Brookfield Asset Management Inc.


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Brookfield Asset Management Inc.

  1. 1. Brookfield Asset Management Inc. A GLOBAL ASSET MANAGEMENT COMPANY Focused on Property, Renewable Power and Other Infrastructure Assets Brookfield Asset Management Investor Day September 15, 2009
  2. 2. Cautionary Note Regarding Forward-Looking Statements This presentation contains forward-looking information within the meaning of Canadian provincial securities laws and other “forward-looking statements,” within the meaning of certain securities laws including Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations. The words “strategy,” “objectives,” “outlook,” “build,” “maintain,” “expand,” “opportunities,” “will,” “stable,” “contracted,” “expect,” “believe” and “should,” derivations thereof and other expressions that are predictions of or indicate future events, trends or prospects and which do not relate to historical matters identify forward-looking statements. We may make such statements in this presentation, in other filings with Canadian securities regulators or the Securities Exchange Commission (SEC) and in other communications. These forward-looking statements include, among others, statements with respect to our financial and operating objectives and strategies to achieve those objectives; our ability to generate going concern values from our assets; our views on the intrinsic value of our business and the shares of the company; acquisition and growth opportunities in the real estate, renewable power and infrastructure sectors; our future operating performance, earnings and cash flows; the effects of IFRS on our financial statements in the future; our currency and interest rate views; our outlook for the renewable power market in North America and Brazil; growth targets for our renewable power business; our outlook for the office, retail and residential real estate sectors; our outlook for the transmission and timber sectors as well as the overall infrastructure sector; and other statements with respect to our beliefs, outlooks, plans, expectations and intentions. Although Brookfield believes that the anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, investors and potential investors should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements and information. Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include: economic and financial conditions in the countries in which we do business; the behaviour of financial markets including fluctuations in interest and exchange rates; availability of equity and debt financing for the company and its affiliates; strategic actions including dispositions; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; our continued ability to attract institutional partners to invest in our funds; adverse hydrology conditions; tenant bankruptcies; recovery of timber markets; regulatory and political factors within the countries in which we operate; acts of God, such as earthquakes and hurricanes; the possible impact of international conflicts and other developments including terrorist acts; and other risks and factors detailed from time to time in the company’s form 40-F filed with the Securities and Exchange Commission as well as other documents filed by the company with the securities regulators in Canada and the United States including in the company’s most recent year end Management Discussion of Financial Results under the heading “Business Environment and Risks.” We caution that the forgoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to Brookfield Asset Management and its affiliated, investors and others should carefully consider the forgoing factors and other uncertainties and potential events. Unless required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise. Currency All dollar figures are in U.S. dollars, unless otherwise indicated. 2 | Brookfield Asset Management Inc. Agenda Overview Bruce Flatt Renewable Power Richard Legault Real Estate Ric Clark Infrastructure Sam Pollock Financial Review Brian Lawson Closing Remarks & Q&A Bruce Flatt Tour of Bay Adelaide Centre Bob MacNicol Reception 3 | Brookfield Asset Management Inc. 1
  3. 3. Overview Bruce Flatt Brookfield Today A global asset management company with over $80 billion of AUM Property Renewable Power Infrastructure 5 | Brookfield Asset Management Inc. 2
  4. 4. A Global Asset Manager Long-term, value-oriented investor 100 years of experience investing, operating and managing high quality assets globally Substantial capitalization – $20 billion permanent equity capitalization Sponsor and manage 20 private equity funds and partnerships since 2001 with capital commitments of ~ $19 billion Manage ~ $20 billion of public securities for clients Positioned to offer specialty investment products to clients STOCK EXCHANGE LISTINGS SOLID RATINGS NYSE, TSX, Euronext DBRS: A(low) Moody’s: Baa2 Ticker: BAM, BAM.A, BAMA S&P: A- Fitch: BBB+ 6 | Brookfield Asset Management Inc. Focused Global Reach Operating locations 50 offices or locations ■ 400 investment professionals ■ 14,000 operating employees 7 | Brookfield Asset Management Inc. 3
  5. 5. Business Strategy – Long Term Objectives are Unchanged Build and maintain “best-in-class” operating platforms Own high quality assets through leading operating platforms that generate high g q y g g p gp g g levels of sustainable free cash flow Finance assets on a conservative, long-term basis, with limited recourse to the corporation Maintain high level of financial liquidity and operational flexibility to capitalize on growth opportunities Expand and foster strong client relationships 8 | Brookfield Asset Management Inc. Brookfield Resilient During Last Two Years Global markets were highly capital constrained and many businesses faced significant operating volatility However, Brookfield was able to finance over $10 billion of debt, continued to generate ~ $1.5 billion of annual free cash flow and invested over $2.0 billion opportunistically to increase future cash flow per share growth This was possible because – Revenue streams in our core businesses are largely contracted to provide stable cash flows – A Assets primarily financed on non-recourse b i supported by transparent t i il fi d basis, t db t t cash flows – Overall leverage is 15% on a deconsolidated basis and 44% on a proportional basis – providing ample equity support during volatile times – Majority of our assets are readily monetizable for value, ensuring that we can reallocate capital into higher return opportunities 9 | Brookfield Asset Management Inc. 4
  6. 6. Moving to 2010 and Beyond All of our major businesses have performed as expected Our franchise, with institutions and financial counterparties, is better than ever The investment environment favours better returns than normal 10 | Brookfield Asset Management Inc. Acquisition Opportunities We are well positioned to pursue major acquisition opportunities Over $3 billion of our own liquidity and $7 billion of third-party capital to invest in potentially higher-yielding opportunities Strong global relationships and reputation as a reliable sponsor and counterparty Breadth and depth of operating platforms Well established and experienced investment teams 11 | Brookfield Asset Management Inc. 5
