EQUITY ACCOUNTED INVESTMENTS

The partnership has investments in joint arrangements that are joint ventures, and also has investments in associates. Joint ventures hold individual commercial properties and portfolios of commercial properties and developments that the partnership owns together with co-owners where decisions relating to the relevant activities of the joint venture require the unanimous consent of the co-owners. Details of the partnership’s investments in joint ventures and associates, which have been accounted for in accordance with the equity method of accounting, are as follows:



			Proportion of ownership interests/voting rights held by the partnership				Carrying value
(US$ Millions)	Principal activity	Principal place of business	Dec. 31, 2019		Dec. 31, 2018		Dec. 31, 2019		Dec. 31, 2018
Joint ventures
Canary Wharf Joint Venture⁽¹⁾	Property holding company	United Kingdom	50	%	50	%	$	3,578	$	3,270
Ala Moana Center, Hawaii	Property holding company	United States	50	%	50	%	1,946		1,611
Manhattan West, New York	Property holding company	United States	56	%	56	%	1,918		1,619
BPR JV Pool A	Property holding company	United States	50	%	50	%	1,882		1,791
BPR JV Pool B	Property holding company	United States	51	%	51	%	1,366		1,217
Fashion Show, Las Vegas	Property holding company	United States	50	%	50	%	832		881
BPR JV Pool C	Property holding company	United States	50	%	50	%	777		756
Grace Building, New York	Property holding company	United States	50	%	50	%	716		581
BPR JV Pool D	Property holding company	United States	48	%	48	%	649		693
Southern Cross East, Melbourne	Property holding company	Australia	50	%	50	%	466		402
The Grand Canal Shoppes, Las Vegas	Property holding company	United States	50	%	50	%	414		608
One Liberty Plaza, New York	Property holding company	United States	51	%	51	%	409		425
680 George Street, Sydney	Property holding company	Australia	50	%	50	%	340		319
Brookfield Brazil Retail Fundo de Investimento em Participaçõe (“Brazil Retail”)	Holding company	Brazil	46	%	46	%	335		309
Baybrook Mall, Texas	Property holding company	United States	51	%	51	%	332		235
Brookfield D.C. Office Partners LLC ("D.C. Fund"), Washington, D.C.	Property holding company	United States	51	%	51	%	283		295
The Mall in Columbia, Maryland	Property holding company	United States	50	%	50	%	282		268
BPR JV Pool F	Property holding company	United States	51	%	51	%	278		185
BPR JV Pool G	Property holding company	United States	68	%	68	%	254		225
Miami Design District, Florida	Property holding company	United States	22	%	22	%	252		286
BPR JV Pool E⁽²⁾	Property holding company	United States	—	%	35	%	—		629
Forest City Joint Ventures⁽³⁾	Property holding company	United States	—	%	—	%	—		1,390
Shops at Merrick Park, Florida⁽²⁾	Property holding company	United States	—	%	55	%	—		266
Other⁽⁴⁾	Various	Various	14% - 55%		12% - 70%		3,119		3,592
							20,428		21,853
Associates
Diplomat Resort and Spa (“Diplomat”)⁽⁵⁾	Property holding company	United States	—	%	90	%	—		390
Brookfield Premier Real Estate Partners Pooling LLC (“BPREP”)⁽⁶⁾	Property holding company	United States	—	%	7	%	—		106
Other	Various	Various	23% - 31%		23% - 31%		336		349
							336		845
Total							$	20,764	$	22,698


⁽¹⁾	Stork Holdco LP is the joint venture through which the partnership acquired Canary Wharf Group plc in London.


⁽²⁾	The partnership acquired its joint venture partner’s incremental interest in the BPR JV Pool E and Shops at Merrick Park during 2019. The partnership will now consolidate the results of these investments. See below for further information.


⁽³⁾	Includes the impact of the deconsolidation of BSREP III investments, primarily Forest City. See below for further information.


⁽⁴⁾	Other joint ventures consists of approximately 40 joint ventures, all of which have a carrying value below $250 million.


⁽⁵⁾	In the fourth quarter of 2019, the partnership reclassified its interest in the Diplomat to assets held for sale.


⁽⁶⁾	In the first quarter of 2019, the partnership accounted for its interest in BPREP as a financial asset and is no longer an equity accounted investment.

