Brookfield Corporation · NYSE:BN
Brookfield — Brookfield Asset Management — Investor Day (September 2021)
190 slides from Brookfield's investor day presentation, September 2021
Slide 1: Brookfield 2021 Investor Day
Brookfield | 2021 INVESTOR DAY
Slide 2: Brookfield Asset Management
Brookfield Asset Management September 2021
Slide 3: Agenda
Agenda Introduction Bruce Flatt, Chief Executive Officer 4 Growth Sachin Shah, Chief Investment Officer 23 Asset Management Franchise Craig Noble, Chief Executive Officer, Alternative Investments 65 Real Estate Brian Kingston, Chief Executive Officer, Real Estate 94 Credit Armen Panossian, Managing
Slide 4: Introduction
Introduction Bruce Flatt, Chief Executive Officer
Slide 5: The key takeaways this year
The key takeaways this year Our 20-year compound annualized return is ±20% Going forward, we should be able to achieve the same performance Growth in our new strategies could enable us to outperform that range Our conservative balance sheet provides downside protection 1. See Notice to Recipients an
Slide 6: Interest rates are near 0%
Interest rates are Near 0% across all major global markets today 6
Slide 7: Alternatives are the place to be
Alternatives are the place to be 20001 20211 20302 95% 5% 70% 30% 40% 60% Equity/Fixed Income Real Assets/Alternatives 1. Source: Willis Towers Watson Global Pension Assets Study, 2020. 2. Brookfield estimate. 7
Slide 8: Valuations for de-risked assets continue to benefit
Valuations for de-risked assets continue to benefit from this environment $30B $1B+ $6B+ Monetizations Realized Carried Interest Accumulated Carry (and Growing) 8
Slide 9: Our operating businesses are structured to capitalize on these tailwinds
Our operating businesses are structured to capitalize on these tailwinds Large-scale, global platforms Access to multiple pools of capital High-performing operating teams Strong financial discipline 9
Slide 10: In the last 12 months we…
In the last 12 months we… Raised over $43B Deployed $45B Monetized $30B 10
Slide 11: Flagships
Flagships Last Round Current Round Next Round $57B $100B $125B+ 1. See Notice to Recipients and Endnotes. 11
Slide 12: Centered around major investment themes
Centered around major investment themes Record government debt creates large infrastructure opportunities Growing allocations to private credit are very positive for our business Quality city center properties are value purchases Alternative property sectors are growth plays Decarbonization is a gen
Slide 13: Looking forward
Looking forward 13
Slide 14: Five existing business groups well positioned for growth
Our five existing business groups are well positioned to deliver strong growth $270B+ across these strategies over the next five years 14
Slide 15: Future growth will be driven by…
Future growth will be driven by… 15
Slide 16: Insurance Solutions: $200–$300 billion
Insurance Solutions $200–$300 billion Our property and infrastructure assets give us a competitive advantage The liability risk today is comparatively low 1. Brookfield estimate. 16
Slide 17: Growth Investing: $100 billion+
Growth Investing $100 billion+ Our technology investment teams are scaling up and capable of deploying capital at scale 1. Brookfield estimate. 17
Slide 18: Transition Funds: $200 billion+
Transition Funds $200 billion+ The global commitment to net-zero emissions creates a multi-trillion-dollar investment opportunity 1. Brookfield estimate. 18
Slide 19: Secondaries: $100 billion+
Secondaries $100 billion+ Our experience across asset classes and existing distribution networks allows us to scale quickly 1. Brookfield estimate. 19
Slide 20: Our conservative balance sheet continues to underpin our growth
Our conservative balance sheet continues to underpin our growth Maintain significant and multiple sources of liquidity Finance predominantly with asset-level debt, recourse only to the asset with no cross-collateralization Structure borrowings on a long-term basis to withstand business cycles $6B 10
Slide 21: Significant liquidity from our real estate portfolio
We will source significant liquidity from our real estate portfolio $20–$30 billion+ Which will be redeployed to new growth strategies or to repurchase shares 1. Brookfield estimate. 21
Slide 22: All of this should enable strong growth
All of this should enable strong growth Plan Value $150–$184/Share $67–$83/Share 2021 2026 1. Market based multiple range of 25 – 40x on fee-related earnings. See Notice to Recipients and Endnotes, including endnotes 7 and 9. 22
Slide 23: Growth
Growth Sachin Shah, Chief Investment Officer
Slide 24: Five market-leading global businesses
We have built five market- leading global businesses 24
Slide 25: Strengths of our organization drive franchise value
That leverage the strengths of our organization and drive franchise value 25
Slide 26: Brookfield Investment Approach
Investment Approach Flexibility Operational of Capital Expertise Brookfield Capital Global Base Capabilities 26
Slide 27: Global network of investment professionals
Global network of investment professionals 1,000+ investment professionals Alignment of interests 30+ countries 27
Slide 28: Unique operating platform
Unique operating platform 150,000+ operating employees Across 30+ countries around the world Operating, development and optimization capabilities 28
Slide 29: Capital Base
Capital Base Permanent equity base that provides significant flexibility Differentiated capital raising strategy that allows us to pool large-scale public and private capital No one has as much invested alongside partners as us $64B Invested alongside partners 1. Invested capital balance adjusted fo
