Brookfield Corporation Reports 21% Increase in Distributable Earnings to $4.3 billion

Invested $50 billion and Monetized $15 billion of Assets YTD

On Track to Achieve Record Inflows of Close to $150 billion in 2023

BROOKFIELD, NEWS, Aug. 10, 2023 (GLOBE NEWSWIRE) -- Brookfield Corporation (: BN, TSX: BN) today announced financial results for the quarter ended June 30, 2023.

Nick Goodman, President of Brookfield Corporation, stated, “Financial performance was very strong during the second quarter, as our operations continued to generate stable and growing cash flows. Momentum continues to grow across the business; so far this year we have announced more than $50 billion of acquisitions, sold approximately $15 billion of assets, and are on track to achieve a record of close to $150 billion of inflows in 2023.”

He added, “We continue to differentiate our franchise with nearly $120 billion of liquidity, strong access to large scale capital, and our deep investment and operating expertise—all of which enables us to further scale our operations with the goal of having one of the largest pools of discretionary capital globally.”

Operating Results

Distributable earnings (“DE”) before realizations increased by 21% compared to the prior year, after adjusting for the special distribution of 25% of our asset management business that we completed in December last year.

See endnotes on page 8.

Net income in the second quarter was $1.5 billion. DE before realizations were $1.0 billion for the quarter and $4.3 billion for the last twelve months (“LTM”). Both benefiting from the strong financial performance and resilient nature of our underlying businesses with the comparative period net income for the LTM including higher valuation gains.

Our asset management business benefited from another strong quarter of fundraising and deployment, increasing fee-related earnings by 16%, when excluding performance fees, compared to the prior year.

Our insurance solutions business delivered a very strong quarter as we continue to focus on expanding the investment returns of our existing assets by redeploying our short-duration investment portfolio into higher yielding assets.

Our operating businesses generated stable and recurring cash flows, reflecting the strong underlying fundamentals of our high-quality businesses. This was supported by the earnings growth across our renewable power & transition, infrastructure, and private equity businesses and same-store net operating income (“NOI”) growth in our real estate business.

During the quarter and over the LTM, earnings from realizations were $174 million and $889 million, respectively, with total DE for the quarter and LTM of $1.2 billion and $5.2 billion, respectively.

Regular Dividend Declaration

The Board declared a quarterly dividend for the Corporation of $0.07 per share, payable on September 29, 2023 to shareholders of record as at the close of business on August 31, 2023. The Board also declared the regular monthly and quarterly dividends on its preferred shares.

Operating Highlights

DE before realizations were $1.0 billion for the quarter and $4.3 billion for the LTM, representing an increase of 21% over the prior year, after adjusting for the special distribution of 25% of our asset management business. Total DE for the quarter was $1.2 billion and $5.2 billion for the LTM.

Asset Management:

• Distributable earnings were $604 million in the quarter and $2.7 billion over the LTM.
• Fee-related earnings increased by 16%, when excluding performance fees, compared to the prior year.
• Fundraising momentum remains strong with inflows of $37 billion year to date and $74 billion for the LTM. Fee-bearing capital was $440 billion as of June 30, 2023, an increase of $48 billion or 12% over the LTM.
• Our fundraising efforts are expected to accelerate in the second half of this year which, when combined with insurance inflows, should allow us to raise a record of close to $150 billion of capital in 2023.

Insurance Solutions:

• Distributable operating earnings were $160 million in the quarter and $634 million over the LTM.
• During the quarter, spread earnings expanded by 20 bps with our average investment portfolio yield now 5.4% on approximately $45 billion of assets, about 220 bps higher than the average cost of capital.
• We remain on track to achieving annualized earnings from this business of $800 million by the end of 2023, with a further step change in earnings expected from the closes of Argo Group and the recently announced acquisition of American Equity Life. With these recently announced acquisitions, our Insurance Solutions business will grow to over $100 billion of assets and the earnings base to a stabilized run-rate of approximately $2 billion annually.
  

Operating Businesses:

• Distributable earnings were $397 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 23% over the LTM, supporting stable and growing cash distributions. Our private equity business continues to deliver resilient and high-quality cash flows.
• Strong leasing momentum within our real estate business drove NOI growth of 8% in our core portfolio compared to the prior year. Although cash flows continue to be impacted by interest rates in the near term, we have deep conviction in the value of our real estate portfolio over the long term.
  

Earnings from realizations of mature assets were $174 million for the quarter and $889 million for the LTM.

• Transacted on approximately $15 billion of asset sales during the first half of the year, bringing the total monetizations completed over the LTM to around $30 billion—all transacting at values higher than our IFRS carrying values, providing strong support for the carrying values of our investments and more than $20 billion of carried interest we forecast to realize into income over the next 10 years.
• Year to date, we have recognized $376 million of net realized carried interest into income and continue to see a path to realize over $500 million of net realized carried interest into income this year.
• Total accumulated unrealized carried interest now stands at $9.5 billion, representing an increase of $104 million during the quarter, net of carried interest realized into income.
  

We ended the quarter with nearly $120 billion of capital available to deploy into new investments.

• In addition to reinvesting back into our businesses, we returned $146 million to shareholders through regular dividends and share repurchases during the quarter. In the LTM, we have repurchased $536 million of Class A shares in the open market.
• We have significant group-wide liquidity of nearly $120 billion, which includes $34 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 13 years and modest maturities through to the end of 2024.

1. Direct costs exclude depreciation and amortization expenses disclosed above.
2. Interest expense from acquisitions, net of dispositions, and upfinancings completed over the twelve months ended June 30, 2023.

SUMMARIZED FINANCIAL RESULTS