This management’s discussion and analysis (“MD&A”) of Brookfield Property Partners L.P. (“BPY”, the “partnership”, or “we”) covers the financial position as of June 30, 2023 and December 31, 2022 and results of operations for the three and six months ended June 30, 2023 and 2022. This MD&A should be read in conjunction with the unaudited condensed consolidated financial statements (the “Financial Statements”) and related notes as of June 30, 2023, included elsewhere in this report, and our Annual Report for the year ended December 31, 2022 on Form 20-F.

We disclose a number of financial measures in this MD&A that are calculated and presented using methodologies other than in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). Non-IFRS measures used in this MD&A are reconciled to or calculated from the most comparable IFRS measure. We utilize these measures in managing our business, including for performance measurement, capital allocation and valuation purposes and believe that providing these performance measures on a supplemental basis to our IFRS results is helpful to investors in assessing our overall performance. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with IFRS. We caution readers that these non-IFRS financial measures may differ from the calculations disclosed by other businesses, and as a result, may not be comparable to similar measures presented by others. Reconciliations of these non-IFRS financial measures to the most directly comparable financial measures calculated and presented in accordance with IFRS, where applicable, are included within this MD&A on page 17. We also caution readers that this MD&A may contain forward-looking statements, see page 28 for our “Statement Regarding Forward-Looking Statements.”

This MD&A includes financial data for the three and six months ended June 30, 2023 and includes material information up to August 11, 2023.

The partnership’s capital structure is comprised of five classes of partnership units: General partnership units (“GP Units”), limited partnership units (“LP Units”), Redeemable/Exchangeable Partnership units (“REUs”), special limited partnership units of the operating partnership (“Special LP Units”) and FV LTIP units of the operating partnership (“FV LTIP Units”). In addition, the partnership issued Class A Cumulative Redeemable Perpetual Preferred Units, Series 1 in the first quarter of 2019, Class A Cumulative Redeemable Perpetual Preferred Units, Series 2 in the third quarter of 2019 and Class A Cumulative Redeemable Perpetual Preferred Units, Series 3 in the first quarter of 2020 (“Preferred Equity Units”). Holders of the GP Units, LP Units, REUs, Special LP Units and FV LTIP Units will be collectively referred to throughout this MD&A as “Unitholders”. The LP Units and REUs have the same economic attributes in all respects, except that the holders of REUs have the right to request that their units be redeemed for cash consideration. In the event that Brookfield Corporation (or the “Corporation”), as the holder of the REUs 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, the Corporation, as holder of REUs, 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 redemption feature referenced above and the fact that they were issued by our subsidiary, we present the REUs as a component of non-controlling interests.

On December 9, 2022, the Corporation completed the distribution of 25% of its asset management business, through Brookfield Asset Management Ltd. (the “Manager”), by way of a plan of arrangement (the “Manager Distribution”). In advance of the Manager Distribution, a reorganization took place within the Corporation whereby the partnership redeemed $1 billion of preferred units issued by a subsidiary of the partnership and acquired certain limited partnership (“LP”) interests in several real estate funds and other investment interests from an indirect subsidiary of the Corporation (“Manager Reorganization”) for net consideration of $2,475 million through the issuance of Class D junior preferred shares, Series 1 and 2 of a subsidiary of the partnership, Brookfield BPY Holdings Inc. (“CanHoldco Class D Junior Preferred Shares”), to the Corporation. The LP interests and other investment interests acquisitions, including related working capital balances acquired, were accounted for as a business acquisition under common control, as discussed in Note 2 of our December 31, 2022 Financial Statements, whereby the partnership records assets and liabilities recognized as a result of transfers of businesses or subsidiaries between entities under common control at carrying value. Differences between the consideration given or received and the carrying amount of the assets and liabilities transferred are recorded within ownership changes in equity. On January 1, 2023, a further LP interest in a real estate fund was acquired from an indirect subsidiary of the Corporation for consideration of $588 million through the issuance of a non-interest bearing note. The funding for this acquisition, along with the subsequent $530 million capital call came through the issuance of LP Units, Special LP Units and REUs to the Corporation. The Corporation retained an identical indirect economic interest in the BSREP IV investment before and after the transaction.

