13 11/20 13/11/2020

Brookfield Asset Management Q3 Earnings

Brookfield Asset Management (NYSE: BAM) earned a record operating funds from operations (operating cash flow) in Q3. The $1.0 billion operating FFO earned in the quarter equates to $2.8 billion in the last twelve months. The company had a fee-bearing capital of $290 billion and $76 billion available for deployment (liquidity) as per September 30th. Assets under management increased to $578 billion compared to $550 billion in Q2. Fee-bearing capital increased with $43 billion over the last twelve months. $18 billion of private fund capital was raised in Q3. Fee-related earnings were $372 million in the quarter which was a 22% increase year over year. Brookfield realized $42 million in carried interest during the quarter and invested $14 billion. Net income to BAM shareholders were $172 million and $1.3 billion was returned to shareholders in the form of dividends and share repurchases. The impact of lockdowns on the company is estimated around $12 million which is an improvement from the $19 million in the second quarter of the year. Excluding the covid-19 impact the operating income would have been $334 million compared to the $316 a year ago. A 6% improvement. Businesses that did not fare well due to lockdowns and other Covid-19 restrictions are slowly recovering. The real estate business has strong demand still and the collection rate is at normal levels according to the CEO. The company is seeing increased foot traffic in their malls and their mall collection rate surpassed 70%. The company will also create a new listed entity to spin-off its new reinsurance business. It will depend on Brookfield’s resources to grow until it gets mature enough. Brookfield Asset Management Reinsurance Partners will be distributed to BAM shareholders as a special dividend. Brookfield hopes the spin-off can be completed in the first half of 2021. According to the plan value (a valuation method used by Brookfield) the company is currently worth $59.65 per share. This is a 65% upside potential from the $36 share price at the time of writing.

Read more in this week's newsletter: Weekly Newsletter #46

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