Brookfield (NYSE:BN) released first-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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Summary
Brookfield reported strong financial performance with distributable earnings of $1.6 billion for the quarter, driven by growth across asset management and stable cash flows from operating businesses.
The acquisition of JustGroup in the UK has significantly increased their insurance assets, enhancing their position in the retirement market.
The company remains optimistic about future growth, particularly in areas like AI, digital infrastructure, and decarbonization, with a strategic focus on high-quality, cash-generative assets.
Brookfield has raised $67 billion in capital this year, contributing to a record fundraising outlook for 2026, and maintains a strong pipeline for asset sales and monetizations.
Management highlighted the importance of disciplined capital allocation and the potential for strategic investments in technology and infrastructure, with a focus on long-term value creation.
Full Transcript
OPERATOR
One good day and welcome to the Brookfield Corporation first quarter 2026 conference call and webcast. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised to withdraw your question. Press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker, Ms. Katie Battaglia, Vice President Investor Relations. Please go ahead.
Katie Battaglia (Vice President Investor Relations)
Thank you Operator and good morning. Welcome to Brookfield Corporation’s first quarter 2026 conference call. On the call today are Bruce Flattened, Chief Executive Officer Nick Goodman, President of Brookfield Corporation and Satchin Shah, Chief Executive Officer of our Wealth Solutions business. Bruce will start off by giving a business update followed by Nick who will discuss our financial and operating results for the quarter. And finally, Satchin will provide an update on our Wealth Solutions business. After our formal comments, we will turn the call over to the operator and take analyst questions. In order to accommodate all those who want to ask questions, we request that you refrain from asking more than two questions. I would like to remind you that in today’s comments, including in responding to questions and in discussing new initiatives in our financial and operating performance, we may make forward looking statements, including forward looking statements within the meaning of applicable Canadian and U.S. security laws. These statements reflect predictions of future events and trends and do not relate to historic events. They are subject to known and unknown risks and future events and results may differ materially from such statements. For further information on these risks and their potential impacts on our company, please see our filings with the securities regulators in Canada and the U.S. and the information available on our website. In addition, when we speak about our Wealth Solutions business or Brookfield Wealth Solutions, we are referring to Brookfield’s investments in this business that supported the acquisition of its underlying operating subsidiaries. With that, I’ll turn the call over to Bruce.
Bruce Flattened (Chief Executive Officer)
Thank you Katie and welcome everyone on the call. We had a strong start to the year. Distributable earnings were $1.6 billion for the quarter, 6 billion over the last 12 months. More importantly, it also looks like the business will get stronger over the year. Our business has performed well and we continue to execute against initiatives which will drive our next phase of growth. Our asset management business delivered strong earnings growth supported by continued fundraising momentum across our institutional client base. Our operating businesses generated stable cash flows backed by resilient Underlying fundamentals our Wealth Solutions business performed well as it continues to scale globally. In April we closed the acquisition of JustGroup, a leading pension risk transfer platform in the UK. This increased total insurance assets by $40 billion and we’re now heading to $200 billion and strengthens our position in one of the world’s most active, attractive retirement markets. Nick will cover our financial results in more detail and tchin will spend more time on Just Group and the continued growth of our Wealth Solutions business. Before that, I would note that the current environment has had no shortage of macro developments competing for investors attention from geopolitics to trade issues, inflation and interest rates. And while these factors are important to monitor, they often receive far, far more attention than their long term impact warrants. Bottom line, we largely try to ignore them when building our business. This is particularly true in periods when capital flows, sentiment and prevailing market narratives influence price, which can increase the impression that the business fundamentals have changed when in most cases they have not. Value, on the other hand, you all know, is determined by the cash flows of a business that it generates and management’s ability to reinvest that capital at attractive returns. Our role as investors is to capitalize on attractive entry points to acquire good businesses for value, operate them well and allow compounding to work over time. Equally important is ensuring that compounding is not disrupted by being forced to act in detrimental ways during periods of market stress. This discipline shapes how we allocate capital and build our businesses. We take the time to watch an industry learn how it works, invest in a measured way, refine a business model, and only then scale a platform. This allows us to make small mistakes while avoiding large ones. In our experience, successful businesses are not built quickly, they are built deliberately with the resilience to allow one to compound cash flows and create value through economic cycles. And by adhering to these principles, our shareholders