| FINANCIAL INSTRUMENTS |
FINANCIAL INSTRUMENTS a)Derivatives and hedging activities The partnership and its operating entities use derivative and non-derivative instruments to manage financial risks, including interest rate and foreign exchange risks. The use of derivative contracts is governed by documented risk management policies and approved limits. The partnership does not use derivatives for speculative purposes. The partnership and its operating entities use the following derivative instruments to manage these risks: •foreign currency forward contracts to hedge exposures to Canadian Dollar, Australian Dollar, British Pound, Euro, Chinese Yuan, Brazilian Real, Indian Rupee, South Korean Won, Swedish Krona, Japanese Yen, New Zealand Dollar, Singapore Dollar and Danish Krone denominated investments in foreign subsidiaries and foreign currency denominated financial assets; •interest rate swaps to manage interest rate risk associated with planned refinancings and existing variable rate debt; •interest rate caps to hedge interest rate risk on certain variable rate debt; and •cross-currency swaps to manage interest rate and foreign currency exchange rates on existing variable rate debt.
There have been no material changes to the partnership’s financial risk exposure or risk management activities since December 31, 2025. Please refer to Note 30, Financial Instruments in the consolidated financial statements for the year ended December 31, 2025 for a detailed description of the partnership’s financial risk exposure and risk management activities. Interest Rate Hedging The following table provides the partnership’s outstanding derivatives that are designated as cash flow hedges of variability in interest rates associated with forecasted fixed rate financings and existing variable rate debt as of June 30, 2026 and December 31, 2025: | | | | | | | | | | | | | | | | | | | (US$ Millions) | Hedging item | Notional | Rates | Maturity dates | Fair value | | | | | | | | Jun. 30, 2026 | Interest rate swaps of US$ SOFR debt | $ | 4,573 | | 3.4% - 3.9% | Aug. 2026 - Mar. 2030 | $ | 8 | | | Interest rate caps of £ SONIA debt | 1,727 | | 2.0% - 5.0% | Jul. 2026 - Jan. 2028 | 6 | | | Interest rate caps of US$ SOFR debt | 1,385 | | 3.9% - 6.0% | Aug. 2026 - Apr. 2029 | 1 | | | Interest rate swaps of AUD BBSW/BBSY debt | 1,177 | | 3.3% - 4.9% | Sep. 2026 - Mar. 2031 | (3) | | | Interest rate swaps of £ SONIA debt | 882 | | 3.8% - 4.0% | Jul. 2026 - Jul. 2027 | (1) | | | Interest rate caps of € EURIBOR debt | 546 | | 4.0% - 4.5% | Jul. 2026 - May 2029 | 1 | | | Interest rate caps of C$ CORRA debt | 299 | | 5.5% | Aug. 2026 | — | | | Interest rate caps of SEK STIBOR debt | 156 | | 3.5% | Feb. 2028 | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Dec. 31, 2025 | Interest rate swaps of US$ SOFR debt | $ | 7,382 | | 3.0% - 3.9% | Aug. 2026 - Mar. 2030 | $ | (2) | | | Interest rate caps of US$ SOFR debt | 3,800 | | 3.0% - 6.8% | Jan. 2026 - Jul. 2028 | 3 | | | Interest rate caps of £ SONIA debt | 2,048 | | 2.0% - 5.0% | Apr. 2026 - Jan. 2028 | 3 | | | Interest rate caps of € EURIBOR debt | 1,148 | | 2.5% - 4.5% | Jul. 2026 - Aug. 2027 | — | | | Interest rate swaps of £ SONIA debt | 896 | | 3.8% | Jul. 2026 | (1) | | | Interest rate swaps of AUD BBSW/BBSY debt | 829 | 3.2% - 4.5% | Jun. 2026 - Nov. 2028 | 1 | | | Interest rate caps of C$ CORRA debt | 467 | 4.5% - 5.5% | Aug. 2026 - Oct. 2026 | — | | | Interest rate caps of SEK STIBOR debt | 159 | 3.5% | Feb. 2028 | — | | | Interest rate swaps of S$ SORA debt | 139 | 1.4% | Aug. 2030 | 3 | | | Interest rate swaps of R$ IPCA debt | 88 | 4.4% - 4.5% | Jan. 2026 - Sep. 2028 | — | | | Interest rate caps of DKK CIBOR debt | 57 | 4.3% | Aug. 2027 | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
