Brookfield Asset Management Inc.
A GLOBAL ASSET MANAGEMENT COMPANY
Focused on Property, Renewable Power and Infrastructure Assets
Corporate Profile
January 2011 January 2011
Cautionary
Note
Concerning
Forward
‐
Looking
Statements
Note: This Corporate Profile contains forward-looking information within the meaning of Canadian provincial securities laws and other “forward-looking statements”, within the meaning of certain securities laws including Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations. We may make such statements in this profile, in other filings with Canadian regulators or the Securities Exchange Commission (SEC) or in other communications. These forward-looking statements include, among others, statements with respect to our financial and operating objectives and strategies to achieve those objectives, capital committed to our funds, our liquidity and ability to access and raise capital, our ability to capitalize on investment opportunities, the potential growth of our asset management business and the related revenue streams there from, the prospects for increasing our cash flow from or continued achievement of targeted returns on our investments, as well as the outlook for the Company’s businesses and other statements with respect to our beliefs, outlooks, plans, expectations, and intentions.
Although Brookfield Asset Management believes that the anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-oo g state e ts a d o at o a e based upo easo ab e assu pt o s a d e pectat o s, t e eade s ou d ot p ace u due e a ce o o a d looking statements and information because they involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.
Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include: economic and financial conditions in the countries in which we do business; the behavior of financial markets including fluctuations in interest and exchange rates; availability of equity and debt financing; strategic actions including dispositions; the ability to effectively integrate acquisitions into existing operations availability of equity and debt financing; strategic actions including dispositions; the ability to effectively integrate acquisitions into existing operations and the ability to attain expected benefits; adverse hydrology conditions; regulatory and political factors within the countries in which the company operates; acts of God, such as earthquakes and hurricanes; the possible impact of international conflicts and other developments including terrorist acts; and other risks and factors detailed from time to time in the company’s form 40-F filed with the Securities and Exchange Commission as well as other documents filed by the company with the securities regulators in Canada and the United States including in the Annual Information Form under the heading “Business Environment and Risks.”
W ti th t th f i li t f i t t f t th t ff t f t lt i t h ti Wh l i f d l ki t t t t
We caution that the forgoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to Brookfield Asset Management, investors and others should carefully consider the forgoing factors and other uncertainties and potential events. The company undertakes no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise.
Brookfield
Investment
Highlights
Over
100
years
of
experience
investing,
operating
and
managing
high
quality
“real
“
assets
– property,
renewable
power
and
infrastructure
• World class operating platforms: focused on owning and managing high quality “real” assets – Generate stable growing cash flows and provide capital protection
– Operating expertise optimizes profitability and asset values – Unique and diversified deal flow
• Strong investment execution capabilities and restructuring expertise: enables us to acquire assets at meaningful discounts to value
– Able to react quickly to opportunities and invest – Willing to work through complex restructurings • Leading asset management franchise:
– Provides enhanced growth and additional capital to pursue acquisitions on an accretive basis – Asset management income adds to cash flow per share
• Alignment of interests: through significant (17%) ownership of common stock by management and directors
S lid it li ti b t ti l li idit d d t i k t id t d t bilit t
• Solid capitalization, substantial liquidity and prudent risk management: provide support and stability to existing businesses and enable continued growth through acquisitions and development activities
• Record of long‐term value creation: through share price and dividends (20‐year total return: 14.4% per annum; 10‐year total return: 20.8%)
• Shares currently trading around tangible net asset value: But this attributes minimal value to our asset • Shares currently trading around tangible net asset value: But this attributes minimal value to our asset
In
Profile
Our primary objective is to generate attractive long‐term returns on a per share basis from high quality assets that produce sustainable cash flows
