UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~June 30, 2018~~March 31, 2019

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from to

COMMISSION FILE NUMBER 1-34948

~~GGP INC.~~Brookfield Property REIT Inc.

(Exact name of registrant as specified in its charter)



Delaware		27-2963337
(State or other jurisdiction of incorporating or organization)		(I.R.S. Employer Identification Number)

~~350 N. Orleans St., Suite 300, Chicago, IL~~250 Vesey Street, 15th Floor, New York, NY		~~60654~~10281-1023
(Address of principal executive offices)		(Zip Code)

~~(312) 960-5000~~(212) 417-7000
(Registrant's telephone number, including area code)

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 (the "Exchange Act") 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.

ý Yes o 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).

ý Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.



ý	Large accelerated filer	o	Accelerated filer
o	Non-accelerated filer ~~(Do not check if a smaller reporting company)~~	o	Smaller reporting company
		o	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes ý No

Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

ýo Yes o No

Securities registered pursuant to Section 12(b) of the Securities Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Stock, par value $.01 per share	BPR	Nasdaq Global Select Market
6.375% Series A Cumulative Perpetual Redeemable Preferred Stock, par value $0.01 per share	BPPAP	Nasdaq Global Select Market

The number of shares of ~~Common~~Class A Stock, $.01 par value, outstanding on ~~July 27, 2018~~May 8, 2019 was ~~962,460,117.~~93,931,957.

Brookfield Property REIT Inc.

~~Table of Contents~~

INDEX

~~GGP INC.~~

~~INDEX~~



			PAGE NUMBER

Part I	FINANCIAL INFORMATION

	Item 1: ~~Consolidated~~ Financial Statements ~~(Unaudited)~~

		Consolidated Balance Sheets as of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 (Unaudited)	34

		Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~(Unaudited)	45

		Consolidated Statements of Equity for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~(Unaudited)	57

		Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~(Unaudited)	79

		Notes to Consolidated Financial Statements (Unaudited)	911

		Note 1: Organization	911

		Note 2: Summary of Significant Accounting Policies	1011

		Note 3: Acquisitions, Sales and Joint Venture Activity	1719

		Note 4: Fair Value	1820

		Note 5: Unconsolidated Real Estate Affiliates	2022

		Note 6: Mortgages, Notes and Loans Payable	2324

		Note 7: ~~Income Taxes~~Leases	2526

		Note 8: ~~Equity and Redeemable Noncontrolling Interests~~Income Taxes	2529

		Note 9: ~~Earnings Per Share~~Equity and Redeemable Noncontrolling Interests	29

		Note 10: ~~Stock-Based Compensation Plans~~Earnings Per Share	3035

		Note 11: ~~Accounts Receivable, net~~Stock-Based Compensation Plans	3136

		Note 12: ~~Notes~~Accounts Receivable, net	3238

		Note 13: ~~Prepaid Expenses and Other Assets~~Notes Receivable	3239

		Note 14: ~~Accounts Payable~~Prepaid Expenses and ~~Accrued Expenses~~Other Assets	3339

		Note 15: ~~Litigation~~Accounts Payable and Accrued Expenses	3340

		Note 16: ~~Commitments and Contingencies~~Litigation	3440

		Note 17: Commitments and Contingencies	40

		Note 18: Subsequent Events	3441

	Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations		3542

		Liquidity and Capital Resources	3844

	Item 3: Quantitative and Qualitative Disclosures about Market Risk		4754

	Item 4: Controls and Procedures		4854

Part II	OTHER INFORMATION

	Item 1: Legal Proceedings		4854

	Item 1A: Risk Factors		4854

	Item 2: Unregistered Sales of Equity Securities and Use of Proceeds		5054

	Item 3: Defaults Upon Senior Securities		5054

	Item 4: Mine Safety Disclosures		5054

	Item 5: Other Information		5054

	Item 6: Exhibits		5055

			~~EXHIBIT INDEX~~SIGNATURES	51

	~~SIGNATURE~~		5256

PART IFINANCIAL INFORMATION

~~GGP INC.~~ITEM IFINANCIAL STATEMENTS

Brookfield Property REIT Inc.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
	(Dollars in thousands, except share and per share amounts)						(Dollars in thousands, except share and per share amounts)
Assets:
Investment in real estate:
Land	$	3,887,771		$	4,013,874		$	2,707,917		$	2,706,701
Buildings and equipment	17,086,107			16,957,720			10,903,813			10,774,079
Less accumulated depreciation	(3,389,587		)	(3,188,481		)	(2,291,563		)	(2,214,603		)
Construction in progress	484,835			473,118			522,233			576,695
Net property and equipment	18,069,126			18,256,231			11,842,400			11,842,872
Investment in Unconsolidated Real Estate Affiliates	3,360,839			3,377,112			5,381,821			5,385,582
Net investment in real estate	21,429,965			21,633,343			17,224,221			17,228,454
Cash and cash equivalents	194,675			164,604			200,786			247,019
Accounts receivable, net	311,660			334,081			222,840			222,562
Notes receivable	351,422			417,558			247,094			256,937
Deferred expenses, net	281,570			284,512			145,166			145,631
Prepaid expenses and other assets	442,574			515,856
Assets held for disposition	120,732			—
Prepaid expenses and other assets (see Notes 7 and 14)							351,377			313,648
Deferred tax assets, net							615,450			619,275
Total assets	$	23,132,598		$	23,349,954		$	19,006,934		$	19,033,526
Liabilities:
Mortgages, notes and loans payable	$	12,847,635		$	12,832,459
Mortgages, notes and loans payable (including related party debt of $341.8 million - see Note 6)							$	13,498,426		$	12,589,649
Investment in Unconsolidated Real Estate Affiliates	22,400			21,393			62,868			124,627
Accounts payable and accrued expenses	878,526			919,432
Accounts payable and accrued expenses (see Notes 7 and 15)							880,051			953,369
Dividend payable	217,480			219,508			49,119			4,668
Deferred tax liabilities	2,245			2,428
Junior subordinated notes	206,200			206,200			206,200			206,200
Liabilities held for disposition	100,711			—
Total liabilities	14,275,197			14,201,420			14,696,664			13,878,513
Redeemable noncontrolling interests:
Preferred	52,256			52,256
Common	171,083			195,870
Total redeemable noncontrolling interests	223,339			248,126
Commitments and Contingencies	—			—
Redeemable Class A equity interests							2,069,999			2,305,895
Redeemable noncontrolling interests							62,119			73,696
Total redeemable interests							2,132,118			2,379,591
Equity:
Common stock:
11,000,000,000 shares authorized, $0.01 par value, 1,041,821,913 issued, 958,391,012 outstanding as of June 30, 2018, and 1,040,382,900 issued, 956,982,536 outstanding as of December 31, 2017	10,144			10,130
Preferred Stock:
500,000,000 shares authorized, $0.01 par value, 10,000,000 shares issued and outstanding as of June 30, 2018 and December 31, 2017	242,042			242,042
Class B Stock: 4,942,500,000 shares authorized, $0.01 par value, 449,728,212 and 454,744,938 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively.							4,497			4,547
Class C Stock: 1,000,000,000 shares authorized, $0.01 par value, 640,051,301 issued and outstanding as of March 31, 2019 and December 31, 2018.							6,401			6,401
Common Stock: 965,000,000 shares authorized, $.01 par value, no shares issued or outstanding as of March 31, 2019 and December 31, 2018							—			—
Preferred Stock: 500,000,000 shares authorized, $0.01 par value, 10,000,000 shares issued and outstanding as of March 31, 2019 and December 31, 2018.							242,042			242,042
Additional paid-in capital	11,880,450			11,845,532			5,731,469			5,772,824
Retained earnings (accumulated deficit)	(2,396,371		)	(2,107,498		)	(5,233,154		)	(4,721,335		)
Accumulated other comprehensive loss	(82,229		)	(71,906		)	(83,113		)	(82,653		)
Common stock in treasury, at cost, 55,969,390 shares as of June 30, 2018 and December 31, 2017	(1,122,640		)	(1,122,640		)
Total stockholders' equity	8,531,396			8,795,660			668,142			1,221,826
Noncontrolling interests in consolidated real estate affiliates	48,340			55,379
Noncontrolling interests related to long-term incentive plan common units	54,326			49,369
Noncontrolling interests in Consolidated Real Estate Affiliates							25,280			26,652
Noncontrolling interests of the Operating Partnership							1,484,730			1,526,944
Total equity	8,634,062			8,900,408			2,178,152			2,775,422
Total liabilities, redeemable noncontrolling interests and equity	$	23,132,598		$	23,349,954
Total liabilities, redeemable interests and equity							$	19,006,934		$	19,033,526

The accompanying notes are an integral part of these consolidated financial statements.

GGP INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
(Dollars in thousands, except per share amounts)
Revenues:

Minimum rents $ 379,312
$ 349,205
$ 747,835
$ 698,218
Tenant recoveries 156,155
161,926
313,157
324,982
Overage rents 3,927
3,280
10,171
9,217
Management fees and other corporate revenues 26,030
20,847
51,795
48,990
Other 17,720
20,538
34,351
40,722
Total revenues 583,144
555,796
1,157,309
1,122,129
Expenses:
Real estate taxes 62,604
59,042
122,337
116,536
Property maintenance costs 10,976
10,724
25,690
25,699
Marketing 1,744
1,296
3,160
3,441
Other property operating costs 71,752
69,590
143,504
138,893
Provision for doubtful accounts 2,234
3,166
5,662
6,617
Property management and other costs 36,595
39,025
76,169
80,139
General and administrative 12,041
15,862
24,288
30,546
Provision for impairment —
—
38,379
—
Depreciation and amortization 173,642
174,298
359,035
344,596
Total expenses 371,588
373,003
798,224
746,467
Operating income 211,556
182,793
359,085
375,662
Interest and dividend income 9,518
17,452
18,667
35,388
Interest expense (140,562 ) (134,209 ) (278,488 ) (266,532 )
Loss on foreign currency —
(3,877 ) —
(694 )
Gain on extinguishment of debt —
55,112
—
55,112
Gain (loss) from changes in control of investment properties and other, net —
(15,841 ) 12,664
(15,841 )
Income before income taxes, equity in income of Unconsolidated Real Estate Affiliates and allocation to noncontrolling interests 80,512
101,430
111,928
183,095
Benefit from (provision for) income taxes 22
(3,844 ) 302
(8,354 )
Equity in income of Unconsolidated Real Estate Affiliates 15,030
30,732
38,869
63,946
Unconsolidated Real Estate Affiliates - gain on investment, net —
—
10,361
—
Net income 95,564
128,318
161,460
238,687
Allocation to noncontrolling interests (1,949 ) (2,455 ) (3,809 ) (5,665 )
Net income attributable to GGP Inc. 93,615
125,863
157,651
233,022
Preferred Stock dividends (3,984 ) (3,984 ) (7,968 ) (7,968 )
Net income attributable to common stockholders $ 89,631
$ 121,879
$ 149,683
$ 225,054
Earnings Per Share:
Basic $ 0.09
$ 0.14
$ 0.16
$ 0.25
Diluted $ 0.09
$ 0.13
$ 0.16
$ 0.24
Dividends declared per share $ 0.22
$ 0.22
$ 0.44
$ 0.44
Comprehensive Income, Net:

Net income $ 95,564
$ 128,318
$ 161,460
$ 238,687
Other comprehensive income (loss)
Foreign currency translation (10,038 ) (4,030 ) (10,417 ) (1,463 )
Net unrealized gains (losses) on other financial instruments (43 ) (3 ) 8
10
Other comprehensive income (loss) (10,081 ) (4,033 ) (10,409 ) (1,453 )
Comprehensive income 85,483
124,285
151,051
237,234
Comprehensive income allocated to noncontrolling interests (1,865 ) (2,135 ) (3,723 ) (5,350 )
Comprehensive income attributable to GGP Inc. 83,618
122,150
147,328
231,884
Preferred Stock dividends (3,984 ) (3,984 ) (7,968 ) (7,968 )
Comprehensive income, net, attributable to common stockholders $ 79,634
$ 118,166
$ 139,360
$ 223,916

Brookfield Property REIT Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended March 31,
	2019			2018
	(Dollars in thousands, except per share amounts)
Revenues:
Rental revenues, net	$	323,020		$	531,769
Management fees and other corporate revenues	41,188			25,766
Other	12,175			16,631
Total revenues	376,383			574,166
Expenses:
Real estate taxes	40,855			59,733
Property maintenance costs	10,061			14,713
Marketing	904			1,417
Other property operating costs	43,422			71,752
Provision for doubtful accounts	—			3,429
Property management and other costs	56,054			39,574
General and administrative	5,413			12,247
Costs related to the BPY Transaction	8,339			—
Provision for impairment	—			38,379
Depreciation and amortization	118,799			185,393
Total expenses	283,847			426,637
Interest and dividend income	8,422			9,148
Interest expense	(154,706		)	(137,925		)
Gain from changes in control of investment properties and other, net	—			12,664
(Loss) income before income taxes, equity (loss) in income of Unconsolidated Real Estate Affiliates and related gain on investment, and allocation to noncontrolling interests	(53,748		)	31,416
(Provision for) benefit from income taxes	(4,450		)	280
(Equity) loss in income of Unconsolidated Real Estate Affiliates	(7,873		)	23,839
Unconsolidated Real Estate Affiliates - gain on investment, net	104,354			10,361
Net income	38,283			65,896
Allocation to noncontrolling interests	(6,633		)	(1,860		)
Net income attributable to Brookfield Property REIT Inc.	$	31,650		$	64,036
Class A Stock Earnings Per Share (See Note 10):
Basic & Diluted Earnings Per Share	$	0.330
Common Stock Earnings Per Share (See Note 10):
Basic				$	0.06
Diluted				$	0.06

Brookfield Property REIT Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Continued) (UNAUDITED)

	Three Months Ended March 31,
	2019			2018
	(Dollars in thousands, except per share amounts)
Comprehensive Income, Net:
Net income	$	38,283		$	65,896
Other comprehensive income (loss)
Foreign currency translation	(404		)	(378		)
Net unrealized gains (losses) on other financial instruments	(56		)	52
Other comprehensive income (loss)	(460		)	(326		)
Comprehensive income	37,823			65,570
Comprehensive income allocated to noncontrolling interests	(6,633		)	(1,858		)
Comprehensive income attributable to Brookfield Property REIT Inc.	$	31,190		$	63,712

The accompanying notes are an integral part of these consolidated financial statements.

Brookfield Property REIT Inc. CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

	Common Stock		Class B Stock		Class C Stock		Preferred Stock		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Common Stock in Treasury			Noncontrolling Interests in Consolidated Real Estate Affiliates and Operating Partnership			Total Equity			Redeemable Class A Stock
	(Dollars in thousands, except for per share and share amounts)
Balance at January 1, 2018	$	10,130	$	—	$	—	$	242,042	$	11,845,532	$	(2,107,498	)	$	(71,906	)	$	(1,122,640	)	$	104,748		$	8,900,408		$	—

Cumulative effect of accounting change											(16,864		)										(16,864		)
Net income											64,036									667			64,703
Distributions to noncontrolling interests in consolidated Real Estate Affiliates																				(1,613		)	(1,613		)
Acquisition/disposition of partner's noncontrolling interests in consolidated Real Estate Affiliates																				(7,228		)	(7,228		)
Long-Term Incentive Plan Common Unit grants, net (174,156 LTIP Units)									—		—									2,384			2,384
Restricted stock grants, net (1,006,061 common shares)	10						—		1,707														1,717
Employee stock purchase program (77,520 common shares)	1								1,736														1,737
Stock options exercised (246,202 common shares)	2								3,985														3,987
Cash dividends reinvested (DRIP) in stock (5,906 common shares)	—						—		139		(139		)										—
Other comprehensive loss														(325		)							(325		)
Cash distributions declared ($0.22 per share)											(210,647		)										(210,647		)
Cash distributions on Preferred Stock ($0.3984 per share)											(3,984		)										(3,984		)
Fair value adjustment for noncontrolling interest in Operating Partnership									23,252														23,252

Balance at March 31, 2018	$	10,143	$	—	$	—	$	242,042	$	11,876,351	$	(2,275,096	)	$	(72,231	)	$	(1,122,640	)	$	98,958		$	8,757,527		$	—

Brookfield Property REIT Inc. CONSOLIDATED STATEMENTS OF EQUITY (Continued) (UNAUDITED)

	Common Stock			Class B Stock			Class C Stock		Preferred Stock		Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Common Stock in Treasury		Noncontrolling Interests in Consolidated Real Estate Affiliates and Operating Partnership			Total Equity			Redeemable Class A Stock
	(Dollars in thousands, except for per share and share amounts)
Balance at January 1, 2019	$	—		$	4,547		$	6,401	$	242,042	$	5,772,824		$	(4,721,335	)	$	(82,653	)	$	—	$	1,553,596		$	2,775,422		$	2,305,895

Net income (loss)														(2,386		)						5,019			2,633			34,036
Distributions to noncontrolling interests in consolidated Real Estate Affiliates																						(46,995		)	(46,995		)
Acquisition/disposition of partner's noncontrolling interests in consolidated Real Estate Affiliates																						(1,066		)	(1,066		)
Buyback of Class A Stock														3,275											3,275			(98,276		)
Buyback of Class B Stock				(105		)					(158,517		)	(65,902		)									(224,524		)
Series K Preferred Unit redemption														923								(544		)	379
Preferred stock dividend ($0.3984 per share)														(3,984		)									(3,984		)
Other comprehensive loss																	(460		)						(460		)
Dividends on Class A ( $0.33 per share) and Class B Stock (Refer to Note 9)														(467,270		)									(467,270		)	(34,036		)
Restricted stock expense, net of forfeitures (3,266 Class A Stock)											—														—			3,122
Class A Conversion to Class B (6,701,962 Class A Shares converted to 5,479,975 Class B Shares)				55							117,162			23,525											140,742			(140,742		)
			��
Balance at March 31, 2019	$	—		$	4,497		$	6,401	$	242,042	$	5,731,469		$	(5,233,154	)	$	(83,113	)	$	—	$	1,510,010		$	2,178,152		$	2,069,999

The accompanying notes are an integral part of these consolidated financial statements.

Brookfield Property REIT Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



	Three Months Ended March 31,
	2019			2018
	(Dollars in thousands)
Cash Flows provided by (used in) Operating Activities:
Net income	$	38,283		$	65,896
Adjustments to reconcile net income to net cash provided by operating activities:
(Equity) loss in income of Unconsolidated Real Estate Affiliates	7,873			(23,839		)
Distributions received from Unconsolidated Real Estate Affiliates	17,699			33,507
Provision for doubtful accounts	2,707			3,429
Depreciation and amortization	118,799			185,393
Amortization/write-off of deferred finance costs	7,899			2,775
Accretion/write-off of debt market rate adjustments	(413		)	(1,108		)
Amortization of intangibles other than in-place leases	(1,205		)	1,971
Straight-line rent amortization	4,496			(1,260		)
Deferred income taxes	3,826			(988		)
Unconsolidated Real Estate Affiliates - gain on investment, net	(104,354		)	(10,361		)
Gain from changes in control of investment properties and other, net	—			(12,664		)
Provision for impairment	—			38,379
Net changes:
Accounts and notes receivable, net	(13,683		)	18,680
Prepaid expenses and other assets (see Notes 7 and 14)	11,297			16,844
Deferred expenses, net	(6,293		)	(7,307		)
Accounts payable and accrued expenses (see Notes 7 and 15)	(80,021		)	(50,283		)
Other, net	3,122			6,401
Net cash provided by (used in) operating activities	10,032			265,465
Cash Flows used in Investing Activities:
Acquisition of real estate and property additions	(16,596		)	—
Development of real estate and property improvements	(144,903		)	(197,190		)
Loans to affiliates	(331,975		)	(2,415		)
Proceeds on loans from affiliates	330,000			—
Proceeds from repayment of loans to joint venture partners	18,020			58,564
Proceeds from sales of investment properties and Unconsolidated Real Estate Affiliates	12,000			—
Contributions to Unconsolidated Real Estate Affiliates	(19,440		)	(20,734		)
Distributions received from Unconsolidated Real Estate Affiliates in excess of income	27,760			29,041
Net cash used in investing activities	(125,134		)	(132,734		)
Cash Flows provided by (used in) Financing Activities:
Proceeds from refinancing/issuance of mortgages, notes and loans payable	956,795			210,000
Principal payments on mortgages, notes and loans payable	(55,531		)	(115,644		)
Deferred finance costs	28			—
Buyback of Class A Stock	(95,000		)	—
Buyback of Class B Stock	(224,525		)	—
Series K preferred unit redemptions	(14,556		)	—
Cash distributions to noncontrolling interests in consolidated real estate affiliates	(2,119		)	(1,613		)
Cash distributions paid to stockholders	(501,306		)	(210,530		)
Cash distributions reinvested (DRIP) in common stock	—			139
Cash distributions paid to preferred stockholders	(3,984		)	(3,984		)
Cash distributions and redemptions paid to unit holders	(2,227		)	(3,190		)
Other, net	—			5,583
Net cash provided by (used in) financing activities	57,575			(119,239		)
Net change in cash, cash equivalents and restricted cash	(57,527		)	13,492
Cash, cash equivalents and restricted cash at beginning of period	298,693			231,939
Cash, cash equivalents and restricted cash at end of period	$	241,166		$	245,431



Brookfield Property REIT Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (UNAUDITED)
	Three Months Ended March 31,
	2019		2018
	(Dollars in thousands)
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	149,903	$	138,646
Interest capitalized	5,590		4,325
Income taxes paid	145		67
Accrued capital expenditures included in accounts payable and accrued expenses	232,248		259,952
Cash paid for amounts included in the measurement of lease liabilities	2,191		—
Recognition of right-of-use asset	73,440		—
Lease liabilities arising from obtaining right-of-use lease asset	73,440		—
Straight-line ground rent asset reclassed to right-of-use asset	52,753		—
Straight-line ground rent liability reclassed to right-of-use asset	3,817		—
Straight-line building rent liability reclassed to right-of-use asset	3,556		—

The accompanying notes are an integral part of these consolidated financial statements.

GGP INC.

CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)

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 and Long Term Incentive Plan Common Units

Total
Equity
(Dollars in thousands, except for per share and share amounts)
Balance at January 1, 2017 $ 9,407
$ 242,042
$ 11,419,939
$ (1,827,866 ) $ (70,456 ) $ (1,137,960 ) $ 65,623
$ 8,700,729

Net income

233,022

1,399
234,421
Distributions to noncontrolling interests in consolidated Real Estate Affiliates

(3,569 ) (3,569 )
Acquisition/disposition of partner's noncontrolling interests in consolidated Real Estate Affiliates (11,943 ) (11,943 )
Contributions from noncontrolling interest in consolidated Real Estate Affiliates —
15,258
15,258
Long Term Incentive Plan Common Unit grants, net (528,617 LTIP Units) 795
(743 ) 10,707
10,759
Restricted stock grants, net (738,687 common shares) 8
—
4,883

4,891
Employee stock purchase program (103,177 common shares) 1

2,547

2,548
Stock options exercised (406,383 common shares) 4

13,837

13,841
Cancellation of repurchased common shares (3,993,237 common shares) (40 ) (52,054 ) (40,258 ) 92,352
—
Treasury stock purchase (3,365,976 common shares) (77,032 ) (77,032 )
Cash dividends reinvested (DRIP) in stock (28,693 common shares)
—
—
696
—

696
Other comprehensive loss

(1,137 )

(1,137 )
Cash distributions declared ($0.44 per share)

(388,280 )

(388,280 )
Cash distributions on Preferred Stock

(7,968 )

(7,968 )
Fair value adjustment for noncontrolling interest in Operating Partnership

10,346

10,346

Balance at June 30, 2017 $ 9,380
$ 242,042
$ 11,400,989
$ (2,032,093 ) $ (71,593 ) $ (1,122,640 ) $ 77,475
$ 8,503,560

GGP INC.

