Q1 2024 Brookfield Corp Earnings Call
Yeah.
Speaker Change: Hello, and welcome to the Brookfield Corporation first quarter 'twenty 'twenty four conference call and webcast. At this time all participants are in the listen only mode. After the speaker's presentation, there will be a question and answer session.
Speaker Change: Ask a question during this session you will need to press star one one of your telephone.
Speaker Change: I would now like to hand, the conference call over to our first speaker Ms. Angela <unk> Vice President. Please go ahead.
Angela: Thank you operator, and good morning, welcome to Brookfield Corporation's first quarter 2024 conference call on the call today are Bruce Flatt, Our Chief Executive Officer, Nick Goodman, President of Brookfield Corporation, and Sachin Shah Chief Executive Officer of our wealth solutions business.
Angela: Bruce I'll start off by giving a business update followed by Nick who will discuss our financial and operating results for the quarter and finally, Sachin will provide an update on the outlook for what's worse.
Speaker Change: After our formal comments, we'll turn the call over to the operator and take analyst questions in order to accommodate all those who want to ask questions. We ask that you refrain from asking more than two questions.
Speaker Change: I'd like to remind you that in today's comments, including in responding to questions and in discussing new initiatives and our financial and operating performance. We may make forward looking statements, including forward looking statements within the meaning of the applicable Canadian and U S Securities Law. These.
Speaker Change: Statements reflect predictions of future events and trends and do not relate to historic events.
Speaker Change: They are subject to known and unknown risks and future events and results may differ materially from such statements.
Speaker Change: 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 and with that I'll turn the call over to Bruce.
Bruce: Thank you Angela and welcome to everyone on the call.
Bruce: We generated strong financial results in the first quarter with distributable earnings for realization of $1 billion for the quarter.
Bruce: And $4 $3 billion for the last 12 months.
Bruce Flatt: This represented an increase compared to last year of 10%.
Bruce: The outlook remains strong with each of our underlying businesses continuing to execute their respective business plans driving organic earnings growth.
Bruce: Supplemented by strategic acquisitions.
Bruce: Of note our wealth solutions business reached a significant milestone through its recent acquisition of American equity life R. E. L. R.
Bruce: Our asset management business announced an important investment in cast awake further enhancing our asset backed lending capabilities.
Bruce: And our operating business.
Bruce: <unk> continued to deliver resilient earnings backed by strong demand for their high quality assets.
Bruce: Sachin Shah CEO of our wealth solutions business is with US today, and we'll spend more time on the ADL transaction in his remarks.
Bruce: Since the start of the year, we repurchased over $700 million of our shares.
Bruce: Excellent prices and we continue to allocate capital to share repurchases.
Bruce: Hansen the value of each of your remaining shares.
Speaker Change: Shifting briefly to the markets.
Speaker Change: The macro environment continues to normalize.
Speaker Change: With interest rates expected to have peaked and inflation beginning to cool.
Speaker Change: Liquidity has returned to capital markets.
Speaker Change: Most major economies in the world are performing better than anticipated and risk appetite has come back to most markets.
Speaker Change: With conditions last restrictive it appears they are wearing them we are in a more stable and constructive market than in the past couple of years.
Speaker Change: With this backdrop transaction volume is picking up in particular for high quality businesses.
Speaker Change: And assets of the type that we own.
Speaker Change: This enabled us to advance a number of monetization initiatives, which Nick will touch on in his remarks at the same time, though we see we anticipate seeing investment opportunities for companies with balance sheets and capital structures that cannot withstand this more normalized rate environment.
Speaker Change: With a record of $150 billion of capital to deploy this should be an excellent period.
Nicholas H. Goodman: For us also to invest.
Nicholas H. Goodman: Turning to the performance of our business today.
Nicholas H. Goodman: Our advantage of scale, our global platform and our operating capabilities combined with the synergies across our Brookfield ecosystem make.
