UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
February 7, 2019
Brookfield Property REIT Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-34948 | 27-2963337 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 250 Vesey Street, 15th Floor, New York, NY | 10281 |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (212) 417-7000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2.):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| x | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act or Rule 12b-2 of the Exchange Act.
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02. | Results of Operations and Financial Condition. |
On February 7, 2019, Brookfield Property REIT Inc. (the “Company”) disclosed the following financial information:
The following is the Company’s balance sheet as at December 31, 2018 and December 31, 2017.
Brookfield Property REIT Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| December 31, 2018 | December 31, 2017 | |||||||
| Assets: | ||||||||
| Investment in real estate: | ||||||||
| Land | $ | 2,706,701 | $ | 4,013,874 | ||||
| Buildings and equipment | 10,774,079 | 16,957,720 | ||||||
| Less accumulated depreciation | (2,214,603 | ) | (3,188,481 | ) | ||||
| Construction in progress | 576,695 | 473,118 | ||||||
| Net property and equipment | 11,842,872 | 18,256,231 | ||||||
| Investment in Unconsolidated Real Estate Affiliates | 5,385,582 | 3,377,112 | ||||||
| Net investment in real estate | 17,228,454 | 21,633,343 | ||||||
| Cash and cash equivalents | 247,019 | 164,604 | ||||||
| Accounts receivable, net | 222,562 | 334,081 | ||||||
| Notes receivable | 256,937 | 417,558 | ||||||
| Deferred expenses, net | 145,631 | 284,512 | ||||||
| Prepaid expenses and other assets | 313,648 | 494,795 | ||||||
| Deferred tax assets, net | 619,275 | 18,633 | ||||||
| Total assets | $ | 19,033,526 | $ | 23,347,526 | ||||
| Liabilities: | ||||||||
| Mortgages, notes and loans payable | $ | 12,589,649 | $ | 12,832,459 | ||||
| Investment in Unconsolidated Real Estate Affiliates | 124,627 | 21,393 | ||||||
| Accounts payable and accrued expenses | 953,369 | 919,432 | ||||||
| Dividend payable | 4,668 | 219,508 | ||||||
| Junior subordinated notes | 206,200 | 206,200 | ||||||
| Total liabilities | 13,878,513 | 14,198,992 | ||||||
| Redeemable equity interests | 2,305,895 | — | ||||||
| Redeemable noncontrolling interests | 73,696 | 248,126 | ||||||
| Total redeemable interests | 2,379,591 | 248,126 | ||||||
| Equity: | ||||||||
| Total stockholders' equity | 1,221,826 | 55,379 | ||||||
| Noncontrolling interests | 1,553,596 | 49,369 | ||||||
| Total equity | 2,775,422 | 8,900,408 | ||||||
| Total liabilities, redeemable noncontrolling interests and equity | $ | 19,033,526 | $ | 23,347,526 | ||||
The following is the Company’s income statement for the years ended December 31, 2018, December 31, 2017 and December 31, 2016.
