gokou3 Posted October 16, 2020 Share Posted October 16, 2020 BROOKFIELD ASSET MANAGEMENT ISSUES US$400 MILLION INAUGURAL GREEN SUBORDINATED NOTES BROOKFIELD, NEWS, Oct. 16, 2020 (GLOBE NEWSWIRE) -- Brookfield Asset Management Inc. (“Brookfield”) (TSX: BAM.A, NYSE: BAM) today announced the closing of its public offering of 4.625% subordinated notes due October 16, 2080 (the “notes”). The size of the offering was US$400 million. 60 years, wow. Link to comment Share on other sites More sharing options...
chrispy Posted October 16, 2020 Share Posted October 16, 2020 I believe BBU high water mark before fees kick back in is like $47 too. 60yr bonds is incredible. Seems like this could be deployed in BPY too if it is for a green investment Link to comment Share on other sites More sharing options...
petec Posted October 16, 2020 Share Posted October 16, 2020 I believe BBU high water mark before fees kick back in is like $47 too. 60yr bonds is incredible. Seems like this could be deployed in BPY too if it is for a green investment Not sure I follow? Surely if it’s raised at BAM it’s deployed at BAM? Link to comment Share on other sites More sharing options...
petec Posted October 16, 2020 Share Posted October 16, 2020 Had sold off the BIPC + BEPC spinoffs and re-deployed mostly back into BAM at current prices. Still have the original BIP.UN + BEP.UN. The latter I was lucky enough to get in on it at its bottom back in Dec 2018 and has been blockbuster since. On a different note, I don't know if anyone listened to BBU at the AGM. find it interesting that these guys deployed heavily, nearly $500 million back in March-April. And now are mostly up 100% on that investment. For a $3.5 billion market cap business that is good. Of course the gains are somewhat offset by some of they private equity business being impacted. But they did what you expect them to do in a downdraft. Take action. BBU’s presentation was hugely impressive. They nailed it - both with the deployment in March and the portfolio they had going in. Far more stable than I’d have assumed. BBU will be transformed by the next generation of realizations. Link to comment Share on other sites More sharing options...
petec Posted October 16, 2020 Share Posted October 16, 2020 Thoughts on this? I don't really follow BPY and don't mean to pile-on, but thought this was an interesting read: https://assets.empirefinancialresearch.com/uploads/2020/09/BPY-BPYU-short-thesis-Dalrymple-Finance-9-20.pdf Having finally read this properly, the main thing that stands out to me is actually just how many levers BAM is able to pull to provide capital to a subsidiary facing a temporary crisis. To my mind that reduces the short term risks and allows one to focus on the long term case. Link to comment Share on other sites More sharing options...
ValueMaven Posted October 16, 2020 Share Posted October 16, 2020 Agreed. This is one of my top stocks for the next 10-15 years. Frankly - I wish they didn't pay a dividend, and used the cash-flow to retire o/s more aggressively post the oaktree acquisition (which was brilliant IMHO) Link to comment Share on other sites More sharing options...
petec Posted October 16, 2020 Share Posted October 16, 2020 Agreed. This is one of my top stocks for the next 10-15 years. Frankly - I wish they didn't pay a dividend, and used the cash-flow to retire o/s more aggressively post the oaktree acquisition (which was brilliant IMHO) Agree Oaktree was brilliant. And the more I dig here the more I think they’ve created something very robust with multiple tailwinds and ways to win. I’m also really excited to see what they can do with insurance over time. Link to comment Share on other sites More sharing options...
ValueMaven Posted October 18, 2020 Share Posted October 18, 2020 Brookfield Announces Strategic Partnership with American Equity Life Well there we go ... that is the insurance deal that has been suggested. Still processing this .. seems huge https://bam.brookfield.com/press-releases/2020/10-18-2020-200019456 Link to comment Share on other sites More sharing options...