Speaker Change: Our franchise is stronger and more resilient than it has ever been.
Speaker Change: The compounding of all these factors enables us to achieve strong and stable financial returns throughout market changes.
Speaker Change: And we've always found that this is the safest way for long term wealth.
Speaker Change: In terms of generating an earning returns.
Speaker Change: We offer a few comments on the many ways to make a good return for stakeholders as.
Speaker Change: As we own and build the backbone of the global economy. There generally are three main drivers of performance for private investors like us.
Speaker Change: The first is margin expansion and growing our business in other words, earning more by running our business well.
Speaker Change: The second is multiple expansion.
Speaker Change: For instance, <unk>.
Speaker Change: Fencing someone at the long term benefits and having built the business getting a higher multiple than you paid for an income stream.
Speaker Change: Lastly, adding more financial leverage which amplifies returns.
Speaker Change: By having the excess return earned on a smaller amount of equity.
Speaker Change: Most of the returns on our investments come from managing our business as well and growing the underlying cash flows.
Speaker Change: In addition, we have found that the safest way to earn good returns is through finding businesses.
Speaker Change: They can continuously deploy capital in a more productive way grow their operations and also operate in a cost disciplined fashion, therefore expanding margins.
Speaker Change: As the era of free money diminishes.
Speaker Change: Running businesses better through operating capabilities.
Speaker Change: Coming increasingly relevant to differentiating reasonable returns.
Speaker Change: Excellent returns.
Speaker Change: This drives our approach to continuously growing our operating teams and assisting our underlying businesses to be better and improve.
Speaker Change: In summary, we continue to execute on our business plans and growth initiatives.
Speaker Change: Differentiating ourselves through our significant amount of deployable capital global scale.
Speaker Change: And the deep operating expertise I just mentioned.
Speaker Change: As always we remain focused on generating strong returns.
Speaker Change: Compounding wealth over the long term for shareholders.
Speaker Change: Thank you as always for your continued support and interest in Brookfield and with those comments I'll turn the call over to Nick.
Nicholas H. Goodman: Thank you Bruce and good morning, everyone.
Nicholas H. Goodman: Results for the first quarter was strong as our businesses continued to generate stable and growing cash flows.
Nicholas H. Goodman: Distributable earnings or de before realizations were $1 billion or <unk> 63 per share for the quarter and $4 $3 billion or $2 70 per share over the last 12 months.
Nicholas H. Goodman: This represents an increase of 10% per share over the prior year after adjusting for the distribution of <unk>, 25% of our manager in December 2022.
Nicholas H. Goodman: Total <unk> was $1 2 billion or <unk> 77 per share for the quarter of $4 9 billion or $3 <unk> per share over the last 12 months with net income of $5 2 billion.
Nicholas H. Goodman: Over the same period.
Nicholas H. Goodman: Starting with our operating performance.
Nicholas H. Goodman: Our asset management business generated distributable earnings of $621 million or 39 cents per share in the quarter $2 5 billion or $1.58 per share for the last 12 months.
Nicholas H. Goodman: We continued to see strong demand for our private fund strategies with total inflows of $20 billion in the first quarter.
Nicholas H. Goodman: Fee bearing capital was $459 billion as of March 31, 6% higher than 12 months ago with fee related earnings in line with the prior year quarter.
Nicholas H. Goodman: Real estate recently announced the acquisition of a majority stake in cast awake, a premier asset backed lender focused on aviation specialty and real estate finance broadening our presence in asset backed lending.
Nicholas H. Goodman: We expect fundraising to build throughout the year, leading to strong growth in earnings.
Nicholas H. Goodman: Our wealth solutions business had a strong quarter continuing to generate stable and growing long dated annuity like cash flows.
Nicholas H. Goodman: Distributable operating earnings were $273 million or <unk> 17 per share in the quarter and $868 million or <unk> 55 per share over the last 12 months and the average cash yield on our capital today is 18%.
