Mr. Bruce Flatt reports

BROOKFIELD ASSET MANAGEMENT REPORTS SECOND QUARTER 2014 RESULTS

Brookfield Asset Management Inc. has released its financial results for the quarter ended June 30, 2014. All currency figures in this release are in United States dollars.

"We are continuing to see clients allocate an increasing portion of their capital to Brookfield's real asset investment strategies, due to the superior risk-adjusted returns generated by these assets," commented Bruce Flatt, chief executive officer of Brookfield. "Our flagship listed partnerships and private funds are well positioned to deliver long-term performance for clients and shareholders."

• Consolidated net income for the quarter was $1.6-billion, or $1.19 per share, nearly four times the 31 cents recorded in the second quarter last year. Net income for the six months increased to $2.4-billion.
• Funds from operations (FFO) for Brookfield shareholders were $569-million or 84 cents per share, 24 per cent higher than the 68 cents recorded last year. This reflected increases in asset management fees, realized disposition gains and the contribution from capital deployed over the last 12 months.
• Fee-bearing capital increased to $84-billion and represented 16-per-cent growth from the same quarter last year.

Operating highlights

The company expanded its asset management franchise and its flagship listed partnerships.

Fee-bearing capital increased during the quarter by $7-billion to $84-billion, which was 16 per cent higher than the same quarter last year after adjusting for the sale of a low-margin fixed income investment business. The company acquired the remaining shares in its office property company, which increased the equity base of its flagship listed property partnership by $500-million. The company added $1.6-billion of assets under management in its public markets asset management business, primarily through market appreciation and fund flows to property and infrastructure securities.

The company's flagship private funds have committed or invested approximately 60 per cent of their capital commitments in aggregate, and the company continues to maintain a robust pipeline of investment opportunities. This gives the company confidence that it will be in a position to launch successor funds well before expiration of their investment period, which should in turn lead to increases in fee-bearing capital. Total assets under management were $192-billion at the end of the quarter.

The company announced or completed acquisitions and capital expansions that will deploy over $2-billion of capital on behalf of clients and Brookfield shareholders.

The company continued to invest in emerging markets and Europe, where it believes valuations are compelling, in particular when compared with the U.S. The company announced plans to acquire a portfolio of office properties in India with an aggregate value of approximately $800-million, continued to move forward with the acquisition of a port and rail network in Brazil, and closed the purchase of wind farms in Ireland for $690-million.

Across the company's property business, it recycled $1.2-billion through the sale of 13 mature properties. The company invested approximately $450-million in retail projects in New York. The company's renewable energy business moved forward with the purchase of the stake it did not own in one of the largest hydroelectric facilities in North America for $613-million, and launched development of new wind projects in Ireland. The company's infrastructure group announced plans to acquire a natural gas storage facility in California and continues to move forward with an acquisition of a container terminal in New York and district energy businesses in Chicago, Seattle and Las Vegas.

The company's private equity group made further add-on purchases in a number of areas and now owns a substantial face value of debt in the power generation and distribution subsidiary of a Texas company that is currently in bankruptcy, making the company one of its largest creditors.

The company increased cash flow and created value with growth initiatives and operational improvements in all of its major businesses.

FFO excluding gains was $422-million, compared with $406-million in the same quarter a year ago. The company's asset management business generated fee revenues of $185-million ($702-million on an LTM basis) leading to a 24-per-cent increase in quarterly fee-related earnings to $88-million. The continued increase is due to 16-per-cent growth in fee-bearing capital and a resultant 31-per-cent increase in the fees generated from the company's listed partnerships, private funds and public market business.

The company's property group generated FFO of $137-million, excluding gains, up 10 per cent from the same quarter last year, as a result of increased ownership of the company's office and U.S. retail portfolios, opportunistic investments, and increases in net rents compared with expiring leases. The company's office property group announced new long-term leases in New York and London that significantly increased its occupancy rates and will contribute to cash flow increases by 2016. The company signed new leases that were on average 5 per cent above expiring rents in its office properties and 14 per cent above expiring rents in its retail portfolio.

The company's renewable energy assets generated FFO of $83-million, up 5 per cent over last year, and benefited from the contribution from recently acquired assets and increased energy prices and capacity sales on uncontracted generation. In Brazil, the company locked in long-term power supply contracts with counterparties at attractive levels.

The company's infrastructure group recorded $53-million of FFO, which was up on a comparable or same-store basis but lower than the previous year, which included the results of an Australasian utility sold in the fourth quarter of 2013. Performance was in line with expectations, and benefited from increased ownership of the company's Brazilian toll road network as well as inflation indexation and a larger regulated asset base in its utilities group. The company continues to invest in the expansion of its South American toll roads and U.K. port operations.

The company's private equity group generated $123-million of FFO excluding gains. This was lower than the 2013 quarter, which included additional FFO from assets that were subsequently sold, in addition to a decrease in panelboard prices. The company's construction business announced new mandates totalling $1.2-billion, including a contract to build a major stadium in Australia. In its North American residential operations, the company recorded higher profits following an increase in the level of land development and sales activity over the last year.

Realized disposition gains generated $147-million of FFO, compared with $58-million in the same quarter a year ago, and included a $68-million gain on the sale of a Denver office property and a $30-million gain on the repayment in full of a distressed debt investment in a European office portfolio.

Dividend declaration

The board of directors declared a quarterly dividend of 16 U.S. cents per share (representing 64 U.S. cents per year), payable on Sept. 30, 2014, to shareholders of record as at the close of business on Aug. 31, 2014. The board also declared all of the regular monthly and quarterly dividends on its preferred shares.

Information on the company's dividends can be found on its website under investors/stock and dividend information.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
               (In millions of dollars, except per share amounts)

                                     Three months ended             Six months ended     
                                               June 30,                     June 30,
                                     2014          2013           2014          2013
Total revenues and other
gains                              $4,835        $5,166         $9,208       $10,117
Direct (costs)                    (3,229)       (3,606)        (6,219)       (7,026)
                                    1,606         1,560          2,989         3,091
Equity-accounted income               345           224            619           490
                                    1,951         1,784          3,608         3,581
Expenses
Interest (loss)                     (639)         (668)        (1,265)       (1,323)
Corporate (costs)                    (33)          (36)           (66)          (80)
                                    1,279         1,080          2,277         2,178
Fair value changes                    996           465          1,711           526
Depreciation and
amortization (loss)                 (371)         (373)          (747)         (738)
Income tax (loss)                   (346)         (370)          (840)         (467)
Net income                          1,558           802          2,401         1,499
Net income attributable
to
Brookfield
shareholders                          785           230          1,326           590
Non-controlling
interests                             773           572          1,075           909
                                    1,558           802          2,401         1,499
Net income per share
Diluted                              1.19          0.31           1.98          0.82
Basic                                1.21          0.31           2.03          0.84

We seek Safe Harbor.