Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that...
Transcript of Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that...
![Page 1: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/1.jpg)
Brookfield Asset Management
12th Annual Investor Meeting September 28, 2016
![Page 2: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/2.jpg)
Cautionary Note Regarding Forward-Looking Statements
Forward-Looking Statements and Information This presentation contains “forward-looking information” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of Brookfield Asset Management and its subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods. In some cases, forward-looking statements can be identified by terms such as “expects,” “anticipates,” “plans,” “believes,” “estimates,” “seeks,” “intends,” “targets,” “projects,” “forecasts” or negative versions thereof and other similar expressions, or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.” Although we believe that our 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 our control, which may cause the actual results, performance or achievements of Brookfield Asset Management to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information. Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business; the behavior of financial markets, including fluctuations in interest and foreign exchanges rate; global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; strategic actions including dispositions; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates); the effect of applying future accounting changes; business competition; operational and reputational risks; technological change; changes in government regulation and legislation within the countries in which we operate; changes in tax laws, catastrophic events, such as earthquakes and hurricanes; the possible impact of international conflicts and other developments including terrorist acts; and other risks and factors detailed from time to time in our documents filed with the securities regulators in Canada and the United States. We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, Brookfield Asset Management undertakes no 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.
Use of Non-IFRS Measures and Other This presentation contains references to financial measures which are not generally accepted accounting measures under IFRS and may differ from similar definitions used by other entities. We believe that these are useful supplemental measures that may assist investors in assessing our financial performance and the cash anticipated to be generated by our operations. Such measures should not be considered as the sole indicators of our performance and should not be considered in isolation from, or as a substitute for, analysis of our financial statements prepared in accordance with IFRS.
Certain values used in this presentation are for illustrative purposes and based on various factors that may or may not materialize, including past performance metrics that may not be indicative of future performance.
References to Brookfield, Brookfield Asset Management or BAM are to Brookfield Asset Management Inc. together with its subsidiaries unless the context reflects otherwise.
All amounts are in U.S. dollars unless otherwise specified.
2
![Page 3: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/3.jpg)
Agenda
3
Bruce Flatt 4 Chief Executive Officer Brian Lawson 45 Chief Financial Officer
![Page 4: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/4.jpg)
Agenda
4
Review of the past 12 months
The fundraising environment today
Our competitive advantages
The growth of our Funds
Where we are going from here
1
2
3
4
5
![Page 5: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/5.jpg)
In the past 12 months we’ve made considerable progress
in building our business into a leading global manager of
Real Assets
5
![Page 6: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/6.jpg)
We completed fundraising for our recent series of flagship funds, doubling the size of the predecessor funds
6
$4.4 $9 billion Real Estate
$1.0 $4 billion $0.8 Private Equity
$7.0 $14 billion Infrastructure $2.7
$1.0
![Page 7: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/7.jpg)
2014 2016
~150 new institutions invested in our funds, bringing the total to 425 – we believe we will achieve 1,000 in time
7
425
280
+52%
+52%
![Page 8: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/8.jpg)
…further diversifying our investor base
8
59%
34% 7%
2016
Europe & Other
North America
Asia, Middle East,
Australia
1) As at June 30, 2016. Private fund capital by geography
![Page 9: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/9.jpg)
We have deployed $16 billion of capital around the world over the past 12 months
9
49% 29%
10% 12%
North America
South America
Asia & Other Europe
Peru
India Germany
1) LTM as at June 30, 2016
![Page 10: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/10.jpg)
We continue to increase total assets under management
2012 2013 2014 2015 2016
$192
$183 $158
$218
$243 11%
10
TOTAL ASSETS UNDER MANAGEMENT ($billions)
1) As at June 30
![Page 11: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/11.jpg)
We completed the spin-off of Brookfield Business Partners
11
Provides investors with the ability to invest directly in businesses within our private equity group
Creates a permanent equity base for these businesses
Establishes a currency to transact with
![Page 12: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/12.jpg)
And achieved favourable results for our other listed partnerships
12
Distribution growth Price appreciation Capitalization growth
![Page 13: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/13.jpg)
Which has all led to meaningful growth in operating results
13
Fee bearing capital
Fee related earnings
Annualized fees and target carry
15%
50%
41%
1) One year return as at June 30, 2016
![Page 14: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/14.jpg)
We have achieved this by executing our simple and repeatable business model
14
Source equity from clients seeking exposure to property and infrastructure returns
Use our access to large scale capital to invest on behalf of clients
Utilize our global reach to identify and acquire high-quality Real Assets
Finance assets on a long-term, low-risk basis
Enhance the cash flows and value of assets by leveraging our leading operating businesses
1
2
3
4
5
![Page 15: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/15.jpg)
Institutions continue to allocate increasing amounts of capital to
Real Asset strategies
15
![Page 16: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/16.jpg)
Traditional equity and fixed income investments no longer provide sufficient total returns
16
Negative interest rates in Japan and Europe continue to put downward pressure on the long U.S. rate
Global growth is slow so it looks like we will continue in a low interest rate environment for a while
Institutional investors are in search of alternatives
![Page 17: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/17.jpg)
We anticipate allocations of capital to Real Assets to grow substantially
17
Equity/Fixed Income Real Assets
90
10
85
15 2000
2016
2030
60
40
![Page 18: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/18.jpg)
Shifts in portfolio allocations are being largely driven by…
18
• Macroeconomic factors – continued slow growth and low interest rate environment • Continued acceptance of Real Assets as an asset class – with infrastructure investment growing at accelerated rates • Changes in regulation – increasing allocations to alternatives and foreign investments by Asian insurance companies and institutions
![Page 19: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/19.jpg)
Allocation trends should continue, irrespective of interest rates
19
• Interest rates should slowly move up in the U.S.
