Brookfield Asset Management Inc. A Global Alternative Asset Management Company Focused on Property, Renewable Power, Infrastructure and Private Equity
Corporate Profile August 2016
2 Cautionary Note Concerning Forward-Looking Statements
This Corporate Profile 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, and
include words 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.”
Notes, assumptions, and definitions can be found in the appendices.
3 Overview
Our Business Page 4
Additional Information
‒ Asset Management Fee Streams Page 14
‒ Asset Management Growth Potential Page 18
‒ Invested Capital Page 20
‒ Contact Information Page 23
100-year history as a global investor, operator and leading asset manager of high
quality real assets
4
Listed Partnerships 45%
Private Funds 41%
Public Markets 7%
Transaction and advisory 7%
Property
Renewable Power
Infrastructure
Private Equity
Other
Assets Under Management ~$250 Billion
• Focused on high quality real assets
• Diversified by asset class and region
Invested Capital $30 Billion3
• Generates $1.3 billion of annualized
distributable cash flow
• ~85% invested in listed entities
Fee Bearing Capital $108 Billion
• Generates $2 billion of annualized
fees and target carried interest
• 700 investment professionals
• Diversified by product mix and strategy
1) Other AUM includes Public Markets AUM of $12.3 billion
2) Fee revenue based on annualized fees, excludes target carried interest
3) Prior to corporate leverage; using IFRS values as at June 30, 2016. See page 24 for detailed definition of Invested Capital
Property
Infrastructure
Renewable power
Private equity
Public markets
BPY
BEP
BIP
BBU
Other holdings
BPY
BEP
BIP
BBU
Other Holdings
Invested Capital Distributable Cash Flow
Brookfield by the Numbers
1
Fee Revenue Diversification:2
5
Interest expense (228)
Corporate costs (128)
(356)
LAST TWELVE MONTHS
JUNE 30,2016 FFO2,3
Fee related earnings $ 660
Realized carried interest 15
675
Listed investments 1,566
Unlisted assets 93
Disposition gains 844
2,503
Total $ 3,178
Total $ 2,822
Per share $ 2.76
Fee Bearing Capital /
IFRS Values1
Summarized Financial Performance
Our asset management business, alongside our invested capital, continues to
generate meaningful returns for our shareholders
Asset Manager
Recurring long-term fees received
from managing our funds and
carried interests
Invested Capital
Capital deployed in managed
funds and on a direct basis which
generate cash distributions
Capitalization
Conservative long-term
capitalization represents
14% LTV on invested capital
1) As at June 30, 2016
2) In millions, except per share amounts
3) A detailed definition of Funds from Operations (“FFO”) can be found on page 24
$108bn
$30bn
$8bn
6
• Large scale capital allows us to
pursue large transactions where
capital is scarce
• Global presence and global
mandates provide breadth of
opportunities
• Operating expertise facilitates
underwriting and enhances returns
• Deep history of global real asset
investing
• Value oriented culture focused on
long term investment returns
• Ability to invest in and operate
multiple asset classes
AS AN INVESTOR
Our Competitive Advantages
Our business strategy is simple and leverages our competitive advantages: large
scale capital; global reach; operating businesses
• Large scale funds enable investors
to deploy large scale capital
• Flexibility to invest across multiple
products
• Operating capability is a key
differentiator
• Alignment of interests
• Excellent performance record
• Real asset expertise aligns with
growing capital allocations
• Transparent operating model and
public company governance
AS AN ASSET MANAGER
7 Asset Management – Diversified Multi-Fund Strategy
• Allows institutional investors to invest
large amounts of capital
• Targetted and predetermined
investment strategies
• Long-term investment horizon
reducing reinvestment risk
• Diversified security portfolios
leveraging our core expertise
• Flexible and scalable investment
mandates
• Delegate tactical investment
decisions
Our clients have tremendous flexibility to invest with us through Listed Partnerships,
Private Funds and Public Markets across our Real Asset operating businesses
Listed Partnerships Private Funds Public Markets
• Exchange traded and highly liquid
• Flexible capital allocation across
broad asset class
• Consistent distribution yield
• Perpetual investment horizon
$49 billion $47 billion $12 billion
FEE BEARING CAPITAL – $108 billion
Brookfield Asset Management
8
-
150
300
450
600
750
900
1,050
1,200
2012 2013 2014 2015 2016 Ann.
