Brookfield Corporation · NYSE:BN
Brookfield — Brookfield Asset Management — Investor Day (September 2013)
140 slides from Brookfield's investor day presentation, Sep 17, 2013
Slide 1: Investor Day 2013
September 17, 2013 INVESTOR DAY 2013
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: Today's Agenda
Today’s Agenda Overview Bruce Flatt Real Assets Kim Redding Fundraising and Financial Results Brian Lawson Operations: Property Ric Clark Infrastructure Sam Pollock Renewable Power Sachin Shah Private Equity Cyrus Madon Summary and Questions Bruce Flatt 3 | Brookfield Asset Management Inc.
Slide 4: Overview
Overview Bruce Flatt
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 exceptional returns while protecting capital 5 | Brookfield Asset Management Inc.
Slide 6: After 20 years of building, we are global
And after 20 years of building, we are global, with 100 offices or locations | ~600 investment professionals | ~24,000 operating employees UK & WESTERN EUROPE, CANADA AND THE MIDDLE EAST ASIA & AUSTRALASIA $25 billion AUM $7 billion AUM $16 billion AUM UNITED STATES $114 billion AUM SOUTH AMERICA $2
Slide 7: A very simple business model
With a very simple business model Invest capital for clients on a value basis to earn exceptional risk adjusted returns Strategy Utilize our operating platforms and expertise to optimize returns Monetize assets when opportunities arise In the process of delivering strong investment returns Objective
Slide 8: Four pillar multi-fund strategy is now in place
And, our four pillar multi-fund strategy is now in place, but is continuing to mature. . . . . . . Brookfield (BAM) 93% 65% 28% 100% Flagship Brookfield Brookfield Renewable Brookfield Brookfield Public Property Partners Energy Partners Infrastructure Partners Capital Partners1 (BPY) (BREP) (BIP) Is
Slide 9: Utilizing excess cash: broaden asset management, repurchase shares
$ As we continue to generate excess cash, we will utilize it to both: Broaden our asset management base, and Repurchase shares for value to shrink the denominator 9 | Brookfield Asset Management Inc.
Slide 10: Positioned well for future growth
Which positions us well for future growth As one of the largest global real asset managers There are only a few alternative asset managers with the track record, global platform and size that we possess Our global fundraising capacity and relationships with investors are excellent and expanding rapi
Slide 11: Excellent historical returns attract capital from clients
And with excellent historical returns1 . . . we continue to attract large amounts of capital from clients Vintages Gross IRR2 Flagship Listed Issuers Infrastructure (BIP)3 2008 18% Renewable Energy (BREP)4 1999 16% Property (BPY)5 1989 16% Private Funds Opportunistic 2001 – 2012 26% Core Plus & Valu
Slide 12: Investment strategies over the last five years
Strategic Opportunistic With respect to acquisitions of these assets, our investment strategies over the last five years, were focused on three investment themes 12 | Brookfield Asset Management Inc.
Slide 13: Over-leveraged developed markets
Over-leveraged developed markets Case study: • GGP • Babcock & Brown Infrastructure 13 | Brookfield Asset Management Inc.
Slide 14: The U.S. housing recovery
The U.S. housing recovery Case study: • Norbord • Ainsworth • Brookfield Residential 14 | Brookfield Asset Management Inc.
Slide 15: Natural gas related investments
and, natural gas related investments Case study: • Hydro plant acquisitions • Private equity investments related to natural gas 15 | Brookfield Asset Management Inc.
Slide 16: Three different themes for the next 36 months
Strategic Opportunistic But we are now focused on three different themes which we expect to continue to be dominant over the next 36 months 16 | Brookfield Asset Management Inc.
Slide 17: Continued focus in Europe
A continued focus in Europe as the markets have “calmed” but asset sales must occur 17 | Brookfield Asset Management Inc.
Slide 18: The unwind of emerging markets
The “unwind” of emerging markets as both currencies are down and capital is fleeing – generating value opportunities 18 | Brookfield Asset Management Inc.
Slide 19: Volatility in commodities
And volatility in commodities, which leads to power, infrastructure and private equity opportunities 19 | Brookfield Asset Management Inc.
Slide 20: Capital and operating resources position us well
And the combination of our capital and operating resources positions us well to pursue these opportunities Our 600 investment professionals are around the world Generate a substantial pipeline of investments And should enable us to put our tens of billions of capital to work 20 | Brookfield Asset Ma
Slide 21: Well positioned for the future
So, we are well positioned for the future, with Strong access to capital with our fund platforms Momentum in private fundraising An established track record Many attractive investment opportunities Interests aligned with clients and investors 21 | Brookfield Asset Management Inc.
Slide 22: Real Assets
REAL ASSETS ing Redd E K Brookfield
Slide 23: Real assets are gaining institutional market share
Real assets are gaining institutional market share as traditional equity and fixed income investments no longer provide sufficient current income or growth potential Yields are low, Interest rates are rising, There could be inflation concerns, Growth is subdued, and Liability requirements are increa
Slide 24: Real Assets to become the New Essential
As investors move beyond the “New Normal,” we expect Real Assets to become the . . . New Essential 24 | Brookfield Asset Management Inc.
