Brookfield Asset Management Ltd.

Hello, and welcome to the Brookfield Asset Management Limited's second quarter 2023 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 11 on your telephone. I would now like to hand the conference call over to our first speaker, Ms. Suzanne Fleming, managing partner. Please go ahead.

Thank you, operator, and good morning. Welcome to Brookfield Asset Management's second quarter 2023 conference call. On the call today are Bruce Flatt, our Chief Executive Officer, Connor Teske, President of Brookfield Asset Management, and Bahir Manios, our Chief Financial Officer. Bruce will start the call today with opening remarks, followed by Connor, who will talk about some of the themes we're focused on, and finally, Bahir, who will discuss our financial and operating results for the 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 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. 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 hand the call over to Bruce.

Thank you, Suzanne, and welcome everyone on the call. Results were strong in the second quarter. We generated fee-related earnings of $548 million and distributable earnings of $527 million. Fee-related earnings were up 16% year-over-year, excluding performance fees, on the back of 12% growth in fee-bearing capital to $440 billion, highlighting the significant fundraising that we've done over the past year and the stable, predictable nature of the business. with nearly 85% of our fee-bearing capital being long-term or perpetual in nature. We have been one of the most active managers so far this year, demonstrating that our contrarian investment approach and established competitive advantages allow us to put significant sums of capital to work and to monetize assets for our clients utilizing our competitive advantages. To put some numbers around the first half of the year, we have committed to investments worth $50 billion, monetized $15 billion of assets, and grown assets under management to $850 billion. These are large figures in any six-month period, but to achieve this in the current environment truly differentiates our franchise. As we look ahead, we continue to see an attractive investment environment and have a very positive outlook for capital raising. This backdrop should lead to excellent returns for clients in our recently launched fund vintages and in turn should allow us to continue to raise significant amounts of capital. Today, investors are more selective in who they choose to partner with. More and more, they are choosing managers that offer scale funds flexible co-investments, and access to deals across a diversified range of asset classes and market conditions. This fits perfectly with our competitive advantages of global scale, deep operating expertise, and diversity of products, as well as significant benefits our clients get by being part of the broader Brookfield ecosystem. Year to date, we have had strong capital inflows of $37 billion and expect an acceleration of fundraising in the back half of the year across our flagship and our complementary strategies. These fundraising efforts alongside the $50 billion of insurance capital from the recently announced AEL transaction should allow us to raise a record of close to $150 billion of capital this year. And given the pace of activity in the first six months of the year, we continue to be able to deploy a large amount of capital that we are raising in this environment. With our significant access to global scale capital, we can focus on investing in the asset classes where our franchise is strongly positioned, such as infrastructure, renewable power and transition, and private credit by leveraging our deep relationships with institutional investors and lenders. These advantages are very powerful and in the current market are a differentiator. Before handing the call over to Connor, I'll spend a little time talking about the opportunity we see once again to acquire great real estate for value. We've been investing in real estate for over half a century in the company and investing on behalf of clients since the early 2000s. Over that period, in that series of funds, we have acquired nearly $100 billion of properties on behalf of our clients across various economic cycles in every sector. And our track record is extremely strong with an average annualized gross return of over 20%. In the decades that we have invested in real estate, we have found that volatile markets often present the best opportunities to acquire high-quality real estate at exceptional values. Today, we are in an environment with higher interest rates, higher inflation, and tightening lender requirements, all of which create uncertainty and pockets of stress in real estate markets globally, particularly, though, in the U.S., As the current cycle is evolving, this story has become one of stress in the capital markets versus the fundamentals of most asset classes. This bodes well for experienced managers with strong access to capital, like us. The strong will get stronger, and as always, the weak will go away. It is worth reminding everyone that fundamentals in most real estate asset classes are very strong. just a few points. Retail centers hit record sales in 2022. Record sales in 2022. Premier office rents are at all-time highs in most cities. As an example, our South Korean, Dubai, and Sao Paulo portfolios are 99% full with all-time high rents. Rents for logistics properties grew 11% in 2022. Multifamily rents in the U.S. went up 15% year over year. Hotel rooms are full almost everywhere, with ADRs ahead of pre-pandemic levels. These strong fundamentals are coupled with a supply side that will provide very little new commercial real estate inventory in the short or even in the medium term. Land constraints high material costs, and limited financing will keep supply low for quite a while and allow for continued rent growth that should outpace inflation. The combination of the pockets of stress in capital markets and strong underlying fundamentals with constrained supply will lead to the best environment we have seen since 2009 to execute on our longstanding investment strategy for real estate, which is to buy high-quality assets for value and drive upside through active asset management. Buying great assets with compromised capital structures is always the easiest way to strong returns. I'm going to repeat that one more time. Buying great assets with compromised capital structures is always the easiest way to strong returns. So acquiring great real estate for value is a good start to be able to repeatedly earn excellent returns over the longer term. One must also drive operational excellence in a portfolio. Our operating expertise is based on having people on the ground across the world and decades of experience in all the major real estate sector. Our hands-on approach gives us control over investment outcomes through cycles and is particularly well-suited for today's environments. We have the ability to leverage our global tenant relationships and the Brookfield ecosystem to great value through our leasing, rental appreciation, refurbishment, and redevelopment of properties. Our nearly 30,000 people in 30 countries dedicated to real estate give us exceptional insights into the market and allow us to see virtually everything in the world. It is during periods of time like now where opportunistic real estate flagship fund series is designed to take advantage of market turbulence, and we have seen the success of our strategy through multiple cycles. We think the latest vintage, which is our fifth fund, will be an excellent vintage, maybe one of our best. Thank you for your continued support and interest in Brookfield Asset Management, and I'll turn the call now over to Connor.