Slide 30: Flexibility of capital
Flexibility of capital Perpetual Affiliates Opportunistic Capital Long-Dated Funds Core Brookfield and Core+ Growth Equity Mezzanine and High Yield Secondaries 30
Slide 31: Repeatable investment strategy
Highly repeatable and consistent investment strategy Invest for Value Repeatable Enhance Monetize Operations 31
Slide 32: Multi-trillion-dollar investable universe
Each business is mature and has a multi-trillion-dollar investable universe ahead of it… 32
Slide 33: Benefiting from strong secular tailwinds
Benefiting from strong secular tailwinds Global Warming Infrastructure Urbanization Deficit Brookfield Technology Revolution Zero Rates Aging Populations 33
Slide 34: Infrastructure
Infrastructure Government deficits 5G rollout/digitization Infrastructure super-cycle $30B $95B $200B 2016 AUM AUM Today AUM 20261 1. Brookfield estimate. 34
Slide 35: Credit
Credit Zero rates Immense flow of funds Established franchise $121B $156B $300B 2016 AUM AUM Today AUM 20261 1. Brookfield estimate. 35
Slide 36: Real Estate
Real Estate Alternate sectors Size and scale of franchise Active development $146B $219B $400B 2016 AUM AUM Today AUM 20261 1. Brookfield estimate. 36
Slide 37: Renewable Power & Transition
Renewable Power & Transition Climate change Decarbonization Electrification of transport and industry $31B $59B $150B 2016 AUM AUM Today AUM 20261 1. Brookfield estimate. 37
Slide 38: Private Equity
Private Equity High-quality businesses (value and growth) Barriers to entry Growing alternatives allocation $18B $77B $150B 2016 AUM AUM Today AUM 20261 1. Brookfield estimate. 38
Slide 39: The proof of our success is in our track record
The proof of our success is in our track record 39
Slide 40: Our franchise has more than doubled over the last five years
Our franchise has more than doubled over the last five years Fee-bearing Capital 2x $132 $187 3x $59 $12 $6 $129 $135 $830B $43 $18 $108B $325B $61 $29 $14 $41 $200 $21 2016 $92 2021 $24 $60 2026 Real Estate Infrastructure Renewable Power & Transition Private Equity Technology and Other Insurance So
Slide 41: Our earnings potential continues to scale
Our earnings potential continues to scale Fee Revenues 2x $1.2 $1.4 3x $0.6 $0.1 $1.1 $0.1 $7.3B $0.4 $0.1 $1.1B $3.4B $0.7 $1.1 $1.7 $0.1 $0.4 $0.3 $0.6 $0.2 2016 $0.7 $1.0 2021 2026 Real Estate Infrastructure Renewable Power & Transition Private Equity Technology and Other Insurance Solutions Cred
Slide 42: Strong track record for our shareholders
Strong track record for our shareholders $55 20% Annualized Return1 8% Annualized Return $2 2001 BAM S&P 500 2021 1. Represents total compounded return, with dividends reinvested. 42
Slide 43: Keeping ESG at the core
All while keeping ESG at the core of all that we do… 43
Slide 44: ESG Principles integrated into our investment process
Our ESG Principles are integrated into our investment process Mitigate the Ensure the Uphold strong Be good impact of our well-being and governance corporate operations on safety of practices citizens the environment employees 44
Slide 45: Lots on the go… What's next?
Lots on the go… What’s next? 45
Slide 46: We are on our way with Transition and Secondaries
We are on our way with Transition and Secondaries 46
Slide 47: Technology and Insurance Solutions are advanced
Technology and Insurance Solutions are advanced 47
Slide 48: Software is the new infrastructure
Software is the new infrastructure 48
Slide 49: Software is the new infrastructure
Software is the new infrastructure Facilitates business processes Supports movement and storage of data Provides analytical underpinning of business decisions 49
Slide 50: Technology capabilities
Technology capabilities 30 investment professionals in Silicon Valley, New York and Shanghai Over 100 technology professionals to assess opportunities 20 growth equity transactions completed to date Over 1,000 different B2B software applications in our business that are our pipeline of opportunities
Slide 51: A number of initiatives underway
We have a number of initiatives underway 2016 2021 Growth equity Strategic partnerships for growth 2019 Tech buyout $100B+ Business 1. Brookfield estimate. 51
Slide 52: Technology will grow to a $100B+ business
Technology will grow to a $100B+ business Building Strategic Value Technical, Investment Investing Operating & Partnerships in the Investing Next Cycle Capabilities 52
Slide 53: Insurance Solutions is a natural extension of our credit business
Insurance Solutions is a natural extension of our credit business 53
Slide 54: The backdrop
The backdrop In the U.S. and Europe, there are over $10 trillion in life and annuity in-force blocks Aging population looking for retirement income and protection Growing allocation to new products in search of yield Interest rates are near zero 54
Slide 55: Investment capabilities
Investment capabilities Alternative credit is perfect for long-duration annuities Real estate and infrastructure provide highest yield, long-duration, credit-worthy products to match against liabilities Our Global Real Estate and Infrastructure franchises will provide a critical advantage in buildin
Slide 56: The perfect partner for insurers
We are the perfect partner for insurers Investment Balance Partner Capabilities Sheet of Choice for Insurers 56
Slide 57: ~$50 billion of real estate and infrastructure credit annually
We generate ~$50 billion of real estate and infrastructure credit investments annually 57
