BROOKFIELD CORPORATION Brookfield Announces $2.4 billion of Net Income,
$1.2 billion of Distributable Earnings in Second Quarter
$24 billion of Capital Raised, including $9 billion for our Flagship Property Fund and
$7 billion for our Transition Fund
BROOKFIELD, NEWS, August 12, 2021 - Brookfield Asset Management Inc. (NYSE: BAM, TSX: BAM.A) today announced financial results for the quarter ended June 30, 2021.
Nick Goodman, CFO of Brookfield, stated, "Our business performed very well during the quarter, recording $1.2 billion of distributable earnings. Growth in our asset management franchise, steady returns on our principal investments and continued momentum on our capital recycling initiatives all contributed to the strong quarter. Subsequent to quarter end, we held the first close of $9 billion for our fourth flagship real estate fund, and our $7 billion founders' close for our Global Transition Fund, taking total fundraising since last quarter to $24 billion. We expect the size of these two funds to exceed $30 billion before they close for capital."
Operating Results
Unaudited | Three Months Ended | Last Twelve Months Ended | ||||||||
For the periods ended June 30 | ||||||||||
(US$ millions, except per share amounts) | 2021 | 2020 | 2021 | 2020 | ||||||
Net income1 | $ | 2,429 | $ | (1,493) | $ | 8,562 | $ | 1,744 | ||
Net income attributable to common | $ | 816 | $ | (656) | $ | 2,866 | $ | 844 | ||
2 | 0.49 | 1.76 | ||||||||
Net income per Brookfield share2 | (0.43) | 0.47 | ||||||||
Funds from operations2,3 | $ | 1,600 | $ 953 | $ | 1,161 | $562 | $ | 7,556 | $ | 4,075 |
Per Brookfield share2,3 | 1.01 | 69.57 % | 0.73 | 4.80 | 2.59 | |||||
Distributable earnings | $ | 1,232 | $ | 1,081 | $ | 6,254 | $ | 3,009 |
- Consolidated basis - includes amounts attributable to non-controlling interests.
- Excludes amounts attributable to non-controlling interests.
- See Basis of Presentation on page 8 and a reconciliation of net income (loss) to FFO on page 5.
Funds from operations (FFO) and net income in the quarter were strong at $1.6 billion and $2.4 billion, respectively, both very large increases over last year.
Our distributable earnings continue to show strong growth, recording $1.2 billion for the quarter, and $6.3 billion over the last twelve months, a 108% increase over the comparative period. The strong performance in the quarter is supported by a 49% increase in fee-related earnings, continued carried interest realizations, increased distributions from our principal investments, and disposition gains recognized on our principal investments.
Monetization activity continued during the quarter as we sold $8 billion of investments, returned $6 billion to clients, and realized $335 million of gross carried interest in the process, taking the total realized since the beginning of the year to more than $1 billion. Investment performance was also very strong in the quarter with our unrealized carried interest balance, not recorded in our financial accounts, increasing to $6.2 billion.
Regular Dividend Declaration
The Board declared a quarterly dividend of US$0.13 per share, payable on September 29, 2021 to shareholders of record as at the close of business on August 31, 2021. The Board also declared the regular monthly and quarterly dividends on its preferred shares.
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Operating Highlights
Fee-bearing capital increased to $325 billion during the quarter, an increase of approximately $48 billion over the last twelve months, leading to a $334 million increase in fee-related earnings over the same period.
Inflows during the quarter totaled $8 billion, across several of our perpetual and long-term fund strategies, as well as a first close of our latest real estate debt fund and further capital raised for our Special Investments strategy. We also currently have approximately $32 billion of additional committed but un-invested capital across our strategies that will earn approximately $320 million of fees annually once deployed.
Our latest round of flagship funds is off to a very strong start with over $30 billion raised to date after strong first closes for our recently launched real estate and transition flagship funds.
