BROOKFIELD ASSET MANAGEMENT LTD Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Craig Siegenthaler - Bank of America - Analyst : Good morning everyone. We wanted to start with fundraising and specifically Real Estate Fund V. So we all know real estate isn't the easiest vertical to fundraise today, but you already raised $13 billion. So that's a pretty impressive number just given the backdrop. And I'm curious which geographies, channels were helpful for this raise to date? And did the opportunistic element really sell with clients given very limited new construction and the migration of capital away from this vertical? Connor Teskey - BROOKFIELD ASSET MANAGEMENT LTD - President of the Manager and Chief Executive Officer - Renewable Power & Transition Good morning, Craig. I'll start by just correcting you in a positive way. We've already raised $16 billion for the strategy. So it's well on track to be our largest real estate strategy raise ever. And it's really capitalizing on, I would say, three things that you mentioned there. One, the fundamentals are incredibly strong right now. The world needs more great real estate, but there is a very significant lack of new supply in major markets and high-quality assets around the world that, it's creating a very robust supply-demand dynamic in those who can bring capital to the market. The second thing is there is no doubt some legacy capital structures that are not well suited for the current interest rate environment, and that's going to create very attractive opportunities to buy high-quality assets with imperfect capital structures at significant discounts to replacement costs. And that's actually what this strategy already has been doing early in its vintage. And then the last point is very much that while different asset classes in different geographies around the world in their real estate cycle will trough at different points in time. The strength of this fundraise was very indicative that investors realized this fund will deploy capital from 12 months ago to two or three years into the future. And no doubt, we are going to catch the bottom during that time frame. And that made this a vintage that many of our most sophisticated and large-scale partners did not want to miss. Maybe just to close out in terms of where we saw significant demand this quarter, very broad-based, but I would highlight strength in the US market.

Question: Craig Siegenthaler - Bank of America - Analyst : Thanks, Connor.

Question: Cherilyn Radbourne - TD Cowen - Analyst : Thanks very much and good morning. I wanted to start by asking a question about your perspective on some of the new product introductions across the industry, which kind of blur the lines between public and private assets. Is that something that you're working on from a product development perspective? Connor Teskey - BROOKFIELD ASSET MANAGEMENT LTD - President of the Manager and Chief Executive Officer - Renewable Power & Transition First and foremost, the headlines and some of the partnerships you see being announced and in particular, the interactions between more traditional securities managers and alternative managers, we think underscores an incredibly large and important trend, which is that alternatives are increasingly becoming part of a standard investment portfolio for all types of investors. A decade ago, it was only institutional investors who invested in alternatives, then insurance companies. Now we're seeing it across retail, high net worth and the more common investor. It's no longer just stocks and bonds. It's now stocks, bonds and alternatives. And in terms of those types of partnerships, we, of course, are monitoring that space carefully and having a number of conversations of our own. And we will look to build our business appropriately. We view this as a long game, and it is something we would consider in the future.

Question: Cherilyn Radbourne - TD Cowen - Analyst : Thank you.

Question: Alexander Blostein - Goldman Sachs - Analyst : Hi, good morning everybody. Maybe just zooming out a little bit and a question on broad fundraising across the platform. You guys had a very strong start to the year at $25 billion in the first quarter. I think on the last call, we talked about organic capital raising in 2025 being a bit better than it was in '24, excluding, obviously, the insurance deal, which I think puts you something in the high $80s billion to $90 billion range. So given the uncertain environment, but obviously momentum in the business is pretty good. Maybe help us kind of re-underwrite that how are you thinking about fundraising through around the year? And how much of that, call it, high $80s billion, do you think ultimately we'll be fee-paying? Thank you. Connor Teskey - BROOKFIELD ASSET MANAGEMENT LTD - President of the Manager and Chief Executive Officer - Renewable Power & Transition There is nothing we see in the current market that would cause us to change the forecast that we have the year. Obviously, things like the strength we've seen in real estate, finishing off the flagships in transition, closing with a record number for Oaktree's ops fund. We remain confident in the number that we outlined at the beginning of the year. And maybe just to overlay that versus the current environment, yes, there is more uncertainty than there was six or eight weeks ago. But this is also the environment where being partnered with a large-scale manager like Brookfield allows investors the opportunity to capitalize on some of the investment opportunities that may surface in this environment. And we do expect the current uncertainty in the environment to only exacerbate the flows of capital to the largest, most established managers with the largest execution capabilities and the greatest track record. So nothing we've seen to start the year would cause us to change our fundraising forecast.

