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8/14/2019 BAM Brook Field Asset Management June 2009 Presentation
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Brookfield Asset Management Inc.
Focused on Property, Renewable Power and Other Infrastructure Assets
Brookfield Asset Management Investor Day
September 15, 2009
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Cautionary Note Regarding Forward-Looking Statements
This presentation contains forward-looking information within the meaning of Canadian provincial securities laws and other forward-looking statements, within the meaningof certain securities laws including Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended,safe harbour provisions of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations. The words strategy,objectives, outlook, build, maintain, expand, opportunities, will, stable, contracted, expect, believe and should, derivations thereof and other expressionsthat are predictions of or indicate future events, trends or prospects and which do not relate to historical matters identify forward-looking statements. We may make suchstatements in this presentation, in other filings with Canadian securities regulators or the Securities Exchange Commission (SEC) and in other communications. Theseforward-looking statements include, among others, statements with respect to our financial and operating objectives and strategies to achieve those objectives; our ability togenerate going concern values from our assets; our views on the intrinsic value of our business and the shares of the company;acquisition and growth opportunities in thereal estate, renewable power and infrastructure sectors; our future operating performance, earnings and cash flows; the effects of IFRS on our financial statements in thefuture; our currency and interest rate views; our outlook for the renewable power market in North America and Brazil; growth targets for our renewable power business; ouroutlook for the office, retail and residential real estate sectors; our outlook for the transmission and timber sectors as well as the overall infrastructure sector; and otherstatements with respect to our beliefs, outlooks, plans, expectations and intentions.
Although Brookfield believes that the anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information arebased upon reasonable assumptions and expectations, investors and potential investors should not place undue reliance on forward-looking statements and informationbecause they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially fromanticipated future results, performance or achievements expressed or implied by such forward-looking statements and information. Factors that could cause actual resultsto differ materially from those contemplated or implied by forward-looking statements include: economic and financial conditions in the countries in which we do business;the behaviour of financial markets including fluctuations in interest and exchange rates; availability of equity and debt financing for the company and its affiliates; strategicactions including dispositions; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; our continuedability to attract institutional partners to invest in our funds; adverse hydrology conditions; tenant bankruptcies; recovery of timber markets; regulatory and political factorswithin the countries in which we operate; acts of God, such as earthquakes and hurricanes; the possible impact of international conflicts and other developments including
| Brookfield Asset Management Inc.2
terrorist acts; and other risks and factors detailed from time to time in the companys form 40-F filed with the Securities and Exchange Commission as well as otherdocuments filed by the company with the securities regulators in Canada and the United States including in the companys mostrecent year end Management Discussionof Financial Results under the heading Business Environment and Risks.
We caution that the forgoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions withrespect to Brookfield Asset Management and its affiliated, investors and others should carefully consider the forgoing factors and other uncertainties and potential events.Unless required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that maybe as a result of new information, future events or otherwise.
Currency
All dollar figures are in U.S. dollars, unless otherwise indicated.
Agenda
Overview Bruce Flatt
Real Estate Ric Clark
Infrastructure Sam Pollock
Financial Review Brian Lawson
Closing Remarks & Q&A Bruce Flatt
| Brookfield Asset Management Inc.3
Tour of Bay Adelaide Centre Bob MacNicol
Reception
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Overview Bruce Flatt
Brookfield TodayA global asset management company with over $80 billion of AUM
| Brookfield Asset Management Inc.5
Property Renewable Power Infrastructure
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A Global Asset Manager
Long-term, value-oriented investor
100 years of experience investing, operating and managing high quality assets
globally
Substantial capitalization $20 billion permanent equity capitalization
Sponsor and manage 20 private equity funds and partnerships since 2001 with
capital commitments of ~ $19 billion
Manage ~ $20 billion of public securities for clients
Positioned to offer specialty investment products to clients
| Brookfield Asset Management Inc.6
STOCK EXCHANGE LISTINGS
NYSE, TSX, EuronextTicker: BAM, BAM.A, BAMA
SOLID RATINGS
DBRS: A(low) Moodys: Baa2S&P: A- Fitch: BBB+
Focused Global Reach
Operating locations
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50 offices or locations 400 investment professionals 14,000 operating employees
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Business Strategy Long Term Objectives are Unchanged
Build and maintain best-in-class operating platforms
Own high quality assets through leading operating platforms that generate high
levels of sustainable free cash flow
Finance assets on a conservative, long-term basis, with limited recourse to the
corporation
Maintain high level of financial liquidity and operational flexibility to capitalize
on growth opportunities
Expand and foster strong client relationships
| Brookfield Asset Management Inc.8
Brookfield Resilient During Last Two Years
Global markets were highly capital constrained and many businesses faced
significant operating volatility
However, Brookfield was able to finance over $10 billion of debt, continued to
generate ~ $1.5 billion of annual free cash flow and invested over $2.0 billion
opportunistically to increase future cash flow per share growth
This was possible because
Revenue streams in our core businesses are largely contracted to providestable cash flows
| Brookfield Asset Management Inc.9
sse s pr mar y nance on non-recourse as s, suppor e y ransparencash flows
Overall leverage is 15% on a deconsolidated basis and 44% on a proportionalbasis providing ample equity support during volatile times
Majority of our assets are readily monetizable for value, ensuring that we canreallocate capital into higher return opportunities
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Moving to 2010 and Beyond
All of our major businesses have performed as expected
Our franchise, with institutions and financial counterparties, is better than ever
The investment environment favours better returns than normal
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Acquisition Opportunities
Over $3 billion of our own liquidity and $7 billion of third-party capital to invest
in potentially higher-yielding opportunities
