Brookfield Asset Management Ltd.

Hello, and welcome to the Brookfield Asset Management 2022 first quarter conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker 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. If you require any further assistance, please press star 0. It is now my pleasure to introduce managing partner, Suzanne Fleming.

Thank you, operator, and good morning. Welcome to Brookfield's first quarter 2022 conference call. On the call today are Bruce Flatt, our chief executive officer, and Nick Goodman, our chief financial officer. Bruce will start off by giving a business update, followed by Nick, who will discuss our financial and operating results, as well as the distribution and partial listing of the asset manager. After our formal remarks, 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 more than two questions at one time. If you have additional questions, please rejoin the queue and we'll be happy to take any additional questions at the end as time permits. I'd like to remind you that in today's comments, including in responding to questions and in discussing 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. 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 US and the information available on our website. And with that, I'll turn the call over to Bruce.

Thank you, Suzanne, and welcome to everyone on the call. We had a strong first quarter. reporting net income of $3 billion and distributable earnings for common shareholders of $1.2 billion. Earnings were supported by the continued strong performance of both our asset management business and our underlying operations. Following our last earnings release, we had discussions with a lot of shareholders. Thank you all for that. Post these discussions, we decided to move forward with separately listing our asset management business by distributing a 25% interest to our shareholders. Based on our estimate of values, shareholders will receive a special distribution of $20 billion of shares, which is somewhere around $12 per share at that time. This will be done tax-free for Canadian and US shareholders, and we are working on the other jurisdictions. We will complete this by the end of 2022, and Nick will provide more details after discussing our financial results. Turning first to markets. With elevated inflation, central banks are now raising interest rates and pulling back on stimulus. The 10-year U.S. Treasury recently hit 3%, which is over 1% higher than it was at the start of the year. It is really important, though, to remember that for cash-generative businesses, in particular ones that we own, 2%, 3%, 4%, 5% interest rates are low by historical standards and can be absorbed in our margins. What is more important for us is that we own one of the largest portfolios of inflation-protected assets in the world. Our assets generally have a high investment cost upfront, earn very high margins, and have low expenses compared with the capital cost. Therefore, in periods of inflation, we capture most of the benefit from the revenue expansion, and the overall value of our investments tend to increase over time. The compounding effects are more profound as you go forward. We're seeing this impact across most of our businesses. In our infrastructure business, for example, we acquired many assets last year based on expectations that inflation would exceed market outlooks and we would be able to capture the upside. We are doing that now. Within real estate, based on our experience, construction costs have increased at least 20% over the past three years. To maintain returns on a new building, rental rates will also need to be approximately 20% higher. This is what we are seeing in New York right now for high quality office buildings where rents have increased by even more than 30% from pre-pandemic levels for great properties. Great companies are wanting great space for their people. Our leasing pipeline in our very high-quality portfolio for space is very robust. We're seeing similar impacts of inflation across our portfolio and it underscores the value of real return assets. They generate strong cash flows through economic cycles while continuing to compound in value. Our clients recognize this. This has led our fundraising to be very strong. We have a vast partner network and a very broad group of clients across the world. In addition, our forms of capital are diverse and have always differentiated us. This will be even more important going forward. We closed our latest credit opportunities fund at $16 billion and will soon be closing our global transition fund at $15 billion. Our latest real estate flagship fund has raised over $12 billion. and will be fully closed by year end. We expect very strong first closes in the second quarter for our infrastructure and private equity funds and have been seeing strong inflows into our perpetual funds. We now have our non-traded REIT approved on numerous distribution platforms and expect to see increased inflows during the second half of this year. Deployment has also been strong. With the public market volatility in the last number of months, we were successful in closing a number of public market bids. In the first quarter, we investor committed $33 billion to new acquisitions, and our pipeline remains robust. We committed $10 billion from our latest flagship real estate fund as a dislocation in markets led to a number of value opportunities for us. We're acquiring numerous companies across our other businesses, including a leading software company that is mission critical to car dealers, a $15 billion electricity transmission business in Australia, and numerous other things. At the same time, the private markets are robust in terms of asset sales, particularly assets that generate strong cash flows and have some form of inflation protection. We continue to actively sell down assets within our real estate portfolio. Notably, we have agreed to sell two office complexes in Australia for a total of $3 billion and recently sold a 300 million pound London office building for a sub-four cap rate. We're also progressing efforts to monetize mature assets across a number of our other businesses. Given recent events around the world, we wanted to remind you about our global presence. We operate in over 30 countries and do not have plans for this number to change too much over time. We have no Brookfield business in Russia. We've been very disciplined about which countries we invest in and have a few criteria that must be met before investing in a certain geography. Those are the standard of governance needs to be at the level of advanced countries. The country must be proven over time to have a respect for foreign capital. We should be able to scale the investments meaningful in the country. And lastly, we should be able to invest across most of our sectors so we get the benefits of economies of scale. We will continue to refer to these criteria when assessing investment opportunities going forward and will remain choosy about where we put your capital to work. Before I turn it over to Nick, I wanted to end with three final points about our overall business. First, we continue to see our fundraising accelerating. While some sponsors are having indigestion, the breadth of our franchise and the diversification of capital makes our business very different. In times of consolidation, large brands win, and as a result we continue to widen our moat. We expect to have our best fundraising year ever this year, and that is on top of a record past few years. Our manager split is meant to continue to advance our strengths even further. Second, we own a vast and highly diversified group of cash-generative inflation-protected assets. In the times we're heading into, this portfolio is what you want to own. We also used the past two years to widen our strengths. This is starting to pay off and should be true even more over the next 24 months. And last, technology has and is changing the world. We always knew this. Our main issue has always been valuation, which often made no sense to us. The difference now versus 20 years ago is that many technology businesses have become real backbone cash generative businesses. With valuations now down and maybe going lower, this presents great opportunity. We believe we will be able to do many things, such as the recent enterprise software acquisition that we added into our private equity business. We've been laying the seeds for years, but for the first time in 20 years, we're really exciting about buying great technology businesses at reasonable valuations. Thank you for your continued support. I'll now pass it over to Nick to go over the financial results and more details on our distribution of 25% of our asset management business.