Question: Alexander Blostein - Goldman Sachs - Analyst : Great. Thank you very much.

Question: Robert Kwan - RBC Capital Markets - Analyst : Great, thank you. Good morning Just in the uncertain and volatile environment like we have historically, Brookfield has taken the contrarian approach and confidently put money to work. In your later comments today, you're saying the environment is playing to your strengths. And so just what segments and geographies are you seeing market dislocations or are you positioning for significant opportunities to arise? Connor Teskey - BROOKFIELD ASSET MANAGEMENT LTD - President of the Manager and Chief Executive Officer - Renewable Power & Transition We expect to be very active. And in terms of where we're seeing the opportunities across the portfolio, I would say right now, it's very broad-based, but I would highlight maybe two or three themes that we're (technical difficulty) our verticals and across asset classes. One is the uncertainty in the public markets is very exacerbated versus the demand we are seeing in private markets. And when you make a comment like that, everyone's had immediately goes to take privates. And those types of opportunities may originate over time, but it also really lends itself to carve-outs. And we're seeing more and more opportunities to do carve-outs and partnerships going forward. The second thing that we would say that we are seeing across all of our verticals is the opportunity to do structured investments, particularly when counterparties may not have access to the public capital markets the way they have in the past. That's working really well for our structured investment strategies, whether it be across infrastructure, whether it be across private equity. And then the last one that just goes without saying is this is the environment where Oaktree goes to work. And this is perfectly suited to their approach, and that's been proven over cycles, and we're excited to see what our partners can do there as well. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 06, 2025 / 3:00PM, BAM.N - Q1 2025 BROOKFIELD ASSET MANAGEMENT LTD Earnings Call

Question: Robert Kwan - RBC Capital Markets - Analyst : That's great. Thank you very much.

Question: Ben Rubin - UBS - Analyst : Great, thank you for taking my questions. For my first one, I have a two-parter on private credit. We're starting to hear some concerns around potential overcrowding or saturation within private credit as an asset class and direct lending more specifically. Is that a theme you're seeing as well across your business? Or is your focus on asset-backed lending and financing real assets less impacted from some of this broader competition we're hearing about? And then secondarily, could you just expand on what Angel Oak adds to your platform and then how kind of the mortgage origination component fits within your larger push into managed insurance? Thank you.

Question: Ben Rubin - UBS - Analyst : Great, thanks. Another question here for you, Hadley. In 1Q, your FRE margins expanded 300 basis points to 57%, although the catch-up fees from your real estate flagship certainly helped. I know a lot of the investment spend behind your insurance platform is now behind you. But how should we think about the potential expense growth or trajectory or spending for the remainder of this year? Thank you.

Question: Ben Rubin - UBS - Analyst : Great. Thank you for taking my questions.

Question: Michael Cyprys - Morgan Stanley - Analyst : Hey, good morning, thanks for taking the question. Given the significant growth that we've seen across your credit platform, but large insurance customers. Just curious how you're thinking about the opportunity set for build out a capital markets business alongside as we've seen some others across the industry monetize origination flow credit and broader connectivity with insurance. So just curious how you're thinking about this potential fee generating opportunity for Brookfield and what it would take to build this out? Connor Teskey - BROOKFIELD ASSET MANAGEMENT LTD - President of the Manager and Chief Executive Officer - Renewable Power & Transition We absolutely are thinking about it. It is now part of our business plan. This is the first year that we focused on building that into our business. And we do think it can be a modest driver of incremental fee revenue going forward. The one point I would highlight is none of that was included in our five-year plan that we presented at Investor Day. So it is something that we are now focused on. We do think it can increase something meaningful into the low hundreds of millions over the next four or five years. But it's not something previously included in our forecast.