have earned excellent compound returns over long periods of time. Over that same period we’ve navigated many market environments. Each felt dramatic at the time. But the most important point is that each period of market disruption in hindsight had very little impact on long term outcomes. Today we believe many of the market distortions we are seeing are temporary and will moderate in the sectors we focus on. And while the current environment may feel volatile, it is ultimately constructive for businesses like ours. In addition, as uncertainty around growth and inflation rises, capital tends to shift towards high quality cash generative assets, an environment that favors real assets which we are specialists in. We are now seeing large flows of funds due to the halo effect, that’s hard assets, low obsolescence and are seeing this across the board within our businesses. Real estate is a good example of this. Sentiment is now catching up with fundamentals. Financing markets are much, much stronger, new supply is limited across our core markets and demand for the best assets continues to grow. In office as an example, replacement costs have risen significantly across our core markets. As a result, the rents required to justify new construction are well above in many markets, double current market rents. This makes new supply very difficult to deliver. And with demand remaining strong, in fact very strong for the best buildings and the best markets, rents continue to rise substantially. To put this in perspective, at Manhattan west, one of our super core assets in our portfolio, it would cost around $2,500 a square foot to build that same building today, compared to our cost of just over $1,000 a square foot. Fortunately, we started this at the depths of COVID in 2020 when few decided that they should build an office building. So we benefited in many ways due to our countercyclical investment. Our most recent lease there was signed at rents nearly three times higher than the first lease in the complex. And the financing recently completed cashed out approximately $400 million of net cash which was due to the increase in value of the asset. This took our debt to almost the construction cost of the building, exemplifying the increase in cash flows since launching the building. And I’d note we continue to own the property. More important, despite rents where they are, they actually need to go higher to justify a new tower like this being constructed today. And we’re seeing the same dynamic play out across our global portfolio. Another example being one leaden hall in London. A brand new asset which we consider as core plus in our portfolio was fully leased within six months of completion and achieved the highest rents ever in the City of London. With very limited new supply and demand for the best buildings continuing to grow, premier assets are becoming increasingly scarce and values are set to continue to rise. Capital markets are also beginning to recognize this as well. The aforementioned financing of to Manhattan west was $1.9 billion for a 10 year non recourse mortgage with a 5.5% coupon and was done at 107 basis point spread to Treasuries. Buyers looking for solid assets are moving back from software to real assets like these. Given all the drama in the news over the last five years, I will repeat that comment. The cash flows of this property allows us to complete a non recourse investment grade financing and generate real cash of $400 million from the property. This is the benefit of owning great real estate through cycles. As fundamentals strengthen and capital markets improve, the embedded value of portfolios that was always there become increasingly evident. At the same time, uncertainty is increasing the urgency for companies and governments to reposition around AI, energy security, data sovereignty and supply chain resilience. These priorities sit at the intersection of the themes we have invested behind for years, namely digitalization, decarbonization and DE globalization. Of course, if you have followed us, these themes are not new, but they are more prominent today than ever and the form they take continues to evolve, taking them in order. Digitalization started with fiber networks and telecom towers, then hyperscale data centers. Today, artificial intelligence is driving the next wave of demand through AI factories which require enormous amounts of computing capacity and reliable power. Second, decarbonization. The opportunity is no longer just energy transition, it is energy addition. In plain English that means more electricity. Demand is rising at a pace not seen in decades, driven by electrification, re industrialization and digital infrastructure. Meeting this demand will require enormous amounts of new generation capacity, with solar, wind, nuclear and batteries increasingly well placed given one or all of their attributes being they are low cost, they can be deployed quickly or they have limited reliance on imported fuel. Last, deglobalization began as reshoring, manufacturing and reorganizing supply chains. It has now evolved to include data sovereignty, where governments and companies want critical data stored and processed within their own borders, leading to the build out of domestic digital infrastructure, including large scale data centers. We are working with major governments and enterprises around the world to help build this infrastructure. And while digitalization, decarbonization and DE globalization will continue to evolve, each is driving significant long term demand for new infrastructure. Our ability to provide scalable solutions across technologies and regions reinforces our position as a partner of choice. And with almost $200 billion of capital to deploy, together with what we expect to be a record fundraising year in 26, we are well positioned to scale these businesses. Thank you all for your continued support in Brookfield. I’ll now turn the call over to Nick.