STOCK INFORMATION Stock Exchange Listings: Dividend Rate/Yield: Q3 2010 Avg Daily Volume: CAPITALIZATION Credit Ratings: NYSE, TSX, Euronext $0.52 per share /1.7%* 2 million shares
DBRS – A(low) Moody’s – Baa2 Fitch – BBB S&P – A‐
COMMON SHARE PERFORMANCE*
Q g y Shares Outstanding: Stock Market Cap: Leverage: 2 million shares 616 million (diluted) $20 billion (31/12/10) Corporate – 14% LTV Group proportionate – 41% LTV SHARE VALUES
* Based on December 2010 average share price
COMMON SHARE PERFORMANCE SHARE VALUES
BAM Share Price: (52 Week Range ending 31/12/10) High: US$33.29
Low: US$20.09
20‐Year 10‐Year 5‐Year 1‐Year BAM (CDN$) 18.0% 25.8% 10.9% 53.0% NET TANGIBLE ASSET VALUE:
Per Share: $30.99 (31/12/10)
SHARE OWNERSHIP
S&P 500 (US$) 9.1% 1.4% 2.3% 15.1%
* As of December 31, 2010, inclusive of dividends
Our
Business
Strategy
Achieve 12% + annualized total return while minimizing risk
• Build and maintain “best in class” operatingp g p platforms to manageg “real assets” that generateg highg
levels of growing sustainable cash flows and increases in per share value
• Expand funds under management and foster strong client relationships
– Provides growth capital
E h h fl i h f
– Enhances cash flows with asset management fees
• Maintain high level of financial liquidity, execution capability and operational flexibility to capitalize on
growth opportunities
Fi i l b i f d id i h h i l
• Finance assets on a conservative, long‐term basis for downside protection through economic cycles
• Reinvest cash flow and monetization proceeds directly and alongside clients to increase returns and
Unique
Attractiveness
of
“Real
Assets”
Real Return. Yield Enhanced. Fixed Income Alternative
• Favourable long term risk adjusted returns generating both cash and capital returns
• Favourable long‐term, risk adjusted returns generating both cash and capital returns
– Long‐term, predictable and sustainable cash flows
• Allows for a stable financing profile
– Tangible, long‐duration assets provide visibility and lower volatility to investors
– Inflation hedge attributes
– Growth opportunities through operating enhancements and capital expansion
Focused
Global
Reach
100 ffi l ti GBP Other 3% 5% Geographic Currency Di t ib ti • 100 offices or locations • 400 investment professionals• 15,000 operating employees USD
BRL CAD 39% 19% 19% 5% Distribution AUD 15% Canada/U.S. UK/Europe Asia/Middle East Brazil/Chile Australia/New Zealand
Operating
Platforms
– Emphasis
on
“Real”
Assets
Platform AUM(1)– Over $100B Invested Capital – $22B Description Renewable Power ±$16 • 167 hydroelectric power plants with ~4 000 MW capacity • Hydroelectric • Wind energy ±$16 billion $7.5 billion 4,000 MW capacity • Two wind farms with combined 240 MW of capacity Commercial Properties • Office, retail l l ±$34 billion $5.2 billion • ~125 million sq. ft. of commercial space globally• Development pipeline billion globally
Infrastructure • Utilities • Transport & Energy ±$17 billion $1.6 billion • 8,800 km of transmission in Canada, Chile • Natural gas transmission and distribution in Australia, New Zealand, U.S. and UK • Operator of 17 ports in UK and Europe p gy • Timberlands p p p • ~2.6 million acres of timberlands in North America and Brazil Residential and Agriculture Development ±$9 billion $2.3 billion • 83 million sq. ft. of residential condos • 122,000 lots for residential land 3 0 000 f i l l l d Development • 370,000 acres of agricultural land Private Equity and
Finance ±$8 billion $1.8 billion
• Bridge lending, real estate finance and
restructuring
Advisory Services ±$23 $ • Fixed income, real estate and infrastructure Advisory Services
Investing
and
Restructuring
Capabilities
Our real asset platforms benefit from more than 35 years experience in restructuring, transaction execution and operating capabilities across industry sectors
Real Estate Industrial & Natural
Resources Resources
Risk Management
Private Equity and
Structuring Expertise Deal
Sourcing
Private Equity and
Finance
Operating Experience Market Intelligence Access to C it l Capital Markets Infrastructure Capital Capital Markets InfrastructureFinancial
Profile
• We are differentiated as an asset manager by the significant capital we invest alongside our clients
and co‐investors, and our diversified sources of capital
• Brookfield has invested $22 billion of capital alongside co‐investors
ASSETS UNDER MANAGEMENT SOURCES OF CAPITAL BROOKFIELD’S INVESTED CAPITAL
Brookfield’s Listed Issuers $8 billion Unlisted Funds $16 billion* Commercial Properties $34 billion Renewable Power $16 billion Infrastructure $17 billion Total-$113 billion Development Commercial Properties $5 billion Renewable Power Infrastructure $2 billion Total - $22 billion Brookfield s Invested Capital $22 billion Public Securities $23 billion Cash, Financial
Assets & Other $6 billion Private Equity & Finance $8 billion Development Activities $9 billion Public Securities $23 billion $16 billion Private Equity & Finance $2 billion Development Activities $2 billion Cash, Financial Assets & Other $3 billion Power