• Our business model works very well even if rates trend higher
• We have found that Real Assets retain their value across the cycle
• Interest rates should rise only if the economy is improving… leading to growth in cash flow returns
Returns on Real Assets remain extremely attractive in this environment
![Page 20: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/20.jpg)
Sovereign investors are leading the way
20
• Ability to commit large amounts of capital
• Long-term, global mandates
• Sophisticated and diverse strategies
• Looking for partners to extend their reach
And Real Assets have become well established as an
asset class across most other institutions as well
![Page 21: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/21.jpg)
We are well positioned as a partner of choice
for Real Asset strategies
21
![Page 22: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/22.jpg)
We have a number of competitive strengths…
22
• 115 years of operating experience – 55,000 employees
• Multiple fund offerings – three ways to invest
• Established governance and client service capabilities
• Large scale capital – ~$250 billion of assets under management
• Global presence – 30+ countries
• Strong track record – proven investment results
![Page 23: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/23.jpg)
One big advantage we have is that investing in Real Assets requires hard work
23
We have more than 55,000 employees and decades of experience
![Page 24: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/24.jpg)
We provide three distinct offerings, which appeal to a broad range of investors
24
Listed Partnerships
$49 billion $47 billion $12 billion
Private Funds
Public Securities
$108 Billion Fee Bearing Capital
Plus numerous co-investment and joint venture opportunities 1) As at June 30, 2016
![Page 25: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/25.jpg)
…which allows us to use multiple channels to source capital to fund transactions… quickly
25
Transactions Private Funds
Listed Partnerships
Co-investors
BAM
Joint Venture Partners
![Page 26: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/26.jpg)
In an industry headed towards +$70 trillion of flows by 2020s, we have already established the backbone
to manage this growth
26
Investors and regulators expect best-in-class governance and compliance We have invested in our client service capabilities
![Page 27: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/27.jpg)
Our large scale capital is a distinct advantage
27
• Real Asset transactions can require extremely large capital commitments
• $108 billion of committed capital within funds
– $18 billion of dry powder in private funds
– Listed partnership liquidity and perpetual equity
• Relationships with global institutions provide substantial co-invest and joint venture capital
• Our corporate balance sheet provides additional liquidity and flexibility
![Page 28: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/28.jpg)
Our private funds provide investors access to premium returns across the Real Asset investible universe
28
Notes/Assumptions: 1) As at June 30, 2016. Excludes funds in market and funds closed within twelve months of the performance calculation date. Past performance is not indicative of future performance.
