Brookfield Asset Management Inc.
A GLOBAL ASSET MANAGEMENT COMPANY
Focused on Property, Renewable Power and Infrastructure Assets
Summary
• Brookfield Asset Management (“Brookfield”) intends to distribute to holders of our common shares an interest in our commercial and other income‐producing property operations, through a special dividend of units of Brookfield Property Partners (“BPY”)
• Following the spin‐off, our common shareholders are expected to hold approximately a 10% interest in the underlying BPY business and Brookfield will hold approximately a 90% interest
• BPY will be one of the largest, publicly traded commercial property companies with a premier portfolio of
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high quality office, retail, multi‐family and industrial assets around the world. With assets under management of ±$72 billion and a significant market capitalization, BPY is positioned to be a premier entity for investors seeking diversified global exposure to commercial property assets
• The distribution policy for BPY is intended to deliver quarterly cash distributions with an initial yield of approximately 4% per annum of initial IFRS value; an initial payout targeted at approximately 80% of FFO; and a targeted distribution growth of 3%‐5% per year
• BPY’s structure is similar to two successful income‐oriented entities previously introduced by Brookfield ‐ Brookfield Infrastructure Partners (“BIP”) and Brookfield Renewable Energy Partners (“BREP”)
• BPY will be managed by Brookfield under the terms of a long‐term management contract
• BPY will be applying to list its shares on the NYSE and TSX, subject to BPY meeting the listing requirements • Subject to regulatory approval and other factors, the distribution is expected to be completed in the second
BPY Scope
BPY will be our flagship public commercial property company and the primary entity through which Brookfield
• BPY will be one of the few property organizations with a global business and a strategy to allocate capital to the most attractive commercial property opportunities around the world
BPY Key Investment Highlights
BPY will be one of the largest publicly‐traded commercial property companies, and will be positioned to become BPY will be one of the largest publicly traded commercial property companies, and will be positioned to become the premier entity for investors seeking global exposure to the commercial property sector with: – Strong track record1 • Since 1989, Brookfield has invested approximately $17.3 billion of equity in commercial property, generating an estimated compound annual return of 15.4% through December 31, 2011 on all opportunistic and core h ll b d b f kf ld investments that will be acquired by BPY from Brookfield – Strong returns • Sustainable and growing cash flows underpinned by a high quality asset base, quality tenant base and long‐term lease expiry profile
• This, combined with our opportunistic investing activities and the portfolio’s development potential, should makeThis, combined with our opportunistic investing activities and the portfolio s development potential, should make BPY attractive to both income and growth‐oriented investors • Anticipated dividend yield of approximately 4% per annum of initial IFRS value with an initial payout of approximately 80% of FFO; targeted to grow 3% to 5% annually – Global scale P id di ifi i f i k d i i • Provides diversification of risk and access to opportunities • Enables allocation of capital to markets/sectors where opportunities are best – Sector diversification • Interests in office, retail, multifamily and industrial properties and other income‐producing real property expected to cause revenue streams to be more stable – Strong acquisition currency • Through a significant equity market capitalization, together with planned exchange listings, BPY will have access to a wide range of capital sources and a greater ability to complete significant mergers and acquisitions – Established operating capabilities • Brookfield’s long‐established operating experience and expertise should provide a strong pipeline of deal flow, market‐specific underwriting expertise and ability to add value at the property and operations level
Key Investment Highlights to Brookfield
Provides strong access to capital • Listed entity enhances liquidity to fund growth • Well capitalized and conservatively structured balance sheet • Access to a wide range of capital sources including an expected diversification of investor base ti over time Brookfield retains significant upside in the business • Following the spin‐off, Brookfield shareholders are currently expected to hold approximately a 10% interest in the underlying BPY business and Brookfield is currently expected to hold approximately a 90% interest • Brookfield expects to reduce ownership over time Ongoing and growing management fees (similar to BIP/BREP) • Management contract provides ongoing asset management fees and incentive distributions which align Brookfield’s interests with BPY’s long‐term success – Base fee of $50 million plus 1.25% of increases in total capitalization – Brookfield entitlement to an incentive‐based distribution linked to growth in distributions to limited partners to limited partners Enhanced profile as asset manager • Greater transparency of Brookfield as a global alternative asset manager Value recognition • Showcase the value of our commercial property assets Proven structure • Proven governance structure (i.e. BIP and BREP)• Brookfield will retain full control through the GP ownership o e s u u e Brookfield will retain full control through the GP ownership
Multi‐Year Strategy
