acquired in-place tenant leases is included in the balance of
buildings and equipment and amortized over the remaining lease term for each tenant.



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



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



|                        |  | Gross Asset |         |  | Accumulated Amortization |   |          | Net Carrying Amount | 
|----------------------- |  | ----------- | ------- |  | ------------------------ | - | -------- | ------------------- | 
|As of December 31, 2014 |  |             |         |  |                          |   |          |                     | 
|Tenant leases:          |  |             |         |  |                          |   |          |                     | 
|In-place value          |  | $           | 608,840 |  |                          | $ | (362,531 | )                   | 
|As of December 31, 2013 |  |             |         |  |                          |   |          |                     | 
|Tenant leases:          |  |             |         |  |                          |   |          |                     | 
|In-place value          |  | $           | 797,311 |  |                          | $ | (420,370 | )                   | 



The above-market tenant leases and below-market
ground leases are included in prepaid expenses and other assets (Note 15); the below-market tenant leases, above-market ground
leases and above-market headquarters office lease are included in accounts payable and accrued expenses (Note 16) in our Consolidated
Balance Sheets.



Amortization/accretion of all intangibles,
including the intangibles in Note 15 and Note 16, had the following effects on our income (loss) from continuing operations:



|                                                       |  | Year Ended December 31, |         
|------------------------------------------------------ |  | ----------------------- | --------
|                                                       |  | 2014                    |         
|Amortization/accretion effect on continuing operations |  | $                       | (196,792



F-70







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



Future amortization/accretion of these
intangibles is estimated to decrease results from continuing operations as follows:





|Year |  | Amount |        
|---- |  | ------ | -------
|2015 |  | $      | 133,254
|2016 |  |        | 103,718
|2017 |  |        | 78,008 
|2018 |  |        | 51,032 
|2019 |  |        | 28,320 



Investments in Unconsolidated Real Estate
Affiliates (Note 6)



We account for investments in joint ventures
where we own a non-controlling joint interest using the equity method. Under the equity method, the cost of our investment is adjusted
for our share of the earnings of such Unconsolidated Real Estate Affiliates from the date of acquisition, increased by our contributions
and reduced by distributions received.



To determine the method of accounting for
partially owned joint ventures, we evaluate the characteristics of associated entities and determine whether an entity is a variable
interest entity ("VIE") and, if so, determine which party is primary beneficiary by analyzing whether we have both the
power to direct the entity's significant economic activities and the obligation to absorb potentially significant losses or receive
potentially significant benefits. Significant judgments and assumptions inherent in this analysis include the nature of the entity's
operations, future cash flow projections, the entity's financing and capital structure, and contractual relationship and terms.
We consolidate a VIE when we have determined that we are the primary beneficiary.



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



Generally, the operating agreements with
respect to our Unconsolidated Real Estate Affiliates provide that assets, liabilities and funding obligations are shared in accordance
with our ownership percentages. Therefore, we generally also share in the profit and losses, cash flows and other matters relating
to our Unconsolidated Real Estate Affiliates in accordance with our respective ownership percentages. Except for Retained Debt
(as described in Note 6), differences between the carrying amount of our investment in the Unconsolidated Real Estate Affiliates
and our share of the underlying equity of our Unconsolidated Real Estate Affiliates are typically amortized over lives ranging
from five to 45 years. When cumulative distributions exceed our investment in the joint venture, the investment is reported
as a liability in our consolidated financial statements. The liability is limited to our maximum potential obligation to fund contractual
obligations, including recourse related to certain debt obligations.



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



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



Cash and Cash Equivalents



Highly-liquid investments with initial
maturities of three months or less are classified as cash equivalents, excluding amounts restricted by certain lender and other
agreements.



Leases



Our leases, in which we are the lessor
or lessee, are substantially all accounted for as operating leases. Leases in which we are the lessor that transfer substantially
all the risks and benefits of ownership to tenants are considered finance leases and the present values of the minimum lease payments
and the estimated residual values of the leased properties, if any, are accounted for as receivables. Leases in which we are the
lessee that transfer substantially all the risks and benefits of ownership to us are considered capital leases and the present
values of the minimum lease payments are accounted for as assets and liabilities.



F-71







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



Tenant improvements, either paid directly
or in the form of construction allowances paid to tenants, are capitalized as Buildings and equipment and depreciated over the
shorter of the useful life or the applicable lease term.



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



Deferred Expenses



Deferred expenses primarily consist of
leasing commissions and related costs and are amortized using the straight-line method over the life of the leases. Deferred expenses
also include financing fees we incurred in order to obtain long-term financing and are amortized as interest expense over the terms
of the respective financing agreements using the straight-line method, which approximates the effective interest method.



Revenue Recognition and Related Matters



Minimum rents are recognized on a straight-line basis over the
terms of the related operating leases, including the effect of any free rent periods. Minimum rents also include lease termination
income collected from tenants to allow for the tenant to vacate their space prior to their scheduled termination dates, as well
as, accretion related to above and below-market tenant leases on acquired properties and properties that were recorded at fair
value at the Effective Date. The following is a summary of amortization of straight-line rent, net amortization /accretion related
to above and below-market tenant leases and termination income, which is included in minimum rents:



|                                                                   |  | Year Ended December 31, |        
|------------------------------------------------------------------ |  | ----------------------- | -------
|                                                                   |  | 2014                    |        
|Amortization of straight-line rent                                 |  | $                       | 48,254 
|Net amortization/accretion of above and below-market tenant leases |  |                         | (66,285
|Lease termination income                                           |  |                         | 10,590 



The following is a summary of straight-line
rent receivables, which are included in accounts and notes receivable, net in our Consolidated Balance Sheets and are reduced for
allowances and amounts doubtful of collection:



|                                    |  | December 31, 2014 |         |  | December 31, 2013 |  
|----------------------------------- |  | ----------------- | ------- |  | ----------------- | -
|Straight-line rent receivables, net |  | $                 | 228,153 |  |                   | $



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



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



We provide an allowance for doubtful accounts
against the portion of accounts receivable, including straight-line rents, which is estimated to be uncollectible. Such allowances
are reviewed periodically based upon our recovery experience. The following table summarizes the changes in allowance for doubtful
accounts:



F-72







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



|                                                            |  | 2014 |         |   | 2013 |   |         | 2012 | 
|----------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- | 
|Balance as of January 1,                                    |  | $    | 17,892  |   |      | $ | 24,692  |      | 
|Provision for doubtful accounts(1)                          |  |      | 10,934  |   |      |   | 5,528   |      | 
|Provisions for doubtful accounts in discontinued operations |  |      | 602     |   |      |   | 1,277   |      | 
|Write-offs                                                  |  |      | (13,807 | ) |      |   | (13,605 | )    | 
|Balance as of December 31,                                  |  | $    | 15,621  |   |      | $ | 17,892  |      | 

_______________________________________________________



| | (1) | Excludes recoveries of $2.7 million, $1.9 million and $3.3 million for the years ended December 31,
2014, 2013 and 2012, respectively.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------



Management Fees and Other Corporate
Revenues



Management fees and other corporate revenues
primarily represent management and leasing fees, development fees, financing fees, and fees for other ancillary services performed
for the benefit of certain of the Unconsolidated Real Estate Affiliates. Management fees are reported at 100% of the revenue earned
from the joint venture in management fees and other corporate revenues on our Consolidated Statements of Operations and Comprehensive
Income (Loss). Our share of the management fee expense incurred by the Unconsolidated Real Estate Affiliates is reported within
equity in income of Unconsolidated Real Estate Affiliates on our Consolidated Statements of Operations and Comprehensive Income
(Loss) and in property management and other costs in the Condensed Combined Statements of Income in Note 6.



The following table summarizes the management fees from affiliates
and our share of the management fee expense:



|                                    |  | Year Ended December 31, |        
|----------------------------------- |  | ----------------------- | -------
|                                    |  | 2014                    |        
|Management fees from affiliates     |  | $                       | 70,887 
|Management fee expense              |  |                         | (26,972
|Net management fees from affiliates |  | $                       | 43,915 



Income Taxes (Note 8)



We expect to distribute 100% of our taxable
capital gains and taxable ordinary income to shareholders annually. If, with respect to any taxable year, we fail to maintain our
qualification as a REIT and cannot correct such failure, we would not be allowed to deduct distributions to shareholders in computing
our taxable income and federal income tax. If any of our REIT subsidiaries fail to qualify as a REIT, such failure could result
in our loss of REIT status. If we lose our REIT status, corporate level income tax would apply to our taxable income at regular
corporate rates, or we may be subject to applicable alternative minimum tax. As a result, the amount available for distribution
to holders of equity securities that would otherwise receive dividends would be reduced for the year or years involved, and we
would no longer be required to make distributions. In addition, unless we were entitled to relief under the relevant statutory
provisions, we would be disqualified from treatment as a REIT for four subsequent taxable years.



Deferred income taxes are accounted for
using the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences
of events that have been included in the financial statements or tax returns and are recorded primarily by certain of our taxable
REIT subsidiaries. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial
reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected
to reverse. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards. A valuation allowance
is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be realized. An
increase or decrease in the valuation allowance that results from a change in circumstances, and which causes a change in our judgment
about the realizability of the related deferred tax asset, is included in the current tax provision. In 2010, GGP experienced a
change in control, as a result of the transactions undertaken to emerge from bankruptcy, pursuant to Section 382 of the Internal
Revenue Code that could limit the benefit of deferred tax assets. In addition, we recognize and report interest and penalties,
if necessary, related to uncertain tax positions within our provision for income tax expense.



F-73







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



Impairment



Operating properties



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



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



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



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



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



During the year ended December 31,
2014, we recorded a $5.3 million impairment charge in continuing operations of our Consolidated Statements of Operations and Comprehensive
Income (Loss). This impairment charge related to one operating property and was recorded because the estimated fair value of the
property, based on a bona-fide purchase offer, was less than the carrying value of the properties. During the year ended December 31,
2014, we recorded no impairment charges in discontinued operations of our Consolidated Statement of Operations and Comprehensive
Income (Loss).



During the year ended December 31,
2013, we recorded no impairment charges in continuing operations of our Consolidated Statements of Operations and Comprehensive
Income (Loss). During the year ended December 31, 2013, we recorded $30.9 million of impairment charges in discontinued operations
of our Consolidated Statement of Operations and Comprehensive Income (Loss), which related to five operating properties. We recorded
a gain on extinguishment of debt in discontinued operations of approximately $66.7 million in the first quarter of 2014 related
to one of these impaired properties that is included in discontinued operations of our Consolidated Statement of Operations and
Comprehensive Income (Loss).



During the year ended December 31,
2012, we recorded no impairment charge in continuing operations of our Consolidated Statements of Operations and Comprehensive
Income (Loss). During the year ended December 31, 2012, we recorded $108.7 million of impairment charges in discontinued operations
of our Consolidated Statement of Operations and Comprehensive Income (Loss), which related to eight operating properties.



Investment in Unconsolidated Real Estate
Affiliates



A series of operating losses of an investee
or other factors may indicate that an other-than-temporary decline in value of our investment in an Unconsolidated Real Estate
Affiliate has occurred. The investment in each of the Unconsolidated Real Estate Affiliates is evaluated for valuation declines
below the carrying amount. Accordingly, in addition to the property-specific impairment analysis that we perform for such joint
ventures (as part of our operating property impairment process described above), we also considered whether there were other-than-temporary
declines with respect to the carrying values of our Unconsolidated Real Estate Affiliates. No impairments related to our investments
in Unconsolidated Real Estate Affiliates were recognized for the years ended December 31, 2014, 2013, and 2012.



F-74







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



Property Management and Other and General
and Administrative Costs



Property management and other costs represent
regional and home office costs and include items such as corporate payroll, rent for office space, supplies and professional fees,
which represent corporate overhead costs not generated at the properties. General and administrative costs represent the costs
to run the public company and include payroll and other costs for executives, audit fees, professional fees and administrative
fees related to the public company.



Fair Value Measurements (Note 5)



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



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

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

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



The impairment section above includes a
discussion of all impairments recognized during the years ended December 31, 2014, 2013 and 2012, which were based on Level 2
inputs. Note 5 includes a discussion of properties measured at fair value on a non-recurring basis using Level 2 inputs and
the fair value of debt, which is estimated on a recurring basis using Level 2 and Level 3 inputs. Note 9 includes a discussion
of our outstanding warrants, which were measured at fair value using Level 3 inputs until the warrant agreement was amended
on March 28, 2013. Note 11 includes a discussion of certain redeemable noncontrolling interests that are measured at fair
value using Level 1 inputs.



Concentrations of Credit Risk



Financial instruments that potentially
subject us to significant concentrations of credit risk consist principally of cash and cash equivalents. We are exposed to credit
risk with respect to cash held at various financial institutions and access to our credit facility. Our credit risk exposure with
regard to our cash and the $1.5 billion available under our credit facility is spread among a diversified group of investment grade
financial institutions. At December 31, 2014, we have $100.0 million outstanding under our credit facility.



Recently Issued Accounting Pronouncements



Effective January 1, 2015 with early adoption
permitted January 1, 2014 the definition of discontinued operations has been revised to limit what qualifies for this classification
and presentation to disposals of components of a company that represent strategic shifts that have (or will have) a major effect
on the company’s operations and financial results. Required expanded disclosures for disposals or disposal groups that qualify
for discontinued operations are intended to provide users of financial statements with enhanced information about the assets, liabilities,
revenues and expenses of such discontinued operations. In addition, in accordance with this pronouncement, companies are required
to disclose the pretax profit or loss of an individually significant component that does not qualify for discontinued operations
treatment. Pursuant to its terms, we have elected to adopt this pronouncement effective January 1, 2015. This definition will be
applied prospectively after the adoption and is anticipated to substantially reduce the number of transactions, going forward,
that qualify for discontinued operations as compared to previous periods.



Effective January 1, 2017, companies will
be required to apply a five-step model in accounting for revenue arising from contracts with customers. The core principle of the
revenue model is that a company recognizes revenue to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Lease contracts
will be excluded from this revenue recognition criteria; however, the sale of real estate will be required to follow the new model.
Expanded quantitative and qualitative disclosures regarding revenue recognition will be required for contracts that are subject
to this pronouncement. The Company is evaluating the potential impact of this pronouncement on its consolidated financial statements.



F-75







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



Use of Estimates



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



NOTE 3 ACQUISITIONS AND JOINT VENTURE ACTIVITY



On December 24, 2014 we formed a joint
venture that holds 100% of Bayside Marketplace and sold a portion of our interest to a third party. We received $71.9 million in
cash, net of debt assumed of $122.5 million, and the partner received a 49% economic interest in the joint venture. We recorded
gain from change in control of investment property of $91.2 million on our Consolidated Statements of Operations and Comprehensive
Income (Loss) for the year ended December 31, 2014, as a result of this transaction. We are the managing member, however we account
for the joint venture under the equity method of accounting because we share control over major decisions with the joint venture
partner and the partner has substantive participating rights including establishing operating and capital decisions including budgets,
in the ordinary course of business.