Asset Management – Financial Performance
LAST TWELVE MONTHS
JUNE 30,2016 2016 2015 Change
Fee Bearing Capital $ 108,312 $ 93,955 $ 14,357
Base Fees
Listed Partnerships $ 370 $ 350 $ 20
Private Funds 439 246 193
Public Markets 103 105 (2)
912 701 211
Incentive Distributions 86 59 27
Other 107 76 31
Fee Revenues 1,105 836 269
Direct Costs (445) (396) (49)
FRE $ 660 $ 440 $ 220
Fee Revenues (LTM)1
Annualized fee revenues are now $1.2 billion; we also generate $830 million of target
carried interest annually, increasing our overall fee run rate to over $2.0 billion
Transaction & Advisory Base Fees
IDR’s
$371
$528
$702
$836
$1,105
$1,181
Performance Fees
50%
1) Excludes carried interest
2) Annualized
(JUN.30, MILLIONS)
2
9 Asset Management – Financial Performance
0
5
10
15
20
25
30
35
40
2012 2013 2014 2015 2016
Uninvested Capital Invested Capital
$10
$18 $18
$22
$39
$7 $9
$
$10 $9
$18
Carry Eligible Capital
(AS AT JUN.30, BILLIONS)
Earning carry (47%)
Uninvested (46%)
Early stage (7%)
Carry Eligible Capital ($39 billion)1
AS AT JUN. 30, 2016
Unrealized Carried Interest – Estimated Time to Realization
AS AT JUN.30, 2016
1) Includes carry eligible capital invested within the last 18 months
2) Estimated based on maturity date of funds currently earning carried interest
$925 million
Carried interest represents our share of fund profits in our private funds. Carry Eligible
Capital increased 77% over the last twelve months to $39 billion, positioning us well
to continue to generate carry, with substantial upside
Unrealized Carried Interest
8+ Years (31%)
4-7 Years (56%)
1-3 Years (13%)
77%
10 Invested Capital
~85% of our Invested Capital is held through listed securities, creating strong levels of
financial flexibility and increased transparency1
• BPY, BEP and BIP are diversified entities with a portfolio of high quality
core plus return asset portfolios with stable cash flows that support stable
distributions
‒ The high-quality nature of their asset base has a proven ability to
withstand economic downturns and they are financed on a long-term
investment grade basis
• BBU is our flagship listed issuer for owning our business and industrial
operations, focused on capital reinvestment for long-term appreciation
‒ The operating performance of the four flagship listed entities is
economically and structurally independent from one another
‒ They each participate in our opportunistic or value add private funds,
providing enhanced returns to the core plus portfolio and aligning
interests
• Listed investments distribute $1.3 billion3 in annualized cash flow
INVESTED CAPITAL $30 billion1
BPY
BEP
BIP
Other
Unlisted
Listed Partnerships
Other listed
1) Using IFRS values as at June 30, 2016. See page 24 for detailed definition of Invested Capital
2) Annualized distributed cash flow based on ownership as at June 30, 2016
Unlisted
BBU
11 Capitalization and Liquidity
We are well positioned with a strong balance sheet and significant access to capital to
maintain our growth momentum
1) Based on IFRS values
• $6.1 billion of core liquidity
to fund growth ($2.9 billion
at BAM itself)
• Over $18 billion of
committed capital from
institutional partners
• ~$25 billion of balance
sheet capital held in listed
investments
• Over $79 billion of permanent equity capitalization (consolidated); debt to capitalization: corporate
(14%), proportionate (47%)
• Debt capital primarily in the form of investment grade; long-term limited recourse financing
secured at the asset level
• Minimal cross collateralization and parental guarantees provides stability and risk mitigation
• Ability to raise third party capital through publicly listed and private funds
• Investment grade ratings: S&P: A-; DBRS: A Low; Moody’s: Baa2
(MILLIONS) Q2’16
Cash and
financial assets $ 1,940
Undrawn committed
credit facilities 4,137
Core Liquidity 6,077
Uncalled private fund
commitments 18,225
Total Liquidity $ 24,302
Strong and Flexible Capitalization Significant Liquidity
Access to Capital
Total 2016 2017 2018 2019 2020 2020+
Average
Terms
Corporate borrowings 4,469$ $ 232 432$ -$ 466$ -$ 3,339$ 8 years
Preferred shares 3,734 - - - - - n/a perp.
