20-F: Brookfield Property Partners Reports Reduced 2025 Net Loss

Brookfield Property Partners L.P. significantly narrowed its net loss in 2025, driven by lower interest expenses and fair value gains in its LP Investments segment, despite a decrease in total revenue.

Summary

• Brookfield Property Partners L.P. reported a net loss of $305 million for the year ended December 31, 2025, a substantial improvement from the $1,997 million net loss in 2024.
• The improvement was primarily due to a $1,234 million reduction in interest expense, with $1,188 million attributed to the deconsolidation of BSREP IV and India REIT, alongside corporate and asset-level debt paydowns.
• Fair value gains were recorded in the LP Investments segment due to updated cashflow and market assumptions, offsetting losses in select U.S. office and retail assets.
• Earnings from equity accounted investments increased by $551 million, reflecting valuation gains in the current year compared to losses in the prior year.
• Total revenue decreased by $1,964 million to $7,147 million in 2025 from $9,111 million in 2024, mainly due to the deconsolidation of BSREP IV and India REIT.
• Commercial property revenue decreased by $1,258 million, and direct commercial property expense decreased by $487 million, both largely due to deconsolidation activities.
• Hospitality revenue decreased by $716 million, primarily from the deconsolidation of BSREP IV, partially offset by acquisition activity and strong performance in the U.K. and Ireland.
• Total assets decreased by $3,311 million to $99,280 million at December 31, 2025, mainly due to deconsolidation and net disposition activity, partially offset by business combinations.
• Debt obligations decreased by $5,185 million to $46,314 million at December 31, 2025, driven by deconsolidation, debt assumed by purchasers, and corporate debt repayments.
• Total equity increased by $4,325 million to $42,574 million, reflecting equity issuances and foreign currency translation impact, partially offset by distributions and disposition activity.
• The company acquired a portfolio of hostel assets across Europe for $376 million in Q3 2025 and several individually immaterial acquisitions for $542 million.
• Significant dispositions in 2025 included manufactured housing communities ($1,356 million), U.S. malls ($162 million), U.S. hotels ($119 million), a logistics asset in Spain ($188 million), an office asset in India ($427 million), an office asset in Australia ($276 million), and logistics assets in Europe ($489 million).

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing positively due to the significant reduction in net loss and strategic debt management, despite revenue declines from deconsolidation. The strong performance in LP Investments and commitment to sustainability are favorable, though ongoing debt negotiations and potential divestiture delays present some caution.

Positives

• Net loss significantly narrowed to $305 million in 2025 from $1,997 million in 2024, indicating improved financial performance.
• Interest expense decreased by $1,234 million, largely due to strategic deconsolidation activities and debt paydowns.
• Fair value gains in the LP Investments segment reflect positive updated cashflow and market assumptions, particularly in multifamily and logistics portfolios in the U.S., and office portfolios in India.
• Equity accounted investments saw a $551 million increase in net earnings, driven by valuation gains.
• Total equity increased by $4,325 million to $42,574 million, bolstered by equity issuances and foreign currency translation.
• The company maintains a diversified portfolio across office, retail, multifamily, logistics, hospitality, and other real estate sectors, mitigating sector-specific risks.
• Strong operating performance was noted in U.K. and Ireland hospitality assets, and U.S. multifamily and student housing portfolios.
• The company's sustainability efforts are recognized, with average GRESB scores of 87/100 for Standing Investments and 95/100 for Development, both exceeding global averages.
• 55% of operationally managed investments by AUM hold at least one sustainability-related certification, demonstrating commitment to responsible real estate ownership.

Negatives

• Total revenue decreased by $1,964 million in 2025 compared to 2024, primarily due to deconsolidation activities.
• Commercial property revenue and direct commercial property expense both decreased significantly due to deconsolidation and net disposition activity.
• Hospitality revenue decreased by $716 million, mainly due to the deconsolidation of BSREP IV.
• Fair value losses were recorded at select office and retail assets in the U.S. due to updated market and leasing assumptions.
• The company has suspended contractual payments on approximately 3% of its non-recourse mortgages and is engaging in restructuring discussions, with a risk of properties being transferred to lenders if negotiations are unsuccessful.
• FFO in the Office segment remained negative at $(34) million in 2025, a further decrease from $(11) million in 2024.
• FFO in the Retail segment decreased to $314 million in 2025 from $367 million in 2024, primarily due to disposition activity.