The table below summarizes the gain calculation:



|Cash received from joint venture partner                                |  | $ | 71,883  |  
|----------------------------------------------------------------------- |  | - | ------- | -
|Less: Proportionate share of previous investment in Bayside Marketplace |  |   | (19,310 | )
|Gain from change in control of investment property                      |  | $ | 91,193  |  



On December 17, 2014, we entered into an
agreement to acquire the Crown Building in New York City, New York located at 730 Fifth Avenue for approximately $1.775 billion
through a joint venture in which we have a 50% interest. We contributed $50.0 million to the joint venture to fund a deposit related
to the acquisition that is expected to close in the second quarter of 2015.



During the year ended December 31, 2014,
we acquired joint venture interests in five retail properties located in New York City, Miami, and Bellevue (WA) for total consideration
of $690.2 million (excluding closing costs), which included equity of $405.5 million and the assumption of debt of $310.2 million.
The five retail properties acquired are described below. We account for the joint ventures under the equity method of accounting
(excluding Miami Design District Associates which is accounted for using the cost method) because we share control over major decisions
with our joint venture partners. These properties will be accounted for as Unconsolidated Real Estate Affiliates, and are recorded
within the investment in and loans to/from Unconsolidated Real Estate Affiliates on our Consolidated Balance Sheets (Note 6).



On October 22, 2014, we contributed $49.1
million for a 50% interest in a joint venture that acquired the retail portion of 530 Fifth Avenue in New York, New York for a
gross purchase price of $300 million with $190 million in gross property-level financing. We have an effective 50% interest in
the joint venture. In connection with the acquisition, we provided $39.4 million in loans to our joint venture partner and $31.0
million in a mezzanine loan to the joint venture (Note 14).



On September 30, 2014, we contributed $8.3
million for a 10% interest in a joint venture that acquired the retail portion of 522 Fifth Avenue in New York, New York for a
gross purchase price of $165.0 million with $83.3 million in gross property-level financing. We have an effective 10% interest
in the joint venture. In connection with the acquisition we provided a $5.3 million loan to our joint venture partner (Note 14).



On September 15, 2014, we contributed $244.7
million to a joint venture that acquired a 20% interest in a development located in Miami, Florida and an 85.67% interest in a
mall located in Bellevue, Washington. The joint venture's 20% interest in the Miami Design District Associates, LLC ("MDDA")
was acquired for a purchase price of $280.0 million. Through the formation of the joint venture, we have a 12.5% share of this
investment and account for it as a cost method investment. The joint venture partner contributed a property, The Shops at the Bravern,
LLC ("Bravern"), for a net contribution of $79.0 million. Through the formation of the joint venture, we have a 40% interest
in the property and account for the joint venture under the equity method of accounting.



F-76







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



On June 27, 2014, we contributed $106.6
million to a joint venture that acquired 685 Fifth Avenue in New York, New York for a gross purchase price of $521.4 million with
$340.0 million in gross property-level financing. We have a 50% interest in the joint venture. In connection with the acquisition
we provided an $85.3 million loan to our joint venture partner (Note 14).



During the year ended December 31,
2013, we acquired four retail properties for total consideration of $396.3 million, which included cash of $355.0 million and the
assumption of debt of $41.3 million. The four retail properties acquired include a 50% interest in a portfolio comprised of two
properties in the Union Square area of San Francisco, which is accounted for as an Unconsolidated Real Estate Affiliate (Note 6).
The following table summarizes the allocation of the purchase price to the net assets acquired at the date of acquisition. These
allocations were based on the relative fair values of the assets acquired and liabilities assumed.



|Investment in real estate, including intangible assets and liabilities |  | $ | 314,750 | 
|---------------------------------------------------------------------- |  | - | ------- | 
|Investment in Unconsolidated Real Estate Affiliate                     |  |   | 39,774  | 
|Net working capital                                                    |  |   | 515     | 
|Net assets acquired                                                    |  | $ | 355,039 | 



On June 28, 2013, we acquired the
remaining 50% interest in Quail Springs Mall, from our joint venture partner, for total consideration of $90.5 million, which included
$55.5 million of cash and the assumption of the remaining 50% of debt. The investment property was previously recorded under the
equity method of accounting and is now consolidated. The acquisition resulted in a remeasurement of the net assets acquired to
fair value and as such, we recorded gains from changes in control of investment properties of $19.8 million for the year ended
December 31, 2013, as the fair value of the net assets acquired was greater than our investment in the Unconsolidated Real
Estate Affiliate and the cash paid to acquire our joint venture partner's interest. The table below summarizes the gain calculation:



|Total fair value of net assets acquired                   |  | $ | 110,893 |  
|--------------------------------------------------------- |  | - | ------- | -
|Previous investment in Quail Springs Mall                 |  |   | (35,610 | )
|Cash paid to acquire our joint venture partner's interest |  |   | (55,507 | )
|Gains from changes in control of investment properties    |  | $ | 19,776  |  



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





|Investment in real estate, including intangible assets and liabilities |  | $ | 186,627 |  
|---------------------------------------------------------------------- |  | - | ------- | -
|Fair value of debt                                                     |  |   | (77,204 | )
|Net working capital                                                    |  |   | 1,470   |  
|Net assets acquired                                                    |  | $ | 110,893 |  





On May 16, 2013, we formed a joint
venture that holds 100% of The Grand Canal Shoppes and The Shoppes at The Palazzo. We received $411.5 million in cash, net of debt
assumed of $311.9 million, and the joint venture partner received a 49.9% economic interest in the joint venture. We recorded gains
from changes in control of investment properties of $200.0 million on our Consolidated Statements of Operations and Comprehensive
Income (Loss) for the year ended December 31, 2013, as a result of this transaction. We are the general partner, however we
account for the joint venture under the equity method of accounting because we share control over major decisions with the partner
and the partner has substantive participating rights. The table below summarizes the gain calculation:



|Cash received from joint venture partner                                                             |  | $ | 411,476  |  
|---------------------------------------------------------------------------------------------------- |  | - | -------- | -
|Proportionate share of previous investment in The Grand Canal Shoppes and The Shoppes at The Palazzo |  |   | (211,468 | )
|Gains from changes in control of investment properties                                               |  | $ | 200,008  |  



F-77







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



NOTE 4 DISPOSITIONS, DISCONTINUED OPERATIONS AND GAINS (LOSSES)
ON DISPOSITIONS OF INTERESTS IN OPERATING PROPERTIES



All of our dispositions of consolidated
operating properties for which there is no continuing involvement, for all periods presented, are included in discontinued operations
in our Consolidated Statements of Operations and Comprehensive Income (Loss) and are summarized in the table below. Gains on disposition
and gains on debt extinguishment are recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss) in the
period the property is disposed.



During 2014, one property, which was previously
transferred to a special servicer, was sold in a lender-directed sale in full satisfaction of the debt. This resulted in a gain
on extinguishment of debt of $66.7 million and a reduction of property-level debt of $79.0 million. We transferred six office properties
and cash aggregating total consideration of $268.0 million in full settlement of our $322.0 million tax indemnification liability
(Note 18). Additionally, we sold three operating properties for $278.6 million, which resulted in a gain of $125.2 million. We
used the net proceeds from these transactions to repay debt of $127.0 million.



During 2013, we sold our interests in six
retail properties for total consideration of $142.6 million, which reduced our property level debt by approximately $143.6 million.
Additionally, one property, which was previously transferred to a special servicer, was sold in a lender-directed sale in full
satisfaction of the debt. This resulted in a gain on debt extinguishment of $25.9 million and a reduction of property level debt
of $96.9 million.



On January 12, 2012, we completed
the RPI Spin-Off, a 30-mall portfolio. The RPI Spin-Off was accomplished through a special dividend of the common stock of RPI
to holders of GGP common stock as of December 30, 2011.



In addition, during 2012, we sold our interests
in an office portfolio, three office properties, 18 retail properties and an anchor box for total cash proceeds of $394.5 million,
and reduced our property level debt by $320.6 million.



The following table summarizes the operations
of the properties included in discontinued operations.



|                                                        |  | Year Ended December 31, |        
|------------------------------------------------------- |  | ----------------------- | -------
|                                                        |  | 2014                    |        
|Retail and other revenue                                |  | $                       | 27,276 
|Total revenues                                          |  |                         | 27,276 
|Retail and other operating expenses                     |  |                         | 17,515 
|Provisions for impairment                               |  |                         | —      
|Total expenses                                          |  |                         | 17,515 
|Operating income (loss)                                 |  |                         | 9,761  
|Interest expense, net                                   |  |                         | (2,188 
|Provision for income taxes                              |  |                         | —      
|Gains (losses) on dispositions                          |  |                         | 130,416
|Net income (loss) from operations                       |  |                         | 137,989
|Gain on extinguishment of debt                          |  |                         | 66,679 
|Gain on extinguishment of tax indemnification liability |  |                         | 77,215 
|Net income (loss) from discontinued operations          |  | $                       | 281,883





F-78







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



NOTE 5 FAIR VALUE



Fair Value of Certain Operating Properties



The following table summarizes certain
of our assets that are measured at fair value on a nonrecurring basis as a result of impairment charges recorded as of December 31,
2014 and 2013.



|                              |  | Total Fair Value Measurement |        |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |   |   | Significant Other Observable Inputs (Level 2) |  |   | Significant Unobservable Inputs (Level 3) | 
|----------------------------- |  | ---------------------------- | ------ |  | -------------------------------------------------------------- | - | - | --------------------------------------------- |  | - | ----------------------------------------- | 
|Year Ended December 31, 2014  |  |                              |        |  |                                                                |   |   |                                               |  |   |                                           | 
|Investments in real estate(1) |  | $                            | 26,250 |  |                                                                | $ | — |                                               |  | $ | 26,250                                    | 
|Year Ended December 31, 2013  |  |                              |        |  |                                                                |   |   |                                               |  |   |                                           | 
|Investments in real estate(1) |  | $                            | 12,000 |  |                                                                | $ | — |                                               |  | $ | 12,000                                    | 

________________________________________________________



| | (1) | Refer to Note 2 for more information regarding impairment.
| | --- | ----------------------------------------------------------



We estimated the fair value relating to
impairment assessments based upon negotiated sales prices, which is classified within Level 2 of the fair value hierarchy.



Fair Value of Financial Instruments



The fair values of our financial instruments
approximate their carrying amount in our consolidated financial statements except for debt. Management's estimates of fair value
are presented below for our debt as of December 31, 2014 and 2013.



|                   |  | December 31, 2014  |            |  | December 31, 2013    |  
|------------------ |  | ------------------ | ---------- |  | -------------------- | -
|                   |  | Carrying Amount(1) |            |  | Estimated Fair Value |  
|Fixed-rate debt    |  | $                  | 13,606,936 |  |                      | $
|Variable-rate debt |  |                    | 2,391,353  |  |                      |  
|                   |  | $                  | 15,998,289 |  |                      | $

________________________________________________________



| | (1) | Includes market rate adjustments of $19.9 million and $0.9 million as of December 31, 2014 and 2013, respectively.
| | --- | ------------------------------------------------------------------------------------------------------------------



The fair value of our Junior Subordinated
Notes approximates their carrying amount as of December 31, 2014 and 2013. We estimated the fair value of mortgages, notes
and other loans payable using Level 2 and Level 3 inputs based on recent financing transactions, estimates of the fair
value of the property that serves as collateral for such debt, historical risk premiums for loans of comparable quality, current
London Interbank Offered Rate ("LIBOR"), U.S. treasury obligation interest rates and on the discounted estimated future
cash payments to be made on such debt. The discount rates estimated reflect our judgment as to what the approximate current lending
rates for loans or groups of loans with similar maturities and assume that the debt is outstanding through maturity. We have utilized
market information as available or present value techniques to estimate the amounts required to be disclosed. Since such amounts
are estimates that are based on limited available market information for similar transactions and do not acknowledge transfer or
other repayment restrictions that may exist in specific loans, it is unlikely that the estimated fair value of any such debt could
be realized by immediate settlement of the obligation.



F-79







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



NOTE 6 UNCONSOLIDATED REAL ESTATE AFFILIATES



Following is summarized financial information
for all of our Unconsolidated Real Estate Affiliates.



|                                                                                      |  | December 31,
2014 |            |   | December 31,
 2013 |  
|------------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ------------------ | -
|Condensed Combined Balance Sheets—Unconsolidated Real Estate Affiliates               |  |                   |            |   |                    |  
|Assets:                                                                               |  |                   |            |   |                    |  
|Land                                                                                  |  | $                 | 1,152,485  |   |                    | $
|Buildings and equipment                                                               |  |                   | 10,009,490 |   |                    |  
|Less accumulated depreciation                                                         |  |                   | (2,591,347 | ) |                    |  
|Construction in progress                                                              |  |                   | 125,931    |   |                    |  
|Net property and equipment                                                            |  |                   | 8,696,559  |   |                    |  
|Investments in unconsolidated joint ventures                                          |  |                   | 16,462     |   |                    |  
|Net investment in real estate                                                         |  |                   | 8,713,021  |   |                    |  
|Cash and cash equivalents                                                             |  |                   | 308,621    |   |                    |  
|Accounts and notes receivable, net                                                    |  |                   | 203,511    |   |                    |  
|Deferred expenses, net                                                                |  |                   | 281,835    |   |                    |  
|Prepaid expenses and other assets                                                     |  |                   | 594,257    |   |                    |  
|Total assets                                                                          |  | $                 | 10,101,245 |   |                    | $
|Liabilities and Owners' Equity:                                                       |  |                   |            |   |                    |  
|Mortgages, notes and loans payable                                                    |  | $                 | 7,945,828  |   |                    | $
|Accounts payable, accrued expenses and other liabilities                              |  |                   | 418,995    |   |                    |  
|Cumulative effect of foreign currency translation ("CFCT")                            |  |                   | (35,238    | ) |                    |  
|Owners' equity, excluding CFCT                                                        |  |                   | 1,771,660  |   |                    |  
|Total liabilities and owners' equity                                                  |  | $                 | 10,101,245 |   |                    | $
|Investment In and Loans To/From Unconsolidated Real Estate Affiliates, Net:           |  |                   |            |   |                    |  
|Owners' equity                                                                        |  | $                 | 1,736,422  |   |                    | $
|Less: joint venture partners' equity                                                  |  |                   | (861,515   | ) |                    |  
|Plus: excess investment/basis differences                                             |  |                   | 1,694,257  |   |                    |  
|Investment in and loans to/from Unconsolidated Real Estate Affiliates, net            |  | $                 | 2,569,164  |   |                    | $
|Reconciliation—Investment In and Loans To/From Unconsolidated Real Estate Affiliates: |  |                   |            |   |                    |  
|Asset—Investment in and loans to/from Unconsolidated Real Estate Affiliates           |  | $                 | 2,604,762  |   |                    | $
|Liability—Investment in Unconsolidated Real Estate Affiliates                         |  |                   | (35,598    | ) |                    |  
|Investment in and loans to/from Unconsolidated Real Estate Affiliates, net            |  | $                 | 2,569,164  |   |                    | $





