Brookfield Asset Management Inc.
(TSX:BAM.A)(NYSE:BAM)(EURONEXT:BAMA)-
Investors, analysts and other interested parties can access
Brookfield Asset Management's 2013 First Quarter Results as well as
the Shareholders' Letter and Supplemental Information on
Brookfield's website under the Investors/Financial Reports section
at www.brookfield.com.
The conference call can be accessed via webcast on May 9, 2013
at 1:00 p.m. Eastern Time at www.brookfield.com or via
teleconference at 1-800-319-4610 toll free in North America. For
overseas calls please dial 1-604-638-5340, at approximately 12:50
p.m. Eastern Time. The teleconference taped rebroadcast can be
accessed at 1-800-319-6413 or 1-604-638-9010 (Password 2811#).
Brookfield Asset Management Inc. today announced its financial
results for the quarter ended March 31, 2013.
"Our operating performance was strong in the first quarter of
2013, with virtually all of the operations contributing growth.
Performance was good across our operations, contributing to a
significant increase in our cash flow," commented Bruce Flatt, CEO
of Brookfield. "Our three flagship public entities are now
operating and clients are increasing their commitments to our
portfolio of private funds."
Performance Highlights
-- Net income during the first three months of 2013 was $697 million,
resulting in $0.51 per share attributable to Brookfield shareholders.
-- Funds from operations ("FFO") for the first quarter of 2013 increased
34% to $689 million.
-- Annualized base management fees, including incentive distributions,
increased 20% to $500 million, following the launch of a number of
funds, and accumulated performance fees increased to $724 million.
-- Fee bearing capital in our listed, private and public funds increased by
$14 billion, increasing fee bearing capital under management to
approximately $74 billion.
-- Brookfield Property Partners was launched as our flagship global
commercial property business, in tandem with our listed infrastructure
and renewable power entities.
Financial Results
Three months ended March 31
US$ millions (except per share amounts) 2013 2012
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Funds from operations(1,2) $ 689 $ 515
Net income(3) 697 722
Per Brookfield share
Funds from operations(1,2) $ 1.03 $ 0.77
Net income(1) 0.51 0.60
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1. Excludes amounts attributable to non-controlling interests
2. Non-IFRS measure. See Basis of Presentation on page 4 for details
3. Consolidated basis. Includes amounts attributable to non-controlling
interests
Our financial results reflect increases in a number of our
operations including significant contributions from housing related
businesses and an increased contribution from asset management and
other service activities. We also benefitted from improved pricing
in our renewable power operations, contributions from recent
capital expansion projects in our infrastructure operations and
favorable rental growth in our property portfolios. Net income
reflects a lower level of fair value gains in the quarter compared
to the same period in 2012.
FFO for Brookfield shareholders increased by $174 million to
$689 million, with the increase due primarily to the positive
operating variances noted in the preceding paragraph. Disposition
gains included in FFO were relatively consistent, with $325 million
recorded in the current quarter compared to $299 million in the
2012 quarter.
Operating Highlights
We expanded our asset management franchise with both listed and
private entities.
Our fee-bearing capital under management increased to
approximately $74 billion, up 24% from year end. We launched our
third flagship listed entity, Brookfield Property Partners, with
one of the world's premier commercial property portfolios. This new
partnership has the scale needed to undertake significant
transactions, as do our infrastructure and renewable power
businesses, and we believe that all three entities have excellent
growth potential.
Our private funds group continues to move forward with capital
campaigns for seven new funds that are targeting commitments of an
additional $5 billion in third party capital. We have a total of
$23 billion committed to our private funds at the end of the
quarter.
We increased cash flow with operational improvements in all of
our major businesses.
Our private equity business continues to achieve strong
performance from a number of operations linked to the North
American housing industry. We signed 1.3 million square feet of new
leases in our office property business at rates 16% higher than the
previous rents, and we see opportunities to attract new tenants on
terms that are significantly better than expiring leases. Our
renewable power operations experienced better pricing and also
generated more electricity as a result of acquisitions and
developments. In our infrastructure business, we achieved
approximately a 10% year-over-year increase in traffic on our South
American toll roads, due to rising consumer acceptance of the
networks.
We invested in growth opportunities in all our major operating
businesses, increasing the capital deployed by both our listed
entities and private funds.
We announced or completed acquisitions and capital expansions
during the quarter, deploying $1.8 billion of capital on behalf of
clients and Brookfield shareholders. We expect these businesses
will make a significant contribution to our future cash flows and
value increases.
In our property business, we moved forward with construction of
new office projects in New York and Toronto and announced the
purchase of a Los Angeles office property portfolio for $550
million subsequent to quarter end. Our infrastructure group expects
to begin moving electricity through an $830 million new-build
transmission system in Texas this quarter.
