- Distributable Earnings Before Realization: $1.1 billion for the quarter, $4.4 billion over the last 12 months, representing an 11% increase per share.
- Total Distributable Earnings: $2.1 billion for the quarter, $5.8 billion over the last 12 months.
- Net Income: $1.1 billion at Brookfield's share, $3.4 billion in total over the last 12 months.
- Assets Under Management: Approximately $1 trillion, with fee-bearing capital at $514 billion as of June 30, a 17% increase year-over-year.
- Fundraising Inflows: $68 billion during the quarter.
- Wealth Solutions Business Distributable Operating Earnings: $292 million for the quarter, $1 billion over the last 12 months.
- Insurance Assets: Over $110 billion following the acquisition of American Equity Life.
- Operating Businesses Distributable Earnings: $371 million for the quarter, $1.5 billion over the last 12 months.
- Renewable Power and Transition Business Operating FFO Growth: 7% increase over the prior year quarter.
- Private Equity Business Same-Store Operating FFO Growth: 17% increase.
- Real Estate Business Same-Store Net Operating Income Growth: 3% over the last 12 months.
- Office and Retail Leases Signed: Nearly 5 million square feet in the quarter.
- Retail Portfolio Occupancy Levels: 95%.
- Monetizations: $950 million gain on the sale of 2% of BAM shares.
- Unrealized Carried Interest: $2.3 billion generated over the last 12 months, with a total accumulated unrealized carried interest of $10.7 billion.
- Deployable Capital: Approximately $150 billion at quarter end, including $62 billion of cash and liquid assets.
- Share Buybacks: Over $800 million repurchased to date this year, adding approximately $0.55 of value per share.
- Quarterly Dividend: $0.8 per share, payable on September 27, 2024.
Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Brookfield Corp (BN, Financial) reported strong financial results for Q2 2024, with distributable earnings before realization increasing by 11% on a per share basis compared to the prior period.
- Total distributable earnings surged by 80% to $2.1 billion for the quarter, driven by increased transaction activity.
- Assets under management reached approximately $1 trillion, with fee-bearing capital increasing by 17% year-over-year.
- The company successfully financed approximately $75 billion of debt and realized $15 billion from asset monetizations globally.
- Brookfield Corp (BN) continues to capitalize on the AI revolution, with the largest combined development pipeline of renewable power and data centers globally.
Negative Points
- The company's total consolidated net income was impacted by higher non-cash depreciation and amortization costs due to recent acquisitions in the infrastructure business.
- Despite strong performance, the share price still materially lags behind the estimated intrinsic value.
- Higher debt costs have impacted funds from operations (FFO) in the real estate segment, although there is sequential improvement.
- There is concern about potential spread compression in the insurance business, although the company maintains a focus on return on equity.
- The realization of carried interest may be delayed as the assets being monetized are in later vintage funds, affecting short-term earnings.
Q & A Highlights
Q: Can you discuss the pipeline and opportunity for more SMA transactions in the wealth segment, including potential timing, fee structures, and margins?
A: Nicholas Goodman, President and CFO, explained that they expect more SMA transactions as the insurance business grows. The capability to originate credit is strong within the asset management business, allowing them to scale up alongside their capital. Fee structures will evolve but should be consistent with other credit SMAs, providing strong growth for earnings in the asset management business.
Q: How might the improving monetization markets affect the real estate space, particularly in terms of M&A activity?
A: Nicholas Goodman noted that initial transactions have a quality bias, but within their T&D portfolio, they own high-quality assets. Transaction activity is returning globally, and they expect interest rates to decline, which should positively impact credit capacity and valuations, aiding monetizations.
Q: What is the sensitivity of FFO within BPG to variable debt costs, especially with potential easing of monetary policy?
A: Nicholas Goodman stated that interest rates and credit spreads are coming down, which will positively impact earnings. With about 30% variable rate debt in the portfolio, the impact will be seen almost immediately as rates decrease.
Q: How does Brookfield view the trade-off between growth and maintaining desired spreads in the insurance business?
A: Nicholas Goodman emphasized a focus on return on equity, maintaining spreads at 2% for existing business. They adjust annuitant rates based on investment opportunities, aiming to maintain 18% to 20% ROE.
Q: What is the outlook for the realization pipeline, and is there potential upside to the previous guidance?
A: Nicholas Goodman confirmed that sales activity is picking up globally, leading to immediate capital returns and setting up well for carry realization in 2025. However, expectations for carry realization should be tempered as current monetizations are in later vintage funds.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
