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Brookfield Property Partners L.P., et al. – ‘SC14D1F’ on 2/12/14 re: Brookfield Office Properties Inc

On:  Wednesday, 2/12/14, at 11:02am ET   ·   Accession #:  1047469-14-813   ·   File #:  5-59615

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/12/14  Brookfield Property Partners L.P. SC14D1F                4:9.7M Brookfield Office Properties Inc  Merrill Corp/New/FA
          Brookfield Office Properties Exchange LP
          Brookfield Property Split Corp.

Document/Exhibit                   Description                      Pages   Size 

 1: SC14D1F     Tender-Offer Statement -- Third-Party Tender Offer  HTML   6.49M 
 2: EX-99.1     Miscellaneous Exhibit                               HTML     15K 
 3: EX-99.7     Miscellaneous Exhibit                               HTML     41K 
 4: EX-99.8     Miscellaneous Exhibit                               HTML     47K 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14D-1F

TENDER OFFER STATEMENT PURSUANT TO RULE 14d-1(b) UNDER THE
SECURITIES EXCHANGE ACT OF 1934

BROOKFIELD OFFICE PROPERTIES INC.
(Name of Subject Company)

Canada
(Jurisdiction of Subject Company's Incorporation or Organization)

BROOKFIELD PROPERTY PARTNERS L.P.
BROOKFIELD PROPERTY SPLIT CORP.
BROOKFIELD OFFICE PROPERTIES EXCHANGE LP
(Bidders)

Common Shares
(Title of Class of Securities)

112900105
(CUSIP Number of Class of Securities (if applicable))

John Stinebaugh
Brookfield Property Group LLC
Brookfield Place
250 Vesey Street, 15th Floor
New York, NY 10281-1023
Telephone: (212) 417-7000

With a copy to:
Mile Kurta, Esq.
Torys LLP
1114 Avenue of the Americas
New York, NY 10036
Telephone: 212-880-6000

(Name, address (including zip code) and telephone number (including area code of
person(s) authorized to receive notices and communications on behalf of bidders)

February 12, 2014
(Date tender offer first published, sent or given to security holders)

CALCULATION OF FILING FEE*

Amount Previously Paid: $453,829
Form or Registration No.: Registration Statement on Form F-4
Filing Party: Brookfield Property Partners L.P.
Date Filed: December 23, 2013

Amount Previously Paid: $240,278
Form or Registration No.: Schedule 13E-3
Filing Parties: Brookfield Property Partners L.P., Brookfield Property Split Corp., Brookfield Office Properties Exchange LP and Brookfield Asset Management Inc.
Date Filed: December 23, 2013

PART I — INFORMATION TO BE SENT TO SHAREHOLDERS

Item 1.    Home Jurisdiction Documents

        Offer to Purchase, dated February 11, 2014, including the Letter of Transmittal and Notice of Guaranteed Delivery.

Item 2.    Informational Legends

        See the front cover page of the Offer to Purchase, dated February 11, 2014.

This document is important and requires your immediate attention. If you are in doubt as to any aspect of the document, you should consult your investment dealer, broker, lawyer or other professional advisor. The Offer has not been approved by any securities regulatory authority nor has any securities regulatory authority passed upon the fairness or merits of the Offer, upon the securities offered pursuant to the Offer or upon the adequacy of the information contained in this document. Any representation to the contrary is a criminal offence.

Information has been incorporated by reference in this document from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the office of Brookfield Property Partners' Corporate Secretary at 73 Front Street, Hamilton, HM 12, Bermuda,+ 441 294-3309, and are also available electronically at www.sedar.com.

This document does not constitute an offer or a solicitation to any Person in any jurisdiction in which such offer or solicitation is unlawful. The Offer is not being made to, nor will deposits be accepted from or on behalf of, Shareholders in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction. However, the Offerors or their agents may, in the Offerors' sole discretion, take such action as the Offerors may deem necessary to make the Offer in any jurisdiction and extend the Offer to Shareholders in such jurisdiction.

February 11, 2014

OFFER TO PURCHASE

any or all of the issued and outstanding common shares of

BROOKFIELD OFFICE PROPERTIES INC.

for consideration for each BPO Common Share of one BPY Unit or $20.34 in cash at the election
of each holder, subject, in each case, to pro-ration as set out herein.

THE OFFER WILL BE OPEN FOR ACCEPTANCE UNTIL 11:59 PM (LOCAL TIME) ON MARCH 19, 2014 UNLESS THE OFFER IS EXTENDED (the "Expiry Time") OR WITHDRAWN BY THE OFFERORS.

Brookfield Property Partners L.P. ("Brookfield Property Partners" or "BPY") and its indirect subsidiaries, Brookfield Property Split Corp. ("BOP Split") and Brookfield Office Properties Exchange LP ("Exchange LP" and, collectively with BPY and BOP Split, the "Offerors") hereby offer (the "Offer") to purchase, upon the terms and subject to the conditions described herein, all of the issued and outstanding common shares (the "BPO Common Shares") of Brookfield Office Properties Inc. ("BPO"), including the BPO Common Shares that may become issued and outstanding after the date of the Offer and prior to the Expiry Time upon the exercise of options or any other rights to acquire BPO Common Shares (such options or rights, the "Other Securities"), other than BPO Common Shares held by the Offerors and their subsidiaries. Under the Offer, each holder of BPO Common Shares (each, a "Shareholder") may elect to receive, for each BPO Common Share tendered by such Shareholder, one non-voting limited partnership unit of Brookfield Property Partners (the "BPY Units") or $20.34 in cash, subject, in each case, to pro-ration as set out herein (the "Offered Consideration"). The total number of BPY Units that may be issued under the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction shall not exceed 186,230,125 and the total amount of cash available under the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction shall not exceed $1,865,692,297, which equates to approximately 67% and 33%, respectively, of the total number BPO Common Shares to be acquired under the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction. Shareholders who tender in the Offer but do not make an election between BPY Units and cash will be deemed to have elected to receive BPY Units.

Canadian Shareholders can elect to receive, in lieu of BPY Units, exchangeable limited partnership units of Exchange LP (the "Exchange LP Units"). Canadian Shareholders who tender in the Offer but do not make an election between BPY Units and Exchange LP Units will be deemed to have elected to receive BPY Units.

The BPO Common Shares are listed and posted for trading on the Toronto Stock Exchange (the "TSX") and the New York Stock Exchange (the "NYSE") under the symbol "BPO". The closing prices and 30-day volume weighted average prices of the BPO Common Shares on the TSX and the NYSE on September 27, 2013, the last trading day prior to the announcement of the Offerors' intention to make the Offer, were C$17.29 and $16.77, respectively and C$17.16 and $16.51, respectively. The closing prices of the BPO Common Shares on the TSX and the NYSE on February 6, 2014 were C$20.44 and $18.46, respectively.

The BPY Units are listed and posted for trading on the TSX under the symbol "BPY.UN" and the NYSE under the symbol "BPY". The closing prices of the BPY Units on the TSX and the NYSE on February 6, 2014 were C$20.81 and $18.80, respectively.

The Exchange LP Units described in this document have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the "U.S. Securities Act"), and may not be offered or sold in the United States or to U.S. Persons.

An investment in the BPY Units offered pursuant to the Offer involves certain risks. For a discussion of risk factors Shareholders should consider in evaluating the Offer, see the "Risk Factors" section of this document starting on page 29.

The Offer is being made for the securities of a Canadian issuer. The historical financial information of BPO and the Offerors which is included or incorporated by reference herein is prepared in U.S. dollars and has been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS"), which differ from United States generally accepted accounting principles ("U.S. GAAP") in certain material respects, and is subject to Canadian auditing and auditor independence standards and, thus, may not be comparable to financial information presented by U.S. companies.

The enforcement by Shareholders of civil liabilities under United States federal and state securities laws may be affected adversely by the fact that BPO and the Offerors are incorporated or otherwise established and located outside the United States, that the Depositary, Information Agent, and some of their respective officers and directors are non-residents of the United States, that some of the experts named in the Circular are non-residents of the United States, and that some of the assets of BPO and the Offerors and the Persons referred to above are located outside the United States. Shareholders may not be able to sue BPO or the Offerors, or their respective officers or directors, as applicable, in a foreign court for violations of United States federal or state securities law. It may be difficult to compel a foreign issuer and its affiliates to subject themselves to a United States court's jurisdiction.

Neither the SEC nor any state securities commission has approved or disapproved of the transaction or the securities to be delivered in connection with the Offer, passed upon the merits or fairness of transaction, or passed upon the adequacy or accuracy of the disclosure in the document. Any representation to the contrary is a criminal offense.

REPORTING CURRENCY AND CURRENCY EXCHANGE RATE INFORMATION

        All references to "$" or "US$" mean U.S. dollars. References to "C$" mean Canadian dollars.

        The Bank of Canada noon rate of exchange on February 6, 2014 for Canadian dollars was $1.00 = C$1.1066.

CURRENCY OF INFORMATION AND MEANING OF CERTAIN REFERENCES

        Unless otherwise indicated, information in this document is given as of November 30, 2013.

        References in this document to BPY Units, in the context of discussion of the Offered Consideration, shall mean either BPY Units or Exchange LP Units, as applicable.

        References in this document to the Maximum Unit Consideration and the Maximum Cash Consideration are based on 527,317,970 fully-diluted BPO Common Shares outstanding.

HISTORICAL PERFORMANCE, MARKET DATA AND FINANCIAL INFORMATION

        This document contains information relating to Brookfield Property Partners' business as well as historical performance and market data for Brookfield Asset Management Inc. ("Brookfield Asset Management") and certain of its operating platforms. When considering this data, Shareholders should bear in mind that historical results and market data may not be indicative of the future results that you should expect from Brookfield Property Partners.

        Unless otherwise indicated, the financial information contained in this document has been prepared in accordance with IFRS. All figures are unaudited unless otherwise indicated.

NOTICE REGARDING BPO INFORMATION

        Except as otherwise indicated herein, the information concerning BPO contained in this document has been taken from or is based upon publicly available information filed with Canadian and U.S. securities regulators and other public sources. BPO has not confirmed the accuracy and completeness of the information in respect of BPO contained herein. Except as otherwise indicated herein, the Offerors have no means of verifying the accuracy or completeness of any of the information contained herein that is derived from publicly available information regarding BPO or whether there has been any failure by BPO to disclose events or facts that may have occurred or may affect the significance or accuracy of any such information.