Subsequent to quarter end, we held first closes for our new Global Transition Fund at $7 billion and our fourth flagship strategic real estate fund of $9 billion. The reception among existing clients to both strategies has been very positive which has resulted in strong retention rates and cross selling. Our added distribution capabilities have also led to a number of investors making their first commitment to a Brookfield strategy. This capital is in addition to the $15 billion raised for our latest opportunistic credit flagship fund.
With two large acquisitions in recent months, our fifth private equity flagship fund is over 75% committed which means we will be shortly launching our sixth vintage fund. Our infrastructure fund is also making great progress on deployment and is approximately 70% invested or committed. We expect to launch the next vintage for this strategy by the end of this year or early in 2022.
We recorded $1.5 billion of realized carried interest into income over the last twelve months, including $335 million during the quarter.
We completed $8 billion of monetizations during the quarter, allowing us to return $6 billion to our clients and realize $335 million of carried interest across several of our earlier vintage funds. We have now surpassed our goal of realizing over $1 billion of carried interest during the year and expect the total to continue growing as we execute on more planned asset sales.
Investment performance was strong in the quarter. We generated $1.1 billion of carried interest, representing growth of 20% in our accumulated unrealized carried interest, taking the total to $6.2 billion.
Annualized fee revenues and target carried interest now stand at a run-rate of $6.7 billion.
Annualized fee revenues and annualized fee-related earnings are now $3.4 billion and $1.6 billion, respectively, largely driven by increased fee-bearing capital across both our private fund and listed strategies. Gross target carried interest stands at $3.3 billion, or $1.8 billion net of costs.
As at June 30, 2021, we had $78 billion of capital available to deploy into new investments.
Deployable capital of $78 billion includes approximately $18 billion of cash, financial assets and undrawn lines of credit in BAM and our affiliates and $60 billion of uncalled fund commitments available for new transactions. During the quarter, we bolstered our liquidity through the continued sell down of approximately $300 million of West Fraser shares from our principal investments, and subsequent to the quarter we issued $850 million of long dated bonds - 2.34% 10-year green bonds and 3.26% 30-year bonds which further strengthens our position as a market leader in sustainable finance.
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CONSOLIDATED BALANCE SHEETS
Unaudited | June 30 | December 31 | ||||
2021 | 2020 | |||||
(US$ millions) | ||||||
Assets | ||||||
Cash and cash equivalents | $ | 10,459 | $ | 9,933 | ||
Other financial assets | 19,016 | 17,730 | ||||
Accounts receivable and other | 22,758 | 24,845 | ||||
Inventory | 11,187 | 10,360 | ||||
Equity accounted investments | 43,315 | 41,327 | ||||
Investment properties | 101,010 | 96,782 | ||||
Property, plant and equipment | 98,086 | 100,009 | ||||
Intangible assets | 25,018 | 24,658 | ||||
Goodwill | 14,953 | 14,714 | ||||
Deferred income tax assets | 3,415 | 3,338 | ||||
Total Assets | $ | 349,217 | $ | 343,696 | ||
Liabilities and Equity | ||||||
Corporate borrowings | $ | 9,145 | $ | 9,077 | ||
Accounts payable and other | 51,617 | 53,041 | ||||
Non-recourse borrowings in entities that we manage | 143,126 | 139,324 | ||||
Subsidiary equity obligations | 3,478 | 3,699 | ||||
Deferred income tax liabilities | 15,914 | 15,913 | ||||
Equity | ||||||
Preferred equity | $ | 4,145 | $ | 4,145 | ||