  7. 7. Current Opportunities Acquiring high quality assets that are being sold into illiquid markets due to financial distress Utilizing strength of operating platforms to capture new businesses and build value Expanding institutional relationships by demonstrating strong relative performance of our strategies through the recent turmoil 12 | Brookfield Asset Management Inc. Institutional Relationships are Growing ~ $20 billion of public securities are managed for clients We currently have 20 private funds and investment programs with ~ $19 billion of commitments with 60 institutional investors Our investment strategies align well with needs of institutional clients – Moderate risk, higher yield, maximum visibility, real returns Pension funds and institutional clients are re-establishing investment programs Brookfield represents an attractive manager – W ll capitalized Well it li d – Leading operating platforms – Strong governance and transparency – Alignment of interests due to Brookfield’s own capital commitments in funds 13 | Brookfield Asset Management Inc. 6
  8. 8. Recently Announced Initiatives $5B Real Estate Turnaround Consortium International pension funds and sovereign wealth funds Allocations of $300 million to $1 billion Global focus with emphasis on North America, Europe and Australasia C$1B Debtor-In-Possession Fund Economic Development Canada, CIBC and Sun Life Focus on Canadian companies and U.S. subsidiaries $400M Colombian Infrastructure Fund Colombian institutional investors Focus on Colombian infrastructure Largest private equity and infrastructure fund in the country 14 | Brookfield Asset Management Inc. 7
  9. 9. Renewable Power Richard Legault Agenda Overview of Portfolio Priorities Market Dynamics and Outlook – North America – Brazil Operating Profile – Positioned for Growth Future Growth Conclusion Q&A 17 | Brookfield Asset Management Inc. 8
  10. 10. Renewable Power Overview One of the world’s largest privately-held hydro portfolios – $12 billion* 3 Countries 3 countries: United States, Canada and Brazil 4,150 Installed Capacity (MW) 4,150 MW total installed capacity 63 River Systems 63 river systems 9 Power Markets 9 power markets ~1000 Employees ~1,000 employees Growth potential through development pipeline and acquisitions * Indicative value derived for IFRS purposes 18 | Brookfield Asset Management Inc. Renewable Power Overview Well positioned in current market with high quality assets Low operating costs provide sustainable cost advantage Simple, proven and highly reliable technology High barriers to entry; difficult to replicate Long-life assets with minimal capex Reservoirs provide flexibility to capture premium pricing Zero carbon emissions Well positioned to realize asset value appreciation over time as gas and carbon prices rise Mcphail, Ontario – 13 MW 19 | Brookfield Asset Management Inc. 9
  11. 11. Priorities 20 | Brookfield Asset Management Inc. Priorities Operations Deliver power to highest-value markets through secured transmission rights Continue to optimize portfolio and maximize revenues by generating during peak demand – 20% premium to market prices based on prior year’s track record Maintain operating costs at current level Manage our capital programs on schedule and budget Securing Value for Shareholders Continue to expand our renewable platform – Expand Brazil renewable generation portfolio – Continue to build on North American platform Increase long-term contracted profile – Generation development in Canada, U.S. and Brazil supported by contracts – Contract current merchant portfolio in Ontario, Quebec and New York 21 | Brookfield Asset Management Inc. 10
  12. 12. Market Dynamics and Outlook 22 | Brookfield Asset Management Inc. Market Outlook – Key Drivers in North America Reduced Supply response Outlook for industrial activity to reduced 2010-2011 in 2008/2009 demand Decrease in demand – Significant reduction in Load growth expected to 15% - 20% in North new investments in gas return with economy set America production to recover in 2010 Gas surplus of Short-term gas prices Reduced exploration and 2-4 Bcf/d decreased but longer drilling in 2009 will reduce Record level of gas te term forward prices not o a d p ces ot p oduct o o atu a production of natural gas storage impacted as significantly for next 12-18 months Lower gas and $7-$8/MMBtu required to With more balanced gas electricity prices stimulate new invest- market in 2010, gas and ments; $10-$12/MMBtu electricity prices are to attract LNG supply in expected to recover mid to long-term Bcf/d = billions of cubic feet per day MMBtu = millions of British thermal units 23 | Brookfield Asset Management Inc. 11
  13. 13. Market Outlook – Gas Prices and Power Market New power plants needed in northeast North America 15,000 – 20,000 MW needed annually Forward Prices vs. CCGT(1) All-in Cost for load growth, post recession $/MWh 120 Shut-down of ageing plants $108 (400,000 MW of capacity 30 years or older) 100 New England (Mass Hub) All-hours Forward Prices Energy Only Current recession will either delay 80 requirement for new capacity or $60 $10 Gas 60 accelerate shutdown of older plants $52 $8 Gas $40 40 Prices need to rise to between $95-$110/MWh in the northeast to 20 support construction of new gas-fired facilities 0 2009 2010 2011 CCGT All-in Cost Fuel Cost (Henry Hub) Variable Opex Capital Cost Carbon Cost Fixed Opex (1) Combined cycle gas turbine 24 | Brookfield Asset Management Inc. Market Outlook – Impact of Carbon Legislation CO2 cap-and-trade likely to be implemented in U.S. and Canada in next few years Waxman-Markey bill cleared U S House of Representatives; Senate approval will U.S. be challenging Congress estimates carbon price of about $14/t in 2012 and $32/t in 2020 CO2 prices to increase cost of dispatch of oil, gas and coal-fired plants Power price estimated to rise in northeast by $4/MWh for each $10/t carbon price 25 | Brookfield Asset Management Inc. 12
  14. 14. Market Outlook – Key Drivers in Brazil Demand was less Market will Outlook for impacted than in remain very tight y g 2010-2011 North America Industrial demand Large hydro projects Economic recovery leads impacted by have long lead times to resumption of 4-5% recession: drop of 11% and are insufficient to annual electricity demand in first half of 2009 meet demand growth (4,000 - 5,000 MW) Residential and Critical need for Increased use of thermal commercial demand additional capacity plants to meet demand resilient: demand resulting in build-out will drive power prices growth of more than of short lead time oil higher 5% in same period and gas-fired plants Hydro facilities remain the low-cost choice for new supply 26 | Brookfield Asset Management Inc. Market Outlook – New Build Costs in Brazil Small hydro facilities receive a significant premium to larger hydro facilities – Users of power generated from small hydro facilities are eligible for a rebate for part of their transmission and distribution charges Upward pressure on system costs, leading to power prices rising faster than inflation Current prices support new build of small hydro Results of Hydro and Biomass Energy Auctions 180 160 140 Trend Line 120 100 R$ / MWh h 80 60 40 20 0 May-05 Oct-06 Feb-08 Jul-09 Nov-10 Auction Date Source: CCEE (Cámara de Comercialización de Energía Eléctrica - Brazil's Electric Energy Commercialization Clearing House) 27 | Brookfield Asset Management Inc. 13
  15. 15. Operating Profile – Positioned for Growth 28 | Brookfield Asset Management Inc. Operating Profile Stable cash flows and increasing operating margins – Contract profile provides downside protection – Abilit to consistently generate premium revenues from un-contracted assets Ability t i t tl t i f t t d t Low and stable operating costs and no need to purchase fuel to generate Benefits from rising electricity prices driven by increasing cost of fuels and carbon compliance cost Long-term capital re-investment program to maintain assets and capture incremental generation opportunities ($ / megawatt hour) 2004 2005 2006 2007 2008 2009E(1) Hydroelectric generation (MWh) Realized price $ 65 $ 66 $ 67 $ 71 $ 77 $ 69 Operating costs (20) (20) (18) (22) (21) (19) $ 45 $ 46 $ 49 $ 49 $ 56 $ 50 (1) 2009E based on results to June 30, 2009 and assuming long-term hydrology and committed power prices for balance of year 29 | Brookfield Asset Management Inc. 14
