Brookfield Asset Management Report 2022
Added on 2022-10-09
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Brookfield Asset
Management Inc.
2 0 1 8 A N N U A L R E P O R T
Management Inc.
2 0 1 8 A N N U A L R E P O R T
This page is intentionally left blank
2018 ANNUAL REPORT 2
CONTENTS
Brookfield at a Glance 3
Letter to Shareholders 6
Management’s Discussion & Analysis 17
PART 1 – Our Business and Strategy 19
PART 2 – Review of Consolidated Financial Results 30
PART 3 – Operating Segment Results 47
PART 4 – Capitalization and Liquidity 75
PART 5 – Accounting Policies and Internal Controls 84
PART 6 – Business Environment and Risks 93
Glossary of Terms 108
Internal Control Over Financial Reporting 114
Consolidated Financial Statements 119
Shareholder Information 201
Board of Directors and Officers 202
Throughout our annual report, we use the following icons:
Asset
Management
Real
Estate
Renewable
Power
Infrastructure Private
Equity
Residential
Development
Corporate
Activities
Five-Year Financial Record
AS AT AND FOR THE YEARS ENDED DEC. 31 2018 2017 2016 2015 2014
PER SHARE1
Net income $ 3.40 $ 1.34 $ 1.55 $ 2.26 $ 3.11
Funds from operations2 4.35 3.74 3.18 2.49 2.11
Dividends3
Cash 0.60 0.56 0.52 0.47 0.45
Special — 0.11 0.45 — —
Market trading price – NYSE4 43.12 43.54 33.01 31.53 33.42
1. 2014 adjusted to reflect three-for-two stock split effective May 12, 2015; per share amounts are net of non-controlling interest.
2. See definition in the MD&A Glossary of Terms beginning on page 108.
3. See Corporate Dividends on page 46.
4. 2018 Market trading price is as at February 13, 2019. Market trading price at December 31, 2018 was $38.35.
CONTENTS
Brookfield at a Glance 3
Letter to Shareholders 6
Management’s Discussion & Analysis 17
PART 1 – Our Business and Strategy 19
PART 2 – Review of Consolidated Financial Results 30
PART 3 – Operating Segment Results 47
PART 4 – Capitalization and Liquidity 75
PART 5 – Accounting Policies and Internal Controls 84
PART 6 – Business Environment and Risks 93
Glossary of Terms 108
Internal Control Over Financial Reporting 114
Consolidated Financial Statements 119
Shareholder Information 201
Board of Directors and Officers 202
Throughout our annual report, we use the following icons:
Asset
Management
Real
Estate
Renewable
Power
Infrastructure Private
Equity
Residential
Development
Corporate
Activities
Five-Year Financial Record
AS AT AND FOR THE YEARS ENDED DEC. 31 2018 2017 2016 2015 2014
PER SHARE1
Net income $ 3.40 $ 1.34 $ 1.55 $ 2.26 $ 3.11
Funds from operations2 4.35 3.74 3.18 2.49 2.11
Dividends3
Cash 0.60 0.56 0.52 0.47 0.45
Special — 0.11 0.45 — —
Market trading price – NYSE4 43.12 43.54 33.01 31.53 33.42
1. 2014 adjusted to reflect three-for-two stock split effective May 12, 2015; per share amounts are net of non-controlling interest.
2. See definition in the MD&A Glossary of Terms beginning on page 108.
3. See Corporate Dividends on page 46.
4. 2018 Market trading price is as at February 13, 2019. Market trading price at December 31, 2018 was $38.35.
3 BROOKFIELD ASSET MANAGEMENT
Brookfield at a Glance
OUR BUSINESS
We are a leading global alternative asset manager with over $350 billion of assets under management and
$138 billion in fee bearing capital. We raise private and public capital from the world’s largest institutional investors,
sovereign wealth funds and individuals, with a focus on generating attractive investment returns that will allow our
investors and their stakeholders to meet their goals and protect their financial future.
