Brookfield Asset Management (BAM) 8 Aug 242024 Q2 Earnings call transcript

Hello, and welcome to the Brookfield Corporation's Second Quarter 2024 Conference Call and Webcast. [Operator Instructions] I would now like to hand the conference call over to our first speaker, Ms. Angela Yulo, Vice President, Investor Relations. Please go ahead.

Thank you, operator, and good morning. Second Conference Corporation's Brookfield to Quarter Call. XXXX Welcome

Bruce Chief of Executive the Corporation. call and our are today President On Officer; Flatt, Nick Brookfield Goodman,

we Bruce to call for In X all the that followed from After business analyst request our discuss will questions. we'll giving order ask the quarter. financial Nick, those asking turn operator comments, the take our results who accommodate will to refrain who start update, than operating and questions, formal by over want off to you by more a and questions.

statements you I and within from differ securities would in like in They the Canadian meaning historic may to make including reflect of to and not we future new and performance, known remind in events questions responding events. risks of may future initiatives U.S. applicable and in forward-looking trends operating discussing that laws. materially to statements, and statements predictions comments, forward-looking events and do such financial and and our statements. today's including unknown relate to are subject These results

For on please our and with further potential securities and risks the the and in our available see website. regulators Canada the filings our on information information U.S. these impacts on company, their

to With over I'll that, turn the Bruce. call

earnings activity to Distributable XX% of billion share flows. everyone, businesses as cash compared $X.X quarter performing months, the for Thank you, to last for second the continuing the each increase call. on basis. deliver increased prior continues total transaction $X.X XX% the strong of and XX quarter billion strong Angela, for a our up. with billion realizations quarter by and the per on well pick to before welcome, Total Results distributable for an year were quarter were representing the to earnings and $X.X

of $XX has cooling around inflation been rates world and down. to Short-term major appetite economies realized are us risk constructive volatile across months, billion regard and setting return liquidity private In $XX deliver number on mature last the we of attractive just the strong decline well markets, the to week, and opportunities, capitalize is financed over in debt the X from interest billion to to coming continues approximately monetize a globally. economy, backdrop, back. monetizations up economic to With With starting the albeit growth assets successfully last assets returns. this

access to start added remaining the value meaningfully to allocate continue this our it our when based of the share enhancing a assets we view over our value of on Since As those opportunity view be underlying lower repurchases investment year, business to great $XXX share. company which to we the specifically the buybacks, to the capital very scaled time, makes share significantly we of intrinsic same to continue real and prices compared At and this look forward, for at teams to million our for believe we of value. of should capital. completed expertise sense, shares repurchase that operational for of each environment the value. with take We intend to

we the past. of foundation plan on As future, to important growth and it success for from reflect what has our the is been the

success past contributed come. to over Our strong consistently one to and drive the has those. ability of continue returns for generate This success to should to our years term certainly investment long the is in

which as large XXX and capital after perpetual further for to has getting investing ourselves over our capital looks global establish built philosophy been asset managers we build returns scale though years. our applied track years investment principles, to Solutions should only has and generated on X Our record. investment strong These of same started. just apply and own principles business, has be enabled as XX% have base us with capital, this the largest compound compound very our own And be to which annual a of key our while one Wealth continue a

investment therefore, can our financial past strong clients compound return performance to our annualized to deepening client for approximately business continuing back manager realize our further sheet their reinvested into meeting carried to balance has shareholders. our or and Our XX% at interest, led, relationships, years XX the to the objectives, which ability be

Note economy to term. strong the into a global over differentiated on capital evolved shareholders But of continue note asset with invest the evolving, compound we global or the that it. assets Our not for you to longer change class exist of has today the an must platform, of us XX% ago. we and economy. that own returns to would backbone and always backbone our the which with that per has deliver as that the enabled basis more share is years we did economy XX I

we AI areas few strong the where investment the is opportunities revolution. seeing very of are One

in power data increase very exciting used builder we the center pipeline us. world, centers backbone for the of is development largest data is to an far largest revolution renewable and in and the computing by combined of renewables data in Fortunately, It's our of and the AI. are this centers the entity any centers for at this run capacity power demand There for of of combined is globally.