Financial data has been prepared using accounting policies in accordance with IFRS, except as otherwise noted. 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. 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$”), Indian Rupees (“₨”), Chinese Yuan (“C¥”), South Korean Won (“₩”) and United Arab Emirates Dirham (“AED”) are identified where applicable.

Additional information is available on our website at bpy.brookfield.com, or on www.sedarplus.ca or www.sec.gov.

    We are Brookfield Corporation’s primary vehicle to make investments across all strategies in real estate. Our goal is to be a leading global owner and operator of high-quality real estate.

Our LP Investments portfolio includes our equity invested in Brookfield-sponsored real estate opportunity funds, which target high-quality assets with operational upside across various real estate sectors, including office, retail, multifamily, logistics, hospitality, mixed-use and other alternative real estate. We target to earn opportunistic returns on our LP Investments portfolio. These investments have a defined hold period and typically generate the majority of profits from gains recognized from realization events, including the sale of an asset or portfolio of assets, or exit of the entire investment. As such, capital invested in our LP Investments recycles over time, as existing funds return capital, and we reinvest these proceeds in future vintages of Brookfield-sponsored funds.

There have been no material changes to our investment strategy since December 31, 2022. For a more detailed description of our investment strategy, please refer to the section titled Item 4.B. “Business Overview” in our December 31, 2022 Annual Report on Form 20-F.

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

•increases in occupancies by leasing vacant space and pre-leasing active developments;

•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;

•preferred equity capital at a reasonable cost;

•new property acquisitions and other investments that fit into our strategic plan; and

•opportunities to dispose of peak value or non-core assets.

In addition to monitoring, analyzing and reviewing earnings performance, we also review initiatives and market conditions that contribute to changes in the fair value of our investment properties. These fair 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.

To measure our performance against these targets, as described above, and measure our operating performance, we focus on non-IFRS measures including net operating income (“NOI”), funds from operations (“FFO”), Company FFO, and equity attributable to Unitholders. We define these non-GAAP measures on page 17.

In this section, we review our financial position and consolidated performance as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022. Further details on our results from operations and our financial positions are contained within the “Segment Performance” section beginning on page 8.

    The following acquisitions and dispositions affected our consolidated results for the three and six months ended June 30, 2023 and 2022. Unless stated otherwise, proceeds represent the selling price attributable to the properties:

•We sold partial interests, without loss of control, in two office assets in the United States for net proceeds of approximately $205 million.

•We sold partial interests, without loss of control, in three office assets in Canada for net proceeds of approximately C$405 million ($306 million).

•We acquired a multifamily asset in the United States for approximately $157 million.

•We acquired five logistics assets in the United States for approximately $400 million.

•We acquired a 23% LP interest in the foreign investments owned by Brookfield Strategic Real Estate Partners (“BSREP”) IV from an indirect subsidiary of the the Corporation (“Acquisition of Foreign Investments”) for consideration of $588 million through the issuance of a non-interest bearing note. There was a subsequent $530 million capital call related to the BSREP IV U.S. and foreign investments. The consideration for the Acquisition of Foreign Investments and capital call was funded by the issuance of LP Units, Special LP Units and REUs to the Corporation.

•The Corporation completed the distribution of 25% of its asset management business, through the Manager, by way of the Manager Distribution. In advance of the Manager Distribution, a reorganization took place within the Corporation wherein we redeemed $1 billion of preferred units issued by a BPY subsidiary and acquired certain LP interests in several real estate funds and other investment interests from an indirect subsidiary of the Corporation for net consideration of $2,475 million through the issuance of CanHoldco Class D Junior Preferred Shares, to the Corporation.

•We sold a portfolio of student housing assets in the United Kingdom in BSREP II fund for approximately £3.4 billion ($4.0 billion).

•We sold three multifamily assets in the United States for approximately $192 million.

•We sold two multifamily assets in the United States for approximately $231 million.

•We deconsolidated our investment in Brookfield Premier Real Estate Partners Australia (“BPREP-A”), as a result of the dilution of our interest. Prior to the transaction, our interest was consolidated and is now reflected as a financial asset.

•We sold eleven multifamily assets in the United States in the BSREP II fund for approximately $469 million.

•One mall was conveyed to the lender in satisfaction of outstanding debt obligations of $361 million.