Non-controlling interests in net assets | 88,423 | 86,804 | ||||
Common equity | 33,369 | 125,937 | 31,693 | 122,642 | ||
Total Liabilities and Equity | $ | 349,217 | $ | 343,696 |
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CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited | Three Months Ended | Six Months Ended | |||||||
For the periods ended June 30 | |||||||||
2021 | 2020 | 2021 | 2020 | ||||||
(US$ millions, except per share amounts) | |||||||||
Revenues | $ | 18,286 | $ | 12,829 | $ | 34,696 | $ | 29,415 | |
Direct costs | (13,994) | (9,446) | (26,181) | (22,155) | |||||
Other income and gains | 1,251 | 29 | 1,955 | 270 | |||||
Equity accounted income (loss) | 488 | (631) | 1,156 | (843) | |||||
Expenses | |||||||||
Interest | (1,831) | (1,715) | (3,661) | (3,567) | |||||
Corporate costs | (30) | (25) | (59) | (49) | |||||
Fair value changes | 377 | (1,153) | 2,471 | (1,567) | |||||
Depreciation and amortization | (1,571) | (1,376) | (3,081) | (2,785) | |||||
Income tax | (547) | (5) | (1,091) | (369) | |||||
Net income (loss) | $ | 2,429 | $ | (1,493) | $ | 6,205 | $ | (1,650) | |
Net income (loss) attributable to: | |||||||||
Brookfield shareholders | $ | 816 | $ | (656) | $ | 2,051 | $ | (949) | |
Non-controlling interests | 1,613 | (837) | 4,154 | (701) | |||||
$ | 2,429 | $ | (1,493) | $ | 6,205 | $ | (1,650) | ||
Net income (loss) per share1 | |||||||||
Diluted | $ | 0.49 | $ | (0.43) | $ | 1.26 | $ | (0.63) | |
Basic | 0.51 | (0.43) | 1.29 | (0.63) |
1. Adjusted to reflect the three-for-two stock split effective April 1, 2020.
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SUMMARIZED FINANCIAL RESULTS
RECONCILIATION OF NET INCOME (LOSS) TO FUNDS FROM OPERATIONS
Unaudited | Three Months Ended | Last Twelve Months Ended | |||||||
For the periods ended June 30 | |||||||||
2021 | 2020 | 2021 | 2020 | ||||||
(US$ millions) | |||||||||
Net income (loss) | $ | 2,429 | $ | (1,493) | $ | 8,562 | $ | 1,744 | |
Financial statement components not included in FFO | |||||||||
Equity accounted fair value changes and other non-FFO items | 328 | 1,253 | 1,595 | 2,462 | |||||
Fair value changes | (377) | 1,153 | (2,615) | 1,169 | |||||
Depreciation and amortization | 1,571 | 1,376 | 6,087 | 5,393 | |||||
Deferred income taxes | 301 | (96) | 499 | (459) | |||||
Realized disposition gains in fair value changes or prior periods | 488 | 469 | 3,204 | 944 | |||||
Non-controlling interests | (3,140) | (1,501) | (9,776) | (7,178) | |||||
Funds from operations1,2 | $ | 1,600 | $ | 1,161 | $ | 7,556 | $ | 4,075 |
SEGMENT FUNDS FROM OPERATIONS
Unaudited | Three Months Ended | Last Twelve Months Ended | |||||||
For the periods ended June 30 | |||||||||
2021 | 2020 | 2021 | 2020 | ||||||
(US$ millions, except per share amounts) | |||||||||
Asset management | $ | 688 | $ | 355 | $ | 2,365 | $ | 1,609 | |
Real estate | 189 | 89 | 1,007 | 927 | |||||
Renewable power | 88 | 566 | 1,323 | 742 | |||||
Infrastructure | 317 | 84 | 795 | 429 | |||||
Private equity | 337 | 137 | 1,962 | 645 | |||||
Residential | 42 | (11) | 151 | 109 | |||||
Corporate | (61) | (59) | (47) | (386) | |||||
Funds from operations1,2 | $ | 1,600 | $ | 1,161 | $ | 7,556 | $ | 4,075 | |
Per share3,4 | $ | 1.01 | $ | 0.73 | $ | 4.80 | $ | 2.59 |
- Non-IFRSmeasure - see Basis of Presentation on page 8.
- Excludes amounts attributable to non-controlling interests.
- Adjusted to reflect the three-for-two stock split effective April 1, 2020.
- Per share amounts are inclusive of dilutive effect of mandatorily redeemable preferred shares held in a consolidated subsidiary.
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Brookfield Asset Management Inc. published this content on 12 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 August 2021 16:11:12 UTC.