Nick Goodman (President)
Thank you Bruce and good morning everyone. Financial results were strong for the first quarter, underpinned by continued momentum across all of our businesses. Distributable earnings or DE before realizations for the quarter were $1.4 billion or $0.59 per share, representing a 7% increase over the prior year. Quarter over the last 12 months, DE before realizations was $5.5 billion or $2.32 per share. Total DE including realizations was $1.6 billion or $0.66 per share for the quarter and $6 billion or $2.54 per share over the last 12 months. Starting with our operating performance, our asset management business started the year strong, generating $765 million of distributable earnings or $0.32 per share for the quarter and $2.8 billion, or $1.20 per share over the last 12 months. We’ve raised $67 billion of capital so far this year, including $21 billion during the quarter, a $40 billion investment mandate from JustGroup and $6 billion for our seventh vintage flagship private equity strategy. Fee Bearing Capital ended the quarter at $614 billion, up 12% over the prior year, driving an 11% increase in fee related earnings to $772 million. And with strong momentum across our flagship and complementary strategies, we are well positioned to deliver a record year of fundraising in 2026. This quarter our results also benefited from a gain on the partial monetization of one of our technology investments which generated approximately $120 million of DE. We own a focused portfolio of select investments in new businesses, technology and innovation driven that are positioned to benefit from major secular trends shaping the global economy. This includes our investment in SpaceX of approximately $1 billion at the pre IPO mark, which is part of a $2 billion total investment. Turning briefly to our wealth Solutions business, which Sachsin will expand on in his remarks, we delivered strong results with distributable earnings of $430 million or $0.18 per share in the quarter and $1.7 billion or $0.71 per share over the last 12 months, representing an 11% increase over the prior year period. Results were driven by continued growth in our asset base, including $4 billion of annuity inflows during the quarter and the ongoing rotation of the portfolio into higher yielding investment strategies, our PNC business also performed well, achieving a combined ratio of 99%, contributing to an overall reduction in our cost of funds. Our operating businesses continue to deliver stable and resilient cash flows with distributable earnings of $360 million or $0.15 per share for the quarter and $1.5 billion or $0.65 per share over the last 12 months. Operating funds from operations in our infrastructure, private equity and energy businesses increased by 19% over the prior year quarter, supported by continued momentum in the underlying businesses and and ongoing execution of growth initiatives across each platform. Fundamentals in our real estate business are very strong. The recovery is quality led with tenants, lenders and capital increasingly focused on the best assets in the strongest markets. Our Supercore and Core plus portfolios are over 95% occupied and we continue to sign new leases at rents materially above expiring levels supported by a strong pipeline of tenant demand and limited new supply in our retail portfolio. Tenant consolidation into top tier malls continues to drive demand for our well located high quality assets and during the quarter 1.6 million square feet of leases commenced at rent 11% above prior levels. In office we signed 2.6 million square feet of leases globally with average net rents 15% above the expiring levels. This included 227,000 square feet of leases in the US a rent more than double expiring levels and 761,000 square feet in Canada a rent 30% above expiring levels including a 203,000 square foot lease at Exchange Tower, a core plus …
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