Did Brookfield Asset Management's core earnings grow in Q1 2024?

Modestly. Fee-Related Earnings rose 1% to $552 million, and Fee Revenues rose 3% to $1.113 billion, driven by fundraising and capital deployment. Distributable Earnings fell 3% to $547 million, mainly because higher taxable fee earnings increased cash taxes by $16 million.

Why did net income decline, and does it matter for shareholders?

Net income fell to $373 million from $516 million, largely because unrealized carried interest allocations turned to a $134 million loss, primarily from lower valuations in certain real estate flagship funds. Because carried interest is volatile and tied to fund performance, management focuses on FRE and DE, which are more recurring and cash-based.

What are the main growth drivers management expects for 2024?

Management expects FRE and DE to grow meaningfully over 2024 as recently raised capital starts contributing fees and as acquisitions flow through the financials. Key drivers include the AEL transaction, the additional Oaktree stake, and the Castlelake partnership, which is expected to add about $40 million of FRE next year. Management also expects cost growth to moderate.

How are the market-linked risks affecting fee revenues?

Base management fees from listed permanent capital vehicles (BEP, BIP and BBU) depend on their market capitalizations, so share price declines reduce fees. Fee-Bearing Capital from these vehicles fell as BEP and BIP market values declined in the quarter. Incentive distributions from BEP and BIP rose 13% on dividend growth of 5% and 6%, partially offsetting that pressure.

What is the status of the AEL and Castlelake transactions?

The AEL acquisition by Brookfield Reinsurance closed on May 2, 2024. It is expected to add about $50 billion of fee-bearing capital and roughly $125 million of annual fee revenues, and it was non-dilutive to BAM shareholders. The Castlelake deal was agreed on May 6, 2024, for about $450 million cash and gives BAM 51% of Castlelake's Fee-Related Earnings, with the option to increase its ownership over time.

BAM 8-K SEC Disclosure — May 13, 2024

01—Abstract

Summary

Summary of the 6-K filed May 13, 2024. Cited figures are marked; the original filing is the authoritative source.

Brookfield Asset Management (BAM) reported Q1 2024 results in this interim report, filed via Form 6-K on May 13, 2024.

Fee-Related Earnings (FRE) were $552 million^a ($0.34 per share), up 1% year over year, and Distributable Earnings (DE) were $547 million ($0.34 per share), down 3% from $563 million, mainly because cash taxes rose $16 million on higher taxable fee earnings. Fee Revenues grew 3% to $1.113 billion, and Fee-Bearing Capital reached $459 billion, up $1.6 billion from year-end. Management highlighted $20 billion of capital raised in Q1, with $10 billion coming after the quarter's earnings-cycle cutoff, and expects FRE and DE to grow meaningfully through 2024 as recently raised capital is deployed and recent transactions contribute.

The filing also details several strategic transactions. Brookfield Reinsurance closed its acquisition of American Equity Investment Life (AEL) on May 2, 2024, adding roughly $50 billion^b of fee-bearing capital and about $125 million of annual fee revenues, while raising BAM's stake in its asset management business from about 25% to 27% without dilution. BAM also increased its Oaktree ownership from about 68% to 73% in April, and agreed on May 6 to acquire a 51% interest in Castlelake's Fee-Related Earnings for about $450 million cash, which management expects to add roughly $40 million of FRE next year.

Net income attributable to common stockholders was $441 million^c, though headline net income of $373 million fell from $516 million, with the decline attributed to lower unrealized carried interest, notably in real estate flagship funds. Investors should weigh the solid fee-based earnings and fundraising momentum against flat-to-declining distributable earnings, lower realized carry, and the valuation pressure in real estate and listed permanent capital vehicles (BEP, BIP, BBU), whose market capitalization declines directly reduce base management fees. The forward growth story therefore depends on fundraising converting into fee revenue and on the AEL and Castlelake acquisitions contributing as guided.

02—Key points

Key Highlights

Fee-Related Earnings of $552 million ($0.34 per share), up 1% year over year, with Fee Revenues up 3% to $1.113 billion.
Distributable Earnings of $547 million ($0.34 per share), down 3% year over year, reflecting a $16 million increase in cash taxes.
Record-level fundraising: $20 billion raised in Q1 2024, with management expecting fundraising to build through the year.
Fee-Bearing Capital rose to $459 billion (from $457 billion at year-end), with 86% long-dated or perpetual in nature.
AEL acquisition closed May 2, 2024, adding about $50 billion of fee-bearing capital and roughly $125 million of annual fee revenues; BAM's stake in the asset manager rose to about 27%.
Oaktree ownership increased from about 68% to 73% after an April 2024 purchase of an additional 4.5% stake for a net $274 million.
Net income attributable to common stockholders was $441 million, but headline net income fell to $373 million from $516 million on lower unrealized carried interest, mainly in real estate flagship funds.

03—Questions

Frequently Asked Questions

Did Brookfield Asset Management's core earnings grow in Q1 2024?
Modestly. Fee-Related Earnings rose 1% to $552 million, and Fee Revenues rose 3% to $1.113 billion, driven by fundraising and capital deployment. Distributable Earnings fell 3% to $547 million, mainly because higher taxable fee earnings increased cash taxes by $16 million.
Why did net income decline, and does it matter for shareholders?
Net income fell to $373 million from $516 million, largely because unrealized carried interest allocations turned to a $134 million loss, primarily from lower valuations in certain real estate flagship funds. Because carried interest is volatile and tied to fund performance, management focuses on FRE and DE, which are more recurring and cash-based.
What are the main growth drivers management expects for 2024?
Management expects FRE and DE to grow meaningfully over 2024 as recently raised capital starts contributing fees and as acquisitions flow through the financials. Key drivers include the AEL transaction, the additional Oaktree stake, and the Castlelake partnership, which is expected to add about $40 million of FRE next year. Management also expects cost growth to moderate.
How are the market-linked risks affecting fee revenues?
Base management fees from listed permanent capital vehicles (BEP, BIP and BBU) depend on their market capitalizations, so share price declines reduce fees. Fee-Bearing Capital from these vehicles fell as BEP and BIP market values declined in the quarter. Incentive distributions from BEP and BIP rose 13% on dividend growth of 5% and 6%, partially offsetting that pressure.
What is the status of the AEL and Castlelake transactions?
The AEL acquisition by Brookfield Reinsurance closed on May 2, 2024. It is expected to add about $50 billion of fee-bearing capital and roughly $125 million of annual fee revenues, and it was non-dilutive to BAM shareholders. The Castlelake deal was agreed on May 6, 2024, for about $450 million cash and gives BAM 51% of Castlelake's Fee-Related Earnings, with the option to increase its ownership over time.

04—Continue

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