Gross Internal Rate of Return (“Gross IRR”) reflects the annualized performance before fund expenses, management fees and carried interest
Vintage Gross IRR1
Opportunistic Real Estate 2006 – 2015 23% Private Equity 2001 – 2015 23%
Core and Value-add Real Estate 2004 – 2013 14% Infrastructure 2006 – 2016 15%
![Page 29: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/29.jpg)
1 2
Our investment approach focuses on two things
29
Making Repeatable Investments
• Where we already have
scale and knowledge
• Assets where we can drive more value
Purchasing for Value
• Acquiring when capital is scarce
• Value the business as if we will hold forever
…Our goal is to achieve both with each investment
![Page 30: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/30.jpg)
Colombian hydroelectric portfolio
30
Sogamoso Hydro, Colombia Calderas, Colombia
Purchasing for Value
Repeatable Investment
![Page 31: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/31.jpg)
We recently acquired a self-storage business and have continued to expand its operations through development and acquisitions
31
We plan to build it into one of the largest self-storage companies in North America
Repeatable Investment
![Page 32: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/32.jpg)
We acquired a district energy business and have continued to grow the operations city by city
32
Repeatable Investment
Our goal is to be one of the largest district energy companies in North America
![Page 33: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/33.jpg)
1
We have three main competitive advantages
33
Large Scale
Capital
2 3 Global Reach
Operating Capabilities
![Page 34: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/34.jpg)
Natural gas pipeline in southeast Brazil
34
$5 billion LARGE SCALE CAPITAL
Brazil GLOBAL REACH
Pipeline Team OPERATING CAPABILITIES
![Page 35: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/35.jpg)
Landmark mixed-use office complex in Berlin
35
Potsdamer, Berlin
€1.3 billion LARGE SCALE CAPITAL
Germany GLOBAL REACH
Office/Retail/Hotel Teams OPERATING CAPABILITIES
![Page 36: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/36.jpg)
Hydroelectric facilities in northern U.S.
36
Holtwood Hydro, Pennsylvania
$1.5 billion LARGE SCALE CAPITAL
U.S. GLOBAL REACH
Renewable Team OPERATING CAPABILITIES
![Page 37: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/37.jpg)
All of which has enabled us to invest our flagship private funds capital...
37
BCP IV
>33% INVESTED1
BIF III
>30% INVESTED1
BSREP II
>65% INVESTED1
…and be in a position to begin fundraising for our next series in 2017
1) As at September 23, 2016 – invested or committed
![Page 38: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/38.jpg)
What does all this mean for Brookfield?
38
![Page 39: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/39.jpg)
We have achieved the scale to compete at all levels on a global basis
39
~$250B assets under management
$108B fee bearing capital
30+ countries
700 investment professionals
55,000 operating employees
$30B invested capital
1) As at June 30, 2016
![Page 40: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/40.jpg)
We have the capacity to continue to grow at an enhanced rate
40
![Page 41: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/41.jpg)
Our pipeline for Real Asset investment opportunities is strong
41
Our competitive advantages offer us opportunities in all environments
Interest rates look like they will be relatively low for a long time
Commodities and emerging markets are slowly recovering
We believe that Brazil bottomed in January 2016
Market volatility creates opportunities
![Page 42: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/42.jpg)
We are launching new products
42
Private Funds
• Expanded Real Estate and Infrastructure Finance Funds
• Core Plus Private Property Funds
• Geographic focused funds and sleeves of funds
• Distress Hedge Fund added in 2015
• Additional long/short and long-only Infrastructure Funds
• Additional Real Asset Funds
Private Funds
Public Securities
![Page 43: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/43.jpg)
Looking ahead, we are focused on five things…
43
Enhancing returns and asset values
Maintain excellent client service and expanding our investor base
Sourcing deals and investing $18 billion of dry powder at or above target returns
Preparing for next series of flagship funds and launching new products
Optimizing value of listed issuers
1
2
3
4
5
![Page 44: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/44.jpg)
Bringing it all together…
44
• The environment is favourable – Strong demand for Real Asset strategies – Attractive investment opportunities – Favourable financing conditions
• We are well positioned
– Large scale capital and established execution capabilities – Strong client base with room to grow
• Execution of our strategy will continue to generate value over the
next 10 years – Asset management cash flows should be ±$4 billion annualized – At normal valuations, a share should have an intrinsic value of
