Distributable Earnings of
Liquidity of Nearly
Retail and Wealth Flows Now Approximately
Expected to be Over
BROOKFIELD, NEWS,
Operating Results
Distributable earnings (“DE”) before realizations increased by 11% per share over the last twelve months (“LTM”), after adjusting for the special distribution of 25% of our asset management business in December last year.
| Unaudited For the periods ended (US$ millions, except per share amounts) |
Three Months Ended | Last Twelve Months Ended | |||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||
| Net income1 | $ | 35 | $ | 716 | $ | 2,015 | $ | 8,612 | |||
| Distributable earnings before realizations2,3 | 1,056 | 1,216 | 4,156 | 4,224 | |||||||
| – Adjusted for the special distribution2,3,4 | 1,056 | 1,085 | 4,049 | 3,707 | |||||||
| – Per Brookfield share2,3,4 | 0.67 | 0.67 | 2.54 | 2.28 | |||||||
| Distributable earnings2,3 | 1,150 | 1,363 | 4,992 | 5,032 | |||||||
| – Per Brookfield share2,3 | 0.73 | 0.85 | 3.13 | 3.10 | |||||||
See endnotes on page 8.
Net income in the third quarter was $35 million. DE before realizations were
Within our asset management business, fee-related earnings increased by 13%, when excluding performance fees, compared to the prior year, due to successful fundraising efforts and capital deployment.
Our insurance solutions business continues to deliver earnings growth driven by strong investment performance on our growing insurance asset base.
Our operating businesses generated stable and predictable streams of cash flows, supported by the underlying earnings across our renewable power & transition, infrastructure, and private equity businesses and growth in same-store net operating income (“NOI”) in our real estate business.
During the quarter and over the last twelve months, earnings from realizations were $94 million and $836 million, respectively, with total DE for the quarter and the last twelve months of
Regular Dividend Declaration
The Board declared a quarterly dividend for the Corporation of
Operating Highlights
DE before realizations were
Asset Management:
-
Distributable earnings were $634 million in the quarter and
$2 .6 billion over the LTM. -
Fee-related earnings increased by 13%, when excluding performance fees, compared to the prior year.
-
Fundraising continues to be strong with inflows of $61 billion year to date and $71 billion for the LTM. Fee-bearing capital was $440 billion as of
September 30, 2023 , an increase of $33 billion or 8% over the LTM. -
We closed our largest ever private equity fund in the quarter and the world’s largest private infrastructure debt fund after quarter end. We remain on track towards achieving our $150 billion capital raising target.
Insurance Solutions:
-
Distributable operating earnings were $182 million in the quarter and $657 million over the LTM, an increase of 14% compared to the prior year quarter.
-
During the quarter, our insurance assets grew to approximately $50 billion and our average investment portfolio yield was 5.5%, about 200 bps higher than the average cost of capital.
-
We continue to track towards reaching $800 million of annualized earnings by the end of 2023. With the expected closing of
Argo Group andAmerican Equity Life , our insurance solutions business will grow to over $100 billion of assets and$1 .2 billion of annualized earnings with a credible path to a stabilized earnings run-rate of approximately $2 billion annually over time.
Operating Businesses:
-
Distributable earnings were $366 million for the quarter and
$1 .5 billion over the LTM. -
Operating Funds from Operations within our renewable power & transition and infrastructure businesses increased by 14% over the LTM, generating stable and growing cash distributions. Our private equity business continues to contribute resilient and high-quality cash flows.
-
Strong performance within our core real estate portfolio drove same-store NOI growth of 9% compared to the prior year, capturing higher revenues and tenant demand. Leasing activity remains strong with 0.8 million square feet completed in the quarter across all our office assets, and foot traffic increased by 7% versus the comparative period at our core retail portfolio.
Earnings from realizations of mature assets were $94 million for the quarter and $836 million for the LTM.
-
Executed on approximately $25 billion of asset sales year to date, bringing the total monetizations completed over the LTM to over $35 billion—substantially all transacting at values higher than our IFRS carrying values, providing strong evidence for the carrying values of our high-quality investments.