USE OF NON-IFRS MEASURES BY BROOKFIELD PROPERTY PARTNERS

        In addition to results reported in accordance with IFRS, Brookfield Property Partners uses certain non-IFRS financial measures, such as property net operating income ("NOI") and funds from operations ("FFO"). NOI and FFO do not have standard meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. NOI and FFO should not be regarded as alternatives to other financial reporting measures prepared in accordance with IFRS and should not be considered in isolation or as substitutes for measures prepared in accordance with IFRS. We define each of these measures as follows:

•

NOI: means revenues from commercial and hospitality operations of consolidated properties less direct commercial property and hospitality expenses, with the exception of depreciation and amortization of real estate assets.



•

FFO: means income, including equity accounted income, before realized gains (losses) on real estate property, fair value gains (losses) (including equity accounted fair value gains (losses)), depreciation and amortization of real estate assets, income tax expense (benefit), and less non-controlling interests.

        NOI is used as a key indicator of performance as it represents a measure over which management has a certain degree of control. Brookfield Property Partners evaluates the performance of its office segment by evaluating NOI from "Existing properties", or "same store" basis, and NOI from "Additions, dispositions and other". NOI from existing properties compares the performance of the property portfolio by excluding the effect of current and prior period dispositions and acquisitions, including developments, and "one-time items", which for the historical periods presented consists primarily of lease termination income. NOI presented within "Additions, dispositions and other" includes the results of current and prior period acquired, developed and sold

properties, as well as the one-time items excluded from the "Existing properties" portion of NOI. Brookfield Property Partners does not evaluate the performance of the operating results of the retail segment on a similar basis as the majority of its investments in the retail segment are accounted for under the equity method and, as a result, are not included in NOI. Similarly, Brookfield Property Partners does not evaluate the operating results of its other segments on a same store basis based on the nature of the investments.

        Brookfield Property Partners also considers FFO an important measure of its operating performance. Brookfield Property Partners' definition of FFO includes all of the adjustments that are outlined in the National Association of Real Estate Investments Trust ("NAREIT") definition of funds from operations, including the exclusion of gains (or losses) from the sale of real estate property, the add back of any depreciation and amortization related to real estate assets and the adjustment for unconsolidated partnerships and joint ventures. In addition to the adjustments prescribed by NAREIT, Brookfield Property Partners also makes adjustments to exclude any unrealized fair value gains (or losses) that arise as a result of reporting under IFRS, and income taxes that arise as certain of its subsidiaries are structured as corporations as opposed to real estate investment trusts ("REITs"). These additional adjustments result in an FFO measure that is similar to that which would result if the company was organized as a REIT that determined net income in accordance with U.S. GAAP, which is the type of organization on which the NAREIT definition is premised. Brookfield Property Partners' FFO measure will differ from other organizations applying the NAREIT definition to the extent of certain differences between the IFRS and U.S. GAAP reporting frameworks, principally related to the recognition of lease termination income, which do not have a significant impact on the FFO measure reported. Because FFO excludes fair value gains (losses), including equity accounted fair value gains (losses), realized gains (losses) on real estate property, depreciation and amortization of real estate assets and income taxes, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs and interest costs, providing perspective not immediately apparent from net income. Brookfield Property Partners reconciles FFO to net income rather than cash flow from operating activities as it believes net income is the most comparable measure.

        Brookfield Property Partners does not utilize net income on its own as a key metric in assessing the performance of its business because, in Brookfield Property Partners' view, it does not provide a consistent or complete measure of the ongoing performance of the underlying operations. Nevertheless, Brookfield Property Partners recognizes that others may wish to utilize net income as a key measure and therefore provides a reconciliation of net income to NOI and FFO on pages A-52 and A-67 in this document.

        Brookfield Property Partners urges Shareholders to review the IFRS financial measures contained herein, including the financial statements, the notes thereto, Brookfield Property Partners' pro forma financial statements and the other financial information contained herein, and not to rely on any single financial measure to evaluate Brookfield Property Partners.

FORWARD LOOKING INFORMATION

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

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

        Factors related to the Offer that could cause actual results to differ materially from those contemplated or implied by forward-looking information include, but are not limited to: the length of time necessary to consummate the Offer may be longer than anticipated; problems may arise in successfully integrating the business of Brookfield Property Partners and BPO; Brookfield Property Partners may not realize the anticipated synergies and other benefits following the Offer if the Offerors do not acquire 100% of the BPO Common Shares; the Offer may involve unexpected costs; and the business of Brookfield Property Partners and BPO may suffer as a result of uncertainty surrounding the Offer.

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

        The Offerors caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on forward-looking statements or information, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, the Offerors do not undertake any obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise.

TABLE OF CONTENTS

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SPECIAL FACTORS

1.     BACKGROUND TO THE OFFER

        In furtherance of Brookfield Asset Management's goal of establishing itself as the asset manager of choice for investors in real estate, infrastructure, power and private equity, with a flagship publicly-traded partnership for each of the real estate, infrastructure and power sectors, Brookfield Asset Management announced in 2012 its intention to form Brookfield Property Partners as a leading commercial real estate owner, operator and investor operating globally and Brookfield's primary entity to own and operate commercial property assets on a global basis. In April 2013, Brookfield Property Partners acquired from Brookfield Asset Management substantially all of its commercial property operations, including Brookfield Asset Management's interests in BPO. Brookfield Asset Management had owned a significant interest in BPO and its predecessor companies since its formation in 1978. In April 2013, Brookfield Asset Management completed a partial spin-off of Brookfield Property Partners to its shareholders. Brookfield Asset Management distributed 35,839,414 BPY Units to its shareholders and retained an approximately 93% economic interest in Brookfield Property Partners, through its ownership of BPY Units and Redemption-Exchange Units (as defined herein), and is the sole shareholder of the BPY General Partner and the BPY Service Providers. The spin-off of Brookfield Property Partners followed the establishment of Brookfield Infrastructure Partners L.P. in 2007 and the establishment of Brookfield Renewable Energy Partners L.P. in 2011.

        Since the spin-off of Brookfield Property Partners, numerous Shareholders have made inquiries regarding the role of BPO in the Brookfield property group and have suggested that a transaction that would allow Shareholders to exchange their BPO Common Shares for BPY Units would be well received by Shareholders.

        Beginning in June 2013, Brookfield Property Partners began assessing the feasibility of a transaction involving BPO. From June through September 2013, Brookfield Property Partners considered the terms of a potential transaction and related structuring, financing and tax considerations.

        On September 11, 2013, Richard Clark, who serves as the chief executive officer of Brookfield Property Partners and chairman of BPO, had a conversation with Dennis Friedrich, Chief Executive Officer of BPO, informing Mr. Friedrich that Brookfield Property Partners was evaluating a potential transaction involving BPO. On September 25, 2013, Mr. Clark informed Mr. Friedrich that the proposed transaction involving BPO was likely to proceed.

        On September 25, 2013, certain non-U.S. Shareholders were approached regarding a transaction involving Brookfield Asset Management and certain of its affiliates, although the specific terms and participants of such transaction were not disclosed, and were provided a form of confidentiality agreement. Confidentiality agreements were entered into with the Locked-Up Shareholders on September 26, 2013.

        On September 26, 2013, Brookfield Property Partners determined the pricing for the proposed transaction involving BPO at its investment committee meeting.

        On September 27, 2013, representatives of Brookfield Property Partners met with the board of directors of Brookfield Asset Management to discuss the potential transaction involving BPO. Brookfield Asset Management considered the terms of the potential transaction and indicated to Brookfield Property Partners that it would be supportive of such a transaction. Brookfield Property Partners asked Brookfield Asset Management to forego any equity enhancement distribution it is entitled to by contract with respect to debt incurred to finance the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction and Brookfield Asset Management agreed to do so to benefit BPY.

        On September 27, 2013, the Offer was submitted to the board of directors of Brookfield Property Partners Limited (the "BPY General Partner") for consideration. The board of directors of the BPY General Partner evaluated the Offer and unanimously approved the Offer and authorized Brookfield Property Partners' service providers to announce the intention to make the Offer and take the other steps necessary in connection with the Offer. Brookfield Asset Management supported the making of the Offer and indicated that it would provide a written consent or vote, as applicable, necessary for the Offer to be made.

        On September 27, 2013, Mr. Clark informed Mr. Friedrich of Brookfield Property Partners' intention to make the Offer and indicated that Brookfield Property Partners would be prepared to provide an overview of the Offer to the BPO Board of Directors on September 30, 2013 following announcement of the Offer.

6

Mr. Clark and Mr. Friedrich had a number of telephone conversations on September 27, 2013 regarding the Offer.

        The Locked-Up Shareholders were informed of the Offer terms after board approvals were obtained on September 27, 2013. Between September 27-29, 2013, Brookfield Property Partners negotiated the Lock-Up Agreements with the Locked-Up Shareholders. The Lock-Up Agreements were entered into on September 29, 2013. See Section 6 of the Circular, "Agreements Relating to the Offer — Lock-Up Agreements" for further details.

        On September 30, 2013, Brookfield Property Partners announced by news release its intention to make the Offer.

        Although there was not one particular methodology used to determine the Offer price, Brookfield Property Partners considered a number of factors typically considered in public real estate acquisitions in determining the Offer price. Brookfield Property Partners considered BPO's future cash flows for each of BPO's properties in operation and its development projects. Brookfield Property Partners derived its cash flow forecasts from its view of future rent, occupancy levels, leasing costs, financing costs, capital expenditures and BPO's general and administrative costs less liabilities including the market value of BPO's debt. For development projects, Brookfield Property Partners also factored in projected development and construction costs. Brookfield Property Partners also considered the relative value of BPO Common Shares compared to the value of BPY Units. In addition, Brookfield Property Partners also considered the impact of the transaction on Brookfield Property Partners' projected FFO per unit and net income per unit. Brookfield Property Partners also reviewed the stock price premiums in certain historical real estate acquisitions compared with the implied premium under the Offer. Specifically, Brookfield Property Partners reviewed the stock price premiums paid in: (1) select public North American real estate transactions completed in the last five- and ten-year periods (constituting 15 and 56 transactions, respectively); (2) select public North American real estate transactions greater than $5 billion completed in the last ten years (constituting 11 transactions); and (3) select public North American office sector transactions (without regards to deal size) completed in the last ten years (constituting 10 transactions), in each case based on publicly available information. The transactions included in categories (2) and (3) above were a subset of the transactions described in category (1) above. Brookfield Property Partners believed that the select real estate transactions described above involved acquirers and/or targets that had certain characteristics that were similar to those of Brookfield Property Partners and/or BPO based on the type of real estate assets involved, the location of assets, and other characteristics; however, these selected transactions were not directly comparable to the Offer, may not reflect all the transactions that would be relevant to an analysis of the consideration paid in the Offer, and were chosen by Brookfield Property Partners in its sole determination and without consultation with financial advisors. For the selected transactions, the median premium in the individual categories described above ranged between 10.4% and 14.1% on the day prior to announcement, and the median premium in the individual categories described above ranged between 13.1% and 17.0% to the 30-day volume weighted average priced ending on the day prior to announcement.