We are well positioned to pursue major acquisition opportunities
Strong global relationships and reputation as a reliable sponsor and counterparty
Breadth and depth of operating platforms
Well established and experienced investment teams
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Current Opportunities
Acquiring high quality assets that are being sold into illiquid markets due
to financial distress
Utilizing strength of operating platforms to capture new businesses and
build value
Expanding institutional relationships by demonstrating strong relative
performance of our strategies through the recent turmoil
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Institutional Relationships are Growing
~ $20 billion of public securities are managed for clients
e currentl have 20 rivate funds and investment ro rams with ~ 19 bil lion
of commitments with 60 institutional investors
Our investment strategies align well with needs of institutional clients
Moderate risk, higher yield, maximum visibility, real returns
Pension funds and institutional clients are re-establishing investment programs
Brookfield represents an attractive manager
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e cap a ze Leading operating platforms
Strong governance and transparency
Alignment of interests due to Brookfields own capital commitments in funds
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Recently Announced Initiatives
$5B Real Estate Turnaround Consortium
International pension funds and sovereign wealth funds
Allocations of $300 million to $1 billion
Global focus with emphasis on North America, Europe and Australasia
C$1B Debtor-In-Possession Fund
Economic Development Canada, CIBC and Sun Life
Focus on Canadian companies and U.S. subsidiaries
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$400M Colombian Infrastructure Fund
Colombian institutional investors Focus on Colombian infrastructure
Largest private equity and infrastructure fund in the country
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Renewable Power Richard Legault
Agenda
Overview of Portfolio
Priorities
Market Dynamics and Outlook
North America
Brazil
Operating Profile Positioned for Growth
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Conclusion
Q&A
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Renewable Power Overview
One of the worlds largest privately-held hydro portfolios $12 billion*
3 countries: United States, Canadaand Brazil
4,150 MW total installed capacity
63 river systems
9 power markets
~1,000 employees
4,150 Installed Capacity (MW)
63 River Systems
9 Power Markets
~1000 Employees
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* Indicative value derived for IFRS purposes
Growth potential through
development pipeline
and acquisitions
Renewable Power Overview
Low operating costs provide sustainable
cost advantage
Well positioned in current market with high quality assets
Simple, proven and highly reliable technology
High barriers to entry; difficult to replicate
Long-life assets with minimal capex
Reservoirs provide flexibility to capture
premium pricing
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Zero carbon emissions
Well positioned to realize asset value appreciation
over time as gas and carbon prices riseMcphail, Ontario 13 MW
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Priorities
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Priorities
Operations
Deliver power to highest-value markets through secured transmission rights
Continue to optimize portfolio and maximize revenues by generating during
peak demand
20% premium to market prices based on prior years track record
Maintain operating costs at current level
Manage our capital programs on schedule and budget
Securing Value for Shareholders
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Continue to expand our renewable platform Expand Brazil renewable generation portfolio
Continue to build on North American platform
Increase long-term contracted profile
Generation development in Canada, U.S. and Brazil supported by contracts
Contract current merchant portfolio in Ontario, Quebec and New York
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Market Dynamics and Outlook
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Market Outlook Key Drivers in North America
Reducedindustrial activity
Supply responseto reduced
Outlook for2010-2011
Decrease in demand
15% - 20% in North
America
Gas surplus of
2-4 Bcf/d
Significant reduction in
new investments in gas
production
Short-term gas prices
decreased but longer
erm forward rices not
Load growth expected to
return with economy set
to recover in 2010
Reduced exploration and
drilling in 2009 will reduce
roduction of natural as
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storage
Lower gas and
electricity prices
impacted as significantly
$7-$8/MMBtu required to
stimulate new invest-
ments; $10-$12/MMBtu
to attract LNG supply in
mid to long-term
for next 12-18 months
With more balanced gas
market in 2010, gas and
electricity prices are
expected to recover
Bcf/d = billions of cubic feet per dayMMBtu = millions of British thermal units
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New power plants needed in northeast North America
Market Outlook Gas Prices and Power Market
15,000 20,000 MW needed annually
for load growth, post recessionForward Prices vs. CCGT(1) All-in Cost
$/MWh
Shut-down of ageing plants
(400,000 MW of capacity 30 years or older)
Current recession will either delay
requirement for new capacity or
accelerate shutdown of older plants
Prices need to rise to between
$40
$52
$60
40
60
80
100 New England (Mass Hub)All-hours Forward Prices
Energy Only
$108
$8 Gas
$10 Gas
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$95-$110/MWh in the northeast to
support construction of new gas-fired
facilities 0
20
2009 2010 2011 CCGT All-inCost
Fuel Cost (Henry Hub)Capital CostFixed Opex
Variable OpexCarbon Cost
(1) Combined cycle gas turbine
Market Outlook Impact of Carbon Legislation
CO2 cap-and-trade likely to be implemented in U.S. and Canada in next few years
-- . .
be challenging
Congress estimates carbon price of about $14/t in 2012 and $32/t in 2020
CO2 prices to increase cost of dispatch of oil, gas and coal-fired plants
Power price estimated to rise in northeast by $4/MWh for each $10/t carbon price
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Market Outlook Key Drivers in Brazil
Demand was lessimpacted than in
Market willremain very tight
Outlook for2010-2011
Industrial demand
impacted by
recession: drop of 11%
in first half of 2009
Residential and
Large hydro projects
have long lead times
and are insufficient to
meet demand
Critical need for
Economic recovery leads
to resumption of 4-5%
annual electricity demand
growth (4,000 - 5,000 MW)
Increased use of thermal
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resilient: demand
growth of more than
5% in same period
resulting in build-out
of short lead time oil
and gas-fired plants
will drive power prices
higher
Hydro facilities remain
the low-cost choice for
new supply
Market Outlook New Build Costs in Brazil
Small hydro facilities receive a significant premium to larger hydro facilities
Users of power generated from small hydro facilities are eligible for a rebate for part ofheir transmission and distribution char es
120
140
160
180
Trend Line
Upward pressure on system costs, leading to power prices rising faster than
inflation
Current prices support new build of small hydro
Results of Hydro and Biomass Energy Auctions
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0