±$160 in 2026
![Page 45: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/45.jpg)
Financial Review – Brian Lawson
45
![Page 46: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/46.jpg)
Themes
46
Progress since last year
Balance sheet and liquidity
Growth potential
![Page 47: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/47.jpg)
We achieved substantial growth over the past year…
47
![Page 48: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/48.jpg)
48
We raised a record amount of private fund capital…
2016
Base fees – private funds $ 160 M
Target carry 355 M
Annualized fees & carry $ 515 M
IMPACT (Annualized)
$16 B increase in
Private Fund FBC
Notes/Assumptions: 1) Impact reflects annualized base fees and target carry, year-over-year change as at June 30 2) LTM net flows to private fund fee bearing capital
![Page 49: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/49.jpg)
49
and expanded our listed partnership capitalization…
$ 60 M Base fees
32 M IDR’s
$ 92 M Annualized fee revenues
Price Appreciation
& Capital Generation
Launch of
BBU
IMPACT (Annualized)
Notes/Assumptions: 1) Impact reflects annualized base fees and incentive distributions, year-over-year change as at June 30
![Page 50: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/50.jpg)
resulting in a 50% increase in fee related earnings…
50
Q2 2015 Base Fees & IDRs Transaction & OtherFees
Direct Costs Q2 2016
+50%
$440
$660 $49 $31
FEE RELATED EARNINGS (LTM) ($millions)
$238
Notes/Assumptions: 1) LTM fee related earnings as at June 30. Excludes net carried interest
![Page 51: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/51.jpg)
FEE RELATED EARNINGS ($millions)
$440
$700
$960
$1,220
$1,480
2015 2016 2017 2018 2019 2020 2021
…outperforming our previous projections
51
Notes/Assumptions: 1) Excludes net carried interest 2) 2016 interpolated value from our 2015 Investor Day financial plan
2015 Investor Day 2016 Investor Day $1,455
$660
$1,140
![Page 52: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/52.jpg)
We have increased annualized target carried interest to $830 million
52
Carry Eligible Capital
Annualized Target Carry
($billions) ($millions)
Core & Value Add $ 22 $ 350
Opportunistic 17 480
$ 39 830
Direct costs (35%) (290)
$ 540
![Page 53: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/53.jpg)
… increasing the value of our asset management business well ahead of our expected pace
53
($millions)
2015 Investor Day 2016 2015A 2016P Actual
20x Fee related earnings $ 8,800 $ 10,650 $ 13,200
10x Target carried interest, net 3,090 3,490 5,400
$ 11,890 $ 14,140 $ 18,600
+56%
Notes/Assumptions: 1) 2016P interpolated from our 2015 Investor Day; target growth of 21% FRE and13% target carried interest 2) Multiple of 20x LTM fee related earnings, as at June 30 3) Multiple of 10x target carried interest as at June 30, net of direct costs; assumes 65% gross margin
+19%
![Page 54: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/54.jpg)
In addition…
54
Brookfield Business Partners spin-off
– $0.50 special distribution to shareholders
– ~85% of our balance sheet is now invested in listed securities
Deployed or committed to invest $16 billion of capital (LTM)
11% total return on IFRS portfolio values
8% dividend growth on BAM shares
Strengthened our capitalization and liquidity profile
Notes/Assumptions: 1) One year total return as at June 30, 2016, based on increase in IFRS values and FFO
![Page 55: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/55.jpg)
55
Our balance sheet contributes meaningfully to our growth…
![Page 56: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/56.jpg)
1
…and provides us with several competitive advantages
56
Strength and liquidity
2 3 Facilitates execution
Value creation opportunities
![Page 57: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/57.jpg)
~85% of our balance sheet is held through listed securities, the majority invested in our four listed partnerships
57
BPY
BEP
BIP
BBU
Unlisted
Other Listed
Provides liquidity and increases transparency
INVESTED CAPITAL – $30 BILLION
1
Notes/Assumptions: 1) As at June 30, 2016
![Page 58: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/58.jpg)
Which is conservatively financed and provides important liquidity
58
1
Capitalization Average Maturity Total
($billions)
Corporate borrowings 8 years $ 4
Preferred shares Perp. 4
Common shares + 35
$ 43
Total Liquidity Total
Core Liquidity $ 6
Uncalled fund commitments 18
$ 24
Notes/Assumptions: 1) Common shares based on recent market pricing
![Page 59: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/59.jpg)
Our balance sheet benefits our asset management operations
59
2
And provides alignment of interest with our fund investors
Co-invest
Seed new products
Expedite transaction execution
![Page 60: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/60.jpg)
Build intrinsic value and narrow discounts
Redeploy / reallocate existing capital
Share buy-backs for value
We have multiple opportunities to enhance the balance sheet values
60
3
![Page 61: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/61.jpg)