CONSOLIDATED STATEMENTS OF EQUITY (Continued)
(UNAUDITED)

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 and Long Term Incentive Plan Common Units

Total
Equity
(Dollars in thousands, except for per share and share amounts)
Balance at January 1, 2018 $ 10,130
$ 242,042
$ 11,845,532
$ (2,107,498 ) $ (71,906 ) $ (1,122,640 ) $ 104,748
$ 8,900,408

Cumulative effect of accounting changes
(Note 2)

(16,864 )

(16,864 )
Net income

157,651

1,170
158,821
Distributions to noncontrolling interests in consolidated Real Estate Affiliates

(2,888 ) (2,888 )
Acquisition/disposition of partner's noncontrolling interests in consolidated Real Estate Affiliates (4,998 ) (4,998 )
Long Term Incentive Plan Common Unit forfeitures (238,655 LTIP Units)

4,634
4,634
Restricted stock grants, net (1,000,143 common shares) 10

4,997

5,007
Employee stock purchase program (80,522 common shares) 1

1,797

1,798
Stock options exercised (249,508 common shares) 2

4,116

4,118
OP Unit Conversion to Common Stock (67,064 common shares) 1
1,368
1,369
Cash dividends reinvested (DRIP) in stock (11,239 common shares)

245
(245 )

—
Other comprehensive loss

(10,323 )

(10,323 )
Cash distributions declared ($0.44 per share)

(421,447 )

(421,447 )
Cash distributions on Preferred Stock

(7,968 )

(7,968 )
Fair value adjustment for noncontrolling interest in Operating Partnership

22,395

22,395

Balance at June 30, 2018 $ 10,144
$ 242,042
$ 11,880,450
$ (2,396,371 ) $ (82,229 ) $ (1,122,640 ) $ 102,666
$ 8,634,062

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~GGP INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(UNAUDITED)~~

Six Months Ended June 30,
2018 2017
(Dollars in thousands)
Cash Flows provided by Operating Activities:

Net income $ 161,460
$ 238,687
Adjustments to reconcile net income to net cash provided by operating activities:

Equity in income of Unconsolidated Real Estate Affiliates (38,869 ) (63,946 )
Distributions received from Unconsolidated Real Estate Affiliates 46,256
52,876
Provision for doubtful accounts 5,662
6,617
Depreciation and amortization 359,035
344,596
Amortization/write-off of deferred finance costs 5,544
5,972
Accretion/write-off of debt market rate adjustments (2,230 ) (2,181 )
Amortization of intangibles other than in-place leases 7,150
18,857
Straight-line rent amortization (594 ) (493 )
Deferred income taxes (1,692 ) 4,817
Gain on dispositions, net —
(2,515 )
Unconsolidated Real Estate Affiliates - gain on investment, net (10,361 ) —
Gain (loss) from changes in control of investment properties and other, net (12,664 ) 15,841
Provision for impairment 38,379
—
Gain on extinguishment of debt —
(55,112 )
Loss on foreign currency —
694
Net changes:

Accounts and notes receivable, net 5,963
(259 )
Prepaid expenses and other assets 32,811
(38,556 )
Deferred expenses, net (21,577 ) (22,010 )
Accounts payable and accrued expenses (50,045 ) (45,441 )
Other, net 13,803
24,008
Net cash provided by operating activities 538,031
482,452
Cash Flows (used in) provided by Investing Activities:

Acquisition of real estate and property additions —
(49,062 )
Development of real estate and property improvements (361,966 ) (269,820 )
Loans to joint venture partners (5,772 ) (47,205 )
Proceeds from repayment of loans to joint venture partners 80,000
47,076
Proceeds from sales of investment properties and Unconsolidated Real Estate Affiliates 60,960
39,622
Contributions to Unconsolidated Real Estate Affiliates (82,637 ) (44,755 )
Distributions received from Unconsolidated Real Estate Affiliates in excess of income 124,792
62,792
Net cash (used in) provided by investing activities (184,623 )
(261,352 )
Cash Flows used in Financing Activities:

Proceeds from refinancing/issuance of mortgages, notes and loans payable 790,000
575,000
Principal payments on mortgages, notes and loans payable (677,926 ) (368,669 )
Deferred finance costs (213 ) (965 )
Treasury stock purchases —
(77,032 )
Cash contributions from noncontrolling interests in consolidated real estate affiliates —
15,258
Cash distributions to noncontrolling interests in consolidated real estate affiliates (2,888 ) (3,569 )
Cash distributions paid to common stockholders (421,374 ) (618,830 )
Cash distributions reinvested (DRIP) in common stock 245
696
Cash distributions paid to preferred stockholders (7,968 ) (7,968 )
Cash distributions and redemptions paid to unit holders (6,361 ) (10,515 )
Other, net 5,705
9,799
Net cash used in financing activities (320,780 ) (486,795 )
Effect of foreign exchange rates on cash and cash equivalents —
(694 )
Net change in cash, cash equivalents and restricted cash 32,628
(266,389 )
Cash, cash equivalents and restricted cash at beginning of period 231,939
531,705
Cash, cash equivalents and restricted cash at end of period $ 264,567
$ 265,316

Six Months Ended June 30,
2018 2017
(Dollars in thousands)
Supplemental Disclosure of Cash Flow Information:

Interest paid $ 284,668
$ 273,321
Interest capitalized 9,385
3,457
Income taxes paid 2,358
6,362
Accrued capital expenditures included in accounts payable and accrued expenses 243,924
105,416

~~The accompanying notes are an integral part of these consolidated financial statements.~~

810

Table of Contents

~~GGP INC.~~Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 1 ORGANIZATION

Readers of this Quarterly Report on Form 10-Q (this "Quarterly Report") should refer to the Company's (as defined below) audited consolidated financial statements for the year ended December 31, ~~2017~~2018 which are included in the Company's Annual Report on Form 10-K (our "Annual Report") for the fiscal year ended December 31, ~~2017~~2018 (Commission File No. ~~1-34948)~~001-34948), as certain footnote disclosures which would substantially duplicate those contained in our Annual Report have been omitted from this Quarterly Report. In the opinion of management, all adjustments necessary for a fair presentation (which include only normal recurring adjustments) have been included in this Quarterly Report. Unless context otherwise requires, capitalized terms used, but not defined in this Quarterly Report, have the same meanings as in our Annual Report.

General

Brookfield Property REIT, Inc. (referred to herein as "BPR or the "Company"), formerly known as GGP Inc. ("GGP" ~~or the "Company"~~)), a Delaware corporation, was organized in July 2010 and is ~~a self-administered and self-managed~~an externally managed real estate investment trust, referred to as a "REIT".

On March 26, 2018, GGP and Brookfield Property Partners L.P. ("BPY") entered into a definitive agreement (the "Merger Agreement") pursuant to which BPY would acquire all of the shares of GGP common stock, par value $0.01 per share, that BPY and its affiliates did not already own through a series of transactions (collectively, the "BPY Transaction"), including, among other things, the exchange of all shares of GGP common stock owned by certain affiliates of BPY and any subsidiary of GGP for Series B Preferred Stock (the "Class B Exchange") and the payment of a special dividend payable to certain holders of record of GGP common stock pursuant to the terms of the Merger Agreement (the "Pre-Closing Dividend").

BPR is an indirect subsidiary of BPY, one of the world's largest commercial real estate companies. In these notes, the terms "we", "us" and "our" refer to ~~GGP~~BPR and its subsidiaries.

~~GGP,~~ BPR, through its subsidiaries and affiliates, is an owner and operator of retail properties. As of ~~June 30, 2018,~~March 31, 2019, we are the owner, either entirely or with joint venture partners, of ~~125~~123 retail ~~properties.~~properties in the United States.

Substantially all of our business is conducted through ~~GGP~~BPR OP, LP ("BPROP"), which we sometimes refer to herein as the Operating Partnership, ~~LP ("GGPOP"), GGP Nimbus, LP ("GGPN")~~ and ~~GGP Limited Partnership ("GGPLP", and together with GGPN and GGPOP, the "Operating Partnerships"), subsidiaries~~its subsidiaries. As of ~~GGP. The Operating Partnerships own an interest in the properties that are part~~March 31, 2019, BPR held approximately 99% of the ~~consolidated financial statements of GGP. As of June 30, 2018, GGP held approximately a 99%~~ common equity ~~ownership (without giving effect to the potential conversion~~ of ~~the Preferred Units and LTIP Units, each as defined below) of GGPLP and GGPN,~~BPROP, while the remaining 1% was held by limited partners and certain previous contributors of properties to ~~GGPOP.~~

GGPOP is the general partner of, and owns a 1.5% equity interest in GGPN and GGPLP. 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 (Note 8). GGPOP also has full value long term incentive plan units and appreciation only long term incentive plan units (collectively "LTIP Units"), which are redeemable for cash or, at our option, shares of GGP common stock (Note 10).BPROP.

In addition to holding ownership interests in various joint ventures, the Operating ~~Partnerships~~Partnership generally ~~conduct their~~conducts its operations through BPR REIT Services LLC. ("BPRRS"), Brookfield Properties Retail Inc. ("BPRI") and General Growth Management, Inc. ("GGMI")~~, General Growth Services, Inc. ("GGSI") and GGPLP REIT Services, LLC ("GGPRS")~~. Each of GGMI and ~~GGSI are~~BPRI is a taxable REIT ~~subsidiaries~~subsidiary ("TRS"s)), which ~~provide~~earn real estate management, leasing, ~~tenant coordination, business~~ development, ~~marketing, strategic partnership~~ and financing fees for other ancillary services for a majority of our Unconsolidated Real Estate Affiliates (defined below) and for substantially all of our Consolidated Properties ~~as defined below. GGSI~~(defined below). BPRI also serves as a contractor to GGMI for these services. ~~GGPRS~~BPRRS 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 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".

As previously announced, we had reached an agreement with Brookfield Property Partners L.P. ("BPY"), pursuant to which, among other things, BPY will acquire all of our outstanding shares of common stock, other than those that BPY and its affiliates already own. The transactions provide for distribution and consideration per GGP share of up to $23.50 in cash or a choice of either one BPY limited partnership unit or one newly created BPY U.S. REIT share of Brookfield Property REIT Inc. ("BPR"), the successor to GGP, subject to proration in each case, based on aggregate cash amount of $9.25 billion. The BPR shares were structured with the intention of providing an economic return equivalent to BPY units, including identical distributions. BPR shareholders will have the right to exchange each BPR share for one BPY unit or the cash equivalent of one BPY unit at the election of BPY. On

July 26, 2018, the company held a special meeting of its common stockholders. At the special meeting, holders of record of GGP common stock on June 22, 2018, the record date for the special meeting, voted upon and approved the transactions. The completion of the transactions remains subject to certain customary closing conditions. The company expects that the transactions will be completed by the end of August this year.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of ~~GGP,~~BPR, 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. Noncontrolling interests are included on our Consolidated Balance Sheets related to the Common,

Table of Contents

Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Preferred, and LTIP Units of ~~GGPOP~~BPROP and are presented either as redeemable noncontrolling interests or as noncontrolling interests in our permanent equity. EThe ~~ach~~Operating Partnership and each of ~~the Operating Partnerships and~~ our consolidated joint ventures are variable interest entities as the limited partners do not have substantive kick-out rights or substantive participating rights. However, as the Company holds a majority voting interest in the Operating ~~Partnerships~~Partnership and our consolidated joint ventures, it qualifies for the exemption from providing certain of the disclosure requirements associated with variable interest entities.

We operate in a single reportable segment, which includes the operation, development and management of retail and other rental properties. 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~~property operations in assessing segment operating performance. We do not distinguish or group our consolidated operations based on geography, size or type for purposes of making property operating decisions. 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~~When assessing segment operating performance, certain non-cash and non-comparable items such as straight-line rent, depreciation expense and intangible asset and liability amortization are excluded from property operations, which are a result of ~~our~~GGP's emergence from bankruptcy, 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.

~~Properties~~Reclassifications

~~Real estate~~Components of revenue that were previously reported as minimum rents, tenant recoveries, and overage rents have been combined and reported as rental revenues on the Consolidated Statements of Comprehensive Income. This change in presentation was done to improve comparability by conforming prior year presentation to the current year presentation required under Accounting Standards Codification ("ASC") 842. Total revenues of the Company are unchanged by this reclassification. Refer to Note 7 for further information.



	Three Months Ended March 31, 2018
	As Originally Reported		As Reclassified
Minimum rents	$	368,523	$	—
Tenant recoveries	157,002		—
Overage rent	6,244		—
Total rental revenues	$	—	$	531,769

Acquisitions of Operating Properties (Note 3)

The fair values of tangible assets are ~~stated at~~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 ~~less any provisions~~approach utilizing published guidelines for ~~impairments. Expenditures~~current replacement cost or actual construction costs for ~~significant betterments~~similar, recently developed properties; and ~~improvements are capitalized. Maintenance~~an income approach. Assumptions used in the income approach to the value of buildings include: capitalization and ~~repairs are charged~~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 (costs we would have incurred to ~~expense when incurred. Construction~~lease the property to the current occupancy level of the property) and ~~improvement costs incurred in connection with~~ the ~~development~~lost revenues during the period necessary to lease-up from vacant to current occupancy level. Such estimates include the fair value of ~~new properties or the redevelopment of existing properties are capitalized. Real estate taxes, interest~~leasing commissions, legal costs and ~~internal~~tenant coordination costs ~~associated with leasing~~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 ~~development overhead incurred during construction periods are capitalized. Capitalization is based on qualified expenditures and interest rates. Capitalized~~include an estimate of the net operating costs (primarily real estate taxes, ~~interest costs,~~insurance, and ~~internal costs associated with leasing~~utilities) incurred during the lease-up period, which generally ranges up to one year. The fair value of the acquired in-place tenant leases is included in the balance of buildings and ~~development overhead are~~equipment and 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~~

remaining lease term for each tenant.

1012

Table of Contents

~~GGP INC.~~Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

~~Reclassifications~~

In November 2016, the FASB issued ASU 2016-18 which requires that a statement of cash flows explain the change during the reporting period in the total of cash, cash equivalents and restricted cash or restricted cash equivalents. The Company adopted this guidance on December 31, 2017, which changes our statements of cash flows and related disclosures for all periods presented. The following is a summary of our cash, cash equivalents and restricted cash total as presented in our statements of cash flows for the six months ended June 30, 2018 and 2017:

Six Months Ended June 30,
2018 2017
Cash and cash equivalents $ 194,675
$ 227,626
Restricted cash 69,892
37,690
Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 264,567
$ 265,316

For the six months ended June 30, 2017 the changes in restricted cash related to cash flows provided by operating activities of $16.0 million, restricted cash related to cash flows used in investing activities of $0.4 million and restricted cash related to cash flows used in financing activities of $2.8 million were reclassified.

~~Acquisitions of Operating Properties (Note 3)~~

Acquisitions of properties are typically accounted for as acquisitions of assets rather than acquisitions of a business. Accordingly, the results of operations of acquired properties have been included in the results of operations from the respective dates of acquisition and acquisition costs are capitalized. 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.

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.~~certain. 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		Gross Asset		Accumulated Amortization			Net Carrying Amount

As of June 30, 2018
As of March 31, 2019
Tenant leases:
In-place value	$	285,145	$	(145,194	)	$	139,951	$	171,211	$	(75,985	)	$	95,226

As of December 31, 2017
As of December 31, 2018
Tenant leases:
In-place value	$	347,232	$	(181,088	)	$	166,144	$	188,140	$	(86,510	)	$	101,630

The above-market tenant ~~leases and below-market ground~~ leases are included in prepaid expenses and other assets (Note ~~13)~~14); the below-market tenant leases ~~above-market ground leases and above-market headquarters office lease~~ are included in accounts payable and accrued expenses (Note ~~14)~~15) in our Consolidated Balance Sheets.

~~Table of Contents~~

~~GGP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

Amortization/accretion of all intangibles, including the intangibles in Note 1314 and Note ~~14,~~15, had the following effects on our income from continuing operations:

Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Amortization/accretion effect on continuing operations $ (14,826 ) $ (16,399 ) $ (30,866 ) $ (41,318 )



	Three Months Ended March 31,
	2019			2018
Amortization/accretion effect on continuing operations	$	(5,182	)	$	(16,039	)

Future amortization/accretion of all intangibles ~~including the intangibles~~ in Note 1314 and Note ~~14,~~15, is estimated to decrease results from continuing operations as follows:

Year Amount
2018 Remaining $ 20,497
2019 28,966
2020 19,567
2021 13,908
2022 12,579

~~Investments in Unconsolidated Real Estate Affiliates (Note 5)~~

We account for investments in joint ventures where we own a non-controlling joint interest using either the equity method or the cost method. If we have significant influence but not control over the investment, we utilize the equity method. If we have neither control nor significant influence, we utilize the cost 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. Under the cost method, the cost of our investment is not adjusted for our share of the earnings of such Unconsolidated Real Estate Affiliates from the date of acquisition and distributions are treated as earnings when 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"). A limited partnership or other similar entity is considered a VIE unless a simple majority of limited partners (excluding limited partners that are under common control with the general partner) have substantive kick-out rights or participating rights. Accounting guidance amended the following: (i) modified the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, (ii) eliminated the presumption that a general partner should consolidate a limited partnership, (iii) affected the consolidation analysis of reporting entities that are involved with VIEs, and (iv) provided a scope exception for certain entities. If an entity is determined to be a VIE, we determine which party is the 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.

~~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 5), 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 5 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, 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

~~Table of Contents~~

~~GGP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

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.

To the extent that we contribute assets to a joint venture accounted for using the equity method, our investment in the joint venture is recorded at the fair value of the consideration of the assets that were contributed to the joint venture. We will recognize gains and losses on the contribution of our real estate to joint ventures, relating to our entire investment in the property, to the extent the buyer is independent of the Company, the collection of the sales price is reasonably assured, and we will not be required to support the operations of the property or its related obligations to an extent greater than our proportionate interest.

~~The combined summarized financial information of unconsolidated joint ventures is disclosed in Note 5 to the Consolidated Financial Statements.~~

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.



Year	Amount
2019 Remaining	$	14,769
2020	14,096
2021	9,442
2022	8,580
2023	8,251

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-market and below-market tenant leases on acquired properties and properties that were recorded at fair value at the emergence from bankruptcy.

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.

Accounting for real estate sales distinguishes between sales to a customer or non-customer for purposes of revenue recognition. Once we, as the seller, determine that we have a contract, we will identify each distinct non-financial asset promised to the counter-party and whether the counter-party obtains control and transfers risks and rewards of ownership of each non-financial asset to determine if we should derecognize the asset.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Leases

We ~~provide~~have entered into lease arrangements for the land and buildings at certain properties, as well as for the use of office space in Chicago, Illinois. We account for leases under Accounting Standards Update ("ASU") 2016-02, Leases ("Topic 842" or "the new leasing standard"). We elected to use the "package of practical expedients", as discussed below, which allowed us not to reassess under the new leasing standard prior conclusions about lease identification, lease classification, and initial direct costs. We elected to recast prior-period comparative information presented in our Consolidated Statements of Comprehensive Income related to rental revenues.

The new leasing standard requires lessees to record a right-of-use ("ROU") asset and a related lease liability for the rights and obligations associated with all lessee leases. Topic 842 also modified the lease classification criteria through the elimination of "bright-line" tests, the removal of historical real estate specific lease provisions, and changes to lessor accounting to align with the new revenue recognition standard (ASC 606).

On the adoption date, we recognized lease liabilities of $73.4 million and ROU assets of $118.9 million for operating leases of Consolidated Properties for which we are the lessee included in accounts payable and accrued expenses and prepaid expenses and other assets, respectively, on the Consolidated Balance Sheet and there was no cumulative effect on retained earnings. In order to determine the lease liabilities recognized upon adoption, we discounted the remaining lease payments using our incremental borrowing rates ("IBR") at January 1, 2019. The weighted average rate applied was 7.36%. The ROU asset balance was initially measured as the lease liability amount adjusted by the amount of prepaid or accrued lease payments, deferred straight-line lease liabilities, and intangible ground lease assets and liabilities relating to leases recognized on our Consolidated Balance Sheet as of December 31, 2018. In transition, an ~~allowance~~adjustment of $45.4 million was made to the ROU asset balance to derecognize $52.8 million of below-market ground lease intangible assets (within prepaid expenses and other assets) and $7.4 million of accrued straight-line rent (within accounts payable and accrued expenses) previously recorded on our Consolidated Balance Sheet.

In addition to the "package of practical expedients", we elected to use the following additional practical expedients permitted by the new leasing standard:

The transition practical expedient that allows us to carry forward our historical accounting treatment for ~~doubtful accounts against~~land easements on existing agreements.

The short-term lease election that allows a lessee not to apply the ~~portion~~balance sheet recognition requirements to leases with a term of 12 months or less; lease payments associated with these leases are recognized on a straight-line basis as an expense over the lease term and are not material.

The practical expedient which allows a lessee to not separate lease and non-lease components. We have elected to apply this election to all classes of underlying assets.

The Company did not elect to apply the practical expedients related to hindsight or assessing impairment of ROU assets.

Lessee arrangements (policy applicable from January 1, 2019)

To account for leases for which we are the lessee under the new leasing standard, contracts must be analyzed upon inception to determine if the arrangement is, or contains, a lease. A lease conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Lease classification tests and measurement procedures are performed at the lease commencement date. Differences in lease classification will affect only the pattern and classification of expense recognition in our Consolidated Statements of Comprehensive Income.

The lease liability is initially measured as the present value of the lease payments over the lease term, discounted using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the lessee’s incremental borrowing rate is used. The lease liability balance is subsequently amortized using the effective interest method. The incremental borrowing rate is determined using an approach based on the rate of interest that the lessee would pay to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. We utilized a market-based approach to estimate the IBR for each individual lease. The approach required significant judgment. Therefore, we utilized different data sets to estimate base IBRs via an analysis of (i) yields on outstanding public debt of BPR, as well as comparable companies, (ii) observable mortgage rates, and (iii) unlevered property yields and discount rates. We then applied adjustments to account for considerations related to (i) term and (ii) security that may not be fully incorporated by the aforementioned data sets. Based on individual characteristics

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(Dollars in thousands, except share and per share amounts)

(Unaudited)

of each lease, we selected an IBR taking into consideration how each data approach and adjustments thereto incorporate term, currency and security.

The lease term is the noncancelable period of the lease, and includes any renewal and termination options we are reasonably certain to exercise. The reasonably certain threshold is evaluated at lease commencement and is typically met if substantial economic incentives or termination penalties are identified.

Lease payments measured at the commencement date include fixed payments, in-substance fixed payments, variable lease payments dependent on a rate or index (using the index or rate in effect at lease commencement), any purchase option the lessee is reasonably certain to exercise, and payments of penalties for terminating the lease if the lease term reflects the lessee exercising the termination option. Fully variable lease payments without an in-substance fixed component are not included in the measurement of the lease liability and are recognized in the period in which the underlying contingency is resolved.

The lease liability is remeasured when the contract is modified, upon the resolution of a contingency such that variable payments become fixed or if our assessment of exercising an extension, termination or purchase option changes. Once remeasured, an adjustment is made to the ROU asset. However, if the carrying amount of the right-of-use asset is reduced to zero, any remaining amount of the remeasurement is recognized in earnings.

The ROU asset balance is initially measured as the lease liability amount, adjusted for any lease payments made prior to the commencement date, initial direct costs, estimated costs to dismantle, remove, or restore the underlying asset and incentives received.

Our current lessee lease portfolio is comprised entirely of operating leases; however if we enter into a finance lease in the future, the new leasing standard requires us to initially recognize and measure these leases using the same method as described above for operating leases. Subsequent to initial recognition, each lease payment would be allocated between interest expense and a reduction of the lease liability. Interest expense would be recognized over the lease term using the interest method to produce a constant periodic rate of interest on the remaining balance of the liability for each period and would be included in interest expense in our Consolidated Statements of Comprehensive Income. The ROU asset would be amortized on a straight-line basis over the lease term, with depreciation recorded in depreciation and amortization in our Consolidated Statements of Comprehensive Income.

The ROU assets in our operating leases are evaluated for impairment in a manner similar to our operating properties, as described below under "Impairment".

Lessor arrangements (policy applicable from January 1, 2019)

At the inception of a new lease arrangement, including new leases that arise from amendments, we assess the terms and conditions to determine the proper lease classification. When the terms of a lease effectively transfer control of the underlying asset, the lease is classified as a sales-type lease. When a lease does not effectively transfer control of the underlying asset to the lessee, but we obtain a guarantee for the value of the asset from a third party, we classify the lease as a direct financing lease. All other leases are classified as operating leases. Control of the underlying asset is transferred to the lessee if any of the following criteria are met: (i) transfer of ownership to the lessee prior to or shortly after the end of the lease term, (ii) lessee has an option to purchase the underlying property that the lessee is reasonably certain to exercise, (iii) the lease term is for the major part of the underlying property’s remaining economic life, (iv) the present value of the sum of lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments is equal to or exceeds substantially all of the fair value of the leased property or (v) the underlying property is of such a specialized nature that it is expected to have no alternative use at the end of the lease term. As of March 31, 2019, we do not have any material sales-type or direct financing leases.

For operating leases with minimum scheduled rent increases, we recognize rental income on a straight‑line basis, including the effect of any free rent periods, over the lease term when collectability of lease payments (and, if applicable, any amounts necessary to satisfy a residual value guarantee) is probable. Variable lease payments are recognized as rental income in the period when the changes in facts and circumstances on which the variable lease payments are based occur. Variable lease payments include overage rent, which is paid by a tenant when the tenant's sales exceed an agreed upon minimum amount, is recognized 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Our leases also contain provisions for tenants to reimburse us for real estate taxes and insurance, as well as for other property operating expenses, marketing costs, and utilities, which are considered to be non-lease components. These tenant reimbursements are most often established in the leases or in less frequent cases computed based upon a formula. We have elected the practical expedient to not separate non-lease components from the lease component for all classes of underlying assets and determined that the lease component is the predominant component in the contract; therefore, these recoveries are recognized in a manner similar to minimum rents and variable rents within rental revenues on our Consolidated Statements of Comprehensive Income.

Recognizing rental and related income on a straight-line basis results in a difference in the timing of revenue recognition from what is contractually due from tenants. Straight-line rents are recorded in accounts receivable, ~~including~~net in our Consolidated Balance Sheet. If we determine that collectability of the lease payments is not probable, we record a current-period adjustment to rental income in the amount of the difference between cumulative straight-line ~~rents, which~~and variable lease income recognized since lease commencement and the amounts collected from the lessee. Future revenue recognition is ~~estimated~~limited to amounts contractually owed and paid by the lessee. Generally, a lease is returned to accrual status when all delinquent payments become current under the terms of the lease agreement and collectability of the remaining contractual lease payments is reasonably probable.

Rental revenues also includes 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-market and below-market tenant leases on acquired properties and properties that were recorded at fair value at the emergence from bankruptcy.

In leasing tenant space, we may provide funding to the lessee through a tenant allowance. To account for a tenant allowance, we determine whether the allowance represents funding for the construction of leasehold improvements and evaluate the control and 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 leasehold improvements, the allowance is capitalized to deferred expenses and considered to be ~~uncollectible. Such allowances~~a lease incentive and is recognized over the lease term as a reduction of rental revenue on a straight-line basis.

Deferred expenses (policy applicable from January 1, 2019)

The new leasing standard defines initial direct costs as incremental costs of a lease that would not have been incurred if the lease had not been obtained. These initial direct costs (consisting primarily of leasing commissions paid to third parties) are ~~reviewed each period based upon~~recognized as deferred expenses on our ~~recovery experience~~Consolidated Balance Sheet and are amortized using the ~~specific facts~~straight-line method over the life of ~~each outstanding amount.~~the leases. Other leasing costs which do not meet the definition of initial direct costs (consisting primarily of internal legal and leasing overhead costs) are expensed as incurred and included in property management and other costs in our Consolidated Statements of Comprehensive Income.

Policy applicable to periods prior to January 1, 2019

Our accounting policy for leases in which we are the lessor or lessee prior to the adoption of the new leasing standard can be found in our audited consolidated financial statements for the year ended December 31, 2018, which are included in our Annual Report.

Management Fees and Other Corporate Revenues

Management fees and other corporate revenues primarily represent real estate 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 Comprehensive Income. 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 Comprehensive Income and in property management and other costs in the Condensed Combined Statements of Income in Note 5. The following table summarizes the management fees from affiliates and our share of the management fee expense:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Management fees from affiliates	$	26,030		$	20,847		$	51,795		$	48,990		$	41,188		$	25,766
Management fee expense	(10,287		)	(8,443		)	(20,779		)	(17,246		)	(12,517		)	(10,491		)
Net management fees from affiliates	$	15,743		$	12,404		$	31,016		$	31,744		$	28,671		$	15,275

~~Based upon~~

Following the ~~new revenue recognition guidance, we determined that typical~~BPY Transaction, certain Brookfield Asset Management Inc. ("BAM")-owned entities provide certain management ~~fees including property~~ and ~~asset~~administration services to BPR. BPR will pay an annual base management ~~construction and development management services, leasing services, property acquisition and disposition services and financing services, needed~~fee to ~~be evaluated for each separate performance obligation included in the contract in order~~BAM equal to ~~determine timing of revenue recognition. Revenues from contracts within the scope~~1.25% of the ~~new revenue recognition guidance were $50.6 million for~~total capitalization of BPR, subject to certain adjustments. For the ~~six~~first twelve months ended June 30, 2018. Management determined that property and asset management and construction and development management services each represent a series of stand-ready performance obligations satisfied over time with each day of service being a distinct performance obligation. For property and asset management services, we are compensated for our services through a monthly management fee earned based on a specified percentage of the monthly rental income or rental receipts generated from the property under management. For construction and development services, we are compensated for planning, administering and monitoring the design and construction of projects at our joint venture properties typically based on a percentage of project costs, hourly rate of development staff or a fixed fee. Revenues from such contracts were $43.7 million for the six months ended June 30, 2018 and are recognized over the life of the applicable contract.