Risks

• Economic performance and asset values are subject to risks incidental to real estate ownership and operation, including downturns in national, regional, and local economic conditions, cyclical nature of the real estate industry, and changes in interest rates.
• Changes in credit rating, current and future indebtedness, refinancing risks, and compliance with restrictive covenants pose financial risks.
• Reliance on significant tenants and potential tenant defaults, bankruptcies, or insolvencies could adversely affect cash flows and operations.
• Inability to renew or enter into new leases on favorable terms for expiring leases could negatively impact cash flows and operating results.
• Force majeure events, uninsurable losses, and higher insurance premiums could adversely affect financial condition and results of operations.
• Trends in the office real estate industry, such as shifts to hybrid or remote work models, could decrease demand, occupancy, rental rates, and property valuations.
• Factors affecting the retail environment, including unemployment, weak income growth, inflation, and increased consumer debt, could negatively impact consumer spending and tenant sales.
• Business disruptions, cybersecurity failures, and data security incidents could disrupt operations, compromise confidential information, and damage reputation.
• Risks associated with joint ventures, partnerships, and co-tenancies, including potential co-venturer bankruptcy or inconsistent economic goals.
• Exposure to possible health and safety and environmental liabilities, including remediation costs and compliance with changing regulations.
• Negative publicity could damage reputation and business, affecting ability to attract and retain tenants, investors, and employees.
• Exposure to actual or alleged fraud, bribery, corruption, other illegal acts, inadequate internal processes, or external events, especially in emerging markets.
• Climate change, including physical risks (sea level rise, extreme weather) and transition risks (policy changes, low-carbon economy shift), may adversely impact operations and markets.
• Reliance on the Property Partnership and Holding Entities for funds, which are legally distinct and must service their debt obligations first.
• Risk of being deemed an investment company under the U.S. Investment Company Act of 1940, which would restrict operations and materially adversely affect the company.
• Dependence on Brookfield and Service Providers, and potential conflicts of interest where Brookfield's broader business interests may not align with the company's or preferred unitholders' best interests.
• Brookfield has no obligation to source acquisition opportunities specifically for the company, and the company may not access all identified opportunities.
• Control of the company may be transferred to a third party without preferred unitholder consent.
• Arrangements with Brookfield may contain terms less favorable than those with unrelated parties, as they were revised during the Privatization.
• Brookfield's fiduciary duties are significantly limited, and preferred unitholders will not receive the same protections as Brookfield's advisory clients.
• The BPY General Partner may be unable or unwilling to terminate the Master Services Agreement.
• Liability of Service Providers is limited, and the company indemnifies them, potentially leading to greater risk-taking.
• Investors should not expect redemption of Preferred Units or New LP Preferred Units on any specific date, as redemption is at the issuer's option.
• Interests of preferred unitholders could be diluted by the issuance of additional units or other transactions.
• Declaration of distributions on Preferred Units and New LP Preferred Units is at the discretion of the applicable general partner and is not guaranteed.
