Brookfield Corporation · NYSE:BN
Brookfield — Brookfield Asset Management — Investor Day (September 2014)
113 slides from Brookfield's investor day presentation, Sep 16, 2014
Slide 1: Investor Meeting 2014
September 16, 2014 Brookfield Asset Management Investor Meeting 2014
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements Note: This Presentation contains “forward-looking information” within the meaning of Canadian provincial securities laws and applicable regulations and “forward- looking statements” within the meaning of the “safe harbor” provisions of the United
Slide 3: Agenda
Agenda Overview and Business Strategy Bruce Flatt Private Fund Activities Leo Van Den Thillart and Environment Private Equity Group Cyrus Madon and Value Creation Financial Impact Brian Lawson and Share Values 3 | Brookfield Asset Management Inc.
Slide 4: Overview
Overview BRUCE FLATT 4 | Brookfield Asset Management Inc.
Slide 5: Our Goal
Our Goal is to be the leading asset manager of Real Assets utilizing our global operations to invest capital for clients at outsized returns while protecting capital 5 | Brookfield Asset Management Inc.
Slide 6: The Next Years
The Next 10 Years We should be able to compound invested capital at 12% to 15% Fees generated should increase towards $3 billion At normal valuations a share should be ± $150 to $200 in 2024 Biggest risks ─ interest rates, real asset allocations, execution Biggest upsides ─ share repurchases for val
Slide 7: Our global scale is best-in-class
After 20 years of building, our global scale is best-in-class 100 offices or locations | ~700 investment professionals | ~28,000 operating employees Canada UK, Europe, Middle East Asia & Australia $23 billion AUM $11 billion AUM $17 billion AUM 3,000 employees 5,500 employees 2,500 employees United
Slide 8: One of the largest global managers of Real Assets
This makes us one of the largest global managers of Real Assets Our clients have unparalleled flexibility to invest with us FEE BEARING CAPITAL FLAGSHIP FUNDS (billions) $ 39 Brookfield Property (“BPY”) Listed Brookfield Renewable Energy (“BREP”) Partnerships Brookfield Infrastructure (“BIP”) $ 29 B
Slide 9: Our business model is simple
And, our business model is simple Source equity from clients who are seeking exposure to property and infrastructure returns Utilize our global reach to identify and acquire high quality real assets on a value basis Finance assets on a long-term, low risk basis Enhance the cash flows and value of th
Slide 10: We invest in multiple types of Real Assets in multiple places
One of our greatest advantages is that we invest in multiple types of Real Assets in multiple places …which allows us to be value investors and pick our spots!! ●●●●● “As there is always a Real Asset sector or country out of favour” 10 | Brookfield Asset Management Inc.
Slide 11: We can invest in multiple markets for three principal reasons
●●●●● We can invest in multiple markets for three principal reasons 11 | Brookfield Asset Management Inc.
Slide 12: Size
Size ●●●●● Few organizations have $200 billion of assets under management and $16 billion of discretionary liquidity to deploy 12 | Brookfield Asset Management Inc.
Slide 13: Global Scale
Global Scale ●●●●● Few organizations are truly global in scale and therefore able to move capital to locations where it is scarce 13 | Brookfield Asset Management Inc.
Slide 14: Operating Platforms
Operating Platforms ●●●●● Our 28,000 people give us confidence to invest 14 | Brookfield Asset Management Inc.
Slide 15: India – UCP
India – UCP 15 | Brookfield Asset Management Inc.
Slide 16: Brazil – VLI
Brazil – VLI 16 | Brookfield Asset Management Inc.
Slide 17: China – Xintiandi
China – Xintiandi 17 | Brookfield Asset Management Inc.
Slide 18: Ireland – Bord Gais
Ireland – Bord Gais 18 | Brookfield Asset Management Inc.