Slide 58: Over 100 insurers already invest in our products
Over 100 insurers in North America and Europe already invest in our products 58
Slide 59: Scale of our credit franchise and capital base differentiates us
The scale of our credit franchise and our capital base differentiates us 59
Slide 60: A strong foundation
And sets up a strong foundation Built a team of ~40 insurance professionals Implemented operational processes and systems Established Brookfield Reinsurance 60
Slide 61: Strong partnerships built in the last 12 months
In the last 12 months, we built strong partnerships Strategic partnership with AEL U.S. insurance company providing a Reinsurance partner of ~$2 billion to reinsure $10 billion of platform for future U.S. growth of long-dated fixed annuities policy holder liabilities $45 billion of insurance AUM agr
Slide 62: New strategies will grow insurance solutions significantly
New strategies will grow our insurance solutions business significantly Today 2026 P&C Direct Annuities Pension Risk Transfer Growing to $45B $200B+ Capital Solutions Insurance Solutions Investment Structured Management Settlement 1. $45B today refers to insurance agreements signed. 2026 figure is a
Slide 63: Pulling all of this together…
Pulling all of this together… 63
Slide 64: Takeaways
Takeaways Our unique blend of investing capabilities and operating expertise drives value We have five global businesses that should double in size Our capital base enables us to partner with investors in a unique way We are building new businesses that will significantly scale The franchise is posi
Slide 65: Asset Management Franchise
Asset Management Franchise Craig Noble, CEO of Alternative Investments
Slide 66: Our asset management franchise
Our asset management franchise Our business is growing faster today than ever before We are well positioned to deliver strong growth Focused on broadening our client base and fund offerings We are one of the Super Brands for global alternatives 66
Slide 67: Strong global investor reach across our funds
We have a strong global investor reach across our funds Current Investor Base $325B Total Fee-bearing 19% Capital Europe & Middle East ~50 Investment Strategies 56% 25% Asia Pacific Americas ~2,000 Global Institutional Investors 1. Private Funds investor base. 67
Slide 68: Fee-bearing capital expected to more than double
Fee-bearing capital is expected to more than double over the next five years $830B $325B $108B 5 Years Ago Today Target in 5 years 1. See Notice to Recipients and Endnotes, including endnote 10. 68
Slide 69: Diversified growth across businesses
Diversified growth across businesses Fee-bearing Capital $830B $325B $108B 5 Years Ago Today Target in 5 years Real Estate Infrastructure Renewable Power & Transition Private Equity Credit Insurance Solutions Technology & Other 1. See Notice to Recipients and Endnotes, including endnote 10. 69
Slide 70: Fee-bearing capital base largely perpetual or long-term
Our fee-bearing capital base is largely perpetual or long-term in nature Includes $100 billion of fee-bearing perpetual capital 23% Open-end credit and other2 77% $325B Long-term or perpetual 1. As at June 30, 2021. 2. Other includes public securities and Oaktree’s share of DoubleLine. 70
Slide 71: Strong investment performance is the foundation of our growth
Strong investment performance is the foundation of our growth 71
Slide 72: Strong investment returns are the foundation for growth
Strong investment returns are the foundation for growth Fund Number of Gross Gross Fund1 History Vintages IRR2 MoC Real Estate 15 years 7 24% 1.7x Infrastructure 11 years 4 15% 1.6x Private Equity3 20 years 5 28% 2.5x Credit 33 years 11 22% 1.7x Renewable Power & Transition4 11 years 4 13% 1.6x 1. R
Slide 73: On track for $100 billion flagship fundraising target
We are on track to achieve our $100 billion flagship fundraising target 73
Slide 74: Growth beyond flagship funds
Growth in our flagship funds is only part of the story… …we also have 45 complementary investment strategies that are driving growth 74
Slide 75: Broad sources of growth
Broad sources of growth Deepening existing relationships Originating new relationships Expanding distribution channels Developing new complementary investment strategies 75
Slide 76: Deepening existing relationships
Deepening existing relationships ~2,000 institutional investors today Average Commitments Across Top 25 LPs ~50% invested in multiple strategies 2x Continued cross-selling represents a large untapped opportunity $4B $1B 5 Years Ago Today Target in 5 Years 76
Slide 77: Originating new relationships
Originating new relationships Significant pipeline of new LP relationships New fund offerings have been a positive catalyst Flagship funds are also gaining large new clients 77
Slide 78: Global fund distribution and service organization
A global fund distribution and service organization built over several decades 250 Professionals 18 Global hub offices 78
Slide 79: Expanding distribution channels
Expanding distribution channels We are growing our presence beyond our traditional client base of very large pension plans and sovereign wealth funds Brookfield Oaktree Wealth Solutions Insurance clients Mid-market institutions 79
Slide 80: Enhanced private wealth distribution channel
We have enhanced our private wealth distribution channel 60+ 15+ 4 Dedicated Public & Private New Strategies Professionals Strategies In Development Focused on building deeper and stronger relationships with financial intermediaries and their financial advisors 80