• Investment focus – Real Estate, Infrastructure, Renewable Power and Private Equity
• Diverse product offering – Core, value-add, opportunistic and credit strategies in both closed-end and
long-life vehicles
• Focused investment strategies – We invest where we have a competitive advantage, such as our strong
capabilities as an owner-operator, our large scale capital and our global reach
• Disciplined financing approach – Debt is carefully employed to enhance returns while preserving capital
throughout business cycles
In addition to our asset management activities outlined above, we invest significant capital from our balance
sheet in our managed entities alongside our investors as well as in other direct investments. This is intended to
generate attractive financial returns and cash flows, support the growth of our asset management activities and
create an important alignment of interests with our investors. We refer to this as our Invested Capital and it totals
approximately $40 billion prior to leverage.
ASSET MANAGEMENT
We provide a wide range of investment products, primarily focused on real estate, renewable power,
infrastructure and private equity
REAL ESTATE
Office, retail, industrial, multifamily, hospitality
and other properties
RENEWABLE POWER
Hydroelectric, wind, solar and other power
generating facilities
PRIVATE EQUITY
Business services, infrastructure services and
industrial operations
INFRASTRUCTURE
Utilities, transport, energy, data infrastructure
and sustainable resource assets
Note: Excludes Residential Development and Corporate Activities which are distinct business segments for IFRS reporting purposes.
“Brookfield,” the “company,” “we,” “us” or “our” refers to Brookfield Asset Management Inc. and its consolidated subsidiaries. The “Corporation” refers
to our asset management business which is comprised of our asset management and corporate business segments. Our “invested capital” or “listed
partnerships” includes our subsidiaries, Brookfield Property Partners L.P., Brookfield Renewable Partners L.P., Brookfield Infrastructure Partners L.P. and
Brookfield Business Partners L.P., which are separate public issuers included within our real estate, renewable power, infrastructure and private equity
segments, respectively. We use “private funds” to refer to our real estate funds, infrastructure funds and private equity funds. Please refer to the Glossary
of Terms beginning on page 108 which defines our key performance measures that we use to measure our business.
Brookfield at a Glance
OUR BUSINESS
We are a leading global alternative asset manager with over $350 billion of assets under management and
$138 billion in fee bearing capital. We raise private and public capital from the world’s largest institutional investors,
sovereign wealth funds and individuals, with a focus on generating attractive investment returns that will allow our
investors and their stakeholders to meet their goals and protect their financial future.
• Investment focus – Real Estate, Infrastructure, Renewable Power and Private Equity
• Diverse product offering – Core, value-add, opportunistic and credit strategies in both closed-end and
long-life vehicles
• Focused investment strategies – We invest where we have a competitive advantage, such as our strong
capabilities as an owner-operator, our large scale capital and our global reach
• Disciplined financing approach – Debt is carefully employed to enhance returns while preserving capital
throughout business cycles
In addition to our asset management activities outlined above, we invest significant capital from our balance
sheet in our managed entities alongside our investors as well as in other direct investments. This is intended to
generate attractive financial returns and cash flows, support the growth of our asset management activities and
create an important alignment of interests with our investors. We refer to this as our Invested Capital and it totals
approximately $40 billion prior to leverage.
ASSET MANAGEMENT
We provide a wide range of investment products, primarily focused on real estate, renewable power,
infrastructure and private equity
REAL ESTATE
Office, retail, industrial, multifamily, hospitality
and other properties
RENEWABLE POWER
Hydroelectric, wind, solar and other power
generating facilities
PRIVATE EQUITY
Business services, infrastructure services and
industrial operations
INFRASTRUCTURE
Utilities, transport, energy, data infrastructure
and sustainable resource assets
Note: Excludes Residential Development and Corporate Activities which are distinct business segments for IFRS reporting purposes.
