Brookfield Takes Net Income Hit As Asset Manager Reaches $1T in AUM
By Isabelle Durso August 8, 2024 12:39 pm
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It’s a tale of two Brookfields.
The Toronto-based investment firm saw its net income dip 47 percent year-over-year while Brookfield (BN) Asset Management hit a vaulted $1 trillion in assets under management, the company said in its second quarter earnings call Thursday.
Brookfield reported a net income of $43 million for the second quarter of 2024, a decrease from their net income of $81 million the prior year quarter, according to its earnings report, and Brookfield President and CFO Nick Goodman addressed concerns about the company’s structure during Thursday’s earnings call.
“Right now, our focus primarily is on investing in assets that are going to generate attractive long-term returns,” Goodman said. “We may make decisions over time that can improve our access to capital. It’s always going to be an evolution, and we’ll see how that plays out.”
And even with good returns from its wealth and insurance businesses, the company dealt with some blows from the real estate market. Its distributable earnings climbed about 10 percent from last year’s quarter to $1.1 billion, or 71 cents per share, while the company’s distributable earnings from real estate declined 12 percent, Bloomberg reported.
In the past quarter, Brookfield sold off several assets in its real estate portfolio, including a luxury hotel in South Korea, an office building in Washington, D.C., and a U.S. manufactured housing portfolio, CEO Bruce Flatt wrote in a letter to shareholders.
When it came to leasing, the company signed nearly 5 million square feet of office and retail leases during the second quarter of 2024, according to the earnings report, but occupancy fell slightly to from 95 percent the year prior to 94.5 percent.
Despite its drop in net income, Brookfield announced strong financial results for the second quarter of the year. Overall, distributable earnings were $2.13 billion for the quarter, including the realization of assets, compared to $1.19 billion during the same period in 2023.
Goodman said on Thursday that cash flows across Brookfield’s asset management, wealth and operating businesses continue to grow.
Even with the real estate dips, its asset management company had a lot to be happy about.
On Wednesday, Brookfield Asset Management — which Brookfield spun off in 2022 to appeal to investors who wanted insights into the company’s growth — announced that it officially hit the $1 trillion mark in assets under management, which it credited to its portfolio diversification in renewable energy and artificial intelligence.
“With capital markets improving and a constructive economic backdrop, we expect transaction activity to continue to increase over the coming quarters,” Goodman said in a statement. “This sets us up well to execute on monetizations across the business and, in turn, further bolster our earnings.”
Isabelle Durso can be reached at idurso@commercialobserver.com.