        Finally, Brookfield Property Partners analyzed the value of the Offer based on the closing price of BPY Units on the day immediately prior to the announcement of the transaction as compared to the price of BPO Common Shares over the five-year period immediately prior to the announcement of the Offer. During such five-year period, BPO Common Shares ranged in price from $4.46 per share to $19.91 per share. The value of the Offer exceeded BPO's stock price 99.4% of the days within such five-year period. Additionally, the value of the Offer represented a premium of 35.1% to BPO's average stock price during such five-year period.

        On the morning of September 30, 2013, Mr. Clark and Brian Kingston, Chief Investment Officer of Brookfield Property Partners, presented the Offer to the BPO Board of Directors. Bruce Flatt, Chief Executive Officer of Brookfield Asset Management, participated by telephone.

        On September 30, 2013, Brookfield Property Partners was informed that disinterested directors of BPO were evaluating the Offer.

        On October 10, 2013, Brookfield Property Partners was informed that the disinterested directors formed the BPO Independent Committee and that the BPO Independent Committee had formally retained Davies Ward Phillips & Vineberg LLP as independent counsel.

7

        On October 30, 2013, Brookfield Property Partners was informed that the BPO Independent Committee retained Morgan Stanley as the independent valuator to value BPO and the Offered Consideration.

        From October 30, 2013 through December 2013, Brookfield Property Partners provided Morgan Stanley with access to due diligence materials regarding Brookfield Property Partners. On November 8, 2013, Brookfield Property Partners participated in a management due diligence session with Morgan Stanley. A follow-up session was held with the BPO disinterested directors on November 14, 2013.

        On December 5, 2013, Brookfield Property Partners and its legal counsel met in Toronto with Morgan Stanley and legal counsel to the BPO Independent Committee. The representatives of Morgan Stanley indicated Morgan Stanley had completed its preliminary valuation analysis and expected to have the written valuations of BPO and Brookfield Property Partners finalized shortly. The representatives of Morgan Stanley briefly provided an overview to Brookfield Property Partners of the approach it was taking to the valuations, but Brookfield Property Partners was not provided with a draft of, or any information with respect to the ranges contained in, Morgan Stanley's preliminary valuation analysis. The parties commenced a discussion on the terms of the Offer. In particular, the representatives of Morgan Stanley requested an increase in the Offered Consideration generally as well as an increase in the cash portion of the Offered Consideration relative to the portion payable in BPY Units. The parties also discussed imposing a collar on the BPY Unit exchange ratio. However, Brookfield Property Partners was not willing to agree to this change to the structure of the Offer because of the uncertainty it presented to Brookfield Property Partners as to the number of BPY Units that would be issued in the transaction and given the fact that the cash payable in the Offer to Shareholders as a result of any pro-ration would serve to mitigate the impact of a change in the price of BPY Units. Between December 6-9, 2013, advisors to Brookfield Property Partners and the BPO Independent Committee continued to have discussions regarding the terms of the Offer. No changes in the terms of the Offer resulted from such discussions.

        Brookfield Property Partners held a conference call with the BPO Independent Committee on December 10, 2013 to discuss the terms of the Offer. The BPO Independent Committee once again proposed an increase to the Offered Consideration, the imposition of a collar on the BPY Unit exchange ratio, and an increase in the relative mix of cash to BPY Units. Brookfield Property Partners indicated that it was not willing to increase the percentage of cash consideration or impose a collar on the exchange ratio. Brookfield Property Partners did indicate a willingness to consider increasing the Offered Consideration, although the parties were unable to reach an agreement on any such increase. The ranges reflected in the preliminary valuation analysis were not shared with Brookfield Property Partners, and no changes were made to the terms of the Offer as a result of these discussions.

        Between December 10-19, 2013, further discussions took place between Brookfield Property Partners and the BPO Independent Committee and their respective advisors regarding the Offered Consideration. The BPO Independent Committee again requested that the overall Offered Consideration be increased. Representatives of Brookfield Property Partners and the BPO Independent Committee continued to discuss imposing a collar on the BPY Unit exchange ratio and also discussed setting the exchange ratio closer to the commencement date of the Offer. Although Brookfield Property Partners expressed a continued willingness to consider increasing the cash portion of the Offered Consideration, it remained unwilling to include a collar on the BPY Unit exchange ratio for the reasons stated above. In addition, Brookfield Property Partners was not willing to set the exchange ratio closer to commencement of the Offer because it believed that the exchange ratio set prior to announcement of the Offer was better representative of the relative value of the Offer than adjusting the exchange ratio after announcement given the impact of the announcement of the Offer on BPY Units and BPO Common Shares as well as the uncertainty it presented to Brookfield Property Partners as to the number of BPY Units that would be issued in the transaction. Discussions continued between the parties, with an emphasis on increasing the cash portion of the Offer.

        On December 19, 2013, after receiving a draft of the Valuations, Brookfield Property Partners participated in a conference call with members of the BPO Independent Committee and, after discussion, indicated its willingness to increase the cash portion of the Offered Consideration by $1.00 to $20.34 per BPO Common Share (in part, based on the draft Valuations) if the BPO Board of Directors was willing to recommend such offer to Shareholders. All other terms of the Offer would remain unchanged. Later in the day and after continued discussions, the BPO Independent Committee notified Brookfield Property Partners that the BPO

8

Board of Directors, based on the recommendation of the BPO Independent Committee, intended to recommend to Shareholders that Shareholders accept the revised Offer.

        On the morning of December 20, 2013, Brookfield Property Partners issued a press release announcing the increase in the cash portion of the Offer. Shortly thereafter, BPO issued a press release announcing the receipt of the Valuations and the BPO Board of Directors' intention to recommend to Shareholders that Shareholders accept the Offer. Brookfield Property Partners also received the final Valuations reflecting the increase in the Offered Consideration.

2.     PURPOSE AND STRUCTURE OF THE OFFER; REASONS FOR THE OFFER

        The Offerors are offering to purchase all of the BPO Common Shares not currently owned by them for, at the election of each Shareholder, one BPY Unit or $20.34 in cash, subject, in each case, to pro-ration as set out herein. The total number of BPY Units that may be issued under the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction shall not exceed 186,230,125 and the total amount of cash available under the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction shall not exceed $1,865,692,297, which equates to approximately 67% and 33%, respectively, of the total number BPO Common Shares to be acquired under the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction. Canadian Shareholders can elect to receive, in lieu of BPY Units, Exchange LP Units.

        The purpose of the Offer is to enable the Offerors to acquire additional, and preferably all, of the outstanding BPO Common Shares not already owned by Brookfield Property Partners. The Offerors and their affiliates own BPO Common Shares and BPO Preferred Shares representing an aggregate voting interest of approximately 50.5% in BPO. For information concerning the BPO Common Shares and BPO Preferred Shares owned by Brookfield Property Partners, see Section 15 of the Circular, "Beneficial Ownership of and Trading in Securities — Beneficial Ownership".

        If the conditions of the Offer are satisfied or waived and the Offerors take up and pay for a number of BPO Common Shares that constitute at least a majority of the BPO Common Shares that can be included for the purposes of "minority approval" under MI 61-101, the Offerors will undertake a Compulsory Acquisition or Subsequent Acquisition Transaction to acquire any BPO Common Shares not deposited under the Offer, subject to customary terms and conditions, in each case for the same consideration as was paid by the Offerors under the Offer, subject to pro-ration. Based on the current number of outstanding BPO Common Shares not owned by the Offerors or other persons whose shares would be required to be excluded from a minority approval vote under MI 61-101, the Offerors must take up and pay for at least 127,798,674 BPO Common Shares to be assured of obtaining Minority Approval under MI 61-101. The exact timing and details of any such transaction will depend upon a number of factors, including the number of BPO Common Shares acquired by the Offerors pursuant to the Offer. The Offerors propose to include in the Subsequent Acquisition Transaction an alternative for Canadian Shareholders to elect to have their BPO Common Shares acquired by BPO rather than the Offerors in a manner that could result in an electing Canadian Shareholder realizing different Canadian tax consequences than those that arise from tendering under the Offer. See Section 24 of this Circular, "Acquisition of BPO Common Shares Not Deposited Under the Offer".

        If the Offerors are unable to effectuate a Compulsory Acquisition or a Subsequent Acquisition Transaction as outlined above, the BPY Filing Persons would still accomplish a number of their objectives to the extent that Shareholders participate in the Offer. Specifically, the BPY Filing Persons would increase their investment in BPO, BPY would increase its public float, and BPY would give BPO investors that wanted to exchange their BPO Common Shares for BPY Units the opportunity to do so at an attractive premium. In such case, the Offerors may evaluate other available alternatives. These alternatives could include, to the extent permitted by applicable Laws, purchasing additional BPO Common Shares: (i) in the open market; (ii) in privately negotiated transactions; or (iii) in another take-over bid or exchange offer or otherwise. Any additional purchases of BPO Common Shares could be at a price greater than, equal to or less than the price to be paid for BPO Common Shares under the Offer and could be for cash or securities or other consideration.

9

        In determining the structure of the transaction, the Offerors, individually and collectively, particularly considered the following material factors:

•

An exchange offer would permit the Offerors to increase their ownership in BPO, with the possibility to acquire 100% of the BPO Common Shares either pursuant to the Offer or thereafter in a Compulsory Acquisition or Subsequent Acquisition Transaction.



•

By structuring the transaction as an "any or all" tender offer, each Shareholder is able to decide whether or not to tender their BPO Common Shares in the Offer, regardless of what other Shareholders decide to do. Shareholders will have sufficient time to make a decision whether or not to tender because the Offer will remain open for at least 35 days (plus the length of any Subsequent Offering Period). Brookfield Property Partners will be in a position to complete a Compulsory Acquisition or Subsequent Acquisition Transaction only if sufficient BPO Common Shares are tendered in the Offer.



•

The Offer would provide Shareholders with an attractive opportunity to exchange their BPO Common Shares for an interest in Brookfield's flagship public commercial property vehicle, with the amounts of BPY Units and cash consideration dependent on the election of the tendering Shareholders.



