Brookfield Asset Management Ltd. Q1 FY2025 earnings call

Bruce's Remarks

• Strong start to the year with highest quarterly earnings growth since public listing. Fee-related earnings at record $698M, up 26% YOY. Distributable earnings up 20% to $654M. Fee-bearing capital at ~$550B, up 20% YOY. Raised $25B in capital this quarter, with $140B inflows over past year. Closed $6B commitments for flagship real estate strategy and $16B for opportunistic credit strategy. Deployed $16B globally and sold $22B of assets, generating $9B in equity proceeds.
• Confident in long-term strategy with secular trends like AI infrastructure, energy needs, private credit driving capital flows. Franchise is more global, diversified, and capable with investments in operating teams in over 30 countries.

Connor's Remarks

• Private markets stable amidst public market volatility. Diversification across strategies, sectors, geographies provides competitive edge. Successful real estate fundraising despite challenging environment. Portfolio anchored in essential assets with resilience to economic cycles. Deployed $16B globally, with nearly $120B of uncalled long-term capital ready. Expanding private credit business with over $320B in credit AUM, goal to double size in 5 years. Acquired majority stake in Angel Oak and increased ownership in Oaktree.

Hadley's Remarks

• Record first quarter earnings: FRE $698M, DE $654M. Fee-bearing capital at $549B, up 20% YOY. Raised $25B in Q1 across various strategies. Deployed $16B, including investments in renewable power, private equity, and infrastructure. Strengthened platform through partnerships and increased ownership in partner managers. Strong balance sheet with $1.4B invested in partnerships, $16B committed by Brookfield Group to funds. Inaugural bond offering of $750M with high investment-grade ratings, strong liquidity.

Fee-related earnings reached a record $698 million for the quarter, up 26% year-over-year or $0.43 per share. Distributable earnings grew by 20% to $654 million or $0.40 per share. Fee-bearing capital now stands at approximately $550 billion, up 20% compared to last year. The firm raised $25 billion of capital this quarter, bringing total inflows over the past year to more than $140 billion. They deployed $16 billion into opportunities globally and sold $22 billion of assets, generating $9 billion of equity proceeds during the quarter.

Guidance

• Continue to stay disciplined, lean into scale and capabilities, and find opportunities in market dislocation. Expect to grow through the market cycle as in previous cycles. Priorities include maintaining discipline, leveraging scale, and capitalizing on market dislocation. Confidence in earnings compounding over time due to strong fundraising, deployment, and monetization.

Risks

• Forward-looking statements subject to known and unknown risks, future events and results may differ materially from statements. Market volatility and broader market uncertainties pose risks to financial performance and investment opportunities.

Q: Good morning, everyone. We wanted to start with fundraising and specifically Real Estate Fund V. So we all know real estate isn't the easiest vertical to fund raise today, but you already raised $13 billion. So that's a pretty impressive number just given the backdrop. And I'm curious, which geographies channels were helpful for this raise to date. And did the opportunistic element really sell with clients given very limited new construction and the migration of capital away from this vertical?

A: Good morning, Craig. I'll start by just correcting you in a positive way. We've already raised $16 billion for the strategy. So it's well on track to be our largest real estate strategy raise ever. And it's really capitalizing on, I would say, three things that you mentioned there. One, the fundamentals are incredibly strong right now. The world needs more great real estate, but there is a very significant lack of new supply in major markets and high-quality assets around the world that it's creating a very robust supply-demand dynamic and those who can bring capital to the market. The second thing is there is no doubt some legacy capital structure that are not well suited for the current interest rate environment, and that's going to create very attractive opportunities to buy high-quality assets within perfect capital structures at significant discounts to replacement costs. And that's actually what this strategy already has been doing early in its vintage. And then the last point is very much that, well, different asset classes in different geographies around the world, in the real estate cycle will trough at different points in time. The strength of this fund raise was very indicative that investors realized this fund will deploy capital from 12 months ago to two or three years into the future. And no doubt, we are going to catch the bottom during that time frame. And that made this a vintage that many of our most sophisticated and large scale partners did not want to miss. Maybe just to close out in terms of where we saw significant demand this quarter, very broad-based, but I would highlight strength in the U.S. market.

Q: Thanks very much, and good morning. I wanted to start by asking a question about your perspective on some of the new product introductions across the industry, which kind of blur the lines between public and private assets. Is that something that you're working on from a product development perspective?

A: First and foremost, the headlines and some of the partnerships you see being announced and in particular, the interactions between more traditional securities managers and alternative managers, we think underscores an incredibly large and important trend, which is that alternatives are increasingly becoming part of a standard investment portfolio for all types of investors. A decade ago, it was only institutional investors who invested in alternatives, then insurance companies. Now we're seeing it across retail, high net worth and the more common investor it's no longer just stocks and bonds. It's now stocks, bonds and alternatives. And in terms of those types of partnerships, we, of course, are monitoring that space carefully and having a number of conversations of our own and we will look to build our business appropriately. We view this as a long game, and it is something we would consider in the future.

Q: Great. Thank you for taking my questions. For my first one, I have a two-parter on private credit. We're starting to hear some concerns around potential overcrowding or saturation within private credit as an asset class and direct lending more specifically. Is that a theme你're seeing as well across your business? Or is your focus on asset-backed lending and financing real assets less impacted from some of this broader competition we're hearing about? And then secondarily, could you just expand on what Angel Oak adds to your platform? And then how kind of the mortgage origination component fits within your larger push into managed insurance?

A: Yes. Actually, I can take that one and tie it in nicely with Angel Oak. So when you think about our $300 billion of assets under management within our credit business, it is heavily focused on opportunistic and real assets, including real estate infrastructure and ABF. And so that puts us in a position to be able to capitalize on the value add that we can bring to the market especially in this environment, as Connor was mentioning, the dislocation makes our capital and that specific type of capital even more valuable. And so we're seeing a strong pipeline of opportunities. The deployment has been quite strong. And we are also very focused on continuing to build out our strategies attached to credit, which takes us to Angel Oak. Angel Oak is actually fits perfectly into the type of credit that we focus on and is actually well positioned to benefit, especially our clients associated with insurance. So the nonqualified side of the mortgage space is quite attractive, and we are excited to have them once we close as part of the overall partner manager group as we continue to expand our capabilities.