8,203$ 232$ 432$ -$ 466$ -$ 3,339$
AS AT JUN.30, 2016
(MILLIONS)
Maturity
12
Strong fundraising and excellent track record
High growth fee streams providing stable cash flows and upside
potential through performance fees
Significant liquidity to fund future growth
Flexibility to allocate capital to asset classes and markets that
offer the best return
Diversified product offerings through multi-fund strategy
Strong alignment with Shareholders and Clients
~18% compound return over the past 20 years
Large Scale Capital
Global Presence
Operations Focus
Why invest in Brookfield now?
Additional Information
14
PERFORMANCE NYSE / TSX
Total Return5 Distributions
5 Year
Annualized
(Per Unit)
Target
Growth
Brookfield Infrastructure Partners BIP / BIP.UN 20% $ 1.57 5% to 9%
Brookfield Renewable Partners BEP / BEP.UN 13% 1.78 5% to 9%
Brookfield Property Partners BPY / BPY.UN 7% 1.12 5% to 8%
Brookfield Business Partners BBU / BBU.UN – 0.25 –6
1) Annual base fee to Brookfield Asset Management
2) Based on capitalization of partnership (market capitalization plus recourse debt, net of cash)
3) On increases in capitalization; initial capitalization for BPY and BEP is $11.5 billion and $8.1 billion, respectively
4) Return hurdle based on quarterly growth of market value of units, subject to a high watermark initially set at $25 per unit
5) As at Aug 12, 2016, Source: Bloomberg, includes reinvestment of dividends. Brookfield Property Partners listed on NYSE April 2013; annualized return since inception
6) Brookfield Business Partner’s level of distribution is not intended to grow as the partnership intends to reinvest its capital. Returns will be based on capital appreciation
Base Management Fees Incentive Distribution Rights
FEE STRUCTURE Fixed
Base Fees
Equity
Enhancement
Fee (bps)2,3
Annual Incentive
Distributions
Return
Hurdles
(1st & 2nd)
Brookfield Infrastructure Partners – 1252 15% / 25% $0.81 / $0.88
Brookfield Renewable Partners $21M1 1253 15% / 25% $1.50 / $1.69
Brookfield Property Partners $50M1 1253 15% / 25% $1.10 / $1.20
Brookfield Business Partners – 1252 20% $25/unit4
Asset Management – Listed Partnerships
Listed Partnerships are permanent capital, high growth entities; we earn contractual
base management and performance fees for managing these partnerships
15
PERFORMANCE1
Committed Capital2
(US$ billions) Vintages Gross Net
Core Plus & Value Add
Property $ 6 2004 – 2013 14% 12%
Infrastructure 26 2006 – 2016 15% 13%
Timberlands 3 2005 – 2012 7% 6%
Lending & Finance 6 2004 – 2014 13% 10%
Opportunistic
Property 21 2006 – 2015 23% 19%
Private Equity 6 2001 – 2015 23% 16%
1) As of June 30, 2016. Past performance is not indicative of future performance, for more information refer to page 15
2) Committed capital represents original committed/pledged capital, including current capital available for commitments, capital raised from funds in market and capital that may no
longer be available given the mandate of each product
TYPICAL FEE STRUCTURE Base Fees
(bps)
Carried
Interest
Target
Return
Return
Hurdles
Core Plus and Value Add 100 – 150 18% 10% to 15% 9%
Opportunistic and Private Equity 150 – 190 20% 18% to 25% 11%
Asset Management – Private Funds
Private Funds generate long-term contractual base fees and have the opportunity to
earn carried interest upon exceeding pre-determined return hurdles
IRR
16 Asset Management – Private Funds1
Committed
Capital Brookfield
(%)2
Year
Formed
BROOKFIELD PROPERTY FUNDS
Opportunistic
Real Estate Opportunity I $240 52% 2006
Real Estate Opportunity II $260 29% 2007
Real Estate Turnaround $5,570 18% 2009
Strategic Real Estate Partners I * $4,350 31% 2012
Strategic Real Estate Partners II * $9,000 26% 2015
Brazil Retail Property $990 35% 2006
India Real Estate Opportunity Partners $282 - 2014
Thayer VI $312 48% 2014
Core Plus
Canadian Office C$1,045 21% 2005
U.S. Office $2,220 83% 2006
DTLA $1,100 45% 2013
Value Add / Finance
U.S. Multifamily Value Add I $325 13% 2011
U.S. Multifamily Value Add II $805 37% 2014
Real Estate Finance I $600 33% 2004
Real Estate Finance II $730 27% 2007
Real Estate Finance III $420 12% 2011
Real Estate Finance IV $1,375 18% 2014
Peninsula Brookfield India Real Estate $95 - 2013
Committed
Capital Brookfield
(%)2
Year
Formed
BROOKFIELD INFRASTRUCTURE FUNDS
Value Add
