BAM Reports Consolidated Net Income of $3.8 Billion and Funds from Operations of $3.4 Billion

 
"We recorded the strongest results in our history, and clients continue to allocate capital to real assets given the returns from these investments," commented Bruce Flatt, CEO of Brookfield. "Fee income continues to increase and our businesses are well positioned to deliver growth in 2014."
Funds from operations ("FFO") for Brookfield shareholders was $3.4 billion during 2013, an increase of 149% from the previous year. FFO in the fourth quarter of 2013 was $1.0 billion, or $1.59 per share, which was more than double the result from the same quarter a year ago, predominantly due to carried interests on Private Funds received during the quarter. 
 
Consolidated net income for the year increased 40% to $3.8 billion, or $3.12 per common share. Net income for the quarter increased to $850 million or $1.08 per share, up 9% from the same quarter in the prior year. 
 
The company's annualized fees and carry now stand at approximately $1.0 billion, including $580 million of annualized base management fees and incentive distributions and $350 million of target annualized carried interests. 
 
Total assets under management increased to $187 billion, and fee bearing capital increased 32% to nearly $80 billion. 
 
Realizations on investments generated $12 billion of liquidity for the full year and locked in favourable investment gains, returned significant cash to limited partners and increased our balance sheet resources. 
 
We continue to identify attractive investments opportunities across our operations and we invested or committed $12 billion of capital during the year on behalf of clients and shareholders. 
 
Financial Results
Three months ended
December 31 Years ended
December 31
US$ millions (except per share amounts) 2013 2012 2013 2012
Funds from operations1,2 $ 1,030 $ 459 $ 3,376 $ 1,356
Per Brookfield share1,2 1.59 0.67 5.14 1.94
Consolidated net income3 $ 850 $ 779 $ 3,844 $ 2,755
Per Brookfield share1 1.08 0.72 3.12 1.97
Excludes amounts attributable to non-controlling interests
See Basis of Presentation on page 4
Consolidated basis - includes amounts attributable to non-controlling interests
FFO for the fourth quarter more than doubled over the 2012 quarter and increased nearly 150% on a full year basis. Our fourth quarter results included $563 million of carried interest on the realization of private fund investments for clients.
Continued business expansion and operating activities positively impacted FFO for both the fourth quarter and the full year. Fee related earnings increased due to the growth in fee bearing capital. We also benefitted from higher lease rates in both our office and retail portfolios, expansion in our transportation and utility businesses and increased power generation as a result of improved water flows and the contribution from acquired and completed facilities.
FFO included $1.3 billion of disposition gains for the full year, including our share of gains on the sale of private equity investments, North American timberlands, units in Brookfield Renewable Energy Partners and the settlement of a long-dated interest rate contract. Core liquidity increased by $2.2 billion.
Net income for the fourth quarter, which includes amounts attributable to non-controlling interests, increased by 9% as the improvement in FFO was largely offset by a decline in the level of fair value changes compared to the 2012 quarter, which included a large number of property appraisal gains that did not recur in 2013. Net income for the year increased by $1.1 billion or nearly 40%, as the increase in FFO more than offset a reduction in the level of fair value gains.
Operating Highlights
- We expanded our asset management franchise and raised a record amount of fee bearing capital.
Fee bearing capital increased to nearly $80 billion, up 32% from the prior year. We completed the launch of Brookfield Property Partners L.P. in April, 2013, and have now established large capitalization listed entities in each of our property, renewable energy and infrastructure businesses. We also held final closes for our follow-on $7 billion infrastructure fund, a $4.4 billion property fund, a $1 billion timber fund, and several smaller funds and assumed management of a property fund in India with $300 million of committed capital. We continue to market four new funds with a total fundraising target of over $2 billion of third party capital. Lastly, we have approximately $9 billion of uncalled client capital that can be invested across our strategies.
- We announced or completed acquisitions and capital expansions during the year that will deploy $12 billion of capital on behalf of clients and Brookfield shareholders.
We launched the merger of our office property business with our flagship listed property entity. Our listed entities committed or invested nearly $4 billion of capital into growth initiatives. In our property group, we acquired a U.S. warehouse business that we merged with our existing operations to create one of North America's largest logistics platforms, and also acquired a European warehouse business. We broke ground on commercial developments in New York, London, Toronto, Calgary and Perth after substantially pre-leasing each project. We committed $750 million to acquire a 22% interest in an office and retail portfolio in Shanghai, China and an additional $500 million for additional property investments in China. We also closed the purchase of a $1.1 billion portfolio of office buildings in downtown Los Angeles.
Our infrastructure group committed a total of $2.7 billion to new investments, increasing its ownership of South American toll roads with a $700 million investment, purchasing district energy assets in Louisiana and Texas and agreed to commit approximately $1.1 billion towards a South American infrastructure logistics business and two container terminal facilities in California. Our renewable energy business invested $1.5 billion in hydroelectric facilities in North America and announced plans to acquire a portfolio of wind farms and development sites in Europe. Our private equity group invested $1.2 billion in a variety of energy, mining and logistics businesses.
- We increased cash flow and created value with operational improvements in all of our major businesses.
Organic growth initiatives launched over the past five years contributed to solid increases in the cash flows from all our businesses. For example, our office property group undertook a $250 million renovation of our flagship New York development and signed new leases during the year that were 7% higher than expiring rents. Our retail property business invested $285 million in shopping mall redevelopments and expansions and signed new leases at rates 12.3% higher than expiring rents.
Our infrastructure business expanded the capacity of its transport networks, increasing customer traffic on its toll road and railways, and commissioned an electrical transmission network in Texas, all of which contributed to a 111% increase in FFO within this segment. Our renewable energy group benefitted from increased hydrology levels, achieved higher prices on sales of uncontracted power and increased its operating efficiency, as we used the expanded scale of our business to reduce costs, and increased FFO by 43%. Our private equity business realized significant gains on investments made in housing-related businesses which increased FFO by 152%.
We continue to refinance debt at attractive long-term rates. We completed $5.5 billion (at share) of refinancing within our retail property portfolio and $5.0 billion of refinancings in our office property portfolio, resulting in $1.8 billion of incremental cash proceeds.
- We completed $12 billion of asset realizations, locking in attractive investment gains and returning capital to investors.
We announced or completed the sale of assets in our major businesses. Highlights included the realization of $2.8 billion from the sale of North American timberlands, $3.1 billion from property dispositions and $780 million from the sale of private equity investments. These transactions, together with the reorganization of the consortium that acquired our U.S. shopping mall business, enabled us to distribute $9 billion of capital and gains from our private funds and increased our group core liquidity by approximately $2.2 billion.
 

on February 19, 2014