Conversely, leasing services, property acquisition and disposition services and financing services are each considered to be a single performance obligation, satisfied as of a point in time. Our fee is paid upon the occurrence of certain contractual event(s) that may be contingent and pattern of revenue recognition may differ from the timing of payment. For these services, the obligation is the execution of the lease,following closing of the ~~sale or acquisition, or closing of the financing or refinancing. As such, revenues are recognized at the point in time when the respective obligation~~BPY Transaction, BAM has ~~been satisfied. Revenues from such contracts~~agreed to waive management fees payable by BPR. There were ~~$6.9 million~~no amounts due pursuant to these services for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019.

Following the BPY Transaction, an affiliate of BAM is entitled to receive incentive distributions based on an amount by which quarterly distributions exceed specified target levels. There were no such amounts payable for the three months ended March 31, 2019.

Impairment

Operating ~~properties~~Properties

We regularly review our ~~consolidated properties~~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, changes in 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.

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~~GGP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

Impairment charges are recorded in the Consolidated Statements of Comprehensive Income 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.

No provisions for impairment were recognized for the three months ended March 31, 2019. During the ~~six~~three months ended ~~June 30,~~March 31, 2018, we recorded a $38.4 million impairment charge on our Consolidated Statements of Comprehensive Income related to one operating property that ~~has~~had non-recourse debt maturing during 2019 that ~~exceeds~~exceeded the fair value of the operating property. ~~No provisions for impairment were recognized for the three months ended June 30, 2018.~~

~~No provisions for impairment were recognized for the three~~

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(Dollars in thousands, except share and ~~six months ended June 30, 2017.~~per share amounts)

(Unaudited)

Changes in economic and operating conditions that occur subsequent to our review of recoverability of our properties could impact the assumptions used in that assessment and could result in future impairment if assumptions regarding those properties differ from actual results.

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 performed 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 three and six months ended June 30, 2018 and 2017.~~

Changes in economic and operating conditions that occur subsequent to our review of recoverability of our investments in Unconsolidated Real Estate Affiliates could impact the assumptions used in that assessment and could result in future impairment if assumptions regarding those investments differ from actual results.

~~Notes Receivable~~

Notes receivable are evaluated for impairment at least quarterly. Impairment occurs when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the loan. If a loan is considered to be impaired, we record an allowance through the provision for loan losses to reduce the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral.

~~No impairments related to our notes receivable were recognized for the three and six months ended June 30, 2018 and 2017.~~

~~Held for Disposition~~

As of June 30, 2018, a non-refundable deposit of significance was received from the buyer for one property, making the sale probable. Therefore, the property was considered held for disposition as of June 30, 2018. Total assets held for disposition were $120.7 million, which included $119.4 million of net investment in real estate, and total liabilities held for disposition were $100.7 million, which included $100.0 million of mortgages, notes and loans payable. The property was subsequently sold on July 13, 2018 (Note 17).

~~Fair Value Measurements (Note 4)~~

~~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;~~

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~~GGP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

~~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.~~

Note 4 includes a discussion of properties measured at fair value on a non-recurring basis using Level 2 and Level 3 inputs and the fair value of debt, which is estimated on a recurring basis using Level 2 and Level 3 inputs. Note 8 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 ~~including the uncommitted accordion feature,~~ available under our credit facility is spread among a diversified group of investment grade financial institutions. We had ~~$260.0~~$987.0 million ~~outstanding~~ and ~~no amount~~$387.0 million outstanding under our credit facility as of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively.

Recently Issued Accounting Pronouncements

~~Based upon~~In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases. This new guidance, including related ASUs that have been subsequently issued, was effective January 1, 2019, and required lessees to recognize a liability to make lease payments and a right-of-use asset, initially measured at the present value of lease payments, for both operating and finance leases. For leases with a term of 12 months or less, lessees were permitted to make an accounting policy election by class of underlying asset to not recognize lease liabilities and lease assets. The guidance allowed lessors and lessees to make an accounting policy election, by class of underlying asset, to not separate non-lease components from lease components. The guidance also provided an optional transition method which allowed entities to initially apply the new ~~revenue recognition~~ guidance ~~revenue recognized for the three and six months ended June 30, 2018 is not significantly different as compared to what would have been recognized~~ in the ~~same~~ period ~~under guidance that was in effect before~~of adoption, recognizing a cumulative-effect adjustment to the ~~change. Effective January 1, 2018, companies are required~~opening balance of retained earnings, if necessary. The Company elected to apply ~~a five-step model in accounting for revenue. The core principle~~the alternative transition method and no cumulative-effect adjustment to the opening balance of ~~the revenue model is that a company recognizes revenue~~retained earnings was deemed necessary 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 are excluded from this revenue recognition criteria; however, the sale of real estate is required to follow the new model. Expanded quantitative and qualitative disclosures regarding revenue recognition are required for contracts that are subject to this pronouncement. The new standard can be adopted either retrospectively to each prior reporting period presented or on a modified retrospective approach as a cumulative effect adjustment as of the date of adoption. record.

The Company adopted the model effective January 1, 2018 using the modified retrospective approach for implementation. We elected to use the practical expedient to apply the model only to contracts not yet completed as of the date of adoption. The adoption resulted in a cumulative-effect adjustment to increase equity as of January 1, 2018 of approximately $1.90 million related to changes in the revenue recognition pattern of lease commissions earned by the Company from our joint ventures and the sale of condos in our Unconsolidated Real Estate Affiliates (Note 5).

In February 2016, the FASB issued Accounting Standards Update ("ASU") 2016-02 which will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under ASU 2016-02, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Lessor accounting remains substantially similar to current GAAP. However, leasing costs that are currently eligible to be capitalized as initial direct costs are limited by ASU 2016-02. In addition, disclosures of leasing activities are to be expanded to include qualitative along with specific quantitative information. For public entities, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. ASU 2016-02 mandates a modified retrospective transition method. The Company expects to adopt this guidancenew standard on January 1, 2019 and ~~will continue~~applied the new guidance as of that date. In addition, the Company has presented all income as a single line item within "rental revenues" in the accompanying Consolidated Statements of Comprehensive Income for the current and comparative period. Refer to ~~evaluate~~ the ~~potential impact~~Reclassifications section of ~~this pronouncement on its consolidated financial statements until~~Note 2 for additional detail. The Company elected to use the ~~guidance becomes effective.~~"package of practical expedients", which allowed the Company to not reassess under the new standard prior conclusions about lease identification, lease classification, and initial direct costs. The Company did not make any adjustments to the opening balance of retained earnings upon adoption of the new standard given the nature of the impacts and other transition practical expedients elected by the Company. The leases section above and Note 7 includes a discussion of the effect of the adoption of the new standard.

In June 2016, the FASB issued ASU 2016-13,Financial Instruments - Credit Losses, which changes the model for the measurement of credit losses on financial instruments. Specifically, the amendments in the ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments in this ASU will be effective for the Company January 1, ~~2020 with early adoption permitted on January 1, 2019.~~2020. The Company is evaluating the potential impact of this pronouncement on its consolidated financial statements.

In ~~October 2016,~~August 2018, the FASB issued ASU ~~2016-16 which changed the current income tax accounting for intra-entity asset sales to be only for inventory. The Company adopted this standard~~2018-13, Fair Value Measurement. This new guidance is effective January 1, ~~2018. For those companies that did not recognize~~2020, with early adoption permitted, and provides new, and in some cases eliminates or modifies the existing disclosure requirements on fair value measurements. Public entities will be required to disclose the following: (i) the changes in unrealized gains and losses for the period included in other comprehensive income ~~tax impact~~for recurring Level 3 fair value measurements held at the end of ~~a sale other than inventory before~~ the ~~adoption date,~~reporting period and (ii) the ~~new ASU was applied on a modified retrospective~~range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

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(Dollars in thousands, except share and per share amounts)

(Unaudited)

~~basis, with a cumulative-effect adjustment directly~~In addition, public entities will no longer be required to ~~retained earnings as~~disclose the following: (i) the amount of ~~January~~and reasons for transfers between Level 1 ~~2018. This resulted in a cumulative-effect adjustment to decrease retained earnings by the unamortized balance~~and Level 2 of the ~~$18.8 million prepaid asset established in December 2016.~~

~~In November 2016,~~fair value hierarchy, (ii) the ~~FASB issued ASU 2016-18 which requires~~policy for timing of transfers between levels and (iii) the valuation processes for Level 3 fair value measurements. The new pronouncement also clarifies and modifies certain existing provisions, including eliminating "at a minimum" from the phrase "an entity shall disclose at a minimum" to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and clarifying that ~~a statement of cash flows explain the change during the reporting period in the total of cash, cash equivalents and restricted cash or restricted cash equivalents. This standard~~materiality is ~~effective for public entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in~~ an ~~interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.~~appropriate consideration when evaluating disclosure requirements. The Company ~~adopted~~is evaluating the potential impact of this ~~guidance~~pronouncement on ~~December 31, 2017, which changes our statements of cash flows and related disclosures for all periods presented.~~

In February 2017, the FASB issued ASU 2017-05 which clarifies the accounting for the derecognition of nonfinancial assets by eliminating the exception in current GAAP for transfers of investments in real estate entities (including equity method investments). The amendments in this update provide guidance on the accounting of partial sales of nonfinancial assets and contributions of nonfinancial assets to a joint venture or other noncontrolling investee. Once this guidance is adopted, an entity would use the guidance in the new revenue recognition standard (discussed above) to determine whether it is transferring multiple, distinct assets and would recognize a gain or loss for each distinct asset transferred. When an entity transfers nonfinancial assets included in a subsidiary and retains or receives an equity interest, it first determines whether it has retained a controllingits consolidated financial interest in the subsidiary. If so, the entity does not derecognize the assets and accounts for the sale of noncontrolling interest in the subsidiary under the consolidation guidance covering decreases in ownership which would result in recognizing a gain or loss. If an entity retains or receives a noncontrolling interest in the entity that owns the asset post-sale, that noncontrolling interest is considered noncash consideration and is included in the transaction price at its fair value. The retained noncontrolling interest is included at its fair value and results in an entity recognizing 100% of the gain on sale of the asset. The Company adopted this standard as of January 1, 2018 using the modified retrospective approach for implementation. We elected to use the practical expedient to apply the standard only to contracts not yet completed as of the date of adoption. The adoption will result in higher gains on future sales of partial real estate interests due to recognizing 100% of the gain on the sale of the partial interest and recording the retained noncontrolling interest at fair value. As of the adoption date, January 1, 2018, there was no cumulative-effect adjustment recorded to retained earnings.statements.

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 allocating the purchase price of real estate acquisitions, the useful lives of assets, capitalization of development and leasing costs, provision for income taxes, recoverable amounts of receivables and deferred taxes, provision for loan loss, initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to acquisitions, impairment of long-lived assets, litigation related accruals and disclosures and fair value of debt. Actual results could differ from these and other estimates.

NOTE 3 ACQUISITIONS, SALES AND JOINT VENTURE ACTIVITY

On January 7, 2019, we completed the sale of our 12.0% interest in Bayside Marketplace for a sales price of $42.0 million, which resulted in a gain of $104.4 million recognized in Unconsolidated Real Estate Affiliates - gain on investment on our Consolidated Statements of Comprehensive Income for the three months ended March 31, 2019.

The Company entered into a series of separate transactions on August 27, 2018 as a result of the BPY Transaction as follows:

BPR-FF JV LLC joint venture was formed with Brookfield Real Estate Partners F LP. The Company contributed properties and recognized a gain from the change in control of the investment properties and other, net of $1.4 billion for the year ended December 31, 2018. In addition, the Company recognized a gain in Unconsolidated Real Estate Affiliates - gain on investment of $18.5 million for the year ended December 31, 2018.

Joint ventures were formed with the Teachers Insurance and Annuity Association of America. The Company contributed properties and recognized a gain from the change in control of the investment properties and other, net of $943.4 million for the year ended December 31, 2018. In addition, the Company recognized a gain in Unconsolidated Real Estate Affiliates - gain on investment of $18.4 million for the year ended December 31, 2018.

Joint ventures were formed with CBRE Global Investment Partners. The Company contributed properties and recognized a gain from the change in control of the investment properties and other, net of $454.0 million for the year ended December 31, 2018.

Joint ventures were formed with the California Public Employees' Retirement System. The Company contributed properties and recognized a gain in Unconsolidated Real Estate Affiliates - gain on investment of $440.3 million for the year ended December 31, 2018.

A new joint venture, BPY Retail Holdings LLC, was formed with an institutional investor. As a result of this investment, the institutional investor owns a noncontrolling interest in all retail assets of the Company, as all retail assets are wholly or partially owned by the Operating Partnership.

On January 29, 2018, we completed the sale of a 49.49% joint venture interest in ~~the Sears Box~~an anchor box at Oakbrook Center to our joint venture partner for a sales price of $44.7 million, which resulted in a gain of $12.7 million recognized in gain from changes in control of investment properties and other, net for the ~~six~~three months ended ~~June 30,~~March 31, 2018.

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

On September 15, 2016, joint ventures we formed with Simon Property Group and Authentic Brands Group LLC ("ABG") acquired Aeropostale, Inc. ("Aeropostale") for $80.0 million in total cash which included cash for working capital requirements of the retail business. The intellectual property and brand related assets were assigned to the Aero IpCo, LLC venture ("IPCO") and the assets and liabilities necessary to run the stores were assigned to the Aero OpCo, LLC ~~venture ("OPCO").~~venture. In connection with the transaction, our total investment was $20.4 million of cash contributed to the ventures for an effective ownership of approximately 26% in the two joint ventures. Aeropostale is a tenant at certain properties for which we receive rental income included in ~~minimum rents~~rental revenues on the Consolidated Statements of ~~Operations and~~ Comprehensive Income.

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~~GGP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

On December 29, 2017, we sold approximately 54% of our interest in IPCO to ABG for a sales price of $16.6 million, which resulted in a gain of $12.0 million recognized in Unconsolidated Real Estate Affiliates - gain on investment on our Consolidated Statements of Comprehensive Income for the year ended December 31, 2017. On March 30, 2018, ABG exercised their call right to purchase ~~our~~the remaining 46% of our original interest in IPCO for a sales price of $13.9 million, which resulted in a gain of $10.4 million recognized in Unconsolidated Real Estate Affiliates - gain on investment on our Consolidated Statements of Comprehensive Income for the ~~six~~three months ended ~~June 30,~~March 31, 2018. In addition, we invested $30.5 million in ABG units on December 29, 2017. The investment is considered a cost method investment and is included in investment in Unconsolidated Real Estate Affiliates on the Consolidated Balance Sheets.

On June 30, 2017, we conveyed Lakeside Mall to the lender in full satisfaction of $144.5 million in outstanding debt. This transaction resulted in a $55.1 million gain on extinguishment of debt for the three and six months ended June 30, 2017.

On June 9, 2017, we closed on the acquisition of our joint venture partner's 50% interest in Neshaminy Mall located in Bensalem, Pennsylvania for a gross purchase price of $65.0 million. Post acquisition, we own 100% of the mall. Prior to the acquisition of the remaining interest, the carrying value for our investment was $55.2 million. As a result of this acquisition, the implied fair value of our previous investment in Neshaminy Mall is $33.7 million, resulting in a loss of $21.5 million, recognized in loss from changes in control of investment properties and other for the three and six months ended June 30, 2017.

On May 12, 2017, we closed on the sale of Red Cliffs Mall in St. George, Utah for $39.1 million. The transaction netted proceeds of approximately $36.3 million and resulted in a gain on sale of $5.6 million recognized in gain from changes in control of investment properties and other for the three and six months ended June 30, 2017.

NOTE 4 FAIR VALUE

Nonrecurring Fair Value Measurements

We estimate fair value relating to impairment assessments based upon discounted cash flow and direct capitalization models that include all projected cash inflows and outflows over a specific holding period, or the negotiated sales price, if applicable. Such projected cash flows are comprised of contractual rental revenues and forecasted rental revenues and expenses based upon market conditions and expectations for growth. Capitalization rates and discount rates utilized in these models are based on a reasonable range of current market rates for each property analyzed. Based upon these inputs, we determined that our valuations of properties using a discounted cash flow or a direct capitalization model were classified within Level 3 of the fair value hierarchy. For our properties for which the estimated fair value was based on negotiated sales prices, we determined that our valuation was classified within Level 2 of the fair value hierarchy.

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. There were no impairment charges recorded during the ~~six~~three months ended ~~June 30, 2018. No impairment charges were recognized during~~March 31, 2019. During the ~~six~~three months ended ~~June 30, 2017.~~March 31, 2018, we recognized $38.4 million in impairment charges.

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) Provisions for Impairment
Six Months Ended June 30, 2018
Investments in real estate (1) $ 71,181
$ —
$ —
$ 71,181
$ 38,379



	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)		Provisions for Impairment

Investments in real estate (1)	$	71,181	$	—	$	—	$	71,181	$	38,379


(1)	Refer to Note 2 for more information regarding impairment. Investments in real estate includes consolidated properties and Unconsolidated Real Estate Affiliates.



Unobservable Quantitative Input		Rate
Discount rates		9.75%
Terminal capitalization rates		10.25%

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~~GGP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

Disclosure of 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 ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)


	June 30, 2018				December 31, 2017				March 31, 2019				December 31, 2018
	Carrying Amount (1)		Estimated Fair Value		Carrying Amount (2)		Estimated Fair Value		Carrying Amount (1)		Estimated Fair Value		Carrying Amount (2)		Estimated Fair Value
Fixed-rate debt	$	10,618,364	$	10,441,443	$	10,420,252	$	10,467,262	$	6,047,625	$	5,694,225	$	6,073,193	$	6,048,104
Variable-rate debt	2,229,271		2,244,670		2,412,207		2,415,457		7,450,801		7,540,910		6,516,456		6,614,172
	$	12,847,635	$	12,686,113	$	12,832,459	$	12,882,719	$	13,498,426	$	13,235,135	$	12,589,649	$	12,662,276


(1)	Includes net market rate adjustments of ~~$21.3~~$7.3 million and deferred financing costs of ~~$25.0~~$115.9 million, net.


(2)	Includes net market rate adjustments of ~~$23.5~~$7.7 million and deferred financing costs of ~~$30.3~~$123.8 million, net.

The fair value of our ~~Junior Subordinated Notes~~junior subordinated notes approximates their carrying amount as of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018. 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 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.

1921

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~~GGP INC.~~Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 5 UNCONSOLIDATED REAL ESTATE AFFILIATES

Following is summarized financial information for all of our real estate related Unconsolidated Real Estate Affiliates accounted for using the equity method and a reconciliation to our total investment in Unconsolidated Real Estate Affiliates. The reconciliation to our total investment in Unconsolidated Real Estate Affiliates is inclusive of investments accounted for using the cost method (Note 2).


	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Condensed Combined Balance Sheets - Unconsolidated Real Estate Affiliates
Assets:
Land	$	2,949,758		$	2,908,181		$	3,604,141		$	3,595,706
Buildings and equipment	14,247,590			14,014,665			23,215,593			23,468,110
Less accumulated depreciation	(3,992,067		)	(3,794,792		)	(4,452,934		)	(4,361,210		)
Construction in progress	509,603			545,305			470,510			489,250
Net property and equipment	13,714,884			13,673,359			22,837,310			23,191,856
Investment in unconsolidated joint ventures	613,853			613,136			627,254			632,060
Net investment in real estate	14,328,737			14,286,495			23,464,564			23,823,916
Cash and cash equivalents	426,027			438,664			586,310			540,905
Accounts receivable, net	324,445			386,634			345,813			348,655
Notes receivable	18,725			15,058			22,498			22,881
Deferred expenses, net	350,576			339,327			500,039			511,814
Prepaid expenses and other assets	209,034			381,980			718,603			796,815
Total assets	$	15,657,544		$	15,848,158		$	25,637,827		$	26,044,986
Liabilities and Owners' Equity:	\						\
Mortgages, notes and loans payable	$	10,539,041		$	10,504,799		$	15,829,842		$	16,139,498
Accounts payable, accrued expenses and other liabilities	555,692			1,115,549			1,032,661			1,118,663
Cumulative effect of foreign currency translation ("CFCT")	(21,258		)	(38,013		)	(7,701		)	(21,384		)
Owners' equity, excluding CFCT	4,584,069			4,265,823			8,783,025			8,808,209
Total liabilities and owners' equity	$	15,657,544		$	15,848,158		$	25,637,827		$	26,044,986
Investment in Unconsolidated Real Estate Affiliates, Net:
Owners' equity	$	4,562,811		$	4,227,810		$	8,775,323		$	8,786,824
Less: joint venture partners' equity	(2,629,508		)	(2,413,822		)	(4,806,830		)	(4,796,896		)
Plus: excess investment/basis differences	1,421,497			1,547,462			1,305,517			1,220,632
Investment in Unconsolidated Real Estate Affiliates, net (equity method)	3,354,800			3,361,450			5,274,010			5,210,560
Investment in Unconsolidated Real Estate Affiliates, net (cost method)	30,483			30,483			30,483			30,483
Elimination of consolidated real estate investment interest through joint venture	(47,323		)	(52,305		)
Retail investment, net	479			16,091			14,460			19,912
Investment in Unconsolidated Real Estate Affiliates, net	$	3,338,439		$	3,355,719		$	5,318,953		$	5,260,955
Reconciliation - Investment in Unconsolidated Real Estate Affiliates:
Asset - Investment in Unconsolidated Real Estate Affiliates	$	3,360,839		$	3,377,112		$	5,381,821		$	5,385,582
Liability - Investment in Unconsolidated Real Estate Affiliates	(22,400		)	(21,393		)	(62,868		)	(124,627		)
Investment in Unconsolidated Real Estate Affiliates, net	$	3,338,439		$	3,355,719		$	5,318,953		$	5,260,955

2022

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~~GGP INC.~~Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Condensed Combined Statements of Income - Unconsolidated Real Estate Affiliates (1)
Revenues:
Minimum rents	$	303,103		$	289,606		$	594,575		$	585,473
Tenant recoveries	119,108			119,923			241,750			241,942
Overage rents	5,325			4,085			11,629			10,192
Rental revenues, net													$	641,036		$	420,419
Condominium sales	12,384			83,402			49,273			180,389			—			36,889
Other	12,732			12,763			31,002			25,842			15,366			18,269
Total revenues	452,652			509,779			928,229			1,043,838			656,402			475,577
Expenses:
Real estate taxes	38,221			32,408			74,357			67,465			62,121			36,136
Property maintenance costs	945			9,575			12,608			21,064			15,677			11,664
Marketing	3,326			3,916			8,917			8,478			6,074			5,591
Other property operating costs	56,686			56,299			112,991			109,930			79,552			56,305
Condominium cost of sales	9,029			60,809			35,924			131,524			—			26,895
Provision for doubtful accounts	1,361			2,059			3,921			4,023			—			2,559
Property management and other costs (2)	22,453			19,910			45,863			38,370			29,040			23,413
General and administrative	1,109			490			1,667			1,063			1,667			558
Depreciation and amortization	159,243			127,240			284,323			249,732			263,399			125,080
Total expenses	292,373			312,706			580,571			631,649			457,530			288,201
Operating income	160,279			197,073			347,658			412,189
Interest income	1,583			2,815			3,424			5,543			2,282			1,841
Interest expense	(116,083		)	(114,193		)	(220,647		)	(225,181		)	(173,599		)	(104,564		)
Provision for income taxes	(198		)	(268		)	(402		)	(545		)	(567		)	(205		)
Equity in loss of unconsolidated joint ventures	(10,107		)	(6,357		)	(17,672		)	(10,711		)
Loss in unconsolidated joint ventures													(8,733		)	(7,563		)
Income from continuing operations	35,474			79,070			112,361			181,295			18,255			76,885
Allocation to noncontrolling interests	(19		)	(20		)	(37		)	(44		)	(14		)	(18		)
Net income attributable to the ventures	$	35,455		$	79,050		$	112,324		$	181,251		$	18,241		$	76,867
Equity In Income of Unconsolidated Real Estate Affiliates:
Net income attributable to the ventures	$	35,455		$	79,050		$	112,324		$	181,251		$	18,241		$	76,867
Joint venture partners' share of income	(12,639		)	(37,093		)	(48,240		)	(86,322		)	(9,056		)	(35,601		)
Elimination of loss from consolidated real estate investment with interest owned through joint venture	714			388			626			1,440
Elimination of gain from consolidated real estate investment with interest owned through joint venture													—			(89		)
Loss on retail investment	(1,243		)	(575		)	(7,099		)	(10,787		)	(5,452		)	(5,856		)
Amortization of capital or basis differences	(7,257		)	(11,038		)	(18,742		)	(21,636		)	(11,606		)	(11,482		)
Equity in income of Unconsolidated Real Estate Affiliates	$	15,030		$	30,732		$	38,869		$	63,946
Equity in income (loss) of Unconsolidated Real Estate Affiliates													$	(7,873	)	$	23,839


(1)	The Condensed Combined Statements of Income - Unconsolidated Real Estate Affiliates include income from ~~Miami Design District~~the joint ventures formed in conjunction with the BPY Transaction subsequent to ~~June 1, 2017.~~August 27, 2018 (Note 3).

(2) Includes management fees charged to the unconsolidated joint ventures by ~~GGMI~~BPRRS and ~~GGSI.~~BRMI.

The Unconsolidated Real Estate Affiliates represent our investments in real estate joint ventures that are not consolidated. We hold interests in 2228 domestic joint ventures, comprising 3866 U.S. retail properties 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

~~Table of Contents~~

~~GGP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

accordance with our respective ownership percentages. We manage most of the properties owned by these joint ventures. We account for investments in joint ventures where we own a non-controlling joint interest using either the equity method or the cost method. If we have significant influence but not control over the investment, we utilize the equity method. If we have neither

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

control nor significant influence, we utilize the cost method. If we control the joint venture, we account for the venture as a consolidated investment.