  16. 16. Operating Profile – Current Hydroelectric and Wind Contract Profile 76% of LTA generation is under contract or hedged in 2010 and >45% contracted long term 80% of contracted revenue is with investment-grade counterparties Opportunity to capture value from un-contracted generation as energy prices rise 2010 2011 2012 Generation (GWh) PPAs(1) 7,372 6,887 6,125 Financial Contracts 3,276 ― ― Un-contracted U t t d 3,649 3 649 7,453 7 453 8,210 8 210 14,297 14,340 14,335 % Contracted 76% 48% 43% Price ($/MWh) $ 75 $ 79 $ 83 (1) Power Purchase Agreements 30 | Brookfield Asset Management Inc. Operating Profile – Storage Flexibility Value of water storage and asset flexibility Generation not sold under a long-term contract is sold in the wholesale power markets in northeastern North America Medium-term h d M di hedges typically protect pricing on majority of un-contracted power i ll i i j i f d In addition to earning energy revenues, our un-contracted assets generate: Annual Revenues(1) Maximizing value of storage Peaking to generate in highest Premiums price hours ~$100 million per year or Providing services to grid +/- $14/MWh Ancillary operators such as voltage Revenues support, capacity and spinning reserves (1) Based on average realized ancillary revenue from 2006 - 2009 31 | Brookfield Asset Management Inc. 15
  17. 17. Operating Profile – Sensitivity Analysis Opportunity to capture value with rising energy prices We have significant leverage to increasing power prices with a low-cost position that protects us from downside risks 2011 C Case St d Study Sensitivity $1/mmbtu or Volume(1) Price(2) Total $7/MWh (TWh) ($/MWh) ($millions) ($millions) Hydroelectric and wind Revenue Contracted generation 6.9 80 552 ― Un-contracted generation Peaking and ancillaries 14 104 ― Wholesale energy sales 7.4 60 444 52 Total 14.3 1,100 Operating costs 14.3 (20) (286) ― Operating cash flow – hydroelectric and wind 814 (1) Based on long-term averages for capacity in place as at June 30, 2009 (2) Based on contracts, forward markets, Brookfield estimates and historical experience 32 | Brookfield Asset Management Inc. Growth Platform 33 | Brookfield Asset Management Inc. 16
  18. 18. The Renewable Power Opportunity Key trends supporting continued growth in renewable power generation Widespread acceptance of climate change – Recognition of the impact of greenhouse gases – N New regulations aimed at reducing coal-fired power; emergence of l ti i d t d i l fi d f cap-and-trade Rising prices from fossil fuels and new-build requirements – Rising oil and gas prices and volatility, with increased resource scarcity – Significant need for new generation Desire for energy independence and security – Reliance on small number of major oil and natural gas regions has increased energy security concerns worldwide; driving search for more local, renewable energy sources Hydro offer best alternative for long-term price certainty – Renewables becoming more cost-competitive with fossil-fuel generation due to low operating costs and steady improvements in technology 34 | Brookfield Asset Management Inc. Growth Platform Expand platform from 4,150 to 6,000 MW in next five years through acquisitions and development activities Track Record Outlook Strategy • 14 projects (500 MW) • 80 professionals • Target high growth built on time and on • 125 MW in markets with scarcity Build budget construction value • Invested $800 million • 600 MW late stage • Contract framework to development reduce risk • Long-term PPAs with creditworthy counterparty • Invested nearly • More than 20,000 MW • Leverage operating $3 billion in over of hydro owned by platform strengths Acquire 20 transactions non-strategics • Value creation through • Added 2,600 MW • Wind is fastest rising prices growing renewable • Target wind assets with segment long-term strategic value 35 | Brookfield Asset Management Inc. 17
  19. 19. Conclusion 36 | Brookfield Asset Management Inc. Conclusion Renewable energy is the fastest growing segment in the power business Hydro assets benefit from sustainable competitive advantages and a particularly strong credit profile in low-priced markets – Lowest cost, longest-life generating technology cost longest life – Ability to generate strong margins in all market conditions – Storage to mitigate low hydrology and realize peak pricing – No environmental fuel cost risk – Positioned to benefit from rising fuel prices and carbon costs Long-term market outlook remains attractive – Need for new supply and rising electricity prices – Fossil fuel prices rising – Carbon legislation is inevitable and will benefit hydro Brookfield is very well positioned in this sector with large scale operating platform in North America and Brazil with development, operating and power marketing capabilities 37 | Brookfield Asset Management Inc. 18
  20. 20. Q&A 19
  21. 21. Property Ric Clark Agenda Overview of Portfolio Operating Profile and Market Dynamics – Office – Development – Retail – Residential Accomplishments and Future Growth Conclusion Q&A 41 | Brookfield Asset Management Inc. 20
  22. 22. Global Reach With Local Insight One of the largest property investors worldwide BAM Global Real Estate Offices: Number of Offices 30 Number of Professionals 7,000 + Head Offices Operating Offices 42 | Brookfield Asset Management Inc. Global Property Operations $38 billion of property assets under management across the real estate spectrum Commercial Properties Development and Other Operations Office Retail Development Residential Services $26 billion $2 billion $5 billion $4 billion $1 billion 120 properties 25 retail malls 20 m sq. ft. 130,000 building lots, Property / commercial 61 m sq. ft. brokerage condo density North America, Australia, Brazil North America, Europe and and Europe Brazil, Europe and North America, North America and Australia Australia Australia and Australia Brazil 43 | Brookfield Asset Management Inc. 21
  23. 23. Global Office Operating Profile and Market Dynamics 44 | Brookfield Asset Management Inc. Office Portfolio 120 commercial property assets and 85 million square feet under management United States Canada Australia UK 60 Properties 29 Properties 20 Properties 11 Properties 47 m sq. ft. 20 m sq. ft. 10 m sq. ft. 8 m sq. ft. 7 Year Avg. 7 Year Avg. 8 Year Avg. 16 Year Avg. Lease Term Lease Term Lease Term Lease Term 45 | Brookfield Asset Management Inc. 22
  24. 24. Outlook in United States Challenges Office fundamentals continue to weaken – economic slowdown and lack of business and consumer confidence Employment figures could continue to decline into 2010 putting pressure on vacancy rates and economic fundamentals Tight credit constricting liquidity, pushing near-term cap rates up, values down Opportunities Although rising, vacancies are still well below normal in most markets New York Bid/Ask rental spreads have been covered in major markets – activity increasing Distressed deals are expected to hit the market in 2010 and 2011 as maturities occur and lenders are no longer able to delay action 46 | Brookfield Asset Management Inc. Outlook in Canada Challenges Commercial property markets are reflective of th economy f the Vacancy rates have begun to rise Significant new supply in Calgary and Toronto will strain these markets Opportunities Vacancies are still on landlord’s side of equilibrium and below peak in 1990s Canadian financial institutions have held up better than their U.S. and international peers Energy/Commodities will rebound first Toronto Development activity remains frozen (outside Calgary and Toronto) 47 | Brookfield Asset Management Inc. 23