F-80







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)





|                                                                              |  | Year Ended  December 31,
 2014 |           |   | Year Ended  December 31,
 2013 |   |           | Year Ended  December 31,
 2012 | 
|----------------------------------------------------------------------------- |  | ------------------------------ | --------- | - | ------------------------------ | - | --------- | ------------------------------ | 
|Condensed Combined Statements of Income—Unconsolidated Real Estate Affiliates |  |                                |           |   |                                |   |           |                                | 
|Revenues:                                                                     |  |                                |           |   |                                |   |           |                                | 
|Minimum rents                                                                 |  | $                              | 827,436   |   |                                | $ | 768,353   |                                | 
|Tenant recoveries                                                             |  |                                | 355,188   |   |                                |   | 327,033   |                                | 
|Overage rents                                                                 |  |                                | 30,915    |   |                                |   | 32,500    |                                | 
|Other                                                                         |  |                                | 39,804    |   |                                |   | 34,007    |                                | 
|Total revenues                                                                |  |                                | 1,253,343 |   |                                |   | 1,161,893 |                                | 
|Expenses:                                                                     |  |                                |           |   |                                |   |           |                                | 
|Real estate taxes                                                             |  |                                | 110,665   |   |                                |   | 104,270   |                                | 
|Property maintenance costs                                                    |  |                                | 39,105    |   |                                |   | 34,666    |                                | 
|Marketing                                                                     |  |                                | 14,626    |   |                                |   | 15,981    |                                | 
|Other property operating costs                                                |  |                                | 172,547   |   |                                |   | 160,286   |                                | 
|Provision for doubtful accounts                                               |  |                                | 3,052     |   |                                |   | 1,283     |                                | 
|Property management and other costs(1)                                        |  |                                | 57,980    |   |                                |   | 52,803    |                                | 
|General and administrative                                                    |  |                                | 9,250     |   |                                |   | 2,333     |                                | 
|Depreciation and amortization                                                 |  |                                | 325,787   |   |                                |   | 279,522   |                                | 
|Total expenses                                                                |  |                                | 733,012   |   |                                |   | 651,144   |                                | 
|Operating income                                                              |  |                                | 520,331   |   |                                |   | 510,749   |                                | 
|                                                                              |  |                                |           |   |                                |   |           |                                | 
|Interest income                                                               |  |                                | 5,909     |   |                                |   | 1,431     |                                | 
|Interest expense                                                              |  |                                | (315,339  | ) |                                |   | (286,917  | )                              | 
|Provision for income taxes                                                    |  |                                | (1,497    | ) |                                |   | (316      | )                              | 
|Equity in loss of unconsolidated joint ventures                               |  |                                | (194      | ) |                                |   | —         |                                | 
|Income from continuing operations                                             |  |                                | 209,210   |   |                                |   | 224,947   |                                | 
|Net income from disposed investment                                           |  |                                | 1,415     |   |                                |   | 28,166    |                                | 
|Allocation to noncontrolling interests                                        |  |                                | (58       | ) |                                |   | 1         |                                | 
|Net income attributable to the ventures                                       |  | $                              | 210,567   |   |                                | $ | 253,114   |                                | 
|Equity In Income of Unconsolidated Real Estate Affiliates:                    |  |                                |           |   |                                |   |           |                                | 
|Net income attributable to the ventures                                       |  | $                              | 210,567   |   |                                | $ | 253,114   |                                | 
|Joint venture partners' share of income                                       |  |                                | (114,263  | ) |                                |   | (140,193  | )                              | 
|Amortization of capital or basis differences                                  |  |                                | (35,026   | ) |                                |   | (44,165   | )                              | 
|Equity in income of Unconsolidated Real Estate Affiliates                     |  | $                              | 61,278    |   |                                | $ | 68,756    |                                | 

________________________________________________________



| | (1) | Includes management fees charged to the unconsolidated joint ventures by GGMI, GGSI and GGPLP.
| | --- | ----------------------------------------------------------------------------------------------



The Unconsolidated Real Estate Affiliates
represent our investments in real estate joint ventures that are not consolidated. We hold interests in 24 domestic joint ventures,
comprising 38 U.S. retail properties and 3 strip/other retail centers, and one joint venture in Brazil. Generally, we share in
the profits and losses, cash flows and other matters relating to our investments in Unconsolidated Real Estate Affiliates in accordance
with our respective ownership percentages. We manage most of the properties owned by these joint ventures. As we have joint control
of these ventures with our venture partners, we account for these joint ventures under the equity method.



F-81







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



On December 1, 2014, we sold our interest
in a joint venture, which resulted in our recognition of a gain of $9.7 million. The $9.7 million gain is recognized within equity
in income of Unconsolidated Real Estate Affiliates on our Consolidated Statements of Operations and Comprehensive Income (Loss).
The gain is included in amortization of capital or basis differences in the table above.



Unconsolidated Mortgages, Notes and
Loans Payable and Retained Debt



Our proportionate share of the mortgages,
notes and loans payable of the unconsolidated joint ventures was $3.9 billion as of December 31, 2014 and $3.2 billion as
of December 31, 2013, including Retained Debt (as defined below). There can be no assurance that the Unconsolidated Properties
will be able to refinance or restructure such debt on acceptable terms or otherwise, or that joint venture operations or contributions
by us and/or our partners will be sufficient to repay such loans.



We have debt obligations in excess of our
pro rata share of the debt for one of our Unconsolidated Real Estate Affiliates ("Retained Debt"). This Retained Debt
represents distributed debt proceeds of the Unconsolidated Real Estate Affiliates in excess of our pro rata share of the non-recourse
mortgage indebtedness. The proceeds of the Retained Debt which were distributed to us are included as a reduction in our investment
in Unconsolidated Real Estate Affiliates. We had retained debt of $89.3 million at one property as of December 31, 2014, and
$90.6 million as of December 31, 2013. We are obligated to contribute funds on an ongoing basis, as needed, to our Unconsolidated
Real Estate Affiliates in amounts sufficient to pay debt service on such Retained Debt. If we do not contribute such funds, our
distributions from such Unconsolidated Real Estate Affiliates, or our interest in, could be reduced to the extent of such deficiencies.
As of December 31, 2014, we do not anticipate an inability to perform on our obligations with respect to Retained Debt.



NOTE 7 MORTGAGES, NOTES AND LOANS PAYABLE



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



|                                                     |  | December 31, 2014(1) |            |  | Weighted-
Average Interest Rate(2) |  |      | December 31, 2013(3) |  |   | Weighted-
Average Interest Rate(2) | 
|---------------------------------------------------- |  | -------------------- | ---------- |  | ---------------------------------- |  | ---- | -------------------- |  | - | ---------------------------------- | 
|Fixed-rate debt:                                     |  |                      |            |  |                                    |  |      |                      |  |   |                                    | 
|Collateralized mortgages, notes and loans payable(4) |  | $                    | 13,600,337 |  |                                    |  | 4.52 | %                    |  | $ | 13,907,029                         | 
|Corporate and other unsecured loans                  |  |                      | 6,599      |  |                                    |  | 4.41 | %                    |  |   | 12,791                             | 
|Total fixed-rate debt                                |  |                      | 13,606,936 |  |                                    |  | 4.52 | %                    |  |   | 13,919,820                         | 
|Variable-rate debt:                                  |  |                      |            |  |                                    |  |      |                      |  |   |                                    | 
|Collateralized mortgages, notes and loans payable(4) |  |                      | 2,291,353  |  |                                    |  | 2.00 | %                    |  |   | 1,700,817                          | 
|Revolving credit facility                            |  |                      | 100,000    |  |                                    |  | 1.73 | %                    |  |   | 51,800                             | 
|Total variable-rate debt                             |  |                      | 2,391,353  |  |                                    |  | 1.99 | %                    |  |   | 1,752,617                          | 
|Total Mortgages, notes and loans payable             |  | $                    | 15,998,289 |  |                                    |  | 4.14 | %                    |  | $ | 15,672,437                         | 
|Junior Subordinated Notes                            |  | $                    | 206,200    |  |                                    |  | 1.68 | %                    |  | $ | 206,200                            | 

________________________________________________________



| | (1) | Includes net $19.9 million of debt market rate adjustments.
| | --- | -----------------------------------------------------------



| | (2) | Represents the weighted-average interest rates on our principal balances, excluding the effects of deferred finance costs.
| | --- | --------------------------------------------------------------------------------------------------------------------------



| | (3) | Includes net $0.9 million of debt market rate adjustments.
| | --- | ----------------------------------------------------------



| | (4) | $100.9 million of the fixed-rate balance and $1.4 billion of the variable-rate balance is cross-collateralized.
| | --- | ---------------------------------------------------------------------------------------------------------------



Collateralized Mortgages, Notes and
Loans Payable



As of December 31, 2014, $21.9 billion
of land, buildings and equipment (before accumulated depreciation) and construction in progress have been pledged as collateral
for our mortgages, notes and loans payable. Certain of these consolidated secured loans, representing $1.5 billion of debt, are
cross-collateralized with other properties. Although a majority of the $15.9 billion of fixed and variable rate collateralized
mortgages, notes and loans payable are non-recourse, $1.7 billion of such mortgages, notes and loans payable are recourse to the
Company as guarantees on secured financings. In addition, certain mortgage loans contain other credit enhancement provisions which
have been provided by GGP. Certain mortgages, notes and loans payable may be prepaid but are generally subject to a prepayment
penalty equal to a yield-maintenance premium, defeasance or a percentage of the loan balance.



F-82







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



During the year ended December 31,
2014, we refinanced consolidated mortgage notes totaling $1.4 billion related to eight properties with net proceeds of $657.1 million.
The prior loans had a weighted-average term-to-maturity of 1.6 years, and a weighted-average interest rate of 4.8%. The new loans
have a weighted-average term-to-maturity of 6.7 years, and a weighted-average interest rate of 3.3%. In addition to these loans,
we also obtained a $450.0 million construction loan at Ala Moana Center with an interest rate of LIBOR plus 1.9%. As of December
31, 2014, the Company has drawn $228.9 million under this loan.



On August 1, 2014, we amended our $1.4
billion corporate loan secured by cross-collateralized mortgages on 14 properties. This amendment lowered the interest rate on
the loan from LIBOR plus 2.50% to LIBOR plus 1.75%. The loan matures on April 26, 2016. At our option, there are two one-year maturity
date extension options available, subject to certain compliance requirements.



Corporate and Other Unsecured Loans



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



|                          |  | December 31, 2014(2) |         |  | Weighted-Average Interest Rate |  |      | December 31, 2013(3) |  |   | Weighted-Average Interest Rate | 
|------------------------- |  | -------------------- | ------- |  | ------------------------------ |  | ---- | -------------------- |  | - | ------------------------------ | 
|Unsecured debt:           |  |                      |         |  |                                |  |      |                      |  |   |                                | 
|HHC Note(1)               |  |                      | 6,735   |  |                                |  | 4.41 | %                    |  |   | 13,179                         | 
|Revolving credit facility |  |                      | 100,000 |  |                                |  | 1.73 | %                    |  |   | 51,800                         | 
|Total unsecured debt      |  | $                    | 106,735 |  |                                |  | 1.90 | %                    |  | $ | 64,979                         | 

_________________________________________________________



| | (1) | Matures in December 2015.
| | --- | -------------------------



| | (2) | Excludes a market rate discount of $0.1 million that decreases the total amount that appears outstanding
in our Consolidated Balance Sheets. The market rate discount amortizes as an addition to interest expense over the life of the
loan.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Excludes a market rate discount of $0.4 million that decreases the total amount that appears outstanding
in our Consolidated Balance Sheets. The market rate discount amortizes as an addition to interest expense over the life of the
loan.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our Facility as amended on October 23,
2013, provides for revolving loans of up to $1.0 billion. The Facility has an uncommitted accordion feature for a total facility
of up to $1.5 billion. The Facility is scheduled to mature in October 2018 and is unsecured. Borrowings under the Facility bear
interest at a rate equal to LIBOR plus 132.5 to 195 basis points, which is determined by the Company's leverage level. The Facility
contains certain restrictive covenants which limit material changes in the nature of our business conducted, including but not
limited to, mergers, dissolutions or liquidations, dispositions of assets, liens, incurrence of additional indebtedness, dividends,
transactions with affiliates, prepayment of subordinated debt, negative pledges and changes in fiscal periods. In addition, we
are required not to exceed a maximum net debt-to-value ratio, a maximum leverage ratio and a minimum net cash interest coverage
ratio; we are not aware of any instances of non-compliance with such covenants as of December 31, 2014. $100.0 million was
outstanding on the Facility, as of December 31, 2014.



Junior Subordinated Notes



GGP Capital Trust I, a Delaware statutory
trust (the "Trust") and a wholly-owned subsidiary of GGPN, completed a private placement of $200.0 million of trust preferred
securities ("TRUPS") in 2006. The Trust also issued $6.2 million of Common Securities to GGPN. The Trust used the proceeds
from the sale of the TRUPS and Common Securities to purchase $206.2 million of floating rate Junior Subordinated Notes of GGPN
due 2036. Distributions on the TRUPS are equal to LIBOR plus 1.45%. Distributions are cumulative and accrue from the date of original
issuance. The TRUPS mature on April 30, 2036, but may be redeemed beginning on April 30, 2011 if the Trust exercises
its right to redeem a like amount of Junior Subordinated Notes. The Junior Subordinated Notes bear interest at LIBOR plus 1.45%
and are fully recourse to the Company. Though the Trust is a wholly-owned subsidiary of GGPN, we are not the primary beneficiary
of the Trust and, accordingly, it is not consolidated for accounting purposes. We have recorded the Junior Subordinated Notes as
a liability and our common equity interest in the Trust as prepaid expenses and other assets in our Consolidated Balance Sheets
as of December 31, 2014 and December 31, 2013.



F-83







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



Letters of Credit and Surety Bonds



We had outstanding letters of credit and
surety bonds of $49.1 million as of December 31, 2014 and $19.4 million as of December 31, 2013. These letters of credit
and bonds were issued primarily in connection with insurance requirements, special real estate assessments and construction obligations.



We are not aware of any instances of non-compliance
with our financial covenants related to our mortgages, notes and loans payable as of December 31, 2014.



NOTE 8 INCOME TAXES



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



As a REIT, we will generally not be subject
to corporate level Federal income tax on taxable income we distribute currently to our stockholders. If we fail to qualify as a
REIT in any taxable year, we will be subject to Federal income taxes at regular corporate rates (including any applicable alternative
minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if we qualify for taxation as a REIT,
we may be subject to certain state and local taxes on our income or property, and to Federal income and excise taxes on our undistributed
taxable income and capital gains. We are currently statutorily open to audit by the Internal Revenue Service for the years ended
December 31, 2011 through 2014 and are statutorily open to audit by state taxing authorities for the years ended December 31,
2010 through 2014.