$8 billion
* I l d $7 4 billi f i t d thi d t it l * Includes $7.4 billion of un-invested third-party capital
Recent
Initiatives
• Acquired remaining 60% of Australian infrastructure company to create a leading, diversified global
infrastructure platform which:
– Significantly expands our international infrastructure franchise, positioning Brookfield
Infrastructure with increased scale and growth opportunities
– Substantially enhances the trading liquidity of Brookfield Infrastructure in a combined entity
with a market capitalization of more than $3 billion
– Simplifies the ownership structure of our infrastructure business
• Cornerstone investor in the $8 billion recapitalization of General Growth Properties
– Brookfield, together with clients, committed $2.5 billion for ~27% of the company and ~14%
of Howard Hughes Corporation, on a fully diluted basis
• Completed reorganization of global office business with sale of portfolio of 16 Australian office
properties to Brookfield Office Properties (BPO):
– Established BPO as a pure‐play global listed office business
– Rationalized and strengthen our global office platform under one entity – creates efficiencies
– Properties are 99% leased with a seven year average lease term and 2% growth in rental
Recent
Initiatives
Cont’d
• Completed $2.2 billion of new financings at attractive rates:
Type Entity Amount (millions) Coupon
Property Mortgage Brookfield Office Properties $ 800 3.89%
Perpetual Preferred
Shares Brookfield Asset Management 250 4.50%
Perpetual Preferred
B kfi ld Offi P i 300 5 15%
Perpetual Preferred
Shares Brookfield Office Properties 300 5.15%
10‐year Corporate Bond Brookfield Renewable Power 450 5.14%
10‐year Corporate Bond Brookfield Asset Management 350 5.30%
• Closed $2.7 billion Infrastructure Fund
— Focused on high quality infrastructure assets in the Americas Fund is nearly double the original target of US$1 5 billion — Fund is nearly double the original target of US$1.5 billion
— BAM has committed 25% alongside premier global institutional investors — 20% invested to date
Tangible
Value
– Downside
Protection
with
Upside
Potential
IFRS “book” values based on recent valuations of most physical assets on the balance sheet; excludes inventories and certain cost accounted investments:
As at September 30, 2010
(millions, except per share amounts) Total Per Share
Pre‐tax common equity, IFRS basis $ 14,982 $ 25.63
Unrecognized values under IFRS(1) 3,300 5.36
Net asset value(2) $ 18,282 $ 30.99
(1) Management estimates of fair value increment attributable to assets that are not re‐valued under IFRS such as residential
d l d i d i l b i
development assets and industrial businesses (2) Presented on a pre‐tax basis
• Tangible value provides downside protection
• Significant upside potential as net asset value does not reflect any value for asset management and
Drivers
of
Intrinsic
Value
Growth
Continue growth of asset management franchise
E h h fl
Reallocate capital and compound cash flows at higher returns
Enhance cash flow
and values of existing assets
The tangible value of our assets ‐$30.99 per share (Sept. 30, 2010)
Significant
Growth
Opportunities
Acquisitions
Additional assets in core platforms Complementary platformsInternal Growth
Locked‐in contracts and regulated rate base businesses Rollover of existing leases/contracts at higher market rates New geographic marketsInternal
Growth
Increased contribution as economy recovers from “short‐term” businesses Growing institutional base of clients Global team of 25 professionals
Asset
Management
Global team of 25 professionalsStrong governance and transparency Wide range of product offerings attractive to investors
Power: Nearly 400 MW of hydro & wind under or near construction
Development
Property: 1.8 M sq. ft. of active developments; 61% leased Infrastructure: Upgrades, expansions and new large scale
Flagship
Assets
– Property,
Power,
Infrastructure
Renewable Power
Lièvre Operations, Quebec
Located in western Quebec along the Lièvre Property
World Financial Center, New York
Located at the forefront of Lower Manhattan
Infrastructure
Dalrymple Bay Coal Terminal ("DBCT"), Australia
Located in western Quebec, along the Lièvre
River, a tributary of the Ottawa River. The
facilities include:
• 4 hydroelectric generating stations with
an installed capacity of 263 MW,
producing on average 1,520 GWh of
Located at the forefront of Lower Manhattan
with over eight million square feet within the
four unique copper‐crowned granite and
glass office towers.
As one of the city's premier business
addresses featuring extensive public spaces
A port facility which exports metallurgical
and thermal coal mined in the Bowen Basin
region of Queensland, Australia, a region
with one of the lowest cost and most prolific
series of coal deposits in the world.
electricity annually.