“Brookfield,” the “company,” “we,” “us” or “our” refers to Brookfield Asset Management Inc. and its consolidated subsidiaries. The “Corporation” refers
to our asset management business which is comprised of our asset management and corporate business segments. Our “invested capital” or “listed
partnerships” includes our subsidiaries, Brookfield Property Partners L.P., Brookfield Renewable Partners L.P., Brookfield Infrastructure Partners L.P. and
Brookfield Business Partners L.P., which are separate public issuers included within our real estate, renewable power, infrastructure and private equity
segments, respectively. We use “private funds” to refer to our real estate funds, infrastructure funds and private equity funds. Please refer to the Glossary
of Terms beginning on page 108 which defines our key performance measures that we use to measure our business.
2018 ANNUAL REPORT 4
Brookfield at a Glance
OUR GLOBAL PRESENCE
$355BASSETS UNDER
MANAGEMENT
$138BFEE BEARING
CAPITAL
750+
INVESTMENT
PROFESSIONALS
30+
COUNTRIES
100,000+
OPERATING
EMPLOYEES
QUICK FACTS
E X C H A N G E S NYSE: BAM TSX: BAM.A EURONEX T: BAMA
Corporate Offices
NEW YORK
TORONTO
LONDON
RIO DE JANEIRO
SYDNEY
SHANGHAI
MUMBAI
DUBAI
ASIA PACIFIC
$27B AUM
~10,000 operating employees
SOUTH AMERICA
$40B AUM
~23,000 operating employees
UNITED STATES
$189B AUM
~21,000 operating employees
EUROPE & MIDDLE EAST
$64B AUM
~30,000 operating employees
CANADA
$35B AUM
~18,000 operating employees
Brookfield at a Glance
OUR GLOBAL PRESENCE
$355BASSETS UNDER
MANAGEMENT
$138BFEE BEARING
CAPITAL
750+
INVESTMENT
PROFESSIONALS
30+
COUNTRIES
100,000+
OPERATING
EMPLOYEES
QUICK FACTS
E X C H A N G E S NYSE: BAM TSX: BAM.A EURONEX T: BAMA
Corporate Offices
NEW YORK
TORONTO
LONDON
RIO DE JANEIRO
SYDNEY
SHANGHAI
MUMBAI
DUBAI
ASIA PACIFIC
$27B AUM
~10,000 operating employees
SOUTH AMERICA
$40B AUM
~23,000 operating employees
UNITED STATES
$189B AUM
~21,000 operating employees
EUROPE & MIDDLE EAST
$64B AUM
~30,000 operating employees
CANADA
$35B AUM
~18,000 operating employees
5 BROOKFIELD ASSET MANAGEMENT
Core Investment Principles
Our approach to investing is disciplined and straightforward. With a focus on value creation and capital
preservation, we invest opportunistically in high quality real assets within our areas of expertise, manage them
proactively and finance them conservatively with a goal of generating stable, predictable and growing cash flows
for investors and shareholders. Our culture is anchored by a set of core investment principles that guide our
decisions and how we measure success.
B U S I N E S S PHILOSOPHY
I N V E S T M E NT GUIDELINES
M E A S U R E MENT OF OUR
CO R P O R ATE SUCCESS
• Build our business and all our relationships based on integrity
• Attract and retain high-calibre individuals who will grow with
us over the long term
• Ensure our people think and act like owners in
all their decisions
• Treat our investor and shareholder money like it’s our own
• Invest where we possess competitive advantages
• Acquire assets on a value basis with a goal of maximizing
return on capital
• Build sustainable cash flows to provide certainty, reduce risk
and lower our cost of capital
• Recognize that superior returns often require a
contrarian approach
• Measure success based on total return on capital over
the long term
• Encourage calculated risks, but compare returns with risk
• Sacrifice short-term profit, if necessary, to achieve long-term
capital appreciation
• Seek profitability rather than growth, as size does not
necessarily add value
Core Investment Principles
Our approach to investing is disciplined and straightforward. With a focus on value creation and capital
preservation, we invest opportunistically in high quality real assets within our areas of expertise, manage them
proactively and finance them conservatively with a goal of generating stable, predictable and growing cash flows
for investors and shareholders. Our culture is anchored by a set of core investment principles that guide our
decisions and how we measure success.