Slide 19: Key characteristics of backbone long-life infrastructure
In all of these transactions, we try to capture several key characteristics of backbone long-life infrastructure 1 Provide essential services to the global economy 2 Generate stable and growing cash flow streams 3 Deliver enhanced current yield 4 Offer protection against inflation 5 Produce attracti
Slide 20: Positioning for the macro-environment
And we try to strategically position ourselves for the macro-environment… 2005 – 2007 Careful investing 2007 – 2008 Cash raising and protecting the franchise 2009 – 2011 Tremendous deep value opportunities • Liquidating assets 2012 – 2015 • Selectively investing and organic investments • Raising cas
Slide 21: Focus on organic investing and three investment themes
Strategic Opportunistic Today, we are focused on organic investing in all of our businesses and three investment themes 21 | Brookfield Asset Management Inc.
Slide 22: Continued focus in Europe
A continued focus in Europe as there is still a huge need for capital given bank deleveraging 22 | Brookfield Asset Management Inc.
Slide 23: Emerging market opportunities
Emerging market opportunities as capital is less freely available 23 | Brookfield Asset Management Inc.
Slide 24: Commodity based opportunities
And commodity based opportunities which lead to power, infrastructure and private equity transactions 24 | Brookfield Asset Management Inc.
Slide 25: Solid long-term return for BAM shareholders
This approach has enabled us to generate a solid long-term return for BAM shareholders Investment Performance Brookfield NYSE S&P 500 1 11% 32% 5 24% 18% 10 19% 7% 20 19% 9% But equally as important, returns for our clients have also been excellent Notes/Assumptions: 1) As at December 31, 2013. 25 |
Slide 26: Value based investment methodology
In all of these situations, we have found that approaching with a value based investment methodology is key… 1 Acquire great assets – pay more, if one has to, for quality 2 Invest assuming we will own the assets forever 3 Buy at less than replacement cost, as this is critical 4 Finance prudently as
Slide 27: Next phase of our plan is leveraging the franchise
Next phase of our plan ●●●●● is leveraging the franchise 27 | Brookfield Asset Management Inc.
Slide 28: Larger Funds, expanded products, wider regions
Larger Funds ●●●●● Expanded range of products ●●●●● Selectively widened fund focus by region 28 | Brookfield Asset Management Inc.
Slide 29: Larger Funds
Larger Funds Infrastructure Private Property and Power Equity ($ millions) $7,500 – $10,000+ $10,000 – $12,000+ $3,500 – $5,000+ $4,400 $7,000 $1,000 $500 $1,000 $400 29 | Brookfield Asset Management Inc.
Slide 30: Expanded Range of Products
Expanded Range of Products Private Public Funds Markets Expanded Real Estate Distress Hedge Fund Finance Funds Additional long/short and Further Multifamily Funds long-only Infrastructure Funds Core Office Funds Additional Property Funds Agriculture Funds Real Asset Funds Timber Funds 30 | Brookfiel
Slide 31: Selectively Widening Our Regional Funds
Selectively Widening Our Regional Funds European focused Funds ●●●●● Asian focused Funds ●●●●● A listed Asian business 31 | Brookfield Asset Management Inc.
Slide 32: Major Priorities
Major Priorities 1 Continued consolidation of franchise 2 Selective acquisitions in this more robust capital environment 3 Harvesting investments to generate cash and lock in returns 4 Launching major new Funds to be ready for less robust times 32 | Brookfield Asset Management Inc.
Slide 33: Q&A
Q&A 33 | Brookfield Asset Management Inc.
Slide 34: Private Fund Activities and Environment
Private Fund Activities and Environment LEO VAN DEN THILLART 34 | Brookfield Asset Management Inc.