Global Infrastructure I * $2,660 25% 2009
Global Infrastructure II * $7,000 40% 2013
Global Infrastructure III * $14,000 29% 2016
Colombia Infrastructure $360 28% 2009
Private Utility $1,370 28% 2006
Sustainable Resources
West Coast Timber $530 - 2005
Timberlands Fund V $1,002 25% 2012
Brazil Timber I $280 18% 2008
Brazil Timber II $270 19% 2012
Brazil Agriculture I $330 31% 2009
Brazil Agriculture II $500 22% 2015
BROOKFIELD PRIVATE EQUITY FUNDS
Opportunistic/Lending
Capital Partners II * C$1,000 40% 2006
Capital Partners III * $1,000 25% 2010
Capital Partners IV * $4,000 25% 2015
Bridge Lending III C$1,450 14% 2009
* Flagship funds. (1) As of July 8, 2016. Includes active investment vehicles managed by Brookfield, including non-securities and certain investment vehicles that do not qualify as
private funds for regulatory purposes. Excludes funds currently in the market and fully divested funds. (2) Brookfield participation includes commitments from; Brookfield Asset
Management, Brookfield Property Partners, Brookfield Renewable Partners, Brookfield Infrastructure Partners and Brookfield Business Partners
17
PERFORMANCE1,2,3 Net Portfolio
Returns
Long-only equity strategies
Global real estate 16.9%
Global infrastructure 16.9%
Long/short strategies
Global real estate 15.9%
Global infrastructure 8.6%
*The number does not reflect the $4.4 Billion of assets under management of the securitized credit business which the firm contracted to sell during the quarter.
1) As of June 30, 2016; Net portfolio returns represent annualized returns since inception of each respective strategy; Inception dates are as follows: Global real estate long-only –
December 31, 2008; Global infrastructure long-only – December 31, 2008; Global real estate long/short – July 31, 2002; Global infrastructure long/short – May 31, 2008
2) Net of management fees
3) Past performance is not indicative of future performance
Asset Management – Public Markets
Public Markets focus on Real Asset listed investment opportunities globally, in both
equity and debt
Actively managed strategies offered through separately managed
accounts, mutual funds, UCITS funds, closed-end funds and private
hedge funds
Significant investor base managed on behalf of institutional and
retail investors
Fee Bearing Capital: ~$12.3 billion*
Infrastructure
Equities
Infrastructure
Real Estate
Fixed Income
18 Asset Management – Fee Bearing Capital Growth
We continue to increase fee bearing capital through our multi-product platform and are
well positioned for continued growth; we currently have three funds in the market
seeking to raise an additional $3 billion of client capital
Source: 2015 BAM Investor Day, as at June 30, 2015
Notes/Assumptions:
1) Fee bearing capital growth: 1) Listed partnerships midpoint of target distribution growth: BPY – 6.5%; BEP – 7.0%; BIP – 7.0%, 2) Listed partnerships capital issuance of $500
million each per annum for the next two years and $750 million each per annum thereafter, and 3) Private funds and public markets fee bearing capital growth at ~10% per
annum.
$160
$94
+10%
CAGR
Actual Interpolated Potential1
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
($ billions)
• We target 10% growth in fee bearing capital
over the long-term:
• Experiencing accelerated growth in
private fund capital raises
• Listed partnership capital expands
with distribution increases, capital
issuances and M&A activity
• 80% of fee bearing capital is perpetual
listed partnerships or long life private funds
(10-12 years)
$108
Q2 2016
19
$1,130
Asset Management – Fee Related Earnings Growth
Fee related earnings have significant leverage to growth in fee bearing capital;
increasing at a much faster rate than fee bearing capital
Source: 2015 BAM Investor Day, as at June 30, 2015
Notes/Assumptions:
1) Fee related earnings growth: i) 2016–2020 based on projected annualized results, ii) Listed partnerships base fee of initial amount plus 125 bps on any increases in
capitalization, iii) Private funds target weighted average base fee of 135 bps by 2020, iv) IDRs based on a 15% participation in distributions above initial threshold and 25%
beyond a second threshold, determined on a per share basis, and v) assumes listed entity dividend growth at mid-point of target distribution growth rates.