• Payment under the Guarantee for New LP Preferred Units is limited and uncertain, dependent on New LP's general partner declaring distributions and BPY receiving sufficient funds from subsidiaries.
• Preferred Units and New LP Preferred Units have extremely limited voting rights.
• Absence of an active trading market may limit transferability and affect market price of Preferred Units and New LP Preferred Units.
• Market interest rates may adversely affect the value of Preferred Units and New LP Preferred Units.
• Redemption may adversely affect return on Preferred Units or New LP Preferred Units if reinvestment opportunities are at lower rates.
• Upon a change of control or delisting, the issuer is not required to redeem preferred units and may not be able to pay increased distribution rates.
• BPY's and New LP's ability to issue parity securities could adversely affect preferred unitholders' rights.
• Terms of Preferred Units and New LP Preferred Units may change without consent under certain limited circumstances (e.g., tax event).
• A change in the rating of Preferred Units or New LP Preferred Units could adversely affect their market price.
• Preferred unitholders may have liability to repay distributions under certain circumstances (Impermissible Capital Withdrawal).
• Difficulty for U.S. or Canadian investors to serve process on or enforce judgments against the company due to its Bermuda incorporation and non-U.S./Canadian assets and management.
• Preferred Unitholders and New LP Preferred Unitholders may be subject to non-U.S. and U.S. state and local taxes and return filing requirements.
• The IRS or CRA may disagree with certain tax assumptions and conventions, potentially affecting tax benefits.
• Delivery of required tax information may be delayed, requiring extensions for tax returns.
• Certain payments may be subject to 30% U.S. federal withholding tax under FATCA.
• Uncertain U.S. federal income tax consequences regarding the treatment of distributions as guaranteed payments for the use of capital.
• Ownership by U.S. tax-exempt organizations may result in unrelated business taxable income (UBTI).
• U.S. Holders may face adverse U.S. federal income tax consequences from indirect interest in a Passive Foreign Investment Company (PFIC) or Controlled Foreign Corporation (CFC).
• Non-U.S. Holders may be subject to U.S. federal income and withholding tax on U.S.-source income.
• Canadian Resident Holders may be required to include Foreign Accrual Property Income (FAPI) in their income without corresponding cash distribution.
• Foreign tax credits for Canadian federal income tax purposes may be limited by Foreign Tax Credit Generator Rules.
• Non-Canadian Holders may be subject to Canadian federal income tax on Canadian source business income or capital gains from taxable Canadian property.
• Canadian federal income tax reporting and withholding tax requirements on disposition of taxable Canadian property for Non-Canadian Holders.
• Payments of dividends or interest by Canadian residents to the Property Partnership or New LP may be subject to Canadian federal withholding tax.
• Preferred Units or New LP Preferred Units may not continue to be qualified investments under the Tax Act for Registered Plans.
• Canadian federal income tax consequences could be materially different if BPY, the Property Partnership, or New LP is a SIFT partnership.
• Failure to maintain effective internal controls could have a material adverse effect on the business.
• Operations are subject to significant political, economic, and financial risks varying by jurisdiction.
• Inflationary pressures may impact the ability to source investments and offset operating cost increases.
• Political instability and unfamiliar cultural factors in various markets could adversely impact investment value.
• As a foreign private issuer, the company is subject to different disclosure obligations under U.S. and Canadian securities laws, potentially leading to less publicly available information.