Our renewable power business invested $600 million in three
transactions: a portfolio of hydroelectric facilities in New
England, a California wind farm and the remaining 50% of a
hydroelectric project in British Columbia. We continue to advance
new hydroelectric and wind projects in North and South America. In
our private equity business, we continue to harvest capital from
housing related businesses and invest in businesses with exposure
to the U.S. natural gas market.
We generated additional liquidity over the course of the quarter
through asset sales, equity issuance, fund formations and debt
financings.
We sold $250 million of units in our renewable power business
and a portion of our equity position in one of our panelboard
operations generating approximately $100 million in proceeds.
We continue to refinance debt at attractive long term rates. We
obtained $1.5 billion of debt within our retail property
portfolios. Our infrastructure group refinanced over $2 billion of
short term borrowings at our Australian railway and UK utility,
generating $300 million of incremental proceeds. The renewable
power platform refinanced $1 billion of debt, including a $450
million bond issue backed by one of our Canadian wind farms.
Dividend Declaration
The Board of Directors declared a quarterly dividend of US$0.15
per share (representing US$0.60 per annum), payable on August 31,
2013, to shareholders of record as at the close of business on
August 1, 2013. The Board also declared all of the regular monthly
and quarterly dividends on its preferred shares.
Information on our dividends can be found on our website under
Investors/Stock and Dividend Information.
Basis of Presentation
This news release and accompanying financial statements are
based on International Financial Reporting Standards ("IFRS")
unless otherwise noted and make reference to funds from operations,
which is a non-IFRS measure.
Funds from operations is defined as net income prior to fair
value changes, depreciation and amortization, and deferred income
taxes, and includes certain disposition gains that are not
otherwise included in net income as determined under IFRS. Funds
from operations also includes the company's proportionate share of
equity accounted investments fund from operations. Brookfield uses
funds from operations to assess its operating results and the value
of its business and believes that many of its shareholders and
analysts also find this measure of value to them.
Funds from operations and its per share equivalent are non-IFRS
measures which do not have any standard meaning prescribed by IFRS
and therefore may not be comparable to similar measures presented
by other companies. The company provides additional information on
the determination of funds from operations and a reconciliation
between funds from operations and net income attributable to
Brookfield shareholders, in the Supplemental Information available
at www.brookfield.com.
Additional Information
The Letter to Shareholders and the company's Supplemental
Information for the three months ended March 31, 2013 contain
further information on the company's strategy, operations and
financial results. Shareholders are encouraged to read these
documents, which are available on the company's website.
The attached statements are based primarily on information that
has been extracted from our interim financial statements for the
three months ended March 31, 2013, which have been prepared using
IFRS. The amounts have not been audited and are not subject to
review by Brookfield's external auditor.
Brookfield Asset Management Inc. is a global alternative asset
manager with over $175 billion in assets under management. The
company has over a 100-year history of owning and operating assets
with a focus on property, renewable power, infrastructure and
private equity. Brookfield offers a range of public and private
investment products and services, and is co-listed on the New York
and Toronto Stock Exchanges under the symbol BAM and BAM.A,
respectively. For more information, please visit our website at
www.brookfield.com.
Please note that Brookfield's previous audited annual and
unaudited quarterly reports have been filed on EDGAR and SEDAR and
can also be found in the investor section of its website at
www.brookfield.com. Hard copies of the annual and quarterly reports
can be obtained free of charge upon request.
For more information, please visit our website at
www.brookfield.com.
Note: This news release contains "forward-looking information"
within the meaning of Canadian provincial securities laws and
"forward-looking statements" within the meaning of 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. Forward-looking statements include statements that are
predictive in nature, depend upon or refer to future events or
conditions, include statements regarding the operations, business,
financial condition, expected financial results, performance,
prospects, opportunities, priorities, targets, goals, ongoing
objectives, strategies and outlook of the company and its
subsidiaries, as well as the outlook for North American and
international economies for the current fiscal year and subsequent
periods, and include words such as "expects", "anticipates",
"plans", "believes", "estimates", "seeks", "intends", "targets",
"projects", "forecasts" or negative versions thereof and other
similar expressions, or future or conditional verbs such as "may",
"will", "should", "would" and "could".
Although we believe that our 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-looking statements and information
because they involve known and unknown risks, uncertainties and
other factors, many of which are beyond our control, 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, but are not limited to: the impact or unanticipated impact
of general economic, political and market factors in the countries
in which we do business; the behavior of financial markets,
including fluctuations in interest and foreign exchange rates;
global equity and capital markets and the availability of equity
and debt financing and refinancing within these markets; strategic
actions including dispositions; the ability to complete and
effectively integrate acquisitions into existing operations and the
ability to attain expected benefits; changes in accounting policies
and methods used to report financial condition (including
uncertainties associated with critical accounting assumptions and
estimates); the effect of applying future accounting changes;
business competition; operational and reputational risks;
technological change; changes in government regulation and
legislation within the countries in which we operate; changes in
tax laws, catastrophic events, 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 our documents filed with the
securities regulators in Canada and the United States.