~~On June 1, 2017, we received an additional 7.3%~~As of ~~our joint venture partner's membership interests~~March 31, 2019, the balance of ROU assets was $60.6 million, net and lease liabilities of $73.5 million for 25 ground leases in Miami Design District in full satisfaction of two promissory notes for $57.6 million and $40.4 million, respectively, resulting in a total ownership of 22.3%. We determined that we had significant influence over the ~~investment subsequent to the acquisition of the additional interest, and therefore we changed our method of accounting for this joint venture from the cost method to the equity method (Note 2).~~

~~On July 12, 2017, we closed on the acquisition of the remaining 50% interest in 8 anchor boxes~~Condensed Combined Balance Sheets - Unconsolidated Real Estate Affiliates under Topic 842, included in ~~the GSPH joint venture with Seritage. We had previously owned a 50% interest in the joint venture~~prepaid expenses and accounted for the joint venture using the equity method of accounting, but as a result of the transaction we now account for this joint venture using the consolidation method of accounting. Simultaneously, we distributed the 4 remaining anchor boxes in GSPH to a newly formed joint venture, GSPHII, between GGPother assets and ~~Seritage in which the ownership interest remains at 50% for both joint venture partners,~~accounts payable and we continue to account for this joint venture using the equity method of accounting. Finally, we acquired a 50% interest in 5 anchor boxes through a newly formed joint venture, GSPH2017, which we account for using the equity method of accounting.

On September 19, 2017, we entered into three transactions with affiliates of Thor related to joint ventures between GGP and Thor at 218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenue. As a resultaccrued expenses, respectively. All of these ~~transactions,~~leases are operating leases; we changed our method of accounting for these three joint ventures from the equity method of accounting. We now consolidate the joint ventures with our joint venture partner's share of equity included in noncontrolling interest.

~~Condominium Sales and Condominium Cost of Sales~~

On March 7, 2014, GGP formed a joint venture, AMX Partners, LLC, with Kahikolu Partners, LLC, for the purpose of constructing a luxury residential condominium tower (the Park Lane condominium project) on a site located within the Ala Moana Shopping Center. Under the previous revenue recognition guidance, the percentage of completion method was used to account for the sales revenue of the Park Lane condominium project. Upon adoption of the new revenue recognition standard (Note 2), risks and rewards of ownership and control over the condominium unit transfers upon the closing of the sale to the customer, and as such, the joint venture will recognize revenue for the condominium unit upon closing.do not have any finance leases.

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 ~~$5.1~~$7.5 billion as of ~~June 30, 2018~~March 31, 2019 and $7.6 billion as of December 31, ~~2017,~~2018, 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~~Retained Debt of ~~$84.1~~$82.8 million at one property as of ~~June 30, 2018,~~March 31, 2019, and ~~$85.2~~$83.3 million as of December 31, ~~2017.~~2018. 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 interest in or our distributions from such Unconsolidated Real Estate Affiliates ~~or our interest in,~~ could be reduced to the extent of such deficiencies. As of ~~June 30, 2018,~~March 31, 2019, we do not anticipate an inability to perform on our obligations with respect to Retained Debt.

~~Table of Contents~~

~~GGP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

NOTE 6 MORTGAGES, NOTES AND LOANS PAYABLE

Mortgages, notes and loans payable and the weighted-average interest rates are summarized as follows:


	June 30, 2018 (1)		Weighted-Average Interest Rate (2)		December 31, 2017 (3)			Weighted-Average Interest Rate (2)		March 31, 2019 (1)		Weighted-Average Interest Rate (2)		December 31, 2018 (3)		Weighted-Average Interest Rate (2)
Fixed-rate debt:
Collateralized mortgages, notes and loans payable	$	10,618,364	4.41	%	$	10,420,252		4.41	%	$	6,047,625	4.39	%	$	6,073,193	4.38	%
Total fixed-rate debt	10,618,364		4.41	%	10,420,252			4.41	%	6,047,625		4.39	%	6,073,193		4.38	%
Variable-rate debt:
Collateralized mortgages, notes and loans payable (4)	2,074,540		3.87	%	2,418,628			3.39	%	1,698,647		4.40	%	1,702,142		4.22	%
Revolving credit facility (5)	154,731		3.34	%	(6,421		)	—
Unsecured corporate debt (5)										5,752,154		4.89	%	4,814,314		4.86	%
Total variable-rate debt	2,229,271		3.83	%	2,412,207			3.39	%	7,450,801		4.78	%	6,516,456		4.69	%
Total Mortgages, notes and loans payable	$	12,847,635	4.31	%	$	12,832,459		4.22	%	$	13,498,426	4.61	%	$	12,589,649	4.54	%
Junior subordinated notes	$	206,200	3.81	%	$	206,200		2.83	%	$	206,200	4.20	%	$	206,200	3.97	%


(1)	Includes ~~$21.3~~$7.3 million of market rate adjustments and ~~$25.0~~$115.9 million of deferred financing costs, net.


(2)	Represents the weighted-average interest rates on our principal balances, excluding the effects of market rate adjustments and deferred financing costs.


(3)	Includes ~~$23.5~~$7.7 million of market rate adjustments and ~~$30.3~~$123.8 million of deferred financing costs, net.


(4)	$~~1.4~~1.3 billion of the variable-rate balance is cross-collateralized.


(5)	Includes deferred financing costs, which are shown as a reduction to the debt balance. See table below for the balance excluding deferred financing costs. ~~Excludes $100.0 million categorized as held for disposition as of June 30, 2018 (Note 2).~~

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Collateralized Mortgages, Notes and Loans Payable

As of ~~June 30, 2018, $18.2~~March 31, 2019, $11.9 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 ~~$1.4~~$1.3 billion of debt, are cross-collateralized. Although a majority of the ~~$12.7~~$7.7 billion of fixed and variable rate collateralized mortgages, notes and loans payable are non-recourse, ~~$808.4~~$687.1 million 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.~~BPR. 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.

During the ~~six months~~year ended ~~June 30,~~December 31, 2018, we refinanced a consolidated mortgage note at 685 Fifth Avenue. The prior $340.0 million variable-rate consolidated mortgage note matured on July 1, 2018 and had an interest rate of LIBOR plus 2.75%. In connection with the refinancing, $100.0 million remained related to the commercial office unit and a new $275.0 million fixed-rate consolidated mortgage note with a term-to-maturity of 10.0 years and an interest rate of 4.53% was obtained on the retail unit. The $100.0 million was paid down in full in conjunction with the sale of the commercial office unit on July 13, ~~2018 (Note 17 ).~~

During the year ended December 31, 2017, we paid down a $73.4 million consolidated mortgage note at Four Seasons Town Centre. The prior loan had a term-to-maturity of 0.2 years and an interest rate of 5.6%. Four Seasons Town Centre subsequently replaced a property that was sold during the year ended December 31, 2017 as collateral in our $1.4 billion loan secured by cross-collateralized mortgages on 14 properties.2018. In addition, we obtained a new ~~consolidated mortgage note~~fixed-rate subordinate loan at The Woodlands Mall ~~of Louisiana~~ for ~~$325.0~~$62.4 million with an interest rate of ~~3.98%. Finally, as~~4.05% and obtained a ~~result of the three transactions~~new fixed-rate loan at ~~218 West 57th Street, 530 Fifth~~605 North Michigan Avenue ~~and 685 Fifth Avenue, we now consolidate a total of $450.0~~for $80.0 million ~~consolidated mortgage notes~~ with interest rates of LIBOR plus 2.75% and LIBOR plus 3.25%. Finally, we refinanced a $190.0 million consolidated mortgage note with a $110.0 million consolidated mortgage note at 530 Fifth Avenue. Both notes had an interest rate of ~~LIBOR plus 3.25%~~4.76%. We ~~manage our exposure to~~also refinanced mortgage notes totaling $117.0 million at two properties. The prior loans totaling $152.3 million had a weighted-average interest rate ~~fluctuations related to this debt using~~of 4.42%. The new loans have a weighted-average term-to-maturity of 4.3 years and a weighted-average interest rate ~~cap agreements. However, our efforts to manage risks associated with interest rate volatility may not be successful.~~

~~Table~~ of ~~Contents~~

~~GGP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

~~Our~~5.24%. We released Columbiana Centre from the $1.4 billion term loan, ~~is secured by cross-collateralized mortgages~~substituting Columbia Mall and Quail Springs Mall, and conveyed Oak View Mall to the lender in full satisfaction of $74.7 million in outstanding debt. The Oak View transaction resulted in a $12.4 million gain on ~~14 properties. The interest rate is LIBOR plus 1.75% and~~extinguishment of debt for the ~~recourse is 50%. The loan matures on April 25, 2019, with two one~~ year ~~extension options.~~ended December 31, 2018.

Corporate and Other Unsecured Loans

We have certain unsecured debt obligations, the terms of which are described below:


	June 30, 2018 (1)		Weighted-Average Interest Rate		December 31, 2017 (2)		Weighted-Average Interest Rate	March 31, 2019 (1)		Weighted-Average Interest Rate		December 31, 2018 (2)		Weighted-Average Interest Rate
Unsecured debt:
Revolving credit facility	$	160,000	3.34	%	$	—	—
Unsecured corporate debt								$	5,855,535	4.89	%	$	4,923,740	4.86	%
Total unsecured debt	$	160,000	3.34	%	$	—	—	$	5,855,535	4.89	%	$	4,923,740	4.86	%


(1)	Excludes deferred financing costs of ~~$5.4~~$103.4 million in ~~2018~~2019 that decrease the total amount that appears outstanding in our Consolidated Balance ~~Sheets and $100.0 million categorized as held for disposition as of June 30, 2018 (Note 2).~~Sheets.


(2)	Excludes deferred financing costs of ~~$6.4~~$109.4 million in ~~2017~~2018 that decrease the total amount that appears outstanding in our Consolidated Balance Sheets.

~~Our~~On March 25, 2019, the Company secured a $341.8 million subordinated unsecured note with Brookfield BPY Holdings Inc., a related party. The note bears interest at a rate equal to LIBOR plus 275 basis points and is scheduled to mature on March 25, 2029.

The Company entered into a new credit agreement (the "Agreement") dated as of August 24, 2018 consisting of a revolving credit facility (the "Facility") ~~as amended on October 30, 2015,~~, Term A-1 and A-2 loans, and a Term B loan. The Facility provides for revolving loans of up to ~~$1.1 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 2020~~billion and ~~is unsecured. Borrowings under the Facility~~borrowings bear interest at a rate equal to LIBOR plus ~~130~~225 basis points. The Facility is scheduled to ~~190 basis points or~~mature in August 2022 and had outstanding borrowings of $987.0 million as of March 31, 2019. The Term A-1 Loan has a total commitment of $900.0 million, with $700.0 million attributable to BPR and $200.0 million attributable to an affiliate, and is scheduled to mature in August 2021 bearing interest at a ~~base~~ rate equal to LIBOR plus 30225 basis points. The Term A-2 Loan has a total commitment of $2.0 billion and is scheduled to 90mature in August 2023 bearing interest at a rate equal to LIBOR plus 225 basis ~~points, which~~points. The Term B Loan has a total commitment of $2.0 billion and is ~~determined by~~scheduled to mature in August 2025 bearing interest at a rate equal to LIBOR plus 250 basis points. The Term A-1, A-2, and B Loans are contractually obligated to be prepaid through net proceeds from property level refinances and asset sales as outlined in the ~~Company's leverage level.~~Agreement. The ~~Facility~~Agreement 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,

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

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~~fixed charge coverage ~~ratio;~~ratio. As of March 31, 2019, we are not aware of any instances of non-compliance with such ~~covenants as of June 30, 2018. As of June 30, 2018, $260.0 million was outstanding on the Facility, including $100.0 million categorized as held for disposition as of June 30, 2018 (Note 2).~~covenants.

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~~common securities to ~~GGPOP.~~BPROP. The Trust used the proceeds from the sale of the TRUPS and ~~Common Securities~~common securities to purchase $206.2 million of floating rate ~~Junior Subordinated Notes~~junior subordinated notes of ~~GGPOP~~BPROP 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.~~junior subordinated notes. The ~~Junior Subordinated Notes~~junior subordinated notes bear interest at LIBOR plus 1.45% and are fully recourse to the Company. We have recorded the ~~Junior Subordinated Notes~~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 ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

Letters of Credit and Surety Bonds

We had outstanding letters of credit and surety bonds of ~~$42.4~~$45.3 million as of ~~June 30, 2018~~March 31, 2019 and ~~$51.3~~$42.4 million as of December 31, ~~2017.~~2018. 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 ~~June 30, 2018.~~March 31, 2019.

NOTE 7 LEASES

Lessee arrangements

We are the lessee in several ground lease agreements for the land under some of our owned buildings. Generally, we own the land underlying the properties; however, at certain properties, all or part of the underlying land is owned by a third party that leases the land to us through a long-term ground lease. In addition, we lease office space for our corporate headquarters and field offices. Our material consolidated leases have reasonably certain lease terms ranging from four years to forty years. Certain leases provide the lessee with two to threerenewal options which are considered to be termination options unless it is reasonably certain that the Company will elect to renew and generally range from five years to ten years each, with renewal rent payments based on a predetermined annual increase, market rates at the time of exercise of the renewal, or changes in the Consumer Price Index ("CPI").

As of March 31, 2019, the balance of ROU assets was $118.5 million, net and lease liabilities of $73.3 million for seven ground leases and one office lease in the Consolidated Balance Sheets under Topic 842, included in prepaid expenses and other assets and accounts payable and accrued expenses, respectively.

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~~GGP INC.~~Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

The maturity of ouroperating lease liabilities as of March 31, 2019 is as follows:



Year	Amount
Remainder of 2019	$	6,534
2020	8,958
2021	9,175
2022	9,395
2023	9,621
2024	9,853
2025 and thereafter	95,184
Total undiscounted lease payments	148,720
Less: Present value adjustment	(75,401		)
Total lease liability	$	73,319

The maturity of ouroperating lease liabilities as of December 31, 2018 is as follows:



Year	Amount
2019	$	9,948
2020	10,164
2021	10,386
2022	10,592
2023	10,794
2024 and thereafter	118,835
Total	$	170,719

Straight-line rent expense recognized for ourconsolidated operating leases was $0.7 million for ground leases and $2.0 millionfor the office leasefor the quarter ended March 31, 2019 and is included in other property operating costs for ground leases and property management and other costs for the office lease, respectively, in the Consolidated Statements of Comprehensive Income. Several lease agreements include variable lease payments which vary based on factors such as sublease income received, the revenues or net operating income of the properties constructed on the leased premises, increases in CPI, and changes in market rents. In addition, our leases require us to reimburse the lessor for the lessor’s tax, insurance and common area costs. Variable lease payments and short-term lease costs recognized as rent expense for operating leases were not significant for the quarter ended March 31, 2019 and are included in other property operating costs in the Consolidated Statements of Comprehensive Income.

The following summarizes additional information related to our operating leases as of March 31, 2019:



Weighted-average remaining lease term (years)	17
Weighted-average discount rate	7.36%

Supplemental disclosure for the statement of cash flows:
Cash paid for amounts included in the measurement of lease liabilities	$2,191

Lessor arrangements

We own a property portfolio comprised primarily of Class A retail properties and lease this retail space to tenants. As of March 31, 2019, we own a controlling interest in and consolidate 57 retail properties located throughout the United States comprising approximately 50 million square feet of GLA. We enter into operating leases with a variety of tenants, the majority of which are national and regional retail chains and local retailers. These operating leases expire starting in year 2019 and typically include

Table of Contents

Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

renewal options, which are generally exercisable only by the tenant. Certain leases also include early termination options which are typically exercisable only by the tenant. Our leases do not allow the tenant to purchase the retail space.

The maturity analysis of the lease payments we expect to receive from our operating leases as of March 31, 2019 is as follows:



Year	Amount
Remainder of 2019	$	710,542
2020	883,509
2021	794,816
2022	701,209
2023	605,294
2024	495,760
Subsequent	1,455,721
	$	5,646,851

The maturity analysis of the lease payments we expect to receive from our operating leases as of December 31, 2018 is as follows:



Year	Amount
2019	$	764,196
2020	696,381
2021	621,582
2022	543,232
2023	464,453
Subsequent	1,442,312
	$	4,532,156

All lease-related income is reported as a single line item, rental revenues, in our Consolidated Statements of Comprehensive Income. Effective January 1, 2019, with the adoption of Topic 842, rental revenues is presented net of provision for doubtful accounts. Rental income recognized on a straight-line basis consists primarily of fixed and in-substance fixed lease payments (including lease payments related to non-lease components which have been combined with the lease component). Variable rental income represents variable lease payments, which consist primarily of overage rents; reimbursements for tenants’ pro rata share of real estate taxes, insurance, property operating and marketing expenses, and utilities; lease payments related to CPI-based escalations and market rent resets; and lease termination income.

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

In accordance with the terms of our operating leases, we billed separately for minimum rents, tenant recoveries and overage rents, lease termination income as shown below for the quarter ended March 31, 2019:



	Amount
Minimum rents, billed	$	221,962
Tenant recoveries, billed	91,927
Lease termination income, billed	1,495
Overage rent, billed	4,351
Total contractual operating lease billings	319,735
Adjustment to recognize contractual operating lease billings on a straight-line basis	3,197
Above and below-market tenant leases, net	2,795
Less provision for doubtful accounts	(2,707		)
Total rental revenues, net	$	323,020

Of the total contractual rental revenues we have billed, 79.2% are fixed lease payments.

NOTE 78 INCOME TAXES

~~We have~~The Company elected to be taxed as a REIT under the Internal Revenue ~~Code.~~Code of 1986, as amended. 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, ~~2014~~2015 through ~~2017~~2018 and are statutorily open to audit by state taxing authorities for the years ended December 31, ~~2013~~2014 through ~~2017. We have one TRS that has extended the statute of limitations for the year ended December 31, 2013 until September 30, 2018 for purposes of reviewing a carryback claim.~~2018.

We have no unrecognized tax benefits recorded pursuant to uncertain tax positions as of ~~June 30, 2018.~~March 31, 2019.

NOTE 89 EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

Allocation to Noncontrolling Interests

Noncontrolling interests consists of the redeemable interests related to ~~GGPOP~~BPROP Common, Preferred, and LTIP Units and the noncontrolling interest in our consolidated joint ventures. The following table reflects the activity included in the allocation to noncontrolling interests.

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Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Distributions to preferred GGPOP units	$	(628	)	$	(882	)	$	(1,261	)	$	(3,014	)
Net income allocation to noncontrolling interests in GGPOP from continuing operations (Common units)	(818		)	(676		)	(1,378		)	(1,251		)
Net income allocation to noncontrolling interests in GGPOP from continuing operations (LTIP units)	(190		)	(299		)	(324		)	(553		)
Distributions to preferred BPROP units ("Preferred Units")													$	(1,614	)	$	(633	)
Net income allocation to noncontrolling interests in BPROP from continuing operations ("Common Units")													—			(560		)
Net income allocation to noncontrolling interests in BPROP from continuing operations ("LTIP Units")													—			(134		)
Net income allocated to noncontrolling interest in consolidated real estate affiliates	(313		)	(598		)	(846		)	(847		)	305			(533		)
Net income allocated to noncontrolling interest of the Operating Partnership (1)													(5,324		)	—
Allocation to noncontrolling interests	(1,949		)	(2,455		)	(3,809		)	(5,665		)	(6,633		)	(1,860		)
Other comprehensive (income) loss allocated to noncontrolling interests	84			320			86			315			—			2
Comprehensive income allocated to noncontrolling interests	$	(1,865	)	$	(2,135	)	$	(3,723	)	$	(5,350	)	$	(6,633	)	$	(1,858	)

(1) Represents the noncontrolling interest of our institutional investor (Note 3).

Noncontrolling Interests

The noncontrolling interest related to the Common, Preferred, and LTIP Units of ~~GGPOP~~BPROP are presented either as redeemable noncontrolling interests in mezzanine equity or as noncontrolling interests in our permanent equity on our Consolidated Balance Sheets. Classification as redeemable or permanent equity is considered on a tranche-by-tranche basis and is dependent on whether we could be required, under certain events outside of our control, to redeem the securities for cash by the holders of the ~~securities.~~securities, Those tranches for which we could be required to redeem the security for cash are included in redeemable equity. If we control the decision to redeem the securities for cash, the securities are classified as permanent equity.

The redeemable Common and Preferred Units of ~~GGPOP~~BPROP are recorded at the greater of the carrying amount adjusted for the noncontrolling ~~interest's~~interest’s share of the allocation of income or loss (and its share of other comprehensive income or loss) and dividends or their redemption value (i.e. 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 in our Consolidated Balance Sheets. Allocation to noncontrolling interests is presented as an adjustment to net income to arrive at net income (loss) attributable to ~~GGP Inc.~~BPR. The preferred redeemable noncontrolling interests have been recorded at carrying value.

Generally, each Series K Preferred Unit of BPROP entitles its holder to distributions and a liquidation preference identical to those established for each share of BPR’s Class A Stock, and each Series L Preferred Unit of BPROP entitles its holder to distributions and a liquidation preference identical to those established for each share of BPR’s Class B Stock. Each LTIP Unit of BPROP is convertible into, and, except for the level of preference, entitles its holder to regular and liquidating distributions equivalent to that of 0.016256057 Series K Preferred Units, subject to adjustment. Each Series K Preferred Unit received by an LTIP holder in connection with the BPY Transaction is redeemable for a cash amount equal to the average closing price of BPR's Class A Stock for five consecutive trading days ending on the date of the notice of redemption, provided that BPR may elect to satisfy such redemption by delivering one share of BPR's Class A Stock. If the holders had requested redemption of the Class A Stock and Preferred Units as of March 31, 2019, the aggregate amount of cash the Company would have paid would have been $2.02 billion and $58.6 million, respectively.

Holders of Series B Preferred Units, Series D Preferred Units, Series E Preferred Units and Series G Preferred Units of BPROP are each entitled to periodic distributions at the rates set forth in the Fifth Amended and Restated Agreement of Limited Partnership of BPROP. Holders of Common Units of BPROP are entitled to distributions of all or a portion of BPROP’s remaining net operating cash flow, when and as declared by BPROP’s general partner. However, the Fifth Amended and Restated Agreement of Limited Partnership of BPROP permits distributions solely to BPR if such distributions were required to allow the Company to comply with the REIT distribution requirements or to avoid the imposition of excise tax.

The Series D Preferred Units of BPROP are convertible based on a conversion ratio of 1.50821, which is the quotient of the Series D Preferred Unit’s $50 liquidation preference and $33.151875 conversion price. Upon conversion, each Series D Preferred Unit entitles its holder to (i) $21.9097 in cash, (ii) a number of Series K Preferred Units of BPROP equal to (x) 0.40682134 Series K

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~~GGP INC.~~Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

~~The common redeemable noncontrolling interests have been recorded at fair value for all periods presented. The preferred redeemable noncontrolling interests have been recorded at carrying value.~~

Generally, the holders of the Common Units share in any distributions by GGPOP with our common stockholders. However, the GGPOP 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 and Preferred Units as(which is subject to adjustment), multiplied by (y) the Series D conversion ratio; and (iii) a number of ~~June 30, 2018, the aggregate amount of cash we would have paid would have been $171.1 million and $52.3 million, respectively.~~

~~GGPOP issued Preferred Units that are, or were, convertible into~~ Common Units of ~~GGPOP at the rates below (subject~~BPROP equal to (x) one Common Unit (which is subject to adjustment)~~. The holder may convert~~, multiplied by (y) the Series D ~~and~~conversion ratio.

The Series E Preferred Units ~~into~~of BPROP are convertible based on a conversion ratio of 1.29836, which is the quotient of the Series E Preferred Unit’s $50 liquidation preference and $38.51 conversion price. Upon conversion, each Series E Preferred Unit entitles its holder to (i) $18.8613 in cash, (ii) a number of Series K Preferred Units of BPROP equal to (x) 0.40682134 Series K Preferred Units (which is subject to adjustment), multiplied by (y) the Series E conversion ratio; and (iii) a number of Common Units of ~~GGPOP at any time,~~BPROP equal to (x) one Common Unit (which is subject to adjustment), multiplied by (y) the Series E conversion ratio.

As of March 31, 2019, there were 532,749.6574 Series D Preferred Units of BPROP outstanding and 502,657.8128 Series E Preferred Units of BPROP outstanding.

As of March 31, 2019, there were 9,717.658 Series B Preferred Units of BPROP outstanding. As of July 10, 2017, the Series B Preferred Unit conversion option expired, and each Series B Preferred Unit now has a fixed cash redemption value of $50 per unit.

Also, as of March 31, 2019, there were 4,176,972.006 Common Units of BPROP outstanding and 839,664 LTIP Units of BPROP outstanding. There were also 1,699,281.285 Series K Preferred Units of former Common Unit holders and 334,324 Series K Preferred Units of former LTIP holders. LTIP Units and Series K Preferred Units issued to individual former LTIP Unitholders are both subject to certain ~~restrictions.~~ redemption rights.

The holder of each Series K Preferred Unit of BPROP issued upon conversion of Series D Preferred Units or Series E Preferred Units of BPROP has the right to redeem such Series K Preferred Unit for a cash amount equal to the average closing price of BPR’s Class A Stock for the five consecutive trading days ending on the date of the notice of redemption, provided that BPR may elect to satisfy such redemption by delivering one share of BPR’s Class A Stock. The holder of each Common Unit of BPROP issued upon conversion of Series D Preferred Units or Series E Preferred Units of BPROP has the right to redeem such Common Unit for a cash amount equal to $0.324405869, subject to adjustment.

Except as otherwise noted, the Common, Preferred, and LTIP Units of BPROP are not convertible ~~into common stock at approximately a one-to-one ratio~~or redeemable at the ~~current stock price.~~election of either the holder or BPROP.

Number of Common Units for each Preferred Unit
Number of Contractual Preferred Units Outstanding as of June 30, 2018
(in thousands)

Converted Basis to Common Units Outstanding as of June 30, 2018
(in thousands)
Conversion Price Redemption Value (1)
(in thousands)
Series B 3.00000
10
—
$ 16.66670
$ 486
Series D 1.50821
533
835
33.15188
26,637
Series E 1.29836
503
679
38.51000
25,133

$ 52,256


~~(1)~~	~~As of July 10, 2017, the Series B preferred unit conversion option expired and now has a fixed cash redemption value of $50 per unit.~~

The following table reflects the activity of the common redeemable noncontrolling interests for the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, and ~~2017.~~2018.


Balance at January 1, 2017	$	262,727
Net income	1,251
Distributions	(2,887		)
Redemption of GGPOP units	(651		)
Other comprehensive loss	(315		)
Fair value adjustment for noncontrolling interests in Operating Partnership	(10,346		)
Balance at June 30, 2017	$	249,779

Balance at January 1, 2018	$	248,126		$	248,126
Net income	1,378			560
Distributions	(3,684		)	(1,842		)
Other comprehensive loss	(86		)	(2		)
Fair value adjustment for noncontrolling interests in Operating Partnership	(22,395		)	(23,252		)
Balance at June 30, 2018	$	223,339
Balance at March 31, 2018				$	223,590

Balance at January 1, 2019				$	73,696
LTIP Expense				3,358
Series K Preferred Unit redemption				(14,935		)
Balance at March 31, 2019				$	62,119

Class A Stock

Class A Stock refers to the Company's Class A Stock, par value $0.01 per share, authorized and issued to unaffiliated GGP common stockholders as part of the BPY Transaction.