Slide 81: Brookfield Oaktree Wealth Solutions
Brookfield Oaktree Wealth Solutions ~$13B ~$80B Current fee-bearing capital Target for this channel raised through private over next five years wealth channel 81
Slide 82: Expanding distribution channels: Insurance and Mid-Market
Expanding distribution channels Insurance Mid-Market Institutions Earning ultra-low returns on Largely untapped within fixed-income portfolios our client base Today, we manage close to Ability to leverage Oaktree’s $30 billion of private fund capital established relationships from insurance companie
Slide 83: Product innovation is a new driver of growth
Product innovation is a new driver of growth 83
Slide 84: Development of new investment strategies and funds
Development of new investment strategies and funds Recently Released In Progress Transition Fund Infrastructure & PE Secondaries Special Investments Long-Dated PE Fund Real Estate Secondaries Global High-Yield Responsible Fund Technology Partners Hedge Solutions Life Sciences Direct Lending Non-Trad
Slide 85: Complementary fund offerings: Real Estate
Developing complementary fund offerings: Real Estate Origins Steady State Opportunistic Growing to $4B $25B+ 1. Brookfield estimate. 85
Slide 86: Complementary fund offerings: Real Estate
Developing complementary fund offerings: Real Estate Origins Steady State Senior European Mezzanine Core+ Core+ Perpetual Long-Term Private Junior Funds Mezzanine U.S. Core+ Perpetual Aus. Core+ Opportunity Opportunistic Perpetual Growing to Zone $4B Opportunistic $25B+ Europe Non-Traded REIT Opport
Slide 87: Complementary fund offerings: Opportunistic Credit
Developing complementary fund offerings: Opportunistic Credit Origins Current Global $15B+ Opportunities $800M 87
Slide 88: Complementary fund offerings: Opportunistic Credit
Developing complementary fund offerings: Opportunistic Credit Origins Current European Special Private Situations Debt Mezzanine Finance BDCs European Principal Power Private Private Direct Strategic Equity Credit Lending Credit Real Estate Real Opportunities Estate Middle Debt Market Direct Global
Slide 89: Complementary fund offerings: Liquid Credit
Developing complementary fund offerings: Liquid Credit Origins1 Current Structured EM Debt Credit Total Return Senior Loans Emerging Markets Equities Liquid Liquid Credit2 CLOs Credit2 $2B Listed $17B Equities Value Equities Global Credit DoubleLine Investment Grade Solutions 1. AUM as at 12/31/1995
Slide 90: Complementary fund offerings: Infrastructure
Developing complementary fund offerings: Infrastructure Origins Steady State Europe Infra. Debt Infrastructure Debt Global Infrastructure Growing to Core $3B ~$30B Perpetual Secondaries 1. Brookfield estimate. 90
Slide 91: Complementary fund offerings: Private Equity
Developing complementary fund offerings: Private Equity Origins Steady State Special Investments Opportunistic Growing to ~$25B Technology $1B Growth Equity Long-Dated Secondaries 1. Brookfield estimate. 91
Slide 92: Complementary fund offerings: Renewable Power & Transition
Developing complementary fund offerings: Renewable Power & Transition Origins1 Steady State Fund I Growing to $12.5B ~$25B 1. Raised $7 billion in our founders’ close, established a $12.5 billion hard cap. Growth projection is a Brookfield estimate. 92
Slide 93: Pulling it all together
Pulling it all together Premier global Broadening Entering alternative asset relationships and a significant management developing new growth cycle business products 93
Slide 94: Real Estate
Real Estate Brian Kingston, CEO, Real Estate
Slide 95: BPY acquisition creates opportunity to surface ~$25 billion of capital
The acquisition of BPY creates the opportunity to surface ~$25 billion of capital 95
Slide 96: Real estate will fuel our capital plans: Hold, Recycle, Monetize
Real estate will fuel our capital plans for years Hold Recycle Monetize Maintain an irreplaceable Reinvest proceeds received Maximize returns through portfolio of trophy from vintage funds a development or mixed-use precincts buy-fix-sell strategy in global gateway cities 96
Slide 97: $30 billion of invested capital
$30 billion of invested capital Core LP Investments Transitional and Development Brookfield Place, NY Center Parcs, UK Elizabeth Quay, Perth $16B $7B $7B Hold Recycle Monetize 97
Slide 98: Hold Recycle Monetize
Real estate will fuel our capital plans for years Hold Recycle Monetize Maintain an irreplaceable Reinvest proceeds received Maximize returns through portfolio of trophy from vintage funds a development or mixed-use precincts buy-fix-sell strategy in global gateway cities 98
Slide 99: Core properties
Core properties An irreplaceable portfolio of high-quality mixed-use precincts Manhattan West Ala Moana Canary Wharf New York Honolulu London 99
Slide 100: Core properties
Core properties ~50 assets 25 gateway markets 40 million sf of area Oakbrook Center, IL 2,600 apartments $1.2 billion annual NOI1 Potsdamer Platz, Berlin 1. On a trailing 12-months basis ending June 30, 2021. See Notice to Recipients. 100
Slide 101: Resilient assets
Resilient assets Core Portfolio Occupancy 100% 95% Average 90% 80% 70% 2016 2017 2018 2019 2020 2021 101
Slide 102: Case study: Bay Adelaide Centre
Case study: Bay Adelaide Centre $800 million of development profit1 2009–2022 Multi-phased Mixed-Use Development $1.4B $2.2B Cost to Develop Stabilized Value 6.2% 4.0% Yield-on-Cost Cap Rate 1. Reflects realized and unrealized gains. 102