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$440
($ millions)
+21%
CAGR
• New capital earns higher base
management fees:
• Greater emphasis on higher return
value add and opportunistic
strategies
• Increases in partnership capital yields
125 bps compared to lower flat fee
on initial capitalization
• Public securities group moving to
higher fee equity strategies
• Incentive distributions increase at a ~36%
CAGR over the next 5 years
Q2-15
LTM Actual Interpolated Potential1 Q2-16
LTM Actual
$660
20
62%2 61% 79% 30%
Brookfield
Asset Management
(BAM)
Brookfield
Property Partners
(BPY)
Brookfield
Business Partners
(BBU)
Brookfield
Renewable Partners
(BEP)
1) Includes residential development operations, directly held real assets, and financial assets
2) Economic ownership interest
3) Portfolios of fixed income and equity securities managed on behalf of clients
Directly Held
Investments1
Brookfield
Property
Funds
Brookfield
Private Equity
Funds
Public
Market
Funds3
Core Office
Core Retail
Opportunistic
Utilities
Transport
Energy
Sustainable Resources
Communications
Private Equity
Industrial and Energy
Business Services
Hydroelectric
Wind
Brookfield
Infrastructure Partners
(BIP)
Brookfield
Investment
Management
(BIM)
Corporate Credit
Infrastructure Securities
Real Estate Securities
Securitized Credit
Fund Renewable Power Infrastructure
Invested Capital – Simple and Transparent Operating Model
21 Invested Capital – Listed Partnerships
~85% of our invested capital is invested in our publicly traded listed partnerships;
which target increasing annual distributions and long-term total returns of 12%–15%
Brookfield
Property
Partners
(NYSE: BPY)
Brookfield
Infrastructure
Partners
(NYSE: BIP)
Brookfield
Renewable
Partners
(NYSE: BEP)
• A premier portfolio of high quality, long-life infrastructure assets across utilities, transport,
energy and communications in North and South America, Australia, and Europe
• Targetting 12-15% total returns; with a 5% current distribution yield
• High quality cash flows; ~90% of cash flows regulated or contracted, ~70% indexed to
inflation and ~60% with no volume risk
• One of the world’s largest publicly traded, pure-play renewable power platforms
• Predominantly hydroelectric portfolio, with ~80% of generation from hydro, complemented
by wind facilities and other renewable asset classes across North America, Latin America
and Europe; ~90% of 2016 generation is contracted
• Target long-term total returns of 12%–15%, with a ~6% current distribution yield
Brookfield
Business
Partners
(NYSE: BBU)
• A business services and industrials company focused on long-term capital appreciation
• Target long-term total returns of ~15%
• Acquire businesses on a value basis, with a focus of out-of-favour sectors; enhance value
of operations by focusing on organic growth; realize value and recycle capital
opportunistically
• Invest in the high quality real estate assets in the world’s most dynamic markets,
‒ Core office and retail is 92% and 95% leased, respectively
• ~85% core office & retail assets targetting 10% to 15% total returns, and ~15% opportunistic
assets targetting 20% total returns; current distribution yield of ~5%
22
Our $30 billion of invested capital provides high levels of financial flexibility and
substantial debt coverage
Invested Capital – Holdings
1) Quoted value based on June 30, 2016 public pricing
2) Excludes realized disposition gains
3) Annualized distributed cash flow is based on current distribution policies
4) Adjusted for 3-for-2 unit split announced on August 3, 2016
5) Includes $540 million of cash and cash equivalents and $530 million of financial assets, net of deposits
6) Estimated 8% annualized total return on weighted average balance
7) Includes assets held in our private equity private funds which are reported to our fund partners on a fair value basis that exceed our IFRS values by $115 million in aggregate.