Slide 25: Stable cash flow streams
Real Assets provide: stable cash flow streams… 1 Real Assets tend to generate stable cash flows supported by long-term agreements, often with pricing provisions that ensure a predictable and growing return over time 25 | Brookfield Asset Management Inc.
Slide 26: Attractive current yields
attractive current yields… 2 The relatively steady and predictable cash flows produced by Real Assets support attractive current income streams 26 | Brookfield Asset Management Inc.
Slide 27: Equity-like upside potential
and equity-like upside potential… 3 Leverage to economic growth enhances value on the upside 27 | Brookfield Asset Management Inc.
Slide 28: Compelling absolute and relative returns
Leading to…..compelling absolute and relative returns… Over the last 10 years, Real Assets have produced impressive nominal and relative returns, outperforming both the global equity and global bond markets COMPARATIVE TOTAL RETURN HISTORY 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 1-Year 3-Year 5-Year 10-Ye
Slide 29: Low volatility
…low volatility… The relative outperformance of Real Assets become even more impressive when viewed on a risk-adjusted basis COMPARISON OF SHARPE RATIOS ACROSS ASSET CLASSES 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 Bonds Stocks Timberlands Property Infrastructure Agrilands Source: MSCI, Bar
Slide 30: Portfolio diversification
…portfolio diversification… The addition of Real Assets to a mixed-asset portfolio may lower overall volatility and enhance risk-adjusted returns CORRELATION OF REAL ASSET RETURNS WITH EQUITIES AND BONDS Equities Bonds Property 0.23 (0.08) Infrastructure (0.11) (0.05) Timberlands (0.05) 0.15 Agrilan
Slide 31: A hedge against inflation
…and a hedge against inflation Real Assets are long-lived, physical resources that provide a natural hedge against inflation CORRELATION OF ASSET CLASSES WITH INFLATION 0.40 0.30 0.20 0.10 0.00 -0.10 -0.20 Property Infrastructure Stocks Bonds Source: MSCI, Barclays, Bloomberg, NCREIF, S&P Dow Jones
Slide 32: Cap rate spreads provide support
Cap rate spreads provide support Real Asset cap rates have maintained wide spreads to bond yields, which will provide valuation support as rates rise MOVEMENT OF CAP RATES RELATIVE TO BOND YIELDS 11% 10% 9% 8% 7% 6% 5% 4% Widest 3% gap 2% 1% Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 De
Slide 33: Real Assets are uniquely positioned
So, we believe Real Assets are uniquely positioned… …to generate attractive returns across various market cycles …to grow as a meaningful component of asset allocations …to become the New Essential 33 | Brookfield Asset Management Inc.
Slide 34: Real Assets are the place to be
and therefore Real Assets are the place to be because, Revenue streams are impacted positively as business environment improves Fixed interest rate loans enhance equity returns Expenses grow slower than revenues Capitalization rates never decreased as much as fixed income investments so there is roo
Slide 35: oO) \S>s
oO) \S>s Trees r NWAISS Brookfield
Slide 36: Fundraising & Financial Results
FUNDRAISING & FINANCIAL RESULTS Brian Lawson
Slide 37: Agenda
Agenda • Review “GP” Momentum and Profitability • Strategy and Balance Sheet Visibility • Discuss Share Value Potential 37 | Brookfield Asset Management Inc.
Slide 38: Business consists of two key components
Our business consists of two key components General Partner • ~$80 billion of capital managed • $987 million annualized fee base1 Invested Capital • $28 billion invested alongside clients and as principal2 • $2.1 billion of FFO on LTM basis3 Notes/Assumptions 1) Based on current commitments and cont
Slide 39: Increased fee bearing capital since year end
We significantly increased fee bearing capital since year end $78B $60B 31 • Launch of BPY 21 29 • Private fund commitments 23 16 18 • New fund launches Dec. 2012 Jun. 2013 Listed Issuers Private Funds Public Securities 39 | Brookfield Asset Management Inc.
Slide 40: Fee related earnings have nearly doubled
As a result, fee related earnings have nearly doubled since June 2012 on an LTM basis and are tracking on an even higher annualized basis 2012 2013 2013 ($ millions) LTM2 LTM2 Annualized3 Management fees and IDRs $ 307 $ 442 $ 557 4 Transaction and advisory 63 56 55 370 498 612 Direct expenses 236 2
Slide 41: Accumulated carried interests not yet booked
And we have accumulated meaningful carried interests that have not yet been booked $765M $547M 78 47 687 500 June 2012 June 2013 $218M Increase Total Accumulated Carry Net of Direct Costs Notes/Assumptions 1) Management estimate of carried interest receivable under existing management arrangements b
Slide 42: Tremendous momentum as an asset manager
We have tremendous momentum as an asset manager $14 billion of private fund capital raised in past twelve months Our listed issuer strategy is fully implemented We have a number of competitive advantages moving forward 42 | Brookfield Asset Management Inc.