B U S I N E S S PHILOSOPHY
I N V E S T M E NT GUIDELINES
M E A S U R E MENT OF OUR
CO R P O R ATE SUCCESS
• Build our business and all our relationships based on integrity
• Attract and retain high-calibre individuals who will grow with
us over the long term
• Ensure our people think and act like owners in
all their decisions
• Treat our investor and shareholder money like it’s our own
• Invest where we possess competitive advantages
• Acquire assets on a value basis with a goal of maximizing
return on capital
• Build sustainable cash flows to provide certainty, reduce risk
and lower our cost of capital
• Recognize that superior returns often require a
contrarian approach
• Measure success based on total return on capital over
the long term
• Encourage calculated risks, but compare returns with risk
• Sacrifice short-term profit, if necessary, to achieve long-term
capital appreciation
• Seek profitability rather than growth, as size does not
necessarily add value
2018 ANNUAL REPORT 6
Letter to Shareholders
OVERVIEW
2018 was a strong year in the global economy, punctuated by considerable political drama and towards the end
of the year, stock market volatility. Behind the volatility, most companies reported good results and ours were no
exception. Net income in aggregate was a record $7.5 billion or $3.40 per share. Funds from operations (FFO) were
$4.35 per share, an increase of 16% over 2017. FFO should grow substantially in 2019, as we expect to sell a number
of assets and therefore record upwards of $1 billion of carried interest into income.
Our assets under management grew to over $350 billion, and asset management results increased commensurately
by 36% to $1.3 billion. We raised $40 billion of capital during the year, invested or committed $35 billion and sold
$14 billion of mature assets. We recently closed our latest opportunistic real estate fund at $15 billion, raised
$7 billion for the first close of our successor private equity fund and are now in the market with our successor
infrastructure fund, which should be by far our largest. In total, this round of flagship funds should raise ±$50 billion
of capital for deployment.
Today we have approximately $35 billion of deployable capital for activities and this should grow as we continue to
raise capital across flagship and other strategies. On a corporate basis, we have started devoting some of our free
cash flow to share repurchases. During the year, $625 million of free cash flow was invested to repurchase shares
of BAM and our listed partnerships.
STOCK PERFORMANCE
We manage our business for the long term. We regularly provide our stock performance as a measure of the
achievement of our goals, although it is not our primary measure of value. Our longer dated returns highlight that
our business is resilient through market cycles and we continue to seek to deliver on our goal of generating in
excess of 12% to 15% compound returns. Volatility toward the end of 2018 led to a small decline in our one-year
performance, but it has recovered in the last month, so we have shown the numbers in the table for the year to
February 13, 2019.
More importantly, our view of the intrinsic value of the business increased significantly over the last twelve months.
We successfully raised and deployed significant amounts of capital and sold several investments in our funds,
building up our accrued carried interest balance. This increased intrinsic value of our businesses should enable us
to continue compounding these results well into the future.
Investment Performance (Years) Brookfield NYSE S&P 500
10-Year U.S.
Treasuries
1 (to February 13, 2019) —% 5% 1%
10 17% 13% 3%
20 17% 6% 5%
25 17% 9% 4%
Letter to Shareholders
OVERVIEW
2018 was a strong year in the global economy, punctuated by considerable political drama and towards the end
of the year, stock market volatility. Behind the volatility, most companies reported good results and ours were no
exception. Net income in aggregate was a record $7.5 billion or $3.40 per share. Funds from operations (FFO) were
$4.35 per share, an increase of 16% over 2017. FFO should grow substantially in 2019, as we expect to sell a number
of assets and therefore record upwards of $1 billion of carried interest into income.
