Brookfield Asset Management Ltd.

Ladies and gentlemen, thank you for standing by, and welcome to the Brookfield Asset Management 2020 Third Quarter Results Conference Call and Webcast. 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 and then one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star and then zero. I would now like to hand the conference over to your speaker today, Ms. Suzanne Fleming. Ma'am, you may begin.

Thank you, operator, and good morning, everyone. Welcome to Brookfield's third quarter 2020 conference call. On the call today are Bruce Flatt, our chief executive officer, Nick Goodman, our chief financial officer, and Mark Murski, a managing partner in our infrastructure business and chief operating officer of its North American operations. 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, Mark will talk about infrastructure's N-Wave 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're 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 morning, everyone on the call. Starting with operating performance in the third quarter, Nick will get into it in detail, but I'll just make a few comments. We earned record operating FFO during the quarter, in fact, higher than any other quarter in our history. This demonstrated the strength and resiliency of our combined asset management franchise and the quality of our operating businesses today. And I would also note that we are just starting our way out of this recession and not all of our businesses are performing where they should be. The strong operating performance across these businesses was driven by excellent results in several of our private equity businesses, some which benefited from strong demand and pricing from new housing starts which snapped back after the lockdowns in the spring. Consistent with previous quarters, our infrastructure and renewable businesses continued to deliver very steady results backed by 100% availability of all of those assets. Those businesses that did see volume decreases in the first half of the year, such as our ports and toll road businesses, saw recoveries during the quarter as governments eased restrictive measures. Within our real estate business, Office rent collections remained at normal collection levels, and investment demand for this asset class is strong and soon to get stronger. Just this last month, we entered into an agreement to sell one of our London office properties at a 9% premium to the price we paid for half the property just 12 months ago. For those of you familiar with real estate jargon, it was at a sub-4% cap rate. Across our retail mall portfolio, foot traffic is increasingly, and more importantly, customer spending continues to increase, as does rent collection each month. For the month of October, we were above 70% collection across our malls, and a good portion of the difference is from tenants that are open, but we are still discussing arrears from the lockdown period. We're also seeing a return of occupancy at most of our hospitality assets as we continue to open up across the portfolio. Of course, nothing is ever perfect, and in some spots we've taken a few steps back, but bottom line is that economies are on the mend and assets are coming back from their induced shutdowns. Turning to our asset management franchise and fundraising, we raised $18 billion of private capital during the quarter, including over $12 billion towards the previously announced first close of our latest distressed debt fund, and $6 billion of commitments across a growing number of other strategies. A few examples include our European Core Plus real estate fund that closed during the quarter, raising just over $1 billion. and exceeding its initial target, and our second vintage private infrastructure debt fund, which has raised nearly $2 billion to date, already double more than the previous fund. The success of our recent fundraising reflects the investment themes that we're seeing in the market today, with investors moving capital out of government bonds and into asset classes with low volatility today. and proven income to supplement their portfolios. Today, we have over $75 billion of liquidity or dry powder across our private and public entities available for new investments. We see opportunities to deploy this capital beginning to pick up. In March, when the shutdown started, governments were able to bridge bond and equity markets to get businesses through a period of time. But those who were in bad financial situations to begin with or borrowed too much money over the last nine months will soon need equity. Many of them will have to be recapitalized in some form, and given our significant amount of capital to put into these opportunities, we are ready for it. With the pipeline of deals that we are currently working on today, we expect to be back into the market soon with our next round of flagship funds, starting with a real estate fund in early 2021. Turning briefly to our own corporate cash deployment, over the last few months we've funded a number of new areas, including reinsurance, which I'll discuss in a moment. We also allocated approximately $1 billion to purchases of BPY, whose current trading price does not reflect anywhere near the value of the high-quality portfolio real estate that it owns. This is similar to the current trading price of Brookfield Asset Management, and given the discount widened recently due both to increases in value of our assets and share price declines, we were repurchasing band shares in the last month and will continue to do so as long as the shares trade at meaningful discounts to our view of underlying value. Lastly, and before I turn it over to Nick, at our investor day in September, I touched on a number of new strategies that we believe will be the next large areas for growth for us over the next decade. One of those strategies is reinsurance. As we looked at the reinsurance space over the last five or ten years, we were cautious with our approach, particularly in an environment of declining interest rates that heightened the risks of locking in long-dated liabilities at relatively high interest rates. But today, with interest rates globally essentially zero, we believe that the risk of reinsuring long-tail liabilities is the lowest it has been in our lifetime. and it's therefore an opportune time to provide capital to insurance platforms and build our reinsurance business. Over the past few years, we have seated a few smaller insurance businesses on our own balance sheet as we built up expertise in the space, but last month we entered into a strategic partnership with American Equity to reinsure $10 billion of their fixed annuity policies. We believe our alternative asset strategies will deliver long-term value to this portfolio, and hopefully other companies will consider similar partnerships with us going forward. In order to set up these growing operations in the most effective form, we also announced our intention to create a new listed entity, which will be named Brookfield Asset Management Reinsurance Partners, which will be distributed to you as a special dividend. This new entity will be designed to enjoy all the benefits of BAM as a paired security, and all the upside created in reinsurance will be shared with all BAM and BAM reinsurance shareholders. We expect that this new share will replicate the success of the pairing of our Brookfield Renewable and Infrastructure Corporations that were created earlier this year. We hope to complete the spinoff of BAM reinsurance partners sometime in the first half of 2021, subject, of course, to all the necessary regulatory approvals. Sometime in the future, once reinsurance is more mature, this pair could be turned into a separate entity, but for the time being, it will require the resources of Brookfield to grow. In the interim, it will be set up efficiently for operating the business, and will also enable you to choose which security of Brookfield Asset Management is best for you to own in your own capacity. So with those comments, I will turn it over to Nick Goodman, who will cover our results in more detail for the quarter.