Slide 43: Compelling attributes we offer to clients
. . . due to the many compelling attributes we offer to our clients SCALE OF Size of capital which few managers can compete with CAPITAL GLOBAL Utilized to identify and acquire high-quality assets for value FOOTPRINT OPERATING Provides market intelligence and conviction PLATFORMS RANGE OF Ability to
Slide 44: Dedicated fundraising group
Our dedicated fundraising group is critical to the organization ~20 professionals supporting fundraising and servicing private fund investors globally Toronto New York Hong Kong San Francisco London Rio de Janeiro Sydney Note: Domicile of current investors highlighted in blue. Location of sales prof
Slide 45: Diversified institutional investor base
We have diversified our institutional investor base • Private Funds investor Committed Private Fund Capital by base of 200, an increase Size of Individual Commitments from ~40 in 2008 • ~30% of clients invest in 30% multiple Private Funds 13% • $5 billion increase in commitments less than 15% $200 m
Slide 46: Goal to increase fee bearing capital over five years
Moving forward…our goal is to substantially increase fee bearing capital over the next five years $126B $78B 49 31 47 29 30 18 2013 2018 Listed Issuers Private Funds Public Securities CAGR 10% Notes/Assumptions 1) Listed entities target distribution growth: BPY – 4%; BREP – 4%; BIP – 5%. 2) Listed e
Slide 47: More than triples fee related earnings
Which more than triples our fee related earnings Total Revenues $1,350M Fee Related Earnings $675M 1,165 $498M $220M 418 70 56 115 24 2013 2018 2013 2018 Management Fees Transactions and Advisory IDR’s CAGR Fee Related Earnings (Net of Direct Costs) (Fee related 25% Notes/Assumptions 1) 2013 based o
Slide 48: Greater opportunity to earn carried interests
And increases in private fund capital provide a greater opportunity to earn carried interests, if we meet returns Target Annualized Carried Interest $610M 183 $375M $268M 112 45 427 223 263 2013 LTM 2013 2018 Target Carried Interest CAGR 18% Net of Direct Expenses Notes/Assumptions 1) 2018 target ca
Slide 49: Increased GP values
All of which leads to increased GP values ($ millions) 20133 20184 Fee related earnings $ 4,400 $ 12,600 Carried interest, net 2,230 4,270 6,630 16,870 Accumulated carry, net 687 1,700 GP values1,2 $ 7,317 $ 18,570 CAGR 20% Notes/Assumptions 1) Multiple of 20X net base fees and IDRs and 10X carried
Slide 50: Listed issuer strategy in varying stages
Our listed issuer strategy is in varying stages of development… Listed Private Ownership Infrastructure 28% Power 65% Property Launched 93% Private Equity n/a n/a 50 | Brookfield Asset Management Inc.
Slide 51: Tremendous access to capital
. . . and gives us tremendous access to capital Listed issuers • Perpetual capital • Access to public capital markets Private funds • Committed long-term capital • Access to institutional capital 51 | Brookfield Asset Management Inc.
Slide 52: Simplified balance sheet and increased transparency
In addition, our listed issuer strategy has greatly simplified our balance sheet and increased transparency IFRS Value Deconsolidated Invested Capital As at June 30, 2013 Proforma ($ billions) Balance Sheet1 Listed Unlisted Invested capital Real assets $ 18.9 $ 17.7 $ 1.2 Private equity and services
Slide 53: 85% of invested capital held through listed investments
85% of invested capital is held through listed investments Proforma Base Base Case Value IFRS Case As at June 30, 2013 ($ billions) Value1 Value2 12% Listed $ 20.7 $ 23.6 3% Unlisted 3.5 4.2 $ 24.2 $ 27.8 85% Listed – Market values2 Unlisted – Appraisal basis Unlisted – Other basis Notes/Assumptions
Slide 54: Listed holdings provide visibility and liquidity
Listed holdings provide visibility for investors and potential liquidity for our balance sheet Proforma Base Case ($ billions) IFRS Value1 Value2 Listed Issuers BPY $ 11.1 $ 11.1 BREP 3.9 4.5 BIP 1.4 2.1 16.4 17.7 Other 4.3 5.9 $ 20.7 $ 23.6 Notes/Assumptions 1) Based on June 30, 2013 balance sheet,
Slide 55: Unlisted assets represent only 15% of invested capital
Unlisted assets represent only 15% of invested capital Proforma Base Case ($ billions) IFRS1 Values Description of Asset Appraised value $ 1.5 $ 1.5 Commercial properties2 Sustainable resources2 Private equity investments3 Other businesses 2.6 3.3 Power contracts4 Service business5 Working capital6
Slide 56: Ability to redeploy substantial capital
Furthermore…investing through listed entities provides us with the ability to redeploy substantial capital Currently “Required” As at June 30, 2013 ($ billions) Held Hold “Surplus” Flagship issuers $ 17.7 $ 6.6 $ 11.1 Other listed 5.9 3.0 2.9 $ 23.6 $ 9.6 $ 14.0 Notes/Assumptions 1) Assumes 25% mini
Slide 57: Share price at a discount to base case value
Yet despite this progress…our share price still allows investors to buy into our franchise at a meaningful discount to base case share value IFRS Base Case Value As at June 30, 2013 ($ billions, except per share amounts) Total Total Per Share General Partner (“GP”) $ ─ $ 7 $ 11 Invested Capital (“LP
Slide 58: Base case represents a conservative valuation
We believe our base case represents a very conservative valuation Recent Base Case Potential Share Price Value Value $45 $36 58 | Brookfield Asset Management Inc.