(a) 2019 Transactions

The deconsolidation of BSREP III resulted in a decrease to equity accounted investments of $1,434 million. Please see Note 5, Investment Properties for further information.

In the fourth quarter of 2019, the partnership acquired its joint venture partners’ incremental interest in Park Meadows in Colorado, Towson Town Center in Maryland, Perimeter Mall in Georgia, and Shops at Merrick Park in Florida, to bring its ownership to 100% and concurrently sold its interest in Bridgewater Commons in New Jersey to the joint venture partner. Prior to the acquisition, the partnership’s joint venture interest was reflected as equity accounted investments. As a result, the partnership gained control of the investments and consolidate its results.

(b) 2018 Transactions

The partnership obtained control of GGP during the third quarter of 2018 following the acquisition of the common shares not previously held by the partnership and its subsidiaries. Subsequent to this transaction, the partnership is consolidating the financial results of GGP, including its interests in properties held through joint ventures. The partnership’s 34% interest in GGP prior to the acquisition was derecognized. Please see Note 4, Acquisition of GGP Inc., for further information.

The partnership obtained control of Forest City during the fourth quarter of 2018 following the acquisition in the BSREP III fund. Forest City included properties held through joint ventures. As mentioned above, these investments were deconsolidated in 2019.

The following table presents the change in the balance of the partnership’s equity accounted investments as of December 31, 2019 and 2018:



(US$ Millions) Years ended Dec. 31,	2019			2018
Equity accounted investments, beginning of year	$	22,698		$	19,761
GGP joint ventures acquired from business acquisition⁽¹⁾	—			10,829
Deconsolidation of pre-acquisition GGP equity interest⁽¹⁾	—			(8,345		)
Additions	684			2,174
Disposals and return of capital distributions	(764		)	(1,304		)
Share of net earnings from equity accounted investments	1,969			947
Distributions received	(470		)	(518		)
Foreign currency translation	127			(395		)
Reclassification to assets held for sale⁽²⁾	(189		)	(567		)
Impact of deconsolidation of BSREP III⁽³⁾	(1,434		)	—
Other comprehensive income and other⁽⁴⁾	(1,857		)	116
Equity accounted investments, end of year	$	20,764		$	22,698

⁽¹⁾

The partnership obtained control of GGP during the third quarter of 2018 following the acquisition of the common shares not previously held by the partnership and its subsidiaries. As a result of the acquisition, GGP’s interest in joint ventures of $10,829 million was added to the balance of equity accounted investments, offset by the deconsolidation of the partnership’s 34% interest of $7,843 million and fair value loss of $502 million from adjusting the partnership’s interest in GGP to its fair value immediately prior to acquiring control. See Note 4, Acquisition of GGP Inc., for further information.


⁽²⁾	The partnership’s interest in the Diplomat was reclassified to assets held for sale in the fourth quarter of 2019. The partnership’s interest in China Xintiandi (“CXTD”) was reclassified to assets held for sale in the fourth quarter of 2018 and sold in the first quarter in 2019.


⁽³⁾	Includes the impact of the deconsolidation of BSREP III investments, primarily Forest City. See above for further information.

⁽⁴⁾

The partnership acquired an incremental interest in Park Meadows in Colorado, Towson Town Center in Maryland, Perimeter Mall in Georgia, Shops at Merrick Park in Florida and 730 Fifth Avenue in New York during 2019, bringing its ownership in each of the malls to 100%. As a result, the partnership now consolidate its interest in the assets. The partnership also acquired an incremental interest in One and Two London Wall Place in London during 2019. As a result, the partnership now consolidates its interest in the assets.

The key valuation metrics for the partnership’s commercial properties held within the partnership’s equity accounted investments are set forth in the table below on a weighted-average basis:



		Dec. 31, 2019					Dec. 31, 2018
Equity accounted investments	Primary valuation method	Discount rate		Terminal capitalization rate		Investment horizon (yrs.)	Discount rate		Terminal capitalization rate		Investment horizon (yrs.)
Core Office
United States	Discounted cash flow	6.8	%	4.9	%	11	6.6	%	5.1	%	10
Australia	Discounted cash flow	6.5	%	5.2	%	10	6.7	%	5.7	%	10
Europe	Discounted cash flow	4.6	%	5.0	%	10	4.7	%	4.9	%	10
Core Retail
United States	Discounted cash flow	6.3	%	4.9	%	10	6.6	%	5.3	%	11
LP Investments - Office	Discounted cash flow	6.0	%	5.3	%	10	6.9	%	5.2	%	9
LP Investments - Retail	Discounted cash flow	7.4	%	6.2	%	10	8.4	%	7.1	%	10
Multifamily⁽¹⁾	Direct capitalization	5.3	%	n/a		n/a	5.2	%	n/a		n/a


⁽¹⁾	The valuation method used to value multifamily investments is the direct capitalization method. The rates presented as the discount rate relate to the overall implied capitalization rate. The terminal capitalization rate and investment horizon are not applicable.

The following tables present the gross assets and liabilities of the partnership’s equity accounted investments as of December 31, 2019 and 2018:



	Dec. 31, 2019
(US$ Millions)	Current assets		Non-current assets		Current liabilities		Non-current liabilities		Net assets
Joint ventures
Canary Wharf Joint Venture	$	1,219	$	13,432	$	1,344	$	6,151	$	7,156
Ala Moana	99		5,717		43		1,882		3,891
Manhattan West	215		6,502		1,659		1,633		3,425
BPR JV Pool A	218		5,862		125		2,191		3,764
BPR JV Pool B	230		6,085		102		3,534		2,679
Fashion Show	38		2,475		20		828		1,665
BPR JV Pool C	41		2,295		34		666		1,636
Grace Building	44		2,304		16		896		1,436
BPR JV Pool D	50		2,183		82		790		1,361
Southern Cross East	6		933		7		—		932
The Grand Canal Shoppes	54		1,782		35		974		827
One Liberty Plaza	28		1,666		39		854		801
680 George Street	3		680		4		—		679
Brazil Retail	31		1,024		11		95		949
Baybrook Mall	14		883		11		236		650
D.C. Fund	50		1,298		190		604		554
The Mall in Columbia	27		867		9		321		564
BPR JV Pool F	9		768		5		227		545
BPR JV Pool G	13		733		15		360		371
Miami Design District	53		1,683		29		570		1,137
Other⁽¹⁾	1,821		14,706		1,971		6,236		8,320
	4,263		73,878		5,751		29,048		43,342
Associates
Other	123		1,837		35		1,045		880
	123		1,837		35		1,045		880
Total	$	4,386	$	75,715	$	5,786	$	30,093	$	44,222


⁽¹⁾	BPR JV Pool E, Forest City Joint Ventures and The Shops at Merrick Park are included in Other for the current year as they have carrying values of nil due to transaction activity and deconsolidation during 2019.



	Dec. 31, 2018
(US$ Millions)	Current assets		Non-current assets		Current liabilities		Non-current liabilities		Net assets
Joint ventures
Canary Wharf Joint Venture	$	666	$	12,268	$	577	$	5,818	$	6,539
BPR JV Pool A	186		5,619		125		2,097		3,583
Manhattan West	142		5,455		681		2,027		2,889
Ala Moana	91		5,063		57		1,874		3,223
Forest City	308		7,729		330		4,152		3,555
BPR JV Pool B	99		5,909		107		3,515		2,386
Fashion Show	35		2,572		19		826		1,762
BPR JV Pool C	42		2,264		34		676		1,596
BPR JV Pool D	43		2,293		101		793		1,442
BPR JV Pool E	47		2,756		39		967		1,797
The Grand Canal Shoppes	28		1,832		23		625		1,212
Grace Building	32		2,043		19		894		1,162
One Liberty Plaza	107		1,604		23		855		833
Southern Cross East	5		805		7		—		803
680 George Street	10		1,334		14		—		1,330
Brazil Retail	30		916		13		67		866
D.C. Fund	58		1,321		31		770		578
Miami Design District	49		1,877		28		629		1,269
The Mall in Columbia	14		858		9		328		535
Shops at Merrick Park	12		660		21		166		485
Other	1,989		20,588		2,413		9,140		11,024
	3,993		85,766		4,671		36,219		48,869
Associates
Diplomat	24		837		23		405		433
BPREP	12		1,998		12		457		1,541
Other	366		1,430		72		819		905
	402		4,265		107		1,681		2,879
Total	$	4,395	$	90,031	$	4,778	$	37,900	$	51,748