Slide 35: Private funds continue their solid momentum
Private funds continue their solid momentum Our fundraising capacity allows us to raise capital on a global scale Competitive advantage: track record, global platform and size Created flagship private funds around our key investment platforms Continuing to expand our dedicated fundraising team Raise
Slide 36: Our dedicated private fundraising group
Our dedicated private fundraising group is critical to the organization ~50 professionals supporting fundraising and servicing private fund investors globally, including 20 dedicated fundraising professionals Korea Japan (2015) Toronto China (2015) New York Hong Kong Los Angeles London Geneva Middle
Slide 37: Diverse Investor Base
Diverse Investor Base Our investor base is diversified across investor type and geographic regions PRIVATE FUND CAPITAL PRIVATE FUND CAPITAL BY INVESTOR TYPE1 BY GEOGRAPHY1 Other2 Europe & Middle East 9% Private Pension 17% 9% Australia Insurance 5% 8% South America 2% 50% 8% 8% Financial Asia Pacif
Slide 38: Diverse Investor Base: investors and capital raised
Diverse Investor Base Our investor base increased from ~40 in 2008 to ~280 today, with ~30% of investors in multiple private funds NUMBER OF PRIVATE FUND INVESTORS PRIVATE FUND CUMULATIVE THIRD-PARTY CAPITAL RAISED 350 $35 $ 31 B ~280 Commitments (US $ Billions) Number of Investors 300 $30 250 $25 2
Slide 39: Fundraising Highlights
Fundraising Highlights We have raised ~$8 billion in the last twelve months1 Brookfield Real Estate Finance Fund IV: Description: Real estate finance-related transactions in a risk position senior to traditional equity and subordinate to traditional first mortgages. Current income targeted to be a m
Slide 40: Growth of Private Funds Business
Growth of Private Funds Business Three flagship strategies: property, infrastructure and private equity Continually raising third-party capital Expected continued growth, particularly in our flagship funds Robust investment opportunities have accelerated our capital deployment 40 | Brookfield Asset
Slide 41: Targeting significant growth in private fund capital commitments
Targeting significant growth in private fund capital commitments CUMULATIVE THIRD-PARTY AND BROOKFIELD PRIVATE FUND CAPITAL RAISED1 ($ billions) $70 $60 $50 $40 $68 $30 $58 $47 Actual $20 $39 Projected $29 $24 $10 $21 $- Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015 Q2 2016 Notes/Assumptions: 1) B
Slide 42: Range of fees and returns for our private funds
Range of fees and returns for our private funds are attractive Base Fees Carried Target PRIVATE FUNDS1 (bps) Interest Term Return Vintages Gross IRR2,3,4 Net IRR2,3,4 Core Plus and 100-150 ∼18% 10-12 yrs 10%-15% 2003-2014 ~13% ~12% Value Add Opportunistic and 150-200 ∼20% 10-12 yrs 18%-25% 2001-2014
Slide 43: Increased Investor Demand for Real Assets
Market Trend: Increased Investor Demand for Real Assets Investors seek portfolios better suited for the current market environment Growing real asset market as investors seek stable, predictable returns ~$15 trillion of capital to be allocated to real assets over next 10 years1 Over 40% of investors
Slide 44: Institutional Allocations Shifting Towards Real Assets
Market Trend: Institutional Allocations Shifting Towards Real Assets ~$420 billion of global Private Equity Funds raised in the last twelve months, of which Real Assets were ~$130 billion SHIFTING INSTITUTIONAL RECENT MOMENTUM IN REAL ASSET ASSET ALLOCATIONS FUNDRAISING ACTIVITY IN THE LAST 12 MONTH
Slide 45: Brookfield's Public Securities Group
Brookfield’s Public Securities Group1 30-year history of active investment in public securities markets ~$17 billion in assets under management Focused investment strategies supported by real assets Positive growth in profitable retail-oriented investment products Targeting growth in high margin hed
Slide 46: Growth in Public Securities Group AUM
Growth in Public Securities Group AUM Accelerating demand for listed real asset investment strategies has fueled recent AUM growth AUM has increased by ~40% (CAGR) since Q2 2012 – ~$5 billion of AUM growth during the last twelve months Public Securities Group AUM1 ($ billions) $17 $12 $8 2Q12 2Q13 2
Slide 47: The Brookfield Story Resonates with Investors
The Brookfield Story Resonates with Investors We are uniquely positioned in the Real Asset space Investment offerings across the real asset spectrum World-class global investment platforms with permanent capital allow us to source opportunities and add value operationally Ability to execute multi-fa
Slide 48: Global Industry Recognition
Global Industry Recognition 2014 2014 2013 2013 2013 2013 Turnaround & Private Equity Deal of Global Fund Manager of Global Fundraising of North American Largest Global Real Transaction of the Year the Year the Year the Year Fundraising of the Year Estate Manager Turnaround Management Canadian Ventu
Slide 49: Q&A
Q&A 49 | Brookfield Asset Management Inc.