Slide 103: Hold Recycle Monetize
Real estate will fuel our capital plans for years Hold Recycle Monetize Maintain an irreplaceable Reinvest proceeds received Maximize returns through portfolio of trophy from vintage funds a development or mixed-use precincts buy-fix-sell strategy in global gateway cities 103
Slide 104: Reinvest the capital into new funds and strategies
We plan to reinvest the capital into new funds and strategies ($ millions) Current Investment Investment Horizon Target Return BSREP I $ 900 2022 18–20% BSREP II 2,500 2025 18–20% BSREP III 2,700 2028 18–20% BSREP IV ̶ 2031–32 18–20% Other Investments 900 2022–25 12–15% Total $ 7,000 1. See Notice t
Slide 105: Significant liquidity coming from our LP Investments
Significant liquidity is coming from our LP Investments Generating returns of 20%+ BSREP I BSREP II BSREP III 3,200 $3,100 $3,000 2,500 $1,900 ($ millions) 1,800 $1,000 1,100 $400 400 (300) 2021 2022 2023 2024 2025+ 1. As at Q2 2021. See Notice to Recipients. 105
Slide 106: Hold Recycle Monetize
Real estate will fuel our capital plans for years Hold Recycle Monetize Maintain an irreplaceable Reinvest proceeds received Maximize returns through portfolio of trophy from vintage funds a development or mixed-use precincts buy-fix-sell strategy in global gateway cities 106
Slide 107: Valuation marks on recent asset sales
Valuation marks on recent asset sales Sale prices consistent with or exceeding pre-pandemic valuations One London Wall 655 New York Avenue 3.80% 4.75% Cap Rate Cap Rate 107
Slide 108: Track record of asset dispositions
Track record Over the last five years, we have completed ~$29 billion of gross asset dispositions at a 6% average premium to IFRS valuation Asset Sales $12B $8B $4B $3B $2B 2016 2017 2018 2019 2020 108
Slide 109: Real estate outlook
Real estate outlook $10B 1 $25B $30B Transitional $5B $20B LP LP Core Core Current Growth Sales Reinvest Future 1. Net of regular distributions. 109
Slide 110: Real estate investments are a cornerstone portfolio
Our real estate investments are a cornerstone portfolio supporting our asset management franchise and will provide capital for future growth 110
Slide 111: Credit
Credit Armen Panossian, Managing Director and Head of Performing Credit
Slide 112: History of Oaktree
History of Oaktree 112
Slide 113: Many areas of expertise, with a long history of success
Many areas of expertise, with a long history of success 2010s • Real Estate Debt • Infrastructure Investing 1970-80s 1995 • • Global High-Yield Bonds Emerging Markets Equities • Value Equities • Emerging Markets Debt • U.S. High-Yield Bonds • Oaktree Formation • European Private Debt Total Return •
Slide 114: Broad, yet specialized array of investment strategies
Broad, yet specialized array of investment strategies Assets Under Management Listed Equities $8B Private Equity $14B Credit Real Estate $88B $18B Performing Credit $51B Opportunistic Credit $37B 1. As at June 30, 2021, and excludes proportionate amount of DoubleLine Capital AUM. 114
Slide 115: Benefiting from our partnership with Brookfield
Benefiting from our partnership with Brookfield Over $30 billion of AUM growth1 since partnership in 2019 Historical Assets Under Management Brookfield’s ($ billions) Partnership with $148 $156 Oaktree $124 $125 $121 $120 $114 $104 $84 $30 $18 $5 1995 2000 2005 2010 2014 2015 2016 2017 2018 2019 202
Slide 116: The most important things
“The most important things” “Only truly superior skill, discipline and integrity are likely to produce consistently high returns in the long run with limited risk.” –Howard Marks Excellence Discipline Client-First in Investing Mindset 116
Slide 117: Growth opportunities
Growth opportunities 117
Slide 118: Building on Oaktree's platform while harnessing Brookfield synergies
Building on the strength of Oaktree’s platform while harnessing synergies with Brookfield Rounding out a successful Opportunities Fund XI fundraise Scaling our Private Credit business with a suite of new product offerings Expanding Global Credit, Oaktree’s multi-asset credit strategy Capitalizing on
Slide 119: Finishing strong with the Opps XI fundraise
Finishing strong with the Opps XI fundraise Key Developments • Nearing the end of the fundraise in November • Exceeded $15 billion target, with over $15.7 billion raised to date • Excellent progress deploying capital, with nearly 70% invested or committed Historical Fundraising for Opportunities Fun
Slide 120: Significant growth planned in Private Credit franchise
Significant growth planned in Private Credit franchise New products targeting over $10 billion of incremental private credit AUM over the next four years Launch Target Size Private Credit Target Strategy Timing ($B) Allocation Demographic Capital Type Global Credit Plus 2021 $ 1.0 25% Institutional
Slide 121: Expansion of the Multi-Asset Credit platform
Expansion of the Multi-Asset Credit platform High Global Credit Plus L+6-8% Global Credit return target L+4-6% Up to 25% private credit Yield return target asset mix 100% liquid credit Quarterly asset mix liquidity Traditional Investment- Monthly Grade Debt liquidity Low More Liquidity Less 121
Slide 122: Partnership with Brookfield offers additional opportunities
Partnership with Brookfield offers additional opportunities Marketing new Mutually benefiting Enhancing capabilities products through from the Brookfield around deal sourcing, Brookfield Oaktree Reinsurance platform origination and Wealth Solutions analytics 122
Slide 123: Where are we finding opportunities in this market?