Question: Michael Cyprys - Morgan Stanley - Analyst : Great. Thank you.

Question: Mario Saric - Scotiabank - Analyst : Good morning and thanks for taking the question. The first one is a bit more of a thematic one focused on the US. Like the tariff volatility that we've seen has raised some questions about the leading global role but is planned by the US, it doesn't seem to have been impacted or have impacted your LP commitments to BSREP V, as noted. But high level, can you talk about any notable trends and how LPs are thinking about future US commitments in a post deliberation they world and secondarily, now recent developments at all change your desired global allocation mix going forward. Connor Teskey - BROOKFIELD ASSET MANAGEMENT LTD - President of the Manager and Chief Executive Officer - Renewable Power & Transition So in terms of fundraising and allocations from investors, we like to think we have one of, if not the most diversified LP base around the world. And while it would be reckless to diminish the impact of tariffs and what they've done to markets we really don't see it changing our fundraising trajectory. Any changes in allocations are going to be de minimis and on the margin. In terms of just our assets and what we see in terms of allocating capital, we think this actually plays to our strength, this is going to lead to a focus on energy security, a focus on data security, it's on onshoring and deglobalization. This requires huge amounts capital. And as one of the largest managers and custodians of that type of capital around the world, we actually think that this environment maybe not week to week, but over months and quarters is going to create an even bigger opportunity for our franchise. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 06, 2025 / 3:00PM, BAM.N - Q1 2025 BROOKFIELD ASSET MANAGEMENT LTD Earnings Call

Question: Mario Saric - Scotiabank - Analyst : Perfect. Okay, thank you.

Question: Kenneth Worthington - JPMorgan - Analyst : Hi, good morning. So thanks for taking the question. I wanted to start by asking where the flagship funds stand in terms of percentage of capital invested and committed and really interested in Infra V transition to and CAP Partner VI. Connor Teskey - BROOKFIELD ASSET MANAGEMENT LTD - President of the Manager and Chief Executive Officer - Renewable Power & Transition Sure. So Infra V is on exactly 50%. BGTF II is at $5.2 billion of $17 billion, so call it about 33% and Brookfield Capital Partners, I believe that one is at about the 60% range

Question: Kenneth Worthington - JPMorgan - Analyst : Excellent. Thank you very much.

Question: Brian Beddell - Deutsche Bank - Analyst : Great, thanks also good morning, still thanks for taking my questions, Maybe just Connor, one for you on deployment pace. So as we think about this backdrop that is -- seems increasingly appealing for your deployment across a number of verticals. How do you think about the cycle times of deploying through these large funds that you've raised recently compared with cycle times in prior vintages? And the objective of the question is when would you get to the next vintage? And if I can put another angle on this question, how would your answer change if we were to say we were going to have a very distressed environment over the next few quarters versus not such a distressed environment? Connor Teskey - BROOKFIELD ASSET MANAGEMENT LTD - President of the Manager and Chief Executive Officer - Renewable Power & Transition Certainly. So the -- typically, for our flagships, we look to deploy them over a 3 to maybe 3.5-year period. And that run rate in a normalized market kind of averaged across our various flagship strategies in a more opportunistic and more distressed market, we absolutely would expect that deployment time line to shorten where we would put more capital to work at the low point in the cycle. That is where we do feel that our Brookfield ecosystem, our access to opportunities, our access to information can allow us to be active when maybe others are looking to hold back a little bit more. In terms of what we're seeing in the current market, we would expect to be at our traditional run rate or inside of it, certainly longer than average in this environment.

Question: Brian Beddell - Deutsche Bank - Analyst : Okay, great. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 06, 2025 / 3:00PM, BAM.N - Q1 2025 BROOKFIELD ASSET MANAGEMENT LTD Earnings Call