•

Shareholders who wish to tender their BPO Common Shares in the Offer have the opportunity to do so on a rollover basis with respect to the BPY Units or Exchange LP Units received as consideration. U.S. Holders (as defined herein) should be able to receive BPY Units on a tax deferred basis. For Canadian Shareholders, the Offerors will offer Exchange LP Units on a tax deferred basis that are exchangeable for BPY Units at the election of the holder. The Exchange LP Units will receive distributions per unit that are equivalent to the distributions per unit received on BPY Units.

        A number of beliefs and other factors were considered in the decision by the Offerors to undertake the Offer at the present time, including the following material factors:

•

Brookfield Property Partners has now been operating for more than six months and is now in a position to make the Offer.



•

The belief that the Offer will be well received by Shareholders based on current market conditions and inquiries from Shareholders.

        A number of other beliefs and factors were considered in the decision by the Offerors to undertake the Offer, including the following material factors:

•

The belief that a successful Offer will increase Brookfield Property Partners' exposure to BPO's office portfolio, which is one of the world's premier office portfolios, with a number of development projects in supply constrained markets.



•

The belief that full ownership of BPO will maximize the value of the combined business, by diversifying BPY's cashflow and enhancing the ability to sell some of BPY's mature, lower-growth assets and re-invest proceeds in geographies and real estate sectors with higher risk-adjusted rates of return.



•

The belief that it would be more advantageous for BPY to operate BPO as a wholly-owned subsidiary rather than a majority-owned public company, due to increased operating flexibility that wholly-owned subsidiary status would provide.



•

The belief that full ownership of BPO will allow Brookfield Property Partners to simplify its corporate structure, eliminate duplicative costs and increase the portion of its equity base invested in directly held assets.



•

The belief that the increased scale, diversification and public float of Brookfield Property Partners that will result from the Offer will improve Brookfield Property Partners' access to the capital markets and lower its cost of capital to fund its growth strategy.



•

Their familiarity with the business, operations, properties, assets, financial condition, business strategy, and prospects of BPO, the nature of the real estate industry in general, industry trends, the regulatory and legislative environment relevant to the industries in which BPO and BPY operate, and global and national economic and market conditions, both on a historical and on a prospective basis.

10

•

Since the formation of BPY as a standalone company in April 2013, numerous BPO investors have contacted BPY expressing interest in exchanging their BPO Common Shares for BPY Units.



•

Brookfield Asset Management's agreement to forego any equity enhancement distribution it is entitled to by contract as a result of debt incurred to finance the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction, which enhances the benefits to BPY.

        A number of beliefs and other factors were considered in the decision by Brookfield Asset Management to support the Offer, including the following:

•

The belief that a successful Offer will enable Brookfield Asset Management to consolidate its office portfolio with its retail, industrial and multi-family properties under a single externally-managed platform and realize efficiencies by operating its real estate business under one platform.



•

The belief that, as a diversified, global real estate vehicle, Brookfield Property Partners will be able to make opportunistic investments in geographies and real estate sectors that enable it to earn higher risk-adjusted returns and enable Brookfield Asset Management to maximize the return on its capital that is invested in the real estate sector.



•

The belief that the increased scale, diversification and public float of Brookfield Property Partners that will result from the Offer will improve Brookfield Property Partners' access to the capital markets and lower its cost of capital, improving Brookfield Property Partners' ability to be Brookfield Asset Management's primary vehicle to fund its global investments in the real estate sector.



•

The belief that a successful Offer will result in a trading price of BPY Units which more accurately reflects the underlying value of Brookfield Property Partners.

3.     PLANS FOR BPO AFTER THE OFFER; CERTAIN EFFECTS OF THE OFFER

Plans for BPO After the Offer

        Unless Brookfield Property Partners is able to complete a Compulsory Acquisition or Subsequent Acquisition Transaction, the BPY Filing Persons do not anticipate that any material changes in respect of BPO's business and affairs will occur. In particular, except as otherwise described in this document, the BPY Filing Persons have no current plans, proposals or negotiations which relate to or would result in: (i) an extraordinary corporate transaction, such as an amalgamation or arrangement, reorganization or liquidation involving BPO; (ii) any purchase, sale or transfer of a material amount of assets of BPO; (iii) any material change in BPO's present dividend policy; (iv) any change in the BPO Board of Directors or management; or (v) any other material change in BPO's corporate structure or business.

        If all of the BPO Common Shares are acquired pursuant to the Offer or a Compulsory Acquisition or Subsequent Acquisition Transaction, the BPY Filing Persons would plan to review BPO and its assets, corporate structure, capitalization, operations, properties, policies, management and personnel to determine what changes, if any, would be desirable, to best organize the activities of BPO, including evaluating the size of the BPO Board of Directors. The BPY Filing Persons expressly reserve the right to make any such changes that they deem necessary or appropriate in light of their review or in light of future developments. In addition, the BPY Filing Persons would plan to sell some of BPO's mature, lower-growth assets and use the proceeds to pay down the Acquisition Credit Facility raised in conjunction with the Offer as well as to re-invest in geographies and real estate sectors that are expected to generate higher risk-adjusted returns.

        As a result of the Offer, the Offerors' interest in BPO's net book value and net earnings will increase due to the number of BPO Common Shares acquired under the Offer. Following the consummation of a Compulsory Acquisition or Subsequent Acquisition Transaction, the Offerors' interest in such items will further increase, and the Offerors will be entitled to benefits resulting from that interest, including cash flow generated by BPO's operations and any future increase in BPO's value. Similarly, the Offerors will also bear the risk of losses generated by BPO's operations and any decrease in the value of BPO after acquiring all outstanding BPO Common Shares.

        In addition, a former Shareholder will not have the opportunity to participate in the earnings and growth of BPO (except indirectly as a BPY Unitholder to the extent such Shareholder receives BPY Units) and will not

11

have any right to vote on corporate matters. Similarly, a former Shareholder will not face the risk of losses generated by BPO's operations or decline in the value of BPO (except indirectly as a BPY Unitholder to the extent such Shareholder receives BPY Units).

        If all outstanding BPO Common Shares are tendered to the Offer, or a Compulsory Acquisition or Subsequent Acquisition Transaction takes place, BPY's ownership interest in BPO and, as the indirect parent of BPY, Brookfield Asset Management's indirect ownership in BPO, would increase from 49.2% and 44.0%, respectively, on a fully-diluted basis to 100% and 66%, respectively. Based on BPO's consolidated financial statements as of September 30, 2013, the tender of all outstanding BPO Common Shares or the completion of a Compulsory Acquisition or Subsequent Acquisition Transaction, together with the funding of the Offer through the New BPY Credit Facility, would result in (1) an increase of approximately $3.7 billion, or 68%, from BPY's existing interest in BPO's net book value of approximately $5.4 billion as of September 30, 2013, and (2) on a pro forma basis an increase of approximately $324 million, or 432%, from BPY's limited partnership existing interest in BPO's net income of approximately $75 million for the nine months ended September 30, 2013 and an increase of approximately $62 million, or 17%, from the redeemable/exchangeable and special limited partner units of the operating partnership's existing interest in BPO's net income of approximately $361 million for the nine months ended September 30, 2013.

        BPO is currently registered under the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the "Exchange Act") and listed on the NYSE under the symbol "BPO". If all outstanding BPO Common Shares are tendered or a Compulsory Acquisition or Subsequent Acquisition Transaction takes place or, as a result of the Offer, BPO decides to terminate its duty to file reports pursuant to Section 13 of the Exchange Act, BPO will no longer have outstanding any equity securities publicly traded in the United States, and the Offerors intend to promptly cause BPO (or make a request to the BPO Board of Directors) to terminate BPO's public reporting obligations with the SEC once the requirements for terminating such obligations are satisfied.

        If BPO were to deregister as an SEC reporting company, there would be a reduction in the publicly available information about BPO, and BPO's executive officers and directors would no longer be subject to the provisions of the Sarbanes-Oxley Act of 2002 and the liability provisions of the Exchange Act. Likewise, if BPO were to terminate its Exchange Act registration, Persons acquiring 5% of the BPO Common Shares would no longer be required to report their ownership under the Exchange Act. Finally, the ability of affiliates of BPO and Persons holding "restricted securities" of BPO to dispose of such securities under Rule 144 under the U.S. Securities Act of 1933, as amended, and the rules, regulations and published policies made thereunder, as now in effect and as they may be amended from time to time prior to the Effective Date (as defined herein) (the "U.S. Securities Act") may be impaired or eliminated.

        Subsequent to the completion of the Offer and a Compulsory Acquisition or Subsequent Acquisition Transaction, as applicable, the Offerors intend to apply to the NYSE and the TSX to de-list the BPO Common Shares from trading. See Section 19 of this Circular, "Effect of the Offer on the Market for BPO Common Shares, Listing and Public Disclosure by BPO".

        After the BPO Common Shares are de-listed from trading on the NYSE and the TSX, BPO is expected to remain a reporting issuer under the Securities Act and all other applicable securities laws, rules and regulations and published policies thereunder in Canada ("Canadian Securities Laws") for so long as the BPO Preferred Shares and the BPO 4.30% Notes and the BPO 4.00% Notes (collectively, the "BPO Senior Notes") remain outstanding.

Treatment of BPO Preferred Shares

        Brookfield Property Partners is not currently intending to make a concurrent offer for any of the BPO Preferred Shares, which will be unaffected by the Offer. Holders of the convertible BPO Preferred Shares (Class AAA, Series G, H, J and K) can elect to convert such BPO Preferred Shares commencing on September 30, 2015, December 31, 2015, December 31, 2014 and December 31, 2016, respectively, in each case subject to BPO's right to redeem or find substitute purchasers.

        If Brookfield Property Partners acquires 100% of the BPO Common Shares, it is Brookfield Property Partners' current intention to (i) provide holders of the outstanding convertible BPO Preferred Shares with the right to convert their shares for BPY Units rather than BPO Common Shares, (ii) make an offer (full or partial)

12

to such holders to exchange up to $100 million of their shares for equivalent shares of another subsidiary of Brookfield Property Partners, or (iii) pursue other alternatives. The non-convertible BPO Preferred Shares will remain outstanding following the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction.