Where are we finding opportunities in this market? 123
Slide 124: Market recovery assumes little risk of future stress
The speed of the market’s recovery assumes little to no risk of future stress Credit Spreads 1,300 Yield Spreads Over Respective Benchmark 1,100 900 700 BPS 500 300 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Global High-Yield Bond Spread Global Leveraged Loan Discount Margin 1. As at August 31
Slide 125: Opportunities in focus
Opportunities in focus Stressed Sector and Off-the-Run Multi-Strategy Rescue Lending Private Credit Liquid Credit Opportunistic private loans Bespoke loans to Diversification across in sectors experiencing companies that are too credit asset classes stress or reduced complex for traditional helps li
Slide 126: Howard Marks quote on the investment environment
“In many ways, we’re back to the investment environment we faced in the years immediately prior to 2020: an uncertain world, offering the lowest prospective returns we’ve ever seen, with asset prices that are at least full-to-high, and with people engaging in pro-risk behavior in search of better re
Slide 127: Oaktree's discipline, expertise and sourcing become more valuable
In an environment like this, Oaktree’s discipline, deep expertise and sourcing capabilities become even more valuable to our clients 127
Slide 128: Financial Update
Financial Update Nicholas Goodman, Chief Financial Officer
Slide 129: Agenda
Agenda Summary 2021 Scorecard Five-Year Review Looking Forward 129
Slide 130: Summary
Summary We have delivered very strong growth in the last 12 months We have met or exceeded targets from the 2016 plan We are set up to deliver strong performance in the next five years with all key value drivers set to grow significantly Distributable earnings should grow at a 23% CAGR 130
Slide 131: 2021 scorecard
2021 scorecard 131
Slide 132: Progress against 2020–21 financial objectives
We made good progress against our 2020–21 financial objectives 2020 Objective Completed 2020–21 Highlight Deploy capital for value Deployed $45 billion Advance monetizations Sold $30 billion; Carry $1.5 billion Launch new flagship funds Raised $32 billion Grow perpetual capital Increased by
Slide 133: Progress against 2020–21 financial objectives (cont'd)
We made good progress against our 2020–21 financial objectives (cont’d) 2020 Objective Completed 2020–21 Highlight Launched Secondaries, Insurance Advance new strategies Solutions, Technology and Transition Pursue strategic transactions Privatized BPY; Established BAM Re 7 Enhance disclosure I
Slide 134: Strong growth since this time last year
We delivered strong growth since this time last year… AS AT JUNE 30 2020 2021 ($ billions) Fee-bearing capital $ 277 $ 325 17% ($ millions) 25% Fee-related earnings $ 1,345 $ 1,679 160% Realized carried interest, net 264 686 Annualized revenues and target carried interest $ 5,637 $ 6,667 18% 134
Slide 135: Predictable, growing distributable earnings
…and continue to generate predictable, growing distributable earnings AS AT JUNE 30 ($ millions) 2020 2021 Fee-related earnings $ 1,345 $ 1,679 Distributions from invested capital 1,512 2,043 2,857 3,722 30% Other costs (555) (622) Distributable earnings before realizations $ 2,302 $ 3,100 35% Reali
Slide 136: 24% payout ratio on DE before realizations
24% payout ratio on DE before realizations, leaves substantial cash flow to redeploy into the business or repurchase shares AS AT JUNE 30 ($ millions) 2020 2021 Distributable earnings before realizations $ 2,302 $ 3,100 Common share dividends (677) (755) Distributable earnings before realizations (n
Slide 137: Our plan value increased by 27%
Our plan value increased by 27% 27% $67–$83 Total $53–$66 Return1 $39–$55 $32–$45 $21 $28 2020 2021 Invested Capital Asset Manager 1. As at June 30. Per share basis, including dividends paid to BAM shareholders. 2. See Notice to Recipients and Endnotes, including endnotes 7, 8 and 9. 3. Total return
Slide 138: Conservatively capitalized balance sheet
Underpinned by a conservatively capitalized balance sheet Conservative Capitalization Strong Corporate Core Liquidity + $5.5B cash on hand + $0.7B financial assets ~$100B + $2.5B undrawn credit facility = $8.7B core liquidity $9B long-term debt $91B perpetual equity1 $64B balance sheet of investment
Slide 139: ESG in action
ESG in action As a signatory to the Net Zero Asset Managers (NZAM) initiative, we have made a commitment to investing aligned with net-zero emissions by 2050 or sooner Commitment to align with TCFD and signatory to PRI Issued $7 billion of Sustainable Financings Strong commitment to both diversity a
Slide 140: Commitment to the net-zero transition
Our commitment to the net-zero transition Catalyze companies onto Paris-aligned net-zero pathways through our new Global Transition investment strategy Collaborate with leading private sector initiatives to advance the role of finance in supporting the economy-wide transition Committed to transparen
Slide 141: Five-year review
Five-year review 141
Slide 142: Value drivers
Value drivers Fee-Related Carried Principal BAM Earnings Interest Investments Value 142
Slide 143: Fee-related earnings
Fee-related earnings Fundraising Fee Rates Margins 143
Slide 144: Fee-bearing capital has almost tripled over five years
Fee-bearing capital has almost tripled over the past five years 29% CAGR $325B $277B $164B $117B $129B 2017 2018 2019 2020 2021 Fee-bearing Capital 1. As at June 30th. 144
Slide 145: Fee rates and margins have remained steady
In that time, fee rates and margins have remained steady Implied Base Management Fees and Margins 100 100% 80 80% 60 60% 40 40% 20 20% 0 0% Fee Rate 2016 2017 2018 2019 2020 Q2 2021 Margin Implied Base Management Fees Margins 1. Excludes Oaktree. 2. Implied base management fees and margin are over L