Slide 50: Private Equity
Private Equity CYRUS MADON 50 | Brookfield Asset Management Inc.
Slide 51: Private Equity Group – Uniquely Positioned
Brookfield’s Private Equity Group – Uniquely Positioned Access to expertise and information resident in Brookfield’s global real asset and related operating platforms Ability to pursue operationally or financially complex transactions Deep operating experience Global reach with regional investment t
Slide 52: Expanding our footprint
As we continue to expand our footprint Global presence NUMBER OF INVESTMENT PROFESSIONALS Dedicated Private Equity investment teams in key areas where Brookfield has an operating presence ─ North America 42 ─ Europe 26 ─ Brazil 13 6 ─ Australia 2001 2006 2011 2014 ─ India Experienced operations prof
Slide 53: Demonstrated ability to deploy and manage capital
With a demonstrated ability to deploy and manage capital Long history of investing in and managing companies across economic cycles Capital deployment accelerating with $9 billion deployed over the past five years Queensway Financial Prime (BBI) 2000 2004 2006 2008 2009 2013 2002 2005 2007 2011 2014
Slide 54: History of consistently strong results
Backed by a history of consistently strong results • Gross return of 27% and net returns of 20%1 • Generated 3x gross multiple of capital on realized investments • Ranked top quartile against benchmarks • No realized losses to date 40% 36% 38% 31% 30% 25% 23% 23% 21% 20% 17% 12% 10% 8% 0% BCP I 2001
Slide 55: Expansion of asset management activities
Resulting in significant expansion of our asset management activities • Private funds to be the primary source of future capital deployment • Brookfield Capital Partners III is over 65% deployed and will reach $3 billion including co-investment mandates • Successor funds to be scaled to periodically
Slide 56: Consistent investment approach over 20 years
Consistent investment approach over 20 years Acquire Invest on a High Quality Value Basis Assets Enhance Value Through an Operations- Oriented Approach 56 | Brookfield Asset Management Inc.
