An overview of the companies in the Brookfield family, plus an analysis of full-year 2023 earnings. Motley Fool Canada analyst Iain Butler breaks it all down in a short video. (Transcript below)
Nick Sciple: I’m Nick Sciple, and this is the “Five-Minute Major,” here to make you a smarter investor in about five minutes. Today, we’re discussing the full year of 2023 earnings results for the Brookfield family of companies. My guest today is Motley Fool Canada Chief Investment Officer Iain Butler. Iain, thanks for joining me.
Iain Butler: Great to be here, Nick.
Overview of companies in Brookfield family
Nick Sciple: It’s always exciting to be here with you as well, Iain, and before we get into Brookfield’s results, let’s maybe do a quick overview of the Brookfield empire. With about half a dozen publicly listed entities it can feel overwhelming to the uninitiated.
Iain Butler: Totally. I get the sense that a lot of people see the variety of Brookfield entities, Brookfield listings, and they simply run away. They immediately label it too complicated and just say “Forget it; I’ll go elsewhere.” But in reality we’re going to try and give a quick overview here in under a minute and hopefully steer some people straight, so they’re not running away for no good reason.
I think of it as sort of a mothership, and that mothership is Brookfield Corporation. Its ticker is on the Toronto Stock Exchange, BN, and it has ownership stakes in the various entities that you see listed also on the Canadian Stock Exchange (and they’re cross-listed as well in the U.S.)
So those entities are:
Brookfield Asset Management, and that’s ticker symbol BAM
Brookfield Infrastructure, ticker symbol BIP.UN
Brookfield Renewables, ticker symbol BEP.UN
Brookfield Business Partners, which is a private-equity firm, ticker symbol there is BBU.UN
And a new entity by the name of Brookfield Reinsurance, an insurance solutions provider, BNRE.
So those are five, let’s call them tentacles, that sort of hover below the mothership, Brookfield Corporation again, and they all sort of operate independently.
But they all, indeed, do flow capital into that mothership, which then gets dispersed amongst the family. Brookfield Asset Management Company — it’s infrastructure, owns a variety of assets. I’m going to run out of time here. (Laughs) So let’s just say, mothership, tentacles below, each are independent. And I think we’re going to spend just a minute or so on Brookfield Corporation’s earnings, right?
Brookfield Corporation’s 2023 earnings
Nick Sciple: Yeah, so let’s beam up to the mothership and look at Brookfield Corporation’s full-year 2023 earnings. What were your biggest takeaways from Brookfield’s year?
Iain Butler: The entity that I didn’t mention earlier is Brookfield Properties, which was taken private by the mothership, maybe a year ago, maybe a bit more than a year ago, maybe a couple of years ago. So that’s a commercial real estate portfolio.
Commercial real estate is obviously a bit of a problem child in the market’s eyes these days. So that’s where my focus goes when I see Brookfield’s earnings, and frankly, I don’t think it’s near the problem child that the market would have you believe. Brookfield deployed about $1.8 billion worth of capital across its real estate portfolio in 2023. In terms of operating performance, they had operating income growth of 7% in the portfolio. 15 million square feet of leases were executed across all of its office assets. And tenant sales (with retail assets), sales per square foot were 21% higher than in 2019 before the whole pandemic issue hit the portfolio.
So that doesn’t seem like a total disaster to me. So you’re not paying very much for that commercial real estate portfolio or maybe even you’re not paying anything for it when you buy a share of Brookfield Corporation. I don’t think it’s near the issue that the market would have you believe.
Otherwise, I’m just consistently dazzled by the numbers that all things Brookfield throw up. It’s a massive entity, a global behemoth. They’ve got financial flexibility and wherewithal to transact wherever they want. And they serve us shareholders very nicely with that capital, too. They bought back $600 million worth of shares in 2023. They’re targeting another $1 billion of buybacks in 2024 and we got a nice dividend increase from Brookfield Corporation of about 14% along with the earnings announcement.
Brookfield Asset Management’s 2023 earnings
Nick Sciple: So that’s Brookfield Corporation. Let’s talk a little bit about Brookfield Asset Management now. This is a company that’s just completed its first full year as an independent business after being spun out from Brookfield Corporation. It trades under the ticker BAM. How do you rate Brookfield Asset Management’s performance in its first year as a publicly traded company?
Iain Butler: Totally, and it’s a newly independently publicly traded company — I mean, Brookfield Asset Management has been around for a long time, so I think of it much the same as I always have. I sort of grew up in the Canadian asset management business, where you had to fight tooth and nail to bring assets in the door. Brookfield Asset Management is bringing literally hundreds of billions of dollars to the door every year, and that’s fee-bearing capital, and that capital is going to generate lovely, distributable cash flow to its shareholders, and that’s a great thing about it being independent because shareholders now get a piece of it, whereas it used to stay within the mothership.
Nick Sciple: All right, just right barely at 5 minutes. We’re out of time. Thank you for joining us for this edition of the Five-Minute Major. We’ll see you next time.
Iain Butler: Fool on.