ValueMaven Posted October 18, 2020 Share Posted October 18, 2020 'A reinsurance transaction through which Brookfield’s reinsurance and annuity subsidiary, Brookfield Asset Management Partners, will reinsure up to $10 billion in annuity liabilities, including an initial $5 billion of existing liabilities and up to an incremental $5 billion of future business when written.' Link to comment Share on other sites More sharing options...
petec Posted October 18, 2020 Share Posted October 18, 2020 I have a feeling this is just the start. Link to comment Share on other sites More sharing options...
petec Posted October 18, 2020 Share Posted October 18, 2020 Also: about half of the equity investment is funded by the 4.625% 60-year bond discussed above. Nice work if you can get it. And the other half by the recent 2051 notes paying 3.537%. Link to comment Share on other sites More sharing options...
petec Posted October 18, 2020 Share Posted October 18, 2020 Brookfield Announces Strategic Partnership with American Equity Life Well there we go ... that is the insurance deal that has been suggested. Still processing this .. seems huge https://bam.brookfield.com/press-releases/2020/10-18-2020-200019456 Strikes me this is a very specific pick. AEL sells fixed *index* annuities, not fixed rate. Fixed index is a tiny chunk of the market. Brookfield did this deliberately. Why? Link to comment Share on other sites More sharing options...
ValueMaven Posted October 19, 2020 Share Posted October 19, 2020 What is AEL paying BAM to reinsurance that $5B - $10B of exposure?? That is completely missing from the statement. Link to comment Share on other sites More sharing options...
Xerxes Posted October 19, 2020 Share Posted October 19, 2020 Very soon Brookfield can star in the remake of the 007 James Bond movie “octopussy” as the main corporate villain with Dan Craig going after the ‘backbone of the world economy’ with its hydro dams and toll-roads. Link to comment Share on other sites More sharing options...
petec Posted October 19, 2020 Share Posted October 19, 2020 What is AEL paying BAM to reinsurance that $5B - $10B of exposure?? That is completely missing from the statement. That’s because the details haven’t been finalized yet - or so I infer from the fact that the second slug of equity is conditional on the finalizing of the reinsurance agreement. EDIT: also, I’m not sure there will be a payment, exactly. AEL will hand over $5bn of float with $5bn more to come. BAM will assume (most of) the liability for those annuities (presumably AEL will keep a share of the liability to align incentives). BAM makes money on the spread between investing the float and paying the liabilities. What’s the betting that Brookfield Asset Management Partners is spun out in 5 years with $100bn-plus of reinsurance and pension AUM? Link to comment Share on other sites More sharing options...
Ballinvarosig Investors Posted October 19, 2020 Share Posted October 19, 2020 Brookfield Announces Strategic Partnership with American Equity Life Well there we go ... that is the insurance deal that has been suggested. Still processing this .. seems huge https://bam.brookfield.com/press-releases/2020/10-18-2020-200019456 Strikes me this is a very specific pick. AEL sells fixed *index* annuities, not fixed rate. Fixed index is a tiny chunk of the market. Brookfield did this deliberately. Why? I am an AEL shareholder, there is a bid from Athene to take AEL out for $36 a share (this is actually the second time Athene have come in for AEL). AEL management have been very eager to reject the Athene takeover. I could be wrong, but my feeling is that they want to keep their jobs (management own an insignificant amount of shares). The structure of the deal, especially with BAM taking a 20% shareholding should effectively act as a poison pill that will keep AEL public and management in situ. The whole deal stinks to me. AEL doesn't need BAM, it doesn't need the extra equity. I am sure the detail will become clearer later on, but BAM are smart, they will extract their pound of flesh from AEL on this. I cannot believe that a management team with a 0.2% shareholding are going to ram their deal down the necks of shareholders. Link to comment Share on other sites More sharing options...
petec Posted October 19, 2020 Share Posted October 19, 2020 They definitely don’t need the equity - they’re planning to use the cash for a buyback! Shares down 11% pre-market, so at least they can buy them back cheap. Maybe BAM will buy more also. Link to comment Share on other sites More sharing options...
thepupil Posted October 19, 2020 Share Posted October 19, 2020 another day, another unfavorable BPY article honestly, realdeal needs to do better than this. this is just recycled content. I think everyone knows by know that BPY is aggressive in marking their portfolio and has a lot of leverage. https://therealdeal.com/issues_articles/all-the-worlds-a-maze/ Link to comment Share on other sites More sharing options...
fareastwarriors Posted October 19, 2020 Share Posted October 19, 2020 Life sci properties are hot... https://www.bloomberg.com/news/articles/2020-10-19/brookfield-said-to-weigh-3-billion-real-estate-portfolio-sale Brookfield Weighs $3 Billion Life Sciences Real Estate Portfolio Sale Brookfield Asset Management Inc. is exploring a sale of its life-sciences real estate portfolio, and seeking about $3 billion, according to people with knowledge of the matter. Link to comment Share on other sites More sharing options...