Nicholas H. Goodman: As at the end of the quarter the average cash yield on our investment portfolio was five 7% approximately 2% higher than the average cost of capital, which has a duration of 10 years on average.
Nicholas H. Goodman: Sachin will speak to our wealth solutions business in more detail. However, it is worth emphasizing that with the close of <unk> in May our annualized earnings are now approximately $1 4 billion.
Sachin G. Shah: And we are on track to grow annual earnings to approximately $2 billion driving significant cash flow growth as a corporation.
Nicholas H. Goodman: Through our combined wealth solutions platforms, we continue to raise approximately $800 million a month from retail products for high net worth and mid market clients.
Nicholas H. Goodman: We remain on track to reach over $1 $5 billion of monthly monthly retail floors in aggregate are close to $20 billion annually.
Nicholas H. Goodman: Our operating businesses continued to deliver stable cash flows generating distributable earnings of $337 million or <unk> 21 per share in the quarter and $1 5 billion or 95 per share over the last 12 months.
Nicholas H. Goodman: Cash distributions are supported by the resilient and high quality earnings across our businesses.
Nicholas H. Goodman: And our real estate business, we continued to see the outperformance of our high quality assets and an increasingly bifurcated market specifically in our core portfolio same store net operating income grew by 5% over the last 12 months and occupancy levels remained at 96%.
Nicholas H. Goodman: In the quarter, we signed over 7 million square feet of office and retail leases.
Nicholas H. Goodman: Focusing on our office portfolio leasing spreads increased by 14% in the quarter and our leasing activity remains robust.
Nicholas H. Goodman: A few examples of our leasing activity included 233000 square foot lease in Toronto 179000 square feet in New York, and 211 square feet between London and Berlin.
Nicholas H. Goodman: In addition, a large office tenant recently announced it will be extending its long term lease at Canary Wharf and looking ahead, our office leasing pipeline remains strong at roughly a million square feet.
Nicholas H. Goodman: While in our retail portfolio leasing activity continues to trend positively with leasing spreads of 15%.
Nicholas H. Goodman: Overall, we see many tier ones for the earnings and valuations in our real estate business with core operating cash flows continuing to grow interest rates interest rates and inflation, peaking and expect it to come down financing spreads tightening and transaction activity picking up.
Nicholas H. Goodman: In our renewable power and transmission business, we continue to see robust demand for clean energy with accelerated global trend of digitalization.
Nicholas H. Goodman: Subsequent to the quarter, we signed a landmark agreement with Microsoft to deliver over 10, five gigawatts of new renewable energy capacity between 2026 and 2013 through the development of projects in the U S and Europe to support Microsoft Data Center growth.
Nicholas H. Goodman: Now turning to monetization across all our businesses. We are very active on a number of sales processes.
Nicholas H. Goodman: With transaction volume picking up picking up we're seeing a flight to quality with buyers focused on the highest quality businesses and assets.
Nicholas H. Goodman: We recently announced the sale of a 49% stake in a premier office asset in Dubai generating an above hurdle return. We're also progressing the sales of a hotel at our Premier mixed use complex in Seoul Korea.
Nicholas H. Goodman: Our fiber platform in France on a road fuels operation in Europe.
Nicholas H. Goodman: Most importantly substantially all sales were completed are expected to be agreed at prices in line with our carrying values.
Nicholas H. Goodman: In addition, we are advancing a significant pipeline of renewable asset sales targeting $3 billion of proceeds in aggregate this year at attractive returns.
Nicholas H. Goodman: Over the last 12 months, we recognized $547 million of net realized carried interest into income.
Nicholas H. Goodman: We also generated $1 $7 billion of unrealized carried interest increasing our total accumulated unrealized carried interest to $10 1 billion.
Nicholas H. Goodman: Of which $9 $1 billion of directly owned by the Corporation.
