Brookfield Asset Management Voting Ord Shs Class A T.BN.PF.J

TD 2

[retiredcf]

Brookfield Asset Management Inc.

(BAM-N, BAM.A-T) US$44.74 | C$54.28

Q1/21 OFFO a Miss; Total FFO a Record on $13bln of Asset Sales Event

BAM reported Q1/21 and provided a business update. The conference call is at 11:00 a.m. ET. Dial-in: 1-866-688-9425 (conference ID 4175982).

Impact: SLIGHTLY POSITIVE

• Q1/21 Results: OFFO was $0.48/share, below the consensus estimate of $0.52 and our forecast of $0.55. Total FFO, which includes realized carried interest and realized disposition gains was a record $1.80/share on strong monetization activity. Fee-related earnings increased 29% y/y to $413mm, while FFO from invested capital declined to $364mm vs. $397mm in Q1/20, which appears to relate largely to the lagged impact of the shutdowns on the property business.

• Fee-Bearing Capital: Fee-bearing capital increased 21% y/y to $319bln, reflecting market appreciation across the listed affiliates and capital deployment in the private funds. The latest flagship distressed debt fund has raised $14.5bln to-date and should hold a final close soon. BAM has also launched fundraising for its fourth flagship real estate fund and inaugural Global Transition Fund, which should both hold first closes in mid-2021, and expects to launch fundraising for its next flagship infrastructure and private equity funds over the next year.

• Carried Interest: BAM recognized a record $681mm of gross carried interest in Q1/21, as it took advantage of robust market conditions to monetize assets. Despite strong carried interest realization, the gross unrealized carried interest balance (at BAM's share) increased 16% to $4.7bln vs. $4.0bln in Q4/20, reflecting value uplifts across the credit and other private funds.

• Capital Deployment: BAM's TTM capital deployment totaled $43bln, including $9bln in Q1/21. The company commented that it is monetizing assets at strong values in developed markets where the capital markets are strong but sees opportunities in markets, such as India, China, and Europe, which are less flush with capital. BAM also sees opportunities in businesses that were more affected by the pandemic, including hotels, travel/tourism, and in-person retail, etc.

• Liquidity: BAM has a record $80bln of available liquidity, including $9bln of corporate liquidity, which the company noted provides more than enough cash to fund the BPY privatization, and, when market opportunities arise, repurchase the BAM shares being issued to fund the BPY deal.