20
40
60
80
May-05 Oct-06 Feb-08 Jul-09 Nov-10
R$/MW
Auction Date
Source: CCEE (Cmara de Comercializacin de EnergaElctrica - Brazil's Electric Energy Commercialization Clearing House)
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Operating Profile Positioned for Growth
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Operating Profile
Stable cash flows and increasing operating margins
Contract profile provides downside protection
y o cons s en y genera e prem um revenues rom un-con rac e asse s
Low and stable operating costs and no need to purchase fuel to generate
Benefits from rising electricity prices driven by increasing cost of fuels and
carbon compliance cost
Long-term capital re-investment program to maintain assets and capture
incremental generation opportunities
($ / megawatt hour) 2004 2005 2006 2007 2008 2009E(1)
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(1) 2009E based on results to June 30, 2009 and assuming long-term hydrology and committed power prices for balance of year
Hydroelectric generation (MWh)Realized price $ 65 $ 66 $ 67 $ 71 $ 77 $ 69
Operating costs (20) (20) (18) (22) (21) (19)
$ 45 $ 46 $ 49 $ 49 $ 56 $ 50
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Operating Profile Current Hydroelectric andWind Contract Profile
76% of LTA generation is under contract or hedged in 2010 and >45% contracted
long term
80% of contracted revenue is with investment-grade counterparties
Opportunity to capture value from un-contracted generation as energy prices rise
2010 2011 2012
Generation (GWh)
PPAs(1) 7,372 6,887 6,125Financial Contracts 3,276
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n-con rac e , , ,
14,297 14,340 14,335
% Contracted 76% 48% 43%
Price ($/MWh) $ 75 $ 79 $ 83
(1) Power Purchase Agreements
Operating Profile Storage Flexibility
Generation not sold under a long-term contract is sold in the wholesale power
markets in northeastern North America
Value of water storage and asset flexibility
Medium-term hedges typically protect pricing on majority of un-contracted power
In addition to earning energy revenues, our un-contracted assets generate:
Annual Revenues(1)
~$100 million
PeakingPremiums
Maximizing value of storageto generate in highest
price hours
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(1) Based on average realized ancillary revenue from 2006 - 2009
per year or+/- $14/MWh
AncillaryRevenues
Providing services to gridoperators such as voltage
support, capacity andspinning reserves
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Operating Profile Sensitivity Analysis
We have significant leverage to increasing power prices with a low-cost position
that protects us from downside risks
Opportunity to capture value with rising energy prices
ase u y
Volume(1) Price(2) Total
Sensitivity$1/mmbtu or
$7/MWh
(TWh) ($/MWh) ($millions) ($millions)
Hydroelectric and wind
Revenue
Contracted generation 6.9 80 552
Un-contracted generation
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ea ng an anc ar es
Wholesale energy sales 7.4 60 444 52
Total 14.3 1,100
Operating costs 14.3 (20) (286)
Operating cash flow hydroelectric and wind 814
(1) Based on long-term averages for capacity in place as at June 30, 2009
(2) Based on contracts, forward markets, Brookfield estimates and historical experience
Growth Platform
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The Renewable Power Opportunity
Widespread acceptance of climate change
Recognition of the impact of greenhouse gases
Key trends supporting continued growth in renewable power generation
ew regu a ons ame a re uc ng coa - re power; emergence ocap-and-trade
Rising prices from fossil fuels and new-build requirements
Rising oil and gas prices and volatility, with increased resource scarcity
Significant need for new generation
Desire for energy independence and security
Reliance on small number of major oil and natural gas regions has increased
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energy security concerns worldwide; driving search for more local, renewable
energy sources
Hydro offer best alternative for long-term price certainty
Renewables becoming more cost-competitive with fossil-fuel generation dueto low operating costs and steady improvements in technology
Growth PlatformExpand platform from 4,150 to 6,000 MW in next five years through acquisitions anddevelopment activities
Track Record Outlook Strategy
Build
14 projects (500 MW)built on time and onbudget
Invested $800 million
80 professionals
125 MW inconstruction
600 MW late stagedevelopment
Target high growthmarkets with scarcityvalue
Contract framework toreduce risk
Long-term PPAs withcreditworthy counterparty
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Acquire
Invested nearly$3 billion in over20 transactions
Added 2,600 MW
More than 20,000 MWof hydro owned bynon-strategics
Wind is fastestgrowing renewablesegment
Leverage operatingplatform strengths
Value creation throughrising prices
Target wind assets withlong-term strategic value
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Conclusion
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Conclusion
Hydro assets benefit from sustainable competitive advantages and a particularly
strong credit profile in low-priced markets
Renewable energy is the fastest growing segment in the power business
, -
Ability to generate strong margins in all market conditions
Storage to mitigate low hydrology and realize peak pricing
No environmental fuel cost risk
Positioned to benefit from rising fuel prices and carbon costs
Long-term market outlook remains attractive
Need for new supply and rising electricity prices
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Fossil fuel prices rising
Carbon legislation is inevitable and will benefit hydro
Brookfield is very well positioned in this sector with large scale operating
platform in North America and Brazil with development, operating and power
marketing capabilities
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Q & A
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Property Ric Clark
Agenda
Overview of Portfolio
Office
Development
Retail
Residential
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Accomplishments and Future Growth
Conclusion
Q & A
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Global Reach With Local Insight
One of the largest property investors worldwide
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BAM Global Real Estate Offices:Number of Offices 30Number of Professionals 7,000 +Head OfficesOperating Offices
Global Property Operations$38 billion of property assets under management across the real estate spectrum
Office Retail ServicesResidentialDevelopment
Commercial Properties Development and Other Operations
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120 properties
North America,Europe and
Australia
25 retail malls
Australia, Braziland Europe
20 m sq. ft.commercial
North America,Brazil, Europe and
Australia
130,000 building lots,61 m sq. ft.
condo density
North America,Australia and
Brazil
Property /brokerage
North America andAustralia
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Global Office Operating Profile and Market Dynamics
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Office Portfolio
United States Canada Australia UK
120 commercial property assets and 85 million square feet under management
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60 Properties
47 m sq. ft.
7 Year Avg.Lease Term
29 Properties
20 m sq. ft.
7 Year Avg.Lease Term
20 Properties
10 m sq. ft.
8 Year Avg.Lease Term
11 Properties
8 m sq. ft.