61
Invested capital will continue to increase, benefitting from capital appreciation and retained cash flow
INVESTED CAPITAL ($billions)
2016 $ 30 CAGR
Capital appreciation
Distribution increases (mid-point) 12 7.0%
Eliminate BPY discount 5 2.7%
17 9.7%
Retained free cash flow
Invested capital 8 3.7%
Capitalization (5)
Fee related earnings 5
8
2021 $ 55 13.5%
Notes/Assumptions: 1) Totals may not add due to rounding. As at June 30. Projected 2021 results 2) Retained free cash flow includes fee related earnings and invested capital cash flow. Assumes mid-point distribution growth for BPY, BIP and BEP and a 7% increase per annum in BAM’s
common dividend. Capitalization & costs includes common share distributions. Accumulated balances are reinvested at 8% 3) 13.4% shown reflects a total return
+13.4%
INCREASE
![Page 62: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/62.jpg)
Eliminating BPY’s discount significantly increases quoted value of our invested capital
62
($millions, except per share amounts) Quoted1 IFRS1 Discount
BPY NAV per share $ 23 $ 31 $ 8
Units held by BAM 485 485 485
Invested Capital $ 10,890 $ 14,780 $ 3,890
+36%
Notes/Assumptions: 1) As at June 30, 2016
…which compounds to $5 billion of intrinsic value by 2021
![Page 63: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/63.jpg)
63
2016 2016
($millions) LTM FFO Free Cash
Flow
Asset Manager
Fee related earnings $ 660 $ 660
Carried interest, net 15 –
675 660
Invested Capital
Invested capital 1,659 1,251
Disposition gains 844 –
Financing and corporate costs (356) (489)
2,147 762
Total $ 2,822 $ 1,422
Which is available to expand our operations and distribute to shareholders
Our operations currently generate $1.4 billion of free cash flow, excluding carried interest and recurring investment gains
Notes/Assumptions: 1) As at June 30. Please refer to endnotes for detailed definitions of Funds from Operations (“FFO”) and Free Cash Flow (“FCF”). FCF from financing and
corporate costs includes preferred share distributions which are excluded in FFO
![Page 64: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/64.jpg)
Our free cash flow should increase strongly… even before carried interest
64
FREE CASH FLOW
($millions) 2016 2021
Fee related earnings $ 660 $ 1,455
Invested capital 1,251 2,150
Financing and corporate costs (489) (500)
Total $ 1,422 $ 3,105
17%
Notes/Assumptions: 1) As at June 30. 2016 LTM and 2021 projected annualized results. 2) Retained free cash flow includes fee related earnings and invested capital cash flow. Assumes mid-point distribution growth for BPY, BIP and BEP and a 7% increase per annum in BAM’s common
dividend. Accumulated balances are reinvested at 8%. 3) Please refer to endnotes for a detailed definition of Free Cash Flow (“FCF”)
![Page 65: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/65.jpg)
We continue to consistently increase our dividend
65
7% average annual increase over past five years
Strong coverage with current and projected free cash flow
Expect no policy change in the short term but will reassess on an ongoing basis
Plus, periodically, we give you a special distribution!!
![Page 66: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/66.jpg)
Looking ahead…
66
![Page 67: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/67.jpg)
67
Rapid expansion over the past year has accelerated our five year growth plans
![Page 68: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/68.jpg)
1
Overall there are three key drivers to our growth
68
Raising Capital
2 3 Fund
Performance Distribution Increases
These also enhance our invested capital
Establishes fee base
Carried interests
IDR’s grow
![Page 69: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/69.jpg)
Our private funds business cycle…
69
7-12 YEARS
![Page 70: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/70.jpg)
70
…has multiple points of value creation
RAISE
DEPLOY (YEARS 1-4)
ENHANCE VALUE (YEARS 4-12)
HARVEST (YEARS 7-12)
Establish base fee
Lock in capital/fees for remainder of fund term
Generate IRR/MoC and carry
Return capital to clients and realize carry
![Page 71: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/71.jpg)
71
2016 MATURITY
2021
Our private capital is long term in nature; 87% extends beyond 2021
$47B
$91B PRIVATE FUND FEE BEARING CAPITAL
CURRENT NEW FLAGSHIP FUNDS NEW CORE+ FUNDS NEW NICHE FUNDS
87%
![Page 72: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/72.jpg)
We have shortened our cycle to launch and deploy new funds…
72
$4.4B 23 mths / 22 mths
$9B 19 mths / >65% in 18 mths
Real Estate
$1B 24 mths / 35 mths
$4B 20 mths / >33% in 15 mths
Private Equity
$7B 11 mths / 28 mths
$14B 10 mths / >30% in 5 mths
Infrastructure
PREVIOUS SERIES Raise / Deploy
CURRENT SERIES Raise / Deploy
Notes/Assumptions: 1) Flagship funds 2) Raise reflects the number of months from marketing launch to final close. Deploy reflects the number of months from when the fund has substantially invested aggregate commitments (typically