Slide 59: Achieving premium values
We intend to achieve premium values in several ways, which are not reflected in base case value More rapid expansion of fee bearing capital Enhanced investment returns through economic growth, operational improvements and development initiatives Redeployment of surplus capital 59 | Brookfield Asset
Slide 60: Base case GP projections
Base case GP projections assume relatively modest growth in capital Projected 2018 Values Growth rate 10% 15% FRE margin 50% 60% 50% 60% Fee bearing capital (billions) $ 126 $ 126 $ 155 $ 155 Projected fee base Fee related earnings 675 815 845 1,010 Target carry, net 427 427 550 550 GP Valuation1,2
Slide 61: 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 62: Reallocating capital at higher returns
Finally…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 62 | Brookfield Asset Management Inc.
Slide 63: 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 2013 Base Case Values Potential 2018 Values1 Growth Rate 10% 12.5% 15% 17.5% Invested Capital Per BAM Share $34 $55 $61 $68 $76 Notes/Assumptions 1) Determined by applying stated growth rates to 2013 base c
Slide 64: Potential returns to shareholders
Putting these together, we have the potential to offer very attractive returns to shareholders Potential 2018 Values 40 35 33 28 68 76 55 61 BAM Potential Share Value $83 $94 $103 $116 Total Return2 14% 17% 19% 22% GP value per BAM share LP value per BAM share2 Notes/Assumptions 1) Refer to slide 60
Slide 65: Brookfield
Brookfield
Slide 66: Property Group (BPG)
PROPERTY GROUP (“BPG”) Ric Clark
Slide 67: Agenda
Agenda • Overview • Investment Profile & Performance • Investment Environment • Recent Initiatives • Growth Plans & Priorities 67 | Brookfield Asset Management Inc.
Slide 68: BPG is a leading global property asset manager
BPG is a leading global property asset manager… Global Investor Property Assets Performance $105B AUM1 Over 300m sq.ft. ~16% gross IRR since 1989 office, retail, multifamily and industrial assets 1) Includes acquisition of IDI which has yet to close. 68 | Brookfield Asset Management Inc.
Slide 69: Established local presence in dynamic property markets
… with an established local presence in the world’s most dynamic property markets 30 Offices | 250 Investment Professionals | 16,600 Operating Employees CANADA $8 billion AUM 44 Professionals UK & EUROPE 2,225 Employees $4 billion AUM 34 Professionals 2,490 Employees AUSTRALIA $9 billion AUM 30 Prof
Slide 70: BPG's property platforms
BPG’s property platforms offer investors access to the firm’s market knowledge, execution capabilities, risk mitigation strategies and deal flow… Brookfield Property Group $105 BILLION OFFICE RETAIL MULTIFAMILY INDUSTRIAL HOTEL & OTHER ASSETS $38 BILLION $48 BILLION $7 BILLION $3 BILLION (1) $8 BILL
Slide 71: BPG's structure maximizes capital flexibility
… while BPG’s structure maximizes capital flexibility and efficiency BROOKFIELD PROPERTY GROUP Premier Asset Manager Brookfield Property Partners Brookfield Private Real Estate Funds $14 Billion of Fee-Bearing Capital •$15 12Billion activeoffunds Fee-Bearing Capital • 5 with active investment period
Slide 72: Consistent growth across business cycles
With consistent growth across business cycles… 2013 $105B AUM 13% CAGR Launched Completed Flagship Launched fundraising on Listed Real Estate $4.4 billion Property 1989 Established Turnaround Global Entity Australian Fund to Opportunity $6B AUM Launched Real Estate Brazil Retail Capitalize on Fund P
Slide 73: Track record of superior investment performance
…BPG has generated a track record of superior investment performance BROOKFIELD PROPERTY PARTNERS • $17 billion of equity invested since 1989 • ~16% gross IRR PRIVATE REAL ESTATE FUNDS • $18 billion of equity raised in 13 funds since 2004 • $13 billion of equity invested since 2004 • 17% gross IRR C
Slide 74: Private real estate funds platform
Now BPG’s private real estate funds platform has access to capital and ability to pursue deals across the risk-return spectrum ($ billions as at Q2 2013) $18 $2.7 $16 $14 $4.4 $12 $10 $8 $6 $10.9 $4 $2 $0 Core-Plus Value-add Finance Opportunistic Total Total Invested Capital Dry Powder Target Fund R
Slide 75: Significant growth in fee-bearing capital
2013 was a transformative year, with significant growth in fee-bearing capital… ($ millions) $250 BASE MANAGEMENT FEES1,2 2008-2013E 26% CAGR $200 $150 $100 $50 $0 2008 2009 2010 2011 2012 2013E Private Funds Public Vehicles 1) Fees prior to direct costs. 2) Represents annualized figures based on ac