-
Year to date, we have recognized $470 million of net realized carried interest into income and continue to see a path to realize well over $500 million of net realized carried interest into income this year.
-
Total accumulated unrealized carried interest now stands at
$9 .9 billion, representing an increase of 12% over the LTM, net of carried interest realized into income.
We ended the quarter with nearly $120 billion of capital available to deploy into new investments.
-
Since the end of the last quarter, we returned over
$400 million to shareholders through regular dividends and share repurchases. Over the LTM, we have repurchased approximately $750 million of Class A shares in the open market. -
We have significant amounts of deployable capital of nearly
$120 billion , which includes$35 billion of cash, financial assets and undrawn credit lines at the Corporation and our affiliates. -
Our balance sheet remains conservatively capitalized, with a weighted-average term of 12 years and modest maturities through to the end of 2024.
-
We maintain strong access to the capital markets enabling us to refinance existing operations and fund growth. In just the past few months, our businesses have been able to access the capital markets and execute a number of financings, increasing the duration, and in many cases tightening the spreads of the debt.
-
Within our real estate business, we have successfully refinanced our 2023 maturities across 131 individual loans with no material impact to liquidity, and we expect to be able to refinance our upcoming maturities with similar success.
CONSOLIDATED BALANCE SHEETS
| Unaudited (US$ millions) |
||||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 12,087 | $ | 14,396 | ||||
| Other financial assets | 26,334 | 26,899 | ||||||
| Accounts receivable and other | 34,613 | 30,208 | ||||||
| Inventory | 12,185 | 12,843 | ||||||
| Equity accounted investments | 54,431 | 47,094 | ||||||
| Investment properties | 121,520 | 115,100 | ||||||
| Property, plant and equipment | 136,428 | 124,268 | ||||||
| Intangible assets | 40,802 | 38,411 | ||||||
|
|
33,698 | 28,662 | ||||||
| Deferred income tax assets | 3,717 | 3,403 | ||||||
| Total Assets | $ | 475,815 | $ | 441,284 | ||||
| Liabilities and Equity | ||||||||
| Corporate borrowings | $ | 13,007 | $ | 11,390 | ||||
| Accounts payable and other | 57,116 | 57,941 | ||||||
| Non-recourse borrowings | 213,559 | 202,684 | ||||||
| Subsidiary equity obligations | 4,220 | 4,188 | ||||||
| Deferred income tax liabilities | 24,656 | 23,190 | ||||||
| Equity | ||||||||
| Non-controlling interests in net assets | $ | 118,786 | $ | 98,138 | ||||
| Preferred equity | 4,103 | 4,145 | ||||||
| Common equity | 40,368 | 163,257 | 39,608 | 141,891 | ||||
| Total Equity | 163,257 | 141,891 | ||||||
| Total Liabilities and Equity | $ | 475,815 | $ | 441,284 | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS
| Unaudited For the periods ended (US$ millions, except per share amounts) |
Three Months Ended | Nine Months Ended | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenues | $ | 24,441 | $ | 23,418 | $ | 71,406 | $ | 68,556 | |||||||
| Direct costs1 | (18,842 | ) | (17,771 | ) | (54,166 | ) | (52,610 | ) | |||||||
| Other income and gains | 381 | 111 | 2,245 | 605 | |||||||||||
| Equity accounted income | 809 | 933 | 1,639 | 2,340 | |||||||||||
| Interest expense | |||||||||||||||
| – Corporate borrowings | (164 | ) | (128 | ) | (454 | ) | (369 | ) | |||||||
| – Non-recourse borrowings | |||||||||||||||
| Same-store | (3,581 | ) | (2,746 | ) | (9,558 | ) | (7,048 | ) | |||||||
| Acquisitions, net of dispositions2 | (268 | ) | — | (1,132 | ) | — | |||||||||
| Upfinancings2 | (68 | ) | — | (314 | ) | — | |||||||||
| Corporate costs | (16 | ) | (30 | ) | (53 | ) | (89 | ) | |||||||
| Fair value changes | (170 | ) | (549 | ) | (70 | ) | 834 | ||||||||
| Depreciation and amortization | (2,246 | ) | (1,997 | ) | (6,648 | ) | (5,694 | ) | |||||||
