Brookfield Asset Management : Q1 2024 Letter to Shareholders

Q1 2024

Brookfield Asset Management Shareholders

Overview

We had a strong start to the year. Greater stability in the markets is creating increased market liquidity; this in turn is leading to greater transaction activity, which is supported by a significant amount of dry powder to invest. At the same time, continued consolidation in the asset management sector should support our fundraising initiatives, with clients preferring to do more with fewer, larger and diversified global managers.

We also completed three strategic transactions to date this year. The first was the closing of American Equity Investment Life (AEL) by Brookfield's Insurance business in April, adding $50 billion of fee-bearing capital to our franchise. Second, we reached an agreement to acquire a majority stake in Castlelake, a best-in-class, asset- backed, private credit manager with $22 billion of assets under management. Third, the acquisition of an additional 5% of Oaktree, which brings our ownership stake in the business to 73%.

We anticipate that our Fee-Related Earnings (FRE) and Distributable Earnings (DE) will grow meaningfully over the course of 2024, as recently raised capital starts to contribute and these transactions begin to flow through our financials.

Liquidity Is Back for High-Quality Assets and Sponsors

With interest rates anticipated to begin decreasing sometime this year and inflation well past peak levels, liquidity has returned to the capital markets. Most major economies are performing better than expected and the markets are assigning a relatively low probability to a global recession. This recovery has revived risk appetite and fostered an increasingly stable and constructive market.

All of this is positive for transaction activity. Stability allows for greater alignment of buyers and sellers, and improving capital markets supports greater investment. We expect to see an improving market for sales of high- quality assets, and we already have numerous examples within our own portfolio. We are also continuing to take advantage of robust debt markets to refinance a significant amount of our debt at attractive spreads.

At the same time, there are still many instances where the balance sheets of high-quality businesses and assets cannot withstand the increase in rates over the past two years, or where the business fundamentals have not lived up to the expectations of the capital structure that was put in place. This should, therefore, be an excellent period to invest for both our equity and credit strategies.

We Are Positioned for a Strong Capital-Raising Year

As a reminder, last year was one of our best fundraising years ever. We have continued our positive momentum into 2024, raising a total of $20 billion during the first quarter, $10 billion of that coming since our last earnings release. We expect that our fundraising will build throughout the year, given the timing of various fund closings and the calendar of upcoming launches.

Our fundraising success is rooted in our longstanding track record of delivering attractive returns to our clients and is reinforced by the deep relationships and partnerships we have built over many decades. We also benefit

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from the diversity of our business, which enables us to raise capital more consistently from year to year in different economic environments. This diversity can be seen in several key areas:

• Asset classes that are in demand. We have leadership positions in infrastructure, renewable power & transition, and credit-all of which are in demand today by institutional investors. These sit at the confluence of the three mega-trends reshaping the global economy: decarbonization, deglobalization and digitalization. These sectors will require $200+ trillion of capital over the next 30 years, creating significant growth opportunities.
• Multi-channeland global fundraising. Recognizing that different investors are influenced at different times and in different ways by global macroeconomic and local events, we deliberately took steps decades ago to expand our ability to raise capital across multiple channels and develop a global investor base. Over the past year, half of our institutional fundraising has originated outside of North America. There are few sponsors that can match our scale or breadth of reach.
• Product innovation. Our organization is centered around building and operating businesses and assets that form the backbone of the global economy. However, the global economy is always evolving. Of the more than $925 billion of assets that we manage, nearly half are in sectors which did not exist 20 years ago-from fiber, telecom towers and data centers, to wind, solar and digital payments. We have over 50 funds in the market and plan to launch additional complementary funds this year. But despite changes in our asset focus over time, our core investment principles remain steadfast: investing for value in essential assets with inflation-linked or contractual cash flows, and prudently operating businesses to earn strong returns while taking moderate risks.
• Acquisitions. We continue to add additional capabilities to our platform. Our recent announcement to acquire a 51% interest in Castlelake marks an exciting next step as we grow our global credit franchise and add further competencies in aviation and other forms of specialty finance to our platform. Our initial investment is projected to contribute an additional $40 million of FRE next year, with the option to increase our ownership over time. These types of partnerships should allow us to continue to scale with other best- in-class partner managers.

Financial Results and Fundraising

FRE was $552 million for the quarter, or $0.34 per share and DE was $547 million, or $0.34 per share, in line with the first quarter of last year. It is important to highlight that our fee revenues in the first quarter from our flagship, private credit and insurance strategies were up more than 12% over last year as a result of our capital raising success on the back of over 15% growth in related fee-bearing capital. We expect that revenues should continue to benefit from our capital-raising activities while cost growth should moderate, resulting in a strong year of earnings growth.

The most significant fundraising updates and deal activity during the first quarter were:

Infrastructure

• We raised over $3.0 billion of capital in the first quarter, including $1.9 billion for our supercore infrastructure strategy as part of the follow-on acquisition of FirstEnergy, for $3.5 billion.
• In January, we acquired a portfolio of core data centers for a purchase price of approximately $1.3 billion. We combined this portfolio with our existing co-location North American data center portfolio to create one of the largest retail data center providers, now named Centersquare.
• Our infrastructure wealth solutions product, Brookfield Infrastructure Income, continues to see robust demand, raising an additional $600 million in the first quarter and bringing assets under management for this offering to over $2.0 billion.