Treatment of Options and Other Share Based Compensation Awards

        The Offer is being made only for BPO Common Shares and not for any Other Securities. Any holder of such Other Securities who wishes to accept the Offer should, to the extent permitted by their terms and applicable Law, exercise the rights under their Other Securities in order to obtain certificate(s) representing BPO Common Shares that may be deposited in accordance with the terms of the Offer. Any such exercise must be made sufficiently in advance of the Expiry Time to ensure that such holders will have certificates representing BPO Common Shares available for deposit prior to the Expiry Time or in sufficient time to comply with the procedures referred to in Section 3 of the Offer, "Manner of Acceptance — Procedure for Guaranteed Delivery".

        If Brookfield Property Partners acquires 100% of the BPO Common Shares, it is Brookfield Property Partners' current intention that the Options and other share based compensation awards then outstanding at BPO be redeemed for cash and/or converted into similar interests in Brookfield Property Partners. The intended approach is as follows:

(a)

Vested in-the-money Options then remaining be redeemed for a cash payment equal to the in-the-money value (i.e., the value of the Offered Consideration determined using the price of the BPY Units at the time of the exchange plus the cash amount, assuming full pro-ration, less the applicable strike price of the Option).



(b)

Unvested in-the-money Options then remaining be exchanged for unvested BPY Options on a basis that preserves the in-the-money value at the time of the exchange with the BPY Options having expiry dates and vesting terms consistent with the unvested Options exchanged.



(c)

Each outstanding out-of-the-money Option (whether vested or unvested) be exchanged for a BPY Option with a strike price equal to the value of a BPY Unit at the time of the exchange and expiry dates and vesting terms consistent with the Options to be exchanged.



(d)

DSUs and BPO restricted shares ("RSs") be exchanged for awards in respect of Brookfield Property Partners such that the fair market value is the same immediately before and after such exchange and other terms and conditions be substantially the same before and after such exchange.

        In addition to the above, holders of Options may receive an additional award of BPY Options with a strike price equal to the value of a BPY Unit at the time of award and subject to vesting terms, in order to enable them to participate in the future appreciation of units of Brookfield Property Partners.

        The holders of Options, DSUs and RSs collectively hold less than 1% of the outstanding BPO Common Shares.

        The tax consequences to holders of Options or Other Securities are not described in this document. Holders of Options and Other Securities should consult their tax advisors for advice with respect to any potential income tax consequences arising from the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction.

Treatment of BPO Senior Notes

        As of September 30, 2013, BPO had $193 million principal amount of BPO 4.30% Notes outstanding and $144 million principal amount of BPO 4.00% Notes outstanding. The BPO Senior Notes will remain outstanding following the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction.

4.     POSITION OF THE BPY FILING PERSONS REGARDING THE FAIRNESS OF THE OFFER

        The BPY Filing Persons are making the statements included in this section solely for purposes of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The BPY Filing Persons, individually and collectively, believe that the Offer is substantively and procedurally fair to unaffiliated security holders of BPO (whether those shareholders tender their BPO Common Shares to the Offer or decline to tender

13

and elect instead to remain as Shareholders, and whether or not a Compulsory Acquisition or Subsequent Acquisition Transaction is consummated).

Factors Supportive of the Offerors' Fairness Determination

        The BPY Filing Persons, individually and collectively, believe that the transaction is fair to unaffiliated security holders of BPO. The BPY Filing Persons, individually and collectively, base their belief on the following material factors, each of which, in their judgment, supports their view as to the substantive fairness of the transaction:

•

Based on the closing prices of C$20.00 and $19.34 per BPY Unit on the TSX and the NYSE, respectively, on September 27, 2013, depending on whether a Shareholder receives (i) only BPY Units, (ii) only cash, or (iii) a combination, assuming full pro ration, the Offer has the values set out below, representing the premiums to the historic trading prices of BPO Common Shares set out below:

•

As of September 30, 2013, BPO's IFRS book value was $21.03 per BPO Common Share and Brookfield Property Partners' IFRS book value was $26.09 per unit. Based on the Exchange Ratio and a Brookfield Property Partners' pro forma book value of $24.16 per unit, Shareholders will realize a 15% increase in the IFRS book value per security on the BPY Units they receive.



•

The midpoint of the value of the BPY Units as determined by Morgan Stanley in the Valuations and the value of the cash consideration in the Offer are each higher than the midpoint of the value of the BPO Common Shares as determined by Morgan Stanley in the Valuations.



•

Brookfield Property Partners' current distribution policy targets a pay-out ratio of approximately 80% of FFO and Brookfield Property Partners pays a quarterly distribution of $0.25 per BPY Unit. Assuming the BPY quarterly distribution amount remains unchanged, Shareholders will realize an increase of 79% in distributions per security on BPY Units that they receive.



•

The combination of BPO and Brookfield Property Partners will create one of the largest, most globally diversified commercial property companies with assets in the world's most dynamic markets. In addition to a premier office portfolio in the United States, Canada, Australia and the United Kingdom composed of properties totaling over 88 million square feet, an investment in Brookfield Property Partners will provide Shareholders with exposure to: (i) one of the highest quality and fastest growing retail shopping center platforms in the United States; (ii) over 64 million square feet of industrial and logistics assets in the United States and Europe; (iii) approximately 20,000 high quality residential apartments; and (iv) the full breadth of Brookfield's real estate business development capabilities, which have originated more than $17 billion of investments in the real estate sector since 1989.



•

Shareholders who receive cash consideration will be able to monetize their investment in BPO, subject to applicable pro-ration, at the Offer premium without incurring brokerage and other costs typically associated with market sales.



•

Canadian Shareholders who receive Exchange LP Units pursuant to the Offer can obtain a full or partial deferral of capital gains for Canadian federal income tax purposes. In addition, Shareholders who are U.S. taxpayers should benefit from U.S. tax deferred treatment with respect to BPY Units received pursuant to the Offer.

14

•

Shareholders who do not tender their BPO Common Shares in the Offer or otherwise waive their dissent rights will be entitled, in connection with a Compulsory Acquisition or Subsequent Acquisition Transaction, if any, to demand the appraisal of their BPO Common Shares by following the procedures required by the CBCA. See Section 24 of the Circular, "Acquisition of BPO Common Shares Not Deposited Under the Offer".



•

Brookfield Property Partners will undertake a Compulsory Acquisition or Subsequent Acquisition Transaction, subject to customary terms and conditions, if at least a majority of the BPO Common Shares that can be included for the purposes of "minority approval" under MI 61-101 have been acquired under the Offer. See Section 24 of the Circular, "Acquisition of BPO Common Shares Not Deposited Under the Offer".



•

There are no unusual requirements or conditions to the Offer and there is no financing condition to the Offer.

        In addition to the factors described above, the BPY Filing Persons, individually and collectively, believe that the Offer is procedurally fair to unaffiliated security holders of BPO, based on the following material factors:

•

BPO announced that its board of directors established a BPO Independent Committee of independent directors. The BPY Filing Persons did not participate in or have any influence over the deliberative process of, or the conclusions reached by, the BPO Independent Committee or the negotiating positions of the BPO Independent Committee.



•

The BPO Independent Committee appointed Morgan Stanley as its exclusive financial advisor and Davies Ward Phillips & Vineberg LLP as legal advisor.



•

Pursuant to MI 61-101, (i) the BPO Independent Committee has selected Morgan Stanley and supervised the preparation of the Valuations and (ii) any Subsequent Acquisition Transaction will require approval by a majority of the votes cast by unaffiliated Shareholders present in person or represented by proxy at a shareholder meeting (which may include votes in respect of BPO Common Shares tendered to the Offer).



•

The amount of the Offered Consideration was negotiated between the Offerors and the BPO Independent Committee, resulting in an increase of $1.00 in the cash consideration per BPO Common Share to $20.34 per share.



•

Each Shareholder will be able to decide whether or not to tender BPO Common Shares in the Offer. If a Compulsory Acquisition or Subsequent Acquisition Transaction is completed, any Shareholder who did not tender to the Offer will be entitled to receive the same consideration that such Shareholder would have received in the Offer, subject to pro-ration.



•

Shareholders will have sufficient time to make a decision whether or not to tender because the Offer will remain open for 35 days (plus the length of any Subsequent Offering Period).



•

If the Offer is amended to include any additional material information, the Offerors will, if necessary to allow adequate dissemination and investor response, extend the Offer for a sufficient period to allow Shareholders to consider the amended information.



•

The BPO Board of Directors has been allowed a reasonable period of time since BPY's announcement of its intention to commence the Offer to develop its position with respect to the Offer. On December 20, 2013, BPO announced that the BPO Board of Directors, upon receiving the recommendation of the BPO Independent Committee, intends to unanimously recommend that Shareholders accept the Offer.

Factors Not Supportive of the Offerors' Fairness Determination

        The BPY Filing Persons, individually and collectively, also considered the following factors, each of which was considered negative in their considerations concerning the substantive and procedural fairness of the terms of the transaction to unaffiliated security holders of BPO:

•

Because Brookfield Property Partners holds an aggregate voting interest in BPO of approximately 50.5% and is not prepared to pursue or support a transaction in which it would sell or otherwise dispose of its

15

interest in BPO, the BPO Board of Directors is constrained in its ability to undertake a sale process with third parties.

•

With respect to the Offered Consideration, the financial interest of the BPY Filing Persons in acquiring the BPO Common Shares for as low a price as possible is adverse to the financial interest of unaffiliated Shareholders in selling their BPO Common Shares for as high a price as possible.



•

In light of the total amount of cash available under the Offer relative to the size of the Offer, it is likely that Shareholders who elect to receive a cash payment for their BPO Common Shares will receive less cash than they elected to receive due to pro-ration. Similarly, in light of the total amount of BPY Units that may be issued under the Offer relative to the size of the Offer, it is also likely that Shareholders who elect to receive BPY Units will receive fewer BPY Units than they elected to receive due to pro-ration. Moreover, the value of the cash consideration ($20.34 per BPO Common Share) may be different than the value of a BPY Unit. The closing price of the BPY Units on the NYSE on September 27, 2013 was $19.34 and the closing price of the BPY Units on the NYSE on February 6, 2014 was $18.80. As a result, due to pro ration a Shareholder may receive consideration with a different value than the Shareholder elected to receive. See "Risk Factors — Risks Relating to the Offer — Shareholders may not receive their desired mix of BPY Units and/or cash in the Offer or in any Compulsory Acquisition or Subsequent Acquisition Transaction due to pro-ration".



•

The BPO Common Shares have in the past traded at higher levels than the price represented by the Offered Consideration. Prior to the Offer being announced, the BPO Common Shares reached an all-time high trading price of $32.81 per share on the NYSE in February 2007 and an all-time low trading price of $4.11 per share on the NYSE in March 2009. This trading history suggests that certain of the Shareholders may have acquired their BPO Common Shares at prices higher than the Offered Consideration.