Future Outlook

The company aims to increase cash flows from its office and retail properties through continued leasing activity, leveraging strong tenant demand for high-quality, well-located spaces. It anticipates expanding cash flows through higher occupancy, particularly in the U.S. office market which is currently below historical levels. The company plans to actively recycle capital from maturing assets into higher-yielding opportunities and expects its business model to be self-funding, not requiring access to capital markets for continued growth. There is an opportunity to advance development inventory in major markets and reposition existing retail properties in response to demand. However, the outlook is subject to macro-economic factors, interest rate fluctuations, and the ability to refinance maturing debt, with some planned divestitures potentially facing delays.

Management Comments

• Our goal is to be the leading global owner and operator of high-quality real estate.
• We believe our global scale and best-in-class operating platforms provide us with a unique competitive advantage as we are able to efficiently allocate capital around the world toward those sectors and geographies where we see the greatest returns.
• We actively recycle capital as assets mature and redeploy proceeds into higher-yielding opportunities, which supports the growth of our portfolio and enhances returns over time.
• Our business model is self-funding and does not require us to access capital markets to fund our continued growth.
• We see an opportunity to advance our development inventory in the near term in response to demand we are seeing in our major markets.

Industry Context

StockSavvy.ai notes that Brookfield Property Partners' strategy of focusing on high-quality, well-located real estate assets aligns with a broader industry trend where premier properties continue to attract demand even amidst shifts to hybrid work models. The significant reduction in net loss, despite revenue declines, suggests effective cost management and strategic asset recycling in a challenging interest rate environment. The emphasis on opportunistic funds and value-add strategies reflects a proactive approach to generating returns in a dynamic real estate market, contrasting with more passive, core-only investment strategies. The company's commitment to sustainability reporting (GRESB scores) also positions it favorably in an industry increasingly scrutinized for environmental, social, and governance (ESG) performance.

Comparison to Industry Standards

• The company's average GRESB score in the Standing Investments Benchmark was 87/100 in 2025, which is higher than the global average of 79/100.
• The company's average GRESB score in the Development Benchmark was 95/100 in 2025, which is higher than the global average of 88/100.
• 55% of the company's operationally managed investments by assets under management (AUM) hold at least one sustainability-related certification, demonstrating a strong commitment to responsible real estate ownership compared to general industry practices.

Corporate Governance

Legal Proceedings

• The company has not been and is not currently subject to any material governmental, legal, or arbitration proceedings which may have or have had a significant impact on its financial position or profitability.
• The company is occasionally named as a party in various claims and legal proceedings arising during the normal course of business, but does not believe the outcome of any current claims will have a material adverse effect.

Related Party Transactions

• Brookfield Corporation owns 100% of BPY's LP Units and is the sole shareholder of the BPY General Partner, exercising full control over BPY's activities.
• Service Providers, subsidiaries of Brookfield Asset Management, provide management and administration services to BPY under a Master Services Agreement.
• BPY pays a management fee to Service Providers equal to 1.05% of the sum of equity attributable to unitholders for Office, Retail, and Corporate segments, plus the carrying value of outstanding non-voting common shares of CanHoldco, and certain fees related to private real estate funds.
• BPY reimburses Service Providers for out-of-pocket fees, costs, and expenses incurred in providing management and administration services, excluding salaries and overhead of their personnel.
• Brookfield may provide additional services to BPY's operating entities outside the Master Services Agreement, with terms determined by Brookfield in its sole discretion, potentially favoring Brookfield's broader business interests.
• A subsidiary of Brookfield Corporation holds $1 million of Class B junior preferred shares of CanHoldco, entitled to a cumulative preferential dividend of 5.0% plus the prevailing yield for 5-year U.S. Treasury Notes (7.64%).
• Brookfield Corporation also holds C$3.4 billion and C$632 million of Class D junior preferred shares, Series 1 and Series 2, respectively, of CanHoldco, each with a 6.25% annual cumulative preferential dividend.
• Brookfield Asset Management holds $5 million of Class A senior preferred shares of CanHoldco.
• Brookfield Corporation and Brookfield Asset Management hold preferred shares in other Holding Entities' wholly-owned subsidiaries, entitled to an aggregate 1% of votes and a 5% cumulative preferential cash dividend.
• Holders of Redemption-Exchange Units (held by Brookfield subsidiaries) have the right to redeem units for cash, subject to BPY's right to acquire them for LP Units.
• BPY's general partner is entitled to a general partner distribution equal to 0.04% of BPY's total distributions.
• BPY and its Service Providers benefit from indemnification provisions and limitations on liability under various agreements with Brookfield.
• Brookfield acquired the seven-year tranche of Class A Preferred Units, Series 1, on December 30, 2021, and the 10-year tranche of Class A Preferred Units, Series 2, on December 31, 2024, from the Class A Preferred Unitholder, subsequently cancelling them.
• BPY sold partial interests in several premier assets to BWS, generating $750 million in proceeds in 2025, and partial interests in BSREP III fund and an opportunistic real estate fund to BWS for $688 million.
• An office asset from BSREP III was sold to India REIT for $777 million in 2025.
• In 2024 and 2023, BPY sold partial interests in several assets to BWS, generating net proceeds of $1.8 billion and $695 million, respectively, at market terms with no gain or loss.
• In August 2023, BPY issued mandatory convertible non-voting preferred shares for $1.6 billion to a wholly-owned subsidiary of BWS.
• On October 4, 2024, BWS completed its acquisition of BPY's interests in BSREP IV, leading to deconsolidation, with BPY retaining a 10% indirect LP interest accounted for as an equity-accounted joint venture with BWS.
• BPY's limited partnership agreement contains provisions that modify and reduce the scope of fiduciary duties owed to BPY and its preferred unitholders by Brookfield, allowing conflicts of interest to be managed in a manner that may not be in their best interests.