Nicholas H. Goodman: And with our asset sales pipeline active we expect to realize additional carried interest into income through the remainder of the year.
Nicholas H. Goodman: Shifting to our balance sheet and liquidity, we continue to maintain a conservatively capitalized balance sheet and high levels of liquidity to date, we have a record of $150 billion of deployable capital, enabling us to invest opportunistically and at scale.
Nicholas H. Goodman: Liquidity coming back to the capital markets, we executed on approximately $40 billion of financings across the group over the last few months.
Nicholas H. Goodman: Notable highlights would include as a corporation, we issued $750 million of 30 year bonds to enhance liquidity.
Nicholas H. Goodman: Offering saw the highest demand for investors, we've ever seen and speaks to the significant appetite for quality and duration in the market today.
Nicholas H. Goodman: In addition, our corporate credit rating with Moody's and S&P.
Nicholas H. Goodman: S&P was reaffirmed the <unk> III and <unk>, respectively.
Nicholas H. Goodman: And our real estate business, we completed close to $15 billion of financings, including $4 billion in our office portfolio. As an example, we executed on $2 billion of debt at our Premier mixed use complex in Seoul Korea.
Nicholas H. Goodman: We have repriced approximately $12 billion of financings across six portfolio companies, extending duration and reducing stress spreads by 40 basis points on average.
Nicholas H. Goodman: And lastly, our renewable power and transition and infrastructure businesses executed on key financings, including the issuance of $3 $85 billion.
Nicholas H. Goodman: Of investment grade bonds as part of our partnership with Intel for their semiconductor facility in Arizona with the issuance being heavily oversubscribed.
Nicholas H. Goodman: These financings emphasize the continued demand from lenders for transition and Digitization opportunities.
Nicholas H. Goodman: Moving on to capital allocation, we reinvested, our excess corporate cash flow back into our businesses and returned $626 million to shareholders through regular dividends and share buybacks in the quarter.
Nicholas H. Goodman: To date this year, we repurchased over $700 million of shares in the open market, adding approximately <unk> 50 per share of value to each remaining share.
Nicholas H. Goodman: And we will continue to allocate capital for further share repurchases should prices remain attractive for us.
Nicholas H. Goodman: Overall, we have had an active start to the year delivering strong financial results and executing well on our strategic plans as we look ahead over the course of 2024 and beyond we expect that the continued momentum in our financial performance combined with a record level of deployable capital sets us up to grow earnings and enhance value even further.
Nicholas H. Goodman: With that I am pleased to confirm to our board of directors has declared a quarterly dividend of <unk> <unk> per share payable at the end of June to shareholders of record at the close of business on June 13th 2024.
Nicholas H. Goodman: Hi, Thank you for your time and I'll now pass the call over to Sachin.
Nicholas H. Goodman: Okay.
Sachin G. Shah: Thank you Nick and good morning, everyone with the recent close of the acquisition of Aes <unk>. We thought it was worthwhile to provide an update on our wealth solutions business and its outlook going forward.
Sachin G. Shah: As many of you know we launched Brookfield reinsurance in late 2020 to focus on annuities and retirement income at a moment in time, when historically low rates presented a unique opportunity to learn the business and potentially meaningfully benefit if rates gradually normalized to higher levels.
Sachin G. Shah: Our strong capital position decades of investment experience and deep operating capabilities positioned us well to build a scale business as demand for retirement income was on the rise.
Nicholas H. Goodman: As we set out to build the business our focus as always was on compounding capital at 15% to 20% returns on equity over the long term, while managing downside risk.
Nicholas H. Goodman: Today in the United States. There is a significant short file in retirement funding for aging populations to the tune of seven trillion deficit.
Nicholas H. Goodman: There are approximately 60 million people in the U S, who are 65 years or older representing one out of every six people.
Nicholas H. Goodman: 100 years ago that number was one out of every 20 people.
Nicholas H. Goodman: And over the next two decades, the U S will add another 25 million people to that aging cohorts.