•

The Offer is not subject to a minimum tender condition and the Offerors will acquire any or all of the BPO Common Shares that are tendered to the Offer. As a result, the trading liquidity for BPO Common Shares not deposited under the Offer may be reduced, which might affect the price of the BPO Common Shares and the ability of a Shareholder to dispose of its BPO Common Shares.



•

Shareholders who do not tender their BPO Common Shares to the Offer may be forced to sell their BPO Common Shares pursuant to a Compulsory Acquisition or Subsequent Acquisition Transaction.



•

A majority of BPO directors who are not employees of BPO are not expected to appoint or retain an unaffiliated representative who would act solely on behalf of unaffiliated security holders of BPO for purposes of negotiating the terms of the Offer and/or preparing a report concerning the fairness of the Offer.

Factors Not Considered

        In reaching their conclusion as to fairness, the BPY Filing Persons, individually and collectively, did not consider the following factors in their considerations concerning the substantive and procedural fairness of the terms of the transaction to unaffiliated security holders of BPO:

•

The liquidation value was not considered because BPO is a viable going concern and the BPY Filing Persons have no plans to liquidate BPO. Therefore, the Offerors believe that BPO's liquidation value is irrelevant to a determination as to whether the Offer is fair to unaffiliated security holders of BPO.



•

The BPY Filing Persons, individually and collectively, are not aware of any firm offers that have been made by a third-party during the past two years to acquire BPO and in any event have no intention of selling the BPO Common Shares owned by Brookfield Property Partners. Accordingly, the BPY Filing Persons did not consider third-party offers in reaching their conclusion as to fairness.

        Although no outside party has been engaged by the BPY Filing Persons to assess the fairness of the Offer to unaffiliated security holders of BPO, pursuant to MI 61-101, the BPO Independent Committee selected Morgan Stanley to prepare the Valuations, which are summarized herein and appended. As required by MI 61-101, the Valuations were paid for by BPY.

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        Beyond the valuation analysis referenced on page 7, the BPY Filing Persons did not establish a pre-Offer going concern value for BPO in determining the fairness of the Offered Consideration to the unaffiliated security holders of BPO because they did not believe there was a single method for determining going concern value. However, the BPY Filing Persons believe that the financial analyses prepared by Morgan Stanley in the Valuations represented potential valuations of BPO as it continues to operate its business, and, to that extent, the BPY Filing Persons considered such analyses to be forms of going concern valuations. The BPY Filing Persons considered each of these analyses in the context of the Valuations prepared by Morgan Stanley as well as various additional factors, including the historical market prices of BPO Common Shares, as an indication of the going concern value of BPO. The BPY Filing Persons expressly adopted these analyses and the Valuations prepared by Morgan Stanley, among other factors considered by the BPY Filing Persons, in reaching their conclusions regarding the fairness of the transactions.

        The foregoing discussion summarizes the material information and factors the BPY Filing Persons, individually and collectively, considered, including factors that support as well as weigh against the Offer and is not intended to be exhaustive. In view of the variety and the amount of information considered, the BPY Filing Persons did not find it practicable to, and did not, make specific assessments of, quantify, or otherwise assign relative weights to these factors in reaching their conclusion. Their view as to the fairness of the transaction to the unaffiliated security holders of BPO should not be construed as a recommendation to any Shareholder as to whether that Shareholder should tender in the Offer.

5.     RECOMMENDATION OF THE BPO BOARD OF DIRECTORS

        The Offerors did not obtain the prior approval or recommendation of the BPO Board of Directors or the BPO Independent Committee before announcing their intention to make the Offer. On December 20, 2013, BPO announced that the BPO Board of Directors, upon receiving the recommendation of the BPO Independent Committee, intends to unanimously recommend that Shareholders ACCEPT the Offer.

6.     REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS

        The following summary of the Valuations is qualified in its entirety by the full text of the Valuations appended hereto as Annex C. Shareholders are encouraged to read the full text of the Valuations appended hereto as Annex C. The Valuations have been prepared for inclusion in this document as required pursuant to MI 61-101. The Valuations do not constitute a recommendation to any Shareholder as to whether such Shareholder should tender to the Offer.

Engagement of Morgan Stanley

        Morgan Stanley was engaged by the BPO Independent Committee pursuant to a letter agreement dated December 2, 2013 (the "Morgan Stanley Engagement Agreement") to provide financial advice and assistance to the BPO Independent Committee in evaluating the Offer, including the preparation and delivery to the BPO Independent Committee of a formal valuation of the BPO Common Shares (the "BPO Valuation") and of the BPY Units (the "BPY Valuation") (together, the "Valuations"). The Morgan Stanley Engagement Agreement provides for a payment to Morgan Stanley of a fee upon the delivery by Morgan Stanley of: (i) its preliminary valuation analysis ($2.0 million); (ii) the Valuations ($2.2 million); and (iii) each subsequent financial opinion ($500,000), if requested by the BPO Independent Committee. None of the fees payable to Morgan Stanley under the Morgan Stanley Engagement Agreement are contingent upon the conclusions reached by Morgan Stanley in the Valuations or in any subsequent financial opinion, or the completion of the Offer. In addition, BPO has agreed to reimburse Morgan Stanley for its reasonable out-of-pocket expenses and to indemnify Morgan Stanley in respect of certain liabilities that might arise out of its engagement.

Credentials of Morgan Stanley

        Morgan Stanley and its affiliated entities is a global financial services firm engaged in the securities, investment management and individual wealth management businesses. Morgan Stanley's securities business is engaged in securities underwriting, trading and brokerage activities, foreign exchange, commodities and derivatives trading, prime brokerage, as well as providing investment banking, financing and financial advisory services. The Valuations are the opinions of Morgan Stanley and their form and content have been approved by a committee of senior investment banking professionals of Morgan Stanley, each of whom is experienced in merger, acquisition, divestiture, valuation and fairness opinion matters.

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Independence of Morgan Stanley

        Morgan Stanley confirms that: (i) it and its affiliated entities are not an issuer insider, associated entity or an affiliated entity of any interested party as each such term is used in MI 61-101; (ii) it and its affiliated entities are not acting as a financial advisor to any interested party in respect of the Offer; (iii) its compensation under the Morgan Stanley Engagement Agreement does not depend in whole or in part on the conclusion reached in the Valuations or the outcome of the Offer; (iv) it and its affiliated entities will not act as manager or co-manager of any soliciting dealer group formed by any interested party in connection with the Offer nor will it, as a member of any such group, perform services beyond customary soliciting dealer's functions nor will it receive more than the per security or per securityholder fee payable to other members of the group; and (v) it and its affiliated entities do not have any material financial interest in the completion of the Offer.

        During the two years preceding the date of the Valuations, Morgan Stanley received fees in the amount of approximately $320,000 from BPO for financial advisory and financial services and no fees from BPY for any such services.

Scope of Review

        In connection with the Valuations, Morgan Stanley obtained information from publicly available sources and from BPO and BPY. In addition, Morgan Stanley reviewed and relied upon (subject to the exercise of professional judgment, and except as expressly described in the Valuations, without attempting to verify independently the completeness or accuracy thereof) or carried out, among other things: management-prepared operating and financial projections for BPO and BPY, various BPY investor presentations and corporate profiles, as well as such other corporate, industry and financial market information, investigations and analyses as Morgan Stanley considered necessary or appropriate in the circumstances. Morgan Stanley also held discussions with management of each of BPO and BPY, the BPO Independent Committee and legal counsel to the BPO Independent Committee. Morgan Stanley has not, to the best of its knowledge, been denied access by BPO or BPY to any information requested by Morgan Stanley. Morgan Stanley did, however, request certain non-public information regarding certain entities in which BPY has an investment for purposes of the BPY Valuation. BPY advised Morgan Stanley that it was legally precluded from providing such information to Morgan Stanley and, as such and with the permission of the BPO Independent Committee, Morgan Stanley relied upon publicly available information with respect to these entities and discussions with BPY with respect to its strategy for these investments for the purposes of the BPY Valuation.

Prior Valuations

        Each of BPO and BPY has represented to Morgan Stanley that there are no prior valuations (as defined in MI 61-101) of BPO or BPY or of their respective securities or material assets, which have been prepared as of a date within two years preceding the date of the Valuations.

Assumptions and Limitations

        With the BPO Independent Committee's acknowledgement and agreement as provided for in the Morgan Stanley Engagement Agreement, Morgan Stanley has relied upon the accuracy, completeness and fair presentation of all data and other information obtained by it from public sources or provided to it by or on behalf of BPO and BPY, or otherwise obtained by Morgan Stanley (collectively, the "Information"). The Valuations are conditional upon such accuracy, completeness and fair presentation. With respect to the budgets, forecasts, projections and/or estimates provided to Morgan Stanley and used in its analyses, Morgan Stanley notes that projecting future results is inherently subject to uncertainty. Morgan Stanley has assumed, however, that such budgets, forecasts, projections and/or estimates were prepared using the assumptions identified therein which Morgan Stanley has been advised are (or were at the time of preparation and continue to be), in the opinion of BPO and BPY, reasonable in the circumstances and were prepared on a basis reflecting the best currently available estimates and judgments of management of BPO and BPY, respectively.

        In preparing the Valuations, Morgan Stanley has made several assumptions, including that conditions precedent to the completion of the Offer can be satisfied in due course, the disclosure in this Circular and the directors' circular of BPO will be accurate in all material respects and will comply, in all material respects, with the requirements of all applicable laws. In preparing the BPY Valuation, and with the permission of the BPO

18

Independent Committee, Morgan Stanley assumed that the Offer will result in the Offerors acquiring 100% of the BPO Common Shares not already owned by the Offerors.

        The Valuations are rendered as of December 19, 2013 on the basis of securities markets, economic and general business and financial conditions prevailing on that date and the condition and prospects, financial and otherwise, of BPO, BPY and their respective subsidiaries and affiliates as they were reflected in the Information provided to Morgan Stanley. In its analysis in connection with the preparation of the Valuations, Morgan Stanley made numerous assumptions with respect to industry performance, general business and economic conditions, and other matters, many of which are beyond the control of Morgan Stanley, BPO or BPY.

        The preparation of a valuation is a complex process and is not necessarily amenable to partial analysis or summary description. Morgan Stanley believes that its analyses must be considered as a whole and that selecting portions of the analyses or the factors considered by it, without considering all factors and analyses together, could create an incomplete view of the process underlying the Valuations. Accordingly, the Valuations should be read in their entirety.