However, the dramatically our increase of meet needs our customers. to must scale

As our several of center well the data a operating number over development result, past as scale as renewable to businesses acquired we years capabilities. have platforms and

agreement Microsoft pursuing and us our Our give advancements lead also in our recent enormous with Westinghouse through business this. an

you saying over Investor look by Day this XX to forward end seeing -- pass September at Before the in New on York. to we our that Nick, floor I will I

are to now your turn website. on and our as always, details I'll for that interest for call you Additional support thank in over Nick. the Brookfield. And continued

Distributable morning, earnings quarter, the of quarter, $X.XX $X.X business. and share our or results share an financial representing generating strong on were over Thank stable basis or the per flows before increase prior the delivered everyone. you, cash XX% growing realizations DE a per Bruce, for We across period. in and good billion second

per were income $X.X billion before $X.XX period. billion last in total realizations share. per the or for over was $X.XX XX months, of or share the XX per $X.X or with months, billion $X.X billion DE DE same net share Over billion $X.X $X.X or $X.XX our the Total and quarter last the over at share

So focusing operating first performance. on our

$XXX and or over distributable months. Our billion asset the quarter per share the share business XX management in generated of million $X.XX $X.X or per last earnings $X.XX

offerings. We continue to see strong our diversified fund across fundraising

supported approximately XX XX% during months June higher by annualized trillion platform. scaling the were the $XX that's than ago. to XX% under $X the billion and prior of are fee-bearing $XXX earnings quarter fee-related capital now in and This Inflows year the was as of Assets credit management compared growth XX, backed quarter. our increase billion

year our expect up back anticipated half We in the flagship of with to earnings for should closes the in growth. the further funds market which latest ramp fundraising result in

our listed This American quarter, X% or in BAM we of Equity decreased billion BAM our as valuable the other XX% securities BAM acquisition $X for liquidity of used by AEL. that Life to currency demonstrates and shares the the of approximately During us. ownership part the provide and consideration as

per deliver the new long-dated We the or of or quarter. $X.XX $X continuing Our the share cash the to of our strong share through operating months. over the taking billion of size quarter, to over insurance our $XXX were business last $XXX billion Distributable the $X.X and flows. on doubled had the of annuity-like in channel. earnings per the another Wealth origination growing $X.XX XX Solutions business acquisition in quarter of business billion annuity assets million and back AEL

AEL, approximately investment with the consistent spread Excluding was the assets on net quarter prior at X%. our

National ANICO annualized when spread million. back in may acquired of we you as earnings business the May were or approximately American Now recall, the $XXX XXXX,

leverage time Our being predicated yield of credit of and over had asset investment was Within portfolio months assets of on the capabilities target to higher-yielding rotate investment spread to with indeed to portfolio investment million. at the and our the the taking the annualized thesis earnings manager origination the earnings doubling the on the into investment $XXX the ownership doubled ANICO, thus, business. XX of of able

We the $X business today of expect to increase have from similar plan the AEL closer of to X.X% annualized the spread this to X%. earnings effect have we growing the portfolio, as investment the earnings repositioned roughly AEL, we from to steadily will today with a our billion billion. very And $X.X

now Through approximately includes $X clients. retail net our a which month million raising for combined $XXX close are Wealth per high Solutions platforms, from products capital month, retail billion worth to we of

FFO months. XX businesses per distributions billion over the from and XX%. continued million of or operating the year X% operating earnings businesses, quarter cash operating our share $XXX equity earnings our infrastructure generating and by of $X.X flows, growing business resilient in per $X.XX transition underpinned high-quality or in are share power, the $X.XX our funds the over distributable last private or operating and by businesses renewable deliver Our same-store by grew increased operations FFO to while Cash in quarter, prior

million our business, leases, we XX% to core portfolio nearly newly signed and delivered leases compared and X% increased the focusing last on of square portfolio, estate expiring. in operating net real quarter, same-store our leases In X income the core our In signed months. office retail XX rents growth over feet on office by those

leased our business, and number Toronto in of square in remain In a highlights our Korea, in transition and activity include robust portfolio, leasing retail footprint And New we feet in South few key feet renewable renewables over XX%. at XXX,XXX our power our markets. and XXX,XXX in feet expanded square London nearly high into Germany. of York levels A over XXX,XXX square office occupancy

global to Nordics. a businesses. gigawatts centers, largest in earnings ], of XXX-plus located largest pipeline data and renewables power reputation by and revolution hold, tremendous our [ combined AI the taking During operating this our provider and Backed behind be operating expertise a a development for the leading the of stake we renewable quarter, and agreed and of the the Newen should platform majority as Australia, our tailwind France the acquire is

transaction we to monetization activity up, picking going forward. level on moving expect increased Now of an monetizations. With