  25. 25. Outlook in Australia Challenges Foreign banks have retreated home, making lending universe smaller l di i ll Remaining banks reluctant to lend on new deals even at higher interest rates Loan-to-value covenants continue to trigger mortgage pay-down requirements on otherwise stable assets Illiquid environment pushing near-term cap rates up and values down Opportunities Economy has not gone into a technical recession, and Sydney long-term fundamentals with commodity-based economy remain strong Fresh infrastructure spending, started in second half of 2009, should aid recovery Headline office vacancy rates are low and office development has been restrained in most markets 48 48 | Brookfield Asset Management Inc. Outlook in United Kingdom Challenges Office fundamentals continue to weaken City speculative development will further erode supply fundamentals, enhancing the vacancy spike predicted during 2009 and early 2010 Sublease inventory impacting market Opportunities London Economy expected to emerge more quickly from recession than continental Europe Real estate has re-priced more rapidly and aggressively, than many markets, attracting greater investor interest 49 49 | Brookfield Asset Management Inc. 24
  26. 26. Global Office Operating Profile Well positioned to ride out market downturn Average occupancy: 95.4% Average annual lease rollover over next 3 years: 5.7% g y Average lease duration: 8 years Average tenant quality: “A” rated Average net rent: 15% below current market Non-recourse financing: 93% Average duration of financing: 5 years Exchange Tower & First Canadian Place Toronto 50 | Brookfield Asset Management Inc. Long-term Lease Profile Our proactive leasing strategy produced over 2.6 million square feet of leases in the first half of 2009. The current portfolio has an average lease term of 8 years, with minimal near-term expiries and an occupancy rate of 95.4% Average Lease Term Vacancy Rate by Market 16 12% 8% 8% 8 6% 6% 7 7 5% 2% 2% U.S. Canada Australia UK U.S. Canada Australia UK Brookfield Market 51 | Brookfield Asset Management Inc. 25
  27. 27. Low Rollover Profile Limited vacancy and minimal rollover exposure ensures continuity of cash flow, low capital expenditures and leasing costs 000's Sq. Ft. Current Country Occupancy Current 2009 2010 2011 2012 2013 2014 2015 2016+ Total U.S. 94% 2,659 605 1,607 2,623 3,497 7,143 2,975 3,922 17,402 42,433 Canada 98% 281 147 881 1,353 1,327 3,208 490 2,610 6,002 16,299 Australia 98% 180 504 459 434 293 364 715 803 6,322 10,074 UK 95% 87 7 53 17 57 24 304 _ 1,112 1,661 Total 95% 3,207 1,263 3,000 4,427 5,174 10,739 4,484 7,335 30,838 70,467 % of Total 5% 2% 4% 6% 7% 15% 6% 11% 44% 100% * Excludes parking, developments and non-managed properties 52 | Brookfield Asset Management Inc. Market Rent Upside Average in-place rents across portfolio are 15% lower than comparable market rents, representing a mark-to-market opportunity for new leases Square In-Place Market Mark to % Leases Rolling Market Feet Rent Rent Market ( (2009-2011) ) U.S. 42,433 $ 23.95 $ 29.00 $ 5.05 11% Canada 16,299 19.60 23.19 3.59 15% Australia 10,074 30.00 33.00 3.00 14% UK 1,661 61.67 58.33 (3.37) 5% Total 70,467 $ 24.70 $ 28.92 $ 4.22 12% Note: Rents have been converted into US$ on the following basis: US$1 = C$1.10, A$1.20, £0.60 53 53 | Brookfield Asset Management Inc. 26
  28. 28. High Quality Cash Flows Focus on high credit quality tenants ensures long duration cash flows 47% of leasable area is comprised of tenants rated A or better The balance of leasable area includes some of the world’s largest professional service firms Invested in markets with resilient economies that produce stable demand Diverse Tenant Base 2000 NOI % 2009 NOI % Financial 74% 59% Government ―% % 10% % Energy 13% 18% Services + Other 13% 18% Total 100% 100% 54 | Brookfield Asset Management Inc. Long Duration Financing 93% of financing is non-recourse to the company Well diversified debt maturity profile with average term of five years U.S. minimal refinancing requirement until 2011 Australia predominantly financed with bank debt on shorter term basis, the norm in the country No near term financing exposure in Canada or UK Average interest rate of 5.2% Successfully refinanced $1.2 billion of property level debt in 2009 and $2.9 billion in i 2008 55 | Brookfield Asset Management Inc. 27
  29. 29. Frequently Asked Questions Questions Response U.S. Office Fund Brookfield’s share of the mezzanine debt is $0.8 billion refinancing i 2011 fi i in By 2011, net operating income of the Fund is expected to increase by 37% from acquisition Brookfield is well capitalized to fund any shortfall of the mezzanine debt, if needed Merrill Lynch Merrill Lynch leases 4.9 million square feet in Brookfield Properties’ exposure WFC portfolio 3.1 million square feet is occupied by Merrill Lynch and 1.8 million square feet is sublet Lease is due in 2013, when the debt on the properties will be fully 2013 amortized Merrill Lynch owns a 49% interest in Tower Four – reducing Brookfield Properties’ net exposure to 2.5 million square feet and Brookfield’s to 1.25 million square feet High quality and low cost basis of WFC renders WFC a value proposition 56 | Brookfield Asset Management Inc. Frequently Asked Questions cont’d Questions Response Persistent decline Current in-place rents are 15% below market averages in i rental rates t l t Minimal exposure due to low vacancy rate and low near term lease rollover exposure (see below) Significant increase Office portfolio is 95.4% leased in vacancy Annual lease roll over of only 5% for the next three years Tenant bankruptcies High quality tenant base High quality class AA and A space which experience flight to quality in these market conditions Only 500,000 square feet of tenant bankruptcies in the worst two years in decades, of which 400,000 square feet re-let at higher rents 57 | Brookfield Asset Management Inc. 28
  30. 30. Development Profile 58 | Brookfield Asset Management Inc. Property – Active Developments Approximately four million square feet of active developments which is 74% pre-leased Completed Under Construction Construction* Total Market Sq. Ft. % Leased Sq. Ft. % Leased Sq. Ft. % Leased U.S. 781 42% ― ― 781 42% Canada 1,425 78% ― ― 1,425 78% Australia 486 87% 1,398 85% 1,884 86% Total , 2,692 70% 1,398 , 85% 4,090 , 74% * No active development in UK except 15% interest in Canary Wharf Developments. Excludes square feet under construction for third parties 59 | Brookfield Asset Management Inc. 29
  31. 31. Property – Held for Development 16.3 million square feet in pipeline which will be selectively built out – 14.0 million square feet in North America – 2.3 million square feet in Australia Total capital invested to date of $0.8 billion Minimal ongoing capital expenditure required Will b ild out when market conditions improve build t h k t diti i and return expectations of +20% can be achieved Manhattan West, New York 60 | Brookfield Asset Management Inc. Frequently Asked Questions Questions Response Increased risks with Began to shut down development 24 months ago development d l t Only commence construction of a development site on a risk- adjusted basis 1.4 million square feet remaining under construction which is 85% pre-leased Significant costs of Low cost basis for the 16 million square feet of development capacity holding development Add sites selectively and only on an opportunistic basis Decreased overhead and holding costs to a “bare-bones” basis Utilize key resources in development group to organically re-work current assets and density 3rd party construction Benefiting significantly from increased government stimulus activity is dependent spending on the economy External construction workbook has increased from $3.5 billion at December 2008 to $4.1 billion External construction workbook is 47% complete, representing approximately three years of scheduled construction activity 61 | Brookfield Asset Management Inc. 30