•We acquired our joint venture partner’s incremental interest in two properties, bringing our ownership in each of the malls to 100%. Prior to the acquisition of the two assets, our joint venture interest was accounted for under the equity method. These two assets are now consolidated.

•We sold an office asset in the United Kingdom for approximately £294 million ($360 million).

•We sold a portfolio of triple net lease assets in the United States in the BSREP I fund for approximately $3.7 billion.

•We sold a portfolio of hotel assets in the United States in the BSREP II fund for approximately $1.5 billion.

For the purposes of the following comparison discussion between the three and six months ended June 30, 2023 and 2022, the above transactions are referred to as the investment activities.

Net (loss) for the three months ended June 30, 2023 was $(458) million compared to net income of $520 million for the same period in the prior year. The decrease is primarily attributable to share of losses from equity accounted investments in our Core Office segment of $249 million, an increase in interest expense resulting from higher interest rates, higher direct hospitality expense of $227 million and commercial property expense of $86 million resulting from the reorganization of certain LP interests in connection with the Manager Reorganization and the Acquisition of Foreign Investments, and fair value losses of $58 million. Partially offsetting these decreases are higher commercial property revenue of $250 million and hospitality revenue of $266 million due to these transactions.

Net (loss) for the six months ended June 30, 2023 was $(852) million compared to net income of $2,212 million for the same period in prior year. The decrease is primarily attributable to share of losses from equity accounted investments in our Core Office segment of $239 million, an increase in interest expense, higher direct hospitality expense of $437 million and commercial property expense of $211 million resulting from the reorganization of certain LP interests in connection with the Manager Reorganization and the Acquisition of Foreign Investments, and fair value losses of $111 million. Partially offsetting these decreases, is higher commercial property revenue of $514 million and hospitality revenue of $488 million from the reorganization of certain LP interests in connection with the Manager Reorganization as well as income tax recovery.

For the three months ended June 30, 2023, commercial property revenue increased by $231 million compared to the same period in the prior year due to revenue from the Manager Reorganization and Acquisition of Foreign Investments of $139 million and $111 million, respectively, partially offset by property dispositions in our LP Investments resulting in a decrease of $47 million compared to prior year.

For the three months ended June 30, 2023, Direct commercial property expense increased by $100 million compared to the same period in the prior year. Margins in 2023 were 61.0%, a decrease of 0.9% compared to 2022.

For the six months ended June 30, 2023, commercial property revenue increased by $462 million compared to the same period in the prior year due to revenue from the Manager Reorganization and Acquisition of Foreign Investments of $286 million and $227 million, respectively, partially offset by property dispositions in our LP Investments resulting in a decrease of $128 million compared to prior year.

For the six months ended June 30, 2023, Direct commercial property expense increased by $218 million compared to the same period in the prior year. Margins in 2023 were 60.7%, an increase of 1.5% compared to 2022.

For the three months ended June 30, 2023, hospitality revenue increased by $287 million compared to the same period in the prior year. The increase was attributable to the Manager Reorganization and Acquisition of Foreign Investments which contributed $220 million and $46 million, respectively, as well as the continued recovery in the hospitality sector.

Direct hospitality expense increased to $525 million for the three months ended June 30, 2023, compared to $277 million in the same period in the prior year. The increase was driven by additional expenses stemming from the reorganization of certain LP interests as a result of the Manager Reorganization and Acquisition of Foreign Investments of $181 million and $46 million, respectively.

For the six months ended June 30, 2023, hospitality revenue increased by $539 million compared to the same period in the prior year. The increase was attributable to the Manager Reorganization and Acquisition of Foreign Investments which contributed $413 million and $75 million, respectively, as well as the continued recovery in the hospitality sector. These increases were partially offset by disposition activity in our LP Investments portfolio which resulted in a decrease of $31 million compared to prior year.

Direct hospitality expense increased to $1,033 million for the six months ended June 30, 2023, compared to $565 million in the same period in the prior year. The increase was driven by additional expenses stemming from the reorganization of certain LP interests as a result of the Manager Reorganization and Acquisition of Foreign Investments of $349 million and $87 million, respectively. These increases were partially offset by disposition activity in our LP Investments portfolio which resulted in a decrease of $24 million compared to the prior year.