16 Year Avg.Lease Term
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Outlook in United States
Challenges
Office fundamentals continue to weaken
and consumer confidence
Employment figures could continue to
decline into 2010 putting pressure on
vacancy rates and economic fundamentals
Tight credit constricting liquidity, pushing
near-term cap rates up, values down
Opportunities
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Although rising, vacancies are still well below
normal in most markets
Bid/Ask rental spreads have been covered inmajor markets activity increasing
Distressed deals are expected to hit the market in 2010 and 2011 as maturities
occur and lenders are no longer able to delay action
New York
Outlook in Canada
Challenges
Commercial property markets are reflective
o e economy
Vacancy rates have begun to rise
Significant new supply in Calgary and Toronto
will strain these markets
Opportunities
Vacancies are still on landlords side of
equilibrium and below peak in 1990s
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Canadian financial institutions have heldup better than their U.S. and international peers
Energy/Commodities will rebound first
Development activity remains frozen (outside Calgary and Toronto)
Toronto
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Outlook in Australia
Challenges
Foreign banks have retreated home, making
en ng un verse sma er
Remaining banks reluctant to lend on new deals even
at higher interest rates
Loan-to-value covenants continue to trigger mortgage
pay-down requirements on otherwise stable assets
Illiquid environment pushing near-term cap rates
up and values down
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Opportunities
Economy has not gone into a technical recession, and
long-term fundamentals with commodity-based economy remain strong Fresh infrastructure spending, started in second half of 2009, should aid recovery
Headline office vacancy rates are low and office development has been restrained
in most markets
48
Sydney
Outlook in United Kingdom
Challenges
Office fundamentals continue to weaken
City speculative development will further
erode supply fundamentals, enhancing
the vacancy spike predicted during 2009
and early 2010
Sublease inventory impacting market
Opportunities London
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Economy expected to emerge more quickly from recession than continentalEurope
Real estate has re-priced more rapidly and aggressively, than many markets,
attracting greater investor interest
49
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Global Office Operating Profile
Average occupancy: 95.4%
Avera e annual lease rollover over next 3 ears: 5.7%
Well positioned to ride out market downturn
Average lease duration: 8 years
Average tenant quality: A rated
Average net rent: 15% below current market
Non-recourse financing: 93%
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Exchange Tower & First Canadian PlaceToronto
Long-term Lease ProfileOur proactive leasing strategy produced over 2.6 million square feet of leases inthe first half of 2009. The current portfolio has an average lease term of 8 years,with minimal near-term expiries and an occupancy rate of 95.4%
acancy Rate by MarketAverage Lease Term
7 78
16
6%5%
12%
6%
8% 8%
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Brookfield Market
U.S. Canada Australia UK
2% 2%
U.S. Canada Australia UK
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Low Rollover Profile
000's Sq. Ft.Country
CurrentOccupancy Current 2009 2010 2011 2012 2013 2014 2015 2016+ Total
Limited vacancy and minimal rollover exposure ensures continuity of cash flow,
low capital expenditures and leasing costs
U.S. 94% 2,659 605 1,607 2,623 3,497 7,143 2,975 3,922 17,402 42,433
Canada 98% 281 147 881 1,353 1,327 3,208 490 2,610 6,002 16,299
Australia 98% 180 504 459 434 293 364 715 803 6,322 10,074
UK 95% 87 7 53 17 57 24 304 _ 1,112 1,661
Total 95% 3,207 1,263 3,000 4,427 5,174 10,739 4,484 7,335 30,838 70,467
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% of Total 5% 2% 4% 6% 7% 15% 6% 11% 44% 100%
* Excludes parking, developments and non-managed properties
Market Rent UpsideAverage in-place rents across portfolio are 15% lower than comparable marketrents, representing a mark-to-market opportunity for new leases
Market
Square
Feet
In-Place
Rent
Market
Rent
Mark to
Market
% Leases Rolling
2009-2011
U.S. 42,433 $ 23.95 $ 29.00 $ 5.05 11%
Canada 16,299 19.60 23.19 3.59 15%
Australia 10,074 30.00 33.00 3.00 14%
UK 1,661 61.67 58.33 (3.37) 5%
Total 70,467 $ 24.70 $ 28.92 $ 4.22 12%
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Note: Rents have been converted into US$ on the following basis: US$1 = C$1.10, A$1.20, 0.60
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High Quality Cash Flows
Focus on high credit quality tenants ensures long duration cash flows
47% of leasable area is comprised of tenants rated A or better
The balance of leasable area includes some of the worlds largest professional
service firms
Invested in markets with resilient economies that produce stable demand
Diverse Tenant Base 2000 NOI % 2009 NOI %
Financial 74% 59%
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Government 10
Energy 13% 18%
Services + Other 13% 18%
Total 100% 100%
Long Duration Financing
Well diversified debt maturity profile with average term of five years
U.S. minimal refinancing requirement until 2011
93% of financing is non-recourse to the company
Australia predominantly financed with bank debt on shorter term basis, the
norm in the country
No near term financing exposure in Canada or UK
Average interest rate of 5.2%
Successfully refinanced $1.2 billion of property level debt in 2009 and $2.9 billion
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n
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Frequently Asked Questions
Questions Response
U.S. Office Fund Brookfields share of the mezzanine debt is $0.8 billion
refinancing in 2011 By 2011, net operating income of the Fund is expected to increase by
37% from acquisition
Brookfield is well capitalized to fund any shortfall of the mezzaninedebt, if needed
Merrill Lynch
exposure Merrill Lynch leases 4.9 million square feet in Brookfield Properties
WFC portfolio
3.1 million square feet is occupied by Merrill Lynch and 1.8 millionsquare feet is sublet
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,amortized
Merrill Lynch owns a 49% interest in Tower Four reducing Brookfield
Properties net exposure to 2.5 million square feet and Brookfields to1.25 million square feet
High quality and low cost basis of WFC renders WFC a valueproposition
Frequently Asked Questions contd
Questions Response
Persistent decline Current in-place rents are 15% below market averages
in rental rates Minimal exposure due to low vacancy rate and low near term lease
rollover exposure (see below)
Significant increase
in vacancy Office portfolio is 95.4% leased
Annual lease roll over of only 5% for the next three years
Tenant bankruptcies High quality tenant base
High quality class AA and A space which experience flight to quality inthese market conditions
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Only 500,000 square feet of tenant bankruptcies in the worst twoyears in decades, of which 400,000 square feet re-let at higher rents
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Development Profile
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Property Active DevelopmentsApproximately four million square feet of active developments which is 74% pre-leased
*
Market Sq. Ft. % Leased Sq. Ft. % Leased Sq. Ft. % Leased
U.S. 781 42% 781 42%
Canada 1,425 78% 1,425 78%
Australia 486 87% 1,398 85% 1,884 86%
Total 2,692 70% 1,398 85% 4,090 74%
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* No active development in UK except 15% i nterest in Canary Wharf Developments. Excludes square feet under construction forthird parties
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Property Held for Development
16.3 million square feet in pipeline which will be
selectively built out
14.0 million square feet in North America
2.3 million square feet in Australia
Total capital invested to date of $0.8 billion
Minimal ongoing capital expenditure required
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u ou w en mar e con ons mprove
and return expectations of +20% can be achievedManhattan West, New York
Frequently Asked Questions
Questions Response
Increased risks with Began to shut down development 24 months ago