75%) allowing for the next fund to be raised, except for current funds, which reflects the number of months from first close to September 2016
![Page 73: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/73.jpg)
…which gives us confidence that we should be able to raise two additional series of funds over the next five years
73
PRIVATE FUNDS & PUBLIC SECURITIES
($millions) FBC
Base Fees
2016 $ 59,545 $ 560
Less: Fund maturities (6,000)
Add: Flagship funds
2017/2019 20,000
2020/2021 20,000
Core+ funds 5,000
Niche funds 5,000
Public securities 7,000
Increase 51,000 600
2021 $ 110,545 $ 1,160
While launching new products Notes/Assumptions: 1) As at June 30 2) Projected annualized results
![Page 74: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/74.jpg)
Our listed partnerships’ fee bearing capital should continue to grow and in five years could look like this…
74
LISTED PARTNERSHIPS
($millions) FBC Base Fees
2016 $ 48,767 $ 425
Market appreciation
Shrink valuation gaps 5,500
Distribution growth 16,500
Issuances 10,000
Increase 32,000 400
2021 $ 80,767 $ 825
As we work to shrink the gaps between intrinsic value and traded values for our partnerships
Notes/Assumptions: 1) Projected annualized results 2) Market appreciation; eliminate the market price to IFRS discount for BPY and listed partnership dividend growth at mid-point of target distribution growth rates 3) Issuances; preferred units or debt issuances. Assumes no change in units outstanding 4) Listed partnership base fees of 125bps on increase in capitalization
![Page 75: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/75.jpg)
... and incentive distributions will grow as increased distributions are paid to unitholders
in our listed partnerships
75
Notes/Assumptions: 1) Assumes no change in units outstanding
-
50
100
150
200
250
300
350
400
450
2016 2017 2018 2019 2020 2021
High end of target distribution growth range
Average of target distribution growth range
Low end of target distribution growth range
High ($400 mm)
Base Case ($340 mm)
Low ($270 mm)
($ millions) INCENTIVE DISTRIBUTIONS
![Page 76: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/76.jpg)
…leading to strong growth in fee related earnings; increasing intrinsic value
76
($millions) 2016 Increase 2021
Base fees $ 912 $ 1,063 $ 1,985
IDR’s 86 254 340
Other fees 107 (7) 100
Fee revenues 1,105 1,310 2,425
Direct costs (445) (520) (970)
Fee related earnings $ 660 $ 790 $ 1,455
20 x Fee related earnings $ 13,200 $ 15,800 $ 29,100
+17% CAGR
Notes/Assumptions: 1) 2016 LTM fee related earnings as at June 30 2) 2021 hypothetical fee revenue. See slides 78-80 for details; assumes a 60% gross margin
![Page 77: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/77.jpg)
77
In addition, we expect to generate
substantial carried interest
![Page 78: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/78.jpg)
How we measure carried interest…
The carry we would
generate on third-party capital, assuming the fund achieves the target return, annualized on a straight
line basis
1 Target Carried
Interest
Carry generated and
based on fund performance to date
2 Unrealized
Carried Interest
Carry earned, excluding amounts subject
to clawback. Basis for financial
statement and FFO recognition
3 Realized
Carry
78
![Page 79: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/79.jpg)
Accumulated carried interest is almost $1 billion, which will be realized as we wind up our funds
79
~60%
($millions)
Accumulated Unrealized Carry Vintage Maturity1
BCP II $ 115 2006 2016
BIF I 150 2009 2022
BSREP I 275 2012 2023
Other funds 385 Various Various
$ 925 Notes/Assumptions: 1) Maturity excludes optional extension periods
![Page 80: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/80.jpg)
Looking forward, growth in private fund capital will increase Carry Eligible Capital and Target Carried Interest…
80
2016 2021 2016 2021
CARRY ELIGIBLE CAPITAL ($billions)
TARGET CARRIED INTEREST ($millions)
$39
$83
$1,790
$830
+17% +17%
Notes/Assumptions: 1) 2021 projected annualized results. As at June 30 2) Target carried interest excludes direct costs
![Page 81: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/81.jpg)
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Existing Funds Target Funds
Which we expect to realize as existing funds mature and we harvest investments
81
($millions) REALIZED CARRIED INTEREST $8B
CUMULATIVE
Notes/Assumptions: 1) 2017-2026 estimated results based on existing and target funds. Realized carried interest determined by accumulated target carried interest over the life of a fund 2) Wind-up of existing fund capital distributed over the last three years of a 10-year fund
![Page 82: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/82.jpg)
82
Pulling it together… we have multiple opportunities
to increase share value
![Page 83: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/83.jpg)
Our base case leads to a $92 per share intrinsic value over the next 5 years
83
2021 Multiple
2021 Base Value
($millions) ($billions, except per share amounts)
Asset Manager Fee related earnings $ 1,455 20x $ 29.1
Target carried interest, net 1,165 10x 11.7
