Brookfield Asset Management Voting Ord Shs Class A T.BAM

TD

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This is a flash report so it's possible that they may raise their current US$57 target. GLTA

Brookfield Asset Management Inc.

(BAM-N, BAM.A-T) US$41.02 | C$52.17

First Look: Q4/20 OFFO Beat; More Flagship Fundraising Launched

Event

BAM reported Q4/20 and provided a business update. The conference call is at 11:00 a.m. ET. Dial-in: 1-866-688-9425 (conference ID 1951549).

Impact: POSITIVE

• Q4/20 Results: OFFO was $0.66/share, well above the consensus estimate of $0.55, and our forecast of $0.53. Fee-related earnings increased 4% y/y to $411mm, and FFO from invested capital increased to $644mm vs. $444mm in Q4/19, benefitting from a strong contribution from financial assets and cyclically- strong earnings from Norbord (now West Fraser Timber).

• Fee-Bearing Capital: Fee-bearing capital increased 8% y/y and q/q to $312bln, with the sequential increase largely reflecting the benefit of market appreciation on the listed affiliates and the credit strategies and capital raised/deployed across the credit platform. BAM has embarked on its next round of flagship fundraising, with a target of $100bln. The latest flagship distressed debt fund has raised $13bln to-date and should hold a final close during H1/21, and the company recently launched its fourth flagship real estate fund and its new Global Transition Fund, which is focused on decarbonizing the global energy grid.

• Carried Interest: BAM recognized a healthy $231mm of carried interest (net) during Q4/20, primarily related to realizations across the credit, private equity, and real estate platforms. The gross unrealized carried interest balance increased to $4.0bln vs. $3.5bln in Q3/20, largely driven by value uplifts across the credit platform and other private funds.

• Capital Deployment: BAM deployed $44bln of capital during 2020, and the latest vintage flagship funds are now ~65% committed/invested. The letter to shareholders discusses several themes, which BAM expects to drive its business/ investing in 2021/2022, including: 1) low interest rates, which are driving demand for alternative investments; 2) the renewable energy transition; 3) technology; 4) the growth of alternative credit; 5) the impact of the pandemic on high-quality real estate (while some property will be used in new ways in the future, BAM sees no major paradigm shift); and 6) the need for businesses and governments to deleverage after taking on debt to weather the pandemic.

• Liquidity: BAM has $77bln of available liquidity, which is supplemented by $2.9bln of annual free-cash-flow (2020A) prior to realized carried interest.