Brookfield Property Partners LP (NASDAQ:BPY) Q3 2019 Earnings Conference Call - Final Transcript

Nov 06, 2019 • 11:00 am ET


Brookfield Property Partners LP (NASDAQ:BPY) Q3 2019 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the Brookfield Property Partners Third Quarter 2019 Financial Results Conference Call. [Operator Instructions]

It is now my pleasure to turn the call over to Mr. Matt Cherry, Senior Vice President of Investor Relations. Please go ahead, sir.

Matthew P. Cherry

Thank you, and good morning. Before we begin our presentation, let me caution you that our discussion will include forward-looking statements. These statements that relate to future results and events are based on our current expectations. Our actual results in future periods may differ materially from those currently expected because of a number of risks, uncertainties and assumptions. The risks, uncertainties and assumptions that we believe are material are outlined in our press release issued this morning.

With that, I'll turn the call over to Chief Executive Officer, Brian Kingston.

Brian Kingston

Thank you, Matt, and good morning, everyone. And thank you for joining our call. With me on the call today are Ric Clark, the Chairman of BPY; Bryan Davis, our CFO, and Sandeep Mathrani, our Global Head of Retail Real Estate.

In my prepared remarks, I'll recap our operating performance from the quarter as well as provide an update on our various ongoing strategic initiatives. Bryan will then provide a detailed update on our quarterly financial results. And after that, we'd be happy to take questions from any of our analysts on the call today.

So, as you may have seen in our disclosure this morning, the third quarter of 2019 was highlighted by the recent completion of several of our development projects, including two marquee buildings for Brookfield in New York and London, delivering over 3 million square feet of modern office space, that's approximately 85% leased upon opening. These buildings demonstrate the strong demand we continue to see for our premier well-located office assets.

Despite a strong asset performance, BPY shares currently trade at a discount. We therefore continued on the path of repurchasing shares this quarter since we believe it represents an attractive investment opportunity for us. As a result, total purchases for this year now total over $500 million. Gross dispositions totaled $3.7 billion in the third quarter, $1.4 billion at our share -- prices that were 4% above our IFRS carrying values. These sales generated $723 million of net proceeds to BPY, bringing our year-to-date total to $1.2 billion.

With expected sales in the fourth quarter of this year, we expect to achieve our goal for the full-year of 2019. Asset sales completed during this quarter included office buildings in Sydney and Boston, and multifamily development in Brooklyn, and a newly developed Mall in Norwalk, Connecticut. The typical real estate cycle movements in cap rates tend to move in lockstep with interest rates. Over the last 12 months, while we've seen a dramatic decline in interest rates in both the US and in Europe, this is yet to be reflected in the valuation of our assets.

To put this into perspective, 100 basis point reduction in cap rates, adds almost $20