Slide 76: Final close of BSREP
… underpinned by the final close of BSREP, our flagship private real estate fund for opportunistic investment… • $4.4 billion final close, ahead of $3.5 billion initial target – BPY Investment: $1.3 billion – Third-party Investors: $3.1 billion • Largest pool of committed real estate capital raised
Slide 77: Launch of BPY and growth potential
…and the launch of BPY, BPG’s flagship listed entity for commercial property investment. BPY’s growth potential offers significant upside to asset management activities Capital Growth Internally Generated Organic Growth New Investments $14 $4 BPY Forecast Unit Value $2 $2 $3 $7 $58 $44 $26 IFRS Valu
Slide 78: Highly successful year for private fundraising
2013 has been a highly successful year for private fundraising… Target Capital Raised % of PRIVATE FUNDS Raise to Date Target Raise ($ billions) BSREP $ 3.5 $ 4.4 124% DTLA 1.1 1.1 100% Funds in fundraising 3.2 0.9 29% Total $ 7.8 $ 6.4 82% 78 | Brookfield Asset Management Inc.
Slide 79: Investing
…. for investing… Highlights: • 2013 acquisitions of IDI, Verde Realty, Gazeley platforms and BSREP result in combined industrial assets valued at approximately $2.6 billion, making Brookfield a top industrial player with 221 properties totaling 62 million square feet % of Capital Investment Fund Co
Slide 80: Capital recycling
… and for capital recycling Asset Sales Actual Expected Total ($ billions) Gross Net Gross Net Gross Net Direct investments $ 1.3 $ 0.6 $ 0.5 $ 0.2 $ 1.8 $ 0.8 Private funds 0.1 0.1 1.1 0.7 1.2 0.8 Total $ 1.4 $ 0.7 $ 1.6 $ 0.9 $ 3.0 $ 1.6 80 | Brookfield Asset Management Inc.
Slide 81: Investment environment continues to yield opportunities
Looking forward, the investment environment continues to yield attractive opportunities CANADA UK & EUROPE • Commodities-based economy that is weakening • Slow growth environment • Sound financial institutions • Political situation remains fragile • Development and select acquisition opportunities •
Slide 82: Growth Plans & Priorities
Growth Plans & Priorities General • Pursue accretive acquisitions in the world’s most resilient markets • Manage funds to maximize value for all stakeholders • Ensure strong investment performance to drive ROE’s, incentive distributions and performance fees Brookfield Property Partners • Enhance sha
Slide 83: Brookfield
Brookfield
Slide 84: Infrastructure Group
INFRASTRUCTURE GROUP Sam Pollock
Slide 85: Agenda
Agenda • Overview • Recent Accomplishments • Brookfield Infrastructure Partners L.P. • Financial Performance • Priorities 85 | Brookfield Asset Management Inc.
Slide 86: A leading global infrastructure asset manager
We are a leading global infrastructure asset manager 11 Offices | Over 100 Corporate Professionals | 5,000 Operating Employees | $24 Billion AUM NORTH AMERICA EUROPE Transport $7 billion AUM $4 billion AUM 30 ports, 3,200 km of toll roads and 5,100 km of rail Utilities 9,900 km of transmission lines
Slide 87: Diversified multi-fund platform
We operate a diversified multi-fund platform. . . Brookfield Infrastructure Group Brookfield Public Issuers Brookfield Private Funds Market Brookfield’s Committed Brookfield’s Cap1 Anchor Capital Anchor Vehicle ($ millions) Investment Strategy ($ millions) Investment Brookfield Infrastructure Partne
Slide 88: Matrix organization leveraging operating platforms
…and a matrix organization that leverages Brookfield’s operating platforms Infrastructure Investment Committee Average 27 years investment experience and 18 years with Brookfield CEO, Infrastructure BAM Corporate Country Heads Sector Managing Partners Average 15 years investment experience and 7 yea
Slide 89: Flagship private funds and public vehicles performed well
To date, our flagship private funds and public vehicles have performed very well FLAGSHIP LISTED ENTITIES Market Annualized Total Return Ticker Symbol Capitalization Vintage 1 Yr 3 Yr 5 Yr ($ millions) Brookfield Infrastructure Partners BIP $ 7,700 2008 15% 39% 20% Acadian Timber Corporation ADN 200
Slide 90: Recent accomplishments
Here are some of our recent accomplishments • Raised $5.7 billion of capital from institutional investors and equity markets • Sold $4.7 billion of timber and non-core assets • Completed $5.5 billion of debt financings at attractive terms • Increased Brookfield Infrastructure Partner’s FFO by 62% ye