The provision for income taxes for the
years ended December 31, 2014, 2013, and 2012 are as follows:



|                                   |  | December 31, 2014 |        |   | December 31, 2013 |   |        | December 31, 2012 | 
|---------------------------------- |  | ----------------- | ------ | - | ----------------- | - | ------ | ----------------- | 
|Current                            |  | $                 | 13,994 |   |                   | $ | 3,855  |                   | 
|Deferred                           |  |                   | (6,741 | ) |                   |   | (3,510 | )                 | 
|Total from Continuing Operations   |  |                   | 7,253  |   |                   |   | 345    |                   | 
|Current                            |  |                   | —      |   |                   |   | —      |                   | 
|Total from Discontinued Operations |  |                   | —      |   |                   |   | —      |                   | 
|Total                              |  | $                 | 7,253  |   |                   | $ | 345    |                   | 



Realization of a deferred tax benefit is
dependent upon generating sufficient taxable income in future periods. Our TRS net operating loss carryforwards of $19.5 million
are currently scheduled to expire in subsequent years through 2033. Our capital loss carryforwards of $6.6 million are scheduled
to expire in 2016. Substantially all of these attributes are limited under Section 382 of the Code and are subject to valuation
allowances.



Each TRS and certain REIT entities subject
to state income taxes are tax paying components for purposes of classifying deferred tax assets and liabilities. Net deferred tax
assets (liabilities) are summarized as follows:



|                               |  | December 31, 
2014 |         |   | December 31, 
2013 |   |         | December 31, 
2012 | 
|------------------------------ |  | ------------------ | ------- | - | ------------------ | - | ------- | ------------------ | 
|Total deferred tax assets      |  | $                  | 19,347  |   |                    | $ | 16,077  |                    | 
|Valuation allowance            |  |                    | (15,127 | ) |                    |   | (15,171 | )                  | 
|Net deferred tax assets        |  |                    | 4,220   |   |                    |   | 906     |                    | 
|Total deferred tax liabilities |  |                    | (21,240 | ) |                    |   | (24,667 | )                  | 
|Net deferred tax liabilities   |  | $                  | (17,020 | ) |                    | $ | (23,761 | )                  | 



Due to the uncertainty of the realization
of certain tax carryforwards, we have established valuation allowances on those deferred tax assets that we do not reasonably expect
to realize. Deferred tax assets that we believe have only a remote possibility of realization have not been recorded.



F-84







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



The tax effects of temporary differences
and carryforwards included in the net deferred tax liabilities as of December 31, 2014, December 31, 2013 and December
31, 2012 are summarized as follows:



|                                                                             |  | December 31, 
2014 |         |   | December 31,
                                                                                2013 |   |         | December 31, 
2012 | 
|---------------------------------------------------------------------------- |  | ------------------ | ------- | - | ------------------------------------------------------------------------------------------------- | - | ------- | ------------------ | 
|Operating loss and tax credit carryforwards                                  |  | $                  | 15,699  |   |                                                                                                   | $ | 15,477  |                    | 
|Other TRS property, primarily differences in basis of assets and liabilities |  |                    | (17,592 | ) |                                                                                                   |   | (24,067 | )                  | 
|Valuation allowance                                                          |  |                    | (15,127 | ) |                                                                                                   |   | (15,171 | )                  | 
|Net deferred tax liabilities                                                 |  | $                  | (17,020 | ) |                                                                                                   | $ | (23,761 | )                  | 



We have unrecognized tax benefits recorded
pursuant to uncertain tax positions of $6.1 million and $5.1 million as of December 31, 2014 and December 31, 2013 respectively,
excluding interest, all of which would impact our effective tax rate. We believe that it is reasonably possible that all of our
currently remaining unrecognized tax benefits may be recognized by the end of 2015 upon the potential settlement of an audit and
the expiration of the statute of limitations.



NOTE 9 WARRANTS



Pursuant to the terms of the Investment
Agreements, the Plan Sponsors and Blackstone were issued 120,000,000 warrants (the "Warrants") to purchase common stock
of GGP with an initial weighted average exercise price of $10.63. Each Warrant was originally recorded as a liability, as the holders
of the Warrants could have required GGP to settle such Warrants in cash upon certain changes of control events. The Warrants were
fully vested upon issuance. Each Warrant has a term of seven years and expires on November 9, 2017. Below is a summary of
the Warrants initially received by the Plan Sponsors and Blackstone.



|Initial Warrant Holder |  | Number of Warrants |             |  | Initial Exercise Price |  
|---------------------- |  | ------------------ | ----------- |  | ---------------------- | -
|Brookfield             |  |                    | 57,500,000  |  |                        | $
|Blackstone—B(2)        |  |                    | 2,500,000   |  |                        |  
|Fairholme(2)           |  |                    | 41,070,000  |  |                        |  
|Pershing Square(1)     |  |                    | 16,430,000  |  |                        |  
|Blackstone—A(2)        |  |                    | 2,500,000   |  |                        |  
|                       |  |                    | 120,000,000 |  |                        |  

______________________________________________________



| | (1) | On December 31, 2012, the Pershing Square Warrants were purchased by the Brookfield Investor.
| | --- | ---------------------------------------------------------------------------------------------



| | (2) | On January 28, 2013, the Fairholme and Blackstone Warrants (A and B) were purchased by GGP.
| | --- | -------------------------------------------------------------------------------------------



The Brookfield Warrants and the Blackstone
Warrants (A and B) were immediately exercisable, while the Fairholme Warrants and the Pershing Square Warrants were exercisable
(for the initial 6.5 years from the issuance) only upon 90 days prior notice, but there is no obligation to exercise
at any point from the end of the 90 day notification period through maturity.



The exercise prices of the Warrants are
subject to adjustment for future dividends, stock dividends, distribution of assets, stock splits or reverse splits of our common
stock or certain other events. In accordance with the agreement, these calculations adjust both the exercise price and the number
of shares issuable for the 120,000,000 Warrants that were initially issued to the Plan Sponsors. During 2013 and 2014, the number
of shares issuable upon exercise of the outstanding Warrants changed as follows:



F-85







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



|                  |  |                     |            |  | Exercise Price                  |  
|----------------- |  | ------------------- | ---------- |  | ------------------------------- | -
|Record Date       |  | Issuable Shares (1) |            |  | Brookfield and Blackstone—B (2) |  
|April 16, 2013    |  |                     | 83,443,178 |  |                                 | $
|July 16, 2013     |  |                     | 83,945,892 |  |                                 |  
|October 15, 2013  |  |                     | 84,507,750 |  |                                 |  
|December 13, 2013 |  |                     | 85,084,392 |  |                                 |  
|April 15, 2014    |  |                     | 85,668,428 |  |                                 |  
|July 15, 2014     |  |                     | 86,215,500 |  |                                 |  
|October 15, 2014  |  |                     | 86,806,928 |  |                                 |  
|December 15, 2014 |  |                     | 87,353,999 |  |                                 |  

_______________________________________________________________________________



| | (1) | Issuable shares as of April 16, 2013 exclude the Fairholme and Blackstone A and B warrants purchased by GGPLP.
| | --- | --------------------------------------------------------------------------------------------------------------



| | (2) | On January 28, 2013, the Fairholme and Blackstone Warrants (A and B) were purchased by GGPLP.
| | --- | ---------------------------------------------------------------------------------------------



| | (3) | On December 31, 2012, the Pershing Square Warrants were purchased by the Brookfield Investor.
| | --- | ---------------------------------------------------------------------------------------------



On December 31, 2012, Brookfield acquired
all of the 16,430,000 Warrants held by Pershing Square for a purchase price of approximately $272 million. At the time of purchase,
the Pershing Square Warrants were exercisable into approximately 10 million common shares of the Company at a weighted-average
exercise price of approximately $9.36 per share, assuming net share settlement (i.e. receive shares in common stock equivalent
to the intrinsic value of the warrant at the time of exercise). In connection with the transaction, Brookfield and Pershing Square
are required to abide by certain undertakings outlined in their Warrant Purchase Agreement dated December 31, 2012, filed
on the same date.



On January 28, 2013, GGPLP acquired
the 41,070,000 Warrants held by Fairholme and the 5,000,000 Warrants held by Blackstone for an aggregate purchase price of approximately
$633 million. At the time of purchase, the GGPLP Warrants were exercisable into approximately 27 million common shares of the Company
at a weighted-average exercise price of approximately $9.37 per share, assuming net share settlement. On March 26, 2013, GGPLP
exercised its warrants and was issued approximately 27.5 million shares of GGP's common stock, under net share settlement (See
Note 12 for further discussion).



As a result of the transactions occurring
on December 31, 2012, and January 28, 2013, Brookfield now owns or manages on behalf of third parties all of the outstanding
Warrants. Brookfield has the option for 57,500,000 Warrants to either full share settle (i.e. deliver cash for the exercise
price of the Warrants in the amount of approximately $618 million in exchange for approximately 68,000,000 shares of common stock)
or net share settle. The remaining 16,430,000 Warrants owned or managed by Brookfield must be net share settled. As of December 31,
2014, the remaining Warrants are exercisable into approximately 59 million common shares of the Company, at a weighted-average
exercise price of approximately $9.11 per share. Due to their ownership of Warrants, Brookfield's potential ownership of the Company
may change as a result of payments of dividends and changes in our stock price.



On March 28, 2013, we amended the
warrant agreement to replace the right of warrant holders to receive cash from the Company under a change of control to the right
to, instead, receive shares of the Company, changing the method of settlement. This amendment results in the classification of
the Warrants as a component of permanent equity on our Consolidated Balance Sheets. Prior to the amendment, the Warrants were classified
as a liability, due to the cash settlement feature, and marked to fair value, with changes in fair value recognized in earnings.
As a result of the amendment, the fair value was determined as of March 28, 2013 with the change in fair value recognized
in our Consolidated Statements of Operations and Comprehensive Income (Loss) and the determined fair value was reclassified to
equity.



The estimated fair value of the Warrants
was $895.5 million as of March 28, 2013. The fair value of the Warrants was estimated using the Black Scholes option pricing
model using our stock price, the Warrant term, and Level 3 inputs (Note 2). As discussed above, the modification of the warrant
agreement resulted in the classification of the Warrants as equity as of March 28, 2013. From December 31, 2012 through
March 28, 2013, changes in the fair value of the Warrants were recognized in earnings. An increase in GGP's common stock price
or in the expected volatility of the Warrants would increase the fair value; whereas, a decrease in GGP's common stock price or
an increase in the lack of marketability would decrease the fair value.



F-86







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



The following table summarizes the change
in fair value of the Warrants which is measured on a recurring basis using Level 3 inputs:



|                              |  | Year Ended December 31, |          
|----------------------------- |  | ----------------------- | ---------
|                              |  | 2013                    |          
|Balance as of January 1,      |  | $                       | 1,488,196
|Warrant liability adjustment  |  |                         | 40,546   
|Purchase of Warrants by GGPLP |  |                         | (633,229 
|Reclassification to equity    |  |                         | (895,513 
|Balance as of December 31,    |  | $                       | —        



The following table summarizes the estimated
fair value of the Warrants and significant observable and unobservable inputs used in the valuation as of March 28, 2013 and
December 31, 2012:



|                                   |  | March 28, 2013 |  | December 31, 2012
|---------------------------------- |  | -------------- |  | -----------------
|Fair value of Warrants             |  | $895,513       |  | $1,488,196       
|Observable Inputs                  |  |                |  |                  
|GGP stock price per share          |  | $19.88         |  | $19.85           
|Warrant term                       |  | 4.62           |  | 4.86             
|Unobservable Inputs                |  |                |  |                  
|Expected volatility                |  | 30%            |  | 33%              
|Range of values considered         |  | (15% - 65%)    |  | (20% - 65%)      
|Discount for lack of marketability |  | 3%             |  | 3%               
|Range of values considered         |  | (3% - 7%)      |  | (3% - 7%)        



NOTE 10 RENTALS UNDER OPERATING LEASES



We receive rental income from the leasing
of retail and other space under operating leases. The minimum future rentals based on operating leases of our Consolidated Properties
as of December 31, 2014 are as follows:



|Year       |  | Amount |          
|---------- |  | ------ | ---------
|2015       |  | $      | 1,385,785
|2016       |  |        | 1,280,551
|2017       |  |        | 1,136,836
|2018       |  |        | 998,624  
|2019       |  |        | 858,889  
|Subsequent |  |        | 3,051,023
|           |  | $      | 8,711,708



Minimum future rentals exclude amounts
which are payable by certain tenants based upon a percentage of their gross sales or as reimbursement of operating expenses and
amortization of above and below-market tenant leases. Such operating leases are with a variety of tenants, the majority of which
are national and regional retail chains and local retailers, and consequently, our credit risk is concentrated in the retail industry.



F-87







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



NOTE 11 EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS



Allocation to Noncontrolling Interests



Noncontrolling interests consists of the
redeemable interests related to our common and preferred Operating Partnership units and the noncontrolling interest in our consolidated
joint ventures. The following table reflects the activity included in the allocation to noncontrolling interests.



|                                                                                                                            |  | Year Ended December 31, |        
|--------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | -------
|                                                                                                                            |  | 2014                    |        
|Distributions to preferred Operating Partnership units                                                                      |  | $                       | (8,965 
|Net (income) loss allocation to noncontrolling interests in operating partnership from continuing operations (common units) |  |                         | (3,228 
|Net (income) loss allocated to noncontrolling interest in consolidated real estate affiliates                               |  |                         | (1,851 
|Allocation to noncontrolling interests                                                                                      |  |                         | (14,044
|Other comprehensive loss allocated to noncontrolling interests                                                              |  |                         | 78     
|Comprehensive income allocated to noncontrolling interests                                                                  |  | $                       | (13,966



Redeemable Noncontrolling Interests



The minority interest related to the Common
and Preferred Units of the Operating Partnership are presented as redeemable noncontrolling interests in our Consolidated Balance
Sheets since it is possible we could be required, under certain events outside of our control, to redeem the securities for cash
by the holders of the securities.



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



The common redeemable noncontrolling interests
have been recorded at fair value for all periods presented. One tranche of preferred redeemable noncontrolling interests has been
recorded at fair value, while the other tranches of preferred redeemable noncontrolling interests have been recorded at carrying
value.



Generally, the holders of the Common Units
share in any distributions by the Operating Partnership with our common stockholders. However, the Operating Partnership agreement
permits distributions solely to GGP if such distributions were required to allow GGP to comply with the REIT distribution requirements
or to avoid the imposition of excise tax. Under certain circumstances, the conversion rate for each Common Unit is required to
be adjusted to give effect to stock distributions. If the holders had requested redemption of the Common Units as of December 31,
2014, the aggregate amount of cash we would have paid would have been $164.0 million.



The Operating Partnership issued Convertible
Preferred Units that are convertible into Common Units of the Operating Partnership at the rates below (subject to adjustment).
The holder may convert the Convertible Preferred Units into Common Units of the Operating Partnership at any time, subject to certain
restrictions. The Common Units are convertible into common stock at a one-to-one ratio at the current stock price.



