Mr. Bruce Flatt reports
BROOKFIELD ASSET MANAGEMENT REPORTS THIRD QUARTER 2016 RESULTS
Brookfield Asset Management Inc. has released its financial results for the quarter ended Sept. 30, 2016.
All currency figures are in U.S. dollars.
Bruce Flatt, chief executive officer of Brookfield, stated: "Real assets continue to be the asset class of choice for institutional investors and as a result, we are seeing strong inflows across our strategies. Our scale and global reach have enabled us to deploy $20-billion of capital over the last 12 months, and we continue to see opportunities to put capital to work in high-quality businesses across our real asset strategies."
OPERATING RESULTS
(In millions, except per-share amounts)
Three months ended Last 12 months ended
Sept. 30, Sept. 30,
2016 2015 2016 2015
Net income (1) $2,021 $845 $4,428 $5,181
Per Brookfield share (2) 1.03 0.26 2.07 2.67
Funds from operations (2) (3) 883 501 3,204 2,113
Per Brookfield
share (2) (3) 0.87 0.48 3.15 2.05
Notes
(1) Consolidated basis -- includes amounts attributable to non-controlling
interests.
(2) Excludes amounts attributable to non-controlling interests.
(3) See basis of presentation on the company's website.
Net income for the third quarter of 2016 totalled $2.0-billion or $1.03 per share, and was $4.4-billion on a last 12-month basis. Net income increased over the same quarter of the prior year due to earnings on new investments, a reduction in deferred tax provisions and operational improvements, which included rent commencements on new leases, the commissioning of assets in the company's infrastructure business and increased pricing and volumes in certain of the company's private equity operations.
Funds from operations (FFO) for the third quarter of 2016 were $883-million or 87 cents per share, and were $3.2-billion on a last-12-month basis. Fee-related earnings for the quarter increased 37 per cent to $173-million, as a result of the 23-per-cent increase in fee-bearing capital over the last 12 months. FFO from invested capital increased by 17 per cent as a result of the contribution from acquisitions across the company's portfolio and operating improvements noted in the preceding paragraph, which were partially offset by the absence of FFO from assets sold. The company sold interests in office and retail properties, generating $392-million of disposition gains, compared with $88-million in the prior period.
Dividend declaration
The board declared a quarterly dividend of 13 U.S. cents per share (representing 52 U.S. cents per annum), payable on Dec. 31, 2016, to shareholders of record as at the close of business on Nov. 30, 2016. The board also declared all of the regular monthly and quarterly dividends on its preferred shares.
Operating highlights
Fee-bearing capital increased by 23 per cent to $111-billion over the last 12 months, including over $2-billion in the third quarter.
Strong capital inflows to the company's private funds, as well as the higher market capitalization of the company's listed issuers, increased the company's annualized fee revenues to $1.2-billion representing a 27-per-cent growth over the past 12 months. The company's recently completed fundraising also substantially increased the amount of capital from which the company is entitled to earn carried interest. As a result, the company's annualized combined run rate of fee revenues and target carry is now $2.0-billion based on current funds under management, up from $1.4-billion at the end of the third quarter of last year.
The company continues to deploy private fund capital and execute significant transactions across its real asset strategies. The company's second flagship real estate opportunity fund, BSREP II, is now 67 per cent committed or invested, which should enable it to launch a successor fund in 2017. The company's most recent flagship funds in infrastructure (BIF III) and private equity (BCP IV), closed earlier this year, are both advancing well at over 30 per cent and 45 per cent invested or committed, respectively.
The company is currently raising capital for four additional funds, including an open-ended real estate fund, a real estate finance fund and two niche funds, targeting $4.6-billion of third party commitments.
Over the last 12 months the company announced or completed acquisitions that will deploy $20-billion of capital, including $10-billion in the current quarter.
In its property group, the company completed the privatization of its U.S. regional mall business, and continued to build out its self-storage, manufactured housing and student housing operations with strategic add-on acquisitions. The company also agreed to buy a 4.2-million-square-foot office portfolio in Mumbai and committed to acquire a mixed-use office, retail and hospitality complex in South Korea.