Slide 91: Significant investments in the last 12 months
Some significant investments in the last 12 months are… Brookfield Rail Expansion Brazilian Toll Roads 5,100 km of tracks 3,200 km, 9 concessions A$600 million $2.2 billion UK Regulated Distribution District Energy Over 1 million connections Serves over 180 customers in urban CBDs1 $1.3 billion $600
Slide 92: Compelling time to invest in infrastructure
It remains a compelling time to invest in the infrastructure sector • Significant opportunities to deploy capital at good values – Commodities pullback – Excess capacity in global container vessel market – Deleveraging of construction companies – Emerging markets are capital constrained • Government
Slide 93: Brookfield Infrastructure Partners risk-adjusted total return
Brookfield Infrastructure Partners offers an attractive risk-adjusted total return SECURE DISTRIBUTION: Profile ~4.7% yield1 ~55% of FFO Credit rating BBB+ Current distribution Low payout ratio Conservative capital structure High quality cash flow ~90% ~70% ~60% Regulated or contracted Indexed to in
Slide 94: Track record of FFO/unit and distribution growth
We have established a solid track record of FFO/unit and distribution growth BROOKFIELD INFRASTRUCTURE PARTNERS FFO/Unit Growth $3.291 34% $2.41 $2.41 Distribution/ $1.79 13% Unit Growth $1.72 $1.50 $1.32 $1.06 $1.10 $1.03 2009 2010 2011 2012 2013 FFO/Unit Distributions/Unit Distribution/Unit 1) H1
Slide 95: FFO per unit growth of ~10% annually
Brookfield Infrastructure Partners has the ability to achieve FFO per unit growth over the long term of ~10% annually New Internally Generated Organic Growth Investments ~2% ~2-3% ~1-2% ~3-4% Inflation Surplus Cash Flows New Capacity Re-invested Investments 95 | Brookfield Asset Management Inc.
Slide 96: Tremendous momentum going into 2014
We have tremendous momentum going into 2014 ($ billions) 2011 2012 2013E1 Capital raised during year $ 0.8 $ 1.0 $ 5.7 Capital deployed/committed2 0.9 2.8 1.1 Fee-bearing capital3 9.5 11.8 15.4 Dry powder 2.5 1.3 6.7 1) Represents actual figures for first half 2013 and Brookfield’s estimates. 2) Inc
Slide 97: GP revenues four-year CAGR of almost 45%
Our GP revenues have grown at a four-year CAGR of almost 45% ASSET MANAGEMENT FEES1,2 ($ millions) $200 $165 $132 $81 $48 2009A 2010A 2011A 2012A 2013E Base - Public Vehicles Base - Private Funds Incentive Distributions Performance 1) Fees prior to direct costs. 2) Represents actual figures for the
Slide 98: Where we go from here
Where we go from here • Deploy $6.7 billion of dry powder • Raise capital for flagship funds • Expand investment footprint and teams into new markets • Establish a flagship public sustainable resources vehicle 98 | Brookfield Asset Management Inc.
Slide 99: Q&A
Q&A
Slide 100: Renewable Power Group
RENEWABLE POWER GROUP Sachin Shah
Slide 101: Agenda
Agenda • Overview and Strategy • Fund Track Record • Investment Performance • The Market and our Growth • Priorities 101 | Brookfield Asset Management Inc.
Slide 102: Managing Renewable Power Assets globally
We manage Renewable Power Assets on a global basis • One of the largest public pure-play renewable power businesses in the world • 1,200 operating employees • Predominantly hydro portfolio $20B 5,900 84% ASSETS UNDER MEGAWATTS HYDROELECTRIC MANAGEMENT OF CAPACITY GENERATION 206 generating facilities
Slide 103: Objective of 12-15% gross returns for investors
Our objective is to deliver gross returns of 12-15% for investors in our managed funds Deploy capital into Preserve strong Maintain strong hydroelectric and balance sheet and margins wind opportunities high levels of across the cycle globally liquidity • Single assets and portfolios • Optimize asset
Slide 104: Our record of performance is strong
Our record of performance is strong • 14 years of rising distributions and consistent growth • 16% annualized total return since 1999 • Growth every year through M&A and development – Focused on North America and Brazil 16% Annualized 104 | Brookfield Asset Management Inc.
Slide 105: Favourable investment performance in managed funds
Resulting in favourable investment performance in our managed funds Geographic Capital Under Gross Focus AUM Management Vintage IRR1 ($ billions) ($ billions) LISTED ISSUERS BRPF Canada $ 5 $ 2.1 1999 – 2011 16% (TSX: BRC) BREP Global $ 17 $ 7.6 2011 – present 15% (NYSE, TSX: BEP) DIRECT HOLDINGS U.