Brookfield Property REIT Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
| Year Ended December 31, | ||||||||||||
| 2018 | 2017 | 2016 | ||||||||||
| Revenues: | ||||||||||||
| Minimum rents | $ | 1,297,945 | $ | 1,455,039 | $ | 1,449,704 | ||||||
| Tenant recoveries | 540,376 | 643,607 | 668,081 | |||||||||
| Overage rents | 29,659 | 34,874 | 42,534 | |||||||||
| Management fees and other corporate revenues | 125,776 | 105,144 | 95,814 | |||||||||
| Other | 70,278 | 89,198 | 90,313 | |||||||||
| Total revenues | 2,064,034 | 2,327,862 | 2,346,446 | |||||||||
| Expenses: | ||||||||||||
| Real estate taxes | 221,175 | 237,198 | 229,635 | |||||||||
| Property maintenance costs | 41,637 | 49,784 | 55,027 | |||||||||
| Marketing | 7,787 | 11,043 | 13,155 | |||||||||
| Other property operating costs | 253,210 | 286,168 | 282,591 | |||||||||
| Provision for doubtful accounts | 12,102 | 10,701 | 8,038 | |||||||||
| Provision for loan loss | — | — | 29,615 | |||||||||
| Property management and other costs | 172,554 | 145,251 | 138,602 | |||||||||
| General and administrative | 46,441 | 56,133 | 55,745 | |||||||||
| Costs related to the BPY Transaction | 202,523 | — | — | |||||||||
| Provision for impairment | 45,866 | — | 73,039 | |||||||||
| Depreciation and amortization | 633,063 | 693,327 | 660,746 | |||||||||
| Total expenses | 1,636,358 | 1,489,605 | 1,546,193 | |||||||||
| Operating income | 427,676 | 838,257 | 800,253 | |||||||||
| Interest and dividend income | 33,710 | 61,566 | 59,960 | |||||||||
| Interest expense | (576,700 | ) | (541,945 | ) | (571,200 | ) | ||||||
| (Loss) gain on foreign currency | — | (819 | ) | 14,087 | ||||||||
| Gains from changes in control of investment properties and other, net | 3,097,196 | 79,056 | 722,904 | |||||||||
| Gain on extinguishment of debt | 13,983 | 55,112 | — | |||||||||
| Income before income taxes, equity in income of Unconsolidated Real Estate Affiliates, discontinued operations and allocation to noncontrolling interests | 2,995,865 | 491,227 | 1,026,004 | |||||||||
| Benefit from (provision for) income taxes | 594,186 | 10,896 | (901 | ) | ||||||||
| Equity in income of Unconsolidated Real Estate Affiliates | 86,552 | 152,750 | 231,615 | |||||||||
| Unconsolidated Real Estate Affiliates - gain on investment, net | 487,166 | 12,000 | 51,555 | |||||||||
| Net income | 4,163,769 | 666,873 | 1,308,273 | |||||||||
| Allocation to noncontrolling interests | (73,228 | ) | (9,539 | ) | (19,906 | ) | ||||||
| Net income attributable to Brookfield Property REIT Inc. | 4,090,541 | 657,334 | 1,288,367 | |||||||||
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On February 6, 2019, the Board of Directors (the “Board”) of the Company appointed Mr. Scott Cutler to the Board, effective February 6, 2019.
Mr. Cutler currently serves as Senior Vice President, Americas Marketplace of eBay Inc. and he has served in that role since 2017. Mr. Cutler previously served as President of StubHub, a separate independent entity within eBay Inc. from 2015 to 2017. Prior to joining eBay Inc., Mr. Cutler spent nine years at the New York Stock Exchange. Prior to his career at the New York Stock Exchange, Mr. Cutler spent several years in investment banking. Mr. Cutler is a member of the board of directors of Brookfield Property Partners Limited (the “BPY General Partner”), the general partner of Brookfield Property Partners L.P., and serves on the board of the Mental Health Association of New York City and on the National Advisory Committee of the BYU Marriott School of Management. Mr. Cutler holds a Bachelor of Science, Economics from Brigham Young University and a Juris Doctor from the University of California, Hastings College of Law.
Effective on February 6, 2019, Mr. Cutler will become eligible to receive the standard compensation provided by the Company to its other independent directors.
Consistent with the Joint Governance Agreement, dated as of August 28, 2018, between the Company and Brookfield Property Partners L.P., the BPY General Partner and BP US REIT LLC (formerly known as Brookfield Properties, Inc., a Delaware corporation), Mr. Cutler will serve as a member of the board of directors of the BPY General Partner.
| Item 8.01. | Other Events. |
On February 6, 2019, the Board approved a modified “Dutch Auction” tender offer (subject to all appropriate filings with the Securities and Exchange Commission) to purchase shares of its class A stock, par value $0.01 per share, at a price of at least $19.00 per share but no more than $21.00 per share. Further details will be provided upon the launch of the tender offer.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BROOKFIELD PROPERTY REIT INC. | ||
| Date: February 7, 2019 | By: | /s/ Michelle Campbell |
| Name: | Michelle Campbell | |
| Title: | Secretary | |