Summarized financial information in respect of the partnership’s equity accounted investments for the years ended December 31, 2019, 2018 and 2017 is set out below:



	Year ended December 31, 2019
(US$ Millions)	Revenue		Expenses		Fair value gains (losses)			Income from EAI⁽¹⁾		Net income			Other compre- hensive income			Partnership’s share of net income			Distributions received
Joint ventures
Canary Wharf Joint Venture	$	555	$	320	$	126		$	22	$	383		$	(11	)	$	191		$	9
Ala Moana	300		149		758			—		909			—			455			48
Manhattan West	201		136		155			—		220			(43		)	123			42
BPR JV Pool A	379		214		172			—		337			—			168			6
BPR JV Pool B	564		350		(50		)	65		229			—			116			—
Fashion Show	118		57		(112		)	—		(51		)	—			(26		)	15
BPR JV Pool C	158		73		7			—		92			—			46			10
Grace Building	107		84		215			—		238			—			119			—
BPR JV Pool D	—		—		(49		)	64		15			—			8			5
Southern Cross East	42		6		110			—		146			—			73			5
The Grand Canal Shoppes	138		73		(44		)	—		21			—			11			21
One Liberty Plaza	134		84		(25		)	—		25			(33		)	13			9
680 George Street	36		9		47			—		74			—			37			15
Brazil Retail	59		54		157			—		162			—			75			39
Baybrook Mall	45		26		204			—		223			—			114			—
D.C. Fund	125		82		(50		)	—		(7		)	—			(4		)	—
The Mall in Columbia	56		29		5			—		32			—			16			—
BPR JV Pool F	39		17		178			—		200			—			102			—
BPR JV Pool G	53		32		50			—		71			—			48			—
Miami Design District	72		67		(234		)	—		(229		)	—			(51		)	—
Other⁽²⁾	1,746		1,217		349			11		889			(17		)	359			142
	4,927		3,079		1,969			162		3,979			(104		)	1,993			366
Associates
Diplomat	172		181		(6		)	—		(15		)	—			(13		)	73
BPREP	—		—		—			—		—			—			—			—
Other	216		251		(10		)	3		(42		)	50			(11		)	31
	388		432		(16		)	3		(57		)	50			(24		)	104
Total	$	5,315	$	3,511	$	1,953		$	165	$	3,922		$	(54	)	$	1,969		$	470


⁽¹⁾	Share of net earnings from equity accounted investments recorded by the partnership’s joint ventures and associates.


⁽²⁾	Includes BPR JV Pool E, Forest City Joint Ventures and The Shops at Merrick Park for the current year as they have carrying values of nil due to transaction activity and deconsolidation during 2019.



	Year ended December 31, 2018
(US$ Millions)	Revenue		Expenses			Fair value gains (losses)			Income from EAI⁽¹⁾			Net income			Other compre- hensive income			Partnership’s share of net income			Distributions received
Joint ventures
Canary Wharf Joint Venture	$	547	$	125		$	(72	)	$	(1	)	$	349		$	8		$	175		$	—
BPR JV Pool A	162		77			(5		)	—			80			—			41			—
Manhattan West	123		104			423			—			442			(15		)	248			—
Ala Moana	78		38			(6		)	—			34			—			17			8
Forest City	48		35			—			—			13			—			8			—
BPR JV Pool B	208		112			(7		)	8			97			—			49			1
Fashion Show	32		13			(2		)	—			17			—			8			3
BPR JV Pool C	52		23			(1		)	—			28			—			14			6
BPR JV Pool D	—		—			—			26			26			—			12			2
BPR JV Pool E	49		15			(2		)	—			32			—			11			3
The Grand Canal Shoppes	30		18			(1		)	—			11			—			5			2
Grace Building	125		83			(34		)	—			8			—			4			8
One Liberty Plaza	114		84			9			—			39			(10		)	21			9
Southern Cross East	45		7			38			—			76			—			38			—
680 George Street	34		9			136			—			161			—			56			18
Brazil Retail	61		30			59			—			90			—			41			20
D.C. Fund	131		81			(45		)	—			5			—			2			22
Miami Design District	24		24			(1		)	—			(1		)	—			—			—
The Mall in Columbia	19		9			(1		)	—			9			—			5			—
Shops at Merrick Park	17		6			—			—			11			—			6			1
Other	1,290		897			696			(22		)	1,067			(19		)	409			143
	3,189		1,790			1,184			11			2,594			(36		)	1,170			246
Associates
GGP⁽²⁾	1,536		1,221			(1,598		)	271			(1,012		)	(15		)	(274		)	214
CXTD⁽³⁾	142		60			18			(3		)	97			—			21			10
Diplomat	174		175			—			—			(1		)	77			(1		)	18
BPREP	60		(10		)	1			—			71			—			9			4
Other	263		261			71			1			74			76			22			26
	2,175		1,707			(1,508		)	269			(771		)	138			(223		)	272
Total	$	5,364	$	3,497		$	(324	)	$	280		$	1,823		$	102		$	947		$	518