  32. 32. Retail Operating Profile 62 | Brookfield Asset Management Inc. Global Retail Operating Profile 25 centres – Brazil – 14 – Oth – 11 Other Average occupancy: 94% – Brazil – 94% – Other – 94 % Average lease duration: 7 years – Brazil – 5 years – Other – 10 years World Square Retail, Sydney 63 | Brookfield Asset Management Inc. 31
  33. 33. Retail Outlook Challenges Vacancy rates in Latin America have moved up moderately while rental rates have flattened and in a few instances, declined Opportunities Continued growth in retail sales per square foot Brazil has overtaken Mexico as the most transparent real estate market in Latin America Shopping Patio Paulista, Sao Paulo Emerging middle class continues to increase while unemployment decreased from 8.8% to 8.1% in June 64 | Brookfield Asset Management Inc. 64 Residential Operating Profile 65 | Brookfield Asset Management Inc. 32
  34. 34. Residential Portfolio 130,000 residential lot equivalents and 61 million square feet of condominium density provide the basis for future growth Brazil U.S. Canada Australia Condominiums Master planned Master planned Master planned communities communities communities and 61 million sq. ft of apartments development California, Alberta, Ontario Washington DC Area, 16,500 lots and Colorado, Texas, 57,300 lots owned apartments Missouri 56,200 lots owned / optioned 66 | Brookfield Asset Management Inc. Residential Outlook Challenges In developed countries, the continued lack of financing has significantly reduced investment fi i h i ifi tl d di t t in the housing sector Most distressed properties coming to market are residential and land deals Opportunities Multi-housing properties continue to outperform other commercial property types, but are not immune to current market conditions Total existing U.S. home sales rose 7.2 percent in July 2009, the biggest gain Heartland Homes, Calgary since record keeping began in 1999 for existing home sales and condos Brazil sales are over 50% higher than last year – markets are very strong 67 | Brookfield Asset Management Inc. 33
  35. 35. Residential Operating Profile Quality developments and strong competitive positions in each market – Brazil – Leading developer in Sao Paulo and Rio de Janeiro with over g p 61 million square feet of condo development – Western Canada – leading developer with 23% market share and over 6,000 acres held for development in Alberta – U.S. – Top five developers with approximately 7,000 acres held for development Local teams with depth of experience in marketing, permitting and development Historical low cost land bank with opportunities in current environment to expand holdings at significant discounts Strategy of optioning land and lots to position for growth with reduced risk Selective capital deployment should earn many multiples of capital 68 | Brookfield Asset Management Inc. Frequently Asked Questions Questions Response Lack of mortgage Diversified residential real estate operations in four countries; availability affects operations in the U.S. have been impacted the most by mortgage sales availability Rates at all-time lows – affordability for consumers The Brazilian operations are experiencing tremendous sales growth due to an increase in mortgage availability Brookfield’s Canadian operations have a very low land cost basis Canadian operations The operations continue to perform well and expect to earn are dependent on the approximately a 10% return on equity in 2009 price of oil Significant holding Brookfield is a long-term investor, using low-cost options to costs of land selectively gain control of large parcels of land inventory Brookfield has the capital necessary to prudently develop the land on a risk-adjusted basis 69 | Brookfield Asset Management Inc. 34
  36. 36. Accomplishments and Future Growth 70 | Brookfield Asset Management Inc. 2009 Accomplishments Enhanced current returns through proactive management Completed 10 commercial developments (Australia 5 North America 5) on time 5, and on budget Leased over 2.6 million square feet Refinanced $1.2 billion of debt Issued ±$1 billion of fresh equity capital Raised ±$5 billion of institutional capital 71 | Brookfield Asset Management Inc. 35
  37. 37. Investment Opportunities As a result of challenging environment for real estate operators globally, there will be opportunities to buy assets or platforms at attractive returns Lack of funding, bleak investor sentiment and deteriorating coverage under loan- to-value covenants have reduced property valuations and pressured debt to equity ratios Lenders have virtually ceased funding in an effort to restore capital and improve regulatory ratios Many real estate owners and debt holders require substantial portfolio de-leveraging in an illiquid market Shortage of experienced global real estate operators with balance sheet capacity and skills t quickly complete l d kill to i kl l t large scale restructurings and M&A t l t t i d transactions ti 72 | Brookfield Asset Management Inc. Real Estate Turnaround Consortium Brookfield is leveraging its real estate and restructuring expertise to take advantage of investment opportunities in the current environment $5 billion consortium to invest in underperforming/undervalued real estate properties and companies Investors include large pension funds, sovereign wealth funds and other institutional investors Allocations of $300 million – $1 billon each Global focus with emphasis on North America, Europe and Australia Transactions will include companies or assets requiring – Financial and operational restructuring – Strategic direction – Re-development – Other active asset management 73 | Brookfield Asset Management Inc. 36
  38. 38. Conclusion 74 | Brookfield Asset Management Inc. Conclusion Brookfield is very well positioned to benefit from the current environment Well located, highest quality commercial property portfolio generating stable cash flows One of the world’s largest real estate operating platforms providing unparalleled access to opportunities across the real estate spectrum Dedicated team of operating and investment professionals focused on value enhancement 75 | Brookfield Asset Management Inc. 37
  39. 39. Priorities Invest consortium capital in high return real estate opportunities Although 80% of results highly stable, proactively manage all current assets and stable solidify current operations to maximize profitability Capitalize on U.S. housing woes as stabilizing market should yield opportunities Continue to diversify investments beyond North America and office sector Capitalize on market illiquidity and selectively look for value where owners are overleveraged 76 | Brookfield Asset Management Inc. Q&A 38
  40. 40. Infrastructure Sam Pollock Agenda Overview of Portfolio Market Dynamics and O tl k M k tD i d Outlook Accomplishments and Future Growth Conclusion Q&A 79 | Brookfield Asset Management Inc. 39