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Renewable Power & Transition

• In January, we finalized the first close of the second vintage of our flagship global transition fund strategy at $10 billion, including $1.2 billion of fund capital raised in the first quarter. We anticipate holding a final close in the second half of 2024.
• Subsequent to the end of the quarter, we launched our Catalytic Transition Fund. This fund was previously announced at COP28 in Dubai with a $1.0 billion commitment from long-time partner ALTÉRRA. We expect to hold the first close later this year.
• Our renewable power business is one of the biggest beneficiaries of the growth of data center demand. We announced a landmark agreement to provide Microsoft with over 10.5 gigawatts of new renewable energy capacity between 2026 and 2030 through the development of projects in the U.S. and Europe.

Real Estate

• We finalized the first close of the fifth vintage of our flagship opportunistic real estate fund strategy, bringing it to over $8.0 billion, including $2.2 billion of capital in the first quarter.
• Subsequent to the end of the quarter, we sold a 49% stake in ICD Brookfield Place, a premier office property in Dubai. This transaction marks one of the largest commercial real estate transactions globally since before the pandemic and represents one of the lowest cap rates (highest valuations) ever for an office building in the region.
• We are also progressing the sale of a hotel that is part of our premier mixed-use complex in Seoul, Korea, generating a strong return on capital, with the overall IFC Seoul Complex virtually 100% full, with very strong cashflows.

Private Equity

• We recently launched several complementary private equity strategies, including a Middle East strategy and a strategy for financial infrastructure investing.
• After partially monetizing a technology services operation in the fourth quarter, our road fuels distribution operation reached an agreement to sell its U.K. and European assets.
• We capitalized on the strength of our portfolio companies to refinance over $18 billion of debt since the beginning of last year at attractive spreads, improving cash flows and positioning them for success.

Credit

• We raised nearly $10 billion of capital across more than a dozen credit strategies this quarter. We believe, along with many of our clients, that now is the time to deploy capital into opportunistic credit.
• Within our Oaktree franchise, we raised nearly $6.0 billion of capital in the first quarter, including $1.0 billion within our sponsor credit business and nearly $1.0 billion in the twelfth vintage of our opportunistic credit fund, bringing the total raised for this fund to nearly $9.0 billion.
• Within insurance solutions, we raised $2.0 billion, bringing our total insurance-relatedfee-bearing capital to $36 billion at the end of the quarter. With the close of AEL, we manage nearly $90 billion of insurance assets today.

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Closing

We remain committed to being a world-class asset manager by investing our capital in high-quality assets that earn solid returns, while emphasizing downside protection. The primary objective of the company continues to be to generate increasing cash flows on a per-share basis, and to distribute that cash to you by dividend or share repurchases.

Thank you for your interest in Brookfield, and please do not hesitate to contact any of us should you have suggestions, questions, comments, or ideas you wish to share.

Sincerely,

Bruce Flatt	Connor Teskey
Chief Executive Officer	President
May 8, 2024

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Cautionary Statement Regarding Forward-Looking Statements and Information

All references to "$" or "Dollars" are to U.S. Dollars. This letter to shareholders contains "forward-looking information" within the meaning of Canadian provincial securities laws and "forward- looking statements" within the meaning of the U.S. Securities Act of 1933, the U.S. Securities Exchange Act of 1934, "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations (collectively, "forward-looking statements"). Forward-looking statements include statements that are predictive in nature, depend upon or refer to future results, events or conditions, and include, but are not limited to, statements which reflect management's current estimates, beliefs and assumptions regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies, capital management and outlook of Brookfield Asset Management Ltd., Brookfield Asset Management ULC and its subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods, and which are in turn based on our experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. The estimates, beliefs and assumptions of Brookfield Asset Management Ltd. are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and as such, are subject to change. Forward-looking statements are typically identified by words such as "target", "project", "forecast", "expect", "anticipate", "believe", "foresee", "could", "estimate", "goal", "intend", "plan", "seek", "strive", "will", "may" and "should" and similar expressions. In particular, the forward-looking statements contained in this letter to shareholders include statements referring to the impact of current market or economic conditions on our businesses, the future state of the economy or securities market, the expected future trading price of our shares or financial results, the results of future fundraising efforts, the expected growth, size or performance of future or existing strategies, future investment opportunities, or the results of future asset sales.