| Income tax | (241 | ) | (525 | ) | (924 | ) | (1,374 | ) | |||||||
| Net income | $ | 35 | $ | 716 | $ | 1,971 | $ | 5,151 | |||||||
| Net income attributable to: | |||||||||||||||
| Brookfield shareholders | $ | 230 | $ | 423 | $ | 431 | $ | 2,372 | |||||||
| Non-controlling interests | (195 | ) | 293 | 1,540 | 2,779 | ||||||||||
| $ | 35 | $ | 716 | $ | 1,971 | $ | 5,151 | ||||||||
| Net income per share | |||||||||||||||
| Diluted | $ | 0.12 | $ | 0.24 | $ | 0.20 | $ | 1.40 | |||||||
| Basic | 0.12 | 0.25 | 0.20 | 1.44 | |||||||||||
1. Direct costs disclosed above exclude depreciation and amortization expense.
2. Interest expense from acquisitions, net of dispositions, and upfinancings completed over the twelve months ended
SUMMARIZED FINANCIAL RESULTS
DISTRIBUTABLE EARNINGS
| Unaudited For the periods ended (US$ millions) |
Three Months Ended | Last Twelve Months Ended | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Asset management | $ | 634 | $ | 748 | $ | 2,607 | $ | 3,008 | |||||||
| Insurance solutions | 182 | 159 | 657 | 239 | |||||||||||
| BEP | 105 | 100 | 415 | 395 | |||||||||||
| BIP | 80 | 75 | 315 | 296 | |||||||||||
| BBU | 9 | 9 | 36 | 30 | |||||||||||
| BPG | 179 | 191 | 766 | 882 | |||||||||||
| Other | (7 | ) | (5 | ) | (24 | ) | (83 | ) | |||||||
| Operating businesses | 366 | 370 | 1,508 | 1,520 | |||||||||||
| Corporate costs and other | (126 | ) | (61 | ) | (616 | ) | (543 | ) | |||||||
| Distributable earnings before realizations1 | 1,056 | 1,216 | 4,156 | 4,224 | |||||||||||
| Realized carried interest, net | 94 | 99 | 750 | 416 | |||||||||||
| Disposition gains from principal investments | — | 48 | 86 | 392 | |||||||||||
| Distributable earnings1 | $ | 1,150 | $ | 1,363 | $ | 4,992 | $ | 5,032 | |||||||
1. Non-IFRS measure – see Non-IFRS and Performance Measures section on page 8.
RECONCILIATION OF NET INCOME TO DISTRIBUTABLE EARNINGS
| Unaudited For the periods ended (US$ millions) |
Three Months Ended | Last Twelve Months Ended | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net income | $ | 35 | $ | 716 | $ | 2,015 | $ | 8,612 | |||||||
| Financial statement components not included in DE: | |||||||||||||||
| Equity accounted fair value changes and other items | 298 | 141 | 2,743 | 1,334 | |||||||||||
| Fair value changes and other | 503 | 549 | 2,214 | (2,814 | ) | ||||||||||
| Depreciation and amortization | 2,246 | 1,997 | 8,637 | 7,433 | |||||||||||
| Deferred income taxes | (238 | ) | 240 | (766 | ) | 768 | |||||||||
| Non-controlling interests in the above items1 | (1,906 | ) | (2,347 | ) | (10,133 | ) | (10,226 | ) | |||||||
| Realized disposition gains in fair value changes or prior periods | 203 | 170 | 815 | 1,084 | |||||||||||
| Less: total disposition gains | (297 | ) | (151 | ) | (1,342 | ) | (1,055 | ) | |||||||
| Less: realized carried interest, net | (94 | ) | (99 | ) | (750 | ) | (416 | ) | |||||||
| Working capital, net | 306 | — | 723 | (496 | ) | ||||||||||
| Distributable earnings before realizations2 | 1,056 | 1,216 | 4,156 | 4,224 | |||||||||||
| Realized carried interest, net3 | 94 | 99 | 750 | 416 | |||||||||||
| Disposition gains from principal investments | — | 48 | 86 | 392 | |||||||||||
| Distributable earnings2 | $ | 1,150 | $ | 1,363 | $ | 4,992 | $ | 5,032 | |||||||
1. Amounts attributable to non-controlling interests are calculated based on the economic ownership interests held by non-controlling interests in consolidated subsidiaries. By adjusting DE attributable to non-controlling interests, we are able to remove the portion of DE earned at non-wholly owned subsidiaries that is not attributable to Brookfield.
