Dean Wilkinson

Dean Wilkinson with CIBC inquired about Brookfield Asset Management's overall view on credit, including concerns around private credit, observations within its portfolio, and redemptions in private wealth strategies.

Answer

Conor Teskey, Chief Executive Officer of Brookfield Asset Management, noted robust market demand for credit driven by capital requirements for energy, digitalization, and deglobalization. He observed strong demand and attractive spreads in real asset and asset-backed lending, with modest and manageable retail redemptions in private wealth, while institutional inflows into credit remain robust.

Dean Wilkinson inquired about Brookfield Asset Management's perspective on concerns surrounding private credit, what they are observing within their portfolio, their general view on the market, and any redemptions seen in private wealth strategies.

Answer

Conor Teskey, CEO, affirmed that market demand for credit remains robust, driven by significant capital requirements for energy, digitalization, and deglobalization. He noted strong demand and attractive spreads in real asset and asset-backed lending, with tight spreads in more commoditized segments. While modest and manageable retail/wealth redemptions occurred late last year, institutional inflows into credit, especially well-positioned products, remain robust.

Dean Wilkinson of CIBC Capital Markets asked if the recent base shelf filing, despite strong liquidity, could signal upcoming M&A opportunities that might add to fee-bearing capital.

Answer

CFO Hadley Peer Marshall clarified that the shelf filing is a standard measure to ensure liquidity for business growth, not for a specific large acquisition. She stated the focus is on funding organic growth, seeding new strategies, and opportunistically acquiring more stakes in partner managers, noting "there's nothing that we need to do" on the M&A front.

Dean Wilkinson asked if Brookfield is concerned about the 'law of large numbers' impacting its growth, specifically whether its ability to deploy capital might flatten out or if the opportunity sets will continue to grow faster than the underlying business.

Answer

Nick Goodman, President of Brookfield Corporation, expressed confidence that the scale of current market trends, particularly in AI infrastructure and renewable power, requires significant capital. He believes the quality and scale of these opportunities are the best ever, allowing for high returns on large capital deployments. Mr. Goodman stated that Brookfield does not foresee any shortage of deployment opportunities in the short, medium, or long term.

Dean Wilkinson asked if Brookfield is concerned about the 'law of large numbers' as the business grows, specifically whether opportunity sets will continue to grow quicker than the underlying business.

Answer

President and CFO Nick Goodman believes the scale and quality of opportunities in AI infrastructure and renewable power are significant and probably the best ever. He does not foresee any shortage of deployment opportunities in the short, medium, or long term.

Dean Wilkinson asked which of Brookfield's major components—property, Wealth Solutions, or carried interest—the market most misunderstands, contributing to the stock's discount to plan value. He also questioned if there were any tax or disposition gain implications from the reallocation of how Brookfield holds its BAM shares.

Answer

President Nick Goodman stated it's difficult to know what the market misunderstands but believes that continued execution across all business lines will ultimately close the valuation gap. Regarding the BAM shares, he confirmed the reallocation has no tax or accounting impact on Brookfield; the company will simply hold liquid Class A shares instead of privately held shares.

Dean Wilkinson from CIBC asked for an update on the $5 billion retail revitalization plan and whether its investments were flowing to BPY's tenants. He also inquired about the approximate percentage of tenants that received rent abatements and if this figure correlated with the 15% of retailers that had not yet reopened.

Answer

CEO Brian Kingston clarified that the retail revitalization plan invests in retailers regardless of their landlord but noted that some investments have been made in BPY tenants due to existing relationships facilitating due diligence. He stated that more investments are expected as many are 'in the hopper.' Regarding abatements, Kingston explained they were concentrated among smaller, local tenants and restaurants based on their ability to pay. He confirmed the percentage of tenants receiving abatements was 'much smaller' and significantly lower than the 15% of unopened stores.

Dean Wilkinson of CIBC inquired about the percentage of BPY's tenant base that would qualify for the new retail revitalization program based on its sales threshold. He also asked about the general terms being negotiated in rent deferral agreements with tenants.

Answer

CEO Brian Kingston provided a rough estimate that between two-thirds and three-quarters of the tenant base would meet the program's sales threshold. He clarified that the demand for this capital would come from the 80% of tenants who had not paid rent. Regarding deferral agreements, Kingston noted that while it's early, the company's goal is the shortest repayment period possible, with an expectation that most deferrals would be repaid over the first 12 months after the properties reopen.