Investment and other revenue includes management fees, leasing fees, development fees, interest income and other non-rental revenue. For the three months ended June 30, 2023, investment and other revenue increased by $66 million, due to incremental revenue from the reorganization of certain LP interests as a result of the Manager Reorganization and Acquisition of Foreign Investments of $95 million and $14 million, respectively, partially offset by a decrease of $27 million in our Core Office segment primarily attributable to lower revenue generated by developments in Australia.

For the three months ended June 30, 2023, investment and other expense decreased by $25 million primarily due to lower development costs in Australia.

For the six months ended June 30, 2023, investment and other revenue decreased by $231 million, primarily due to a decrease of $255 million in our LP Investments segment resulting from the disposition of multifamily develop-for-sale assets in the prior year, partially offset by incremental revenue due to the reorganization of certain LP Interests as a result of the Manager Reorganization and Acquisition of Foreign Investments of $115 million and $14 million, respectively.

For the six months ended June 30, 2023, investment and other expense decreased by $195 million primarily due to a decrease of $151 million in our LP Investments segment resulting from the disposition of multifamily develop-for-sale assets in the prior year as well as a decrease of $44 million in our Core Office segment due to lower development costs in Australia.

Interest expense increased by $551 million for the three months ended June 30, 2023, as a result of the reorganization of certain LP interests as a result of the Manager Reorganization and Acquisition of Foreign Investments which contributed $158 million and $176 million, respectively, the rising interest rate environment in the current year and asset-level financings and corporate draws.

Interest expense increased by $1,118 million for the six months ended June 30, 2023, as a result of the reorganization of certain LP interests as a result of the Manager Reorganization and Acquisition of Foreign Investments which contributed $303 million and $373 million, respectively, the rising interest rate environment in the current year and asset-level financings and corporate draws, partially offset by disposition activity of $46 million.

General and administrative expense increased by $118 million for the three months ended June 30, 2023 as compared to the same period in the prior year. The increase is due to the reorganization of certain LP interests as a result of the Manager Reorganization and Acquisition of Foreign Investments which contributed $103 million and $30 million, respectively, partially offset by disposition activity.

General and administrative expense increased by $218 million for the six months ended June 30, 2023 as compared to the same period in the prior year. The increase is due to the reorganization of certain LP interests as a result of the Manager Reorganization and Acquisition of Foreign Investments which contributed $167 million and $67 million, respectively, partially offset by disposition activity.

Fair value (losses) gains, net includes valuation gains (losses) on commercial properties and developments as well as mark-to-market adjustments on financial instruments and derivatives and foreign currency gains (losses) on disposal of assets denominated in foreign currencies. While we measure and record our commercial properties and developments using valuations prepared by management in accordance with our policy, external appraisals and market comparables, when available, are used to support our valuations.

We measure all investment properties at fair value, including those held within equity accounted investments. Valuations are prepared at a balance sheet date with changes to those values recognized as gains or losses in the income statement. Our valuations are generally prepared at the individual property level by internal investment professionals with the appropriate expertise in the respective industry, geography and asset type. We leverage their extensive expertise and experience in the valuation of properties accumulated through involvement in acquisitions and dispositions, negotiations with lenders and interactions with institutional private fund investors.

We obtain external appraisals for a number of properties each year to support our valuation process and for other business purposes. We compare the results of those external appraisals to our internally prepared values and reconcile significant differences when they arise. During the three months ended June 30, 2023, we obtained external appraisals of 51 of our Core Office properties representing a gross property value of $18 billion. These external appraisals were within 1% of management’s valuations. Our historical dispositions further provide support for our valuations, as we typically contract at prices comparable to IFRS values.

There have been no material changes to our valuation methodology since December 31, 2022. Refer to our 2022 Annual Report on Form 20-F for further detail on the valuation methodology of our investment properties and hospitality properties.

Fair value losses, net for our Core Office segment were $296 million for the three months ended June 30, 2023. These losses were driven by discount rate and capitalization rate expansion, partially offset by gains from updated cash flow assumptions. Fair value losses, net for our Core Office segment were $434 million for the six months ended June 30, 2023. These losses were due to discount rate and capitalization rate expansion, as mentioned above, partially offset by gains from updated cashflow assumptions in the U.S., U.K. and Australia. Fair value gains, net for our Core Office segment were $88 million for the six months ended June 30, 2022. These gains were driven by capturing mark-to-market rents at an asset in the U.S and improved cash flow assumptions at certain assets in Canada and the U.K.