Each share of Class A Stock is entitled to cumulative dividends per share in a cash amount equal in value to the amount of any distribution made on a BPY limited partnership unit ("BPY unit"). In addition, each share of Class A Stock is exchangeable for

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~~GGP INC.~~Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

one BPY unit or its cash equivalent (the form of payment to be determined by BP US REIT LLC, in its sole discretion). Such exchange and distribution rights are subject to adjustment in the event of certain dilutive or other capital events by BPY or BPR. If and to the extent declared by the Company's board of directors, the record and payment dates for the dividends or other distributions upon the shares of Class A Stock, to the extent not prohibited by applicable law, is expected to be the same as the record and payment dates for the dividends or other distributions upon the BPY units. Pursuant to the terms of the Company's charter, all such dividends to holders of Class A Stock will be paid prior and in preference to any dividends or distributions on the Class B Stock or Class C Stock will be fully declared and paid before any dividends are declared and paid or any other distributions are made on any Class B Stock or Class C Stock. The holders of Class A Stock shall not be entitled to any dividends from BPR other than the Class A dividend.

Upon any liquidation, dissolution or winding up of the Company that is not a Market Capitalization Liquidation Event (as defined below) or substantially concurrent with the liquidation, dissolution or winding up of BPY, the holders of Class A Stock are entitled to a cash amount, for each share of Class A Stock, equal to the market price of one BPY unit (subject to adjustment in the event of certain dilutive or other capital events by BPY or BPR) on the date immediately preceding announcement of such liquidation, dissolution or winding up, plus all declared and unpaid dividends. If, upon any such liquidation, dissolution or winding up, the assets of BPR are insufficient to make such payment in full, then the assets of BPR will be distributed among the holders of Class A Stock ratably in proportion to the full amounts to which they would otherwise be respectively entitled to receive.

If the market capitalization of the Class A Stock (i.e., if the price per share of Class A Stock, multiplied by the number of shares of Class A Stock outstanding) averages, over any period of 30 consecutive trading days, less than one (1) billion dollars, the BPR board will have the right to liquidate BPR’s assets and wind up BPR’s operations (a "Market Capitalization Liquidation Event"). Upon any Market Capitalization Liquidation Event, the holders of Class A Stock shall be entitled to a cash amount, for each share of Class A Stock, equal to the dollar volume-weighted average price of one BPY unit over the ten (10) trading days immediately following the public announcement of such Market Capitalization Liquidation Event, plus all declared and unpaid dividends. If, upon any such Market Capitalization Liquidation Event, the assets of BPR are insufficient to make such payment in full, then the assets of BPR will be distributed among the holders of Class A Stock ratably in proportion to the full amounts which they would otherwise be respectively entitled to receive. Notwithstanding the foregoing, upon any Market Capitalization Liquidation Event, BPY may elect to exchange all of the outstanding shares of the Class A Stock for BPY units on a one-for-one basis, subject to adjustment in the event of certain dilutive or other capital events by BPY or BPR.

Holders of Class A Stock shall have the right to exchange all or a portion of their Class A Stock for cash at a price equal to the value of an equivalent number of BPY units, subject to adjustment in the event of certain dilutive or other capital events by BPY or BPR. Upon receipt of a request for exchange, BPR will deliver a notice of exchange to BPY within one (1) business day and will have ten (10) business days to deliver the cash amount to the tendering holder. Upon receipt of the notice of exchange, BPY may elect to satisfy BPR’s exchange obligation by exchanging all of the shares of the Class A Stock tendered for BPY units on a one-for-one basis. This initial one-for-one conversion factor is subject to adjustment in the event of certain dilutive or other capital events by BPY or BPR. If so elected, BPY will have to satisfy such obligation within ten (10) business days from the date of the notice of exchange. If BPY exercises its right to assume the exchange obligation, units of BPY units will be delivered in exchange for the Class A Stock and such Class A Stock will automatically be converted into Class B Stock.

As there are certain events outside of the Company’s control whereby it could be required to redeem the Class A Stock for cash by the holders of the securities, the Class A Stock is included in redeemable equity. Accordingly, the Class A Stock are recorded at the greater of the carrying amount or their redemption value (i.e. 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 in the Company’s Consolidated Balance Sheets. There is no adjustment within additional paid-in capital for the Class A stock when the fair value is less than the carrying value.

Class B Stock

The following description of Class B Stock sets forth certain general terms and provisions of Class B Stock. Each share of Class B-1 Stock shall have terms (including the same powers, preferences and relative, participating, optional and other special rights, and qualifications, limitations and restrictions) identical to the terms of a share of Class B Stock. References herein to Class B Stock shall be deemed to be a reference to Class B Stock and Class B-1 Stock, as applicable.

Table of Contents

Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Pursuant to the Charter Amendments and subject to the prior rights of holders of all classes, including the Class A Stock, and any series of preferred stock at the time outstanding having prior rights as to dividends, each share of Class B Stock will entitle its holder to cumulative dividends per share in a cash amount at a rate of 10% per year of the Class B liquidation amount per share, with such Class B liquidation amount per share equal to the last closing price of a share of GGP common stock on the New York Stock Exchange on the trading day immediately preceding the date the series B designations was filed with the Secretary of State of the State of Delaware. On October 18, 2018, each of the Class B Stock Holders hereby irrevocably waived, all of its right, title and interest in and to 2.5% of the Dividend Rate, including without elimination all rights and entitlement to payment of such amounts. This partial dividend waiver results in a 7.5% effective rate per year of the Class B Liquidation Amount per share. Dividends on the Class B Stock may also be paid by an in-kind distribution of additional shares of Class B Stock or any other class of shares of capital stock of BPR ranking junior to the Class A Stock. Dividends on the Class B Stock shall be cumulative and shall be payable quarterly in arrears, when, as and if declared by the Company's Board of Directors with respect to dividends on the Class B Stock.

Holders of the Class B Stock are not entitled to receive dividends, redemptions or other distributions: (i) unless and until (a) BPR has paid the aggregate dividends owed to the holders of Class A Stock and (b) the dividend coverage ratio (as defined below) is equal to or greater than 1.25:1, (ii) if any tendering holder of Class A Stock has not received the cash or BPY units due upon exchange or (iii) if holders of Class A Stock are owed cash in the event of an adjustment to the conversion factor. The dividend coverage ratio is referred to as a ratio of (i) BPR’s funds from operations, as calculated in accordance with the definition of funds from operations used by the National Association of Real Estate Investment Trusts ("Nareit"), for the immediately preceding fiscal quarter, to (ii) the product of (a) the amount of the most recent regular quarterly distribution declared by BPY on each BPY unit, times (b) the number of shares of Class A Stock outstanding at such time.

Class C Stock

Class C Stock refers to the Company's Class C Stock, par value $0.01 per share, authorized as part of the BPY Transaction. Pursuant to the amended charter and subject to the prior rights of holders of all classes, including the holders of Class A Stock and Class B Stock, and any series of preferred stock at the time outstanding having prior rights as to dividends, each share of Class C Stock will entitle its holder to dividends when, as and if declared by the Company's Board of Directors out of any assets of BPR legally available therefore. The record and payment date for dividends on shares of Class C Stock shall be such date that the Company's Board of Directors shall designate.

Notwithstanding the foregoing, holders of the Class C Stock are not entitled to receive dividends, redemptions or other distributions: (i) unless and until (a) BPR has paid the aggregate dividends owed to the holders of Class A Stock and (b) the dividend coverage ratio is equal to or greater than 1.25:1, (ii) if any tendering holder of Class A Stock has not received the cash or BPY units due upon exchange, (iii) if holders of Class A Stock are owed cash in the event of an adjustment to the conversion factor or (iv) unless and until the full cumulative dividends on the Class B Stock for all past dividend periods and any current dividend periods have been (or contemporaneously are) (a) declared or paid in cash or (b) declared and a sum sufficient for the payment thereof in cash is set apart for such payment.

Class A Stock Dividend

Our Board of Directors declared Class A Stock dividends during 2019 and 2018 as follows:



Declaration Date	Record Date	Payment Date	Dividend Per Share
2019
May 6	May 31, 2019	June 28, 2019	$	0.330
February 6	February 28, 2019	March 29, 2019	0.330
2018
October 31	November 30, 2018	December 31, 2018	$	0.315
August 28	August 31, 2018	September 28, 2018	0.315

Table of Contents

Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Class A Stock Repurchases

On August 28, 2018, the Company’s Board of Directors authorized the repurchase of the greater of (i) 5% of the Company’s Class A Stock that are issued or outstanding or (ii) 10% of its public float of Class A Stock over the next 12 months from time to time as market conditions warrant. On March 29, 2019, BPR purchased for cancellation 4,679,802 shares of Class A Stock at a purchase price of $20.30 per share, for an aggregate cost of approximately $95 million, excluding fees and expenses.

Class B Stock Dividend

Our Board of Directors declared Class B Stock dividends during 2019 as follows:



Declaration Date	Record Date	Payment Date	Average Dividend Per Share
2019
March 25	March 27, 2019	March 27, 2019	$	1.015

A dividend was declared on the Class B Stock of the Company in the amount equal to all unpaid dividends on such shares from the date of issue to March 31, 2019 at the rate of 7.5% per annum payable on March 27, 2019 to the holders of record of Class B Stock on March 27, 2019.

Class B Stock Redemption

In the quarter, 2019, BPR redeemed 10,496,703 shares of Class B-1 Stock held by BPR FIN 1 Subco LLC for fair market value consideration of $224.5 million, being the redemption amount of the shares acquired at $21.39 per share.

Common Stock Dividend

Our Board of Directors declared common stock dividends during 2018 ~~and 2017~~ as follows:

Declaration Date Record Date Payment Date Dividend Per Share
2018
May 3 July 13, 2018 July 31, 2018 $ 0.22
February 7 April 13, 2018 April 30, 2018 0.22
2017
October 31 December 15, 2017 January 5, 2018 $ 0.22
August 2 October 13, 2017 October 31, 2017 0.22
May 1 July 13, 2017 July 28, 2017 0.22
January 30 April 13, 2017 April 28, 2017 0.22



Declaration Date (1)	Record Date	Payment Date	Dividend Per Share
2018
May 3	July 13, 2018	July 31, 2018	$	0.22
February 7	April 13, 2018	April 30, 2018	0.22

(1) Excludes the Pre-Closing Dividend (Note 1).

~~Our~~A Dividend Reinvestment Plan ("DRIP") ~~provides~~provided 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~~shares. Pursuant to the DRIP, eligible stockholders who ~~enroll~~enrolled in the DRIP on or before the fourth business day preceding the record date for a dividend payment ~~will be~~were able to have that dividend reinvested. As a result of the DRIP elections, ~~11,239~~no shares were issued during the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 and ~~28,693~~5,906 shares were issued during the ~~six~~three months ended ~~June 30, 2017.~~March 31, 2018. The Company terminated the registration statement relating to the DRIP (File No. 333-172795) with the filing of a post-effective amendment on August 28, 2018.

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~~"Pre-Merger Preferred Stock") at a price of $25.00 per share, resulting in net proceeds of $242.0 million after issuance costs. In connection with the BPY Transaction, each share of Pre-Merger Preferred Stock was converted into one share of 6.375% Series A cumulative redeemable preferred stock of BPR (the "Series A Preferred Stock"). The Series A 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,~~Class A 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).

~~Our Board of Directors declared preferred stock dividends during 2018 and 2017 as follows:~~

Declaration Date Record Date Payment Date Dividend Per Share
2018
July 31 September 17, 2018 October 1, 2018 $ 0.3984
May 3 June 15, 2018 July 2, 2018 0.3984
February 7 March 15, 2018 April 2, 2018 0.3984
2017
October 31 December 15, 2017 January 2, 2018 $ 0.3984
August 2 September 15, 2017 October 2, 2017 0.3984
May 1 June 15, 2017 July 3, 2017 0.3984
January 30 March 15, 2017 April 3, 2017 0.3984

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~~GGP INC.~~Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

The Series A Preferred Stock does not have a stated maturity date but we may redeem the Series A Preferred Stock for $25.00 per share plus all accrued and unpaid dividends. Upon certain circumstances surrounding a change of control, holders of Series A Preferred Stock may elect to convert each share of their Series A Preferred Stock into a number of shares of Class A Stock or Class C Stock, at the option of the holder, equivalent to $25.00 plus accrued and unpaid dividends, but not to exceed a cap of 2.4679 shares of Class A Stock or Class C Stock (subject to certain adjustments related to splits, subdivisions, or combinations). The BPY Transaction did not meet the definition of a change in control per the certificate of designation governing the Series A Preferred Stock.

Our Board of Directors declared preferred stock dividends during 2019 and 2018 as follows:



Declaration Date	Record Date	Payment Date	Dividend Per Share
2019
May 6	June 14, 2019	July 1, 2019	$	0.3984
February 6	March 15, 2019	April 1, 2019	0.3984
2018
October 31	December 14, 2018	January 1, 2019	$	0.3984
July 31	September 17, 2018	October 1, 2018	0.3984
May 3	June 15, 2018	July 2, 2018	0.3984
February 6	March 15, 2018	April 2, 2018	0.3984

Accumulated Other Comprehensive Loss

The following table reflects the ~~activity of the~~ components of accumulated other comprehensive loss ~~for the three months ended June 30, 2018,~~as of March 31, 2019, and ~~2017:~~2018:

Foreign currency translation Net unrealized gains (losses) on other financial instruments Total
Balance at April 1, 2017 $ (67,998 ) $ 117
$ (67,881 )
Other comprehensive income (loss) (3,709 ) (3 ) (3,712 )
Balance at June 30, 2017 $ (71,707 ) $ 114
$ (71,593 )

Balance at April 1, 2018 $ (72,398 ) $ 167
$ (72,231 )
Other comprehensive income (loss) (9,954 ) (44 ) (9,998 )
Balance at June 30, 2018 $ (82,352 ) $ 123
$ (82,229 )



	March 31, 2019			March 31, 2018
Net unrealized gains on financial instruments	$	75		$	167
Foreign currency translation	(83,188		)	(72,398		)
Accumulated other comprehensive loss	$	(83,113	)	$	(72,231	)

~~The following table reflects the activity of the components of accumulated other comprehensive loss for the six months ended June 30, 2018, and 2017:~~

Foreign currency translation Net unrealized gains (losses) on other financial instruments Total
Balance at January 1, 2017 $ (70,560 ) $ 104
$ (70,456 )
Other comprehensive income (loss) (1,147 ) 10
(1,137 )
Balance at June 30, 2017 $ (71,707 ) $ 114
$ (71,593 )

Balance at January 1, 2018 $ (72,022 ) $ 116
$ (71,906 )
Other comprehensive income (loss) (10,330 ) 7
(10,323 )
Balance at June 30, 2018 $ (82,352 ) $ 123
$ (82,229 )

~~Table of Contents~~

~~GGP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

NOTE 9 10 EARNINGS PER SHARE

~~Basic~~Class A Stock

Income available to Class A stockholders is limited to distributed income or dividends declared. Additionally, for purposes of allocating earnings to Class A Stock, the portion of the change in the carrying amount of Class A Stock that reflects a redemption in excess of fair value is considered a dividend to the Class A stockholders. As the Class A Stock redemption value approximates its fair value, basic and diluted earnings per share ("EPS") for Class A Stock is equivalent to the dividends declared for the period January 1, 2019 through March 31, 2019. There were 109,804,513 and 98,419,483 shares of Class A Stock outstanding as of December 31, 2018 and March 31, 2019, respectively. EPS is not presented for Class B Stock and Class C Stock as neither class of stock is publicly traded.

Common Stock

In 2018, basic EPS for common stock was computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding. Diluted EPS isfor common stock was 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~~were computed using the "treasury" method.

~~Information related to our EPS calculations is summarized as follows:~~

Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Numerators - Basic and Diluted:

Net income 95,564
128,318
161,460
238,687
Preferred Stock dividends (3,984 ) (3,984 ) (7,968 ) (7,968 )
Allocation to noncontrolling interests (1,949 ) (2,455 ) (3,809 ) (5,665 )
Net income attributable to common stockholders $ 89,631
$ 121,879
$ 149,683
$ 225,054
Denominators:

Weighted-average number of common shares outstanding - basic 958,387
882,255
957,921
883,374
Effect of dilutive securities 1,808
63,070
2,321
64,038
Weighted-average number of common shares outstanding - diluted 960,195
945,325
960,242
947,412
Anti-dilutive Securities:

Effect of Preferred Units 1,514
1,544
1,514
1,544
Effect of Common Units 8,374
4,809
8,374
4,780
Effect of LTIP Units 1,725
1,879
1,756
1,885
Weighted-average number of anti-dilutive securities 11,613
8,232
11,644
8,209

~~For the three and six months ended June 30, 2017,~~ The dilutive ~~options and dilutive shares related to the warrants are included in the denominator~~effect of ~~diluted EPS.~~

Outstanding Common Units and LTIP Units have also been excluded from the diluted earnings per share calculation because including such units would also require that the share of GGPOP income attributable to such 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~~was computed using the ~~Preferred Units dividend be added back to the net income, resulting in anti-dilution.~~

During the year ended December 31, 2017, Brookfield, Abu Dhabi Investment Authority and Future Fund Board of Guardians exercised warrants for 83,866,187 shares of common stock using both full and net share settlement.

GGP owned 55,969,390 shares of treasury stock as of June 30, 2018 and 2017. These shares are presented as common stock in treasury, at cost, on our Consolidated Balance Sheets. Additionally, GGPN holds 27,459,195 shares of stock as a result of warrants purchased during the year ended December 31, 2013. 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."if-converted" method.

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~~GGP INC.~~Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Information related to our EPS calculations is summarized as follows:



	Three Months Ended March 31, 2018
Numerators - Basic:
Net income	$	65,896
Preferred Stock dividends	(3,984		)
Allocation to noncontrolling interests	(1,860		)
Net income attributable to common stockholders	$	60,052
Denominators:
Weighted-average number of common shares outstanding - basic	957,450,333
Effect of dilutive securities	2,842,797
Weighted-average number of common shares outstanding - diluted	960,293,130
Anti-dilutive Securities:
Effect of Preferred Units	1,514,030
Effect of Common Units	8,374,109
Effect of LTIP Units	1,788,081
Weighted-average number of anti-dilutive securities	11,676,220

NOTE 1011 STOCK-BASED COMPENSATION PLANS

The GGP Inc. 2010 Equity Plan (the "Equity Plan") ~~reserved for issuance of 4% of outstanding shares~~was renamed as the Amended and Restated Brookfield Property REIT Inc. 2010 Equity Incentive Plan on ~~a fully diluted basis.~~August 28, 2018 in connection with the BPY Transaction. 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,~~The Company's directors, officers and other employees and those of ~~GGP and~~ its subsidiaries and affiliates are eligible for the 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~~BPR's Class A 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.

~~On November 12, 2014,~~In connection with the ~~Company's~~BPY Transaction, the Equity Plan was amended ~~to allow for the grant of LTIP Units to~~and certain ~~officers, directors,~~outstanding awards were modified. All outstanding GGP in and ~~employees~~out of the ~~Company~~money options were canceled and replaced with Class A Stock of BPR and BPY options, respectively. Certain existing appreciation only LTIP awards were canceled and replaced with substitute awards of a BPY affiliate. Outstanding restricted GGP shares were replaced with restricted shares of Class A Stock. As the awards were modified in conjunction with an equity restructuring, they were accounted for as ~~an alternative to~~modifications. Incremental compensation cost was measured as the ~~Company's stock options or restricted stock. LTIP Units are classes~~excess of ~~partnership interests that under certain conditions, including vesting, are convertible by~~ the ~~holder into common units, which are redeemable by the holder for common shares on a one-to-one ratio (subject to adjustment for changes to GGP's capital structure) or for the cash~~fair value of ~~such shares~~the replacement awards over the fair value of the original awards immediately before the terms were modified. Total compensation cost measured at the ~~option~~date of modification was the grant-date fair value of the ~~Company.~~

~~On February 17, 2016,~~original awards for which the ~~Company's Equity Plan~~requisite service is expected to be rendered (or has already been rendered) plus the incremental cost associated with the replacement awards. For vested awards, incremental compensation cost was ~~amended to allow for the grant of restricted stock or LTIP Units to certain officers, directors, and employees of the Company that vest based~~recognized on the ~~achievement of certain established metrics that are based on~~modification date. For unvested awards, incremental compensation cost is being recognized over the ~~performance of the Company.~~

On January 1, 2017, the Company adopted ASU 2016-09, Compensation - Stock Compensation. This new guidance allowed us to make the election to account for share-based payment forfeitures when they occur versus estimating a forfeiture rate. This resulted in a cumulative effect of accounting change adjustment of $3.0 million to additional paid-in capital, noncontrolling interests related to LTIP Units and accumulated distributions in excess of earnings as of January 1, 2017.

~~Compensation expense related to stock-based compensation plans for the three and six months ended June 30, 2018, and 2017 is summarized in the following table in thousands:~~

Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Stock options - Property management and other costs $ 59
$ 981
$ 147
$ 1,954
Stock options - General and administrative 10
2,449
74
4,635
Restricted stock - Property management and other costs 2,002
1,546
3,105
3,058
Restricted stock - General and administrative 1,284
1,308
1,894
1,827
LTIP Units - Property management and other costs 272
393
635
792
LTIP Units - General and administrative 3,793
6,333
7,962
10,942
Total $ 7,420
$ 13,010
$ 13,817
$ 23,208
remaining service period.

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~~GGP INC.~~Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Compensation expense related to stock-based compensation plans for the three months ended March 31, 2019, and 2018 is summarized in the following table in thousands:



	Three Months Ended March 31,
	2019		2018
Stock options - Property management and other costs	$	—	$	89
Stock options - General and administrative	—		64
Restricted stock - Property management and other costs	1,384		1,103
Restricted stock - General and administrative	335		610
LTIP Units - Property management and other costs	72		363
LTIP Units - General and administrative	957		4,169
Total	$	2,748	$	6,398

The following tables summarize stock option, LTIP Unit and restricted stock activity for the Equity Plan for ~~GGP for~~ the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 and ~~2017:~~2018:


	2018				2017				2019				2018
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Stock options Outstanding at January 1,	14,427,103		$	17.84	15,277,189		$	17.90	1,011,523		$	19.71	14,427,103		$	17.84
Granted	—		—		—		—		—		—		—		—
Exercised	(249,508	)	15.66		(406,383	)	17.84		(773,642	)	17.91		(246,202	)	15.61
Forfeited	(1,082	)	28.86		(108,554	)	22.75		(13	)	26.05		—		—
Expired	(48,919	)	22.96		(4,107	)	28.86		—		—		(42,217	)	22.19
Stock options Outstanding at June 30,	14,127,594		$	17.86	14,758,145		$	17.86
Conversion effect (1)									—		—		—		—
Stock options Outstanding at March 31,									237,868		$	25.59	14,138,684		$	17.87

(1)

In connection with the BPY Transaction, outstanding GGP in and out of the money options were canceled and replaced with Class A Stock of BPR and BPY options, respectively. The BPY options remain outstanding as of March 31, 2019 as they are held by employees of BPR subsidiaries. Stock compensation costs related to the grant of BPY option awards to employees of BPR subsidiaries are recognized as compensation expense with a corresponding capital contribution from BPY.



	2019				2018
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
LTIP Units Outstanding at January 1,	3,921,175		$	25.96	4,747,664		$	26.98
Granted (1)	—		—		—		—
Exercised	(1,694,222	)	28.33		—		—
Forfeited	—		—		(179,824	)	25.82
Expired	—		—		—		—
Conversion effect (1)	—		—		—		—
LTIP Units Outstanding at March 31,	2,226,953		$	24.16	4,567,840		$	27.02


(1)	In connection with the BPY Transaction, certain existing LTIP awards were canceled and replaced with substitute awards of a BPY affiliate. The substitute LTIP awards remain outstanding as of March 31, 2019 as they are held by employees

Table of Contents

Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

of BPR subsidiaries. Stock compensation costs related to the grant of BPY affiliate LTIP awards to employees of BPR subsidiaries are recognized as compensation expense with a corresponding capital contribution from BPY.

2018 2017
Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value
LTIP Units Outstanding at January 1, 4,747,664
$ 26.98
4,345,912
$ 27.27
Granted —
—
553,526
25.38
Exercised (64,499 ) 29.15
(32,680 ) 29.15
Forfeited (179,824 ) 25.82
(58,894 ) 26.77
Expired —
—
—
—
LTIP Units Outstanding at June 30, 4,503,341
$ 26.99
4,807,864
$ 27.05



	2019				2018
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Restricted stock Outstanding at January 1,	986,937		$	22.48	1,089,364		$	25.29
Granted	—		—		1,074,137		21.52
Vested	(384,553	)	22.60		(224,532	)	26.25
Forfeited	(3,266	)	21.55		(68,076	)	25.90
Conversion effect (1)	—		—		—		—
Restricted stock Outstanding at March 31,	599,118		$	22.41	1,870,893		$	22.99

2018 2017
Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value
Restricted stock Outstanding at January 1, 1,089,364
$ 25.29
476,686
$ 27.11
Granted 1,074,137
21.52
808,448
25.30
Vested (230,147 ) 26.18
(166,852 ) 26.81
Canceled (73,994 ) 25.74
(69,761 ) 25.92
Restricted stock Outstanding at June 30, 1,859,360
22.98
1,048,521
25.84


(1)	In connection with the BPY Transaction, outstanding restricted GGP shares were replaced with restricted shares of Class A Stock.

NOTE 1112 ACCOUNTS RECEIVABLE, NET

The following table summarizes the significant components of accounts receivable, net.


	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Trade receivables	$	90,628		$	109,968		$	96,530		$	97,329
Short-term tenant receivables	4,785			4,776			4,326			4,378
Straight-line rent receivable	233,884			233,630			140,549			137,387
Other accounts receivable	5,117			5,165			2,924			3,126
Total accounts receivable	334,414			353,539			244,329			242,220
Provision for doubtful accounts	(22,754		)	(19,458		)	(21,489		)	(19,658		)
Total accounts receivable, net	$	311,660		$	334,081		$	222,840		$	222,562

3138

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~~GGP INC.~~Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 1213 NOTES RECEIVABLE

The following table summarizes the significant components of notes receivable.

June 30, 2018 December 31, 2017
Notes receivable $ 342,253
$ 404,129
Accrued interest 9,169
13,429
Total notes receivable 351,422
417,558

On July 12, 2017, we entered into a promissory note with our joint venture GS Portfolio Holdings II, LLC ("GSPHII"), in which we lent GSPHII $127.4 million that bears interest at 6.3% from January 1, 2018 until the note matures on December 31, 2018. Interest payments occur a month in arrears, commencing on the first day of the second calendar month with a final payment on the maturity date. The note is collateralized by GSPHII's interest in four anchor boxes.

