Brookfield Asset Management Ltd.

Ladies and gentlemen, thank you for standing by, and welcome to the Brookfield Asset Management second quarter 2020 results conference call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Ms. Suzanne Fleming, Managing Partner. Thank you. Please go ahead, Ann.

Thank you, Operator, and good morning. Welcome to Brookfield's second quarter 2020 conference call. On the call today are Bruce Flatt, our Chief Executive Officer, Nick Goodman, our Chief Financial Officer, and Bahir Menyos, CFO of our infrastructure business. Bruce will start off by giving a business update, followed by Nick, who will discuss our financial and operating results for the quarter. And finally, Bahir will give an update on our infrastructure business. After our formal comments, we'll turn the call over to the operator and take analyst questions. I'd like to remind you that in today's comments, including in responding to questions and in discussing new initiatives in our financial and operating performance, we may make forward-looking statements, including forward-looking statements within the meaning of applicable Canadian and U.S. securities law. These statements reflect predictions of future events and trends and do not relate to historic events. They are subject to known and unknown risks, and future events and results 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 now I'll turn the call over to Bruce.

Thank you, Suzanne, and good day, everyone. Our business performed well during the quarter, and since we last spoke to you, we recorded our largest fundraising period ever. We raised $23 billion across various pools of capital, the highlight of which was the $12 billion of initial commitments for our latest flagship distressed credit fund. This was raised against the backdrop of the global economic shutdown, which impacted many businesses, including some of ours. But we are now seeing economies across the world slowly reopening. And while it could take well into 2021 for a full recovery, our impacted businesses are already showing signs of improvement. The success of our fundraising in the period highlights the scale and diversity of our product offerings. When we partnered with Oak Tree last year, as well as refocused efforts on growing our perpetual private fund offerings, we did so to round out the product offering to ensure we had products that were attractive to our clients across all cycles. This quarter exemplified the benefits of this strategy as we were able to accelerate fundraising for Flagship Distressed Debt Fund and raise capital for more fixed-income-like perpetual funds. A record level of fundraising means we now have $77 billion of capital available to deploy into investments, and we expect the pace of investment to increase over the next 12 months as opportunities present themselves. Overall, the increased levels of government debt that we have seen as a result of the economic shutdown will have long-term effects on many things, the most important of which is that many countries around the world will have to offload spending onto the private sector and sell assets. This should bode well for the scaling up of our infrastructure and our renewable businesses. And we have Bahir Manios, CFO of our infrastructure business, with us on the call today to give us an update on that business and where we are seeing opportunity. As government aid tapers, the private sector will also be increasingly in need of capital And there should be many opportunities for us to invest across all of our pools of capital. This will include us putting funds to work in non-control investments in our recently created special investments program, distressed debt opportunities in our oak tree funds, and control investments within our property infrastructure, renewable, and private equity flagship funds. Our latest round of flagship funds is approximately 50% deployed in aggregate, and with the pipeline we see today, we should be back in the market for all of them in 2021. Turning to interest rates, we have discussed over the past 12 to 18 months about what a low interest rate environment means for our fundraising. And we are seeing that play out in real time today with the capital raised since May. But with a zero interest rate environment here and it increasingly looking like it will be here for five years plus, this will also have a meaningful impact in a positive way on the real assets that we already own. The majority of our assets today have long-term fixed contracts, either long-leased property, contracted power, or utility or utility-like assets. And with interest rates dropping, the value ascribed to these cash flow streams increases significantly. Just in the past few weeks, we have started to see bids for real estate and infrastructure assets at higher multiples than pre-COVID. While the majority of our investments are the long-term contracted assets, which I just mentioned, we do have some businesses that saw disruption from the shutdowns. In our private equity business, we witnessed some businesses with sales down more than 50% with the shutdowns in April and May. But virtually all our operations are now experiencing increased activity with some approaching comparable results to last year in July, August. In our retail business, our U.S. retail centers were shut down by government mandate for two months. All but one reopened by June 30th, with foot traffic now back to more than 50% of normal levels and improving every week. Eighty-five percent of stores in the retail malls are now open, Rents are now being collected, and our teams are focused on discussions about collection for the shutdown period with some tenants. While a smaller part of our business, most of our hotels have now also begun to reopen. The largest hospitality business we own is called Center Parks in the United Kingdom, which is experiencing higher forward bookings than at this time last year. largely as a result of it being a domestic offering when international offerings are hard to access. As another anecdote, we're experiencing significantly increased sales in our U.S. single-family housing operations. As an example, last year on average we sold 65 homes. To put that into perspective, in April it was close to zero. And today, we're selling between 80 and 100 per week. That is 20 to 30% higher than last year. And I would note for you that virtually all single-family builders of similar scale are experiencing this, not just us. This has further flowed to wood products, where prices have tripled since March. This bodes well for our investment in Norboard, which has similarly tripled its price in the stock market since March, and the company looks like it has significant room to generate super profits this year. As it relates to office buildings, our views are laid out in the shareholder letter, and in the next short while, we will post a client white paper on the subject for you to review on our website. Simply stated, our view is that companies use their offices to foster culture, collaboration and development of talent. This cannot be replicated from a home office. Further reinforcing these views, I would note a few facts. First, our sole office buildings, which were among the first shut down globally, are now back to 90% employee occupancy. And I would note for you that Korea is a very tech-savvy place. Shanghai is back to almost the same. In addition, we collect bad swipes on employees at our office properties. This totals a million people who work in our properties globally. This is a very large sample of global office workers. The overall information is powerful as we know who comes and goes, for how long, when, and how they move around. What I can tell you is that virtually every day on average since May 1, the numbers in the office have increased. This gives us hard data to base our views on. Therefore, please consider those comments when you read news which suggests that nobody will ever go back to the office. Ironically, often provided by some of those who benefit from people staying at home. So please consider those views. Our views are based on hard data and very extensive discussions with large groups of corporations who we leave space to, not merely conjecture. With those comments, I would gladly turn it over to Nick Goodman, who will cover our results for the quarter.