development Only commence construction of a development site on a risk-
adjusted basis
1.4 million square feet remaining under construction which is 85%pre-leased
Significant costs of
holding development Low cost basis for the 16 million square feet of development capacity
Add sites selectively and only on an opportunistic basis
Decreased overhead and holding costs to a bare-bones basis
Utilize key resources in development group to organically re-work
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current assets and density
3rd party construction
activity is dependent
on the economy
Benefiting significantly from increased government stimulusspending
External construction workbook has increased from $3.5 billion atDecember 2008 to $4.1 billion
External construction workbook is 47% complete, representingapproximately three years of scheduled construction activity
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Retail Operating Profile
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Global Retail Operating Profile
25 centres
Brazil 14
er
Average occupancy: 94%
Brazil 94%
Other 94 %
Average lease duration: 7 years
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Brazil 5 years Other 10 years
World Square Retail, Sydney
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Retail Outlook
Challenges
Vacancy rates in Latin America have moved up
moderately while rental rates have flattened
and in a few instances, declined
Opportunities
Continued growth in retail sales per square foot
Brazil has overtaken Mexico as the most
transparent real estate market in Latin America
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Emerging middle class continues to increase
while unemployment decreased from 8.8% to 8.1% in June
64
Shopping Patio Paulista, Sao Paulo
Residential Operating Profile
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Residential Portfolio
U.S. Canada Australia
130,000 residential lot equivalents and 61 million square feet of condominium
density provide the basis for future growth
Brazil
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Master plannedcommunities
California,Washington DC Area,
Colorado, Texas,Missouri
56,200 lots owned /optioned
Master plannedcommunities
Alberta, Ontario
57,300 lots owned
Condominiums
61 million sq. ft ofdevelopment
Master plannedcommunities and
apartments
16,500 lots andapartments
Residential Outlook
Challenges
In developed countries, the continued lack of
nanc ng as s gn can y re uce nves men
in the housing sector
Most distressed properties coming to market
are residential and land deals
Opportunities
Multi-housing properties continue to outperform
other commercial property types, but are not
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Total existing U.S. home sales rose
7.2 percent in July 2009, the biggest gain
since record keeping began in 1999 for existing
home sales and condos
Brazil sales are over 50% higher than last year markets are very strong
Heartland Homes, Calgary
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Residential Operating Profile
Quality developments and strong competitive positions in each market
Brazil Leading developer in Sao Paulo and Rio de Janeiro with over61 million square feet of condo development
Western Canada leading developer with 23% market share and over6,000 acres held for development in Alberta
U.S. Top five developers with approximately 7,000 acres held fordevelopment
Local teams with depth of experience in marketing, permitting and development
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Historical low cost land bank with opportunities in current environment to expand
holdings at significant discounts
Strategy of optioning land and lots to position for growth with reduced risk
Selective capital deployment should earn many multiples of capital
Frequently Asked Questions
Questions Response
Lack of mortgage Diversified residential real estate operations in four countries;
availability affects
sales
operations in the U.S. have been impacted the most by mortgageavailability
Rates at all-time lows affordability for consumers
The Brazilian operations are experiencing tremendous sales growthdue to an increase in mortgage availability
Brookfields
Canadian operations
are dependent on the
Canadian operations have a very low land cost basis
The operations continue to perform well and expect to earnapproximately a 10% return on equity in 2009
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Significant holding
costs of land
inventory
Brookfield is a long-term investor, using low-cost options toselectively gain control of large parcels of land
Brookfield has the capital necessary to prudently develop the land ona risk-adjusted basis
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Accomplishments and Future Growth
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2009 Accomplishments
Enhanced current returns through proactive management
,
and on budget
Leased over 2.6 million square feet
Refinanced $1.2 billion of debt
Issued $1 billion of fresh equity capital
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Raised $5 billion of institutional capital
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Investment Opportunities
Lack of funding, bleak investor sentiment and deteriorating coverage under loan-
to-value covenants have reduced property valuations and pressured debt to
As a result of challenging environment for real estate operators globally, there will
be opportunities to buy assets or platforms at attractive returns
equity ratios
Lenders have virtually ceased funding in an effort to restore capital and improve
regulatory ratios
Many real estate owners and debt holders require substantial portfolio
de-leveraging in an illiquid market
Shortage of experienced global real estate operators with balance sheet capacity
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an s s o qu c y comp e e arge sca e res ruc ur ngs an ransac ons
Real Estate Turnaround Consortium
$5 billion consortium to invest in underperforming/undervalued real estate
properties and companies
Brookfield is leveraging its real estate and restructuring expertise to take advantageof investment opportunities in the current environment
Investors include large pension funds, sovereign wealth funds and other
institutional investors
Allocations of $300 million $1 billon each
Global focus with emphasis on North America, Europe and Australia
Transactions will include companies or assets requiring
Financial and o erational restructurin
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Strategic direction
Re-development
Other active asset management
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Conclusion
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Conclusion
Well located, highest quality commercial property portfolio generating stable
cash flows
Brookfield is very well positioned to benefit from the current environment
One of the worlds largest real estate operating platforms providing unparalleled
access to opportunities across the real estate spectrum
Dedicated team of operating and investment professionals focused on value
enhancement
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Priorities
Invest consortium capital in high return real estate opportunities
,
solidify current operations to maximize profitability
Capitalize on U.S. housing woes as stabilizing market should yield opportunities
Continue to diversify investments beyond North America and office sector
Capitalize on market illiquidity and selectively look for value where owners are
overleveraged
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Q & A
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Infrastructure Sam Pollock
Agenda
Overview of Portfolio
ar e ynam cs an u oo
Accomplishments and Future Growth
Conclusion
Q & A
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Overview of Portfolio
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Infrastructure Current Portfolio~$7 billion of assets under management in the Americas, UK and Australia
SocialAgrilands
Infrastructure
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2.5 million acres ofhigh quality
timberlands inNorth and South
America
8,800 km inCanada and Chile
$3.5 billion $300 million $350 million
400,000 acres ofagrilands in Brazil:sugar cane, rubber,
soya, corn,pineapple, and cattle
Development andmanagement of
assets in UK andAustralia
$3 billion
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Infrastructure Strategy