On May 23, 2017, we entered into a promissory note with our joint venture partner, Bayside Equities, LLC ("Bayside Equities"), a subsidiary of AHC, in which we lent Bayside Equities $19.1 million that bears interest at 12.2% per annum. The note is collateralized by Bayside Equities' economic interest in Riverchase Galleria and the Tysons Galleria anchor box and matures on May 23, 2021.



	March 31, 2019		December 31, 2018
Notes receivable	$	239,993	$	239,597
Accrued interest	7,101		17,340
Total notes receivable	$	247,094	$	256,937

Notes receivable includes ~~$204.3 million of notes receivable~~a note from our joint venture partners related to the acquisition of 730 Fifth Avenue in New York, New York. The ~~first~~ note ~~was issued for $104.3 million to our joint venture partner in the retail portion and~~ bears interest at 8.0% compounded annually and matures on February 12, 2025. The second note was issued for $100.0 million to the joint venture partner acquiring the office portion of the property and bears interest at 8.0% subject to terms and conditions in the loan agreement and matures on April 17, 2025. As of ~~June 30, 2018,~~March 31, 2019, there was ~~$175.8~~$199.8 million outstanding on the ~~first~~ note.

On January 30, 2019, we entered into a revolving credit facility with BPY Bermuda Holdings IV Limited in which we lent $330.0 million. The ~~$80.0 million outstanding~~note had an interest rate of LIBOR plus 2.50% and matured on January 30, 2020. On March 25, 2019, the ~~second~~ note was paid down in ~~full during the second quarter of 2018.~~full.

NOTE 1314 PREPAID EXPENSES AND OTHER ASSETS

The following table summarizes the significant components of prepaid expenses and other assets.


	June 30, 2018							December 31, 2017							March 31, 2019							December 31, 2018
	Gross Asset		Accumulated Amortization			Balance		Gross Asset		Accumulated Amortization			Balance		Gross Asset		Accumulated Amortization			Balance		Gross Asset		Accumulated Amortization			Balance
Intangible assets:
Above-market tenant leases, net	$	306,701	$	(230,532	)	$	76,169	$	411,789	$	(313,228	)	$	98,561	$	134,361	$	(103,398	)	$	30,963	$	160,363	$	(125,152	)	$	35,211
Below-market ground leases, net	118,994		(15,910		)	103,084		118,994		(14,870		)	104,124		—		—			—		61,983		(8,293		)	53,690
Real estate tax stabilization agreement, net	111,506		(48,237		)	63,269		111,506		(45,081		)	66,425		111,506		(52,970		)	58,536		111,506		(51,393		)	60,113
Total intangible assets	$	537,201	$	(294,679	)	$	242,522	$	642,289	$	(373,179	)	$	269,110	$	245,867	$	(156,368	)	$	89,499	$	333,852	$	(184,838	)	$	149,014
Remaining prepaid expenses and other assets:
Restricted cash						69,892							67,335							40,380							51,674
Security and escrow deposits						2,294							2,308							1,562							1,394
Prepaid expenses						52,435							54,987							31,657							39,816
Other non-tenant receivables						29,957							31,265							53,059							53,016
Deferred tax, net of valuation allowances						22,570							21,061
Right of use assets, net																				118,545							—
Other						22,904							69,790							16,675							18,734
Total remaining prepaid expenses and other assets						200,052							246,746							261,878							164,634
Total prepaid expenses and other assets						$	442,574						$	515,856						$	351,377						$	313,648

3239

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~~GGP INC.~~Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 1415 ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The following table summarizes the significant components of accounts payable and accrued expenses.


	June 30, 2018							December 31, 2017							March 31, 2019							December 31, 2018
	Gross Liability		Accumulated Accretion			Balance		Gross Liability		Accumulated Accretion			Balance		Gross Liability		Accumulated Accretion			Balance		Gross Liability		Accumulated Accretion			Balance
Intangible liabilities:
Below-market tenant leases, net	304,092		(142,874		)	$	161,218	348,984		(162,228		)	$	186,756	180,395		(69,405		)	$	110,990	194,858		(76,825		)	$	118,033
Above-market headquarters office leases, net	—		—			—		4,342		(3,860		)	482
Above-market ground leases, net	9,880		(2,857		)	7,023		9,880		(2,648		)	7,232		—		—			—		754		(73		)	681
Total intangible liabilities	$	313,972	$	(145,731	)	$	168,241	$	363,206	$	(168,736	)	$	194,470	$	180,395	$	(69,405	)	$	110,990	$	195,612	$	(76,898	)	$	118,714
Remaining accounts payable and accrued expenses:
Accrued interest						43,282							43,874							32,339							29,576
Accounts payable and accrued expenses						48,902							77,405							52,289							68,425
Accrued real estate taxes						81,075							78,213							44,169							59,877
Deferred gains/income						84,308							90,379							64,897							75,841
Accrued payroll and other employee liabilities						34,786							54,520							27,423							64,515
Construction payable						246,639							221,172							232,248							267,102
Tenant and other deposits						26,195							32,106							12,674							12,248
Lease liability right of use																				73,319							—
Insurance reserve liability						12,862							12,035							12,546							12,281
Capital lease obligations						5,385							5,385							5,385							5,385
Conditional asset retirement obligation liability						6,201							6,149							2,391							2,484
Other						120,650							103,724							209,381							236,921
Total remaining Accounts payable and accrued expenses						710,285							724,962							769,061							834,655
Total Accounts payable and accrued expenses						$	878,526						$	919,432						$	880,051						$	953,369

NOTE 1516 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.

~~GGP~~The Company is subject to litigation related to the ~~agreements with~~ BPY ~~(Note 1). GGP~~Transaction. The Company cannot predict the outcome of pending litigation, nor can it predict the amount of time and expense that will be required to resolve such litigation.

~~Table of Contents~~

~~GGP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

NOTE 1617 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 Comprehensive Income:

Table of Contents

Brookfield Property REIT Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
	(Dollars in thousands)								(Dollars in thousands)
Contractual rent expense, including participation rent	$	2,191	$	2,187	$	4,341	$	4,385	$	3,265	$	2,150
Contractual rent expense, including participation rent and excluding amortization of above and below-market ground leases and straight-line rent	1,639		1,615		3,237		3,241		3,265		1,598

NOTE 1718 SUBSEQUENT EVENTS

On ~~July 2, 2018,~~April 9, 2019, the ~~company~~Company obtained a new ~~fixed-rate~~variable-rate loan at ~~Plaza Frontenac~~Coronado Center, Governor's Square and Lynnhaven Mall for ~~$100.0~~proceeds of $515.0 million with an interest rate of ~~4.43%~~LIBOR plus 3.40%. The loan replaced ~~a fixed-rate loan of $52.0~~three loans totaling $461.2 million with ana weighted-average interest rate of ~~3.04%~~4.24%.

On ~~July 12, 2018,~~April 26, 2019, the ~~company obtained a new fixed-rate subordinate loan~~Company announced that it is offering $1.0 billion of senior secured notes. The notes will bear interest at ~~The Woodlands Mall for $62.4 million with~~ an ~~interest~~annual rate of ~~4.05%.~~5.75%, payable on May 15 and November 15 of each year, beginning on November 15, 2019. The notes will mature on May 15, 2026.

On July 12, 2018, the company obtained a new fixed-rate loan at Christiana Mall for $550.0 million with an interest rate of 4.28%. The loan replaced a fixed-rate loan of $225.0 million with an interest rate of 5.10%.

On July 13, 2018, the company completed the sale of the commercial office unit at 685 Fifth Avenue for a gross sales price of $135.0 million. In conjunction with the sale, we paid down a $100.0 million loan. The assets and liabilities related to the 685 Fifth Avenue office property were classified as held for sale on the Consolidated Balance Sheets as of June 30, 2018.

On July 26, 2018, the company held a special meeting of its common stockholders. At the special meeting, holders of record of GGP common stock on June 22, 2018, the record date for the special meeting, voted upon and approved the transactions. The completion of the transactions remains subject to certain customary closing conditions. The company expects that the transactions will be completed by the end of August this year.


ITEM 2	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All references to numbered Notes are to specific footnotes to our ~~consolidated financial statements~~Consolidated Financial Statements included in this Quarterly Report and whose descriptions are incorporated into the applicable response by reference. The following discussion should be read in conjunction with such ~~consolidated financial statements~~Consolidated Financial Statements and related Notes. Capitalized terms used, but not defined, in this Management's Discussion and Analysis of Financial Condition and Results of Operations ~~("MD&A")~~ have the same meanings as in such Notes.

Overview

GGP Inc., ("GGP" or the "Company") (now known as Brookfield Property REIT Inc. or "BPR"), a Delaware corporation, was organized in July 2010 and is an externally managed real estate investment trust, referred to as a "REIT".

BPR is an indirect subsidiary of BPY, one of the world's largest commercial real estate companies. As used herein, the terms "we", "us" and "our" refer to BPR and its subsidiaries. BPR, through its subsidiaries and affiliates, is an owner and operator of retail properties. As of March 31, 2019, we are the owner, either entirely or with joint venture partners, of 123 retail properties located throughout the United States comprising approximately 121 million square feet of gross leasable area, or GLA.

Substantially all of our business is conducted through BPR OP, LP ("BPROP"), which we sometimes refer to herein as the Operating Partnership, and its subsidiaries. As of March 31, 2019, BPR held approximately 99% of the common equity of BPROP, while the remaining 1% was held by limited partners and certain previous contributors of properties to BPROP.

In addition to holding ownership interests in various joint ventures, the Operating Partnership generally conducts its operations through BPR REIT Services LLC. ("BPRRS"), Brookfield Properties Retail Inc. ("BPRI") and General Growth Management, Inc. ("GGMI"). Each of GGMI and BPRI is a taxable REIT subsidiary ("TRS"), which earn real estate management and leasing fees, development fees, financing fees for other ancillary services for a majority of our unconsolidated real estate affiliates and for substantially all of our consolidated properties. BPRI also serves as a contractor to GGMI for these services. BPRRS generally provides financial, accounting, tax, legal, development, and other services to our consolidated properties.

Our primary business is owning and operating best-in-class retail properties that provide an outstanding environment and experience for our communities, retailers, ~~employees,~~ consumers and stockholders. We ~~are an S&P 500 real estate company with~~own a property portfolio comprised primarily of Class A retail properties (defined primarily by sales per square foot) and urban retail properties. GGP Inc. defines best-in-class retail and modern luxury through curated merchandising and elegant culinary experiences set against the backdrop of refined ambiance across this distinguished collection of destinations. Our retail properties are the core centers of retail, dining and entertainment within their trade areas and, therefore, represent hubs of daily life. As of June 30, 2018, we own, either entirely or with joint venture partners, 125 retail properties located throughout the United States comprising approximately 122 million square feet of gross leasable area ("GLA").

We provide management and other services to substantially all of our properties, including properties which we own through joint venture arrangements and which are unconsolidated for GAAP purposes. Our management operating philosophies and strategies are the same whether the properties are consolidated or unconsolidated.

We seek to increase long-term Company NOI and Company EBITDA (as defined below) growth through proactive management and leasing of our properties. We also recycle capital through strategic dispositions in order to opportunistically invest in high quality retail properties. We believe that the most significant operating factor affecting incremental cash flow and Company EBITDA growth is increased rents earned from tenants at our properties. This growth is primarily achieved by:

~~contractual rent increases;~~

~~occupancy growth;~~

~~positive leasing spreads;~~

~~income from redevelopment projects; and~~

~~controlling operating expenses.~~

As of ~~June 30, 2018~~March 31, 2019, the portfolio was ~~95.6% leased,~~94.3% occupied, compared to ~~95.7% leased~~94.4% occupied at ~~June 30, 2017.~~March 31, 2018. On a suite-to-suite basis, the leases commencing occupancy in the trailing 12 months exhibited initial rents that were ~~11.8%~~7.1% higher than the final rents paid on expiring leases.

We have identified approximately $1.5 billion of development and redevelopment projects within our portfolio, including re-development of anchor box spaces, over 80% of which is being invested into Class A retail properties. We currently expect to achieve stabilized returns of approximately ~~7-9%~~7-13% for all projects.

We believe our long-term strategy can provide our stockholders with a competitive risk-adjusted total return comprised of dividends and share price appreciation.

As previously announced, we had reached an agreement with BPY, pursuant to which, among other things, BPY will acquire all of our outstanding shares of common stock, other than those that BPY and its affiliates already own. The transactions provide for distribution and consideration per GGP share of up to $23.50 in cash or a choice of either one BPY limited partnership unit or one newly created share of BPR, subject to proration in each case, based on aggregate cash amount of $9.25 billion. The BPR shares were structured with the intention of providing an economic return equivalent to BPY units, including identical distributions. BPR shareholders will have the right to exchange each BPR share for one BPY unit or the cash equivalent of one BPY unit at the election of BPY. On July 26, 2018, the company held a special meeting of its common stockholders. At the special meeting, holders of record of GGP common stock on June 22, 2018, the record date for the special meeting, voted upon and approved the transactions. The completion of the transactions remains subject to certain customary closing conditions. The company expects that the transactions will be completed by the end of August this year.

Financial Overview

Net income attributable to ~~GGP~~BPR decreased from ~~$233.0~~$64.0 million for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 to ~~$157.7~~$31.7 million for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 primarily due to the sale of partial interests in properties related to joint ventures formed in

conjunction with the BPY Transaction and an increase in interest expense as a ~~one-time gain on~~result of the new debt ~~extinguishment in~~related to the ~~prior year.~~BPY Transaction. Our ~~Company NOI (as defined below) increased 0.6%~~funds from ~~$1.1 billion for the six months ended June 30, 2017 to $1.1 billion for the six months ended June 30, 2018. Our Company FFO (as defined below) increased 0.6%~~operations ("FFO") decreased 51.8% from ~~$680.9~~$328.2 million for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 to ~~$685.3~~$158.3 million for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019 primarily due to the sale of partial interests in properties related to joint ventures formed in conjunction with the BPY Transaction.

See Non-GAAP Supplemental Financial Measures below for a discussion of ~~Company NOI, Company EBITDA and Company~~ FFO, along with a reconciliation to ~~the comparable GAAP measures, Operating income and~~ Net income attributable to ~~GGP.~~BPR.

Operating Metrics

The following table summarizes selected operating metrics for our portfolio.


	June 30, 2018 (1)			June 30, 2017 (1)			March 31, 2019 (1)			March 31, 2018 (1)
In-Place Rents Per Square Foot for Total Retail Properties (2)	$	78.37		$	78.22		$	79.17		$	78.73

Percentage Leased for Total Retail Properties	95.6		%	95.7		%
Percentage Occupied for Total Retail Properties							94.3		%	94.4		%


(1)	Metrics exclude properties acquired in the year ended December 31, ~~2017~~2018 and the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, reductions in ownership as a result of sales or other transactions, and certain redevelopments and other properties.


(2)	Rent is presented on a cash basis and consists of base minimum rent and common area costs.

Lease Spread Metrics

The following table summarizes signed leases compared to expiring leases in the same suite, for leases where (1) the downtime between new and previous tenant was less than 24 months, (2) the occupied space between the previous tenant and new tenant did not change by more than 10,000 square feet and (3) the new lease is at least a year. These metrics are weighted based on the operating income contribution of the properties.

# of Leases SF
Term
(in years)
Initial Rent PSF (1) Expiring Rent PSF (2)
Initial Rent
Spread
% Change
Trailing 12 Month Commencements 1,266
4,085,587
6.7
$ 59.23
$ 52.98
$ 6.26
11.8 %



	# of Leases	SF (in thousands)	Term (in years)	Initial Rent PSF (1)		Expiring Rent PSF (2)		Initial Rent Spread		% Change
Trailing 12 Month Commencements	1,105	4,488	7.5	$	61.55	$	57.45	$	4.11	7.1	%


(1)	Represents initial annual rent over the lease consisting of base minimum rent and common area maintenance.


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

Results of Operations

Three months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~

The following table is a breakout of the components of ~~minimum rents:~~rental revenues:


	Three Months Ended June 30,											Three Months Ended March 31,
	2018			2017			$ Change			% Change		2019			2018			$ Change			% Change
	(Dollars in thousands)											(Dollars in thousands)
Components of Minimum rents:
Components of Rental Revenues:
Base minimum rents	$	362,649		$	350,787		$	11,862		3.4	%	$	221,962		$	361,909		$	(139,947	)	(38.7	)%
Lease termination income	20,306			3,373			16,933			502.0	%	1,495			5,603			(4,108		)	(73.3	)%
Straight-line rent	(667		)	1,385			(2,052		)	(148.2	)%	3,197			1,261			1,936			153.5	%
Above and below-market tenant leases, net	(2,976		)	(6,340		)	3,364			(53.1	)%	2,795			(250		)	3,045			(1,218.0	)%
Total Minimum rents	$	379,312		$	349,205		$	30,107		8.6	%
Tenant recoveries												91,927			157,002			(65,075		)	(41.4	)%
Overage rent												4,351			6,244			(1,893		)	(30.3	)%
Less provision for doubtful accounts												(2,707		)	—			(2,707		)	—
Total rental revenues, net												$	323,020		$	531,769		(208,749		)	(39.3	)%

Base minimum rents ~~increased $11.9~~decreased $139.9 million, primarily due to ~~218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenue becoming consolidated properties during~~the joint ventures formed in conjunction with the BPY Transaction in the third quarter of ~~2017. This~~2018. The joint ventures resulted in a ~~$7.2~~$119.1 million ~~increase~~decrease in permanent base minimum rents during the ~~second~~first quarter of 2019 compared to the first quarter of 2018 compared to the second quarter of 2017. In addition, the acquisition of our joint venture partner's interest in Neshaminy during the second quarter of 2017 resulted in a $2.1 million increase in base minimum rents. Rents from new developments and contractual rent steps between 2017 and 2018 also increased base minimum rents. The disposition of three operating properties during 2017 resulted in an offsetting $4.2 million decrease in base minimum rents.

~~Lease termination income increased $16.9 million from one tenant at multiple operating properties.~~(Note 3).

Tenant recoveries decreased ~~$5.8~~$65.1 million, primarily due ~~in part~~ to the ~~disposition~~joint ventures formed in conjunction with the BPY Transaction in the third quarter of ~~three operating properties during 2017. These dispositions~~2018. The joint ventures resulted in a ~~$2.5~~$58.4 million decrease in tenant recoveries during the ~~second~~first quarter of 2019 compared to the first quarter of 2018 ~~compared to the second quarter of 2017.~~(Note 3).

Management fees and other corporate revenues increased ~~$5.2 million primarily due to a $4.8 million increase in property and asset management fees related to the Seritage joint venture (Note 5).~~

~~Other revenue decreased $2.8~~$15.4 million primarily due to the ~~disposition~~joint ventures formed in conjunction with the BPY Transaction in the third quarter of ~~three operating properties during 2017, resulting~~2018. The joint ventures resulted in a ~~$5.8~~$12.2 million ~~decrease~~increase in ~~other revenue. The sale~~property management and leasing fees during the first quarter of ~~a land parcel at one property during 2017 resulted in an offsetting $2.3 million in other revenue.~~2019 compared to the first quarter of 2018 (Note 3).

Real estate taxes increased $3.6 million due in part to 218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenue becoming consolidated properties during the third quarter of 2017. This resulted in a $1.8 million increase in real estate taxes during the second quarter of 2018 compared to the second quarter of 2017.

~~General and administrative expense~~ decreased ~~$3.8 million~~ ~~primarily due to a decrease in compensation expense (Note 10).~~

~~Interest and dividend income decreased $7.9~~$18.9 million, primarily due to the ~~settlement of notes receivable with our~~ joint ~~venture partners during 2017.~~

Interest expense increased $6.4 million primarily due to 218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenue becoming consolidated properties during the third quarter of 2017. This resulted in a $6.9 million increase in interest expense during the second quarter of 2018 compared to the second quarter of 2017. In addition, we obtained a new consolidated mortgage note at Mall of Louisiana during the third quarter of 2017, resulting in a $3.3 million increase in interest expense. The disposition of three operating properties during 2017 resulted in an offsetting $2.9 million decrease in interest expense.

The loss on foreign currency during the three months ended June 30, 2017 is related to the impact of changes in the exchange rate on the proceeds from the settlement of a note receivable denominated in Brazilian Reais and receivedventures formed in conjunction with the ~~sale of Aliansce~~BPY Transaction in the third quarter of ~~2013.~~

2018. The ~~gain on extinguishment of debt during the three months ended June 30, 2017 relates to Lakeside Mall, which was conveyed to the lender in full satisfaction of the debt.~~

The loss from changes in control of investment properties and other of $15.8 million during the three months ended June 30, 2017 relates to the acquisition of the remaining interest in Neshaminy Mall and our sale of our interest in Red Cliffs Mall.

~~Provision for income taxes decreased $3.9 million primarily due to a decrease in taxable income recognized by our taxable REIT subsidiary for the sale of condominiums.~~

~~Equity in income of Unconsolidated Real Estate Affiliates decreased $15.7 million primarily due to a decrease in income recognition on condominiums and demolition work at one property.~~

~~Six months ended June 30, 2018 and 2017~~

~~The following table is a breakout of the components of minimum rents:~~

Six Months Ended June 30,
2018 2017 $ Change % Change
(Dollars in thousands)
Components of Minimum rents:

Base minimum rents $ 724,561
$ 704,437
$ 20,124
2.9 %
Lease termination income 25,909
9,308
16,601
178.4 %
Straight-line rent 593
493
100
20.3 %
Above and below-market tenant leases, net (3,228 ) (16,020 ) 12,792
(79.9 )%
Total Minimum rents $ 747,835
$ 698,218
$ 49,617
7.1 %

~~Base minimum rents increased $20.1 million primarily due to 218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenue becoming consolidated properties during the third quarter of 2017. This~~joint ventures resulted in a ~~$14.2~~$19.4 million increase in base minimum rents during the first six months of 2018 compared to the first six months of 2017. In addition, the acquisition of our joint venture partner's interest in Neshaminy during the second quarter of 2017 resulted in a $5.1 million increase in base minimum rents. Rents from new developments and contractual rent steps between 2017 and 2018 also increased base minimum rents. The disposition of three operating properties during 2017 resulted in an offsetting $9.0 million decrease ~~in base minimum rents.~~

~~Lease termination income increased $16.6 million from one tenant at multiple operating properties.~~

Tenant recoveries decreased $11.8 million primarily due to the disposition of three operating properties during 2017. This resulted in a $5.0 million decrease in tenant recoveries during the first six months of 2018 compared to the first six months of 2017. The acquisition of our joint venture partner's interest in Neshaminy during the second quarter of 2017 resulted in an offsetting $1.9 million increase in tenant recoveries.

Management fees and other corporate revenues increased $2.8 million primarily due to $9.4 million increase in property and asset management fees related to the Seritage joint venture (Note 5). This is partially offset by a $4.3 million one-time profit participation payment received during 2017 related to our Aeropostale joint venture (Note 3).

Other revenue decreased $6.4 million primarily due to the disposition of three operating properties during 2017, resulting in a $6.0 million decrease in other revenue, and a contract termination fee of $3.2 million received during 2017. The sale of a land parcel at one property during 2017 resulted in an offsetting $2.3 million in other revenue.

Real estate taxes increased $5.8 million primarily due to 218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenue becoming consolidated properties during the third quarter of 2017. This resulted in a $3.7 million increase in real estate taxes during the first ~~six months~~quarter of ~~2018~~2019 compared to the first ~~six months~~quarter of ~~2017.~~2018 (Note 3).

~~General and administrative~~Other property operating costs decreased $28.3 million, primarily due to the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018. The joint ventures resulted in a $28.4 million decrease in other property operating costs during the first quarter of 2019 compared to the first quarter of 2018 (Note 3).

Interest expense ~~decreased $6.3~~increased $16.8 million, primarily due to a ~~decrease~~$68.2 million increase in ~~compensation~~interest expense ~~(Note 10).~~

~~The provision for impairment during~~on the ~~six months ended June 30, 2018 is related to an impairment charge recorded on one operating property (Note 2).~~

Depreciation and amortization increased $14.4 million primarily due to the write-off of $9.4 million of corporate assets in 2018. In addition, the consolidation of 218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenuenew credit agreement entered into during the third quarter of ~~2017 resulted~~2018 (Note 6). This was partially offset by the joint ventures formed in ~~a $10.6 million increase~~conjunction with the BPY Transaction in ~~depreciation and amortization and the acquisition of our joint venture partner's interest in~~

Neshaminy during the second quarter of 2017 resulted in a $3.7 million increase in depreciation and amortization. The disposition of three operating properties during 2017 resulted in an offsetting $5.1 million decrease in depreciation and amortization.

~~Interest and dividend income decreased $16.7 million primarily due to the settlement of notes receivable with our joint venture partners during 2017.~~

~~Interest expense increased $12.0 million primarily due to 218 West 57th Street, 530 Fifth Avenue and 685 Fifth Avenue becoming consolidated properties during~~ the third quarter of ~~2017.~~2018. This resulted in a ~~$13.3~~$50.7 million ~~increase~~decrease in interest expense during the first ~~six months~~quarter of ~~2018~~2019 compared to the first ~~six months of 2017. In addition, we obtained a new consolidated mortgage note at Mall of Louisiana during the third~~ quarter of ~~2017, resulting in a $6.6 million increase in interest expense. The disposition of three operating properties during 2017 resulted in an offsetting $5.9 million decrease in interest expense.~~

The loss on foreign currency during the six months ended June 30, 2017 is related to the impact of changes in the exchange rate on the proceeds from the settlement of a note receivable denominated in Brazilian Reais and received in conjunction with the sale of Aliansce in the third quarter of 2013.2018 (Note 3).

The gain from changes in control of investment properties and other of $12.7 million during the ~~six~~three months ended ~~June 30,~~March 31, 2018 relates to the sale of a 49.9% joint venture interest in the Sears Box at Oakbrook Center (Note 3). The loss from changes in control of investment properties and other of $15.8 million during the six months ended June 30, 2017 relates to the acquisition of the remaining interest in Neshaminy Mall and our sale of our interest in Red Cliffs Mall.

Provision for income taxes ~~decreased $8.7~~of $4.5 million during the three months ended March 31, 2019 is primarily due to ~~a decrease~~the recognition of deferred taxes related to certain transactions effectuated in ~~taxable income recognized by our taxable REIT subsidiary for~~ the ~~sale of condominiums.~~BPY Transaction.

Equity in income of ~~Unconsolidated Real Estate Affiliates~~unconsolidated real estate affiliates decreased ~~$25.1~~$31.7 million, primarily due to a decrease in income recognition on ~~condominiums and demolition work at one property.~~condominiums.