F-88







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)





|            |  | Number of Common Units for each Preferred Unit |         |  | Number of Contractual Convertible Preferred Units Outstanding as of December 31, 2014 |  |           | Converted Basis to Common Units Outstanding as of December 31, 2014 |  |  | Conversion Price |  |  | Redemption Value |         
|----------- |  | ---------------------------------------------- | ------- |  | ------------------------------------------------------------------------------------- |  | --------- | ------------------------------------------------------------------- |  |  | ---------------- |  |  | ---------------- | --------
|Series B(1) |  |                                                | 3.00000 |  |                                                                                       |  | 1,279,386 |                                                                     |  |  | 3,990,772        |  |  | $                | 16.66670
|Series D    |  |                                                | 1.50821 |  |                                                                                       |  | 532,750   |                                                                     |  |  | 803,498          |  |  |                  | 33.15188
|Series E    |  |                                                | 1.29836 |  |                                                                                       |  | 502,658   |                                                                     |  |  | 652,631          |  |  |                  | 38.51000
|            |  |                                                |         |  |                                                                                       |  |           |                                                                     |  |  |                  |  |  |                  |         

_____________________________________________________



| | (1) | The conversion price of Series B preferred units is lower than the GGP December 31, 2014
closing common stock price of $28.13. Therefore, a common stock price of $28.13 is used to calculate the Series B redemption
value.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following table reflects the activity
of the redeemable noncontrolling interests for the years ended December 31, 2014, 2013, and 2012.



|Balance at January 1, 2012                                                  |  | $ | 223,795 |  
|--------------------------------------------------------------------------- |  | - | ------- | -
|Net loss                                                                    |  |   | (3,498  | )
|Distributions                                                               |  |   | (2,850  | )
|Redemption of operating partnership units                                   |  |   | (2,730  | )
|Dividend for RPI Spin-Off                                                   |  |   | 3,137   |  
|Other comprehensive loss                                                    |  |   | (258    | )
|Fair value adjustment for noncontrolling interests in Operating Partnership |  |   | 50,623  |  
|Balance at December 31, 2012                                                |  | $ | 268,219 |  
|Balance at January 1, 2013                                                  |  |   | 268,219 |  
|Net income                                                                  |  |   | 2,281   |  
|Distributions                                                               |  |   | (3,275  | )
|Redemption of operating partnership units (1)                               |  |   | (41,889 | )
|Other comprehensive income                                                  |  |   | 393     |  
|Fair value adjustment for noncontrolling interests in Operating Partnership |  |   | 3,173   |  
|Balance at December 31, 2013                                                |  | $ | 228,902 |  
|Balance at January 1, 2014                                                  |  | $ | 228,902 |  
|Net income                                                                  |  |   | 3,228   |  
|Distributions                                                               |  |   | (3,059  | )
|Redemption of operating partnership units                                   |  |   | (350    | )
|Other comprehensive income                                                  |  |   | (78     | )
|Fair value adjustment for noncontrolling interests in Operating Partnership |  |   | 70,653  |  
|Balance at December 31, 2014                                                |  | $ | 299,296 |  

_____________________________________________________



| | (1) | Operating partnership unit holders redeemed 1,756,521 units in 2013.
| | --- | --------------------------------------------------------------------



F-89







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



Common Stock Dividend and Purchase of
Common Stock



Our Board of Directors declared common
stock dividends during 2014 and 2013 as follows:



|Declaration Date |  | Record Date |  | Payment Date     |  | Dividend Per Share |     
|---------------- |  | ----------- |  | ---------------- |  | ------------------ | ----
|2014             |  |             |  |                  |  |                    |     
|November 14      |  | December 15 |  | January 2, 2015  |  | $                  | 0.17
|August 12        |  | October 15  |  | October 31, 2014 |  |                    | 0.16
|May 15           |  | July 15     |  | July 31, 2014    |  |                    | 0.15
|February 26      |  | April 15    |  | April 30, 2014   |  |                    | 0.15
|2013             |  |             |  |                  |  |                    |     
|October 28       |  | December 13 |  | January 2, 2014  |  | $                  | 0.14
|July 29          |  | October 15  |  | October 29, 2013 |  |                    | 0.13
|May 10           |  | July 16     |  | July 30, 2013    |  |                    | 0.12
|February 4       |  | April 16    |  | April 30, 2013   |  |                    | 0.12



Distributions paid on our common stock
and their tax status, as sent to our shareholders, is presented in the following table. The tax status of GGP distributions in
2014, 2013, and 2012 may not be indicative of future periods.



|                           |  | Year Ended December 31, |      
|-------------------------- |  | ----------------------- | -----
|                           |  | 2014                    |      
|Ordinary income            |  | $                       | 0.499
|Capital gain distributions |  |                         | 0.034
|Distributions per share    |  | $                       | 0.533



Our Dividend Reinvestment Plan ("DRIP")
provides eligible holders of GGP's common stock with a convenient method of increasing their investment in the Company by reinvesting
all or a portion of cash dividends in additional shares of common stock. Eligible stockholders who enroll in the DRIP on or before
the fourth business day preceding the record date for a dividend payment will be able to have that dividend reinvested. As a result
of the DRIP elections, 22,186 shares were issued during the year ended December 31, 2014 and 28,852 shares were issued during
the year ended December 31, 2013.



Preferred Stock



On February 13, 2013, we issued, in
a public offering, 10,000,000 shares of 6.375% Series A Cumulative Perpetual Preferred Stock (the "Preferred Stock")
at a price of $25.00 per share, resulting in net proceeds of $242.0 million after issuance costs. The Preferred Stock is recorded
net of issuance costs within equity on our Consolidated Balance Sheets, and accrues a quarterly dividend at an annual rate of 6.375%.
The dividend is paid in arrears in preference to dividends on our common stock, and reduces net income available to common stockholders,
and therefore, earnings per share.



The Preferred Stock does not have a stated
maturity date but we may redeem the Preferred Stock after February 12, 2018, for $25.00 per share plus all accrued and unpaid
dividends. We may redeem the Preferred Stock prior to February 12, 2018, in limited circumstances that preserve ownership
limits and/or our status as a REIT, as well as during certain circumstances surrounding a change of control. Upon certain circumstances
surrounding a change of control, holders of Preferred Stock may elect to convert each share of their Preferred Stock into a number
of shares of GGP common stock equivalent to $25.00 plus accrued and unpaid dividends, but not to exceed a cap of 2.4679 common
shares (subject to certain adjustments related to GGP common share splits, subdivisions, or combinations).



F-90







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



Our Board of Directors declared preferred
stock dividends during 2014 and 2013 as follows:



|Declaration Date |  | Record Date  |  | Payment Date    |  | Dividend Per Share |       
|---------------- |  | ------------ |  | --------------- |  | ------------------ | ------
|2014             |  |              |  |                 |  |                    |       
|November 14      |  | December 15  |  | January 2, 2015 |  | $                  | 0.3984
|August 12        |  | September 15 |  | October 1, 2014 |  |                    | 0.3984
|May 15           |  | June 16      |  | July 1, 2014    |  |                    | 0.3984
|February 26      |  | March 17     |  | April 1, 2014   |  |                    | 0.3984
|2013             |  |              |  |                 |  |                    |       
|October 28       |  | December 13  |  | January 2, 2014 |  | $                  | 0.3984
|July 29          |  | September 13 |  | October 1, 2013 |  |                    | 0.3984
|May 10           |  | June 14      |  | July 1, 2013    |  |                    | 0.3984
|March 4          |  | March 15     |  | April 1, 2013   |  |                    | 0.2125



NOTE 12 EARNINGS PER SHARE



Basic earnings per share ("EPS")
is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding.
Diluted EPS is computed after adjusting the numerator and denominator of the basic EPS computation for the effects of all potentially
dilutive common shares. The dilutive effect of the Warrants and the dilutive effect of options and their equivalents (including
fixed awards and nonvested stock issued under stock-based compensation plans), are computed using the "treasury" method.



F-91







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



Information related to our EPS calculations
is summarized as follows:



|                                                                         |  | Year Ended December 31, |        
|------------------------------------------------------------------------ |  | ----------------------- | -------
|                                                                         |  | 2014                    |        
|Numerators—Basic:                                                        |  |                         |        
|Income (loss) from continuing operations                                 |  | $                       | 398,011
|Preferred Stock dividend                                                 |  |                         | (15,936
|Allocation to noncontrolling interests                                   |  |                         | (12,935
|Income (loss) from continuing operations—net of noncontrolling interests |  |                         | 369,140
|Discontinued operations                                                  |  |                         | 281,883
|Allocation to noncontrolling interests                                   |  |                         | (1,109 
|Discontinued operations—net of noncontrolling interests                  |  |                         | 280,774
|Net income (loss)                                                        |  |                         | 679,894
|Preferred Stock dividend                                                 |  |                         | (15,936
|Allocation to noncontrolling interests                                   |  |                         | (14,044
|Net income (loss) attributable to common stockholders                    |  | $                       | 649,914
|Numerators—Diluted:                                                      |  |                         |        
|Income (loss) from continuing operations—net of noncontrolling interests |  | $                       | 369,140
|Diluted income (loss) from continuing operations                         |  | $                       | 369,140
|Net income (loss) attributable to common stockholders                    |  | $                       | 649,914
|Diluted net income (loss) attributable to common stockholders            |  | $                       | 649,914
|Denominators:                                                            |  |                         |        
|Weighted-average number of common shares outstanding—basic               |  |                         | 887,031
|Effect of dilutive securities                                            |  |                         | 57,690 
|Weighted-average number of common shares outstanding—diluted             |  |                         | 944,721
|Anti-dilutive Securities:                                                |  |                         |        
|Effect of Preferred Units                                                |  |                         | 5,505  
|Effect of Common Units                                                   |  |                         | 4,833  
|Effect of Stock Options                                                  |  |                         | —      
|Effect of Warrants                                                       |  |                         | —      
|                                                                         |  |                         | 10,338 



Options were dilutive for the years ended
December 31, 2014 and December 31, 2013 and are included in the denominator of EPS. Because of the net loss, options
were anti-dilutive for the year ended December 31, 2012, and, their effect has not been included in the calculation of diluted
net loss per share. Warrants were dilutive for the year ended December 31, 2014 and are included in the denominator of EPS.
Potentially dilutive shares related to the Warrants for the years ended December 31, 2013 and December 31, 2012 are excluded
from the denominator in the computation of diluted EPS because they are anti-dilutive.



Outstanding Common Units have also been
excluded from the diluted earnings per share calculation because including such Common Units would also require that the share
of GGPOP income attributable to such Common Units be added back to net income therefore resulting in no effect on EPS. Outstanding
Preferred Units have been excluded from the diluted EPS calculation for all periods presented because including the Preferred Units
would also require that the Preferred Units dividend be added back to the net income, resulting in anti-dilution.



During the year ended December 31,
2013, GGPOP repurchased 28,345,108 shares of GGP's common stock for $566.9 million. These shares are presented as common stock
in treasury, at cost, on our Consolidated Balance Sheets. Accordingly, these shares have been excluded from the calculation of
EPS. In addition, GGPOP was issued 27,459,195 shares of GGP common stock on March 26, 2013, as a result of GGPOP's purchase and
subsequent exercising of the Fairholme and Blackstone A and B Warrants (Note 9). These shares are presented as issued, but
not outstanding on our Consolidated Balance Sheets. Accordingly, these shares have been excluded from the calculation of EPS.



F-92







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



On February 10, 2014, GGPOP repurchased
27,624,282 shares of GGP’s common stock for $555.8 million. These shares are presented as common stock in treasury, at cost,
on our Consolidated Balance Sheets.  Accordingly, these shares have been excluded from the calculation of EPS.



On May 1, 2014, the shares of GGP common
stock owned by GGPOP were contributed to GGPN, and as a result of these transactions, GGPN owns an aggregate of 83,428,585 shares
of GGP common stock as of December 31, 2014, of which 55,969,390, with an aggregate cost of $1,122.7 million, are shown as
treasury stock and 27,459,195 are shown as issued, but not outstanding on our Consolidated Balance Sheets.



NOTE 13 STOCK-BASED COMPENSATION PLANS



Incentive Stock Plans



The General Growth Properties, Inc.
2010 Equity Plan (the "Equity Plan") which remains in effect after the Effective Date, reserved for issuance of 4% of
GGP outstanding shares on a fully diluted basis as of the Effective Date. The Equity Plan provides for grants of nonqualified stock
options, incentive stock options, stock appreciation rights, restricted stock, other stock-based awards and performance-based compensation
(collectively, "the Awards"). Directors, officers and other employees of GGP's and its subsidiaries and affiliates are
eligible for Awards. The Equity Plan is not subject to the Employee Retirement Income Security Act of 1974, as amended. No participant
may be granted more than 4,000,000 shares, or the equivalent dollar value of such shares, in any year. Options granted under the
Equity Plan will be designated as either nonqualified stock options or incentive stock options. An option granted as an incentive
stock option will, to the extent it fails to qualify as an incentive stock option, be treated as a nonqualified option. The exercise
price of an option may not be less than the fair value of a share of GGP's common stock on the date of grant. The term of each
option will be determined prior to the date of grant, but may not exceed 10 years.



Stock Options



The following tables summarize stock option
activity for the Equity Plan for GGP for the years ended December 31, 2014, 2013 and 2012:



|                                          |  | 2014   |            |   | 2013                            |   |       | 2012   | 
|----------------------------------------- |  | ------ | ---------- | - | ------------------------------- | - | ----- | ------ | 
|                                          |  | Shares |            |   | Weighted Average Exercise Price |   |       | Shares | 
|Stock options Outstanding at January 1,   |  |        | 21,565,281 |   |                                 | $ | 17.28 |        | 
|Granted                                   |  |        | 50,000     |   |                                 |   | 22.41 |        | 
|Exercised                                 |  |        | (1,164,945 | ) |                                 |   | 15.47 |        | 
|Forfeited                                 |  |        | (662,820   | ) |                                 |   | 18.89 |        | 
|Expired                                   |  |        | (43,292    | ) |                                 |   | 14.58 |        | 
|Stock options Outstanding at December 31, |  |        | 19,744,224 |   |                                 | $ | 17.36 |        | 





F-93







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



|                             |                      |  | Stock
    Options Outstanding |            |            | Stock
    Options Exercisable                              | 
|---------------------------- | -------------------- |  | ----------------------------- | ---------- | ---------- | ---------------------------------------------------------- | 
|Range of Exercise
    Prices |                      |  | Shares                        |            |            | Weighted
    Average Remaining Contractual Term (in years) | 
|                             | $8.00   -     $12.00 |  |                               |            | 2,000,000  |                                                            | 
|                             | $13.00  -    $17.00  |  |                               |            | 5,863,404  |                                                            | 
|                             | $18.00  -    $23.00  |  |                               |            | 11,880,820 |                                                            | 
|Total                        |                      |  |                               | 17,746,224 |            |                                                            | 
|                             |                      |  |                               | $          | 212,645    |                                                            | 



Stock options under the Equity Plan generally
vest in 25% increments annually from one year from the grant date. Options under certain previous equity plans were replaced under
the Plan with options, fully vested, in GGP common stock.