  41. 41. Overview of Portfolio 80 | Brookfield Asset Management Inc. Infrastructure – Current Portfolio ~$7 billion of assets under management in the Americas, UK and Australia Transmission Timber Social Agrilands Infrastructure $3 billion $3.5 billion $300 million $350 million 8,800 km in 2.5 million acres of 400,000 acres of Development and Canada and Chile high quality agrilands in Brazil: management of timberlands in sugar cane, rubber, assets in UK and North and South soya, corn, Australia America pineapple, and cattle 81 | Brookfield Asset Management Inc. 40
  42. 42. Infrastructure Strategy Long-life assets Acquire high quality Minimal sustaining capital requirements infrastructure infrastr ct re assets Stable cash flow due to barriers to entry or equivalent competitive advantage Apply disciplined Proactive business development to originate transactions approach to investing, Focus on complex opportunities where we can buy for focused on value better value Use operations- Objective is to influence key value drivers oriented approach to enhance returns Active management to earn superior returns 82 | Brookfield Asset Management Inc. Operating Profile –Transmission Brookfield has established a strong presence in two key markets 8,800 km of transmission lines in Ontario and Chile 480 km development project in Texas Brookfield capital investment – $0.3 billion Investment Thesis Stable and predictable cash flow governed by regulated frameworks and long-term contracts Revenue and margins increase with inflation Critical link between power production and consumption Attractive capital projects to deliver growth from existing businesses 83 | Brookfield Asset Management Inc. 41
  43. 43. Operating Profile – Timber Brookfield has built the sixth largest timberland estate in North America 2.5 million acres of high quality timberlands in eastern and western North America and Brazil Focus primarily on high quality Douglas fir and Whitewood 33,000 acres of higher and better use land Brookfield capital investment – $0.5 billion Investment Thesis Total return value proposition is a combination of capital appreciation and cash returns h t Operating flexibility and access to export markets provide opportunity to maximize pricing and adjust harvest levels in response to market conditions 84 | Brookfield Asset Management Inc. Market Dynamics and Outlook 85 | Brookfield Asset Management Inc. 42
  44. 44. Market Dynamics and Outlook – Transmission Transmission business continues to produce solid results despite impact of global recession – Supported by regulated frameworks and long term contracts long-term Favourable regulatory environments and growing electricity demand in our markets are increasing value of existing assets Development required to expand and/or upgrade transmission grid in North America and Chile – 70% of the U.S. transmission grid is over 25 years old, requiring significant upgrades – U S go ernment stimulus plan incl des $110 billion of incenti es for U.S. government stim l s includes incentives renewable power which presents opportunities for build-out of transmission system – In Chile, continued build-out of infrastructure to support growth of mining and industrial companies 86 | Brookfield Asset Management Inc. Market Dynamics and Outlook – Timber Timber markets have been more volatile and experienced greater softness than expected, but long-term outlook positive Anticipate that medium-term pricing will increase and operating results will significantly improve, starting late 2010 g y p , g – Wood remains a critical building material for U.S. residential and commercial construction – Year-to-date 2009 U.S. housing starts at 0.5 million(1) are significantly below normalized levels – Long-term demographics support a return to normalized U.S. housing starts in the 1.6 to 1.8 million units per year range Longer term, we expect attractive pricing to be supported by a number of factors – Mountain pine beetle infestation reducing North American SPF lumber supply by 20% – Increase in global demand from Asian markets and rapidly expanding bio-fuel industry – Withdrawals of timberlands for conservation/environmental purposes (1) Annualized, seasonally adjusted 87 | Brookfield Asset Management Inc. 43
  45. 45. Market Dynamics and Outlook – Timber cont’d Favourable market conditions will allow implementation of our elevated harvest plan – 25% elevated harvest level for 10 year period before returning to long run 10-year long-run sustainable yield level – Elevated harvest levels x 30% increase in pricing cash flows increase by $75 million annually Private market transactions remain at high valuations despite recent market conditions – Asset class continues to attract significant institutional interest 88 | Brookfield Asset Management Inc. Accomplishments and Future Growth 89 | Brookfield Asset Management Inc. 44
  46. 46. 2009 Accomplishments Completed sale of Brazilian Transmission investment (TBE) for after tax proceeds of $275 million – Gain of $68 million Awarded $500 million, 480 km transmission development project in Texas Launched $400 million Colombia Infrastructure Fund Issued $300 million of long-term notes at Transelec Listed Brookfield Infrastructure Partners on the Toronto Stock Exchange 90 | Brookfield Asset Management Inc. Compelling Investment Opportunity Global Infrastructure Historically Trend Toward Infrastructure Spending Strong Privatization Gap Deficit Performance $25 trillion over next Chronic under- Public private On relative and risk 25 years(1) spending and budget partnerships and adjusted return basis Driven by population constraints private financial initiatives Inflation linked and economic Aging assets revenues growth needing replacement (1) OECD estimates 91 | Brookfield Asset Management Inc. 45
  47. 47. Growth Opportunities – Current Transmission Operations Existing network provides opportunities for participation in – Expected capacity upgrades in both markets – Customer-initiated expansion projects In second year of a five-year capital investment plan to invest $1 billion in upgrades and expansions to Chilean transmission system – Expansion required to support local mining p and industrial companies – $370 million booked to date Commenced development of Texas Transmission project 92 | Brookfield Asset Management Inc. Growth Opportunity – Leveraging our Transmission Platform U.S. transmission grid upgrade required to maintain integrity of system U.S. power grid is a patch-work consisting of a 300,000 mile system with 12,500 b t ti 12 500 substations and 9 200 electric power plants d 9,200 l t i l t $200 billion of investment(1) will be required to upgrade and expand the transmission grid Returns supported by attractive rate-based framework (FERC) Transmission investment required to support growth in renewable power Wind energy only represents 1% of U.S. electricity supply(2) but 35% of electricity generation capacity additions in the U.S. ti it dditi i th U S Renewables currently comprise 10% of U.S. generation mix; the Obama administration is targeting 25% by 2025 Construction of new transmission capacity required to transmit renewable generation to population centres (1) Estimate by former FERC Chairman Kelliher (2) In 2007 93 | Brookfield Asset Management Inc. 46