Nicholas H. Goodman: Accordingly, as the population gets older in the western World the retirement deficit that exists today will only compound.
Nicholas H. Goodman: Furthermore, less than 50% of U S workers qualify for retirement benefits through their employer, putting significant pressure on government entitlements.
Nicholas H. Goodman: As a result, the demand for private sector solutions that provide stable annuity like income for an aging population are not only large today, but will grow well into the future.
Nicholas H. Goodman: Accordingly in 2023 record annuity sales surpassed $385 billion.
Nicholas H. Goodman: In the United States.
Nicholas H. Goodman: Our business today is primarily focused on long duration fixed annuity and pension products, where we provide a fixed rate of return to individuals for a predictable number of years.
Nicholas H. Goodman: These products help individuals plan for retirement.
Nicholas H. Goodman: Manage and protect their wealth.
Nicholas H. Goodman: And ensure they have a stable income source well into the future.
Nicholas H. Goodman: These products also have a very stable and predictable profile for us, allowing us to focus on investment returns rather than insurance outcomes.
Nicholas H. Goodman: As we have built out our business. We have maintained this core principle, where our products are designed to provide long term long term stable income to individuals and a predictable profile to us, which then allows us to utilize our investment capabilities to generate consistent excess spreads.
Nicholas H. Goodman: The stable profile of individual income requirements and the long dated nature of our investments ensures our earnings are highly predictable and very cash flow generative over a very long period of time.
Nicholas H. Goodman: In effect, we are leaning on the skills that have made us successful for decades, while generating stable and growing utility like earnings similar to the earnings generated by our other Brookfield businesses.
Nicholas H. Goodman: Three market differentiating capabilities unique to Brookfield continue to underpin our business.
Nicholas H. Goodman: Brookfield asset management's leading investment franchise.
Nicholas H. Goodman: He has over $50 billion of credit opportunities across Brookfield ecosystem annually.
Nicholas H. Goodman: These investment products are ideally suited to insurance balance sheets due to their low volatility capital efficiency and stable returns.
Nicholas H. Goodman: And importantly, our wealth solutions business and the credit business within Brookfield asset management complement each other and should grow in tandem driving earnings and cash flow generation.
Nicholas H. Goodman: Second Brookfield Corporation has 155 billion permanent capital balance sheet underpinned by its long term approach to investing capital, earning attractive risk adjusted returns with downside protection and not taking undue risk with capital.
Nicholas H. Goodman: We've applied the same philosophy to growing our wealth solutions business, our $8 billion of equity capital within Brookfield reinsurance has been invested from Brookfield Corporation's balance sheet, providing 100% alignment with insurance policyholders distribution partners and other stakeholders.
Nicholas H. Goodman: And third our operational expertise.
Nicholas H. Goodman: Historically, we have been successful across Brookfield, when we manage operations to lower risk and drive growth.
Nicholas H. Goodman: In this case that approach led us to quickly being more than just a financial investor and focused us on building out our own direct policy origination platform.
Nicholas H. Goodman: The ability to get closer to customers create new products manage risk and aligned business initiatives to our long term objectives supports our ability to deliver high teens returns and compound capital over the long term.
Nicholas H. Goodman: Our progress in building out the business took its first major step in 2022 through the acquisition of American National a writer of premiums across life annuity and property and casualty product lines.
Nicholas H. Goodman: At the time of our acquisition American National had never sold more than $1 billion of annuities in any year of its 100 year operating history.
Nicholas H. Goodman: Following our acquisition, we focused the business through strategically exiting a number of noncore product lines, optimizing the investment portfolio and improving capital efficiency.
Nicholas H. Goodman: In our first full year of operations, we sold over $6 billion of annuities out of American National.
Nicholas H. Goodman: In 2024, we are targeting 11 billion of annuity and pension origination.
Nicholas H. Goodman: Today, our investment is realizing over 20% returns on invested equity and our growth prospects are tremendous.