Slide 57: Leveraging expertise across Real Asset platforms
Leveraging expertise and information resident in Brookfield’s global Real Asset and related operating platforms PRIVATE EQUITY PROPERTY Multifamily Industrial Hospitality Office Retail • Transaction sourcing • Deal execution INFRASTRUCTURE Energy Renewable Transportation Utilities • Commodities inte
Slide 58: Selectively expanding our sector focus
We plan to continue to grow by selectively expanding our sector focus Future 2001 2006 2011 Sectors FOREST PRODUCTS CONSTRUCTION LOGISTICS/STORAGE CHEMICALS & ENGINEERING BUILDING PRODUCTS PACKAGING & AGRICULTURE/ SPECIALTY PAPER SUPPLY CHAIN INDUSTRIALS & MANUFACTURING AEROSPACE PARTS ENERGY METALS
Slide 59: Expanded scope of our investing
And we have expanded the scope of our investing INVESTMENT THEMES TRANSACTION TYPES 2001 2014 Underperforming Businesses Opportunistic Buyouts Leverage Real Assets & Related Operating Platforms Corporate Carve-Outs Capital Markets Weakness Platform Investments Distressed Investments & Out of F
Slide 60: Case Study: Building a Platform Company
Case Study Building a Platform Company Natural gas producer focused on coal-bed methane (“CBM”) and shallow gas • Privatized in 2011, establishing a CBM platform with ability to execute a roll-up strategy • Executed three highly complementary acquisitions in each of 2012, 2013 and 2014 • Production
Slide 61: Case Study: Maintaining our Operations Focus
Case Study Maintaining our Operations Focus • Acquired distressed lumber business and executed a roll up strategy – generated significant synergies • Created largest cedar producer in North America – total investment of over $300 million • Housing crisis reduced demand, revenue and profitability REV
Slide 62: Case Study: Maintaining our Operations Focus
Case Study Maintaining our Operations Focus • Brookfield operations team stepped in to manage the business ─ Rationalized production and cost structure ─ Reduced working capital by $100 million ─ Established China as a key export market ─ Sold non-core assets to generate $190 million • Public market
Slide 63: North America is recovering and capital markets are strong
North America is recovering and capital markets are strong GDP growth Continued recovery in labour and housing markets Mild inflation U.S. stock market at record highs Debt is abundant and cheap Capital available for acquisitions – Corporates/Private Equity 63 | Brookfield Asset Management Inc.
Slide 64: Record high LBO valuations
Leading to record high LBO valuations LBO PURCHASE PRICE MULTIPLE1 11.0 X 9.8 X 9.9 X 10.0 X 9.5 X 9.1 X 8.9 X 8.9 X 9.0 X 8.6 X 8.5 X 8.2 X 7.9 X 8.0 X 7.4 X 7.1 X 7.0 X 6.5 X 6.1 X 6.0 X 5.0 X 4.0 X 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Notes/Assumptions: 1) Source:
Slide 65: Capitalizing on current macro conditions
Capitalizing on current macro conditions Greater emphasis on Brazil, Europe, Australia and India Brazil Europe Australia India • Downward • Fragile • Muted growth • New pressure on recovery government economy • Home price reforming • Volatile inflation banking sector • Muted industrial • Mining over
Slide 66: In summary…
In summary… Value-oriented buyers Operations-oriented approach Global team including dedicated operations professionals Proven ability to deploy significant capital across market cycles Excellent performance track record 66 | Brookfield Asset Management Inc.
Slide 67: Q&A
Q&A 67 | Brookfield Asset Management Inc.
Slide 68: Financial Results
Financial Results BRIAN LAWSON 68 | Brookfield Asset Management Inc.
Slide 69: Agenda
Agenda ●●●●● “GP” Momentum and Profitability Share Value Potential 69 | Brookfield Asset Management Inc.
Slide 70: Returns from our asset management activities have increased
●●●●● The returns from our asset management activities have increased substantially since last year 70 | Brookfield Asset Management Inc.
Slide 71: Expanded fee bearing capital
We have continued to expand fee bearing capital FEE BEARING CAPITAL UNDER MANAGEMENT1 14% ($ billions) CAGR 90 $84 80 $71 70 60 $57 $54 $50 50 40 30 Public Markets 20 Listed Partnerships 10 Private Funds 0 2 2010 2011 2012 2013 2014 Notes/Assumptions: 1) As at June 30. 2) Excludes $7 billion fee bea
Slide 72: Significant growth in fee revenues
…leading to significant growth in fee revenues FEE REVENUES1,2 27% CAGR ($ millions) 800 $702 700 600 $528 500 400 $368 $302 300 $269 200 100 0 2010 2011 2012 2013 2014 Notes/Assumptions: 1) Excludes direct costs and net carried interests. 2) For the last twelve months June 30. 72 | Brookfield Asset
Slide 73: Fee related earnings increased by 42%
Fee related earnings increased by 42% on an LTM basis ($ millions) 2013 2014 Fee revenues1 $ 528 $ 702 Direct costs (288) (361) Fee related earnings $ 240 $ 341 +42% Notes/Assumptions: 1) Excludes carried interest. 73 | Brookfield Asset Management Inc.