Slide 146: Achieved the five-year projections shown in 2016
And we achieved the five-year projections we showed in 2016 ~$5.7B 5-year Cumulative Projection ~$5.9B 5-year Cumulative Actuals 2017 2018 2019 2020 2021 $1.7B $1.3B $1.1B $1.1B $0.7B 2017 2018 2019 2020 2021 2016 IR Day Projections Actual 1. As at June 30th. 146
Slide 147: Carried interest
Carried interest Carry-Eligible Investment Monetizations Capital Performance 147
Slide 148: Carry-eligible capital has grown significantly
Our carry-eligible capital has grown significantly over last 5 years and today is diversified across asset classes and strategies 38% CAGR $144B $122B $72B $47B $40B 2017 2018 2019 2020 2021 Carry-eligible Capital 1. As at June 30. 148
Slide 149: Funds meet or exceed target returns
Our funds continue to meet or exceed their target returns, which underpins our potential to realize carried interest 149
Slide 150: Monetization activity has ramped up
With our earlier vintage funds maturing, monetization activity has ramped up significantly over the last five years ~$10B 2017 Monetizations ~$30B2021 Monetizations 150
Slide 151: Surpassed milestone in realizing carried interest
Meaning we have now surpassed an important milestone in realizing carried interest 151
Slide 152: Realized carried interest vs five-year projection
Actual realized carried interest also compares favorably to the five-year projection from 2016 ~$1.2B 5-year Cumulative Projection ~$2.8B 5-year Cumulative Actuals 2017 2018 2019 2020 2021 $1.5B $0.5B $0.5B $0.2B $0.1B 2017 2018 2019 2020 2021 2016 IR Day Projections Actual 1. As at June 30. 152
Slide 153: Principal investments generate stable cash yields
3 Principal Investments have continued to generate stable and growing cash yields plus value accretion Generated $8 billion in cash distributions over the last five years, representing an average yield of 4–5% Received $2 billion in distributions in 2021—in line with our projection at Investor Day f
Slide 154: Distributable earnings more than tripled
As a result, distributable earnings have more than tripled over the past five years and are ahead of our 2016 plan 33% CAGR $4.10 $2.00 $1.60 $1.80 $1.30 2017 2018 2019 2020 2021 Distributable Earnings per Share 1. As at June 30. 154
Slide 155: 17% CAGR in our plan value
… and we have achieved a 17% CAGR in our plan value $67–$83 17% CAGR1 $39–$55 $37–$44 $32–$45 $27–$37 $21–$29 $17–$24 22 28 20 21 21 2017 2018 2019 2020 2021 Invested Capital Asset Manager 1. As at June 30. Per share basis, including dividends paid to BAM shareholders. See Notice to Recipients and E
Slide 156: Looking forward
Looking forward 156
Slide 157: Compounding value, ~15% annualized returns
We remain focused on compounding value and delivering ~15% annualized returns to shareholders over the long term 157
Slide 158: Targeting to double size and value of the business
And are targeting to double the size and value of the business over the next five years 158
Slide 159: Growth is accelerating despite being larger
Growth is accelerating despite the business being larger 159
Slide 160: Key growth drivers
Key growth drivers Flagship Fundraising New Strategies Product Development & Distribution Value Accretion in Growth in Principal Investments Perpetual Capital 160
Slide 161: Value drivers
Value drivers Fee-Related Carried Principal BAM Earnings Interest Investments Value 161
Slide 162: Fee-bearing capital over $800 billion within five years
Fee-bearing capital should be over $800 billion within five years AS AT JUNE 30 ($ billions) 2021 2026 Real Estate $ 59 $ 132 Infrastructure 61 135 Renewable Power & Transition 41 92 Private Equity 21 60 Credit 129 187 Technology & Other 14 24 14% $ 325 $ 630 CAGR Insurance Solutions (committed $45
Slide 163: Growth in long-dated and perpetual capital
Driven by growth in long-dated and perpetual capital AS AT JUNE 30 ($ billions) 2021 2026 Long-term private funds $ 140 $ 341 Perpetual strategies 108 376 Liquid strategies 77 113 21% Fee-bearing capital $ 325 $ 830 CAGR 1. See Notice to Recipients and Endnotes, including endnote 10. 163
Slide 164: Long-term private fund fee-bearing capital over $340 billion
Long-term private fund fee-bearing capital should rise to over $340 billion, while returning $78 billion to clients Return of Capital Co-Invest and Other3 Other Strategies2 ---- Flagship Series ---- Credit $341B Next Round Current Round $140B1 19% CAGR 2021 2026 1. Opening long-term private funds as
Slide 165: Perpetual strategies fee-bearing capital over $370 billion
…and fee-bearing capital from perpetual strategies should increase to over $370 billion Insurance Solutions Other2 -17 17 $376B 200 Distribution Market Perpetual Private Growth Valuation (BBU, Other) Issuances 268 (BIP, BEP) Fundraising 3 2 $108B1 65 15 91 108 28% CAGR 2021 2026 Perpetual Affiliates
Slide 166: Margins and fee rates stable going forward
We expect both margins and fee rates to be stable going forward 166
Slide 167: Plan will more than double fee-related earnings
Achieving the plan will more than double fee-related earnings over the next five years AS AT JUNE 30 ($ millions) 20211 2026 Base fees $ 3,008 $ 5,740 Other fees 400 521 Fee revenues 3,408 6,261 Direct costs (1,679) (2,876) 1,729 3,385 Partners’ interests (121) (176) +15% $ 1,608 $ 3,209 CAGR Insura
Slide 168: Carried interest
Carried interest 168
Slide 169: Significant carried interest if return targets are met
If we meet our return targets, we will earn a significant amount of carried interest on our current carry-eligible capital Carry Realization $4B $7B In years 1–3 In years 7–10 $21B $10B In years 4–6 169
Slide 170: The larger our funds, the larger our potential carry
The larger our funds, the larger our potential carry 170
Slide 171: Carry-eligible capital to continue to grow