Our assets under management grew to over $350 billion, and asset management results increased commensurately
by 36% to $1.3 billion. We raised $40 billion of capital during the year, invested or committed $35 billion and sold
$14 billion of mature assets. We recently closed our latest opportunistic real estate fund at $15 billion, raised
$7 billion for the first close of our successor private equity fund and are now in the market with our successor
infrastructure fund, which should be by far our largest. In total, this round of flagship funds should raise ±$50 billion
of capital for deployment.
Today we have approximately $35 billion of deployable capital for activities and this should grow as we continue to
raise capital across flagship and other strategies. On a corporate basis, we have started devoting some of our free
cash flow to share repurchases. During the year, $625 million of free cash flow was invested to repurchase shares
of BAM and our listed partnerships.
STOCK PERFORMANCE
We manage our business for the long term. We regularly provide our stock performance as a measure of the
achievement of our goals, although it is not our primary measure of value. Our longer dated returns highlight that
our business is resilient through market cycles and we continue to seek to deliver on our goal of generating in
excess of 12% to 15% compound returns. Volatility toward the end of 2018 led to a small decline in our one-year
performance, but it has recovered in the last month, so we have shown the numbers in the table for the year to
February 13, 2019.
More importantly, our view of the intrinsic value of the business increased significantly over the last twelve months.
We successfully raised and deployed significant amounts of capital and sold several investments in our funds,
building up our accrued carried interest balance. This increased intrinsic value of our businesses should enable us
to continue compounding these results well into the future.
Investment Performance (Years) Brookfield NYSE S&P 500
10-Year U.S.
Treasuries
1 (to February 13, 2019) —% 5% 1%
10 17% 13% 3%
20 17% 6% 5%
25 17% 9% 4%
7 BROOKFIELD ASSET MANAGEMENT
MARKET ENVIRONMENT
Economic fundamentals generally remain strong globally. We continue to see good availability of liquidity in debt
markets, and inflows into our fund strategies have been robust. This is all playing out against a backdrop of political
upheaval and the reality that we are in the late stages of the business cycle, and therefore will likely see a recession at
some point in the next few years.
The U.S. economy, while slowing from the pace in late 2017 and early 2018, continues to be strong. Interest rates are
still historically low and we expect that to continue. The stock market took a welcome pause at the end of 2018 which
brought rationality back to the equity markets. In the context of this backdrop and amidst these conditions in 2018,
we found a number of great businesses to acquire.
Economic momentum in Europe has been slow for some time due to uncertainty over Brexit, Italy’s budget deadlock
with the EU, and long-term structural issues. We expect activity to be better once the outlook on Brexit becomes
clearer, but in the meantime, we believe there will be select opportunities to deploy capital.
Canada and Australia are exceptional long-term markets for investment and while they are small on a global basis,
both are very important to us, given our major presence in each. We believe they will continue to be excellent markets
for us, given their stability and resilience. In 2018, we were successful on a number of fronts in both countries.
The South American markets in which we invest have been recovering nicely, with Brazil the slowest, but are set to
recover now that a new government is in place. We invested significant capital in South America over the past three
years and will both continue to tuck-in assets around these businesses and monetize investments as the currencies
and economies recover.
Asia continues to increase its importance in the global economy. While trade issues have been disruptive in the
short term, and growth is slowing due to the law of large numbers, these countries are very important global
investment markets. We continue to judiciously increase our investments in India, China, Japan and South Korea.
A SUMMARY OF 2018
Total assets under management are now over $350 billion, as we continue to raise and deploy large amounts of
capital across our businesses.