The company's renewable power business completed the take-private transaction for the company's 3,000-megawatt Colombian hydroelectric portfolio, increasing its ownership interest to 99.6 per cent. In addition, the company continued to advance its development pipeline, including wind projects in Europe and hydroelectric projects in Brazil.
The company's infrastructure group announced the purchase of a 90-per-cent interest in a system of natural gas transmission assets in Brazil for over $5-billion. The company also closed the previously announced acquisitions of an Australian logistics business and a North American gas storage business.
In its private equity operations, the company entered into a definitive agreement to acquire a 70-per-cent stake in Brazil's largest private water distribution, collection and treatment business. The company's facilities management operations benefited from expansion through follow-on acquisitions.
The company raised approximately $4-billion of capital through the sale of mature assets over the last 12 months.
In the third quarter, the company sold several assets in its property business including an office asset in Sydney, an interest in four U.S. malls and a hotel portfolio in Germany. The company also sold utility assets in its infrastructure business at attractive multiples to rate base. The company continues to identify further disposition opportunities across asset classes that it expects to realize over the balance of 2016 and 2017.
Finally, the company has substantial financial resources with which to pursue future transactions.
Dry powder in the company's private funds at the end of the quarter was $19-billion. In addition to this the company has core liquidity of over $7-billion, of which $3-billion is at the corporate level with the balance within the company's listed partnerships.
Additional information
The letter to shareholders and the company's supplemental information for the three months ended Sept. 30, 2016, contain further information on the company's strategy, operations and financial results. Shareholders are encouraged to read these documents, which are available on the company's website.
The statements on the company's website are based primarily on information that has been extracted from the company's interim financial statements for the three and nine months ended Sept. 30, 2016, which have been prepared using international financial reporting standards. The amounts have not been audited by Brookfield's external auditor.
Information on the company's dividends can be found on the company's website under stock and distributions/distribution history.
Quarterly earnings call details
Investors, analysts and other interested parties can access Brookfield Asset Management's 2016 third quarter results as well as the shareholder letter and supplemental information on Brookfield's website under the reports and filings section at the company's website.
The conference call can be accessed via webcast on Nov. 11, 2016, at 11:30 a.m. Eastern Time at the company's website or via teleconference at 1-800-319-4610 toll-free in North America. For overseas calls please dial 1-604-638-5340, at approximately 11:20 a.m. Eastern Time. A recording of the teleconference can be accessed at 1-800-319-6413 or 1-604-638-9010 (password 0883 followed by the number sign).
Brookfield Asset Management is a leading global alternative asset manager with approximately $250-billion in assets under management. The company has more than a 100-year history of owning and operating assets with a focus on property, renewable power, infrastructure and private equity.
Please note that Brookfield's previous audited annual and unaudited quarterly reports have been filed on EDGAR and SEDAR and can also be found in the shareholder section of its website. Hard copies of the annual and quarterly reports can be obtained free of charge upon request.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per-share amounts)
Three months ended Last 12 months ended
Sept. 30, Sept. 30,
2016 2015 2016 2015
Revenues $6,285 $5,056 $17,476 $14,375
Direct (costs) (4,590) (3,740) (12,568) (10,341)
Other income and gains 325 133 391 145
Equity-accounted income 454 304 1,041 1,174
Expenses
Interest (loss) (825) (691) (2,407) (2,117)
Corporate (costs) (20) (25) (68) (83)
------ ------ ------ ------
1,629 1,037 3,865 3,153
Fair value changes (loss) (59) 389 358 1,572
Depreciation and
amortization (loss) (541) (436) (1,538) (1,265)
Income tax (loss 992 (145) 556 22
------ ------ ------ ------
Net income 2,021 845 3,241 3,482
====== ====== ====== ======
Net income attributable to
Brookfield shareholders 1,036 289 1,478 1,663
Net income attributable to
Non-controlling interests 985 556 1,763 1,819
------ ------ ------ ------
2,021 845 3,241 3,482
====== ====== ====== ======
Net income per share
Diluted 1.03 0.26 1.41 1.60
Basic 1.05 0.27 1.44 1.65
We seek Safe Harbor.
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