Definition and Approach to Fair Market Value

        The Valuations are based upon techniques and assumptions that Morgan Stanley considered appropriate in the circumstances for the purposes of arriving at an opinion as to the range of fair market values of the BPO Common Shares and the range of fair market values of the BPY Units. Morgan Stanley approached the Valuations in accordance with MI 61-101, which, in the case of an insider bid such as the Offer, requires the valuator to make a determination as to the "fair market value" of not only the affected securities (i.e. the BPO Common Shares), but also the non-cash consideration (except in certain circumstances outlined in MI 61-101) to be received pursuant to the Offer.

        MI 61-101 defines "fair market value" as the monetary consideration that, in an open and unrestricted market, a prudent and informed buyer would pay a prudent and informed seller, each acting at arm's length with the other and under no compulsion to act. In accordance with MI 61-101, Morgan Stanley has made no downward adjustment to the fair market value of the BPO Common Shares to reflect the liquidity of the BPO Common Shares, the effect of the Offer on the BPO Common Shares, or the fact that the BPO Common Shares held by minority shareholders do not form part of a controlling interest. Consequently, the BPO Valuation provides a conclusion on a per BPO Common Share basis with respect to BPO's "en bloc" value, being the price at which all of the BPO Common Shares could be sold to one or more buyers at the same time.

        As Exchange LP was established for the sole purpose of the Offer, the Exchange LP Units will be exchangeable at any time on a one-for-one basis, at the option of the holder, for BPY Units, subject to their terms and applicable laws, and, as Morgan Stanley understands it, will provide a holder thereof with economic terms which are substantially equivalent to those of a BPY Unit, Morgan Stanley believes that the fair market value of a BPY Unit is an appropriate indicator of the expected fair market value of the Exchange LP Units.

BPO Valuation

        Based upon and subject to the analyses, assumptions, qualifications and limitations discussed in the BPO Valuation, in addition to other factors that it considered relevant, Morgan Stanley is of the opinion that, as of December 19, 2013, the fair market value of the BPO Common Shares is in the range of $18.50 per BPO Common Share to $21.00 per BPO Common Share.

Distinctive Material Benefits to BPY and its Affiliates

        Morgan Stanley reviewed and considered whether any distinctive material benefit would accrue to BPY or its affiliates through the acquisition of all of the BPO Common Shares not already owned by the Offerors. Morgan Stanley determined that by completing the Offer, BPY would benefit from greater direct ownership of real estate as well as a more simplified ownership structure, both of which would give BPY greater control of its assets and increase its strategic flexibility. Morgan Stanley also concluded that by completing the Offer, BPY would benefit from an enhanced public float and trading liquidity. Additionally, based on interviews with BPY management, BPY estimated that by completing the Offer, they may be able to reduce BPO general and administrative expenses by up to approximately $15 million.

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BPY Valuation

        Based upon and subject to the analyses, assumptions, qualifications and limitations discussed in the BPY Valuation, in addition to other factors that it considered relevant, Morgan Stanley is of the opinion that, as of December 19, 2013, the fair market value of the BPY Units is in the range of $19.00 per BPY Unit to $22.00 per BPY Unit.

Other Considerations

        The full text of the Valuations is appended hereto as Annex C. A draft of the Valuations dated December 18, 2013 was shared with the BPO Independent Committee and Brookfield Property Partners on December 18, 2013 (the "Draft Valuations"), and is filed as an exhibit to the Transaction Statement on Schedule 13E-3 filed with the SEC by the BPY Filing Persons. The Draft Valuations did not present any findings, make any recommendations or constitute an opinion of Morgan Stanley in any respect. The financial analyses, methodologies and assumptions used in the Valuations were substantially similar to those used in the Draft Valuations, subject to refinement and updates in the descriptions of certain of the properties and assets owned by the Offerors and BPO that were provided by the management of the Offerors and reflected in the Valuations. In addition, the Valuations took into account the $1.00 per BPO Common Share increase in the cash portion of the Offered Consideration that Brookfield Property Partners agreed to make on December 19, 2013 which was not reflected in the Draft Valuations. The estimated range of market values of the BPO Common Shares was the same in the Draft Valuations as it was in the Valuations, and the estimated range of market values of the BPY Units was the same in the Draft Valuations as it was in the Valuations.

        The Valuations and the Draft Valuations will be made available for inspection and copying at the principal executive offices of Brookfield Property Partners during its regular business hours by any BPO Shareholder or representative who has been so designated in writing. Brookfield Property Partners will also provide a copy of the Valuations or the Draft Valuations, without charge, by written or oral request directed to Brookfield Partners at the address and telephone number specified in Annex E.

7.     CONDUCT OF BPO'S BUSINESS IF THE OFFER IS NOT COMPLETED

        If the Offer is not completed because a condition of the Offer is not satisfied or because the Offerors terminate the Offer, the BPY Filing Persons expect that BPO's current management will continue to operate BPO's business substantially as presently operated. However, the BPY Filing Persons, individually and collectively, anticipate that if the Offer is not completed, the BPY Filing Persons will reevaluate their options with respect to acquiring additional BPO Common Shares. In particular, the BPY Filing Persons may consider:

•

not taking any action at that time, including not purchasing any BPO Common Shares, in which case the Shareholders would receive no consideration for their BPO Common Shares (except through sales in the open market) and would bear the risk that the trading price per BPO Common Share could decline to a price that is less than the Offered Consideration;



•

purchasing BPO Common Shares in the open market or privately-negotiated transactions, with purchases made at either market prices at the time of purchase or privately-negotiated prices, respectively, which may be higher or lower than or the same as the Offered Consideration;



•

making a new offer; or



•

attempting to negotiate a merger or other business combination with BPO, subject to compliance with applicable Laws.

        If the Offerors were to pursue any of these alternatives, it might take considerably longer for the unaffiliated Shareholders to receive any consideration for their BPO Common Shares (other than through sales in the open market) than if they had tendered their BPO Common Shares to the Offer. Any such transaction may result in proceeds per share to the unaffiliated Shareholders that are more than, less than or the same as the Offered Consideration.

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8.     DISSENTERS' RIGHTS; RULE 13E-3

Dissenters' Rights

        Under Canadian law, Shareholders will not have dissenters' rights to payment of fair value of their BPO Common Shares in connection with the Offer. However, if a Compulsory Acquisition or Subsequent Acquisition Transaction is consummated, each Shareholder at the effective time of such acquisition will have the right to exercise dissenters' rights for payment of fair value of their BPO Common Shares.

        No provision has been made to (1) grant BPO Shareholders access to the corporate files of the BPY Filing Persons or (2) obtain counsel or appraisal services at the expense of the BPY Filing Persons (other than the Valuations).

        The following summarizes provisions of the CBCA regarding dissenters' rights that would be applicable in connection with a Compulsory Acquisition or a Subsequent Acquisition Transaction. This discussion is not a complete statement of law pertaining to dissenters' rights under Canadian law. See Section 24 of the Circular, "Acquisition of BPO Common Shares Not Deposited Under the Offer".

Compulsory Acquisition

        To exercise their statutory right of Compulsory Acquisition (as defined under Section 24 of the Circular, "Acquisition of BPO Common Shares Not Deposited Under the Offer"), the Offerors must give notice (the "Offerors' Notice") to each Shareholder who did not accept the Offer (and each Person who subsequently acquires any such BPO Common Shares) (in each case, a "Dissenting Offeree") and to the Director of such proposed acquisition within 60 days after the date of the termination of the Offer and in any event within 180 days from the date of the Offer. The Offerors' Notice shall state that (i) holders of more than 90% of the BPO Common Shares subject to the Offer have accepted the Offer, (ii) the Offerors are bound to take up and pay for or have taken up and paid for the BPO Common Shares of Shareholders who accepted the Offer, (iii) a Dissenting Offeree is required to elect to transfer its BPO Common Shares to the Offerors on the terms on which the Offerors acquired the BPO Common Shares of Shareholders who accepted the Offer or to demand payment of the fair value of the BPO Common Shares by so notifying the Offerors within 20 days after it receives the Offerors' Notice, (iv) a Dissenting Offeree that does not notify the Offerors of such election is deemed to have elected to transfer its BPO Common Shares on the same terms on which the Offerors acquired the BPO Common Shares of Shareholders who accepted the Offer, and (v) a Dissenting Offeree must send its BPO Common Shares within 20 days after receiving the Offerors' Notice.

        Within 20 days of giving the Offerors' Notice, the Offerors must pay or transfer to BPO the consideration the Offerors would have had to pay or transfer to the Dissenting Offerees if they had elected to accept the Offer, to be held in trust for the Dissenting Offerees. Within 20 days after receipt of the Offerors' Notice, each Dissenting Offeree must send the certificates representing the BPO Common Shares held by such Dissenting Offeree to BPO and must elect to either demand payment of the fair value of such BPO Common Shares held by such Dissenting Offeree or to transfer such BPO Common Shares to the Offerors on the terms of the Offer. A Dissenting Offeree who does not, within 20 days after receiving the Offerors' Notice, notify the Offerors that the Dissenting Offeree is electing to demand payment of the fair value of the Dissenting Offeree's BPO Common Shares is deemed to have elected to transfer such BPO Common Shares to the Offerors on the same terms that the Offerors acquired BPO Common Shares from Shareholders who accepted the Offer. If a Dissenting Offeree has elected to demand payment of the fair value of such BPO Common Shares, the Offerors may, within 20 days after paying or transferring to BPO the consideration the Offerors would have had to pay or transfer to the Dissenting Offerees if they had elected to accept the Offer, apply to court to fix the fair value of such BPO Common Shares of such Dissenting Offeree. If the Offerors fail to apply to such court within 20 days after they made the payment or transferred the consideration to BPO, the Dissenting Offeree may then apply to the court within a further period of 20 days to have the court fix the fair value. If no such application is made by that Dissenting Offeree or the Offerors within such periods, the Dissenting Offeree will be deemed to have elected to transfer its BPO Common Shares to the Offerors on the same terms on which the Offerors acquired BPO Common Shares from the Shareholders who accepted the Offer. Any judicial determination of the fair value of the BPO Common Shares could be more or less than the amount paid per BPO Common Share pursuant to the Offer.