During assets. strong road Europe asset advanced the an fuels returns, including operation our renewable investment in quarter, in D.C., and South luxury several Korea, we Washington, office several sales completed our and or hotel in on

the on shares, of BAM In million sale gain this in float of $XXX approximately addition, realized increased shares. and our of we assists the X% with a

to of carried $X.X interest, Over our accumulated $X.X XX months, the generated corporation. owned last interest unrealized is the total unrealized we directly billion carried which by $XX.X of billion, increasing billion

$XXX realize year. to realized date net interest carried this recognized to of and carried of year, million also into additional the we end through We interest expect income the

our across businesses. strong remain Fundamentals

business, infrastructure resulting consolidated accounting total higher and treatment in our income recent impacted noncash in net depreciation However, in the costs. was from mainly of our amortization quarter, acquisitions the

the businesses. each we quality the our recovery that of and transaction continued of will drive in further growth assets our Given activity, tailwinds many see in earnings

Outside our strong our balance franchise. sheet position and liquidity results, continued financial to conservative differentiate of our

capital the corporation, $XX at We cash positioned deployable have large-scale focus billion end this our approximately business. Wealth we affiliates at which to $XXX on and Solutions are attractive billion With of of assets capital, our well opportunities. includes liquid quarter and growth

to the we credit on of markets. demand growth relative and the capitalize XX-year executed across credit supporting the issuances. date in of and the spreads year, ongoing to at narrowing We recent and continue XX bonds, billion the issued $XX capital comparable highlights group XX include by in on strong corporation, to XX- financings Notable most $XXX spreads this points, basis million tightening approximately respectively, We operations.

trends. closed At XXX of the million the average basis of Partners. $XXX an credit Brookfield XX-year approximately issuance notes compressed points XX spreads bond million interest a CAD Brookfield financings in global aligned of with secular demonstrate by Partners, we we Renewable successfully Infrastructure very These businesses strong and subordinated on

X approximately In financing points the basis And with an estate. $XXX XX the portfolio New X-year on markets approximately loan we billion loan financings office repriced XXX of reducing new a real lastly, significantly strong basis our points, by real estate companies, York business, million for improved we spread spreads across a of credit at a $XX refinanced average. of signal

through Shifting repurchases we regular the share, adding capital flow expect back capital each We date over excess businesses remaining of during and this million to into and further open quarter. reinvested returned share approximately share To our year, allocation. of shares XXXX. in buybacks $XXX value to shareholders repurchased our dividends to $X.XX the remainder cash market, to of $XXX and we allocate continue to the to over million

beyond. over this In summary, strong year to and we of to build and continue the performance, we achieved the financial expect balance momentum

market to the further With on conditions, monetization the pick well bolster our improving coming anticipate positioning execute to up we earnings. and over quarters, transaction activity us

our Directors am dividend XX of of September has confirm that, on declared share XXXX. to on of Board payable that to the pleased close $X.XX record September quarterly I XX, With at a business of per shareholders

for your to back and call hand the for you now Thank questions. time, I the will operator

first our comes of the RBC Kwan Capital question Instructions] [Operator with line Markets. Geoff from

was question QX. first think -- and margins? party, of pipeline to closed their the opportunity third I'm investments transactions, segment. manage and first I more fee They in of just if timing, the My insurer about wondering you talk can types structures the potential these on Wealth to do the for

there's the build. more happy on to these, we really behind Nick. and to One, is it's I think and couple the scale of management I we're our grow books continue the stronger And forces significantly, driving have think appetite than the to it. business to going see is to and Listen, credit of I and originate as Jeff, capability Yes. that comment, a think the we originate asset we growing insurance that that have business. will

our capability our and can up our invest alongside and we And scale. we us bring as scale will build REIT. we BN capital alongside alongside SMEs then clients will we these So can they then

a And of SMAs. growth a think I sourcing have the consistent to structures business. place. time, exact we to The we're in think type underwriting be a earnings have because you should originate lot other see want broadly asset operating these over in of we quarter, lot but for invested and in of that continue that clients credit the signed leverage assets scale the because strong be with I we credit management credit evolve business up So of for capability able it fee tailwind the in. will And should one these to

how earlier, And consensus or I lower-quality businesses. other -- seems a markets it a high-quality my in really be real be might particular, when on for transact, the pick lag And for maybe just my to M&A space, you within play improving, real maybe question is, is, I'm you so business within the it effect wondering there Okay. to like out some quality might a question estate and less really, of general when you might monetize to up, able the starts monetization of there's think mean this are bit talked portfolio? do about is estate sort assets T&D bias easier

are say transactions high long own Jeff, a I you're have quality. within remember, that we not core bias right. want there would for they they The to consider are for initial we term, we assets assets, once T&D, But the own diverse. a And be high-quality the also geographically quality. may but

of the in lot So returning. T&D across asset We've a transaction in the is the transactions sold we out on We're activity globe, of sold one working and U.S. Brazil.