  48. 48. Growth Opportunity – Leveraging our Transmission Platform Texas Transmission Development Project In January 2009, Brookfield and a partner awarded the right to build, own and operate d d th i ht t b ild d t $500 million of transmission lines in Texas Only participant without existing power operations in Texas to win an award Investment Thesis Low development risk due to regulatory framework and project cost recovery provisions Essentially acquiring licensed utility at 1X rate base Opportunity to grow by participating in future build-out of Texas grid as an incumbent 94 | Brookfield Asset Management Inc. Growth Opportunities – Timber Current focus in Brazil and smaller value opportunities around existing operations – Recently made a 43,000 acre acquisition 43 000 in Brazil through a Brookfield-sponsored timberlands partnership Identifying potential distressed opportunities in North America Value of timberlands has held up 95 | Brookfield Asset Management Inc. 47
  49. 49. Current Investment Focus North America South America Global – Opportunistic Regulated electricity and Regulated electricity and Regulated electricity and gas distribution gas distribution gas distribution Transmission systems Transmission systems Transmission systems Oil and gas pipelines Ports Transportation Storage facilities Toll Roads Timber Airports Timber Return Expectations Return Expectations Return Expectations – Utilities: 12% to 14% – Utilities: 15% to 18% – Distressed assets: 18%+ – Pipelines, Generation – Transportation: 17%+ and Storage: 15% to 17% With lower levels of leverage and higher equity returns, the current environment offers very attractive risk-adjusted returns for infrastructure investments 96 | Brookfield Asset Management Inc. Distressed Investment Opportunities Brookfield’s strategy is to pursue distressed infrastructure investments in companies with – Large scale, high quality assets – Complex and/or highly levered capital structures – Strong underlying cash flows – Trading at low valuations Brookfield can benefit from expertise in corporate restructuring, liquidity available to pursue these opportunities and its global operating presence 97 | Brookfield Asset Management Inc. 48
  50. 50. Brookfield Infrastructure Partners L.P. Established as Brookfield’s primary vehicle to own and operate certain infrastructure assets on a global basis Structure Publicly traded Publicly-traded partnership Current yield ~ 6.5% managed by Brookfield Recently sold investment in Brazilian transmission for a $68 million gain Market Symbol NYSE: BIP TSX: BIP.UN Substantial growth within existing portfolio Fully-diluted ~ 38 million* Units Portfolio by Asset Class Quarterly Social $0.265 per unit Distribution Infrastructure 3% Book Value $23.94* per unit Electricity Timber 57% 40% Transmission Unit Price $16.84 (Sept. 14/09) * as at June 30, 2009 98 | Brookfield Asset Management Inc. Conclusion 99 | Brookfield Asset Management Inc. 49
  51. 51. Conclusion Global investors are increasingly embracing infrastructure as an asset class with compelling investment opportunities Growth in spending in this sector expected to average US$2 trillion annually through 2015 with increasing need for private vs. government investment Brookfield is well positioned within the current environment – Embedded growth in existing asset base, especially as economy recovers – Focus and ability to execute large scale transactions – Strong pipeline of deals and opportunities 100 | Brookfield Asset Management Inc. Q&A 50
  52. 52. Financial Review Brian Lawson Agenda Operating Performance Intrinsic V l I t i i Values Capitalization Currency and Interest Rates Liquidity Q&A 103 | Brookfield Asset Management Inc. 51
  53. 53. Operating Performance We are benefiting from – Locked-in long-term revenues – St Strong operating margins ti i – Stable financing platform Commercial office – 95% leased with 8 year average term – Market rents exceed “in-place” rents by approximately 15% Renewable power – 80% of revenues sold forward until 2011; 50% with average term of 12 years – Low cost producer Several “short duration” businesses not contributing – In our view, have reached bottom in most cases – Poised for increasing contributions 104 | Brookfield Asset Management Inc. Earnings Profile Adjusted IFRS valuation $ 16,650 Blended equity IRR 14% “Annualized” return $ 2,300 IRR returns accrue in two forms: Net operating income (50%) $ 1,150 Value appreciation (50%) 1,150 $ 2,300 By way of reference, operating cash flows during 2008 and 2007, excluding major disposition gains, were $1.2 billion and $1.1 billion, respectively Under IFRS, we will record an increased proportion of unrealized value appreciation in our financial statements 105 | Brookfield Asset Management Inc. 52
  54. 54. Future Earnings Potential Our base returns should be supplemented in the future by the following – Investment of current surplus liquidity – Normalized contributions from development assets and cyclical businesses – Reinvestment of free cash flow – Expansion of institutional fund activities and fees contributed – Ability of operating platforms to enhance returns 106 | Brookfield Asset Management Inc. Underlying Values Equity values, reflecting asset appraisal value As at December 31 2008 (millions except per share amounts) 31, (millions, Total Per Share Book value per share under historical accounting at 12/31/08 $ 4,911 $ 8.92 Add: Appraisal value adjustments pursuant to IFRS 9,240 15.40 14,151 24.32 Add: Estimated excess value of assets over book value that are not 1,500 2.50 included within the IFRS fair value framework(1) Add: Increase due to cash flows and currency movements 1,000 1.67 Underlying value $ 16,651 $ 28.49 (1) Management estimate Does not include capitalized value of management fees, or value of franchise to deploy capital in the future or the true selling value of assets compared with IFRS values 107 | Brookfield Asset Management Inc. 53
  55. 55. Underlying Values – Going Concern Value – Illustrative* $36.50 Adjusted to Normalized Valuations(1) $8.00 $28.50 $28 50 Values Not Recorded Under IFRS $2.50 $26.00 IFRS Values(2) $4.00 $22.00 Share Trading Price $22.00 * For illustrative purposes only; not intended to be a forecast of future results (1) Estimate based on 150 basis point IRR change on values (2) As at December 31, 2008, adjusted for cash flows and currency adjustments to June 30, 2009 108 | Brookfield Asset Management Inc. Solid Capitalization $20 billion of permanent equity capitalization Conservative debt levels – 15% deconsolidated; 44% across operations Long-dated maturities reduces need to access markets – Negligible “wholesale” overnight funding – Diversified maturity profile Continued access to capital – Straight-forward financings backed by high quality assets and visible cash flows 109 | Brookfield Asset Management Inc. 54
  56. 56. Solid Capitalization cont’d Liabilities Property Shareholder Debt to (billions) Assets Corporate Subsidiary Specific Capital Capital Deconsolidated Book value $ 10.6 $ 2.3 $ 0.7 $ ― $ 6.3 28% Add: Underlying value adjustments 9.3 ― ― ― 9.2 Underlying value 19.9 2.3 0.7 ― 15.5 15% Add: Pro rata interest in operations 21.1 ― 2.9 12.0 0.5 Proportionate 41.0 2.3 3.6 12.0 16.0 44% Add: Other partners’ interests 27.0 ― 1.5 10.9 9.6 Consolidated $ 68.0 $ 2.3 $ 5.1 $ 22.9 $ 25.6 45% 110 | Brookfield Asset Management Inc. Currencies and Interest Rates Our equity values are impacted by changes in currencies and long-term interest rates There has been considerable volatility in currencies and rates over the past year We typically match fund our assets, which results in natural hedges through the associated financing From time to time, we will “layer on” additional mitigation through financial contracts and other means, recognizing that this may result in net income volatility All of our currency and interest rate positions are covered by a comprehensive risk management framework 111 | Brookfield Asset Management Inc.