For the three and six months ended June 30, 2026, the amount of hedge ineffectiveness recorded in earnings in connection with the partnership’s interest rate hedging activities was nil (2025 - nil). Foreign Currency Hedging The following table presents the partnership’s outstanding derivatives that are designated as net investment hedges in foreign subsidiaries or cash flow hedges as of June 30, 2026 and December 31, 2025: | | | | | | | | | | | | | | | | | | | | | | (US$ Millions) | Hedging item | | Notional | Rates | Maturity dates | Fair value | | Jun. 30, 2026 | Net investment hedges | € | 198 | | €0.83/$ - €0.91/$ | Jul. 2026 - Jan. 2028 | $ | 1 | | | Net investment hedges | £ | 1,233 | | £0.74/$ - £0.81/$ | Jul. 2026 - Sep. 2028 | 8 | | | Net investment hedges | A$ | 134 | | A$1.48/$ - A$1.57/$ | Sep. 2026 - Dec. 2027 | (5) | | | | | | | | | | Net investment hedges | R$ | 494 | | R$5.85/$ - R$6.08/$ | Apr. 2028 - Jun. 2028 | — | | | Net investment hedges | ₩ | 144,000 | | ₩1,463.90/$ - ₩1,467.05/$ | May 2028 - May 2029 | 4 | | | Net investment hedges | Rs | 45,373 | | Rs95.32/$ - Rs99.20/$ | Oct. 2026 - Dec. 2027 | (1) | | | | | | | | | | Net investment hedges | £ | 262 | | £0.87/€ | Sep. 2027 | 1 | | | Net investment hedges | C$ | 481 | | C$1.34/$ - C$1.42/$ | Jul. 2026 - Jul. 2028 | 3 | | | | | | | | | | Net investment hedges | CNH | 2,797 | | CNH6.77/$ - CNH7.04/$ | Oct. 2026 - Jun. 2028 | (23) | | | Net investment hedges | SEK | 193 | | SEK8.97/$ - SEK9.19/$ | Sep. 2027 | 1 | | | Net investment hedges | ¥ | 13,002 | | ¥149.65/$ - ¥157.80/$ | Dec. 2026 - Mar. 2029 | 1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cross currency swaps of C$ SOFR debt | C$ | 1,400 | | C$1.25/$ - C$1.34/$ | Sep. 2026 - Feb. 2028 | (84) | | | Dec. 31, 2025 | Net investment hedges | € | 497 | | €0.83/$ - €0.94/$ | Feb. 2026 - Sep. 2028 | $ | (24) | | | Net investment hedges | £ | 996 | | £0.74/$ - £0.84/$ | Mar. 2026 - Jul. 2028 | (19) | | | Net investment hedges | A$ | 372 | | A$1.51/$ - A$1.57/$ | Sep. 2026 - Jun. 2030 | (2) | | | | | | | | | | Net investment hedges | R$ | 984 | | R$5.90/$ - R$7.94/$ | Jan. 2026 - Oct. 2028 | (12) | | | Net investment hedges | ₩ | 611,705 | | ₩1,360.98/$ - ₩1,460.22/$ | Mar. 2026 - Dec. 2026 | 17 | | | Net investment hedges | Rs | 61,141 | | Rs86.87/$ - Rs96.78/$ | Jan. 2026 - Oct. 2028 | 20 | | | Net investment hedges | HK$ | 346 | | HK$7.51/$ - HK$7.68/$ | Mar. 2028 - Jun. 2030 | 1 | | | Net investment hedges | £ | 258 | | £0.86/€ | Sep. 2026 | (6) | | | Net investment hedges | C$ | 470 | | C$1.31/$ - C$1.41/$ | Apr. 2026 - Aug. 2030 | (3) | | | Net investment hedges | AED | 41 | | AED3.68/€ | Jun. 2027 | — | | | Net investment hedges | CNH | 2,797 | | CNH6.77/$ - CNH7.14/$ | Jan. 2026 - Jun. 2028 | (10) | | | Net investment hedges | SEK | 778 | | SEK9.02/$ - SEK9.71/$ | Sep. 2027 - Dec. 2028 | (4) | | | Net investment hedges | ¥ | 15,330 | | ¥137.02/$ | Jun. 2027 | 10 | | | Net investment hedges | NZ$ | 30 | NZ$1.69/$ | Mar. 2029 | — | | | Net investment hedges | S$ | 225 | S$1.21/$ - S$1.23/$ | Jul. 2028 - Dec. 2028 | 1 | | Net investment hedges | DKK | 54 | DKK6.01/$ - DKK6.14/$ | Jul. 2028 | — | | | Net investment hedges | € | 18 | €0.13/DKK | Jul. 2028 | — | | | Net investment hedges | € | 2 | €1.09/£ | Jul. 2028 | — | | | Net investment hedges | € | 214 | €0.09/SEK | Mar. 2028 - Dec. 2028 | — | | | Cross currency swaps of C$ SOFR debt | C$ | 1,400 | | C$1.25/$ - C$1.34/$ | Sep. 2026 - Feb. 2028 | (50) | |
For the three and six months ended June 30, 2026 and 2025, the amount of hedge ineffectiveness recorded in earnings in connection with the partnership’s foreign currency hedging activities was not significant. Other Derivatives The following table presents details of the partnership’s other derivatives, not designated as hedges for accounting purposes, that have been entered into to manage financial risks as of June 30, 2026 and December 31, 2025: | | | | | | | | | | | | | | | | | | | | (US$ Millions) | Derivative type | Notional |