Fair value gains, net for our Core Retail segment were $32 million for the three months ended June 30, 2023. These gains were primarily driven by updated cash flow assumptions. Fair value losses, net for our Core Retail segment were $3 million for the six months ended June 30, 2023. These losses were primarily due to updated market assumptions partially offset by gains from updated leasing and cash flow assumptions. Fair value gains, net for our Core Retail segment were $150 million for the six months ended June 30, 2022. These gains were driven by updated cash flow assumptions.

Fair value gains, net for our LP Investments segment were $170 million for the three months ended June 30, 2023. The fair value gains were primarily driven by fair value gains on a conditional acquisition of office assets in India in 2022, that closed in the current quarter. Also contributing to these gains are updated leasing assumptions in certain logistics assets in the U.S. and updated valuation metrics at select multifamily assets located in the U.S. Fair value gains, net for our LP Investments segment were $298 million for the six months ended June 30, 2023. These gains were primarily driven by updated valuation metrics and leasing assumptions in select logistics, student housing, multifamily and office assets located in the U.S. and Brazil, and the gains recognized in India as discussed above. Fair value gains, net for our LP Investments segment for the six months ended June 30, 2022 were $918 million primarily driven by fair value gains on our student housing portfolio and office portfolios, as well as capitalization rate compression in our U.S. Manufactured Housing portfolio.

    Our most significant equity accounted investments are Canary Wharf in the U.K, Manhattan West in New York, Ala Moana Center in Hawaii, Fashion Show in Las Vegas, Grand Canal Shoppes in Las Vegas and our interest in a retail joint venture in Brazil.

During the six months ended June 30, 2023, we sold 99% of our interest in an office tower in Midtown New York for approximately of $101 million is now reflected as a financial asset and 13% of our interest in Bryant Park Office Tower in New York for approximately $83 million.

Our share of net losses from equity accounted investments for the three and six months ended June 30, 2023 were $198 million and $174 million, respectively, which represents a decrease of $617 million and a decrease of $973 million, respectively, compared to the same periods in the prior year. The decrease in current year earnings is primarily due to fair value losses as a result of updated market assumptions and disposition activity. Also contributing to the decrease is the acquisition of our joint venture partner’s interest in certain Core Retail properties in the prior year. As a result of these acquisitions, we discontinued accounting for these assets under the equity method and now consolidate these properties. This decrease was partially offset by gains at recently completed developments.

The partnership’s income tax expense decreased for the three and six months ended June 30, 2023 as compared to the same period in the prior year is primarily due to a decrease in pre-tax income, a change in the tax rate of certain subsidiaries, and an increase in the benefit recognized for deferred tax assets.

As of June 30, 2023, we had $129,970 million in total assets, compared with $112,516 million at December 31, 2022. This $17,454 million increase was primarily due to the reorganization of certain LP interests as a result of the Acquisition of Foreign Investments, other acquisition activity during the year, and foreign currency translation partially offset by distributions related to the sale of a student housing asset in the prior year and property dispositions.

The following table presents the changes in investment properties from December 31, 2022 to June 30, 2023:

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

(2)See Note 28, Related Parties of our Q2 2023 financial statements for further information on the Acquisition of Foreign Investments.

Commercial properties are commercial, operating, rent-producing properties. Commercial properties increased from $66,067 million at the end of 2022 to $79,261 million at June 30, 2023. The increase was primarily due to the Acquisition of Foreign Investments and other acquisition activity and capital spend in the period, partially offset by the reclassification of assets to held for sale, property dispositions and fair value losses. Refer to Note 3, Investment Properties of our Q2 2023 Financial Statements for further information.

    Commercial developments consist of commercial property development sites, density rights and related infrastructure. The total fair value of development land and infrastructure was $4,277 million at June 30, 2023, an increase of $1,759 million from the balance at December 31, 2022. The increase is primarily due to the Acquisition of Foreign Investments and other acquisition activity, in addition to capital spend in our Core Office and LP investments, partially offset by an office asset becoming operational in the current year. Refer to Note 3, Investment Properties of our Q2 2023 Financial Statements for further information.