the picks on we b, a high-quality down, be valuations, we expect and have positive are up; But that, that appetite for activity assets, interest and credit monetization. capacity looks be a, investor it for even will tailwind rates think to like coming will going dependent which strong transaction be I assets. a catalyst be T&D, should and and it So within

are remember I a assets thinking Okay. I some more kind know at. of Yes. what maybe was of there. some others, you of that's quality and lot -- than correctly, if in sorry. was XXX-ish like there's getting I the just I and No, opportunistic there's obviously

opportunity would also on. are. And comment take they I the to just Yes, Jeff,

X% consider in what the equity we would we If regional in real you in the have U.S. is office estate, look at

it's of context major significant be a relatively number driver not the number, successful monetization a we even to and in activity So not if because going overall of that are it's is small portfolio.

the from Scotiabank. Our comes next question Mario with of Saric line

FFO. have Nick, improvement That core impacted same-store just costs growth estate sticking real quarter. the higher core X%, is sequential estate, at real this debt the flow but the showing to said, healthy NRR remains

us As basis x it's this if kind FFO going That policy sensitivity costs? FFO you down the of to like, come XX BPG to of the remind BPG some year. easy by annualized it your percent. could points, within like variable in debt half Could for example, kind of impact monetary of be of looks second rates

XX rates Mario, coming to Yes. ago. points compressed right, historical XX, areas there room XX coming still basis Specific, They're I in but have compress. interest average, in about spreads down. interest think, some further are you're top On off compared of down, months significantly. credit They're to basis think are XXX we points

XX% rate the a I in cuts about be catalyst through. interest work maybe will rate with positive So that, with as combined debt we today, variable portfolio think

percentage, some Now into off, almost as fixed and on through of see down. rate start to rolling give it to but impact refinance going the -- varies, the a you it hedges earnings the rates debt you we exact impact come immediately but coming to when rate rate lower market are because depends floating with

of is Okay. second thematic And my more long-term question kind question. of a a

I time to to new need with respect capital evolve as the highlighted asset with think classes emerge. Bruce invested when

the you guess, think, BN listed about it collectively, estimated investments as or got despite next the structure think question in optimal concept move value? intrinsic do the progress? strong over corporate XX, that still in price to the that XX how in Wealth the something Solution the corporate endure is in And your you still share is the X, work is recently, Or pretty structure? the with to we materially genesis in pertains the respect real X, see to present business, structure the a years? I expect lags it reason estate subsidiaries you that fully Do and owning I

on that listen, observation, just in going good in that assets is returns, invested are generating And real excellent a is being enormous getting estate own, our to own, long-term we they attractive focus we potential. That's the has returns. And insurance primary that generate going Mario. are in the insurance and Yes.

focus. the So that's primary

and and the it deep tailwind, as do assess business. here thought that we today, have developed sit asset But businesses structure But make access is for the grow, market the in as Now the that having you evolve, we over as time time, as a these now, markets. served management to time. evolve. And decisions capital. right focus the It the for may compounding evolve reached we're may in on the -- saw, we a some that we and structure markets business value on we where great as improve planning our better primarily our real as public And structure was scale public our that can business.

it's see an how to so and out. always it evolution, And plays we'll going be

Our next TD with the from Cherilyn question of Radbourne comes line Cowen.

concern for talk been this going the growth trade-off you no you're in quarter and/or spread you spread Can about about raised desired forward? very there's insurance. ROE compression that doubt maintaining between As how in aware, the business potential versus see

absolutely, primary the you focus return is on on tell business our Yes, just I Cherilyn. would equity.