⁽¹⁾	Share of net earnings from equity accounted investments recorded by the partnership’s joint ventures and associates.


⁽²⁾	Includes net income presented before allocation to non-controlling interests and preferred dividends from GGP prior to the GGP acquisition in the third quarter of 2018.


⁽³⁾	The partnership sold it’s interest in CXTD in the first quarter of 2019.



	Year ended December 31, 2017
(US$ Millions)	Revenue		Expenses		Fair value gains (losses)			Income of EAI⁽¹⁾		Net income			Other compre- hensive income			Partnership’s share of net income			Distributions received
Joint ventures
Canary Wharf Joint Venture	$	581	$	370	$	(49	)	$	21	$	183		$	5		$	91		$	—
Manhattan West	81		70		308			—		319			—			179			1
Grace Building	120		80		(23		)	—		17			—			9			7
One Liberty Plaza	3		2		103			—		104			(7		)	53			—
Southern Cross East	46		7		21			—		60			—			30			—
Brazil Retail	48		29		31			—		50			—			23			11
680 George Street	34		9		17			—		42			—			21			—
D.C. Fund	129		76		(54		)	—		(1		)	—			(1		)	23
VAMF II⁽²⁾	154		116		117			4		159			—			59			—
Principal Place - Commercial⁽²⁾	28		61		132			—		99			—			49			—
Potsdamer Platz⁽²⁾	96		95		108			—		109			—			27			—
One New York Plaza⁽²⁾	121		78		(4		)	—		39			7			6			1
Republic Plaza⁽²⁾	46		30		(33		)	—		(17		)	—			(9		)	—
75 State Street⁽²⁾	49		30		6			—		25			—			6			2
245 Park Avenue	54		31		(24		)	—		(1		)	—			—			10
Other	259		111		148			—		296			16			153			38
	1,849		1,195		804			25		1,483			21			696			93
Associates
GGP⁽³⁾⁽⁴⁾	2,405		1,207		(2,307		)	518		(591		)	12			179			240
CXTD⁽⁵⁾	128		145		121			—		104			—			23			—
Diplomat	151		166		—			—		(15		)	43			(14		)	6
BPREP	40		27		31			71		115			—			12			3
Other	253		183		147			—		217			61			65			27
	2,977		1,728		(2,008		)	589		(170		)	116			265			276
Total	$	4,826	$	2,923	$	(1,204	)	$	614	$	1,313		$	137		$	961		$	369


⁽¹⁾	Share of net earnings from equity accounted investments recorded by the partnership’s joint ventures and associates.


⁽²⁾	In the current year ended December 31, 2019, these joint ventures are presented within Joint Ventures - Other.


⁽³⁾	Includes net income presented before allocation to non-controlling interests and preferred dividends from GGP prior to the GGP acquisition in the third quarter of 2018.


⁽⁴⁾	As a result of the partnership’s exercise of GGP warrants in 2017, the additional shares that were acquired by the partnership were acquired at a discount to the net fair value of the proportionate interest in the underlying assets acquired and liabilities assumed. The partnership recognized a $442 million gain within the partnership’s share of net income.


⁽⁵⁾	The partnership sold it’s interest in CXTD in the first quarter of 2019.

Certain of the partnership’s investment in joint ventures and associates are subject to restrictions over the extent to which they can remit funds to the partnership in the form of the cash dividends or repayments of loans and advances as a result of borrowing arrangements, regulatory restrictions and other contractual requirements.