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Subsequent Acquisition Transaction

        Any Subsequent Acquisition Transaction (as defined under Section 24 of the Circular, "Acquisition of BPO Common Shares Not Deposited Under the Offer") may result in Shareholders having the right to dissent in respect thereof and demand payment of the fair value of their BPO Common Shares. The exercise of such right of dissent, if certain procedures are complied with by the Shareholder, could lead to a judicial determination of fair value required to be paid to such Dissenting Offeree for its BPO Common Shares. The fair value so determined could be more or less than the amount paid per BPO Common Share pursuant to such transaction or pursuant to the Offer. The exact terms and procedures of the rights of dissent available to Shareholders will depend on the structure of the Subsequent Acquisition Transaction and will be fully described in the proxy circular or other disclosure document provided to Shareholders in connection with the Subsequent Acquisition Transaction.

Rule 13e-3

        Because the Offerors own BPO Common Shares and BPO Preferred Shares representing an aggregate voting interest of approximately 50.5% in BPO, they are "affiliates" of BPO and therefore the transactions contemplated in this document constitute a "going private" transaction under Rule 13e-3 under the Exchange Act. Rule 13e-3 under the Exchange Act requires, among other things, that certain financial information concerning BPO and certain information relating to the fairness of the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction to unaffiliated Shareholders be filed with the SEC and disclosed to Shareholders prior to consummation of the Offer and such transaction. The Offerors have provided or incorporated by reference such information in this document, a Transaction Statement on Schedule 13e-3 and a Tender Offer Statement on Schedule 14D-1F and the respective exhibits thereto filed with the SEC. If permitted by applicable Laws, subsequent to the completion of the Offer, and a Compulsory Acquisition or Subsequent Acquisition Transaction, as applicable, the Offerors intend to apply to the NYSE and the TSX to de-list the BPO Common Shares from trading and to cause BPO to terminate its public reporting obligations under U.S. securities laws.

9.     INTERESTS OF CERTAIN PERSONS IN THE OFFER.

        Certain Interests of Brookfield Asset Management, Brookfield Property Partners, BOP Split and Exchange LP.    In considering the fairness of the consideration to be received in the Offer, Shareholders should be aware that Brookfield Asset Management, Brookfield Property Partners, BOP Split and Exchange LP have certain interests that present actual or potential conflicts of interest in connection with the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction, including that their financial interests with regard to the price per BPO Common Share offered in the Offer are generally adverse to the financial interests of the Shareholders being asked to tender their BPO Common Shares. None of the foregoing persons have formed any special or independent committee with respect to the Offer.

        Financial Interests.    The interests of Brookfield Asset Management, Brookfield Property Partners, BOP Split and Exchange LP in respect of the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction are different from the interests of Shareholders because such entities have an interest in acquiring the BPO Common Shares for as low a price as possible and Shareholders have an interest in selling their BPO Common Shares for as high a price as possible. The interests of the directors, officers and other affiliates of each of Brookfield Asset Management, Brookfield Property Partners, BOP Split and Exchange LP in the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction may be the same as or different from the interests of Shareholders. For example, while in general the interests of Brookfield Asset Management, Brookfield Property Partners, BOP Split and Exchange LP's respective directors and officers in respect of the Offer will be aligned with such entities' respective interests, some of such persons own BPO Common Shares or Options convertible into BPO Common Shares, which they are entitled to tender to the Offer for the same price per BPO Common Share that is available to Shareholders, and/or own DSUs with a value derived from the value of the BPO Common Shares.

        Increase in Equity Enhancement Distributions.    In considering the Offer, Shareholders should be aware that, although Brookfield Asset Management has agreed to forego any equity enhancement distribution it is entitled

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to by contract with respect to debt incurred to finance the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction, a successful Offer will result in Brookfield Asset Management receiving an increased quarterly equity enhancement distribution due to the expected increased capitalization value of Brookfield Property Partners as a result of the issuance of BPY Units in the Offer and in any Compulsory Acquisition or Subsequent Acquisition Transaction. See "Risk Factors — Risks Relating to Brookfield Property Partners' Relationship with Brookfield — Brookfield Property Partners' organizational and ownership structure, as well as its contractual arrangements with Brookfield, may create significant conflicts of interest that may be resolved in a manner that is not in the best interests of Brookfield Property Partners or the best interests of the BPY Unitholders" for further details.

        Interlocking Directors and Officers.    In considering the Offer and any position taken by BPO with respect to the Offer, Shareholders should be aware that certain officers and directors of BPO have interests in connection with the Offer which may present them with certain actual or potential conflicts of interest. Richard B. Clark is chairman and a director of BPO, serves as the chief executive officer of Brookfield Property Partners, is Chief Executive Officer of Brookfield's global property group, a Senior Managing Partner of Brookfield Asset Management, a member of the board of directors of General Growth Properties, Inc. and Chairman of Rouse Properties, Inc. Jack L. Cockwell is a director of BPO, a director and Group Chairman of Brookfield Asset Management and a director of a number of Brookfield Asset Management's affiliates. Mr. Cockwell was President and Chief Executive Officer of Brookfield Asset Management from 1991 to 2001 and was a senior executive of Brookfield Asset Management's predecessor companies. Michael Hegarty is a director of BPO and is a director of Rouse Properties, Inc. Brian W. Kingston is a director of BPO, serves as President and Chief Investment Officer of Brookfield Property Partners and is a Senior Managing Partner of Brookfield Asset Management. Robert L. Stelzl is a director of BPO and is a director and Chair of Brookfield Residential Properties Inc. John E. Zuccotti is a director of BPO and is the Chairman of the Board of Directors of Brookfield Financial Properties LLC, a holding subsidiary of BPO which holds interests in certain BPO properties in the United States.

        Options, DSUs and RSs.    Certain officers and directors of BPO hold Options, DSUs and RSs. All vested Options may be exercised in accordance with their terms and the BPO Common Shares acquired thereby may be tendered in the Offer. If Brookfield Property Partners acquires 100% of the BPO Common Shares, it is Brookfield Property Partners' current intention that the Options and other share based compensation awards then outstanding at BPO be redeemed for cash and/or converted into similar interests in Brookfield Property Partners. The intended approach is as follows:

(a)

Vested in-the-money Options then remaining be redeemed for a cash payment equal to the in-the-money value (i.e., the value of the Offered Consideration determined using the price of the BPY Units at the time of the exchange plus the cash amount, assuming full pro-ration, less the applicable strike price of the Option).



(b)

Unvested in-the-money Options then remaining be exchanged for unvested BPY Options on a basis that preserves the in-the-money value at the time of the exchange with the BPY Options having expiry dates and vesting terms consistent with the unvested Options exchanged.



(c)

Each outstanding out-of-the-money Option (whether vested or unvested) be exchanged for a BPY Option with a strike price equal to the value of a BPY Unit at the time of the exchange and expiry dates and vesting terms consistent with the Options to be exchanged.



(d)

DSUs and RSs be exchanged for awards in respect of Brookfield Property Partners such that the fair market value is the same immediately before and after such exchange and other terms and conditions be substantially the same before and after such exchange.

        In addition to the above, holders of Options may receive an additional award of BPY Options with a strike price equal to the value of a BPY Unit at the time of award and subject to vesting terms, in order to enable them to participate in the future appreciation of units of Brookfield Property Partners.

        Indemnification.    The Offerors expect that all rights to indemnification, advancement of expenses and exculpation currently in effect in favor of the present and former directors or officers of BPO, including on the

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terms provided in BPO's articles of incorporation and bylaws currently in effect, with respect to matters occurring prior to the consummation of the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction will survive the consummation of the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction and continue in full force and effect thereafter.

10.   CERTAIN UNAUDITED FINANCIAL PROJECTIONS

Base Case Financial Projections

        Brookfield Property Partners does not as a matter of course make public projections as to future sales, earnings, or other results. However, the management of Brookfield Property Partners has prepared the base case financial projections of Brookfield Property Partners (the "Base Case Financial Projections") set forth below in connection with Morgan Stanley's preparation of the Valuations. The Base Case Financial Projections were not prepared with a view toward public disclosure or with a view toward complying with the published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, or IFRS, but, in the view of the management of Brookfield Property Partners, the Base Case Financial Projections were prepared on a reasonable basis, reflect the best available estimates and judgments available at the time they were prepared, and present, to the best of management's knowledge and belief, the expected course of action and the expected future financial performance of Brookfield Property Partners. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this document are cautioned not to place undue reliance on the Base Case Financial Projections.

        In developing the Base Case Financial Projections, management of Brookfield Property Partners made numerous assumptions with respect to Brookfield Property Partners for the period from 2014 to 2015, including:

•

the acquisition of all of the outstanding BPO Common Shares by the end of the second quarter of 2014 at the Offer consideration per BPO Common Share of either one BPY Unit or $19.34 in cash (subject to pro-ration);



•

the sale of certain assets of BPO and Brookfield Property Partners in 2014 and 2015;



•

continued investments in the Brookfield Strategic Real Estate Partners series of funds and certain other future real estate funds;



•

BPO's distribution of all free cash flows to Brookfield Property Partners starting 2015; and



•

the repayment of the Acquisition Credit Facility in full by 2015.

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25

Adjusted Financial Projections

        After the Base Case Financial Projections were provided to Morgan Stanley, Morgan Stanley requested that Brookfield Property Partners prepare an alternative set of financial projections (the "Adjusted Financial Projections") based upon the following assumptions which differ from the assumptions considered in the Base Case Financial Projections:

•

the increase in the Offer price to $20.34 per BPO Common Share;



•

Brookfield Property Partners would not make new investments in the Brookfield Strategic Real Estate Partners series of funds and certain other future real estate funds as contemplated by the Base Case Financial Projections; and



•

the inclusion of the Manhattan West development project in the BPO business plan (which was excluded from the Base Case Financial Projections).

        In addition, the Adjusted Financial Projections (i) did not reflect the sale of certain assets of BPO and Brookfield Property Partners in 2014 and 2015 and (ii) reflected an increase in the number of issued and outstanding BPO Common Shares (calculated on a fully-diluted basis) in the third quarter of 2013 as compared to the number of BPO Common Shares in the second quarter of 2013 reflected in the Base Case Financial Projections.

        The Adjusted Financial Projections were not prepared with a view toward public disclosure or with a view toward complying with the published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, or IFRS. The Adjusted Financial Projections were prepared on the same basis as the Base Case Financial Projections, which, in the view of the management of Brookfield Property Partners, were prepared on a reasonable basis and reflect the best available estimates and judgments at the time they were prepared, but were adjusted to reflect the assumptions described immediately above. This information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this document are cautioned not to place undue reliance on the Adjusted Financial Projections.

        The Adjusted Financial Projections are set forth below.

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