AS AT AND FOR THE TWELVE MONTHS
ENDED DEC. 31 (MILLIONS) 2014 2015 2016 2017 2018 CAGR
Total assets under management $ 203,840 $ 227,803 $ 239,825 $ 283,141 $ 354,736 15%
Fee bearing capital 85,936 94,262 109,576 125,590 137,528 12%
Gross annual run rate of fees plus target carry 1,204 1,489 2,031 2,475 2,975 25%
Fee related earnings (after costs) 378 496 712 896 1,129 31%
Cash available for reinvestment or
distribution to BAM shareholders 1,024 1,274 1,782 1,899 2,419 24%
Asset Management Activities
Our fee bearing capital has seen step-change increases over the past few fund series, increasing from $49 billion
in 2009 to $86 billion in 2014 and $138 billion in 2018. This growth in fee bearing capital will continue to contribute
to an even higher growth of fee related earnings, carried interest and cash flows. In early 2019, we completed the
final close for our flagship real estate fund, had a first close for our flagship private equity fund in late 2018, and
recently launched our next infrastructure fund. In 2018, we also launched an Australian long-life real estate fund and
long-life infrastructure fund. With all this, we raised $22 billion of third-party private capital across our strategies.
MARKET ENVIRONMENT
Economic fundamentals generally remain strong globally. We continue to see good availability of liquidity in debt
markets, and inflows into our fund strategies have been robust. This is all playing out against a backdrop of political
upheaval and the reality that we are in the late stages of the business cycle, and therefore will likely see a recession at
some point in the next few years.
The U.S. economy, while slowing from the pace in late 2017 and early 2018, continues to be strong. Interest rates are
still historically low and we expect that to continue. The stock market took a welcome pause at the end of 2018 which
brought rationality back to the equity markets. In the context of this backdrop and amidst these conditions in 2018,
we found a number of great businesses to acquire.
Economic momentum in Europe has been slow for some time due to uncertainty over Brexit, Italy’s budget deadlock
with the EU, and long-term structural issues. We expect activity to be better once the outlook on Brexit becomes
clearer, but in the meantime, we believe there will be select opportunities to deploy capital.
Canada and Australia are exceptional long-term markets for investment and while they are small on a global basis,
both are very important to us, given our major presence in each. We believe they will continue to be excellent markets
for us, given their stability and resilience. In 2018, we were successful on a number of fronts in both countries.
The South American markets in which we invest have been recovering nicely, with Brazil the slowest, but are set to
recover now that a new government is in place. We invested significant capital in South America over the past three
years and will both continue to tuck-in assets around these businesses and monetize investments as the currencies
and economies recover.
Asia continues to increase its importance in the global economy. While trade issues have been disruptive in the
short term, and growth is slowing due to the law of large numbers, these countries are very important global
investment markets. We continue to judiciously increase our investments in India, China, Japan and South Korea.
A SUMMARY OF 2018
Total assets under management are now over $350 billion, as we continue to raise and deploy large amounts of
capital across our businesses.
AS AT AND FOR THE TWELVE MONTHS
ENDED DEC. 31 (MILLIONS) 2014 2015 2016 2017 2018 CAGR
Total assets under management $ 203,840 $ 227,803 $ 239,825 $ 283,141 $ 354,736 15%
Fee bearing capital 85,936 94,262 109,576 125,590 137,528 12%
Gross annual run rate of fees plus target carry 1,204 1,489 2,031 2,475 2,975 25%
Fee related earnings (after costs) 378 496 712 896 1,129 31%
Cash available for reinvestment or
distribution to BAM shareholders 1,024 1,274 1,782 1,899 2,419 24%
Asset Management Activities
Our fee bearing capital has seen step-change increases over the past few fund series, increasing from $49 billion
in 2009 to $86 billion in 2014 and $138 billion in 2018. This growth in fee bearing capital will continue to contribute
to an even higher growth of fee related earnings, carried interest and cash flows. In early 2019, we completed the
final close for our flagship real estate fund, had a first close for our flagship private equity fund in late 2018, and
recently launched our next infrastructure fund. In 2018, we also launched an Australian long-life real estate fund and
long-life infrastructure fund. With all this, we raised $22 billion of third-party private capital across our strategies.
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