Rates | Maturity dates | Fair value | | | Jun. 30, 2026 | Interest rate caps | $ | 2,487 | | 2.4% - 6.0% | Jul. 2026 - Jun. 2027 | $ | (11) | | | | Interest rate swaps on forecasted fixed rate debt | 75 | | 5.3% | Jun. 2028 - Jun. 2030 | (14) | | | | Interest rate swaps of US$ debt | — | | 3.3% - 3.4% | Mar. 2027 - Mar. 2028 | — | | | | | | | | | | | Dec. 31, 2025 | Interest rate caps | $ | 7,113 | | 2.3% - 6.3% | Feb. 2026 - Jan. 2028 | $ | 2 | | | | Interest rate swaps on forecasted fixed rate debt | 75 | | 5.3% | Jun. 2028 - Jun. 2030 | (16) | | | | Interest rate swaps of US$ debt | — | | 3.3% - 3.6% | Mar. 2026 - Mar. 2028 | — | | |
b)Measurement and classification of financial instruments
Classification and Measurement The following table outlines the classification and measurement basis, and related fair value for disclosures, of the financial assets and liabilities in the interim condensed consolidated financial statements: | | | | | | | | | | | | | | | | | | | | Jun. 30, 2026 | Dec. 31, 2025 | | (US$ Millions) | Classification and measurement basis | Carrying value | Fair value | Carrying value | Fair value | | Financial assets | | | | | | | Loans and notes receivable | Amortized cost | $ | 873 | | $ | 873 | | $ | 536 | | $ | 536 | | | Other non-current assets | | | | | | | Securities - FVTPL | FVTPL | 2,795 | | 2,795 | | 2,815 | | 2,815 | | | Derivative assets | FVTOCI/FVTPL | 51 | | 51 | | 68 | | 68 | | Accounts receivable(1) | Amortized cost | 109 | | 109 | | 90 | | 90 | | | Securities - FVTOCI | FVTOCI | 178 | | 178 | | 230 | | 230 | | | Other marketable securities | Amortized cost | 30 | | 30 | | 29 | | 29 | | | Restricted cash | Amortized cost | 150 | | 150 | | 182 | | 182 | | | Current assets | | | | | | | Securities - FVTOCI | FVTOCI | 10 | | 10 | | 15 | | 15 | | | Derivative assets | FVTOCI/FVTPL | 61 | | 61 | | 63 | | 63 | | Accounts receivable(2) | Amortized cost | 1,218 | | 1,218 | | 735 | | 735 | | | Restricted cash | Amortized cost | 151 | | 151 | | 287 | | 287 | | Cash and cash equivalents(3) | Amortized cost | 2,038 | | 2,038 | | 1,896 | | 1,896 | | | Total financial assets | | $ | 7,664 | | $ | 7,664 | | $ | 6,946 | | $ | 6,946 | | | Financial liabilities | | | | | | Debt obligations(4) | Amortized cost | $ | 49,519 | | $ | 49,500 | | $ | 46,314 | | $ | 46,503 | | | Capital securities | Amortized cost | 1,326 | | 1,326 | | 1,325 | | 1,325 | | | Capital securities - fund subsidiaries | FVTPL | — | | — | | 81 | | 81 | | | Other non-current liabilities | | — | | — | | | | | Loan payable | FVTPL | 9 | | 9 | | 6 | | 6 | | | Accounts payable | Amortized cost | 189 | | 189 | | 297 | | 297 | | | Derivative liabilities | FVTOCI/FVTPL | 76 | | 76 | | 108 | | 108 | | | Accounts payable and other liabilities | | — | | — | | | | Accounts payable and other(5) | Amortized cost | 3,349 | | 3,349 | | 2,629 | | 2,629 | | | Loans and notes payable | Amortized cost | 2,307 | | 2,307 | | 2,412 | | 2,412 | | | Derivative liabilities | FVTOCI/FVTPL | 126 | | 126 | | 104 | | 104 | | | Total financial liabilities | | $ | 56,901 | | $ | 56,882 | | $ | 53,276 | | $ | 53,465 | |