Nicholas H. Goodman: To further scale and diversify our capabilities. We recently completed the acquisition of American equity life.
Nicholas H. Goodman: Although we only closed last week, we have hit the ground running to integrate the business seamlessly into our broader operations.
Nicholas H. Goodman: We have improved <unk> credit rating, given our financial strength and we are positioned to record the highest annuity sales in the Companys history over the next 12 months.
Nicholas H. Goodman: With the acquisitions, we've made over the last few years and our organic growth. We have built the business into one of the leading providers of annuities and pensions in the U S. We now have over $110 billion of diversified insurance assets and the capability to originate over $20 billion of annuity sales annually.
Nicholas H. Goodman: In the near term.
Nicholas H. Goodman: Our business today generates approximately $1 4 billion of new annualized earnings on $8 billion of invested capital as.
Nicholas H. Goodman: As we optimize and reinvest the asset portfolio, we expect earnings to grow significantly from here as our portfolio today has over 25 billion of cash and shorter duration financial assets.
Nicholas H. Goodman: And as we reinvest these assets over the next 18 to 24 months the existing business is on track to surpass 2 billion of cash earnings annually.
Nicholas H. Goodman: Applying a conservative multiple to these long dated annuity like cash flows. We believe we have built a business and a franchise that is worth in excess of $20 billion.
Nicholas H. Goodman: Given our scale operational capabilities and significant embedded growth combined with our M&A capabilities, we see a credible path to once again doubling this business over the next five years as we continue to target, 15% to 20% returns on our equity compounding over the long term with that I will.
Speaker Change: I'll turn the call back over to the operator for questions.
Speaker Change: Thank you and as a reminder, if you have a question. Please press star one of your telephone.
Speaker Change: And your question has been answered or you want to remove yourself from the queue. Please press star one again.
Nicholas H. Goodman: Our first question comes from the line of Mario <unk> with Scotiabank. Your line is now open.
Mario: Hi, Good morning, and thank you for taking my questions. The first one is maybe for Nick just on carried interest in realizations.
Mario: Nick on the last call you talked about realized carry BBB and the $400 million to $500 million range for 'twenty for fairly consistent 23, Q1 was off to a surprisingly solid start.
Mario: <unk> $200 million.
Mario: With the language, suggesting transaction market should continue to improve so I guess the question is this quarter to 500 million still a reasonable range or can we see b and exceed that level.
Nicholas H. Goodman: Hey, Mario Good morning, Yes, I think it's still a reasonable range, we expected it to be a little bit frontloaded. This year, just given monetization and where they're coming from and in which funds. So I would still work off that previous level. We gave you.
Speaker Change: Got it Okay and then my second question just on real estate debt I think you mentioned 15 billion refinancing.
Mario: What's highlighted can you can you talk about what you've seen in terms of spreads on both the unsecured and secured market quarter over quarter for the types of assets that youre looking to refinance as well as kind of lender appetite in terms of where ltvs are going.
Speaker Change: Yes, sure I would say as a general comment liquidity in the capital markets has been very strong to start the year. We highlighted a number of financings that we are continuing to execute.
Mario: Very strong financings across the business every day.
Mario: And I think when you are bringing high quality assets to the market debate is very strong.
Mario: And especially when people are looking for duration backed by long duration cash flows in real estate, specifically, it's been a really strong start to the year I think in the market in the U S. Theres more see MBS issued already this year than in totality and last year, we've seen demand strong across the spectrum.
Mario: Retail very strong multifamily logistics.
Mario: And all those kind of assets industrial and we're starting to see the bit improved for officers, where we've seen some office assets start to come into conduit CMS for the highest quality real estate. So we're starting to see the liquidity and appreciation of the bifurcation of office and the demand for and on high quality real estate improved spreads.