2. Non-IFRS measure – see Non-IFRS and Performance Measures section on page 8.
3. Includes our share of Oaktree’s distributable earnings attributable to realized carried interest.
EARNINGS PER SHARE
| Unaudited For the periods ended (US$ millions) |
Three Months Ended | Nine Months Ended | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net income | $ | 35 | $ | 716 | $ | 1,971 | $ | 5,151 | |||||||
| Non-controlling interests | 195 | (293 | ) | (1,540 | ) | (2,779 | ) | ||||||||
| Net income attributable to shareholders | 230 | 423 | 431 | 2,372 | |||||||||||
| Preferred share dividends1 | (41 | ) | (37 | ) | (123 | ) | (111 | ) | |||||||
| Dilutive effect of conversion of subsidiary preferred shares | — | — | — | — | |||||||||||
| Net income available to common shareholders | 189 | 386 | 308 | 2,261 | |||||||||||
| Dilutive impact of exchangeable shares of affiliate | 1 | 1 | 2 | 4 | |||||||||||
| Net income available to common shareholders including dilutive impact of exchangeable shares | $ | 190 | $ | 387 | $ | 310 | $ | 2,265 | |||||||
| Weighted average shares | 1,561.2 | 1,562.5 | 1,565.8 | 1,565.0 | |||||||||||
| Dilutive effect of conversion of options and escrowed shares using treasury stock method2 and exchangeable shares of affiliate | 24.5 | 48.9 | 23.9 | 53.5 | |||||||||||
| Shares and share equivalents | 1,585.7 | 1,611.4 | 1,589.7 | 1,618.5 | |||||||||||
| Diluted earnings per share3 | $ | 0.12 | $ | 0.24 | $ | 0.20 | $ | 1.40 | |||||||
1. Excludes dividends paid on perpetual subordinated notes of $3 million (2022 – $3 million) and
2. Includes management share option plan and escrowed stock plan.
3. Per share amounts are inclusive of dilutive effect of mandatorily redeemable preferred shares held in a consolidated subsidiary.
Additional Information
The Letter to Shareholders and the company’s Supplemental Information for the three and twelve months ended
The statements contained herein are based primarily on information that has been extracted from our financial statements for the quarter and nine months ended
Brookfield Corporation’s Board of Directors have reviewed and approved this document, including the summarized unaudited consolidated financial statements prior to its release.
Information on our dividends can be found on our website under Stock & Distributions/Distribution History.
Quarterly Earnings Call Details
Investors, analysts and other interested parties can access Brookfield Corporation’s 2023 Third Quarter Results as well as the Shareholders’ Letter and Supplemental Information on Brookfield Corporation’s website under the Reports & Filings section at bn.brookfield.com.
To participate in the Conference Call today at
About
Please note that Brookfield Corporation’s previous audited annual and unaudited quarterly reports have been filed on EDGAR and SEDAR and can also be found in the investor section of its website at www.brookfield.com. Hard copies of the annual and quarterly reports can be obtained free of charge upon request.
For more information, please visit our website at www.bn.brookfield.com or contact:
| Communications & Media: Tel: (212) 618-3469 Email: [email protected] |
Investor Relations: Tel: (416) 359-8647 Email: [email protected] |
Non-IFRS and Performance Measures
This news release and accompanying financial information are based on International Financial Reporting Standards (“IFRS”), as issued by the
We make reference to Distributable Earnings (“DE”). We define DE as the sum of distributable earnings from our asset management business, distributable operating earnings from our insurance solutions business, distributions received from our ownership of investments, realized carried interest and disposition gains from principal investments, net of earnings from our Corporate Activities, preferred share dividends and equity-based compensation costs. We also make reference to DE before realizations, which refers to DE before realized carried interest and realized disposition gains from principal investments. We believe these measures provide insight into earnings received by the company that are available for distribution to common shareholders or to be reinvested into the business.