Slide 74: Ahead of last year's implied potential growth rate
Which puts us ahead of last year’s implied potential growth rate FEE RELATED EARNINGS ($ millions) $675 $341 $220 $275 Actual Interpolated 2013 Investor Day 2010 2011 2012 2013 2014 2015 2016 2017 2018 74 | Brookfield Asset Management Inc.
Slide 75: Increased quantity and quality of fee bearing capital
We have increased the quantity and quality of fee bearing capital 20131 2014 Increase Fee bearing capital $ 71 bn $ 84 bn +16% Annualized base fees $ 518 mm $ 610 mm +18% Notes/Assumptions: 1) Reflects sale of $7 billion fixed income business in Q2 2014, and elimination of $7 million of annualized b
Slide 76: Annualized fee and target carry base over $1.1 billion
…and our annualized fee and target carry base to over $1.1 billion ($ millions) 2013 2014 Base fees $ 525 $ 610 Incentive distributions 32 48 Transaction and advisory 55 56 Performance income 10 30 622 744 Target carried interest 375 375 $ 997 $ 1,119 +12% 76 | Brookfield Asset Management Inc.
Slide 77: Fee revenues diversified by asset sector and product mix
Fee revenues are increasingly diversified based on both asset sector and product mix ASSET SECTOR1 PRODUCT MIX1 Advisory Advisory 8% 8% Property Public Public Markets 16% Markets 16% Listed 31% 40% Partnerships Private Equity 5% 10% Renewable 36% Energy 30% Private Funds Infrastructure Notes/Assumpt
Slide 78: Increased GP franchise values
All of which resulted in increased GP franchise values since last year ($ millions) 2013 2014 20 x Fee related earnings1 $ 4,800 $ 6,820 10 x Target carried interest, net2,3 2,440 2,440 GP values $ 7,240 $ 9,260 +28% Notes/Assumptions: 1) Multiple of 20x June 30, 2014 and 2013 LTM fee related earnin
Slide 79: We made significant progress on a number of fronts…
●●●●● We made significant progress on a number of fronts… 79 | Brookfield Asset Management Inc.
Slide 80: Listed partnerships expanded to nearly $40 billion
●●●●● We expanded the capitalization of our listed partnerships to nearly $40 billion… 80 | Brookfield Asset Management Inc.
Slide 81: Listed partnerships have delivered solid investment returns
Our two initial listed partnerships have delivered solid investment returns… Unit Price Distribution Growth Year Return1 Actual Target Brookfield 1 22% 6% CAGR Renewable $1.55 Energy 3 13% (BREP) $1.45 5%─9% 5 19% $1.38 2012 2013 2014 Brookfield 1 26% 13% Infrastructure CAGR (BIP) 3 23% $1.92 5 29%
Slide 82: Brookfield Property Partners well positioned for growth
Brookfield Property Partners is now well positioned for future growth Merged with Brookfield Office Properties – Simplifies structure and provides direct ownership of global office portfolio – Greatly enhances ability to reallocate capital Expanded capabilities to invest in multiple asset classes St
Slide 83: Substantial momentum in private fund activities
●●●●● We have created substantial momentum in our private fund activities 83 | Brookfield Asset Management Inc.
Slide 84: During the last twelve months we…
During the last twelve months we… Returned $5.4 billion of capital to investors, including a 38% gross return on GGP Crystalized and received $565 million of carried interest Raised $5.8 billion of new commitments 84 | Brookfield Asset Management Inc.