Private fund fair values are audited annually and provided to private fund clients on a quarterly basis
No. of Units Quoted1
IFRS LTM
Listed investments
Brookfield Property Partners 485 10,890$ 14,780$ 597$ 543$
Brookfield Renewable Partners 183 5,463 3,915 262 326
Brookfield Infrastructure Partners 102 4
3,081 1,638 237 160
Brookfield Business Partners 73 1,392 1,667 225 18
BPY Preferred Shares n/a 1,275 1,275 76 76
Norbord 35 688 237 74 11
Acadian Timber 8 96 81 7 6
Other listed Various 434 434 50 21
Financial assets5
Various 1,070 1,070 38 90 6
24,389$ 25,097 1,566 1,251$
Unlisted investments
Residential development 2,578 134
Energy marketing 1,076 (96)
Other7
968 55
4,622 93
29,719$ 1,659$
Distributed
Cash Flow
(Annualized)3
AS AT AND FOR THE PERIODS ENDED JUN. 30, 2016
(MILLIONS)
Invested Capital FFO2
23 Investor Relations Contacts
Contact Title E-Mail Address Phone Number
Brian Lawson Chief Financial Officer [email protected] (416) 363-9491
Derek Gorgi SVP, Finance & Treasury [email protected] (416) 359-8590
Dennis Blasutti Vice President, Finance [email protected] (416) 369-5741
Karly Dyck Director, Finance [email protected] (416) 956-5194
24 Appendix – Notes, Assumptions, and Definitions
Definitions and Notes
• Fee Bearing Capital 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 on certain portfolios managed in our public markets activities. Performance fees are typically determined on an annual
basis and 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. 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
• Annualized fee base and target carry is a non-IFRS measure that consists of annualized fees plus target carried interest
‒ 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 advisory fees which are equal to a simple average of the last two years’ revenue, annualized
performance fees earned from public markets which is equal to a simple average of the last two years’ revenues, and target carried interest
‒ 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 targetted returns on the private funds. It is determined by multiplying the target gross return of a fund, less the base management fee, by the percentage carried
interest to which we are entitled to, multiplied by the amount of third-party capital, and by the utilization factor
• LTM represents last twelve months of financial data
• Funds from Operations (“FFO”) is a key measure of our financial performance and we use FFO to assess operating results and our businesses performance on a segmented basis. We define FFO as net
income prior to fair value changes, depreciation and amortization, deferred income taxes and transaction costs. When determining FFO, we include our proportionate share of the FFO of equity accounted
investments on a fully diluted basis. FFO and its per share equivalent are non-IFRS measures which do not have any standard meaning prescribed by IFRS and therefore may not be comparable to similar
measures presented by other companies. The most directly comparable IFRS financial measure is net income. Please refer to the “Reconciliation of Net Income to FFO” contained in the Supplemental
Information posted and maintained on our website for the relevant period
• Invested Capital is the amount of common equity allocated to a business segment or business line within a segment. This measure is intended to present the net assets associated with FFO of the
segment. Invested capital is equal to common equity by segment, an IFRS measure contained in the filed Interim Report and Annual Report for the relevant period
• The private funds performance summary on page 13 sets forth the aggregate performance of our private investment funds by strategy (collectively, the “Funds”) that Brookfield is currently managing or has
previously managed, and is intended to illustrate Brookfield’s experience in managing funds. Committed capital includes original committed/pledged capital, including current capital available for
commitments and capital that may no longer be available given the mandate of each product. Gross Internal Rate of Return (“Gross IRR”) reflects the annualized performance before fund expenses,
management fees and carried interest. “Net IRR” reflects annualized performance taking into account fund expenses, management fees and carried interest and are calculated on a fund level and not for
any individual investor. Fund investors will likely have different performance returns than those used to aggregate net performance herein due to varying economic terms. In certain funds, Brookfield and its
affiliates do not pay management fees or carried interest as a limited partner, which would otherwise result in lower returns, as such Brookfield has included a notional fee on Sponsor capital as if it were a
third party investor. Gross IRR and Net IRR by strategy reflect the aggregate equity invested, realized and unrealized proceeds, fund expenses, management fees and carried interest, in the funds
currency, if applicable, for the respective private investment vehicle. Aggregate performance includes certain funds that are not eligible for performance fees or “carried interest” and excludes funds’ in
marketing or funds closed within 12 months of the performance calculation date. Prior performance is not indicative of future results and there can be no guarantee that future funds or investments will
achieve comparable results or be able to avoid losses. Gross IRR and Net IRR reflect performance from the funds’ initial investment date to June 30, 2016
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