TSX:BAM - Post Discussion
Post by
retiredcf on Feb 12, 2021 9:41am
TD 2
They did indeed raise their target by over 10% to US$63.00. GLTA
Brookfield Asset Management Inc.
(BAM-N, BAM.A-T) US$42.57 | C$54.04
Q4/20 OFFO Beat; More Flagship Fundraising Launched
Event
BAM reported Q4/20 results and provided a business update.
Impact: POSITIVE
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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 were up 4% y/y to $411mm and FFO from invested capital increased to $644mm vs. $444mm in Q4/19.
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Fee-bearing Capital: Fee-bearing capital increased 8% y/y and q/q to $312bln, with the sequential increase largely reflecting market appreciation across the listed affiliates/credit strategies, as well as capital raised/deployed in credit. BAM has embarked on its next round of flagship fundraising and sounds confident about its target of $100bln. The latest flagship distressed debt fund has raised $13bln to- date and should hold a final close in H1/21, and the company recently launched its fourth flagship real-estate fund as well as its inaugural Global Transition Fund, which is focused on decarbonizing the global energy grid, and should reach $7.5bln+ in size, including $2bln from BAM.
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Carried Interest: BAM recognized a healthy $231mm of net carried interest in Q4/20, primarily related to realizations across the credit, private equity, and real- estate platforms. Despite strong carried interest realization, the net unrealized carried interest balance was up 14% q/q to $2.6bln, of which BAM expects to recognize 60% over the next three years, with Q1/21 likely to be particularly active.
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BPY Privatization: BAM does not expect a take-private deal to negatively affect fee-related earnings, as fees would be prospectively determined based on NAV. A privatization would temporarily increase BAM's invested capital in real estate, but the company expects that its balance-sheet exposure to real estate would decline over time vs. current levels, based on the flexibility afforded by private ownership. We believe that portions of BPY's portfolio would be well-suited to seed perpetual core real-estate strategies, which should be accretive to fee-bearing capital.
TD Investment Conclusion
We see a prolonged period of near-zero interest rates as a favourable backdrop for BAM, as it should only increase investor appetite for alternative investment products as fixed-income substitutes. Furthermore, we anticipate that BAM will capitalize on market dislocation resulting from the pandemic to enhance its franchise, as it has done in previous cycles.
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