Realized carried interest and realized disposition gains are further described below:
-
Realized Carried Interest represents our contractual share of investment gains generated within a private fund after considering our clients’ minimum return requirements. Realized carried interest is determined on third-party capital that is no longer subject to future investment performance.
-
Realized Disposition Gains from principal investments are included in DE because we consider the purchase and sale of assets from our directly held investments to be a normal part of the company’s business. Realized disposition gains include gains and losses recorded in net income and equity in the current period, and are adjusted to include fair value changes and revaluation surplus balances recorded in prior periods which were not included in prior period DE.
We make reference to Funds from Operations (“FFO”). We define FFO as net income attributable to shareholders prior to fair value changes, depreciation and amortization, and deferred income taxes, and it includes realized disposition gains that are not recorded in net income as determined under IFRS. FFO also includes the company’s share of equity accounted investments’ FFO on a fully diluted basis.
FFO consists of the following components:
-
Operating FFO represents the company’s share of revenues less direct costs and interest expenses; excludes realized carried interest and disposition gains, fair value changes, depreciation and amortization and deferred income taxes; and includes our proportionate share of FFO from operating activities recorded by equity accounted investments on a fully diluted basis. We present this measure as we believe it assists in describing our results and variances within FFO.
-
Realized Carried Interest as defined above.
-
Realized Disposition Gains are included in FFO because we consider the purchase and sale of assets to be a normal part of the company’s business. Realized disposition gains include gains and losses recorded in net income and equity in the current period, and are adjusted to include fair value changes and revaluation surplus balances recorded in prior periods which were not included in prior period FFO.
We use DE and FFO to assess our operating results and the value of Brookfield Corporation’s business and believe that many shareholders and analysts also find these measures of value to them.
We also make reference to Net Operating Income (“NOI”), which refers to the revenues from our operations less direct expenses before the impact of depreciation and amortization within our real estate business. We present this measure as we believe it is a key indicator of our ability to impact the operating performance of our properties. As NOI excludes non-recurring items and depreciation and amortization of real estate assets, it provides a performance measure that, when compared to prior periods, reflects the impact of operations from trends in occupancy rates and rental rates.
We disclose a number of financial measures in this news release that are calculated and presented using methodologies other than in accordance with IFRS. These financial measures, which include DE and FFO, should not be considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, similar financial measures calculated in accordance with IFRS. We caution readers that these non-IFRS financial measures or other financial metrics are not standardized under IFRS and may differ from the financial measures or other financial metrics disclosed by other businesses and, as a result, may not be comparable to similar measures presented by other issuers and entities.
We provide additional information on key terms and non-IFRS measures in our filings available at www.bn.brookfield.com.
| End Notes |
1. Consolidated basis – includes amounts attributable to non-controlling interests.
2. Excludes amounts attributable to non-controlling interests.
3. See Reconciliation of Net Income to Distributable Earnings Before Realizations and Distributable Earnings on page 5 and Non-IFRS and Performance Measures section on page 8.
4. Distributable earnings before realizations, including per share amounts, for the three months ended
Notice to Readers
This news release contains “forward-looking information” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of the
Although
We caution that the foregoing list of important factors that may affect future results is not exhaustive and other factors could also adversely affect future results. Readers are urged to consider these risks, as well as other uncertainties, factors and assumptions carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements, which are based only on information available to us as of the date of this news release. Except as required by law,
Past performance is not indicative nor a guarantee of future results. There can be no assurance that comparable results will be achieved in the future, that future investments will be similar to historic investments discussed herein, that targeted returns, growth objectives, diversification or asset allocations will be met or that an investment strategy or investment objectives will be achieved (because of economic conditions, the availability of appropriate opportunities or otherwise).
Target returns and growth objectives set forth in this news release are for illustrative and informational purposes only and have been presented based on various assumptions made by
Certain of the information contained herein is based on or derived from information provided by independent third-party sources. While
Source:
| Title | Document |
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English |