Brookfield Asset Management Ltd.

Good day, ladies and gentlemen, and welcome to the Brookfield Asset Management Second Quarter 2019 Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touch-tone telephone. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Suzanne Fleming, Managing Partner. Ma'am, you may begin.

Thank you, operator, and good morning. Welcome, everyone, to Brookfield's second quarter 2019 conference call. On the call today are Bruce Flatt, our chief executive officer, and Brian Lawson, our chief financial officer, as well as Sachin Shah, managing partner and head of our renewables business. Brian will start off by discussing the highlights of our financial and operating results for the quarter, followed by Bruce, who will give an update on our business. Finally, Sachin will give an update on our efforts to grow our solar power business. After our formal comments, we'll turn the call over to the operator and take analyst questions. In order to accommodate all those who want to ask questions, we ask that you refrain from asking multiple questions at one time in order to provide an opportunity for others in the queue. We'll be happy to respond to additional questions later in the call. We'd like to remind you that in responding to questions and in talking about new initiatives and our financial and operating performance, we may make forward-looking statements. including forward-looking statements within the meaning of applicable Canadian and U.S. law. These statements reflect predictions of future events and trends and do not relate to historic events. They're subject to known and unknown risks, and future events may differ materially from such statements. For further information on these risks and their potential impacts on our company, please see our filings with the securities regulators in Canada and the U.S. and the information available on our website. Thank you, and I'll now turn the call over to Brian.

Thank you, Suzanne, and good morning to all of you on the call. So let me start off by saying that we are very pleased with the results for the quarter. Our asset management business reported particularly strong results led by fundraising within our private funds, and this led to a 33% increase in fee-related earnings prior to performance income. As well, acquisitions and organic growth contributed to strong operating performance within our underlying investments and our listed partnerships. Together, funds from operations, or FFO, totaled $1.1 billion, or $1.09 per share, and net income was $704 million, or 36 cents per share attributable to shareholders. Cash available for distribution and or reinvestment was $599 million for the quarter, $2.5 billion over the past 12 months. So first, I will touch on the results of our asset management business. This, as you know, includes our fee-related earnings and carried interest. So those fee-related earnings were $263 million in the quarter. Before performance fees, as I mentioned, that's a 33% increase over the prior year quarter, and that reflects a similar increase in the amount of fee-bearing capital. We did record some significant performance fees last year, so this growth is not evident in the total FRE. but does represent very strong growth. And this is pronounced by the or reinforced by the fact that our annualized fees and target carry have also increased by 33% from this time last year. So this positions us very well going forward. What was a big part of driving that was we added $35 billion to fee-bearing capital over the past 12 months. This includes $27 billion of net private fund inflows as we are in the midst of raising our current vintage of flagship funds, and as well we continue to build out newer product offerings. It also reflects the increase in the capitalization and the distributions at our listed partnerships. Going forward, we expect continued growth in fee-related earnings. We will benefit from full period contributions from the latest round of flagship fundraising and subsequent closings, as well as additional fee revenues from the capital issued last year by BPY in association with the privatization of its retail business in August of last year. These fees will turn on late in the third quarter, and we'll see a full quarter of contributions starting in the fourth quarter. With respect to carried interest, we recorded $190 million of realized carry in our FFO this quarter. This is the amount that became no longer subject to clawback during the quarter, largely as a result of asset dispositions in our fourth flagship private equity fund, as well as our first flagship real estate fund, which locked in these values. Over the past 12 months, we've recognized $536 million of carried interest into income, and we expect to recognize additional carry from both these funds in the second half of 2019 and the first half of 2020 as we continue to complete asset realizations. Turning to invested capital, including disposition gains, FFO from this source in the quarter was $405 million. FFO growth across the listed partnerships was strong. We benefited from new investments within the businesses, as well as same-store growth and development within the existing businesses. This was partially offset by FFO reductions from some directly held investments that are more cyclical or variable in nature, so this was not entirely unexpected. Disposition gains in FFO totaled $303 million in the quarter. This represents our share of gains on the sale of several investments across portfolios. Dispositions included the sale of our interest in a residential management services company, a facilities management services business, and our executive relocation services businesses. Over the past 12 months, we generated over $2.5 billion of cash available for distribution and or reinvestment, as I mentioned earlier. This cash flow supplements our core liquidity at the BAM level. Overall, liquidity stands at nearly $50 billion. This includes $14 billion of core liquidity across Brookfield and the listed partnerships, and $35 billion of uncalled private fund commitments. We continue to look for opportunities to deploy this capital. But at the same time, we continue to focus on maintaining elevated liquidity so that we can continue to invest opportunistically and across any point of a market cycle. So finally, and before closing, I would be pleased to confirm that our Board of Directors has declared a $0.16 quarterly dividend per share, and that's payable at the end of September. And so with that, I will hand the call over to Bruce. Thank you very much.