X%. So want we which the for incredibly draw spread our on was disciplined at that we why quarter out will this to stay of pre-existing and business that, focused maintained people is

environment in is offer that quick in lowered basis matching the that we will ROE. to the XX% Now manage evolved AEL we as but focus week, as comes up just primary opportunity see, as that a that and we're the in So offering react gravitate we changed, are reposition spread, a rate last fairly that those been the towards and that how changes, with the has to we changing investment rate X we And portfolio. rate on maintaining XX% on has we've we've rate by in the at points to market investment XX against dynamic the lower

So focus is be primary going to on our return equity.

which that, on a the sees pipeline. gears a that's wall potential in in been There's terms while, yesterday. touch in maturity developing of of context here want in of then can on credit Ben debt the the expand of point? some what And part Oaktree switching cycle so-called Maybe distressed you you for been real Okay. little terms for bit to but also estate talked a touched about at on a deal

Yes.

favor distress in just Let fallen we've loans, for yet. good to areas, but opportunities capital seen make in with or for We've another, is gaps markets. the opportunity seen still -- financing not certain But to credits. they've attractive and us provided one pretty the of the which reason market the out

to banks take the stress, maybe capital back. to step the opportunity provide a where have GAAP So had deleverage,

gaps market portfolio were of up underlying regulatory I for being it's are think for there to as participate. capital we do without were when was opposed doubt, or the impacts, see maybe And we dynamics as credit lending to to and stress lot cover and high-quality our added come credit still rates So and have a by going provide opportunity to distress. driven the across to but those leverage available renewal, funds, But necessarily a spreads the Oaktree tight. X assets,

of Our line Movahedi Capital question BMO comes Markets. from with the next Sohrab

Nick, call X.X% mean, you the the to on insurance, go the to credit gave spreads. a on range X.X opposed I to, management spread. that of they where sorry, I or back I'll decision? for is wanted to what question spread, earlier it just -- to much you don't the I macro here How kind insurance operate? know, answer Like did as X% of it

that see. just of the real existing we of reallocation plan here. There's with is short portfolio. we is lot at lot held term relative thesis portfolio, A of a just into Yes. the investment It's it liquid AEL, to that no credit the Sohrab, look lower-yielding are assets opportunities the macro

it's much overallocated ANICO repositioning to just barbelling short-term an but liquid they're to liquid, the some portfolio. will risk They to spread the between in that we uplift similar cash and that portfolio. portfolio, the maintain see adding and the really And So about really assets. without

can't got for Like on a like too just up, earlier takers bit you from I little that answer. market, the think just the crystal you -- price probably because you any price clarity otherwise, confused won't I can't get like I up rate right? you volume, the -- are really And maybe far

But point, think point. I Sohrab, that's the that's the exactly

spread then are that comfortable maybe lower, can sales We rate little will are that. earn are it for live on we That we a our it. offer at means then bit quarter, a willing that to with a we

believe we Now current our set price we the inflow a return. are still taker, a we've offered think $XX and running we're going can but I is good to run maintain the But in price can a been rate a we rate, think environment, at billion at comfortable were about it at levels. earn these we we're where point

that. XX% is same I Okay. around of that you're on targeting type appreciate still that business on XXx the predicated just for ROE XX% that And leverage. to topic,

X Yes, leverage. in to range, that XXx .

question of the next Kenneth from JPMorgan. Our line comes Worthington with

realization It's We click to Alex the Bernstein on double on wanted for pipeline. Ken.

mind, that some still see you that upside is the the prior of we it transaction that With case that it activity we to Those due guidance possible to comments in the that were holds that in year in pertaining mentioned? with for Or especially sector. call the what suggesting yesterday, up. go XXX at as to some XXX is renewable the comments some today heard your number? is to line made You BAM might

BAM affiliates, of what be the listen, means activity, either the seeing our immediately globally. it sales Canada made those on returns, in Yes, and the picking listed it U.S., said to at term, with excellent capital depending investments. right, sales North. our short return or in is was yesterday, means you're we are And are the and Yes, up comments activity on consistent what who

and then into we come, But longer working because turns I preferred see funds, But these I XXXX we on we have expectations returning you'll come realization in is then what are original vintage carry would execute impact. carry. it does well it start to monetizing way going on realization more capital, through are really up sales our carrier assets working later on So temper think as where it through the us to immediate And that term, the are earnings. our sets return. that we into

As will back turn Ms. it there closing remarks. Angela to are no now questions, Yellow I for more

you, Thank with us end And that, call. for joining everybody, we'll the today.

for concludes Thank participating, you today's This call. you now conference and may disconnect.