Mario: Tightened I see across the board I am not sure Ltvs are drifting not much higher but demand is definitely stronger across the capital stack, but the flow of demand for the tripoli's is driving down the spreads and that helps the overall cost. So I would say generally we see spreads continue to tighten but more importantly, we're seeing the demand that being there which is <unk>.
Mario: <unk> and refinancings, and we will start to support transaction volume in the U S outside of the U S.
Mario: Markets are very strong with a $2 billion financing in Korea, which is predominantly office to $600 million office financing in Perth, Australia. So I would say that demand in depth of appetite for real estate across the spectrum, including office continues to be very robust globally.
Speaker Change: Okay. Those are my two.
Speaker Change: Thank you. Thank you.
Mario: Thank you. Our next question comes from the line of Ken Worthington with Jpmorgan. Your line is now open.
Kenneth Brooks Worthington: Hi, good morning, and thanks for taking the question.
Kenneth Brooks Worthington: Part of the Brookfield game plan has been to monetize the non core part of the real estate holdings.
Kenneth Brooks Worthington: And the thought was this can be done over say, a five to seven year period.
Kenneth Brooks Worthington: You and Bruce called out this morning, the improving conditions you called it the monetization that you're executing on how do you see the monetization picture developing for what you had previously called out as those noncore balance sheet investments versus how youre seeing the Brookfield funds.
Kenneth Brooks Worthington: Monetize given the difference in the investment mix.
Mario: And I guess the follow up would be.
Mario: Is going to be a factor in terms of the <unk>.
Mario: Modernization picture going forward.
Speaker Change: So let me let me address the different parts of that Kevin maybe I'll start with insurance first I think we've identified that the core real estate that we own the top 35 office and retail assets that we want to own all of our portion of it for a very long time, which are truly some of the best real estate in the world with long.
Speaker Change: <unk> cash flows high quality assets those are perfect assets for insurance companies to look to own. So as we think about the long term ownership of the core of interest CEO, but the Broadwell solutions insurance platform will play a part in that and we expect to make progress on that in the next 12 months.
Speaker Change: As it speaks to monetization, yes liquidity and transactions has started to pick up we still in an office building in Brazil. So it's not specifically assets outside of office that we're seeing.
Speaker Change: Capital markets improve liquidity improves and that supports transactions. So our plan on T&D Hasnt changed.
Speaker Change: Office in the U S. Maybe has a little bit more time to go before transaction activity really picks up and that will be supported by the improved liquidity in the capital markets, but our outlook for that Hasnt changed and our strategy is the same.
Speaker Change: Okay, great. Thank you very much.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Cherilyn Radbourne with TD Cowen. Your line is now open.
Cherilyn Radbourne: Good morning.
Cherilyn Radbourne: I wanted to start with a question on wealth solution, so probably for new fashion in.
Cherilyn Radbourne: In the letter you mentioned further growth through pension risk transfer and international expansion.
Cherilyn Radbourne: Was hoping you could touch on the current environment for pension risk transfer deals and comment on some of the complexities and opportunities associated with international expansion.
Speaker Change: Sure no problem.
Speaker Change: So the pension markets both in the U S and the U K.
Speaker Change: Our very strong the U K has been at it now probably for about six or seven years, where.
Speaker Change: Every year you get.
Speaker Change: A very large.
Cherilyn Radbourne: Set of pensions coming off corporation balance sheets into.
Cherilyn Radbourne: Private hands and as a result, we've seen very meaningful growth in some of the pension aggregators in the U K.
Cherilyn Radbourne: But there is still probably 20 years and.
Cherilyn Radbourne: Close to a trillion dollars of pensions that have to come off corporation balance sheets in the UK alone.
Cherilyn Radbourne: Over the next two decade period so.
Cherilyn Radbourne: So we see tremendous growth there and it's a market, where we think given our asset origination in what's called matching adjustment in the UK, we could be highly successful. The U S is much earlier in their transition from pension sitting on corporate balance sheets, and so I think we have not only a longer runway, but given the scale of U S companies.