  57. 57. Currency Views We are naturally long foreign currencies BAM Equity U.S. 50% Canada 20% Brazil 15% Australia 10% UK 5% 100% We hedge foreign investments if we believe the currencies are meaningfully over-valued. Otherwise, we stay naturally long l d Oth i t t ll l We are comfortable with U.S. dollar exposure because we believe it will be an extremely important global currency for many decades Canada, Brazil and Australia are healthy commodity-based countries with currencies, we believe, should perform well relative to the U.S. dollar 112 | Brookfield Asset Management Inc. Interest Rate Views Background The valuation of our long-lived assets are sensitive to long-term interest rates We generally match fund long-term liabilities against our long-term assets, where possible To the extent we have equity in assets, this portion of our investment is un-hedged and therefore at risk to increases in rates of return Current View Our view is that rates are going higher (over next five years) given all of the recent fiscal stimulus We will consider taking steps to further lock-in long-term rates over the next number of years 113 | Brookfield Asset Management Inc. 56
  58. 58. Liquidity and Capital Deployment Over the past two years, we have completed over $10 billion of financings and asset monetizations Our ability to do this is a direct result of the stability of our operating cash flows, the high quality of our assets, the conservative nature and flexibility of our financing structure and the strength of our relationships Proceeds were used largely to refinance short-term debt maturities, invest in our business and new opportunities, and to increase surplus liquidity 114 | Brookfield Asset Management Inc. Financial Flexibility Over the last two years, we generated and invested approximately $2 billion of capital in our operations to drive higher future cash flow per share growth (billions) Sources Uses U.S. northwest timber $ 0.6 U.S. residential $ 0.3 Renewable power 0.6 Brazil hydro 0.4 Commercial office 0.2 Brazil residential 0.2 Brazil transmission 0.3 Commercial office 0.4 Insurance + other 0.4 Brookfield common shares 0.3 $ 2.1 Other value opportunities 0.4 $ 2.0 115 | Brookfield Asset Management Inc. 57
  59. 59. Significant Capital to Pursue Growth Opportunities Looking forward, we have over $10 billion of available capital to take advantage of the current environment and opportunities Currently over $3 billion of core liquidity Access to additional $7 billion of capital from partners to fund growth – $5 billion Real Estate Turnaround Consortium – C$1 billion Debtor-In-Possession Fund – $400 million Colombia Infrastructure Fund $2.8 billion financings and monetizations since March 31st – Continued access to debt markets – Brookfield Renewable Power Fund – Brookfield Properties’ equity issue ~ $1.5 billion of free cash flow per year Continued ability to monetize assets 116 | Brookfield Asset Management Inc. Q&A 58
  60. 60. Conclusion Bruce Flatt Current Environment Improving Positive signs of a global economic recovery – Globally, central banks are supplying liquidity – Cost of capital and credit spreads are normalizing – The rapid deterioration of business fundamentals has stopped – Access to capital markets has improved for well capitalized issuers – U.S. housing market is stabilizing – Institutional investors are once again committing capital to private funds 119 | Brookfield Asset Management Inc. 59
  61. 61. Current Environment Improving cont’d Though not all benefiting equally – Many companies and assets are overleveraged or poorly financed – Demand still lagging in consumer spending-related sectors – Labour market recovery still required for sustained recovery to take hold Opportunities for investment for those with capital – Turnaround/restructuring expertise – High quality assets for significant discount values – Existing operations benefit from contractual cash flow streams 120 | Brookfield Asset Management Inc. Well Positioned in the Current Environment Solid Capitalization Substantial with Downside Liquidity and Cash Growth Potential Protection Flow Generation Permanent equity Over $3 billion liquidity Strong and growing capital plus co-investor institutional Low parent company commitments relationships debt Significant and Significant pipeline of Conservative financing sustainable cash flows opportunities and capital turnover Leading operating platforms 121 | Brookfield Asset Management Inc. 60
  62. 62. Significant Franchise Value Our operations are able to leverage corporate expertise and the Brookfield brand to enhance underlying value over the long term BROOKFIELD Strategic direction Capital allocation Global relationships OPERATING PLATFORMS Access to deal f flow Transaction execution Operational excellence Focus on profitability Non-recourse financing 122 | Brookfield Asset Management Inc. Summary Priorities Put to work the recently raised $6 billion in capital commitments to take advantage of the current environment Continue to generate substantial funds for investment strategies Foster organic growth of each operating platform through continued proactive asset management 123 | Brookfield Asset Management Inc. 61
  63. 63. Final Thoughts This is an unprecedented period in recent history to acquire high quality assets and create value for investors Few companies have the capital, geographic presence, scale and depth of operations to take advantage of opportunities Brookfield has track record of expanding our operating platforms at exceptional values during turbulent times The past two years have only strengthened our franchise support from employees who see us as a survivor and want to be with us institutions who view that we were prudent with their capital and our model aligns well today with them banks want to lend to risk averse, good investors shareholders who we hope view us as prudent stewards of their capital 124 | Brookfield Asset Management Inc. Q&A 62
  64. 64. Bay Adelaide Centre Tour Bob MacNicol 63
  65. 65. Management Team Presenting Today Management Team Presenting Today Ric Clark, Senior Managing Partner Ric is the Senior Managing Partner, Property Operations. Ric joined Brookfield in 1996 and is responsible for the company's real estate operations. He is the CEO of Brookfield Properties and formerly was the President of the company's U.S. Commercial Operations. Ric has been employed with the company's predecessors since 1984 in various executive roles. A Certified Public Accountant in the United States, Ric holds a Business degree from the University of Pennsylvania. Bruce Flatt, Senior Managing Partner & CEO Bruce is th S i M B i the Senior Managing P t i Partner and Chi f E d Chief Executive Offi ti Officer of th company. H was appointed t thi position i F b f the He i t d to this iti in February 2002, following eight years in various senior executive positions in Brookfield's property operations. Bruce joined Brookfield in 1990 and worked in a number of the company's operations prior to joining the real estate business in 1994. He holds a Business degree from the University of Manitoba. Brian Lawson, Senior Managing Partner & CFO Brian is Senior Managing Partner and Chief Financial Officer. Brian has held senior management positions within Brookfield since the early 1990s. As Chief Financial Officer, Brian is responsible for Brookfield's financial reporting, corporate finance and overall funding activities of the organization. Brian graduated from the University of Toronto and subsequently qualified as a Chartered Accountant. Richard Legault, Senior Managing Partner Richard is Senior Managing Partner, and President and Chief Executive Officer of Brookfield Renewable Power. Appointed in 2000, Richard is responsible for the power generation operations at Brookfield. Richard was previously Vice-President, Energy Division of James Maclaren Industries, an affiliate of Norbord, where he formerly held various senior energy and financial positions. Richard has a Bachelor of Accounting from the Université du Québec in Hull, and is a member of the Canadian Institute of Chartered Accountants. Sam Pollock, Senior Managing Partner Sam is a Senior Managing Partner and Head of Infrastructure. Sam is responsible for the expansion of our infrastructure operating platform. Sam joined Brookfield's financial services operation in 1994 and has held various senior positions in the organization, including leadership of the company's financial advisory services and investment group. Sam is a Chartered Accountant and holds a business degree from Queen's University. Bob MacNicol, Senior Vice President, Office Leasing Bob is Senior Vice President, Office Leasing, Eastern Canada, Brookfield Properties. Bob is responsible for the office leasing of 9.1 million square feet in Toronto. Bob joined Brookfield in 1989 and has taken a leadership role in the leasing of Brookfield Place, First Canadian Place and Bay Adelaide Centre. Bob holds a degree in Economics from Queen’s University. 129 | Brookfield Asset Management Inc. 64