The Unconsolidated Real Estate Affiliates - gain on investment during the ~~six~~three months ended ~~June 30,~~March 31, 2019 relates to the sale of our 12.0% interest in Bayside Marketplace (Note 3). The Unconsolidated Real Estate Affiliates - gain on investment during the three months ended March 31, 2018 ~~is related~~relates to the sale of a portion of our interest in Aeropostale (Note 3).

Liquidity and Capital Resources

Our primary source of cash is from the ownership and management of our properties and strategic dispositions. We may generate cash from refinancings or borrowings under our revolving credit facility. Our primary uses of cash include payment of operating expenses, debt service, reinvestment in and redevelopment of properties, tenant allowances, dividends, share repurchases and strategic acquisitions.

We anticipate maintaining financial flexibility by managing our future maturities and amortization of ~~debt, and minimizing cross collateralizations and corporate guarantees.~~debt. We believe that we currently have sufficient liquidity to satisfy all of our commitments in the form of ~~$194.7~~$200.8 million of consolidated unrestricted cash and ~~$790.0~~$513.0 million of available credit under our credit facility as of ~~June 30, 2018,~~March 31, 2019, as well as anticipated cash provided by operations.

Our key financing objectives include:

to obtain property-secured debt with laddered maturities;

~~to strategically leverage unencumbered retail properties;~~ and

to minimize the amount of debt that is cross-collateralized and/or recourse to us.

We may raise capital through public or private issuances of debt securities, preferred stock, ~~common stock, common units~~Class A Stock, Common Stock of ~~the Operating Partnerships (as defined in Note 1),~~BPROP, share repurchases or other capital raising activities.

The Company entered into a new credit agreement (the "Agreement") dated as of August 24, 2018 consisting of a revolving credit facility (the "Facility"), Term A-1 and A-2 loans, and a Term B loan. The Facility provides for revolving loans of up to $1.5 billion and borrowings bear interest at a rate equal to LIBOR plus 225 basis points. The Facility is scheduled to mature in August 2022 and had outstanding borrowings of $987.0 million as of March 31, 2019. The Term A-1 Loan has a total commitment of $900.0 million, with $700.0 million attributable to BPR and $200.0 million attributable to an affiliate, and is scheduled to mature in August 2021 bearing interest at a rate equal to LIBOR plus 225 basis points. The Term A-2 Loan has a total commitment of $2.0 billion and is scheduled to mature in August 2023 bearing interest at a rate equal to LIBOR plus 225 basis points. The Term B Loan has a total commitment of $2.0 billion and is scheduled to mature in August 2025 bearing interest at a rate equal to LIBOR plus 250 basis points. The Term A-1, A-2, and B Loans are contractually obligated to be prepaid through net proceeds from property level refinances and asset sales as outlined in the Agreement. The Agreement 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 and fixed charge coverage ratio. As of March 31, 2019, we are not aware of any instances of non-compliance with such covenants.

~~During the year ended December 31, 2017,~~2018. In addition, we ~~paid down a $73.4 million consolidated~~refinanced mortgage ~~note~~notes totaling $1.1 billion at ~~Four Seasons Town Centre.~~nine properties. The prior ~~loan~~loans totaling $1.2 billion had a ~~term-to-maturity of 0.2 years and an~~weighted-average interest rate of ~~5.6%~~4.89%. ~~Four Seasons Town Centre subsequently replaced~~The new loans have a ~~property that was sold during the year ended December 31, 2017 as collateral in our $1.4 billion loan secured by cross-collateralized mortgages on 14 properties. In addition, we obtained~~weighted-average term-to-maturity of 5.1 years and a ~~new consolidated mortgage note at Mall of Louisiana for $325.0 million with an~~weighted-average interest rate of ~~3.98%~~5.21%. We also obtained new mortgage notes totaling $416.2 million at six properties with a ~~new unconsolidated mortgage note at one property for $74.2 million with an~~weighted-average term-to-maturity of 4.6 years and a weighted-average interest rate of ~~3.77%~~4.72%.

On March 25, 2019, the Company secured a $341.8 million subordinated unsecured note with Brookfield BPY Holdings Inc., a related party. The note bears interest at a rate equal to LIBOR plus 275 basis points and ~~paid down a $60.0 million unconsolidated mortgage note~~is scheduled to mature on March 25, 2029.

On April 26, 2019, the Company announced that it is offering $1.0 billion of senior secured notes. The notes will bear interest at ~~that property with~~ an ~~interest~~annual rate of ~~LIBOR plus 1.75%. Finally, we refinanced a $190.0 million consolidated mortgage note with a $110.0 million consolidated mortgage note at 530 Fifth Avenue. Both~~5.75%, payable on May 15 and November 15 of each year, beginning on November 15, 2019. The notes ~~had an interest rate of LIBOR plus 3.25%. Additional financing activity is related to draws and repayments~~will mature on ~~the corporate revolver.~~May 15, 2026.

As of ~~June 30, 2018,~~March 31, 2019, we had ~~$2.8~~$7.9 billion of debt pre-payable at our proportionate share without penalty. We may pursue opportunities to refinance this debt at lower interest rates and longer maturities.

As of ~~June 30, 2018,~~March 31, 2019, our proportionate share of total debt aggregated ~~$18.6~~$21.6 billion. Our total debt includes our consolidated debt of ~~$13.1~~$13.7 billion and our share of ~~Unconsolidated Real Estate Affiliates~~unconsolidated real estate affiliates debt of ~~$5.6~~$7.9 billion. Of our proportionate share of total debt, ~~$1.3~~$6.8 billion is recourse to the Company or its subsidiaries (including the ~~facility)~~Facility) due to guarantees or other security provisions for the benefit of the note holder.

The amount of debt due in the next three years represents ~~27.8%~~32.5% of our total debt at maturity. The maximum amount due in any one of the next ten years is no more than ~~$3.2 billion~~$4.2 million at our proportionate share or approximately ~~18.1%~~20.2% of our total debt at maturity.

The following table illustrates the scheduled payments for our proportionate share of total debt as of ~~June 30, 2018.~~March 31, 2019. The $206.2 million of ~~Junior Subordinated Notes~~junior subordinated notes are due in 2036, but we may redeem them any time after April 30, 2011 (Note 6). As we do not expect to redeem the notes prior to maturity, they are included in the consolidated debt maturing subsequent to ~~2022.~~2023.


	Consolidated		Unconsolidated		Consolidated		Unconsolidated
	(Dollars in thousands)				(Dollars in thousands)
2018	$	332,766	$	195,593
2019	1,178,353		1,076,494		$	301,034	$	1,304,957
2020	1,660,913		1,102,336		701,013		905,871
2021	2,936,891		318,502
2021 (1)					2,772,728		758,156
2022	1,426,337		1,130,247		2,054,651		1,124,571
2023 (2)					3,238,521		1,269,020
Subsequent(3)	5,518,575		1,762,393		4,636,679		2,568,555
Total	$	13,053,835	$	5,585,565	$	13,704,626	$	7,931,130


(1)	Includes the Term A-1 Loan (Note 6).


(2)	Includes the Term A-2 Loan (Note 6).


(3)	Includes the Term B Loan (Note 6).

We believe we will be able to extend the maturity date, repay under our available line of credit or refinance the consolidated debt that is scheduled to mature in ~~2018.~~2019. We also believe that the joint ventures will be able to refinance the debt of our ~~Unconsolidated Real Estate Affiliates~~unconsolidated real estate affiliates upon maturity; however, there can be no assurance that we 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.

Acquisitions and Joint Venture Activity

From time-to-time we may acquire whole or partial interests in high-quality retail properties or make strategic dispositions. Refer to Note 3 for more information.

Developments and Redevelopments

We are currently redeveloping several consolidated and unconsolidated properties primarily to improve the productivity and value of the property, convert large-scale anchor boxes into smaller leasable areas and to create new in-line retail space and new restaurant venues. The execution of these redevelopment projects within our portfolio was identified as providing compelling risk-adjusted returns on investment.

We have development and redevelopment activities totaling approximately ~~$1.4 billion~~$694.6 million under construction and ~~$72~~$809.7 million in the pipeline. We continue to evaluate a number of other redevelopment projects to further enhance the quality of our assets. Expected returns are based on the completion of current and future redevelopment projects, and the success of the leasing and asset management plans in place for each project. Expected returns are subject to a number of variables, risks, and uncertainties including those disclosed within Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 (our "Annual Report"). We also refer the reader to our disclosure related to forward-looking statements, below. The following table illustrates our planned redevelopments:

Property Description GGP's Total Projected Share of Cost GGP's Investment to Date (1) Expected Return on Investment (2) Stabilized Year
Major Development Summary (in millions, at share unless otherwise noted)
Under Construction

New Development
Norwalk, CT
Ground up development 525
206
7-9% 2020
Staten Island Mall
Staten Island, NY
Expansion 231
185
7-9% 2019
Other Projects Redevelopment projects at various properties 689
527
6-8% 2018
Total Projects Under Construction $ 1,445
$ 919

Projects in Pipeline

Other Projects Redevelopment projects at various properties 72
25
7-9% TBD
Total Projects in Pipeline $ 72
$ 25



			Stabilized Year	Proportionate Cost (1)
Property	Location	Description	Stabilized Year	Total		To-Date
Major Development Summary (in millions, at share unless otherwise noted)
Active developments

The SoNo Collection	Norwalk, CT	Ground up development	2022	451.3		233.3

Active redevelopments

Paramus Park	Paramus, NJ	Sears Redevelopment for Stew Leonard's	2021	20.7		10.1
Stonestown Galleria	San Francisco, CA	Anchor Redevelopment for Retail and Entertainment	2021	148.9		3.5
Other Projects	Various		2020-2022	73.7		26.9
Active developments/redevelopments				$	694.6	$	273.8
In planning

Ala Moana	Honolulu, HI	Residential Tower	2025	159.3		—
Alderwood	Lynnwood, WA	Sears Redevelopment - Retail	2022	5.6		0.9
Alderwood	Lynnwood, WA	Sears Redevelopment - Residential	2022	11.7		0.1
Jordan Creek	West Des Moines, IA	Younkers Redevelopment (inc. Dave & Busters)	2021	23.5		—
North Point	Alpharetta, GA	Sears Redevelopment - Retail + Restaurants	2022	13.1		0.3
North Point	Alpharetta, GA	Sears Redevelopment - Residential	2022	62.6		—
Northbrook Court	Northbrook, IL	Macy’s Redevelopment - Retail, grocery anchored expansion	2022	40.5		0.7
Northbrook Court	Northbrook, IL	Macy’s Redevelopment - Residential	2022	24.3		—
Oxmoor Center	Louisville, KY	Sears Redevelopment for Top Golf + restaurants	2022	28.5		0.7
Streets at Southpoint	Durham, NC	Mixed Use Densification	2024	106.5		—
Tysons Galleria	McLean, VA	Macy's Redevelopment for iPic and multi-level small-shop expansion	2022	123.1		1.1
Valley Plaza Mall	Bakersfield, CA	Sears backfill for multi-tenant spec	2021	18.1		—
Other Projects	Various		2021-2025	192.9		1.3
In planning				$	809.7	$	5.1
Total retail developments				$	1,504.3	$	278.9


(1)	~~Projected costs and investments to date exclude capitalized interest and internal overhead.~~


~~(2)~~	~~Return on investment represents first year stabilized cash on cost return, based upon budgeted assumptions. Actual costs may vary.~~Costs are at BPR's ownership share post August 28, 2018, with closing of new joint venture partnerships.

Our investment in these projects for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 increased from December 31, ~~2017~~2018 in conjunction with the applicable development plan and as projects near completion. The continued progression of redevelopment projects resulted in increases to ~~GGP's~~our investment to date.

Capital Expenditures, Capitalized Interest and Overhead (at share)

The following table illustrates our capital expenditures, capitalized interest, and internal costs associated with leasing and development overhead, which primarily relate to ordinary capital projects at our operating properties. In addition, we incurred tenant allowances and capitalized leasing costs for our operating properties as outlined below. Capitalized interest is based upon qualified expenditures and interest rates; capitalized leasing and development costs are based upon time expended on these activities. These costs are amortized over lives which are consistent with the related asset.


	Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2019		2018
	(Dollars in thousands)				(Dollars in thousands)
Operating capital expenditures (1)	$	71,364	$	72,887	$	39,723	$	37,130
Tenant allowances and capitalized leasing costs (2)	96,798		90,969		46,296		49,401
Capitalized interest and capitalized overhead	36,162		29,007		10,624		18,872
Total	$	204,324	$	192,863	$	96,643	$	105,403


(1)	Reflects only non-tenant operating capital expenditures.


(2)	Tenant allowances paid on ~~4.2~~3.3 million square feet.

Class A Stock Dividend

Our Board of Directors declared Class A Stock dividends during 2019 as follows:



Declaration Date	Record Date	Payment Date	Dividend Per Share
2019
May 6	May 31, 2019	June 28, 2019	$	0.330
February 6	February 28, 2019	March 29, 2019	0.330
2018
October 31	November 30, 2018	December 31, 2018	$	0.315
August 28	August 31, 2018	September 28, 2018	0.315

Class B Stock Dividend

Our Board of Directors declared Class B Stock dividends during 2019 as follows:



Declaration Date	Record Date	Payment Date	Average Dividend Per Share
2019
March 25	March 27, 2019	March 27, 2019	$	1.015

A dividend was declared on the Class B Stock of the Company in the amount equal to all unpaid dividends on such shares from the date of issue to March 31, 2019 at the rate of 7.5% per annum payable on March 25, 2019 to the holders of record of Class B Stock on March 22, 2019.

Common Stock Dividends

~~Our~~GGP's Board of Directors declared common stock dividends during ~~2018~~2019 and ~~2017~~2018 as follows:



Declaration Date (1)	Record Date	Payment Date	Dividend Per Share
2018
May 3	July 13, 2018	July 31, 2018	$	0.22
February 7	April 13, 2018	April 30, 2018	0.22

(1) Excludes the Pre-Closing Dividend (Note 1).

Preferred Stock Dividends

On February 13, 2013, weGGP issued, under a public offering, 10,000,000 shares of 6.375% Series A Cumulative Stock at a price of $25.00 per share. In connection with the BPY Transaction, each share was converted into one share of 6.375% Series A Preferred Stock. Our Board of Directors declared preferred stock dividends during ~~2018~~2019 and ~~2017~~2018 as follows:

Declaration Date

Record Date

Payment Date

Dividend Per Share

Record Date

Payment Date

Dividend Per Share

2019

May 6

June 14, 2019

July 1, 2019

0.3984

February 6

March 15, 2019

April 1, 2019

0.3984

2018

October 31

December 14, 2018

January 1, 2019

0.3984

July 31

September 17, 2018

October 1, 2018

0.3984

September 17, 2018

October 1, 2018

0.3984

May 3

June 15, 2018

July 2, 2018

0.3984

June 15, 2018

July 2, 2018

0.3984

February 7

March 15, 2018

April 2, 2018

0.3984

March 15, 2018

April 2, 2018

0.3984

2017

October 31

December 15, 2017

January 2, 2018

0.3984

August 2

September 15, 2017

October 2, 2017

0.3984

May 1

June 15, 2017

July 3, 2017

0.3984

January 30

March 15, 2017

April 3, 2017

0.3984

Summary of Cash Flows

Cash Flows from Operating Activities

Net cash (used in) provided by operating activities was ~~$538.0~~$10.0 million for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 and ~~$482.5~~$265.5 million for the ~~six~~three months ended ~~June 30, 2017.~~March 31, 2018. Significant changes in the components of net cash (used in) provided by operating activities include:

in ~~2018,~~2019, a decrease inof cash ~~outflows for marketing and property maintenance & operating costs~~inflows was primarily due to ~~a continued effort to reduce operating expenses; and~~the joint ventures formed in conjunction with the BPY Transaction in the third quarter of 2018 (Note 3);

in ~~2017,~~2018, an increase in cash inflows from ~~tenant recoveries.~~distributions received from unconsolidated real estate affiliates; and

in 2018, an increase in cash inflows related to collection of accounts and notes receivable, net.

Cash Flows from Investing Activities

Net cash used in investing activities was ~~$184.6~~$(125.1) million for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 and ~~$261.4~~$(132.7) million for the ~~six~~three months ended ~~June 30, 2017.~~March 31, 2018. Significant components of net cash (used in) provided by investing activities include:

in 2019, development of real estate and property improvements, $(144.9) million;

in 2019, proceeds from repayment of loans to joint venture partners, $18.0 million;

in 2019, contributions to unconsolidated real estate affiliates, $(19.4) million;

in 2019, distributions received from unconsolidated real estate affiliates in excess of income, $27.8 million;

in 2019, loan to affiliates of $(332.0) million;

in 2019, proceeds from loan to affiliates of $330.0 million;

in 2018, development of real estate and property improvements, ~~$(362.0)~~$(197.2) million;

in 2018, proceeds from repayment of loans to joint venture partners, ~~$80.0~~$58.6 million;

in 2018, contributions to unconsolidated real estate affiliates, ~~$(82.6) million;~~

~~in 2018, distributions received from unconsolidated real estate affiliates in excess of income $124.8 million;~~

~~in 2017, development of real estate and property improvements, $(318.9) million;~~

~~in 2017, proceeds from repayment of loans to joint venture partners, $47.1 million;~~

~~in 2017, contributions to unconsolidated real estate affiliates $(44.8)~~$(20.7) million; and

in ~~2017~~2018, distributions received from unconsolidated real estate affiliates in excess of income, ~~$62.8~~$29.0 million.

Cash Flows from Financing Activities

Net cash ~~used in~~(used in) provided by financing activities was ~~$320.8~~$57.6 million for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 and ~~$486.8~~$(119.2) million for the ~~six~~three months ended ~~June 30, 2017.~~March 31, 2018. Significant components of net cash ~~used in~~(used in) provided by financing activities include:

in 2019, proceeds from the refinancing or issuance of mortgages, notes and loans payable of $956.8 million;

in 2019, buyback of Class A Stock of $(95.0) million;

in 2019, buyback of Class B Stock of $(224.5) million;

in 2019, cash distributions paid to stockholders of $(501.3) million;

in 2018, proceeds from the refinancing or issuance of mortgages, notes and loans payable of ~~$790.0~~$210.0 million; net of principal payments of ~~$(677.9)~~$(115.6) million; and

in 2018, cash distributions paid to common stockholders of ~~$(421.4) million;~~

~~in 2017, proceeds from the refinancing or issuance of mortgages, notes and loans payable, of $575.0 million; net of principal payments of $(368.7) million;~~

~~in 2017, repurchase of treasury stock of $(77.0) million; and~~

~~in 2017, cash distributions paid to common stockholders of $(618.8)~~$(210.5) million.

Seasonality

Although we have a year-long temporary leasing program, occupancies for short-term tenants and, therefore, rental income recognized, are higher during the fourth quarter of the year. In addition, the majority of our tenants have December or January lease years for purposes of calculating annual overage rent amounts. Accordingly, overage rent thresholds are most commonly achieved in the fourth quarter. As a result, revenue production is generally highest in the fourth quarter of each year.

Critical Accounting Policies

Our discussion and analysis of financial condition and results of operations is based on our consolidated interim financial statements, which have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statements and disclosures. Some of these estimates and

assumptions require application of difficult, subjective, and/or complex judgment about the effect of matters that are inherently uncertain and that may change in subsequent periods. We evaluate our estimates and assumptions on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

A disclosure of our critical accounting policies which affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements is included in our Annual Report in Management's Discussion and Analysis of Financial Condition and Results of Operations.

For the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, there were no significant changes to these policies except for the policies related to the ~~derecognition of nonfinancial assets and in substance nonfinancial assets, including real estate, and the recognition of the related gain on sale of investment properties as a result of the~~ adoption of ~~ASU 2014-09, Revenue from Contracts with Customers and ASU 2017-05, Other Income–Gains and Losses from the Derecognition of Nonfinancial Assets,~~Accounting Standards Update ("ASU") 2016-02, Leases as of January 1, ~~2018~~2019 as described in Note 2.2 and below.

~~Revenue Recognition~~

Leases

Effective January 1, ~~2018,~~2019, we adopted the requirements of the new ~~revenue recognition guidance.~~lease guidance which required lessees to recognize a liability to make lease payments and a right-of-use asset, initially measured at the present value of lease payments, for both operating and finance leases. For ~~additional information on~~leases with a term of 12 months or less, lessees were permitted to make an accounting policy election by class of underlying asset to not recognize lease liabilities and lease assets. The guidance allowed lessors and lessees to make an accounting policy election, by class of underlying asset, to not separate non-lease components from lease components. The guidance also provided an optional transition method which allowed entities to initially apply the new ~~standard and~~guidance in the ~~impact to our results~~period of ~~operations, refer to Note 2. We determine the appropriate revenue recognition for our contracts with customers by analyzing the type, terms and conditions of each contract or arrangement with~~adoption, recognizing a ~~customer. We classify contract revenues as product or service according~~cumulative-effect adjustment to the ~~predominant attributes~~opening balance of retained earnings, if necessary. The Company elected to apply the ~~relevant underlying contracts unless~~alternative transition method and no cumulative-effect adjustment to the ~~contract can clearly be split between product and service. We define service revenue as revenue from activities that are not associated with the design, development or production~~opening balance of ~~tangible assets. Our service revenue is primarily related~~retained earnings was deemed necessary to ~~our property management services provided to our joint ventures.~~record.

Refer also to the accounting policies discussed in Note 2.

REIT Requirements

In order to remain qualified as a REIT for Federal income tax purposes, we must distribute at least 90% of our taxable ordinary income to stockholders. We are also subject to federal income tax to the extent we distribute less than 100% of our REIT taxable income, including capital gains. See Note 78 to the Consolidated Financial Statements for more detail on our ability to remain qualified as a REIT.

Recently Issued Accounting Pronouncements

Refer to Note 2 of the Consolidated Financial Statements for recently issued accounting pronouncements.

Non-GAAP Supplemental Financial Measures and Definitions

Proportionate or At Share Basis

The following non-GAAP supplemental financial measures are all presented on a proportionate basis. The proportionate financial information presents the consolidated and unconsolidated properties at the Company's ownership percentage or ~~“at share”~~"at share". This form of presentation offers insights into the financial performance and condition of the Company as a whole, given the significance of the Company's unconsolidated property operations that are owned through investments accounted for under GAAP using the equity method.

The proportionate financial information is not, and is not intended to be, a presentation in accordance with GAAP. The non-GAAP proportionate financial information reflects our proportionate economic ownership of each asset in our property portfolio that we do not wholly own. The amounts in the column labeled "Noncontrolling Interests" were derived on a property-by-property basis by including the share attributable to noncontrolling interests in each line item from each individual property. The Company does not have legal claim to the noncontrolling interest of assets, liabilities, revenue, and expenses. The amount of cash each noncontrolling interest receives is based on the specific provisions of each operating agreement and varies depending on certain factors including the amount of capital contributed by each investor and whether any investors are entitled to preferential distributions. The amounts in the column labeled "Unconsolidated Properties" were derived on a property-by-property basis by including our share of each line item from each individual entity. This provides visibility into our share of the operations of our joint ventures.

We do not control the unconsolidated joint ventures and the presentations of the assets and liabilities and revenues and expenses do not represent our legal claim to such items. The operating agreements of the unconsolidated joint ventures generally provide that partners may receive cash distributions (1) to the extent there is available cash from operations, (2) upon a capital event, such as a refinancing or sale or (3) upon liquidation of the venture. The amount of cash each partner receives is based upon specific provisions of each operating agreement and varies depending on factors including the amount of capital contributed by each partner and whether any contributions are entitled to priority distributions. Upon liquidation of the joint venture and after all liabilities, priority distributions and initial equity contributions have been repaid, the partners generally would be entitled to any residual cash remaining based on their respective legal ownership percentages.

We provide non-GAAP proportionate financial information because we believe it assists investors and analysts in estimating our economic interest in our unconsolidated joint ventures when read in conjunction with the Company's reported results under GAAP. Other companies in our industry may calculate their proportionate interest differently than we do, limiting the usefulness as a

comparative measure. Because of these limitations, the non-GAAP proportionate financial information should not be considered in isolation or as a substitute for our financial statements as reported under GAAP.

~~Net Operating Income ("NOI") and Company NOI~~

The Company defines NOI as proportionate income from operations and after operating expenses have been deducted, but prior to deducting financing, property management, administrative and income tax expenses. NOI excludes management fees and other corporate revenue and reductions in ownership as a result of sales or other transactions. The Company considers NOI a helpful supplemental measure of its operating performance because it is a direct measure of the actual results of our properties. Because NOI excludes reductions in ownership as a result of sales or other transactions, management fees and other corporate revenue, general and administrative and property management expenses, interest expense, retail investment property impairment or non-recoverable development costs, depreciation and amortization, gains and losses from property dispositions, allocations to noncontrolling interests, provision for income taxes, preferred stock dividends, and extraordinary items, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact on operations from trends in occupancy rates, rental rates and operating costs.

The Company also considers Company NOI to be a helpful supplemental measure of its operating performance because it excludes from NOI items such as straight-line rent, and amortization of intangibles resulting from acquisition accounting and other capital contribution or restructuring events. However, due to the exclusions noted, Company NOI should only be used as an alternative measure of the Company's financial performance.

We present Company NOI, Company EBITDA (as defined below) and Company FFO (as defined below); as we believe certain investors and other users of our financial information use these measures of the Company's historical operating performance.

Adjustments to NOI, EBITDA and FFO, including debt extinguishment costs, market rate adjustments on debt, straight-line rent, intangible asset and liability amortization, real estate tax stabilization, gains and losses on foreign currency and other items that are not a result of normal operations, assist management and investors in distinguishing whether increases or decreases in revenues and/or expenses are due to growth or decline of operations at the properties or from other factors. In addition, the Company's leases include step rents that increase over the term of the lease to compensate the Company for anticipated increases in market rentals over time. The Company's leases do not include significant front loading or back loading of payments or significant rent-free periods. Therefore, we find it useful to evaluate rent on a contractual basis as it allows for comparison of existing rental rates to market rental rates. Management has historically made these adjustments in evaluating our performance, in our annual budget process and for our compensation programs.

Other REITs may use different methodologies for calculating NOI and Company NOI, and accordingly, the Company's Company NOI may not be comparable to other REITs. As a result of the elimination of corporate-level costs and expenses and depreciation and amortization, the Company NOI we present does not represent our total revenues, expenses, operating profit or net income and should not be used to evaluate our performance as a whole. Management compensates for these limitations by separately considering the impact of these excluded items, to the extent they are material, to operating decisions or assessments of our operating performance. Our consolidated GAAP statements of operations include such amounts, all of which should be considered by investors when evaluating our performance.