Acquire high quality
Long-life assets
Minimal sustaining capital requirementsn ras ruc ure asse s Stable cash flow due to barriers to entry or equivalent
competitive advantage
Apply disciplined
approach to investing,
focused on value
Proactive business development to originate transactions
Focus on complex opportunities where we can buy forbetter value
Use operations-
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oriented approach to
enhance returns
Active management to earn superior returns
Operating Profile Transmission
8,800 km of transmission lines in Ontario and Chile
480 km development project in Texas
Brookfield has established a strong presence in two key markets
Brookfield capital investment $0.3 billion
Investment Thesis
Stable and predictable cash flow governed by
regulated frameworks and long-term contracts
Revenue and margins increase with inflation
Critical link between power production and
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consumption
Attractive capital projects to deliver growth
from existing businesses
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Operating Profile Timber
2.5 million acres of high quality timberlands in eastern and western
North America and Brazil
Brookfield has built the sixth largest timberland estate in North America
Focus primarily on high quality Douglas fir and Whitewood
33,000 acres of higher and better use land
Brookfield capital investment $0.5 billion
Investment Thesis
Total return value proposition is a combination of capital appreciation and
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cas re urns
Operating flexibility and access to export markets provide opportunity to
maximize pricing and adjust harvest levels in response to market conditions
Market Dynamics and Outlook
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Market Dynamics and Outlook Transmission
Transmission business continues to produce solid results despite impact of
global recession
-
Favourable regulatory environments and growing electricity demand in our
markets are increasing value of existing assets
Development required to expand and/or upgrade transmission grid in North
America and Chile
70% of the U.S. transmission grid is over 25 years old, requiring significantupgrades
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. . v u u u vrenewable power which presents opportunities for build-out of transmission
system
In Chile, continued build-out of infrastructure to support growth of miningand industrial companies
Market Dynamics and Outlook Timber
Anticipate that medium-term pricing will increase and operating results will
significantly improve, starting late 2010
Timber markets have been more volatile and experienced greater softness thanexpected, but long-term outlook positive
Wood remains a critical building material for U.S. residential and commercialconstruction
Year-to-date 2009 U.S. housing starts at 0.5 million(1) are significantly belownormalized levels
Long-term demographics support a return to normalized U.S. housing startsin the 1.6 to 1.8 million units per year range
Longer term, we expect attractive pricing to be supported by a number of factors
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Mountain pine beetle infestation reducing North American SPF lumber supplyby 20%
Increase in global demand from Asian markets and rapidly expanding bio-fuelindustry
Withdrawals of timberlands for conservation/environmental purposes
(1) Annualized, seasonally adjusted
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Market Dynamics and Outlook Timber contd
Favourable market conditions will allow implementation of our elevated
harvest plan
- -sustainable yield level
Elevated harvest levels x 30% increase in pricing cash flows increaseby $75 million annually
Private market transactions remain at high valuations despite recent market
conditions
Asset class continues to attract significant institutional interest
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Accomplishments and Future Growth
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2009 Accomplishments
Completed sale of Brazilian Transmission investment (TBE) for after tax proceeds
of $275 million
Awarded $500 million, 480 km transmission development project in Texas
Launched $400 million Colombia Infrastructure Fund
Issued $300 million of long-term notes at Transelec
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Listed Brookfield Infrastructure Partners on the Toronto Stock Exchange
Compelling Investment Opportunity
Global InfrastructureTrend Toward
Historically
Gap
DeficitPrivatization
Performance
Chronic under-
spending and budget
constraints
Aging assets
needing replacement
Public private
partnerships and
private financial
initiatives
On relative and risk
adjusted return basis
Inflation linked
revenues
$25 trillion over next25 years(1)
Driven by populationand economicgrowth
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(1) OECD estimates
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Growth Opportunities Current Transmission Operations
Existing network provides opportunities for
participation in
Expected capacity upgrades in both markets
Customer-initiated expansion projects
In second year of a five-year capital investment
plan to invest $1 billion in upgrades and expansions
to Chilean transmission system
Expansion required to support local miningand industrial companies
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$370 million booked to date
Commenced development of Texas Transmission
project
Growth Opportunity Leveraging our Transmission Platform
U.S. transmission grid upgrade required to maintain integrity of system
U.S. power grid is a patch-work consisting of a 300,000 mile system with
, su s a ons an , e ec r c power p an s
$200 billion of investment(1) will be required to upgrade and expand the
transmission grid
Returns supported by attractive rate-based framework (FERC)
Transmission investment required to support growth in renewable power
Wind energy only represents 1% of U.S. electricity supply(2) but 35% of electricity
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genera on capac y a ons n e . . Renewables currently comprise 10% of U.S. generation mix; the Obama
administration is targeting 25% by 2025
Construction of new transmission capacity required to transmit renewable
generation to population centres
(1) Estimate by former FERC Chairman Kelliher(2) In 2007
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Growth Opportunity Leveraging our Transmission Platform
Texas Transmission Development Project
In January 2009, Brookfield and a partner
awarded the right to build, own and operate
$500 million of transmission lines in Texas
Only participant without existing power
operations in Texas to win an award
Investment Thesis
Low development risk due to regulatory
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Essentially acquiring licensed utility at
1X rate base Opportunity to grow by participating in future build-out of Texas grid as an
incumbent
Growth Opportunities Timber
Current focus in Brazil and smaller value
opportunities around existing operations
,in Brazil through a Brookfield-sponsored
timberlands partnership
Identifying potential distressed opportunities
in North America
Value of timberlands has held up
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Current Investment Focus
North America South America Global Opportunistic
Regulated electricity and Regulated electricity and Regulated electricity and
Transmission systems
Oil and gas pipelines
Storage facilities
Timber
Transmission systems
Ports
Toll Roads
Airports
Timber
Transmission systems
Transportation
Return Expectations
Return Expectations
Return Expectations
+
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With lower levels of leverage and higher equity returns, the current environmentoffers very attractive risk-adjusted returns for infrastructure investments
Pipelines, Generationand Storage: 15% to 17%
Transportation: 17%+
Distressed Investment Opportunities
Brookfields strategy is to pursue distressed infrastructure investments in
companies with
Large scale, high quality assets
Complex and/or highly levered capital structures
Strong underlying cash flows
Trading at low valuations
Brookfield can benefit from expertise in corporate restructuring, liquidity
available to pursue these opportunities and its global operating presence
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Brookfield Infrastructure Partners L.P.