The following table presents a roll-forward of changes in our equity accounted investments December 31, 2022 to June 30, 2023:

(1)See Note 28, Related Parties of our Q2 2023 financial statements for further information on the Acquisition of Foreign Investments.

Equity accounted investments decreased by $68 million since December 31, 2022 primarily due to dispositions within our LP Investments and a decrease in share of net earnings from equity accounted investments, partially offset by the Acquisition of Foreign Investments and the positive impact of foreign currency translation. Refer to Note 4, Equity Accounted Investments of our Q2 2023 Financial Statements for further information.

The following table presents a roll-forward of changes in property, plant and equipment December 31, 2022 to June 30, 2023:

(1)See Note 28, Related Parties of our Q2 2023 financial statements for further information on the Acquisition of Foreign Investments.

(2)Includes right-of-use assets of $431 million (December 31, 2022 - $393 million).

Property, plant and equipment increased by $903 million since December 31, 2022, primarily due to the acquisition of certain LP interests as a result of the Acquisition of Foreign Investments, acquisitions within our LP Investments and the positive impact of foreign currency translation, partially offset by depreciation and disposition activity. Refer to Note 5, Property, Plant and Equipment of our Q2 2023 Financial Statements for further information. Property, plant and equipment primarily includes our hospitality assets which are revalued annually at December 31, using a depreciated replacement cost approach.

The following table presents a roll-forward of changes in assets held for sale December 31, 2022 to June 30, 2023:

At June 30, 2023, assets held for sale included six office assets in Ireland, four malls in the U.S., four office assets in the U.S., one hospitality asset in the U.S., one multifamily asset in Brazil, as the partnership intends to sell controlling interests in these assets to third parties in the next 12 months. Refer to Note 10, Held For Sale of our Q2 2023 Financial Statements for further information.

(1)See Note 28, Related Parties of our Q2 2023 financial statements for further information on the Acquisition of Foreign Investments.

Our debt obligations, excluding debt obligations associated with assets held for sale, increased to $66,798 million at June 30, 2023 from $58,562 million at December 31, 2022. The increase was driven by the Acquisition of Foreign Investments and the positive impact of foreign currency translation, partially offset by repayment of debt. In the current period we reclassified $770 million of debt related to held for sale to liabilities associated with assets held for sale. Refer to Note 11, Debt Obligations of our Q2 2023 Financial Statements for further information.

Total equity was $47,337 million at June 30, 2023, an increase of $5,600 million from the balance at December 31, 2022. The increase was primarily driven by equity issued as part of the Acquisition of Foreign Investments, which contributed $5,509 million, and the impact of foreign currency translation partially offset by the net loss and distributions during the period.

Interests of others in operating subsidiaries and properties was $23,068 million at June 30, 2023, an increase of $4,984 million from the balance of $18,084 million at December 31, 2022 due to the Acquisition of Foreign Investments and the positive impact of foreign currency translation, partially offset by dispositions since the prior year.

The following table summarizes our key operating results:

Revenue varies from quarter to quarter due to acquisitions and dispositions of commercial and other income producing assets, changes in occupancy levels, including mandated closures, as well as the impact of leasing activity 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. In addition, our North American hospitality assets generally have stronger performance in the winter and spring months compared to the summer and fall months, while our European hospitality assets exhibit the strongest performance during the summer months. Fluctuations in our net income are also impacted by the fair value of properties in the period to reflect changes in valuation metrics driven by market conditions or property cash flows.

Our operations are organized into four operating segments which include Core Office, Core Retail, LP Investments and Corporate.

The following table presents FFO by segment:

(1)This is a non-IFRS measure our partnership uses to assess the performance of its operations as described in the “Non-IFRS Financial Measures” section on page 17. An analysis of the measures and reconciliation to IFRS measures is included in the “Reconciliation of Non-IFRS measures” section on page 17.

The following table presents Company FFO (“CFFO”) by segment:

(1)This is a non-IFRS measure our partnership uses to assess the performance of its operations as described in the “Non-IFRS Financial Measures” section on page 17. An analysis of the measures and reconciliation to IFRS measures is included in the “Reconciliation of Non-IFRS measures” section on page 17.