Although Brookfield Asset Management Ltd. believes that such forward-looking statements are based upon reasonable estimates, beliefs and assumptions, actual results may differ materially from the forward-looking statements. Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: (i) our lack of independent means of generating revenue; (ii) our material assets consisting solely of our interest in Brookfield Asset Management ULC; (iii) challenges relating to maintaining our relationship with Brookfield Corporation and potential conflicts of interest; (iv) Brookfield Asset Management Ltd. being a newly formed company; (v) our liability for our asset management business; (vi) our ability to maintain Brookfield Asset Management Ltd.'s excepted status as a "foreign private issuer" under U.S. federal securities laws; (vii) the impact on growth in fee- bearing capital of poor product development or marketing efforts; (viii) our ability to maintain our global reputation; (ix) volatility in the trading price of our class A limited voting shares; (x) being subjected to numerous laws, rules and regulatory requirements, and the potential ineffectiveness of our policies to prevent violations thereof; (xi) meeting our financial obligations due to our cash flow from our asset management business; (xii) foreign currency risk and exchange rate fluctuations; (xiii) requirement of temporary investments and backstop commitments to support our asset management business; (xiv) rising interest rates; (xv) revenues impacted by a decline in the size or pace of investments made by our managed assets; (xvi) the variability of our earnings growth, which may affect our dividend and the trading price of our class A limited voting shares; (xvii) exposed risk due to increased amount and type of investment products in our managed assets; (xviii) difficulty in maintaining our culture or managing our human capital; (xix) political instability or changes in government; (xx) unfavorable economic conditions or changes in the industries in which we operate; (xxi) catastrophic events, such as earthquakes, hurricanes, or pandemics/epidemics; (xxii) deficiencies in public company financial reporting and disclosures; (xxiii) ineffective management of environmental, social and governance (ESG) considerations, and inadequate or ineffective health and safety programs; (xxiv) the failure of our information and technology systems; (xxv) us and our managed assets becoming involved in legal disputes; (xxvi) losses not covered by insurance; (xxvii) inability to collect on amounts owing to us; (xxviii) information barriers that may give rise to conflicts and risks; (xxix) risks related to our renewable power and transition, infrastructure, private equity, real estate, and other alternatives, including credit strategies; (xxx) risks relating to Canadian and United States taxation laws; and (xxxi) other factors described 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 and other factors could also adversely affect future results. Readers are urged to consider these risks, as well as other uncertainties, factors and assumptions carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward- looking statements, which are based only on information available to us as of the date of this letter to shareholders. Except as required by law, Brookfield Asset Management Ltd. undertakes no obligation to publicly update or revise any forward-looking statements, whether written or oral, that may be as a result of new information, future events or otherwise.

Past performance is not indicative nor a guarantee of future results. There can be no assurance that comparable results will be achieved in the future, that future investments will be similar to historic investments discussed herein, that targeted returns, growth objectives, diversification or asset allocations will be met or that an investment strategy or investment objectives will be achieved (because of economic conditions, the availability of appropriate opportunities or otherwise).

Target returns and growth objectives set forth in this letter to shareholders are for illustrative and informational purposes only and have been presented based on various assumptions made by Brookfield Asset Management Ltd. in relation to the investment strategies being pursued, any of which may prove to be incorrect. There can be no assurance that targeted returns or growth objectives will be achieved. Due to various risks, uncertainties and changes (including changes in economic, operational, political or other circumstances) beyond Brookfield Asset Management Ltd.'s control, the actual performance of the business could differ materially from the target returns and growth objectives set forth herein. In addition, industry experts may disagree with the assumptions used in presenting the target returns and growth objectives. No assurance, representation or warranty is made by any person that the target returns or growth objectives will be achieved, and undue reliance should not be put on them. Prior performance is not indicative of future results and there can be no guarantee that Brookfield Asset Management Ltd. will achieve the target returns or growth objectives or be able to avoid losses.

Certain of the information contained herein is based on or derived from information provided by independent third-party sources. While Brookfield Asset Management Ltd. believes that such information is accurate as of the date it was produced and that the sources from which such information has been obtained are reliable, Brookfield Asset Management Ltd. makes no representation or warranty, express or implied, with respect to the accuracy, reasonableness or completeness of any of the information or the assumptions on which such information is based, contained herein, including but not limited to, information obtained from third parties.

Expectations around future realizations of carried interest are illustrative. To calculate these figures, we assume that we achieve the gross target return rates for each of our funds for which we are eligible to earn carried interest. There can be no assurance that we will achieve these target returns or that we will realize these levels of carried interest. Carried interest is a contractual arrangement whereby we receive a fixed percentage of investment gains generated within a private fund provided that the investors receive a predetermined minimum return. Carried interest is typically paid towards the end of the life of a fund after the capital has been returned to investors and may be subject to "claw back" until all investments have been monetized and minimum investment returns are sufficiently assured. This is referred to as realized carried interest. Gross carried interest represents realizations after Brookfield Corporation receives its 33% share but before any direct costs that we would pay to employees.

Cautionary Statement Regarding the Use of Non-GAAP Measures

This letter to shareholders contains references to financial measures that are calculated and presented using methodologies other than in accordance with U.S. GAAP. These financial measures, which include Distributable Earnings, its components and its per share equivalent, should not be considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, similar financial measures calculated in accordance with U.S. GAAP. We caution readers that these non-GAAP financial measures or other financial metrics are not standardized under U.S. GAAP and may differ from the financial measures or other financial metrics disclosed by other businesses and, as a result, may not be comparable to similar measures presented by other issuers and entities.

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