The weighted-average fair value of stock
options as of the grant date was $5.33 for stock options granted during the year ended December 31, 2014 and $5.11 for stock
options granted during the year ended December 31, 2013. The intrinsic value of stock options exercised during the year was
$18.2 million, $4.9 million, and $3.3 million for the year ended December 31, 2014, December 31, 2013, and December 31, 2012, respectively.



Restricted Stock



Pursuant to the Equity Plan, GGP and GGP Inc.
made restricted stock grants to certain employees and non-employee directors. The vesting terms of these grants are specific to
the individual grant. The vesting terms varied in that a portion of the shares vested either immediately or on the first anniversary
and the remainder vested in equal annual amounts over the next two to five years. Participating employees were required to remain
employed for vesting to occur (subject to certain exceptions in the case of retirement). Shares that did not vest were forfeited.
Dividends are paid on restricted stock and are not returnable, even if the underlying stock does not ultimately vest.



The following table summarizes restricted
stock activity for the respective grant year ended December 31, 2014, December 31, 2013 and December 31, 2012:



|                                                                            |  | 2014   |            |   | 2013                                       |   |       | 2012   | 
|--------------------------------------------------------------------------- |  | ------ | ---------- | - | ------------------------------------------ | - | ----- | ------ | 
|                                                                            |  | Shares |            |   | Weighted
    Average Grant Date Fair Value |   |       | Shares | 
|Nonvested restricted stock grants
    outstanding as of beginning of period |  |        | 1,242,924  |   |                                            | $ | 13.99 |        | 
|Granted                                                                     |  |        | 34,100     |   |                                            |   | 20.04 |        | 
|Vested                                                                      |  |        | (1,154,894 | ) |                                            |   | 14.08 |        | 
|Canceled                                                                    |  |        | (17,988    | ) |                                            |   | 14.73 |        | 
|Nonvested restricted stock
    grants outstanding as of end of period       |  |        | 104,142    |   |                                            | $ | 14.79 |        | 



The weighted average remaining contractual
term of nonvested awards as of December 31, 2014 was one year. The fair value of shares vested during the year was $29.5
million, $3.4 million, and $3.9 million for the year ended December 31, 2014, December 31, 2013, and December 31, 2012, respectively.



Other Required Disclosures



Historical data, such as the past performance
of our common stock and the length of service by employees, is used to estimate expected life of the stock options and our restricted
stock and represents the period of time the options or grants are expected to be outstanding. The weighted average estimated values
of options granted were based on the following assumptions:



F-94







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)





|                           |  | Year Ended December 31, |      
|-------------------------- |  | ----------------------- | -----
|                           |  | 2014                    |      
|Risk-free interest rate(*) |  |                         | 2.20 
|Dividend yield(*)          |  |                         | 2.70 
|Expected volatility        |  |                         | 30.00
|Expected life (in years)   |  |                         | 6.25 

_________________________________________________________



| | (*) | Weighted average
| | --- | ----------------



Compensation expense related to stock-based
compensation plans is summarized in the following table:



|                                                     |  | Year Ended December 31, |       
|---------------------------------------------------- |  | ----------------------- | ------
|                                                     |  | 2014                    |       
|Stock options—Property management and other costs    |  | $                       | 7,468 
|Stock options—General and administrative             |  |                         | 15,074
|Restricted stock—Property management and other costs |  |                         | 1,683 
|Restricted stock—General and administrative          |  |                         | 1,013 
|Total                                                |  | $                       | 25,238



Unrecognized compensation expense as of
December 31, 2014 is as follows:



|Year |  | Amount |       
|---- |  | ------ | ------
|2015 |  | $      | 19,558
|2016 |  |        | 16,507
|2017 |  |        | 13,976
|2018 |  |        | 1,731 
|     |  |        | 51,772



These amounts may be impacted by future
grants, changes in forfeiture estimates or vesting terms, and actual forfeiture rates which differ from estimated forfeitures.



NOTE 14ACCOUNTS
AND NOTES RECEIVABLE



The following table summarizes the significant components of
Accounts and notes receivable, net.



|                                         |  | December 31, 2014 |         |   | December 31, 2013 |  
|---------------------------------------- |  | ----------------- | ------- | - | ----------------- | -
|Trade receivables                        |  | $                 | 124,698 |   |                   | $
|Notes receivable                         |  |                   | 320,881 |   |                   |  
|Straight-line rent receivable            |  |                   | 230,172 |   |                   |  
|Other accounts receivable                |  |                   | 3,638   |   |                   |  
|Total Accounts and notes receivable      |  |                   | 679,389 |   |                   |  
|Provision for doubtful accounts          |  |                   | (15,621 | ) |                   |  
|Total Accounts and notes receivable, net |  | $                 | 663,768 |   |                   | $



Notes receivable includes $88.5 million
and $39.4 million due from an entity who is our partner in the joint ventures related to the acquisition of the properties at 685
and 530 5th Avenue in New York, New York (Note 3). The notes receivable bear interest at a rate of 7.5% and 9%, respectively. Interest
is compounded quarterly with accrued but unpaid interest increasing the loan balance, and are collateralized by our partner's ownership
interest in the joint ventures, and mature on June 27, 2024 and October 22, 2024, respectively.



F-95









GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



Also included in notes receivable is a
$132.4 million note receivable issued to Rique Empreendimentos e Participacoes Ltda. (“Rique”) in conjunction with
our sale of Aliansce Shopping Centers, S.A. (“Aliansce”) to Rique and Canada Pension Plan Investment Board on September
30, 2013.  The note receivable is denominated in Brazilian Reais, bears interest at an effective interest rate of approximately
14%, is collateralized by shares of common stock in Aliansce, and requires annual principal and interest payments over the 5 year
term.  We recognize the impact of changes in the exchange rate on the note receivable as gain or loss on foreign currency
in our Consolidated Statements of Operations and Comprehensive Income (Loss).



Within notes receivable is a $32.2 million
note receivable from our joint venture partner related to the acquisition of a portfolio of two properties in the Union Square
area of San Francisco in September 2013. The note receivable bears interest at an interest rate of 5.21% and is collateralized
by our partner's ownership interest in the joint venture. The note receivable matures on September 16, 2023.



NOTE 15 PREPAID EXPENSES AND OTHER ASSETS



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



|                                                  |  | December 31, 2014 |           |  | December 31, 2013        |  
|------------------------------------------------- |  | ----------------- | --------- |  | ------------------------ | -
|                                                  |  | Gross Asset       |           |  | Accumulated Amortization |  
|Intangible assets:                                |  |                   |           |  |                          |  
|Above-market tenant leases, net                   |  | $                 | 870,103   |  |                          | $
|Below-market ground leases, net                   |  |                   | 119,866   |  |                          |  
|Real estate tax stabilization agreement, net      |  |                   | 111,506   |  |                          |  
|Total intangible assets                           |  | $                 | 1,101,475 |  |                          | $
|Remaining Prepaid expenses and other assets:      |  |                   |           |  |                          |  
|Security and escrow deposits                      |  |                   |           |  |                          |  
|Prepaid expenses                                  |  |                   |           |  |                          |  
|Other non-tenant receivables                      |  |                   |           |  |                          |  
|Deferred tax, net of valuation allowances         |  |                   |           |  |                          |  
|Other                                             |  |                   |           |  |                          |  
|Total remaining Prepaid expenses and other assets |  |                   |           |  |                          |  
|Total Prepaid expenses and other assets           |  |                   |           |  |                          |  





F-96







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



NOTE 16 ACCOUNTS PAYABLE AND ACCRUED EXPENSES



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



|                                                      |  | December 31, 2014 |         |  | December 31, 2013     |  
|----------------------------------------------------- |  | ----------------- | ------- |  | --------------------- | -
|                                                      |  | Gross Liability   |         |  | Accumulated Accretion |  
|Intangible liabilities:                               |  |                   |         |  |                       |  
|Below-market tenant leases, net                       |  | $                 | 502,919 |  |                       | $
|Above-market headquarters office leases, net          |  |                   | 15,268  |  |                       |  
|Above-market ground leases, net                       |  |                   | 9,127   |  |                       |  
|Total intangible liabilities                          |  | $                 | 527,314 |  |                       | $
|Remaining Accounts payable and accrued expenses:      |  |                   |         |  |                       |  
|Accrued interest                                      |  |                   |         |  |                       |  
|Accounts payable and accrued expenses                 |  |                   |         |  |                       |  
|Accrued real estate taxes                             |  |                   |         |  |                       |  
|Deferred gains/income                                 |  |                   |         |  |                       |  
|Accrued payroll and other employee liabilities        |  |                   |         |  |                       |  
|Construction payable                                  |  |                   |         |  |                       |  
|Tenant and other deposits                             |  |                   |         |  |                       |  
|Insurance reserve liability                           |  |                   |         |  |                       |  
|Capital lease obligations                             |  |                   |         |  |                       |  
|Conditional asset retirement obligation liability     |  |                   |         |  |                       |  
|Uncertain tax position liability                      |  |                   |         |  |                       |  
|Other                                                 |  |                   |         |  |                       |  
|Total remaining Accounts payable and accrued expenses |  |                   |         |  |                       |  
|Total Accounts payable and accrued expenses           |  |                   |         |  |                       |  



F-97







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



NOTE 17 ACCUMULATED OTHER COMPREHENSIVE LOSS



Components of accumulated other comprehensive loss as of December 31,
2014 and 2013 are as follows:



|                                              |  | December 31, 2014 |         |   | December 31, 2013 |  
|--------------------------------------------- |  | ----------------- | ------- | - | ----------------- | -
|Net unrealized gains on financial instruments |  | $                 | 70      |   |                   | $
|Foreign currency translation                  |  |                   | (51,823 | ) |                   |  
|                                              |  | $                 | (51,753 | ) |                   | $



NOTE 18 LITIGATION



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



Urban Litigation



In October 2004, certain limited partners
(the "Urban Plaintiffs") of Urban Shopping Centers, L.P. ("Urban") filed a lawsuit against Urban's general
partner, Head Acquisition, L.P. ("Head"), as well as The Rouse Company, LP, Simon Property Group, Inc., Westfield America,
Inc., and various of their affiliates, including Head's general partners (collectively, the "Urban Defendants"), in Circuit
Court in Cook County, Illinois. GGP, GGP Operating Partnership, LP ("GGPOP") and other affiliates were later included
as Urban Defendants. The lawsuit alleged, among other things, that the Urban Defendants breached the Urban partnership agreement,
unjustly enriched themselves through misappropriation of partnership opportunities, failed to grow the partnership, breached their
fiduciary duties, and tortiously interfered with several contractual relationships. The Urban Plaintiffs sought relief in the form
of unspecified monetary damages and equitable relief requiring, among other things, the Urban Defendants, including GGP, Inc. and
its affiliates, to engage in certain future transactions through Urban. On May 19, 2014 the Company settled the litigation and
recorded a loss of $17.9 million, which is included in general and administrative expense in our Consolidated Statements of Operations
and Comprehensive Income (Loss). The Company invested $60.0 million in Urban and contributed, at fair value, a 5.6% interest in
three assets in exchange for preferred equity interests. The Company has no obligation to engage in future activity through Urban
other than transactions associated with currently existing partnership assets.



Default Interest



Pursuant to the Plan, the Company cured
and reinstated that certain note (the "Homart Note") in the original principal amount of $254.0 million between GGPLP
and The Comptroller of the State of New York as Trustee of the Common Retirement Fund ("CRF") by payment in cash of accrued
interest at the contractual non-default rate. CRF, however, contended that the Company's bankruptcy caused the Company to default
under the Homart Note and, therefore, post-petition interest accrued under the Homart Note at the contractual default rate was
due for the period June 1, 2009 until November 9, 2010. On June 16, 2011, the United States Bankruptcy Court for
the Southern District of New York (the "Bankruptcy Court") ruled in favor of CRF, and, on June 22, 2011, the Company
elected to satisfy the Homart Note in full by paying CRF the outstanding default interest and principal amount on the Homart Note
totaling $246.0 million. As a result of the ruling, the Company incurred and paid $11.7 million of default interest expense during
the year ended December 31, 2011. The Company appealed the Bankruptcy Court's order and reserved its right to recover the
payment of default interest. On March 13, 2013, the parties reached a settlement. In exchange for the Company's dismissal
of its appeal, CRF waived all claims to attorneys' fees.



Pursuant to the Plan, the Company agreed
to pay to the holders of claims (the "2006 Lenders") under a revolving and term loan facility (the "2006 Credit
Facility") the principal amount of their claims outstanding of approximately $2.6 billion plus post-petition interest at the
contractual non-default rate. However, the 2006 Lenders asserted that they were entitled to receive interest at the contractual
default rate. In July 2011, the Bankruptcy Court ruled in favor of the 2006 Lenders. The Company had accrued $96.1 million as of
December 31, 2012. The Company appealed the Bankruptcy Court ruling, and on March 13, 2013, the parties reached a settlement.
In exchange for the Company's dismissal of its appeal, and a payment by the Company of $97.4 million, the 2006 Lenders waived all
claim to attorneys' fees.



F-98







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



Tax Indemnification Liability



Pursuant to the Investment Agreements,
GGP previously indemnified HHC from and against 93.75% of any and all losses, claims, damages, liabilities and reasonable expenses
to which HHC and its subsidiaries become subject, in each case solely to the extent directly attributable to MPC Taxes (as defined
in the Investment Agreements) in an amount up to $303.8 million. Under certain circumstances, we agreed to be responsible for interest
or penalties attributable to such MPC Taxes in excess of the $303.8 million. The IRS disagreed with the method used to report gains
for income tax purposes that are the subject of the MPC taxes. As a result of this disagreement, The Howard Hughes Company, LLC
and Howard Hughes Properties, Inc. filed petitions in the United States Tax Court on May 6, 2011, contesting this liability
for the 2007 and 2008 years and a trial was held in early November 2012. The United States Tax Court rendered its opinion
on June 2, 2014, in favor of the IRS. On September 15, 2014, the United States Tax Court formally entered its decision awarding
the IRS $144.1 million in taxes for 2007 and 2008. On December 12, 2014, we reached an agreement with HHC for settlement, which
included the transfer of six office properties with a historical cost of $106.8 million and an agreed-upon value of $130.0 million
and cash of $138.0 million in full settlement of the $322.0 million tax indemnification liability ($303.8 million plus applicable
interest). As a result of the settlement, GGP recognized a gain on extinguishment of tax indemnification liability of approximately
$77.2 million which amount is included in discontinued operations on the Consolidated Statements of Operations and Comprehensive
Income (Loss) for the year ended December 31, 2014.



NOTE 19 COMMITMENTS AND CONTINGENCIES



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



|                                                                                                                                                 |  | Year Ended December 31, |       
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------- | ------
|                                                                                                                                                 |  | 2014                    |       
|Contractual rent expense, including participation rent                                                                                           |  | $                       | 13,605
|Contractual rent expense, including participation rent and excluding amortization of above and below-market ground leases and straight-line rent |  |                         | 9,036 



See Note 8 and Note 18 for our obligations
related to uncertain tax positions and for disclosure of additional contingencies.