Slide 85: Flagship funds more than 60% invested or committed
…and our three private flagship funds are more than 60% invested or committed in aggregate Total Fund Invested or Commitments1 Committed (%) ($ millions) BSREP $ 4,400 94% BIF 7,000 45% BCP 1,000 65% $ 12,400 Which should allow us to commence marketing substantially larger successor funds Notes/Assu
Slide 86: Public markets group continuing to attract new capital
Our public markets group is continuing to attract new capital LTM base fees increased by more than 50% to $85 million Generated $62 million performance fees LTM1 Notes/Assumptions: 1) Includes $28 million realized and $34 million of unrealized performance fees, which are dependent on future performa
Slide 87: Excellent performance results
…and has posted excellent performance results Net Portfolio Returns1,2,3 Long-only equity strategies Global real estate 20% Global infrastructure 32% Long/short strategies Global real estate 27% Global infrastructure 17% Notes/Assumptions: 1) For the last twelve months ended June 30, 2014. 2) Net of
Slide 88: Continued momentum in our GP results
Looking forward ●●●●● We see continued momentum in our “GP” results 88 | Brookfield Asset Management Inc.
Slide 89: Listed partnerships have access to low cost capital
Our listed partnerships continue to have access to low cost capital ●●●●● And can issue equity to fund future investments on an accretive basis 89 | Brookfield Asset Management Inc.
Slide 90: Launch over $20 billion of new private funds
●●●●● We hope to launch over $20 billion1 of new private funds within the next 12-18 months Notes/Assumptions: 1) Includes commitments from third-party clients and Brookfield entities. 90 | Brookfield Asset Management Inc.
Slide 91: Expand our public markets business
●●●●● And we believe we can profitably expand our public markets business based on their performance record and market position 91 | Brookfield Asset Management Inc.
Slide 92: Continued growth in fee bearing capital
As a result, we expect continued growth in fee bearing capital… FEE BEARING CAPITAL ($ billions) $138 +10% $84 Actual Interpolated Potential – see notes 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Notes/Assumptions: 1) Listed partnerships midpoint of target distribution growth: BPY – 6.5%; BRE
Slide 93: Increased fee related earnings
…leading to increased fee related earnings FEE RELATED EARNINGS ($ millions) $875 +21% $341 Actual Interpolated Potential – see notes 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Notes/Assumptions: 1) 2015–2019 based on projected annualized results. 2) Listed partnerships base fee of initial am
Slide 94: Drivers of accelerated fee related earnings growth
Fee related earnings increased at an accelerated rate due to… Increase in average base fees earned on private funds – Increased emphasis on value add and opportunity funds Incremental listed partnership equity earns 125 basis points – BPY and BREP launched with initial flat fee which represented low
Slide 95: Potential to earn greater carried interests
Increased private fund capital creates the potential to earn greater carried interests TARGET CARRIED INTERESTS1 ($ millions) $690 +13% $375 $450 Net of fees2 Interpolated 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Notes/Assumptions: 1) Target carried interest is a non-IFRS measure intended t
Slide 96: Increase in GP franchise value
Which should lead to a meaningful increase in our GP franchise value ($ millions) 2014 2019 Fee related earnings1 $ 6,820 $ 16,500 Carried interest, net2 2,440 4,500 $ 9,260 $ 21,000 18% Notes/Assumptions: 1) Multiple of 20X LTM fee related earnings for 2014 and 20X hypothetical fee related earnings
Slide 97: Favourable returns from invested capital
●●●●● We are continuing to generate favourable returns from our invested capital 97 | Brookfield Asset Management Inc.
Slide 98: Invested capital provides cash flow, liquidity and alignment
●●●●● This capital provides an important source of cash flow and liquidity, as well as strong alignment with fund investors 98 | Brookfield Asset Management Inc.