• 50 kilometres of transmission lines
interconnected to the New York, New
England and Ontario power grids.
• Watershed area covering approximately
addresses featuring extensive public spaces,
dozens of shops and restaurants, and a
stunning outdoor waterfront esplanade along
the Hudson River.
The tenant roster includes some of the most
i i i i l fi
One of the largest coal terminals, accounting
for 8% of the total global seaborne coal
exports and 21% of global metallurgical
seaborne coal exports.
g pp y
9,560 square kilometres with water
Flagship
Assets
– Property,
Power,
Infrastructure
Renewable Power
Brazil
Property
Southern Cross East, Australia
Infrastructure
Transelec, Chile
The power generation facilities are located on 22 different river systems, which include 34 hydroelectric generating stations with
an installed capacity of 596 MW, producing on average 3,277 GWh of electricity annually. Located across seven states in Brazil and Southern Cross East Tower is a landmark A‐
grade office building located in Melbourne, with premium grade services.
The building comprises a ground level foyer and retail tenancies, 36 upper levels of office
The largest electricity transmission system in Chile, with approximately 8,200 kilometres of transmission lines.
Transelec’s system includes 100% of Chile’s 500 kv transmission lines, the highest Located across seven states in Brazil and
remotely operated from a control centre located in the State of Parana.
All power produced by the facilities is sold under power purchase agreements to end‐use
customers or local distribution companies with and retail tenancies, 36 upper levels of office
accommodation and basement parking for 950 vehicles.
500 kv transmission lines, the highest voltage lines in the country, and
approximately 45% and 95% of the 200 kv and 154 kv lines in Chile, respectively.
customers or local distribution companies with the average term of power purchase
Financial
Strength,
Liquidity
and
Flexibility
~$4 billion of core liquidity to fund growth
Access to additional $8 billion of capital from institutional partners
Significant
Liquidity
~ $1.5 billion annually / $3 billion total group cash flow
Free Cash Flow
$ y / $ g p $30 billion of permanent equity capitalization
Conservative debt levels
Free
Cash
Flow
Strong and Flexible
Conservative debt levels Long‐term financing
Strong investment grade ratings
Continued favorable access to market with lower reference rates
Strong
and
Flexible
Capitalization
mitigating higher spreads
Ability to raise third party capital through publicly listed and
private funds
Conservative
Capitalization
Structured to enhance returns while minimizing risk
• 14% (corporate) and 41% (group proportionate) • Investment grade strategy – Over 80% of group debt has no recourse to
Brookfield
• Readily manageable maturity profile – No corporate maturities until 2012
– Finance primarily at asset level and on non‐ recourse basis
– Maintain substantial liquidity
– Extend maturity profile by refinancing assets with long‐dated debt
– Project‐specific and subsidiary maturities modest in next two years
– Investment grade credit ratings
g
– Maturities diversified over long period
Borrowings 14% Accounts Payable d Oth 6% Borrowings 41% Shareholders’ Equity 40% Borrowings 38% Shareholders’ Equity 45%
DECONSOLIDATED PROPORTIONATE CONSOLIDATION FULL CONSOLIDATION
and Other 6% Capital Securities 3% Shareholders’ Equity 77% A t P bl Capital Securities 2% Accounts Payable Capital
Compelling
Private
Fund
Offerings
• Broad product mix with substantial institutional investor backing
– A series of differentiated private funds and investment programs
– Over $22$ billion of institutional capitalp commitments,, includingg more than $6$ billion from
Brookfield
– Over 80 institutional fund clients, diversified by type and geography
• Compellingp g investment strategiesg
– Wide range of product offerings along the risk‐return spectrum
– Focus on core competencies of the broader platform
• Attractive platform for investorsAttractive platform for investors
– Well capitalized
– Leading owner‐operator
– Integrated with operating platforms to leverage in‐house expertise, deal flow, resources and
market intelligence
market intelligence
– Strong governance and transparency
Diversity
of
Global
Institutional
Investors
in
Private
Funds
Third-Party Capital by Geography (1)
Third-Party Capital by Investor Type (1)
Family Office & Other
7% Corporate Pension North Australia & Asia 63% 27% 6% 49% 4%
Banks/ Investment & Financial Public Consultant 5% North America 3% S h 7% 63% Europe Sovereign Insurance 8% 49% Pension South America & Other
Established
Funds
Strong track record of creating value through core, value add and opportunistic strategies