The following table summarizes the contractual
maturities of our long-term commitments. Long-term debt and ground leases include the related acquisition accounting fair value
adjustments:



|                                      |  | 2015 |         |  | 2016 |   |         | 2017 |  |   | 2018    |  |  | 2019 |           |  | Subsequent/ Other |   |           | Total | 
|------------------------------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------- |  |  | ---- | --------- |  | ----------------- | - | --------- | ----- | 
|Mortgages, notes and loans payable(1) |  | $    | 650,557 |  |      | $ | 692,066 |      |  | $ | 877,261 |  |  | $    | 1,837,460 |  |                   | $ | 1,327,020 |       | 
|Retained debt-principal               |  |      | 1,530   |  |      |   | 1,601   |      |  |   | 1,705   |  |  |      | 1,801     |  |                   |   | 1,902     |       | 
|Purchase obligations (2)              |  |      | 203,262 |  |      |   | —       |      |  |   | —       |  |  |      | —         |  |                   |   | —         |       | 
|Ground lease payments                 |  |      | 4,821   |  |      |   | 4,820   |      |  |   | 4,849   |  |  |      | 4,767     |  |                   |   | 4,810     |       | 
|Junior Subordinated Notes(3)          |  |      | —       |  |      |   | —       |      |  |   | —       |  |  |      | —         |  |                   |   | —         |       | 
|Uncertain tax position liability(4)   |  |      | 6,663   |  |      |   | —       |      |  |   | —       |  |  |      | —         |  |                   |   | —         |       | 
|Total                                 |  | $    | 866,833 |  |      | $ | 698,487 |      |  | $ | 883,815 |  |  | $    | 1,844,028 |  |                   | $ | 1,333,732 |       | 

_________________________________________________________



| | (1) | The $100.0 million outstanding on the revolving credit facility as of December 31, 2014 is included in 2015.
| | --- | ------------------------------------------------------------------------------------------------------------



| | (2) | Purchase obligations relate to payables for capital expenditures.
| | --- | -----------------------------------------------------------------



F-99







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



| | (3) | The $206.2 million of Junior Subordinated Notes are due in 2036, but may be redeemed any time after
April 30, 2011. As we do not expect to redeem the notes prior to maturity, they are included in the consolidated debt maturing
subsequent to 2019.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | We believe that it is reasonably possible that all of our currently remaining unrecognized tax
benefits may be recognized by the end of 2015 upon the potential settlement of an audit and the expiration of the statute of limitations.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTE 20 SUBSEQUENT EVENTS



We formed a partnership to own and operate Ala Moana Center
located in Honolulu, Hawaii. Effective with the partnership formation, we own a 75% equity interest and the partner owns a 25%
equity interest in Ala Moana Center. The transaction generated approximately $907 million of net proceeds, of which we received
approximately $670 million of net proceeds at closing on February 27, 2015. The remaining net proceeds of approximately $237 million
will be paid in late 2016 upon completion of the redevelopment and expansion. We may sell an additional 12.5% equity interest in
Ala Moana Center within the next 60 days on the same economic terms.



NOTE 21 QUARTERLY FINANCIAL INFORMATION (UNAUDITED)



Quarterly data for the year ended December 31,
2014 and 2013 is summarized in the table below. Figures presented below have been adjusted for discontinued operations (Note 4).
In Q4 2014, they include the impact of provisions for impairment (Note 2). In Q1 2013, the adjustments include the Warrant liability
adjustment (Note 9). In Q4 2014 and Q2 2013 the adjustments include gains from changes in control of investment properties (Note
3) in continuing operations.



|                                               |  | 2014           |        
|---------------------------------------------- |  | -------------- | -------
|                                               |  | First 
Quarter |        
|Total revenues                                 |  | $              | 622,884
|Operating income                               |  |                | 222,905
|Income from continuing operations              |  |                | 58,915 
|Income from discontinued operations            |  |                | 72,972 
|                                               |  |                |        
|Net income attributable to common shareholders |  |                | 124,052
|Basic Earnings Per Share:                      |  |                |        
|Continuing operations                          |  |                | 0.06   
|Discontinued operations                        |  |                | 0.08   
|Diluted Earnings Per Share:                    |  |                |        
|Continuing operations                          |  |                | 0.05   
|Discontinued operations                        |  |                | 0.08   
|Dividends declared per share                   |  | $              | 0.15   
|Weighted-average shares outstanding:           |  |                |        
|Basic                                          |  |                | 896,257
|Diluted                                        |  |                | 947,971





F-100







GENERAL GROWTH PROPERTIES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



(Dollars in thousands, except per share
amounts)



|                                                      |  | 2013          |        
|----------------------------------------------------- |  | ------------- | -------
|                                                      |  | First Quarter |        
|Total revenues                                        |  | $             | 618,774
|Operating income                                      |  |               | 196,185
|Income (loss) from continuing operations              |  |               | (26,705
|Income (loss) from discontinued operations            |  |               | 17,967 
|                                                      |  |               |        
|Net income (loss) attributable to common shareholders |  |               | (13,653
|Basic Earnings (Loss) Per Share:                      |  |               |        
|Continuing operations                                 |  |               | (0.03  
|Discontinued operations                               |  |               | 0.02   
|Diluted Earnings (Loss) Per Share:                    |  |               |        
|Continuing operations                                 |  |               | (0.03  
|Discontinued operations                               |  |               | 0.02   
|Dividends declared per share                          |  | $             | 0.12   
|Weighted-average shares outstanding:                  |  |               |        
|Basic                                                 |  |               | 939,271
|Diluted                                               |  |               | 939,271



F-101







GENERAL GROWTH PROPERTIES, INC.

SCHEDULE III—REAL ESTATE AND ACCUMULATED
DEPRECIATION

DECEMBER 31, 2014

(Dollars in thousands)



|                             |  |                      |  |                 |           |  | Acquisition
    Cost(b) |   |         | Costs
    Capitalized Subsequent to Acquisition |  |  | Gross
    Amounts at Which Carried at Close of Period(c) |  |  |                                     |        |   |      |   | Life Upon Which
    
    Latest
|---------------------------- |  | -------------------- |  | --------------- | --------- |  | ----------------------- | - | ------- | ----------------------------------------------- |  |  | -------------------------------------------------------- |  |  | ----------------------------------- | ------ | - | ---- | - | -------------------------------
|Name of Center               |  | Location             |  | Encumbrances(a) |           |  | Land                    |   |         | Buildings
    and Improvements                  |  |  | Land                                                     |  |  | Buildings
    
    and Improvements |        |   | Land |   |                                
|Ala Moana Center             |  | Honolulu, HI         |  | $               | 1,628,907 |  |                         | $ | 571,836 |                                                 |  |  | 1,738,740                                                |  |  | $                                   | 954    |   |      | $ | 18,610                         
|Apache Mall                  |  | Rochester, MN        |  |                 | 96,151    |  |                         |   | 17,738  |                                                 |  |  | 116,663                                                  |  |  |                                     | —      |   |      |   | 2,079                          
|Augusta Mall                 |  | Augusta, GA          |  |                 | 170,000   |  |                         |   | 25,450  |                                                 |  |  | 137,376                                                  |  |  |                                     | —      |   |      |   | 7,988                          
|Baybrook Mall                |  | Friendswood, TX      |  |                 | 260,905   |  |                         |   | 76,527  |                                                 |  |  | 288,241                                                  |  |  |                                     | (1,091 | ) |      |   | 3,045                          
|Beachwood Place              |  | Beachwood, OH        |  |                 | 212,291   |  |                         |   | 59,156  |                                                 |  |  | 196,205                                                  |  |  |                                     | —      |   |      |   | 3,486                          
|Bellis Fair                  |  | Bellingham, WA       |  |                 | 89,778    |  |                         |   | 14,122  |                                                 |  |  | 102,033                                                  |  |  |                                     | —      |   |      |   | 22,652                         
|Boise Towne Square           |  | Boise, ID            |  |                 | 141,703   |  |                         |   | 44,182  |                                                 |  |  | 163,118                                                  |  |  |                                     | —      |   |      |   | 6,921                          
|Brass Mill Center            |  | Waterbury, CT        |  |                 | 98,114    |  |                         |   | 31,496  |                                                 |  |  | 99,107                                                   |  |  |                                     | —      |   |      |   | 4,661                          
|Coastland Center             |  | Naples, FL           |  |                 | 125,063   |  |                         |   | 24,470  |                                                 |  |  | 166,038                                                  |  |  |                                     | —      |   |      |   | 821                            
|Columbia Mall                |  | Columbia, MO         |  |                 | —         |  |                         |   | 7,943   |                                                 |  |  | 107,969                                                  |  |  |                                     | (154   | ) |      |   | (307                           
|Columbiana Centre            |  | Columbia, SC         |  |                 | —         |  |                         |   | 22,178  |                                                 |  |  | 125,061                                                  |  |  |                                     | —      |   |      |   | (2,675                         
|Coral Ridge Mall             |  | Coralville, IA       |  |                 | 113,384   |  |                         |   | 20,178  |                                                 |  |  | 134,515                                                  |  |  |                                     | 2,219  |   |      |   | 13,758                         
|Coronado Center              |  | Albuquerque, NM      |  |                 | 197,534   |  |                         |   | 28,312  |                                                 |  |  | 153,526                                                  |  |  |                                     | 4,545  |   |      |   | 39,799                         
|Crossroads Center            |  | St. Cloud, MN        |  |                 | 103,785   |  |                         |   | 15,499  |                                                 |  |  | 103,077                                                  |  |  |                                     | —      |   |      |   | 1,464                          
|Cumberland Mall              |  | Atlanta, GA          |  |                 | 160,000   |  |                         |   | 36,913  |                                                 |  |  | 138,795                                                  |  |  |                                     | —      |   |      |   | 8,059                          
|Deerbrook Mall               |  | Humble, TX           |  |                 | 145,934   |  |                         |   | 36,761  |                                                 |  |  | 133,448                                                  |  |  |                                     | —      |   |      |   | 2,080                          
|Eastridge Mall               |  | Casper, WY           |  |                 | —         |  |                         |   | 5,484   |                                                 |  |  | 36,756                                                   |  |  |                                     | —      |   |      |   | 7,278                          
|Eastridge Mall               |  | San Jose, CA         |  |                 | 136,203   |  |                         |   | 30,368  |                                                 |  |  | 135,317                                                  |  |  |                                     | (3,127 | ) |      |   | 3,623                          
|Fashion Place                |  | Murray, UT           |  |                 | 226,730   |  |                         |   | 24,068  |                                                 |  |  | 232,456                                                  |  |  |                                     | 2,079  |   |      |   | 51,224                         
|Fashion Show                 |  | Las Vegas, NV        |  |                 | 839,570   |  |                         |   | 564,310 |                                                 |  |  | 627,327                                                  |  |  |                                     | 10,013 |   |      |   | 49,679                         
|Four Seasons Town Centre     |  | Greensboro, NC       |  |                 | 83,254    |  |                         |   | 17,259  |                                                 |  |  | 126,570                                                  |  |  |                                     | —      |   |      |   | 3,732                          
|Fox River Mall               |  | Appleton, WI         |  |                 | 178,063   |  |                         |   | 42,259  |                                                 |  |  | 217,932                                                  |  |  |                                     | —      |   |      |   | 3,051                          
|Glenbrook Square             |  | Fort Wayne, IN       |  |                 | 149,782   |  |                         |   | 30,965  |                                                 |  |  | 147,002                                                  |  |  |                                     | 2,444  |   |      |   | 16,060                         
|Governor's Square            |  | Tallahassee, FL      |  |                 | 71,787    |  |                         |   | 18,289  |                                                 |  |  | 123,088                                                  |  |  |                                     | —      |   |      |   | 8,144                          
|Grand Teton Mall             |  | Idaho Falls, ID      |  |                 | —         |  |                         |   | 13,066  |                                                 |  |  | 59,658                                                   |  |  |                                     | —      |   |      |   | 1,231                          
|Greenwood Mall               |  | Bowling Green, KY    |  |                 | 63,000    |  |                         |   | 12,459  |                                                 |  |  | 85,370                                                   |  |  |                                     | (330   | ) |      |   | 813                            
|Hulen Mall                   |  | Fort Worth, TX       |  |                 | 127,529   |  |                         |   | 8,665   |                                                 |  |  | 112,252                                                  |  |  |                                     | —      |   |      |   | 14,722                         
|Jordan Creek Town Center     |  | West Des Moines, IA  |  |                 | 216,782   |  |                         |   | 54,663  |                                                 |  |  | 262,608                                                  |  |  |                                     | (226   | ) |      |   | 3,905                          
|Lakeside Mall                |  | Sterling Heights, MI |  |                 | 148,591   |  |                         |   | 36,993  |                                                 |  |  | 130,460                                                  |  |  |                                     | —      |   |      |   | 2,835                          
|Lynnhaven Mall               |  | Virginia Beach, VA   |  |                 | 235,000   |  |                         |   | 54,628  |                                                 |  |  | 219,013                                                  |  |  |                                     | (90    | ) |      |   | 28,869                         
|Mall of Louisiana            |  | Baton Rouge, LA      |  |                 | 216,515   |  |                         |   | 88,742  |                                                 |  |  | 319,097                                                  |  |  |                                     | —      |   |      |   | 1,041                          
|Mall St. Matthews            |  | Louisville, KY       |  |                 | 186,662   |  |                         |   | 42,014  |                                                 |  |  | 155,809                                                  |  |  |                                     | (5,981 | ) |      |   | 9,383                          
|Market Place Shopping Center |  | Champaign, IL        |  |                 | 113,425   |  |                         |   | 21,611  |                                                 |  |  | 111,515                                                  |  |  |                                     | —      |   |      |   | 6,918                          
|Mayfair Mall                 |  | Wauwatosa, WI        |  |                 | —         |  |                         |   | 84,473  |                                                 |  |  | 352,140                                                  |  |  |                                     | (1,950 | ) |      |   | 274                            
|Meadows Mall                 |  | Las Vegas, NV        |  |                 | 159,032   |  |                         |   | 30,275  |                                                 |  |  | 136,846                                                  |  |  |                                     | —      |   |      |   | 391                            
|Mondawmin Mall               |  | Baltimore, MD        |  |                 | —         |  |                         |   | 19,707  |                                                 |  |  | 63,348                                                   |  |  |                                     | —      |   |      |   | 19,328                         





F-102







|                              |  |                    |  |                 |         |  | Acquisition
    Cost(b) |  |         | Costs
    Capitalized Subsequent to Acquisition |  |  | Gross
    Amounts at Which Carried at Close of Period(c) |  |  |                                     |         |   |      |  | Life Upon Which
    