Stakeholder Impact

• **Shareholders (LP Unitholders)**: The significant reduction in net loss and increase in total equity are positive for LP unitholders, indicating improved financial health. However, the decrease in total revenue and FFO in some segments, along with the inherent conflicts of interest due to Brookfield's full ownership and control, could be a concern. Distributions to LP unitholders are at the discretion of the BPY General Partner and are not guaranteed.
• **Preferred Unitholders**: Preferred unitholders receive cumulative preferential cash distributions, which are expected to continue. However, their units are not redeemable at their option, have extremely limited voting rights, and rank junior to debt obligations. The potential for dilution from additional unit issuances and the impact of market interest rates on unit value are relevant. The limited fiduciary duties owed by Brookfield also mean their interests may not always be prioritized.
• **Employees**: While BPY itself has no direct employees, its operating entities do. The company's commitment to human capital development, diversity, occupational health and safety, and human rights (including anti-modern slavery policies) positively impacts employees within its broader operational structure. The Personal Trading Policy applies to employees of Brookfield Corporation and its controlled affiliates, including BPY, regulating their personal trading activities.
• **Customers (Tenants)**: The focus on maintaining quality standards for properties, proactive leasing, and managing operating costs aims to benefit tenants through high occupancy rates and attractive spaces. However, risks related to tenant defaults, bankruptcies, and competition could affect the stability of the tenant base and the services provided.
• **Creditors**: The decrease in total debt obligations and the company's belief in its ability to refinance or repay maturing debt are positive. However, the suspension of contractual payments on some non-recourse mortgages and ongoing restructuring discussions introduce risk, as properties could be transferred to lenders if negotiations fail. The subordination of preferred units to debt obligations provides a layer of protection for senior creditors.
• **Regulatory Bodies**: The adoption of a Clawback Policy and adherence to SEC and Canadian securities regulations, along with robust cybersecurity and data privacy programs, demonstrate compliance efforts. The company's participation in sustainability benchmarks (GRESB) and alignment with TCFD recommendations also address growing regulatory and stakeholder expectations regarding ESG.

Next Steps

• Continue leasing activity in office and retail portfolios to increase occupancy and rental rates.
• Actively recycle capital from maturing assets and redeploy into higher-yielding opportunities.
• Advance development inventory in major markets and reposition existing retail properties.
• Address debt obligations maturing in 2026-2027 through extensions, repayments, or refinancings.
• Engage in modification or restructuring discussions with creditors for suspended non-recourse mortgage payments.
• Monitor and refine sustainability strategies and practices, including climate change mitigation and adaptation efforts.
• Continue to comply with evolving data privacy and cybersecurity regulations and enhance protection capabilities.

Key Dates

Recommendation

The significant reduction in net loss and improved equity position are positive indicators, suggesting a stabilization and potential turnaround in financial performance. However, the decline in total revenue, ongoing debt restructuring discussions, and the inherent conflicts of interest due to Brookfield's full ownership warrant a cautious approach. While the company is actively managing its portfolio and debt, the market may need to see sustained revenue growth and successful resolution of debt issues before a stronger recommendation can be made. The long-term strategy of asset recycling and focus on high-quality real estate is sound, but short-to-medium term uncertainties remain.

Keywords

Real Estate, Property Management, SEC Filing, 20-F, Financial Results, Net Loss, Interest Expense, Fair Value, LP Investments, Office Properties, Retail Properties, Debt Obligations, Equity, Acquisitions, Dispositions, Corporate Governance, Clawback Policy, Brookfield, Commercial Property, Hospitality, Risk Management, Sustainability, Preferred Units, Non-IFRS Metrics