~~Earnings Before Interest Expense, Income Tax, Depreciation, and Amortization ("EBITDA") and Company EBITDA~~

The Company defines EBITDA as NOI less certain property management and administrative expenses, net of management fees and other corporate revenues. EBITDA is a commonly used measure of performance in many industries, but may not be comparable to measures calculated by other companies. Management believes EBITDA provides useful information to investors regarding our results of operations because it helps us and our investors evaluate the ongoing operating performance of our properties after removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization). Management also believes the use of EBITDA facilitates comparisons between us and other equity REITs, retail property owners who are not REITs and other capital-intensive companies. Management uses Company EBITDA to evaluate property-level results and as one measure in determining the value of acquisitions and dispositions and, like FFO (discussed below), it is widely used by management in the annual budget process and for compensation programs. Please see adjustments discussion above for the purpose and use of the adjustments included in Company EBITDA.

EBITDA and Company EBITDA, as presented, may not be comparable to similar measures calculated by other companies. This information should not be considered as an alternative to net income, operating profit, cash from operations or any other operating performance measure calculated in accordance with GAAP.

Funds From Operations ("FFO") ~~and Company FFO~~

The Company determines FFO based upon the definition set forth by ~~National Association of Real Estate Investment Trusts (“NAREIT”).~~Nareit. The Company determines FFO to be its share of consolidated net income (loss) attributable to ~~common stockholders and redeemable non-controlling common unit holders~~Brookfield Property REIT Inc. computed in accordance with GAAP, ~~excluding~~adjusted for real estate related depreciation and amortization, excluding gains and losses from extraordinary items, excluding cumulative effects of accounting changes, excluding gains and losses from the sales of, or any impairment charges related to, previously depreciated operating properties, plus the allocable portion of FFO of unconsolidated joint ventures based upon the Company's economic ownership interest, and all determined on a consistent basis in accordance with GAAP. ~~As with the~~The Company's presentation of ~~NOI,~~ FFO has been reflected on a proportionate basis.

The Company considers FFO a helpful supplemental measure of the operating performance for equity REITs and a complement to GAAP measures because it is a recognized measure of performance by the real estate industry. FFO facilitates an understanding of the operating performance of the Company's properties between periods because it does not give effect to real estate depreciation and amortization since these amounts are computed to allocate the cost of a property over its useful life. Since values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, the Company believes that FFO provides investors with a clearer view of the Company's operating performance.

We calculate FFO in accordance with standards established by ~~NAREIT,~~Nareit, which may not be comparable to measures calculated by other companies who do not use the ~~NAREIT~~Nareit definition of FFO or do not calculate FFO in accordance with ~~NAREIT~~Nareit guidance. In addition, although FFO is a useful measure when comparing our results to other REITs, it may not be helpful to investors when

comparing us to non-REITs. As with the presentation of Company NOI and Company EBITDA, we also consider Company FFO, which is not in accordance with NAREIT guidance and may not be comparable to measures calculated by other REITs, to be a helpful supplemental measure of our operating performance. Please see adjustments discussion above for the purpose and use of the adjustments included in Company FFO.

FFO and Company FFO do not represent cash flow from operations as defined by GAAP, should not be considered as an alternative to net income determined in accordance with GAAP as a measure of operating performance, and is not an alternative to cash flows as a measure of liquidity or indicative of funds available to fund our cash needs. In addition, Company FFO per diluted share does not measure, and should not be used as a measure of, amounts that accrue directly to stockholders' benefit.

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures

~~The Company presents NOI, EBITDA and FFO as they are financial measures widely used in the REIT industry.~~ In order to provide a better understanding of the relationship between the Company's non-GAAP financial measures of ~~NOI, Company NOI, EBITDA, Company EBITDA,~~ FFO, ~~and Company FFO, reconciliations have been provided as follows: a reconciliation of GAAP operating income to NOI and Company NOI,~~ a reconciliation of GAAP net income attributable to ~~GGP to EBITDA and Company EBITDA, and a reconciliation of GAAP net income attributable to GGP~~BPR to FFO ~~and Company FFO.~~has been provided. None of the Company's non-GAAP financial measures represents cash flow from operating activities in accordance with GAAP, none should be considered as an alternative to GAAP net income (loss) attributable to ~~GGP~~BPR and none are necessarily indicative of cash flow. In addition, the Company has presented such financial measures on a consolidated and unconsolidated basis (at the Company's proportionate share) as the Company believes that given the significance of the Company's operations that are owned through investments accounted for by the equity method of accounting, the detail of the operations of the Company's unconsolidated properties provides important insights into the income and FFO produced by such investments.

~~The following table reconciles GAAP Operating Income to Company NOI (dollars in thousands) for the three and six months ended June 30, 2018 and 2017:~~

Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017

Operating Income $ 211,556
$ 182,793
$ 359,085
$ 375,662
Loss (gain) on sales of investment properties 40
83
23
(1,128 )
Depreciation and amortization 173,642
174,298
359,035
344,596
Provision for impairment —
—
38,379
—
General and administrative 12,041
15,862
24,288
30,546
Property management and other costs 36,595
39,025
76,169
80,139
Management fees and other corporate revenues (26,030 ) (20,847 ) (51,795 ) (48,990 )
Consolidated Properties 407,844
391,214
805,184
780,825
Noncontrolling interest in NOI of Consolidated Properties (4,982 ) (5,102 ) (10,219 ) (10,822 )
NOI of sold interests (2 ) (4,903 ) (225 ) (10,381 )
Unconsolidated Properties 172,144
175,836
342,545
361,930
Proportionate NOI 575,004
557,045
1,137,285
1,121,552
Company adjustments:
Minimum rents 3,734
3,453
2,860
11,612
Real estate taxes 1,490
1,491
2,979
2,979
Property operating expenses 769
789
1,537
1,576
Company NOI $ 580,997
$ 562,778
$ 1,144,661
$ 1,137,719

~~The following table reconciles GAAP Net income attributable to GGP to Company EBITDA for the three and six months ended June 30, 2018 and 2017:~~

Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017

Net Income Attributable to GGP $ 93,615
$ 125,863
$ 157,651
$ 233,022
Allocation to noncontrolling interests 1,949
2,455
3,809
5,665
Loss (gain) on sales of investment properties 40
83
23
(1,128 )
Gain on extinguishment of debt —
(55,112 ) —
(55,112 )
Loss (gain) from changes in control of investment properties and other —
15,841
(12,664 ) 15,841
Unconsolidated Real Estate Affiliates - gain on investment —
—
(10,361 ) —
Equity in income of Unconsolidated Real Estate Affiliates (15,030 ) (30,732 ) (38,869 ) (63,946 )
Provision for impairment —
—
38,378
—
(Benefit from) provision for income taxes (22 ) 3,844
(302 ) 8,354
Loss on foreign currency —
3,877
—
694
Interest expense 140,562
134,209
278,488
266,532
Interest and dividend income (9,518 ) (17,452 ) (18,667 ) (35,388 )
Depreciation and amortization 173,642
174,298
359,035
344,596
Consolidated Properties 385,238
357,174
756,521
719,130
Noncontrolling interest in EBITDA of Consolidated Properties (4,783 ) (4,904 ) (9,820 ) (10,397 )
EBITDA of sold interests —
(4,815 ) (196 ) (10,209 )
Unconsolidated Properties 160,686
165,784
319,684
342,405
Proportionate EBITDA 541,141
513,239
1,066,189
1,040,929
Company adjustments:
Minimum rents 3,734
3,453
2,860
11,612
Real estate taxes 1,490
1,491
2,979
2,979
Property operating expenses 769
789
1,537
1,576
General and administrative 889
—
$ 1,401
$ —
Company EBITDA $ 548,023
$ 518,972
$ 1,074,966
$ 1,057,096

The following table reconciles GAAP net income attributable to ~~GGP~~BPR to ~~Company~~ FFO for the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019 and ~~2017:~~

2018:

Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017

Net Income Attributable to GGP $ 93,615
$ 125,863
$ 157,651
$ 233,022
Redeemable noncontrolling interests 1,008
975
1,702
1,805
Provision for impairment excluded from FFO —
—
38,379
—
Noncontrolling interests in depreciation of Consolidated Properties (2,135 ) (2,008 ) (4,331 ) (4,783 )
Loss (gain) on sales of investment properties 40
83
23
(1,128 )
Preferred stock dividends (3,984 ) (3,984 ) (7,968 ) (7,968 )
Loss (gain) from changes in control of investment properties and other —
15,841
(12,664 ) 15,841
Depreciation and amortization of capitalized real estate costs - Consolidated Properties 169,297
169,867
341,133
335,844
Depreciation and amortization of capitalized real estate costs - Unconsolidated Properties 83,856
74,566
155,922
148,559
FFO (1) 341,697
381,203
669,847
721,192
Company adjustments:
Minimum rents 3,734
3,453
2,860
11,612
Real estate taxes 1,490
1,491
2,979
2,979
Property operating expenses 769
789
1,537
1,576
General and administrative 889
—
1,401
—
Depreciation on non-income producing assets —
—
9,408
—
Investment income, net (205 ) (205 ) (409 ) (409 )
Market rate adjustments (1,172 ) (1,122 ) (2,327 ) (2,331 )
Loss on foreign currency —
3,877
—
694
FFO from sold interests —
(54,769 ) (15 ) (54,379 )
Company FFO $ 347,202
$ 334,717
$ 685,281
$ 680,934



	Three Months Ended March 31,
	2019			2018

Net Income Attributable to BPR	$	31,650		$	64,036
Redeemable noncontrolling interests	—			694
Provision for impairment excluded from FFO	—			38,379
Unconsolidated Real Estate Affiliates - gain on investment	(104,354		)	(10,361		)
Noncontrolling interests in Unconsolidated Real Estate Affiliates - gain on investment of the Operating Partnership	10,175			—
Gain (loss) on sales of investment properties	(5,511		)	10,343
Preferred stock dividends	(3,984		)	(3,984		)
Gain (loss) from changes in control of investment properties and other	—			(12,664		)
Depreciation and amortization of capitalized real estate costs - Consolidated Properties	113,970			171,834
Depreciation and amortization of capitalized real estate costs - Unconsolidated Properties	138,408			72,066
Noncontrolling interests in depreciation	(22,063		)	(2,192		)
FFO	$	158,291		$	328,151


~~(1)~~	~~FFO as defined by the National Association of Real Estate Investment Trusts.~~

Forward-Looking Statements

Certain statements made in this section or elsewhere in this report may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of ~~1995.~~1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that do not relate to historical or current facts or matters are forward-looking statements. When used, the words “may," "will," "seek," "expects," "anticipates," "believes," "targets," "intends," "should," "estimates," "could," "continue," "assume," "projects," "plans," or similar expressions, are intended to identify forward-looking statements. Although ~~the Company believes~~we believe the expectations reflected in any forward-looking statement are based on reasonable assumptions, itwe can give no assurance that ~~its~~our expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and other factors. ~~Such factors~~Accordingly, investors should use caution in relying on forward-looking statements.

Some of the risks and uncertainties that may cause our actual results, performance, or achievements to differ materially from those expressed or implied by forward-looking statements include, but are not limited to:

General volatility of conditions affecting the retail sector;

our inability to acquire and maintain tenants or to lease space on terms favorable to us;

risks related to the ~~Company's ability~~bankruptcy or store closures of national tenants with chains of stores in many of our properties;

our inability to sell real estate quickly;

risks related to perceptions by retailers and shoppers of the convenience and attractiveness of our retail properties;

risks related to the development, expansion and acquisitions of properties;

risks related to competition in our business;

risks related to natural disasters or terrorist attacks;

risks related to cyber and data security breaches or information technology failures;

environmental uncertainties and related costs, including costs resulting from uninsured potential losses;

general risks related to inflation or deflation;

risks relating to impairment charges for our real estate assets;

risks related to conflicts of interest with BPY and our status as "controlled company" within the meaning of the rules of Nasdaq;

our dependence on our subsidiaries for cash;

risks related to our joint venture partners, including risks related to conflicts of interests, potential bankruptcies, tax-related obligations and financial support relating to such joint venture partners;

our inability to maintain status as a REIT, and possible adverse changes to tax laws;

risks related to our indebtedness and debt restrictions and covenants;

our inability to refinance, extend, restructure or repay near and ~~intermediate term debt, its indebtedness, its ability~~indeterminate debt;

our inability to raise capital through ~~equity issuances, asset sales or~~financing activities; and

risks related to the ~~incurrence of new debt, retail and credit market conditions, impairments, its liquidity demands and economic conditions. The Company discusses~~BPY Transaction.

We discuss these and other risks and uncertainties in ~~its annual~~our Annual Report and our quarterly periodic reports filed with the Securities and Exchange Commission. The Company may update that discussion in its periodic reports, but otherwise takes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in the market risks described in our Annual Report.

ITEM 4 CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including the ~~Chief Executive Officer ("CEO")~~persons performing the functions of principal executive and ~~Chief Financial Officer ("CFO"~~principal financial officers for us pursuant to a Master Services Agreement, dated August 27, 2018, among us, Brookfield Asset Management Inc. and other parties thereto (the "Master Services Agreement"), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended, (the "Exchange Act")).

Based on that evaluation, the ~~CEO~~persons performing the functions of principal executive and principal financial officers for us pursuant to the ~~CFO~~Master Services Agreement have concluded that our disclosure controls and procedures ~~are effective.~~were effective at the end of the period covered by this report.

Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS

The Company is subject to litigation related to the BPY Transaction. The Company cannot predict the outcome of pending litigation, nor ~~any~~can it predict the amount of ~~the Unconsolidated Real Estate Affiliates is currently involved in any material pending legal proceedings nor,~~time and expense that it will be required to ~~our knowledge, is any material legal proceeding currently threatened against the Company or any of the Unconsolidated Real Estate Affiliates.~~resolve such litigation.

ITEM 1A RISK FACTORS

~~In addition~~There are no material changes to the risk factors previously disclosed in our Annual Report, the following risk factors relate to the agreement reached with BPY (Note 1). We refer to the transactions contemplated by the merger agreement and other related transaction agreements collectively as the Transactions.

~~Risks Relating to the Transactions~~

~~GGP common stockholders cannot be sure of the market price of class A stock they may elect to receive as the pre-closing dividend.~~

Following the consummation of the Transactions, GGP common stockholders may elect to receive shares of class A stock (however, if enough GGP common stockholders elect to receive BPY units, then all those eligible to receive class A stock in connection with the Transactions will receive BPY units instead). Prior to completion of the Transactions, there has not been and will not be established public trading for class A stock. The market price of class A stock following the Transactions will be unknown until the commencement of its trading following completion of the Transactions.

Although a number of conditions to the completion of the Transactions have been satisfied, certain other conditions remain to be satisfied and if these conditions are not satisfied or waived, the Transactions will not be completed.

~~Completion of the Transactions is subject to a number of conditions which must be satisfied or waived under the merger agreement in order for the Transactions to be completed.~~

In addition, GGP and BPY each may terminate the merger agreement under certain circumstances, including, among other reasons, if the charter amendment, bylaws amendment, partnership agreement amendment and the merger fail to consummate by September 26, 2018. If the Transactions are not consummated, the market price of GGP common stock may decline.

~~There can be no assurance that the conditions to the closing of the Transactions will be satisfied or waived. Accordingly, there can be no assurance that the Transactions will be consummated.~~

~~The pendency of the Transactions could adversely affect the business and operations of GGP.~~

Due to the operating covenants in the merger agreement, GGP may be unable, during the pendency of the Transactions, to take certain actions without BPY’s consent, even if such actions would otherwise prove beneficial to GGP common stockholders. Those operating covenants will continue to apply, subject to the terms of the merger agreement, until the Transactions are consummated, unless otherwise agreed by GGP and BPY.

~~If BPY’s financing in connection with the Transactions becomes unavailable or is insufficient, the Transactions may not be completed.~~

A subsidiary of BPY has entered into a financing commitment to, among other things, fund the Transactions and related fees and expenses. The financing commitment is subject to certain conditions, which may or may not be satisfied. In the event that the financing contemplated by that financing commitment is not available or is available in less than the expected amount, other necessary financing may not be available on acceptable terms, in a timely manner or at all. If alternative financing is available, it could be more costly than that reflected in the financing commitment, which would have a negative impact on BPY’s results of operations following the Transactions. However, the obligations of BPY in connection with the Transactions are not subject to any conditions regarding the ability to obtain financing for the consummation of the Transactions.

~~The merger agreement contains provisions that could discourage a potential competing acquiror of GGP or could result in any competing proposal being at a lower price than it might be otherwise.~~

The merger agreement contains “no shop” provisions that, subject to limited exceptions, restrict GGP’s ability to solicit, or knowingly initiate, facilitate or encourage, or provide any confidential or non-public information with regard to, competing third-party proposals to acquire all, or a significant part, of GGP. In addition, if GGP receives any third-party acquisition proposal, GGP is required to promptly notify BPY. If GGP determines to act with respect to a third-party superior proposal, GGP must negotiate with BPY in good faith regarding potential amendments to the merger agreement (to the extent that BPY requests to negotiate) such that the third-party superior proposal would no longer be a superior proposal. Upon termination of the merger agreement to accept a superior proposal, GGP may be required to pay a termination fee to BPY.

These provisions and agreements (i) could discourage a potential competing acquiror that might have an interest in acquiring all, or a significant part, of GGP from considering or proposing an acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than the market value proposed to be received or realized in the Transactions; or (ii) might result in a potential competing acquiror proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee or expense reimbursement that may become payable in certain circumstances.

The merger agreement includes restrictions on the ability of GGP to make distributions to its stockholders, even if it would otherwise have net income and net cash available to make such distributions.

In addition to the pre-closing dividend that GGP expects to declare and pay to its common stockholders who are not affiliated with BPY in connection with the Transactions under the merger agreement, GGP is permitted to pay the second quarter dividend of $0.22 per share of GGP common stock declared on May 3, 2018 and payable on July 31, 2018, to holders of record of GGP common stock (other than BPY and BPY's affiliates) on July 13, 2018.

Given its status as a REIT, GGP may need to (and is permitted to under the merger agreement) make certain minimum distributions in excess of the above limits. In the event the permitted amounts of dividends described above are exceeded, pursuant to a distribution necessary for GGP, as applicable, to qualify as a REIT or to avoid the incurrence of any income or excise tax, such distributions would be deducted from the total cash amount to be distributed to GGP common stockholders in connection with the Transactions.

Although GGP and BPY generally have agreed to use their reasonable best efforts to close the Transactions as promptly as practicable in accordance with the merger agreement, certain factors could delay the closing. Therefore, even if GGP has available net income or net cash to make distributions to its common stockholders and satisfies any other conditions to make such distributions, the terms of the merger agreement could prohibit such action.

~~GGP is subject to litigation related to the Transactions.~~

GGP is subject to litigation related to the Transactions. GGP cannot predict the outcome of pending litigation, nor can it predict the amount of time and expense that will be required to resolve such litigation. An unfavorable resolution of any such litigation concerning the Transactions could delay or prevent the consummation of the Transactions. In addition, the costs of defending the

litigation, even if resolved in GGP’s favor, could be substantial and such litigation could distract GGP from pursuing the consummation of the Transactions and other potentially beneficial business opportunities.Report.

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None~~On August 28, 2018, the Company’s Board of Directors authorized the repurchase of the greater of (i) 5% of the Company’s Class A Stock that are issued or outstanding or (ii) 10% of its public float of Class A Stock over the next 12 months from time to time as market conditions warrant. The Company has made no repurchases as of March 31, 2019 under the share repurchase program.

On March 25, 2019, BPR redeemed 10,496,703 shares of Class B-1 Stock held by BPR FIN 1 Subco LLC for fair market value consideration of $224.5 million, being the redemption amounts of the shares acquired at $21.39 per share.

On March 29, 2019, BPR purchased for cancellation 4,679,802 shares of Class A Stock at a purchase price of $20.30 per share, for an aggregate cost of approximately $95 million, excluding fees and expenses.

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 OTHER INFORMATION

~~None.~~The other information presented below is being filed as a result of the Company's adoption of the new accounting guidance for lease accounting ("ASC 842") on January 1, 2019. As part of that adoption, the Company elected the available practical expedient, for all classes of assets, not to separate lease components in contracts from the nonlease components in those contracts, when recording revenues associated with operating leases where it is the lessor. Since the lease component is the predominant component under the Company's leases, combined revenues from both the lease and nonlease components are accounted for in accordance with ASC 842 and will be reported in all periods subsequent to the adoption of the new accounting guidance in a single caption, "rental revenues", onthe Company's Consolidated Statements of Comprehensive Income. The presentation and disclosure of rental revenueshave been adjusted to reflect these changes for the quarter ended March 31, 2019. Refer to Note 2 of Part I, Item 1 "Financial Statements" for further details on these updates to significant accounting policies.

This information is intended to assist investors in making comparisons of the Company's historical financial information with future financial information. The reported financial information below has been reclassified to conform to the current presentation.

The table below summarizes the reclassified presentation of our total revenues by year due to the adoption of the new leasing standard.



	Years Ended December 31,
	2018		2017		2016
Minimum rents	$	1,297,945	$	1,455,039	$	1,449,704
Tenant recoveries	540,376		643,607		668,081
Overage rents	29,659		34,874		42,534
Management fees and other corporate revenues	125,776		105,144		95,814
Other	70,278		89,198		90,313
Total revenues, as reported	$	2,064,034	$	2,327,862	$	2,346,446

The table below summarizes our total revenues as originally reported in our Annual Report to reflect the revised presentation of total combined rental revenues due to the adoption of the new leasing standard.



	Years Ended December 31,
	2018		2017		2016
Total rental revenues	$	1,867,980	$	2,133,520	$	2,160,319
Management fees and other corporate revenues	125,776		105,144		95,814
Other	70,278		89,198		90,313
Total revenues, as reported	$	2,064,034	$	2,327,862	$	2,346,446

ITEM 6 EXHIBITS



2.1*		~~Amendment to Agreement and Plan of Merger, dated as of June 25, 2018, by and among Brookfield Property Partners L.P., Goldfinch Merger Sub Corp. and GGP Inc.~~
				Incorporated by Reference Herein
~~10.1~~	Exhibit Number		~~Amended and Restated Class B Stock Exchange Agreement, dated as of June 25, 2018, by and among GGP Inc. and the parties listed on~~ Description		Form	Exhibit ~~A thereto~~	Filing Date	File No.

~~31.1~~4.1*		Modified Redemption Rights Agreement, dated August 28, 2018, between Brookfield Property REIT Inc. and Everitt Enterprises, Inc.

4.2*		Modified Redemption Rights Agreement, dated August 28, 2018, between Brookfield Property REIT Inc. and Koury Corporation.

31.1*		Certification of Brian W. Kingston, Chief Executive Officer, ~~Pursuant~~Brookfield Property Group LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~31.2~~
31.2*		Certification of Bryan K. Davis, Chief Financial Officer, ~~Pursuant~~Brookfield Property Group LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~32.1~~
32.1**		Certification of Brian W. Kingston, Chief Executive Officer, ~~Pursuant~~Brookfield Property Group LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~32.2~~
32.2**		Certification of Bryan K. Davis, Chief Financial Officer, ~~Pursuant~~Brookfield Property Group LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101			The following financial information from ~~GGP~~Brookfield Property REIT Inc.'s. Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2018,~~March 31, 2019, has been filed with the SEC on ~~July 31, 2018,~~May 10, 2019, formatted in XBRL (Extensible Business Reporting Language): (1) Consolidated Balance Sheets, (2) Consolidated Statements of Comprehensive Income, (3) Consolidated Statements of Equity, (4) Consolidated Statements of Cash Flows and (5) Notes to Consolidated Financial Statements.


*	Filed herewith.

** Furnished herewith.

Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the registrant has not filed debt instruments relating to long-term debt that is not registered and for which the total amount of securities authorized thereunder does not exceed 10% of total assets of the registrant and its subsidiaries on a consolidated basis as of ~~June 30, 2018.~~March 31, 2019. The registrant agrees to furnish a copy of such agreements to the SEC upon request.

~~EXHIBIT INDEX~~

Incorporated by Reference Herein
Exhibit Number Description Form Exhibit Filing Date File No.

2.1*
Amendment to Agreement and Plan of Merger, dated as of June 25, 2018, by and among Brookfield Property Partners L.P., Goldfinch Merger Sub Corp. and GGP Inc.
S-4 2.2 6/25/2018 333-224593

10.1
Amended and Restated Class B Stock Exchange Agreement, dated as of June 25, 2018, by and among GGP Inc. and the parties listed on Exhibit A thereto
S-4 10.2 6/25/2018 333-224593

31.1
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101 The following financial information from GGP Inc.'s. Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, has been filed with the SEC on July 31, 2018, formatted in XBRL (Extensible Business Reporting Language): (1) Consolidated Balance Sheets, (2) Consolidated Statements of Comprehensive Income, (3) Consolidated Statements of Equity, (4) Consolidated Statements of Cash Flows and (5) Notes to Consolidated Financial Statements.


*	~~Certain exhibits and schedules have been omitted pursuant to Item 602(b)(2) of Regulation S-K and will be provided to the SEC upon request.~~

~~SIGNATURE~~SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	~~GGP INC.~~
	~~(Registrant)~~
	Brookfield Property REIT Inc.

Date: ~~July 31, 2018~~May 10, 2019	By:	/s/ ~~Heath Fear~~Michelle Campbell
		~~Heath Fear~~Michelle Campbell
		Secretary

Date: May 10, 2019	By:	/s/ Bryan K. Davis
		Bryan K. Davis
		Chief Financial ~~Officer~~Officer*
		~~(on behalf of the Registrant)~~Brookfield Property Group LLC


*	Mr. Davis performs the functions of chief financial officer for Brookfield Property REIT Inc. (the "Company") pursuant to a Master Services Agreement, dated August 27, 2018, among Brookfield Asset Management Inc., the Company and certain other parties thereto.

5256



Year	Amount
2018 Remaining	$	20,497
2019	28,966
2020	19,567
2021	13,908
2022	12,579



	Number of Common Units for each Preferred Unit	Number of Contractual Preferred Units Outstanding as of June 30, 2018 (in thousands)	Converted Basis to Common Units Outstanding as of June 30, 2018 (in thousands)	Conversion Price		Redemption Value (1) (in thousands)
Series B	3.00000	10	—	$	16.66670	$	486
Series D	1.50821	533	835	33.15188		26,637
Series E	1.29836	503	679	38.51000		25,133
						$	52,256



Property	Description	GGP's Total Projected Share of Cost		GGP's Investment to Date (1)		Expected Return on Investment (2)	Stabilized Year
Major Development Summary (in millions, at share unless otherwise noted)
Under Construction
New Development Norwalk, CT	Ground up development	525		206		7-9%	2020
Staten Island Mall Staten Island, NY	Expansion	231		185		7-9%	2019
Other Projects	Redevelopment projects at various properties	689		527		6-8%	2018
	Total Projects Under Construction	$	1,445	$	919
Projects in Pipeline
Other Projects	Redevelopment projects at various properties	72		25		7-9%	TBD
	Total Projects in Pipeline	$	72	$	25