Cherilyn Radbourne: Even though larger volume of pension that will come off.
Cherilyn Radbourne: All that being said.
Cherilyn Radbourne: We started building out our U S pension business last year.
Cherilyn Radbourne: We.
Cherilyn Radbourne: We in the last 12 months have done $3 billion of U S pensions.
Cherilyn Radbourne: In terms of.
Cherilyn Radbourne: The transactions that we've won.
Cherilyn Radbourne: And we're still just in the very early days I think that's a business that can comfortably scale to $7 billion to $10 billion a year in the U S for us and in the U K. We are in the process of getting licensed we should be in a position by the end of the year, where we're actually bidding on transactions.
Cherilyn Radbourne: And similar to our U S strategy will start small and eventually migrate into the larger transactions.
Speaker Change: That's great color. Thank you.
Cherilyn Radbourne: And then just in terms of capital allocation during the quarter. We noticed that there was just over $450 million that was reinvested back into the operating businesses can you give us some color as to what that went toward.
Speaker Change: Yes for sure Sharon.
Speaker Change: So that was as you say capital allocation, so taking the consolidated cash flow that we have.
Sharon: We use that to retire corporate bonds within BP Y, which I think we've talked about in the past deleveraging that corporate balance sheet as a capital allocation decision when we weigh up that against other things. We can do so thats, where the cash rent in the quarter.
Speaker Change: Perfect. Thank you. Thank you thanks.
Speaker Change: Thanks, Sean.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Geoffrey Kwan with RBC capital markets. Your line is now open.
Geoffrey Kwan: Hi, good morning.
Geoffrey Kwan: The discount to NAV remains wide, but it has narrowed meaningfully in the past couple of quarters.
Geoffrey Kwan: Given your outlook for capital deployment, how has it changed your appetite for share buybacks.
Geoffrey Kwan: With given where the discount is today.
Geoffrey Kwan: Jeff I think it remains the same we have complete conviction not only in the intrinsic value of the business.
Geoffrey Kwan: Ive listened to.
Geoffrey Kwan: Remarks today as the growth potential in the tier ones that we have across the franchise and we still see tremendous growth from here today. So we still see buybacks being a very attractive.
Geoffrey Kwan: Use of our of our capital we weigh that up against other opportunities that we have and we have lots of strategic initiatives going on in the organization. A couple of executed recently, which are all highly additive to the franchise, but they are just as attractive no.
Geoffrey Kwan: As they've been over the last few months.
Speaker Change: Okay and just my second question, maybe expanding on Ken's question on the T&D market.
Speaker Change: <unk> I mean, if we're looking at over the next five years, if we assume the monetization market.
Speaker Change: Call It opens up at some point in this year.
Speaker Change: Do you see that that monetization of the TD portfolio as you've got a.
Speaker Change: I don't know call it a material amount of the portfolio that could get monetize kind of call. It out of the gate or is it something that.
Speaker Change: Maybe a little bit more back end loaded and thinking.
Speaker Change: Thinking about that profile.
Speaker Change: Listen, Jeff I think it will just take it as the market comes like to be clear.
Speaker Change: T&D still has good real estate. These are good assets, we're comfortable owning them on when the transaction market improves if transactions are at levels that are attractive we will look to monetize we think over the next five years that market will be there, but we're under no pressure to do this and when you think about it in the context of the overall business of Brookfield. This is not a material driver.
Speaker Change: To us achieving our strategic objectives.
Speaker Change: By right sizing the business overtime, and we will do it when it makes sense.
Speaker Change: So that's how I'd summarize the approach.
Speaker Change: Okay. Thank you.
Speaker Change: Yes.
Speaker Change: Thank you I would now like to turn the call back over to MS. Angela yellow for closing remarks.
Angela Yulo: Thank you everybody for joining us today and with that we'll end the call.
Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.