We caution that the foregoing list of important factors that may
affect future results is not exhaustive. When relying on our
forward-looking statements, investors and others should carefully
consider the foregoing factors and other uncertainties and
potential events. Except as required by law, 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.
The tender offer for the issued and outstanding shares of the
7.625% Series A Cumulative Redeemable Preferred Stock ("Preferred
Stock") of MPG Office Trust, Inc. ("MPG") by Brookfield DTLA Inc.
("Purchaser"), a direct wholly-owned subsidiary of Brookfield
Office Properties Inc. ("BPO"), to be made in connection with the
transaction described in this communication has not yet commenced,
and this communication is neither an offer to purchase nor a
solicitation of an offer to sell any shares of Preferred Stock.
This communication is for informational purposes only. At the time
the tender offer is commenced, Purchaser will file a tender offer
statement with the Securities and Exchange Commission ("SEC") on
Schedule TO containing an offer to purchase, form of letter of
transmittal and related materials, and thereafter MPG will file
with the SEC a tender offer solicitation/recommendation statement
on Schedule 14D-9 with respect to the tender offer. In addition,
Brookfield DTLA Fund Office Trust Investor Inc. ("Sub REIT"), a
company that has been established in connection with the
transaction, may file a registration statement with the SEC
relating to preferred stock of Sub REIT that may be issued to
holders of Preferred Stock who do not tender into the tender offer.
Holders of Preferred Stock should read those materials carefully
because they will contain important information, including the
various terms and conditions of the tender offer. These materials
will be sent free of charge to all holders of Preferred Stock. In
addition, all of those materials (and all other materials filed or
furnished by MPG, BPO, Purchaser or Sub REIT with the SEC) will be
available at no charge from the SEC through its website at
www.sec.gov.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31 December 31
US$ millions 2013 2012
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Assets
Cash and cash equivalents $ 2,926 $ 2,850
Other financial assets 3,280 3,111
Accounts receivable and other 6,993 6,952
Inventory 6,839 6,581
Investments 11,642 11,618
Investment properties 33,478 33,161
Property, plant and equipment 32,075 31,148
Sustainable resources 3,464 3,516
Intangible assets 5,689 5,770
Goodwill 2,478 2,490
Deferred income tax asset 1,686 1,665
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Total Assets $ 110,550 $ 108,862
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Liabilities and Equity
Accounts payable and other $ 10,692 $ 11,652
Corporate borrowings 3,691 3,526
Non-recourse borrowings
Property-specific mortgages 35,049 33,720
Subsidiary borrowings 8,146 7,585
Deferred income tax liabilities 6,570 6,425
Capital securities 967 1,191
Interests of others in consolidated funds 453 425
Equity
Preferred equity 2,901 2,901
Non-controlling interests in net assets 24,764 23,287
Common equity 17,317 18,150
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Total Equity 44,982 44,338
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Total Liabilities and Equity $ 110,550 $ 108,862
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CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended March 31
US$ millions (except per share amounts) 2013 2012
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Revenues $ 4,951 $ 4,039
Direct costs (3,420) (2,864)
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1,531 1,175
Equity accounted income 266 388
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1,797 1,563
Expenses
Interest (655) (655)
Corporate costs (44) (42)
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Net income prior to valuation items and income tax 1,098 866
Valuation items
Fair value changes 61 343
Depreciation and amortization (365) (297)
Income tax (97) (190)
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Net income $ 697 $ 722
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Net income attributable to:
Brookfield shareholders $ 360 $ 416
Non-controlling interests 337 306
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$ 697 $ 722
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Net income per share
Diluted $ 0.51 $ 0.60
Basic $ 0.52 $ 0.63
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RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS(1)
(Unaudited)
For the three months ended March 31
US$ millions 2013 2012
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Net income prior to valuation items and income tax
(see above) $ 1,098 $ 866
Adjust for:
Fair value changes within equity accounted
income (68) (251)
Current income taxes (34) (27)
Disposition gains not included in net income 350 291
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1,346 879
Non-controlling interest (657) (364)
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Funds from operations(1) $ 689 $ 515
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Notes:
1. Non-IFRS measure, see Basis of Presentation on page 4
Contacts: Media: Brookfield Asset Management Inc. Andrew Willis
SVP, Communications & Media (416) 369-8236 (416) 363-2856
(FAX)andrew.willis@brookfield.com Investors: Brookfield Asset
Management Inc. Katherine Vyse SVP, Investor Relations (416)
369-8246 (416) 363-2856 (FAX)katherine.vyse@brookfield.com
www.brookfield.com
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