    Latest
|----------------------------- |  | ------------------ |  | --------------- | ------- |  | ----------------------- |  | ------- | ----------------------------------------------- |  |  | -------------------------------------------------------- |  |  | ----------------------------------- | ------- | - | ---- |  | -------------------------------
|Name of Center                |  | Location           |  | Encumbrances(a) |         |  | Land                    |  |         | Buildings
    and Improvements                  |  |  | Land                                                     |  |  | Buildings
    
    and Improvements |         |   | Land |  |                                
|Newgate Mall                  |  | Ogden, UT          |  |                 | 58,000  |  |                         |  | 17,856  |                                                 |  |  | 70,318                                                   |  |  |                                     | —       |   |      |  | 8,075                          
|North Point Mall              |  | Alpharetta, GA     |  |                 | 250,000 |  |                         |  | 57,900  |                                                 |  |  | 228,517                                                  |  |  |                                     | —       |   |      |  | 9,868                          
|North Star Mall               |  | San Antonio, TX    |  |                 | 325,946 |  |                         |  | 91,135  |                                                 |  |  | 392,422                                                  |  |  |                                     | —       |   |      |  | 4,563                          
|Northridge Fashion Center     |  | Northridge, CA     |  |                 | 237,466 |  |                         |  | 66,774  |                                                 |  |  | 238,023                                                  |  |  |                                     | —       |   |      |  | 29,729                         
|NorthTown Mall                |  | Spokane, WA        |  |                 | —       |  |                         |  | 12,310  |                                                 |  |  | 108,857                                                  |  |  |                                     | —       |   |      |  | 151                            
|Oak View Mall                 |  | Omaha, NE          |  |                 | 80,440  |  |                         |  | 20,390  |                                                 |  |  | 107,216                                                  |  |  |                                     | —       |   |      |  | (15                            
|Oakwood Center                |  | Gretna, LA         |  |                 | —       |  |                         |  | 21,105  |                                                 |  |  | 74,228                                                   |  |  |                                     | —       |   |      |  | 22,463                         
|Oakwood Mall                  |  | Eau Claire, WI     |  |                 | —       |  |                         |  | 13,786  |                                                 |  |  | 92,114                                                   |  |  |                                     | —       |   |      |  | 4,411                          
|Oglethorpe Mall               |  | Savannah, GA       |  |                 | 150,000 |  |                         |  | 27,075  |                                                 |  |  | 157,100                                                  |  |  |                                     | —       |   |      |  | (420                           
|Oxmoor Center                 |  | Louisville, KY     |  |                 | 90,379  |  |                         |  | —       |                                                 |  |  | 117,814                                                  |  |  |                                     | —       |   |      |  | 11,024                         
|Paramus Park                  |  | Paramus, NJ        |  |                 | 91,592  |  |                         |  | 31,320  |                                                 |  |  | 102,054                                                  |  |  |                                     | —       |   |      |  | 4,883                          
|Park City Center              |  | Lancaster, PA      |  |                 | 187,362 |  |                         |  | 42,451  |                                                 |  |  | 195,409                                                  |  |  |                                     | —       |   |      |  | 2,640                          
|Park Place                    |  | Tucson, AZ         |  |                 | 189,665 |  |                         |  | 61,907  |                                                 |  |  | 236,019                                                  |  |  |                                     | —       |   |      |  | 2,070                          
|Peachtree Mall                |  | Columbus, GA       |  |                 | 77,889  |  |                         |  | 13,855  |                                                 |  |  | 92,143                                                   |  |  |                                     | —       |   |      |  | 2,368                          
|Pecanland Mall                |  | Monroe, LA         |  |                 | 90,000  |  |                         |  | 12,943  |                                                 |  |  | 73,231                                                   |  |  |                                     | —       |   |      |  | 6,928                          
|Pembroke Lakes Mall           |  | Pembroke Pines, FL |  |                 | 260,000 |  |                         |  | 64,883  |                                                 |  |  | 254,910                                                  |  |  |                                     | —       |   |      |  | (11,507                        
|Pioneer Place                 |  | Portland, OR       |  |                 | —       |  |                         |  | —       |                                                 |  |  | 97,096                                                   |  |  |                                     | —       |   |      |  | 14,134                         
|Prince Kuhio Plaza            |  | Hilo, HI           |  |                 | 43,930  |  |                         |  | —       |                                                 |  |  | 52,373                                                   |  |  |                                     | —       |   |      |  | 5,461                          
|Providence Place              |  | Providence, RI     |  |                 | 400,416 |  |                         |  | —       |                                                 |  |  | 400,893                                                  |  |  |                                     | —       |   |      |  | 7,012                          
|Provo Towne Centre            |  | Provo, UT          |  |                 | 44,333  |  |                         |  | 17,027  |                                                 |  |  | 75,871                                                   |  |  |                                     | 943     |   |      |  | (9,874                         
|Quail Springs Mall            |  | Oklahoma City, OK  |  |                 | 69,461  |  |                         |  | 40,523  |                                                 |  |  | 149,571                                                  |  |  |                                     | —       |   |      |  | 5,505                          
|Red Cliffs Mall               |  | St. George, UT     |  |                 | —       |  |                         |  | 6,811   |                                                 |  |  | 33,930                                                   |  |  |                                     | —       |   |      |  | 1,695                          
|Ridgedale Center              |  | Minnetonka, MN     |  |                 | 150,971 |  |                         |  | 39,495  |                                                 |  |  | 151,090                                                  |  |  |                                     | (4,089  | ) |      |  | 6,247                          
|River Hills Mall              |  | Mankato, MN        |  |                 | —       |  |                         |  | 16,207  |                                                 |  |  | 85,608                                                   |  |  |                                     | —       |   |      |  | 1,295                          
|Rivertown Crossings           |  | Grandville, MI     |  |                 | 160,861 |  |                         |  | 47,790  |                                                 |  |  | 181,770                                                  |  |  |                                     | —       |   |      |  | 2,563                          
|Rogue Valley Mall             |  | Medford, OR        |  |                 | 55,000  |  |                         |  | 9,042   |                                                 |  |  | 61,558                                                   |  |  |                                     | —       |   |      |  | 1,726                          
|Sooner Mall                   |  | Norman, OK         |  |                 | —       |  |                         |  | 9,902   |                                                 |  |  | 69,570                                                   |  |  |                                     | —       |   |      |  | 1,769                          
|Spokane Valley Mall           |  | Spokane, WA        |  |                 | 60,437  |  |                         |  | 16,817  |                                                 |  |  | 100,209                                                  |  |  |                                     | —       |   |      |  | (7,417                         
|Staten Island Mall            |  | Staten Island, NY  |  |                 | 266,659 |  |                         |  | 102,227 |                                                 |  |  | 375,612                                                  |  |  |                                     | —       |   |      |  | (728                           
|Stonestown Galleria           |  | San Francisco, CA  |  |                 | 180,000 |  |                         |  | 65,962  |                                                 |  |  | 203,043                                                  |  |  |                                     | (13,161 | ) |      |  | (3,436                         
|The Crossroads                |  | Portage, MI        |  |                 | 98,427  |  |                         |  | 20,261  |                                                 |  |  | 95,463                                                   |  |  |                                     | 1,110   |   |      |  | 1,212                          
|The Gallery At Harborplace    |  | Baltimore, MD      |  |                 | 86,232  |  |                         |  | 15,930  |                                                 |  |  | 112,117                                                  |  |  |                                     | —       |   |      |  | 5,839                          
|The Maine Mall                |  | South Portland, ME |  |                 | 235,000 |  |                         |  | 36,205  |                                                 |  |  | 238,067                                                  |  |  |                                     | —       |   |      |  | 9,322                          
|The Mall In Columbia          |  | Columbia, MD       |  |                 | 350,000 |  |                         |  | 124,540 |                                                 |  |  | 479,171                                                  |  |  |                                     | —       |   |      |  | 25,204                         
|The Oaks Mall                 |  | Gainesville, FL    |  |                 | 134,253 |  |                         |  | 21,954  |                                                 |  |  | 173,353                                                  |  |  |                                     | —       |   |      |  | (4,415                         
|The Parks at Arlington        |  | Arlington, TX      |  |                 | 258,493 |  |                         |  | 19,807  |                                                 |  |  | 299,708                                                  |  |  |                                     | 49      |   |      |  | 16,704                         
|The Shoppes at Buckland Hills |  | Manchester, CT     |  |                 | 124,961 |  |                         |  | 35,180  |                                                 |  |  | 146,474                                                  |  |  |                                     | —       |   |      |  | 3,460                          
|The Shops At Fallen Timbers   |  | Maumee, OH         |  |                 | —       |  |                         |  | 3,785   |                                                 |  |  | 31,771                                                   |  |  |                                     | (535    | ) |      |  | (1,951                         
|The Shops At La Cantera       |  | San Antonio, TX    |  |                 | 158,743 |  |                         |  | 80,016  |                                                 |  |  | 350,737                                                  |  |  |                                     | —       |   |      |  | 27,054                         
|The Streets At SouthPoint     |  | Durham, NC         |  |                 | 257,515 |  |                         |  | 66,045  |                                                 |  |  | 242,189                                                  |  |  |                                     | —       |   |      |  | 103                            



F-103

















|                                                      |  |                   |  |                 |            |         | Acquisition
    Cost(b) |   |           | Costs
    Capitalized Subsequent to Acquisition |  |   | Gross
    Amounts at Which Carried at Close of Period(c) |        |  |                                     |         |         |      |   | Life Upon Which
    Latest
|----------------------------------------------------- |  | ----------------- |  | --------------- | ---------- | ------- | ----------------------- | - | --------- | ----------------------------------------------- |  | - | -------------------------------------------------------- | ------ |  | ----------------------------------- | ------- | ------- | ---- | - | --------------------------
|Name of Center                                        |  | Location          |  | Encumbrances(a) |            |         | Land                    |   |           | Buildings
    and Improvements                  |  |   | Land                                                     |        |  | Buildings
    
    and Improvements |         |         | Land |   |                           
|The Woodlands Mall                                    |  | The Woodlands, TX |  |                 | 255,242    |         |                         |   | 84,889    |                                                 |  |   | 349,315                                                  |        |  |                                     | 2,315   |         |      |   | 21,145                    
|Town East Mall                                        |  | Mesquite, TX      |  |                 | 160,270    |         |                         |   | 9,928     |                                                 |  |   | 168,555                                                  |        |  |                                     | —       |         |      |   | 4,744                     
|Tucson Mall                                           |  | Tucson, AZ        |  |                 | 246,000    |         |                         |   | 2,071     |                                                 |  |   | 193,815                                                  |        |  |                                     | —       |         |      |   | 73,919                    
|Tysons Galleria                                       |  | McLean, VA        |  |                 | 318,100    |         |                         |   | 90,317    |                                                 |  |   | 351,005                                                  |        |  |                                     | —       |         |      |   | 5,992                     
|Valley Plaza Mall                                     |  | Bakersfield, CA   |  |                 | 240,000    |         |                         |   | 38,964    |                                                 |  |   | 211,930                                                  |        |  |                                     | —       |         |      |   | 536                       
|Visalia Mall                                          |  | Visalia, CA       |  |                 | 74,000     |         |                         |   | 11,912    |                                                 |  |   | 80,185                                                   |        |  |                                     | —       |         |      |   | 902                       
|Westlake Center                                       |  | Seattle, WA       |  |                 | 46,611     |         |                         |   | 19,055    |                                                 |  |   | 129,295                                                  |        |  |                                     | (14,819 | )       |      |   | (79,432                   
|Westroads Mall                                        |  | Omaha, NE         |  |                 | 151,638    |         |                         |   | 32,776    |                                                 |  |   | 184,253                                                  |        |  |                                     | —       |         |      |   | 17,156                    
|White Marsh Mall                                      |  | Baltimore, MD     |  |                 | 190,000    |         |                         |   | 43,880    |                                                 |  |   | 177,194                                                  |        |  |                                     | 4,125   |         |      |   | 6,427                     
|Willowbrook                                           |  | Wayne, NJ         |  |                 | 360,000    |         |                         |   | 110,660   |                                                 |  |   | 419,822                                                  |        |  |                                     | —       |         |      |   | (929                      
|Woodbridge Center                                     |  | Woodbridge, NJ    |  |                 | 250,000    |         |                         |   | 67,825    |                                                 |  |   | 242,744                                                  |        |  |                                     | —       |         |      |   | 22,272                    
|Office, other
    and construction in progress (e)(f) |  | 1,992,723         |  |                 |            | 112,034 |                         |   |           | 472,689                                         |  |   |                                                          | 50,778 |  |                                     |         | 802,417 |      |   |                           
|                                                      |  | Total             |  | $               | 16,204,489 |         |                         | $ | 4,208,586 |                                                 |  | $ | 17,286,897                                               |        |  | $                                   | 36,021  |         |      | $ | 1,445,806                 





F-104







GENERAL GROWTH PROPERTIES, INC.

SCHEDULE III—REAL ESTATE AND ACCUMULATED
DEPRECIATION (Continued)

DECEMBER 31, 2014

(Dollars in thousands)

_________________________________________________________



| | (a) | See description of mortgages, notes and other loans payable in Note 7 of Notes to Consolidated Financial Statements.
| | --- | --------------------------------------------------------------------------------------------------------------------



| | (b) | Acquisition for individual properties represents historical cost at the end of the month acquired.
| | --- | --------------------------------------------------------------------------------------------------



| | (c) | The aggregate cost of land, buildings and improvements for federal income tax purposes is approximately $19.8 billion.
| | --- | ----------------------------------------------------------------------------------------------------------------------



| | (d) | Depreciation is computed based upon the following estimated useful lives:
| | --- | -------------------------------------------------------------------------



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



| | (e) | Office and other retail properties, as well as properties, that have been de-leased for redevelopment.
| | --- | ------------------------------------------------------------------------------------------------------



| | (f) | Includes $1.4 billion cross-collateralized corporate loan.
| | --- | ----------------------------------------------------------



F-105







GENERAL GROWTH PROPERTIES, INC.

NOTES TO SCHEDULE III

(Dollars in thousands)



Reconciliation of Real Estate



|                               |  | 2014 |            |   | 2013 |   |            | 2012 | 
|------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | ---- | 
|(In thousands)                 |  |      |            |   |      |   |            |      | 
|Balance at beginning of period |  | $    | 22,998,275 |   |      | $ | 23,461,858 |      | 
|Additions                      |  |      | 703,227    |   |      |   | 1,049,417  |      | 
|Impairments                    |  |      | (5,278     | ) |      |   | (18,361    | )    | 
|Dispositions and write-offs    |  |      | (718,914   | ) |      |   | (1,494,639 | )    | 
|Balance at end of period       |  | $    | 22,977,310 |   |      | $ | 22,998,275 |      | 



Reconciliation of Accumulated Depreciation



|                               |  | 2014 |           |   | 2013 |   |           | 2012 | 
|------------------------------ |  | ---- | --------- | - | ---- | - | --------- | ---- | 
|(In thousands)                 |  |      |           |   |      |   |           |      | 
|Balance at beginning of period |  | $    | 1,884,861 |   |      | $ | 1,440,301 |      | 
|Depreciation expense           |  |      | 685,006   |   |      |   | 737,565   |      | 
|Dispositions and write-offs    |  |      | (289,022  | ) |      |   | (293,005  | )    | 
|Balance at end of period       |  | $    | 2,280,845 |   |      | $ | 1,884,861 |      | 





F-106