Slide 106: Expanding managed capital and fees
We continue to expand our managed capital and fees ($ billions, except fees) 2010 2011 2012 2013 E1 Fee-bearing capital - Listed issuers $ 2.1 $ 7.0 $ 10.1 $ 10.0 - Private funds 0.5 0.5 0.8 2.4 Base Management Fees2 n/a 20 M 39 M 72 M 1) 2013 amounts are as at June 30, 2013. 2) Fees are presented o
Slide 107: Renewable Power is a Compelling Asset Class
Renewable Power is a Compelling Asset Class • Aging infrastructure and need for new supply – Most U.S. markets will have reserve margin issues by end of the decade – Average age of coal facilities in NEPOOL and PJM is ~ 47 years • Diversification of fuel risk – Approximately 40% of current U.S. powe
Slide 108: Very Large and Growing Investable Universe
Very Large and Growing Investable Universe • Global renewable installed capacity is growing by about 100 GW or $200 billion of new supply per year • Generation is projected to reach 6,400 TWh in 2017 from 4,540 TWh in 2011 • Costs, production and reliability continue to improve RENEWABLE ELECTRICITY
Slide 109: Investment Outlook – North America
Investment Outlook – North America MARKET ENVIRONMENT INVESTMENT THESIS • Historically low power price • Opportunity to buy for deep value environment (~$40/MWh) (50% of replacement cost) • Aging infrastructure and coal • Renewables are an attractive retirement alternative • Slow economic recovery •
Slide 110: Investment Outlook – Brazil
Investment Outlook – Brazil MARKET ENVIRONMENT INVESTMENT THESIS • Over 30 years of sustained 4% to 5% • Significant new investment needed demand growth (current $R entry point attractive) • New supply coming from expensive • Power prices are rising and low cost thermal generation hydros will benefi
Slide 111: Investment Outlook – Europe
Investment Outlook – Europe MARKET ENVIRONMENT INVESTMENT THESIS • Balance sheet and liquidity pressures • Asset disposition programs and (Government, Utilities) opportunities to buy for value • Strong recognition and support for • Need for new investment to displace renewables coal and nuclear • Re
Slide 112: M&A Expertise
M&A Expertise ORIGINATION & COMMERCIAL & FUNDING EXECUTION TECHNICAL ASSESSMENT Pipeline • Reviewed $20 billion of transactions in last 12 months • Executed on $2 billion of transactions in our core markets with BREP and private equity capital Strong Balance Sheet • Investment grade balance sheet an
Slide 113: Development Growth
Development Growth PROJECT LICENSING & ENGINEERING & STAKEHOLDER IDENTIFICATION REGULATORY TECHNICAL RELATIONS Pipeline • 1,800 MW development pipeline • Predominantly hydro and wind • Built over 20 hydro and wind projects on scope, schedule and budget since 2003 Capital • $1.3 billion of projects o
Slide 114: Brookfield Renewable Energy Partners risk-adjusted total returns
Brookfield Renewable Energy Partners offers attractive risk-adjusted total returns SECURE DISTRIBUTION: Profile ~5.4% yield 92% of generation $32 NAV BBB credit rating Current distribution Contracted and Trades at Conservative capital inflation-linked discount structure High quality cash flow $575 m
Slide 115: Positioned for strong organic growth
Brookfield Renewable Energy Partners – positioned for strong organic growth Retained • $100 million of cash flow retained annually in BREP to reinvest Cash Flow • Potential to increase BREP’s FFO by 2% to 3% annually Price Upside • Acquired 2 TWh at bottom of market (~ $40/MWh) in last 12 months • S
Slide 116: Where we go from here
Where we go from here • Take advantage of large scale opportunities to deploy capital – Historically low price environment in America – Need for infrastructure in Brazil – Distress in Europe • Re-contract PPA maturities and merchant exposures at accretive prices • Raise capital from assets through r
Slide 117: Q&A
Q&A
Slide 118: Private Equity Group
PRIVATE EQUITY GROUP Cyrus Madon
Slide 119: Agenda
Agenda • Private Equity Group Overview • Industry and Portfolio Overview • Current Investment Themes • Monetizations • Private Equity Outlook and Environment • Summary 119 | Brookfield Asset Management Inc.
