Brookfield or Brookfield or Brookfield?

Brookfield or Brookfield or Brookfield?

A general overview of the Brookfield family of companies. Brookfield do business in North and South America as well as Europe, India and China. Their business is world-wide in scope while they work their way into the arteries of the world economy. While the media report on the knee-jerk news of the day and Wall street fixate on the next quarterly earnings reports, the management team at Brookfield patiently place their chess pieces on the strategic squares of the world economy and wait while planning for the future.

Brookfield or Brookfield or Brookfield?

We are often asked by investors which Brookfield stock they should own – BAM or one of our four listed partnerships. While it sounds self-serving, we recommend “all of them,” because while each carries the Brookfield brand and owns and operates high-quality businesses, each one is different and has a specific goal of being best in class in their specific area of expertise – asset management, real estate, renewable power, infrastructure or private equity.

Of course, BAM is a significant owner of each of our listed partnerships, benefiting from their cash flows and value creation, but is focused and driven by our asset management business. It is though notable that our franchise is differentiated in the asset management industry by the scale and growth potential of these best-in-class listed partnerships which are managed by us in the same way as we manage our private funds for private investors. Furthermore, with very large ownership stakes in each partnership, we are incented to ensure each creates longterm value because as each of our entities does well, and trades well, this translates into further value creation for BAM.

The commonality of our entities is that all share the same disciplined investment approach, respect for capital, and access to our global operating platform and relationships. These characteristics have stood us well for a long time.

Brookfield Property Partners (BPY) is a premier, diversified commercial real estate portfolio featuring some of the world’s premier properties. This is a portfolio that is well leased to high credit-quality tenants, generating stable, sustainable cash flows. The business features significant organic growth through an active development and redevelopment pipeline, in which the company leverages its multi-sector expertise. Investment returns are supplemented by BPY’s participation in Brookfield-sponsored real estate opportunity funds, which invest in high-quality assets that are mispriced or feature significant operational upside across various property sectors, such as logistics, multifamily and self-storage.

Brookfield Infrastructure Partners (BIP) owns high-quality infrastructure assets that are the backbone of the global economy. Infrastructure cash flows are supported by regulated and long-term contractual frameworks and typically their cash flows are linked to inflation and/or global growth. The opportunity set in the business is very substantial as governments and corporations outsource their infrastructure investment to entities specialized in managing these types of assets. BIP is positioned with an investment-grade balance sheet, and irreplaceable assets on five continents across four sectors; energy, transportation, utilities and data.

Brookfield Renewable Partners (BEP) is one of the largest pure-play renewable power businesses globally, offering exposure to decarbonized energy, at a time when the global power grid is transforming from fossil fuels to renewables. BEP has 100+ years of experience in power generation, with over 17,000 megawatts of hydro, wind, solar, distributed generation and storage capacity across four continents. Over 75% of the generation is from hydro, leading to long-term cash flows with minimal annual re-investment.

Brookfield Business Partners (BBU) offers a unique opportunity to invest publicly in private equity investments. BBU invests in businesses with high barriers to entry, low production costs and those with the potential to benefit from Brookfield’s global operating expertise. BBU has the flexibility to invest in any form (debt, equity, public, private) and across industries, enabling investment flexibility for when we find “good businesses” in times of market dislocation.

While each of our five securities is different, they are all investments that we expect will generate significant value creation over the long term. We hope that at least one of them will suit your investment needs, but we think all of them can belong in a well-diversified portfolio of investments.

Bruce Flatt,

Excerpt from Brookfield Asset Management’s Quarterly Letter,

February 14, 2019