(1)Includes other non-current receivables associated with assets classified as held for sale on the condensed consolidated balance sheet in the amount of $23 million and nil as of June 30, 2026 and December 31, 2025, respectively. (2)Includes other current receivables associated with assets classified as held for sale on the condensed consolidated balance sheet in the amount of $591 million and $103 million as of June 30, 2026 and December 31, 2025, respectively. (3)Includes cash and cash equivalents associated with assets classified as held for sale on the condensed consolidated balance sheets in the amount of $550 million and $37 million as of June 30, 2026 and December 31, 2025, respectively. (4)Includes debt obligations associated with assets classified as held for sale on the condensed consolidated balance sheet in the amount of $14,545 million and $84 million as of June 30, 2026 and December 31, 2025, respectively. (5)Includes accounts payable and other liabilities associated with assets classified as held for sale on the condensed consolidated balance sheet in the amount of $1,388 million and $221 million as of June 30, 2026 and December 31, 2025, respectively. Fair Value Hierarchy Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). Fair value measurement establishes a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Quoted market prices (unadjusted) in active markets represent a Level 1 valuation. When quoted market prices in active markets are not available, the partnership maximizes the use of observable inputs within valuation models. When all significant inputs are observable, either directly or indirectly, the valuation is classified as Level 2. Valuations that require the significant use of unobservable inputs are considered Level 3, which reflect the partnership’s market assumptions and are noted below. This hierarchy requires the use of observable market data when available.
The following table outlines financial assets and liabilities measured at fair value in the consolidated financial statements and the level of the inputs used to determine those fair values in the context of the hierarchy as defined above: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jun. 30, 2026 | Dec. 31, 2025 | | (US$ Millions) | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | | Financial assets | | | | | | | | | | | | | | | | | | | Securities - FVTPL | $ | — | | $ | 947 | | $ | 1,848 | | $ | 2,795 | | $ | — | | $ | 947 | | $ | 1,868 | | $ | 2,815 | | | Securities - FVTOCI | 159 | | — | | 29 | | 188 | | 210 | | — | | 35 | | 245 | | | Derivative assets | — | | 112 | | — | | 112 | | — | | 131 | | — | | 131 | | | Total financial assets | $ | 159 | | $ | 1,059 | | $ | 1,877 | | $ | 3,095 | | $ | 210 | | $ | 1,078 | | $ | 1,903 | | $ | 3,191 | | | | | | | | | | | | Financial liabilities | | | | | | | | | | Capital securities - fund subsidiaries | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 81 | | $ | 81 | | | Derivative liabilities | — | | 202 | | — | | 202 | | — | | 212 | | — | | 212 | | | Loan payable | — | | 9 | | — | | 9 | | — | | 6 | | — | | 6 | | | Total financial liabilities | $ | — | | $ | 211 | | $ | — | | $ | 211 | | $ | — | | $ | 218 | | $ | 81 | | $ | 299 | |
The following table presents the change in the balance of financial assets and financial liabilities accounted for at fair value categorized as Level 3 as of June 30, 2026 and December 31, 2025: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jun. 30, 2026 | Dec. 31, 2025 |
(US$ Millions) | Financial assets | Financial liabilities | Financial assets | Financial liabilities | | Balance, beginning of period | $ | 1,903 | | $ | 81 | | $ | 2,508 | | $ | 208 | | | Acquisitions | | 99 | | | — | | | 279 | | | — | | | Dispositions | | (51) | | | — | | | (627) | | | (3) | | Fair value losses gains, net and OCI | | (69) | | | — | | | (257) | | | (158) | | Reclassification of Opportunistic Fund Investments to assets and liabilities held for sale(1) | | (5) | | | (81) | | | — | | | — | | | Other | | — | | | — | | | — | | | 34 | | | Balance, end of period | $ | 1,877 | | $ | — | | $ | 1,903 | | $ | 81 | |
(1)See Note 29, Related Parties for further information on the Reclassification of Opportunistic Fund Investments.
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