Established as Brookfields primary vehicle to own and operate certain infrastructure
assets on a global basis
Publicl - raded artnershi Current ield~ 6.5%
~ 38 million*
$0.265 per unit
NYSE: BIPTSX: BIP.UN
managed by Brookfield
ruc ure
Market Symbol
Fully-dilutedUnits
QuarterlyDistribution
Social
Portfolio by Asset Class
.
Recently sold investment in Brazilian
transmission for a $68 million gain
Substantial growth within existing
portfolio
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$23.94*Book Value
per unit
* as at June 30, 2009
ElectricityTransmission40%57%Timber
$16.84Unit Price(Sept. 14/09)
Conclusion
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Conclusion
Global investors are increasingly embracing infrastructure as an asset class with
compelling investment opportunities
Growth in spending in this sector expected to average US$2 trillion annually
through 2015 with increasing need for private vs. government investment
Brookfield is well positioned within the current environment
Embedded growth in existing asset base, especially as economy recovers
Focus and ability to execute large scale transactions
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Q & A
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Financial Review Brian Lawson
Agenda
Operating Performance
n r ns c a ues
Capitalization
Currency and Interest Rates
Liquidity
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Q & A
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Operating Performance
We are benefiting from
Locked-in long-term revenues
rong opera ng marg ns
Stable financing platform
Commercial office
95% leased with 8 year average term
Market rents exceed in-place rents by approximately 15%
Renewable power
80% of revenues sold forward until 2011 50% with avera e term of 12 ears
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Low cost producer
Several short duration businesses not contributing In our view, have reached bottom in most cases
Poised for increasing contributions
Earnings Profile
Adjusted IFRS valuation $ 16,650
Blended equity IRR 14%
Annualized return $ 2,300
IRR returns accrue in two forms:
Net operating income (50%) $ 1,150
Value appreciation (50%) 1,150
$ 2,300
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By way of reference, operating cash flows during 2008 and 2007, excluding major
disposition gains, were $1.2 billion and $1.1 billion, respectively
Under IFRS, we will record an increased proportion of unrealized value
appreciation in our financial statements
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Future Earnings Potential
Our base returns should be supplemented in the future by the following
Normalized contributions from development assets and cyclical businesses
Reinvestment of free cash flow
Expansion of institutional fund activities and fees contributed
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Underlying Values
Equity values, reflecting asset appraisal value
s a ecem er , m o ns , ex cep p er s ar e am ou n s o a er are
Book value per share under historical accounting at 12/31/08 $ 4,911 $ 8.92
Add: Appraisal value adjustments pursuant to IFRS 9,240 15.40
14,151 24.32
Add: Estimated excess value of assets over book value that are notincluded within the IFRS fair value framework(1)
1,500 2.50
Add: Increase due to cash flows and currency movements 1,000 1.67
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Does not include capitalized value of management fees, or value of franchise
to deploy capital in the future or the true selling value of assets compared with
IFRS values
Underlying value 16,651 28.49
(1) Management estimate
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Underlying Values Going Concern Value Illustrative*
Adjusted to Normalized Valuations(1)
$8.00
$36.50
Values Not Recorded Under IFRS
$2.50
IFRS Values(2)
$4.00$22.00
$26.00
28.50
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$22.00
* For illustrative purposes only; not intended to be a forecast of future results(1) Estimate based on 150 basis point IRR change on values(2) As at December 31, 2008, adjusted for cash flows and currency adjustments to June 30, 2009
Solid Capitalization
$20 billion of permanent equity capitalization
Conservative debt levels
15% deconsolidated; 44% across operations
Long-dated maturities reduces need to access markets
Negligible wholesale overnight funding
Diversified maturity profile
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Continued access to capital
Straight-forward financings backed by high quality assets and visiblecash flows
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Solid Capitalization contd
Liabilities
(billions) Assets Corporate SubsidiaryPropertySpecific
ShareholderCapital
Debt toCapital
Deconsolidated
Book value $ 10.6 $ 2.3 $ 0.7 $ $ 6.3 28%
Add: Underlying value adjustments 9.3 9.2
Underlying value 19.9 2.3 0.7 15.5 15%
Add: Pro rata interest in operations 21.1 2.9 12.0 0.5
Proportionate 41.0 2.3 3.6 12.0 16.0 44%
Add: Other partners interests 27.0 1.5 10.9 9.6
Consolidated $ 68.0 $ 2.3 $ 5.1 $ 22.9 $ 25.6 45%
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Currencies and Interest Rates
Our equity values are impacted by changes in currencies and long-term interest
rates
There has been considerable volatility in currencies and rates over the past year
We typically match fund our assets, which results in natural hedges through the
associated financing
From time to time, we will layer on additional mitigation through financial
contracts and other means, recognizing that this may result in net income
volatility
All of our currency and interest rate positions are covered by a comprehensive
risk management framework
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Currency Views
We are naturally long foreign currencies
BAM Equity
We hedge foreign investments if we believe the currencies are meaningfully
U.S. 50%
Canada 20%
Brazil 15%
Australia 10%
UK 5%
100%
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over-va ue . erw se, we s ay na ura y ong
We are comfortable with U.S. dollar exposure because we believe it will be an
extremely important global currency for many decades
Canada, Brazil and Australia are healthy commodity-based countries with
currencies, we believe, should perform well relative to the U.S. dollar
Interest Rate Views
Background
The valuation of our long-lived assets are sensitive to long-term interest rates
We generally match fund long-term liabilities against our long-term assets,
where possible
To the extent we have equity in assets, this portion of our investment is
un-hedged and therefore at risk to increases in rates of return
Current View
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recent fiscal stimulus
We will consider taking steps to further lock-in long-term rates over the next
number of years
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Liquidity and Capital Deployment
Over the past two years, we have completed over $10 billion of financings and
asset monetizations
Our ability to do this is a direct result of the stability of our operating cash flows,