Accumulated carried interest, net 5.0
45.8
Invested Capital Invested capital 13.5% growth 55.0
Leverage (8.4)
46.6
Total $ 92.4 Per Share $ 92
+22% Notes/Assumptions: 1) Values are for illustrative purposes and based on various factors that may or may not materialize, including
past performance metrics that may not be indicative of future performance 2) Estimated total return including dividends compared to public pricing per share on September 23, 2016 3) Projected annualized target carried interest, net assumes gross margin of 65%
Total Return
![Page 84: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/84.jpg)
84
We have the potential to outperform our base case
![Page 85: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/85.jpg)
Additional capital raised and distribution growth expands fee related earnings and target carry
85
($millions)
Fee Bearing Capital FRE
Target Carry
Add: Enhanced values
Larger flagship funds
2017/2019 $ 5,000 $ 60 $ 105
2020/2021 10,000 130 215
Listed Partnership
Equity issuances 10,000 230 –
Distribution growth 5,000 150 –
Performance income – 125 –
Direct costs (280) (110)
Net increase $ 30,000 $ 415 $ 210 Multiple 20x 10x
Increase in valuation $ 8,300 $ 2,100
Notes/Assumptions: 1) Values are for illustrative purposes and based on various factors that may or may not materialize, including past performance metrics that may not be indicative of future performance 2) Listed partnership equity issuance of $600 million per annum, except for BBU of $200 million per annum for the next five years 3) Assumes listed partnerships distributions grow at the high end of the target range; BPY 8%, BIP 9%, BEP 9% 4) Direct costs assume a gross margin of 60% for fee revenues and 65% for target carried interest
![Page 86: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/86.jpg)
Our upside scenarios increase share value further
86
($billions, except per share amounts) Increase
2021 Enhanced
Values
Asset Manager Fee related earnings $ 8.3 $ 37.4
Target carried interest, net 2.1 13.8
Accumulated carried interest 5.5
56.7
Invested Capital Invested capital (16.5% growth) 10.0 65.0
Leverage (8.4)
56.6
Total intrinsic value $ 113.3 Per Share $ 113
+27%
Notes/Assumptions: 1) Values are for illustrative purposes and based on various factors that may or may not materialize, including past performance metrics that may not be indicative of future performance 2) Estimated total return including dividends compared to public pricing per share on September 23, 2016
TOTAL RETURN
![Page 87: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/87.jpg)
87
Our earnings and cash flows have favourable characteristics
![Page 88: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/88.jpg)
Fee related earnings are stable and highly visible
88
Base fees are fixed rate contractual arrangements
Capital is “sticky”
– Private fund life of ~10 years
– Listed partnership equity is perpetual
IDR’s determined by visible distribution policies
Costs are largely controllable
![Page 89: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/89.jpg)
Carried interest will become a source of recurring cash flow and earnings
89
Based on relatively lower volatility asset classes
Supported by growth in tangible asset values
Realization less dependent on IPO market value
![Page 90: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/90.jpg)
Invested capital produces relatively low volatility returns
90
Underpinned largely by high-quality core/core+ type assets
Cash flows consist mostly of visible and predictable distributions from listed partnerships
![Page 91: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/91.jpg)
In closing…
Across Brookfield we are focused on three priorities throughout our business
91
Best-in-class investment performance
Designing innovative funds for our clients
Service excellence
These are the key determinants of our long-term success
![Page 92: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/92.jpg)
Q&A
92
![Page 93: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/93.jpg)
93
This Investor Meeting material contains key operating and performance measures that we employ in analyzing and discussing our results. These measures include non-IFRS measures. We describe our key financial measures below and include a complete list of our operating and performance measures on pages 36 through 38 of our December 31, 2015 annual report.
• Funds from Operations (“FFO”) is our key measure of financial performance. FFO is defined as net income attributable to shareholders prior to fair value changes, depreciation and
amortization, and deferred income taxes, and includes disposition gains that are not recorded in net income as determined under IFRS. FFO also includes the company’s share of equity accounted investments’ funds from operations on a fully diluted basis.
• Free Cash Flow (“FCF”) is comprised of fee related earnings, distributed cash flow from listed investments based on current distribution policies, financing and corporate costs and preferred share distributions.