Core and Value Add Year Formed Opportunity and Private Equity Year Formed
Core and Value Add Year Formed
U.S. Office 2006
Canadian Office 2005
West Coast Timberlands 2005
Global Timber Fund 2008
B il Ti b 2008
Opportunity and Private Equity Year Formed
Real Estate Opportunity 2006
Real Estate Opportunity II 2007
Brazil Retail Property 2006
Special Situations I 2001 S i l Sit ti II 2006 Brazil Timber 2008 Transmission 2006 Colombia Infrastructure 2009 Americas Infrastructure 2009 Bridge LendingI 2003 Special Situations II 2006
Real Estate Turnaround Program 2009
Listed Managed Entities Year Formed
Brazil Agrilands 2011
Peru Infrastructure 2010
Bridge Lending I 2003
Bridge Lending II 2007
Bridge Lending III 2009
Real Estate Finance I 2004
Real Estate Finance II 2007
Brookfield Infrastructure Partners 2008 Brookfield Office PropertiesCanada 1995
Brookfield Renewable Power Fund 1999
Acadian Timber 2006
In
Summary
Brookfield is very well positioned in this environment
• Substantial liquidity and consistent access to capital
• Wide array of attractive investment opportunities
• World class operating platforms with dedicated professional operating and investment teams
Investment
Principles
BUSINESS PHILOSOPHY
• Build the business and all the relationships based on integrity
• Attract and retain high calibre individuals who will grow with us over the long termAttract and retain high calibre individuals who will grow with us over the long term
• Ensure our people think and act like owners in all their decisions
• Treat our clients’ money like it is our own
INVESTMENT GUIDELINES INVESTMENT GUIDELINES
• Invest, as lead investor, where we possess competitive advantages and are in a position to actively manage our
assets and create value through operational or other improvements
• Acquire assets on a value basis to maximize long‐term, risk‐adjusted return on capital
• Build sustainable cash flows to provide certainty reduce risk and lower the cost of capitalBuild sustainable cash flows to provide certainty, reduce risk and lower the cost of capital
• Recognize that superior returns often require contrarian thinking
MEASUREMENT OF OUR CORPORATE SUCCESS
• Measure success based on total return on capital over the long term • Measure success based on total return on capital over the long term • Encourage calculated risks, but compare returns with risk
• Sacrifice short‐term profit, if necessary, to achieve long‐term capital appreciation • Seek profitability rather than growth, because size does not necessarily add value
Major
Shareholders
Management and directors own/control 17% of Brookfield, alongside other major institutional investors
Major institutional investors owning over 5 million Brookfield common shares:
RBC Asset Management
TD Asset Management/TD Securities
Third Avenue Management
Davis Selected Advisers
McLean Budden
Pyramis Global Advisors Major institutional investors, owning over 5 million Brookfield common shares:
g
Bank of Nova Scotia
Invesco Trimark Ltd./Van Kampen
BlackRock Asset Management
Select Equity Group
Pyramis Global Advisors
Morgan Stanley Investment Management
William Blair & Company
IronBridge Capital Management
Franklin Templeton Investments
BMO Capital Markets
Horizon Capital Markets
First Manhattan
Franklin Templeton Investments
GWL Investment Management
CI Investment
Committed
to
Sustainable
Development
Environmental
Leadership:
One of the world’s leading asset managers, with a unique focus on renewable power assets, world‐class commercial properties and a strong involvement in the community, as well as a demonstrated commitment to sustainable development
Sustainability Recognition
• Meritas Jantzi Social Index
• KLD Global Climate 100 Index (GC 100)
• Desjardins Environment Fund
• S&P/TSX Clean Technology Index (BRC.UN)
Focus on Renewable Energy
• Hydro and wind
• Brookfield is among the pioneers in the evolving carbon credit market in Brazil, engaging in emissions trading with
European and other companies through the World Bank
Propertiesp
• Features, systems and programs that foster energy efficiency
• LEED (Leadership in Energy and Environmental Design) standards for many existing and all new developments
Timberlands
• Sustainable forestry practices that meet and exceed federal state and provincial standards
Investor
Relations
Contacts
Contact Title E-Mail Address Phone Number
Bruce Flatt Chief Executive Officer flatt@brookfield.com (416) 363-9491
(212) 417-7000
Brian Lawson Chief Financial Officer brian.lawson@brookfield.com (416) 363-9491
Sachin Shah Managing Partner, Finance sachin.shah@brookfield.com (416) 363-9491
Katherine Vyse Senior Vice President, Investor katherine.vyse@brookfield.com (416) 369-8246
Katherine Vyse Senior Vice President, Investor
Relations and Communications