the high quality of our assets, the conservative nature and flexibility of our
financing structure and the strength of our relationships
Proceeds were used largely to refinance short-term debt maturities, invest in our
business and new opportunities, and to increase surplus liquidity
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Financial Flexibility
Over the last two years, we generated and invested approximately $2 billion of
capital in our operations to drive higher future cash flow per share growth
(billions) Sources Uses
U.S. northwest timber $ 0.6 U.S. residential $ 0.3
Renewable power 0.6 Brazil hydro 0.4
Commercial office 0.2 Brazil residential 0.2
Brazil transmission 0.3 Commercial office 0.4
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Insurance + other 0.4 Brookfield common shares 0.3
$ 2.1 Other value opportunities 0.4
$ 2.0
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Significant Capital to Pursue Growth Opportunities
Currently over $3 billion of core liquidity
Looking forward, we have over $10 billion of available capital to take advantage
of the current environment and opportunities
Access to additional $7 billion of capital from partners to fund growth
$5 billion Real Estate Turnaround Consortium
C$1 billion Debtor-In-Possession Fund
$400 million Colombia Infrastructure Fund
$2.8 billion financings and monetizations since March 31st
Continued access to debt markets
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Brookfield Properties equity issue
~ $1.5 billion of free cash flow per year
Continued ability to monetize assets
Q & A
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Conclusion Bruce Flatt
Current Environment Improving
Positive signs of a global economic recovery
Globall central banks are su l in li uidit
Cost of capital and credit spreads are normalizing
The rapid deterioration of business fundamentals has stopped
Access to capital markets has improved for well capitalized issuers
U.S. housing market is stabilizing
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Institutional investors are once again committing capital to private funds
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Current Environment Improving contd
Though not all benefiting equally
Man com anies and assets are overlevera ed or oorl financed
Demand still lagging in consumer spending-related sectors
Labour market recovery still required for sustained recovery to take hold
Opportunities for investment for those with capital
Turnaround/restructurin ex ertise
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High quality assets for significant discount values
Existing operations benefit from contractual cash flow streams
Well Positioned in the Current Environment
Permanent equity
Solid Capitalizationwith Downside
Protection
SubstantialLiquidity and CashFlow Generation
Growth Potential
Over $3 billion liquidity
-
Strong and growing
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Low parent company
debt
Conservative financing
-
commitments
Significant and
sustainable cash flows
and capital turnover
relationships
Significant pipeline of
opportunities
Leading operating
platforms
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Significant Franchise Value
Our operations are able to leverage corporate expertise and the Brookfield brand to
enhance underlying value over the long term
BROOKFIELD
OPERATING PLATFORMS
Strategic direction
Capital allocation
Global relationships
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Access to deal flow
Transaction execution
Operational excellenceFocus on profitability
Non-recourse financing
Summary Priorities
Put to work the recently raised $6 billion in capital commitments to take
advantage of the current environment
Continue to generate substantial funds for investment strategies
Foster organic growth of each operating platform through continued proactive
asset management
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Final Thoughts
This is an unprecedented period in recent history to acquire high quality assets
and create value for investors
Few companies have the capital, geographic presence, scale and depth of
operations to take advantage of opportunities
Brookfield has track record of expanding our operating platforms at exceptional
values during turbulent times
The past two years have only strengthened our franchise support from
employees who see us as a survivor and want to be with us
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institutions who view that we were prudent with their capital and our
model aligns well today with them
banks want to lend to risk averse, good investors
shareholders who we hope view us as prudent stewards of their capital
Q & A
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Management Team Presenting Today
Management Team Presenting TodayRic Clark, Senior Managing PartnerRic is the Senior Managing Partner, Property Operations. Ric joined Brookfield in 1996 and is responsible for the company's realestate operations. He is the CEO of Brookfield Properties and formerly was the President of the company's U.S. CommercialOperations. Ric has been employed with the company's predecessors since 1984 in various executive roles. A Certified PublicAccountant in the United States, Ric holds a Business degree from the University of Pennsylvania.
Bruce Flatt, Senior Managing Partner & CEOi i i i i i i i i i iBruce is the Senior Managing Partner and Chief Executive Officer of the company. He was appointed to this position in February
2002, following eight years in various senior executive positions in Brookf ield's property operations. Bruce joined Brookfield in 1990and worked in a number of the company's operations prior to joining the real estate business in 1994. He holds a Business degreefrom the University of Manitoba.
Brian Lawson, Senior Managing Partner & CFOBrian is Senior Managing Partner and Chief Financial Officer. Brian has held senior management positions within Brookfield since theearly 1990s. As Chief Financial Officer, Brian is responsible for Brookfield's financial reporting, corporate finance and overall fundingactivities of the organization. Brian graduated from the University of Toronto and subsequently qualified as a Chartered Accountant.
Richard Legault, Senior Managing PartnerRichard is Senior Managing Partner, and President and Chief Executive Officer of Brookfield Renewable Power. Appointed in 2000,Richard is responsible for the power generation operations at Brookfield. Richard was previously Vice-President, Energy Division ofJames Maclaren Industries, an affiliate of Norbord, where he formerly held various senior energy and financial positions. Richard has
a Bachelor of Accounting from the Universit du Qubec in Hull, and is a member of the Canadian Institute of Chartered Accountants.Sam Pollock, Senior Managing PartnerSam is a Senior Managing Partner and Head of Infrastructure. Sam is responsible f or the expansion of our infrastructure operatingplatform Sam joined Brookfield's financial services operation in 1994 and has held various senior positions in the organization