• Fee Bearing Capital (“FBC”) represents the capital committed, pledged or invested in our listed partnerships, private funds, and public markets that we manage which entitle us to earn fee revenues and/or carried interests. Fee bearing capital includes both called (“invested”) and uncalled (“pledged” or “committed”) amounts.
• Fee revenues include base management fees, incentive distributions, performance fees and transaction and advisory fees presented within our asset management segment. Fee revenues exclude carried interest.
• Fee Related Earnings (“FRE”) is comprised of fee revenues less direct costs (other than costs related to carried interests). FRE gross margin is equal to FRE as a percentage of fee revenues.
• Base management fees are determined by contractual arrangements, are typically equal to a percentage of fee bearing capital, are accrued quarterly, include base fees earned on fee bearing capital from both clients and ourselves and are typically earned on both called and uncalled amounts.
• Incentive distributions (IDRs) are determined by contractual arrangements and are paid to us by our three primary listed partnerships and represent a portion of distributions paid by a listed partnership above a pre-determined threshold.
• Performance fees are paid to us when we exceed pre-determined investment returns in certain portfolios managed within public securities and in our private equity listed partnership. Performance fees are not subject to “clawback” in future years.
• Carried Interests are contractual arrangements whereby we receive a fixed percentage of investment gains generated within a private fund provided that the investors receive a pre-determined minimum return. Carried interests are typically paid towards the end of the life of a fund after the capital has been returned to investors and may be subject to “clawback” until all investments have been monetized and minimum investment returns are sufficiently assured. This is referred to as realized carried interest. We defer recognition of carried interests in our financial statements until they are no longer subject to adjustment based on future events. Unlike fees and incentive distributions, we only include carried interests earned in respect of third-party capital when determining our segment results.
• Unrealized carried interest is based on carried interest that would be receivable under the contractual formula at the period end date as if the fund was liquidated and all investments had
been monetized at the values recorded on that date. Carry generated refers to the change in unrealized carry during a specified period, adjusted for realized carry.
• Target carried interest is a mechanical calculation that is intended to represent the annualized carried interest we would earn on third-party private fund capital subject to carried interest on the assumption that we achieve the targeted returns on the private funds. It is determined by multiplying the target gross return of a fund, by the percentage carried interest, by the amount of third-party capital, and discounted by a utilization factor representing the average invested capital over the fund life.
• Annualized fees include annualized base management fees which are determined by the contractual fee rate multiplied by the current level of fee bearing capital, annualized incentive distributions based on our listed partnerships current annual distribution policies, annualized transaction and performance fees equal a simple average of the last two years’ revenues.
• LTM represents last twelve months of financial data.
NOTES, DEFINITIONS AND ASSUMPTIONS
![Page 94: Brookfield Asset Management/media/Files/B/BrookField... · · 2016-09-28Although we believe that our anticipated future results, performance or achievements expressed or implied](https://reader031.fdocuments.us/reader031/viewer/2022030805/5b0e5a6f7f8b9aec4b8b5217/html5/thumbnails/94.jpg)
Base CaseNo. of Units Quoted1 IFRS
Listed investmentsBrookfield Property Partners 485 10,890$ 14,780$ Brookfield Renewable Partners 183 5,463 3,915 Brookfield Infrastructure Partners 102 3,081 1,638 Brookfield Business Partners 73 1,392 1,667 BPY Preferred Shares n/a 1,275 1,275 Norbord 35 688 237 Acadian Timber 8 96 81 Other listed Various 434 434 Financial assets Various 1,070 1,070
24,389 25,097 Unlisted investments2
Residential development 2,578 2,578 Energy marketing 1,076 1,076 Other 968 968
4,622 4,622 29,011$ 29,719$
AS AT JUN. 30, 2016(MILLIONS)
94
• Base Case Value or Invested Capital refers to the value ascribed to our company’s investments on a deconsolidated basis utilizing the following valuation methodologies, which primarily utilize public pricing or reading available external valuation inputs:
− For listed investments where a publically quoted price is available, base case value is determined by the quoted market price multiplied by our holdings.
− Unlisted or privately held investments are based on IFRS values
− Our asset management franchise value is a mechanical calculation using multiples based on comparable companies trading values in the asset management industry and/or multiples
utilized in analysts reports for comparable companies Base Case comparison to IFRS equity value
1) Quoted value based on June 30, 2015 public pricing 2) Quoted value utilizes IFRS value for unlisted assets
NOTES, DEFINITIONS AND ASSUMPTIONS (CONT’D)