Slide 99: $28 billion of invested capital generating distributable cash
We have approximately $28 billion1 of invested capital, generating $1.1 billion2 of annualized distributable cash INVESTED CAPITAL DISTRIBUTABLE CASH Non-listed Non-listed Various BPY BPY BIP Various BIP BREP BREP Notes/Assumptions: 1) Using August 29, 2014 market prices for listed investments, appr
Slide 100: Invested capital should benefit from economic growth
Invested capital should benefit from economic growth and improved fundamentals Property – Increased occupancy and in-place rents Power – Higher energy prices and cost optimization Infrastructure – Pass through of inflation and GDP increases Private Equity – Continued growth in operating earnings fro
Slide 101: Reallocating capital to invest at higher returns
In addition…our ability to reallocate capital allows us to invest at higher returns Expand our business…to accelerate growth of asset management activities…and fees and Stock buybacks…if our shares continue to trade at a meaningful discount 101 | Brookfield Asset Management Inc.
Slide 102: Redeploying balance sheet capital to fund growth and repurchase shares
We remain committed to redeploying balance sheet capital to fund growth and repurchase shares Relevant decision factors include: Maintain strong liquidity profile Must be accretive to share value Shareholder friendly and cost effective basis 102 | Brookfield Asset Management Inc.
Slide 103: Value and growth not reflected in IFRS values and market prices
●●●●● We believe, however, there is considerable value and growth potential that is not reflected in our IFRS values and current market prices 103 | Brookfield Asset Management Inc.
Slide 104: Base case GP projections
Our base case GP projections assume relatively modest growth assumptions Projected 2019 Values Growth rate in 10% 15% fee bearing capital FRE margin 50% 60% 50% 60% Fee bearing capital (billions) $ 138 $ 138 $ 165 $ 165 Projected fee base Fee related earnings 875 1,045 1,065 1,275 Target carry, net1
Slide 105: Incentive distributions enhance growth in fee related earnings
Incentive distributions enhance the growth rate in fee related earnings ($ millions) INCENTIVE DISTRIBUTIONS 350 HYPOTHETICAL GROWTH High ($315 mm) 300 250 Average ($250 mm) 200 Low ($185 mm) 150 100 50 0 2014 2015 2016 2017 2018 2019 High end of target distribution growth range Average of target di
Slide 106: Potential significant increases in carried interest
And…we have the potential to generate significant increases in carried interest as we continue to grow and deploy private fund capital ($ millions) 1,000 GROWTH IN ANNUALIZED TARGET CARRY BASED ON HYPOTHETICAL RETURNS High end ($940 mm) 900 800 700 Base case ($690 mm) 600 Low end ($560 mm) 500 400 3
Slide 107: Target of 12-15% annualized return on invested capital
As in the past…we hope to exceed our target of a 12-15% annualized return on invested capital 2014 Base Case Values Potential 2019 Values1,2 Growth Rate 12% 15% 18% 20% Invested Capital ($ billions) $28 $52 $59 $67 $72 Notes/Assumptions: 1) Determined by applying stated growth rates to 2014 base cas
Slide 108: Pulling it together…
●●●●● Pulling it together… 108 | Brookfield Asset Management Inc.
Slide 109: Potential to offer very attractive returns to shareholders
We have the potential to offer very attractive returns to shareholders BAM Potential Equity Value – 2019 ($ billions, except per share amount) Assumptions: FBC growth rate 10% 10% 15% 15% FRE gross margin 50% 60% 50% 60% LP return 12% 15% 18% 20% Equity value GP value1 $ 21 $ 24 $ 25 $ 30 Invested c
Slide 110: Q&A
Q&A 110 | Brookfield Asset Management Inc.
Slide 111: Notes, Assumptions and Definitions
Notes, Assumptions and Definitions • 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 (
Slide 112: Notes, Assumptions and Definitions (cont'd)
Notes, Assumptions and Definitions (cont’d) • Base Case Value or Invested Capital refers to the value ascribed to our company’s investments and its asset management activities on a deconsolidated basis utilizing the following valuation methodologies, which primarily utilize public pricing or reading
Slide 113: September 16, 2014 Q&A
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Brookfield Asset Management — Investor Day (September 2014) on 6ix