• The formation of BPY represents the continuation of a strategy to maximize our business flexibility throughThe formation of BPY represents the continuation of a strategy to maximize our business flexibility through the launch of publicly traded flagship companies supported by flagship private funds
• The launch of our infrastructure company (BIP, 2008) and renewable power company (BREP, 2011) have been well received by the market
• Once the full re‐alignment is completed with our flagship private funds working in conjunction with theseOnce the full re alignment is completed, with our flagship private funds working in conjunction with these sector specific listed entities, we believe that we will have created a global alternative asset manager with access to capital that few will rival BROOKFIELD ASSET MANAGEMENT BROOKFIELD RENEWABLE ENERGY PARTNERS BROOKFIELD INFRASTRUCTURE PARTNERS BROOKFIELD PROPERTY PARTNERS BROOKFIELD PRIVATE EQUITY PARTNERS 28% 68% 90% 100% (BREP) (BIP) (BPY)
BROOKFIELD AMERICAS BROOKFIELD BROOKFIELD
Significant Shareholder Alignment
• Brookfield Asset Management has an equity investment in BPY of approximately $11 million, in addition to acting as manager • Accordingly, the largest component of return to the Brookfield remains the equity returns on invested capital in BPY • In addition, Brookfield earns management fee and incentive fees as BPY’s capitalization increases • Brookfield’s significant capital investment alongside investors, fully aligns interests, risks and rewards with BPY shareholders with a focus on profitable growthCapital Investment Total Return
Expectations Expected Annual Returns On Capital to BAM $11.0 B 12% ‐ 15% $1.32B ‐ $1.65B Fee Returns Initial Annual Management Fee $50M
Contacts
Contact Title E-Mail Address Phone Number
Ri Cl k Chi f E ti Offi Ri l k@b kfi ld (212) 417 7063
Ric Clark Chief Executive Officer Ric.clark@brookfield.com (212) 417 - 7063
Steve Douglas Chief Financial Officer Steve.douglas@brookfield.com (416) 359-8646
Cautionary Notes
A registration statement containing important information relating to the securities described in this presentation has been filed with the United States Securities and Exchange Commission. The registration statement is subject to completion. This presentation does not provide full disclosure of all material facts relating to the securities. Investors should read the final registration statement for disclosure of those facts, especially risk factors relating to the units of Brookfield Property Partners L.P. (“BPY”).
This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities. BPY units are expected to be distributed as a special dividend and no securities are being sold and no proceeds will be raised. There is no assurance that a special dividend of BPY units will be declared by
Brookfield Asset Management Inc. (“Brookfield”) or, if declared, as to the amount of the dividend.
All operating and other statistical information is presented as if BPY will own 100% of each property in its portfolio, regardless of whether it will own all of the interests in each property
the interests in each property.
All amounts are in U.S. dollars unless otherwise specified.
Cautionary Note Concerning Forward‐Looking Statements
This presentation contains certain forward‐looking statements. Forward‐looking statements relate to expectations, beliefs, projections, future plans andp g g p , , p j , p
Cautionary Notes
cont’dThe forward‐looking statements are based on Brookfield’s beliefs, assumptions and expectations of BPY’s future performance, taking into account all information currently available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to Brookfield or within its control. If a change occurs, BPY’s business, financial condition, liquidity and results of operations may vary materially from those expressed in the forward‐looking statements. The following factors, among others, could cause actual results to vary from the forward‐looking statements: changes in the general economy; the cyclical nature of the real estate industry; actions of competitors; failure to attract new tenants and enter statements: changes in the general economy; the cyclical nature of the real estate industry; actions of competitors; failure to attract new tenants and enter into renewal or new leases with tenants on favourable terms; BPY’s ability to derive fully anticipated benefits from future or existing acquisitions, joint ventures, investments or dispositions; actions or potential actions that could be taken by BPY’s co‐venturers, partners, fund investors or co‐tenants; the bankruptcy, insolvency, credit deterioration or other default of BPY’s tenants; actions or potential actions that could be taken by Brookfield; the departure of some or all of Brookfield’s key professionals; the threat of litigation; changes to legislation and regulations; possible environmental liabilities and other possible liabilities; BPY’s ability to obtain adequate insurance at commercially reasonable rates; BPY’s financial condition and liquidity; downgrading of credit ratings and adverse conditions in the credit markets; changes in financial markets, foreign currency exchange, interest rates or political conditions; the general volatility of the capital markets and the market price of BPY’s units; and other factors described in the registration statement, including those set forth under Item 3.D. “Key Information – Risk Factors,” Item 5. “Operating and Financial Review and Prospects” and Item 4.B. “Information on the Company – Business Overview.”
Except as required by applicable law, Brookfield undertakes no obligation to update or revise publicly any forward‐looking statements, whether as a result of new information, future events or otherwise.
Non‐IFRS Measures