Slide 120: Overview
Overview Brookfield’s Private Equity Group focuses on value investing • Traditional private equity approach in industries where we have expertise • Distress investing with an objective to control or influence • History of sourcing great transactions throughout market cycles • Strong operational skil
Slide 121: Assets under management increased to nearly $8 billion
Assets under management has increased to nearly $8 billion Brookfield Private Equity Group Brookfield Private Funds Directly Held Investments $3.5B of AUM $4.2B of AUM • $2.9 billion of capital raised across three private equity funds • Capital raised from the first two funds is fully deployed; Fund
Slide 122: Dedicated and growing investment team
We have a dedicated and growing investment team with extensive experience • Senior team and investment committee have an average 25 years of experience • Investment professionals in Canada, U.S., UK NUMBER OF and Brazil INVESTMENT PROFESSIONALS • Dedicated operations team is highly experienced in op
Slide 123: Consistently strong results
Brookfield Private Equity Group has generated consistently strong results • Net outperformance of 16% versus the S&P 500 over 12 years • Top quartile performance among North American private equity funds1 • Fund performance continuing to improve as portfolio matures • No realized losses to date REAL
Slide 124: Consistent and proven approach to investing
We have a consistent and proven approach to investing over decades and throughout market cycles ACQUIRE FOR VALUE Invest at a discount to intrinsic value ACQUIRE GREAT ASSETS Look for great assets that are undermanaged FOCUS ON OPERATIONS Generate returns by altering business strategies and repositi
Slide 125: Deal sourcing capability is a distinct advantage
Our deal sourcing capability is a distinct advantage in identifying opportunities • Pro-active approach to sourcing/screening – leveraging Brookfield’s global platforms which have 600 professionals worldwide • We reviewed over 50 investment opportunities during the last 12 months • Three of these be
Slide 126: Industry Overview
Industry Overview FOREST PRODUCTS BUSINESS AND BUILDING PRODUCTS FINANCIAL SERVICES CONSTRUCTION AND ENGINEERING PACKAGING AND METALS AND SPECIALTY PAPER MINING ENERGY 126 | Brookfield Asset Management Inc.
Slide 127: Portfolio Overview
Portfolio Overview 127 | Brookfield Asset Management Inc.
Slide 128: Portfolio performance continues to improve
Portfolio performance continues to improve LTM REVENUE GROWTH LTM EBITDA GROWTH 32% 5% 24% 24% 4% 4% 3% 16% 2% 0% Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Note: Revenue and EBITDA growth are for fund portfolio investments. 128 | Brookfield Asset Management Inc.
Slide 129: Meaningful Growth in Fees
Meaningful Growth in Fees BASE MANAGEMENT FEES1 PERFORMANCE FEES1,2 ($ millions) ($ millions) 32 318 28 246 22 21 20 178 182 80 79 76 13 20 20 2009 2010 2011 2012 2013F 2009 2010 2011 2012 H1-13 Cumulative realized performance fees Cumulative performance fees 1) Base management and performance fees
Slide 130: Focused on select investment themes
We are focused on select investment themes INVESTMENT THEME RECENT INVESTMENTS Distressed Sellers • Depressed natural gas prices have forced E&P companies to sell assets Corporate Carve Outs • Assets trading at a significant discount due to operational weakness Commodities Weakness • Financing marke
Slide 131: $1.3 billion of monetizations over the past 12 months
We have completed $1.3 billion of monetizations over the past 12 months, realizing substantial gains for investors and locking in strong performance • Longview Fibre • Ainsworth Lumber • Western Forest Products • Norbord • Armtec 131 | Brookfield Asset Management Inc.
Slide 132: Successful Monetizations – Longview Fibre
Successful Monetizations LONGVIEW FIBRE • Originally purchased in 2007 • Increased EBITDA from $40 million to $160 million through multi-year operational turnaround • Sold Longview in July 2013 for $1 billion • Realized cumulative proceeds of over $1.1 billion, generating an IRR of 70% and an invest
Slide 133: Successful Monetizations – Ainsworth Lumber
Successful Monetizations AINSWORTH LUMBER • Brookfield led the recapitalization of Ainsworth Lumber, a North American OSB producer in 2006 • Thesis: acquire high quality assets amid a housing slowdown and depressed prices • Undertook a major repositioning of the business • The ensuing recession enab
Slide 134: Current outlook and environment is favourable
The current outlook and environment is favourable for our business CURRENT MACRO OUTLOOK • U.S. economic recovery ongoing – but growth is slow • European bank deleveraging • Housing continues positive trend • Unsustainably low interest rate environment • Cheap energy is driving manufacturing and che
Slide 135: Excellent investment opportunities for our clients
The Brookfield Private Equity Group provides excellent investment opportunities for our clients • Proven team • Differentiated approach • Strong track record and history of value creation • Deep and broad operations experience • Attractive fundamentals for our business approach • Strong networks acr
Slide 136: Ber.
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Slide 137: Q & A
4 My 4 Brookfield 2) a So September 17, 2
Slide 138: Notes, Assumptions and Definitions
Notes, Assumptions and Definitions • The following indices have been utilized to measure and represent the performance of Real Assets, unless otherwise noted. Property: NCREIF Property Index (data availability begins in 1Q 1978) Infrastructure: Dow Jones Brookfield Global Infrastructure Composite In
Slide 139: Base Case Valuation Reconciliation to Q2-2013 Deconsolidated IFRS Values
• Committed/Pledged Capital includes original committed/pledged capital, including current capital available for commitments and capital that may no longer be available given the mandate and limitations of each product. • Performance reflects the investments' performance from initial investment/comm
Slide 140: Investor Day 2013
September 17, 2013 INVESTOR DAY 2013
Brookfield Asset Management — Investor Day (September 2013) on 6ix