And we expect carry-eligible capital to continue to grow over the next five years $355B 20% CAGR $310B $250B $225B $180B $144B 2021 2022 2023 2024 2025 2026 1. See Notice to Recipients and Endnotes, including endnote 10. 171
Slide 172: Carry potential is continuously growing
Which means our carry potential is continuously growing Annual Generated Accumulated Unrealized Realized Carry Carry Carry $5B $6B $14B 8% 18% 38% CAGR CAGR CAGR $4B $6B $4B $9B $1B $3B $2B $4B $1B 2021 2026 2021 2026 2021 2026 Net Net Net 1. Last twelve months ending June 30, 2021. Carried interest
Slide 173: Realized carried interest expected to total ~$42 billion
Realized carried interest over the next 10 years is now expected to total approximately $42 billion based on target returns $12B Years 1–5 $30B Years 6–10 $8.1B $6.3B $5.8B $4.5B $4.9B $5.0B 6.4 $3.4B 1.0 3.1 4.1 2.9 3.8 $2.0B $1.3B 3.4 3.5 $0.8B 2.7 2.1 2.2 1.2 1.9 1.7 1.1 2022 2023 2024 2025 2026
Slide 174: Principal investments
Principal investments 174
Slide 175: Principal investments provide a perpetual capital base
Our principal investments provide a perpetual capital base that generates strong returns $64 billion 14% IRR ~$2B ~$3B Over ~35 years Annual dividends Annual value appreciation 1. Invested capital balance adjusted for privatization of BPY. 175
Slide 176: Several strategic benefits
Which provides several strategic benefits Resiliency through cycles with a real asset, inflation-protected capital base Capital to pursue strategic growth Support for clients and our broader asset management franchise Long-dated alignment of interests Flexibility to buy back stock opportunistically
Slide 177: Growing cash flow increases value of invested capital
Our growing cash flow significantly increases the value of our invested capital, which can be used to repurchase shares Cash Retained – Distributions from Capitalization Invested Capital and Dividends -8 $116B Cash Retained – 23 Asset Manager 23 Value Appreciation (BBU, Other)2 Distribution Increase
Slide 178: Pulling it all together… what does this mean?
Pulling it all together… what does this mean? 178
Slide 179: Distributable earnings should be $11 billion annually
If we achieve this plan, distributable earnings should be $11 billion annually AS AT JUNE 30 ($ billions) 20211 2026 Fee-related earnings1 $ 1.7 $ 3.2 Distributions from investments 2.0 4.1 Other costs (0.6) (0.5) Distributable earnings, before realizations 3.1 6.8 Realized carried interest, net 0.7
Slide 180: 23% CAGR over the next five years
… representing a 23% CAGR over the next five years $ per share $6.80 23% $5.70 $4.40 $3.60 $3.00 $2.40 $4.20 $3.10 $3.60 $2.50 $2.70 $2.00 2021 2026 DE Before Realizations Realized Carried Interest, Net Insurance Solutions 1. As at June 30. See Notice to Recipients and Endnotes, including endnotes 1
Slide 181: Cumulative cash flow should be $30 billion over five years
Based on our plan, cumulative cash flow generated should be $30 billion over five years… Cash flow will be returned to owners unless reinvested in the business ($ billions) 2026 Distributable earnings before realizations, including insurance solutions $ 30.6 Realized carried interest, net1 7.9 Distr
Slide 182: Key value drivers should grow meaningfully
…And each of our key value drivers should grow meaningfully over the next five years Fee-related earnings to ~$3.2 billion in 2026 or $3.7 billion, including insurance solutions Generated carried interest, net of costs, to ~$4.3 billion annually Accumulated unrealized carry, net of costs, to $9 bill
Slide 183: Growth in asset management and compounding balance sheet value
Driven by growth in our asset management franchise and compounding value on our balance sheet Insurance $150–$184 Compounding Solutions Retained $143–$172 Cash Value Creation $7–$12 – Invested 22 Value Creation Capital Value Creation – – Carry 12 Fee-related Earnings 18 Discount to $67–$83 Plan Valu
Slide 184: In conclusion
In conclusion Plan value today is $67–$83 per share Our 20-year compound annualized return is ±20% Going forward, we should be able to achieve the same performance Plan value is expected to be $150–$184 per share in five years Growth in our new strategies could enable us to outperform that range Our
Slide 185: Making BAM a very attractive investment proposition
Making BAM a very attractive investment proposition 185
Slide 186: Brookfield 2021 Investor Day
Brookfield | 2021 INVESTOR DAY
Slide 187: Endnotes
Endnotes 1. AUM for Brookfield is calculated as follows: (i) for investments that Brookfield consolidates for accounting purposes or actively manages, including investments of which Brookfield or a controlled investment vehicle is the largest shareholder or the primary operator or manager, at 100% o
Slide 188: Notice to Recipients
Notice to Recipients INVESTOR DAY 2021 – NOTICE TO RECIPIENTS Brookfield is not making any offer or invitation of any kind by communication of this document to the recipient and under no circumstances is it to be construed as a prospectus or an advertisement. Except where otherwise indicated herein,
Slide 189: Notice to Recipients (cont'd)
Notice to Recipients (cont’d) Where this presentation refers to growth in fee-related earnings, growth is in accordance with growth in fee-bearing capital. The management fees for BEP is fixed fees on initial capitalization and an additional fee of 1.25% on the amount in excess of initial capitaliza
Slide 190: Notice to Recipients (cont'd)
Notice to Recipients (cont’d) CAUTIONARY STATEMENT REGARDING PAST AND FUTURE PERFORMANCE AND TARGET RETURNS Past performance is not indicative nor a guarantee of future results. There can be no assurance that comparable results will be achieved in the future, or that future investments or fundraisin
Brookfield Asset Management — Investor Day (September 2021) on 6ix