thepupil Posted October 20, 2020 Share Posted October 20, 2020 Life sci properties are hot... https://www.bloomberg.com/news/articles/2020-10-19/brookfield-said-to-weigh-3-billion-real-estate-portfolio-sale Brookfield Weighs $3 Billion Life Sciences Real Estate Portfolio Sale Brookfield Asset Management Inc. is exploring a sale of its life-sciences real estate portfolio, and seeking about $3 billion, according to people with knowledge of the matter. this is a great example of how analytically complicated Brookfield is and how hard it is to "follow the money" for any given transaction. I was a FCE shareholder and owned it in part for their Cambridge / MIT life sciences campus (though I would note that ownership of these assets does revert to MIT in 2062 and 2091. MIT already owns the land, but the actual structures revert to the university on those dates (75 years after they were built), making this more onerous than a typical ground lease. I confirmed this with IR, who was kind enough to respond to an individual shareholder. IR did note there was some uncertainty as to how exactly the structure will be unwound and if there'd be any consideration involved, but that it was correct to think of it as having no ownership then. so i saw this headline and thought to myself "holy shit that will de-lever BPY like crazy". Then I checked and remembered that Forest City is actually held in BSREP III, the $15B opportunity fund. BSREP III bought FCE for $6.8B equity (I assume they may have syndicated co-investment in this deal and that BSREP III does not actually own 100% of the equity in the FCE deal because an institional RE fund wouldn' put 45% in one deal) . BAM owns 18% of BSREP III and BPY owns 7% of BSREP III, so BPY's share in this life sciences portfolio is pretty small. So the waterfall will be something like this: Life Sciences Portfolio sale: $3B Less and associated debt Equity proceeds Less co-investment partners equity share Less any BSREP Fund level facilities / debt then to BREP III LP's of which BAM is 18% / BPY is 7% bottom line is this isn't as big of a liquidity event for BPY as it may looks, but it will probably be a nice "sold for above the mark" data point and likely increase the expected IRR on the LP investments. the 2016 VIC pitch on Forest City had a BULL case valuation of its life sciences portfolio of $1.9 billion and a bear case of $1.5B. 4 years later, rumored sale at $3 billion. I'm not sure if those are precisely comparable, but the rumored sale is for 2.3mm sf and FCE owned 2.0mm sf of life sciences so I'm assuming that it is roughly the same assets. Link to comment Share on other sites More sharing options...
chrispy Posted October 20, 2020 Share Posted October 20, 2020 thepupil - thank you for sharing. With regards to the BBU presentation - I agree it was quite compelling. After selling my BBU shares a couple of years ago I am intrigued to buy back in. The one thing that I cant reconcile with BBU is, who is going to buy and own these shares? They are not very liquid, do not pay a substantial dividend like the other LPs, and have tax filing annoyance. Link to comment Share on other sites More sharing options...
Shane Posted October 20, 2020 Share Posted October 20, 2020 thepupil - thank you for sharing. With regards to the BBU presentation - I agree it was quite compelling. After selling my BBU shares a couple of years ago I am intrigued to buy back in. The one thing that I cant reconcile with BBU is, who is going to buy and own these shares? They are not very liquid, do not pay a substantial dividend like the other LPs, and have tax filing annoyance. I wouldn't let that deter me if I liked the outlook for a business - liquidity can fix itself over the years if the business grows. Link to comment Share on other sites More sharing options...
ValueMaven Posted October 20, 2020 Share Posted October 20, 2020 Or you can just own BAM - accept all of the economic exposure you are getting from the different subs and call it a day. That is how I view this :-) Link to comment Share on other sites More sharing options...
chrispy Posted October 20, 2020 Share Posted October 20, 2020 Shane - Agree, just something I think about when comparing it to the other LPs. ValueMaven - That is the approach I am using right now and content with it Link to comment Share on other sites More sharing options...
Xerxes Posted October 20, 2020 Share Posted October 20, 2020 On BBU Although it was not mentioned this past few quarters by mgmt, at some point last year when they bought Genworth Canada (a mortgage insurance play) I think they said something along the lines of it being more a core long term holding with safe annuity loke payment . I.e float and invest kind of play If that has merit, sometimes in the future BBU could be funding itself internally rather issuing equity to grow. Link to comment Share on other sites More sharing options...
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