The following table presents equity attributable to Unitholders by segment as of June 30, 2023 and December 31, 2022:

(1)This is a non-IFRS measure our partnership uses to assess the performance of its operations as described in the “Non-IFRS Financial Measures” section on page 17. An analysis of the measures and reconciliation to IFRS measures is included in the “Reconciliation of Non-IFRS measures” section on page 17.

The following table presents FFO, CFFO and net income in our Core Office segment for the three and six months ended June 30, 2023 and 2022:

FFO from our Core Office segment was $7 million for the three months ended June 30, 2023 as compared to $95 million in the same period in the prior year. This decrease was driven by higher interest expense due to increased interest rates on our variable debt obligations coupled with an increase in debt obligations as a result of financing activity in the U.S. and the U.K. as well as lower earnings from equity accounted investments primarily due to disposition activity, partially offset by an increase in fair value gains.

FFO from our Core Office segment was $24 million for the six months ended June 30, 2023 as compared to $234 million in the same period in the prior year. This decrease was attributable to the movements discussed above, coupled with reduced fee revenue in the U.S. and U.K.

For the three and six months ended June 30, 2023, CFFO decreased by $83 million and $207 million, respectively, primarily attributable to the FFO movements discussed above.

Net income (loss) decreased by $793 million to $(511) million during the three months ended June 30, 2023 as compared to the same period in 2022. The decrease is due to the share of net losses from equity accounted investments attributable to fair value losses in the U.K. resulting from discount rate and capitalization rate expansion as well as fair value losses in the U.S. also driven by discount rate and capitalization rate expansion at certain properties.

Net income (loss) decreased by $1,293 million to $(593) million during the six months ended June 30, 2023 as compared to the same period in 2022. The decrease is a result of the movements discussed above, partially offset by lower income taxes.

    The following table presents key operating metrics for our Core Office portfolio as at and for the three months ended June 30, 2023 and 2022:

(1)NOI for unconsolidated properties is presented on a proportionate basis, representing the Unitholders’ interest in the property. See “Reconciliation of Non-IFRS Measures - Core Office” below for a description of the key components of NOI in our Core Office segment.

(2)Includes leasable office and retail square footage at our properties.

(3)Annualized cash rent from leases on a per square foot basis including tenant expense reimbursements, less operating expenses incurred for that space, but excluding the impact of straight-line rent or amortization of free rent periods.

(4)Presented using normalized foreign exchange rates, using the June 30, 2023 exchange rate.

NOI from our consolidated properties decreased to $247 million during the three months ended June 30, 2023 compared to the prior year primarily due to lease expirations and the deconsolidation of our BPREP-A investments, partially offset by the positive impact of foreign currency translation.

NOI from our unconsolidated properties, which is presented on a proportionate basis, increased to $270 million during the three months ended June 30, 2023, compared to $242 million in the prior year due to a development becoming operational since the prior year.

The following table presents the changes in investment properties in the Core Office segment from December 31, 2022 to June 30, 2023:

Commercial properties totaled $21,505 million at June 30, 2023, compared to $22,129 million at December 31, 2022. The decrease was driven primarily by the reclassification of properties to assets held for sale, fair value losses during the period, partially offset by an asset becoming operational, the positive impact of foreign currency translation and incremental capital spend in the U.S.

Commercial developments decreased by $609 million from December 31, 2022 to June 30, 2023. The decrease was primarily the result of an asset becoming operational, partially offset by incremental capital expenditures.

The following table presents the changes in equity accounted investments in the Core Office segment from December 31, 2022 to June 30, 2023:

Equity accounted investments decreased by $212 million since December 31, 2022 to $8,335 million at June 30, 2023. The decrease was driven by a decrease in share of net earnings, disposition activity and distributions, partially offset by the positive impact of foreign currency translation.

Debt obligations decreased by $1,120 million since December 31, 2022 to $13,146 million at June 30, 2023. The decrease was primarily driven by the repayment of debt as a result of disposition activity, partially offset by the positive impact of foreign currency translation.

The following table summarizes the scope and progress of active developments in our Core Office segment as of June 30, 2023: