Q3 2024 Brookfield Corp Earnings Call
Operator: The World Is Yours Hello, and welcome to the Brookfield Corporation third quarter 2024 conference call in webcam At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 1 on your telephone.
[music].
Hello, and welcome to the Brookfield Corporation third quarter, 2024 conference call and webcast at.
At this time all participants are in a listen only mode.
After the speaker presentation there'll be a question and answer session.
To ask a question during the session you will need to press star one one on your telephone.
Angela Yulo: I would now like to hand the conference call over to our first speaker, Ms. Angela Yulo, Vice President, Investor Relations. Please go ahead.
Speaker Change: I'd now like to hand, the conference call over to our first Speaker is Angela Vice President Investor Relations. Please go ahead.
Angela Yulo: Thank you, operator and good morning.
Thank you operator, and good morning, welcome to the Brookfield Corporation third quarter 2024 conference call.
Angela Yulo: Welcome to Brookfield Corporation's third quarter 2024 On the call today are Bruce Flatt, our Chief Executive Officer, and Nick Goodman, President of Brookfield Corporation. Bruce will start off by giving a business update, followed by Nick, who will discuss our financial and operating results. After our formal comments, we'll turn the call over to the operator and take analyst In order to accommodate all those who want to ask questions, we ask that you refrain from asking more than two questions.
Speaker Change: On the call today are Bruce Flatt, our Chief Executive Executive Officer, and Nick Goodman, President of Brookfield Corporation.
Speaker Change: Bruce will start off by giving a business update followed by Nick who will discuss our financial and operating results for the quarter.
After our formal comments, we'll turn the call over to the operator and take analyst questions.
Speaker Change: In order to accommodate all those who want to ask questions. We ask that you refrain from asking more than two questions.
Angela Yulo: I would like to remind you that in today's comments, including in responding to questions and in discussing new initiatives in our financial and operating We may make forward-looking statem- Including four looking statements within the meaning of applicable Canadian and U.S. security These statements reflect predictions of future events and trends and do not relate to historic events. They are subject to known and unknown risks, and future events and results may differ materially from such. For further information on these risks and their potential impacts on our Please see our filings with the securities regulators in Canada and the U.S.
Speaker Change: I would 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.
Speaker Change: These 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.
Angela Yulo: and the information available on our website.
Angela Yulo: In addition, when we speak about our Wealth Solutions business, our Brookfield Wealth We are referring to Brookfield's investments in this business that supported the acquisitions of its underlying operating With that, I'll turn the call over.
Speaker Change: In addition, when we speak about our wealth solutions business, our Brookfield what solutions, we are referring to Brookfield investments in this business that supported the acquisition of its underlying operating subsidiaries.
Bruce Flatt: That I will turn the call over to Bruce.
Bruce Flatt: Yeah.
Bruce Flatt: Thank you, Angela, and welcome everyone on the call. We delivered strong financial results in the third quarter, distributed earnings before realization. increased 19% to a record $1.3 billion. That was $0.80 per share. Quarter, and $4.6 billion, or $2.90 per share, for the last 12 months.
Bruce Flatt: Thank you Angela and welcome everyone on the call.
Bruce Flatt: We delivered strong financial results in the third quarter distributable earnings before realization.
Bruce Flatt: 19% to a record $1 3 billion.
Bruce Flatt: 80 cents per share for the quarter, and 4.6 billion or $2 90 per share.
Bruce Flatt: For the last 12 months.
Bruce Flatt: Nick will cover these results later in the call. Focusing first on the mark A Reduction in Short Interest Rates Globally combined with solid growth and resilient economic data is increasing the market's confidence in pricing risk. leading to liquidity returning to the capital market. Transaction, Activity Picking In the past few months alone, we have seen an increased level of monetization. totalling over $17 billion across our We expect this momentum to continue across the franchise as high-quality, cash-flowing businesses with compelling growth profiles are proving to be highly attractive to both buyers and to lenders. Nick will speak to asset sales that we advanced across the business, all of which are expected to generate attractive returns.
Speaker Change: Nick will cover these.
Speaker Change: <unk> later in the call.
Speaker Change: Focusing first on the market.
Speaker Change: A reduction in short interest rates globally.
Speaker Change: Combined with solid growth and resilient economic data is increasing the market's confidence and pricing risk.
Speaker Change: This is leading to liquidity returning to the capital markets.
Speaker Change: Transaction activity picking up.
Speaker Change: In the past few months alone we have seen an increased level of monetization.
Speaker Change: Totaling over $17 billion across our business.
Speaker Change: We expect this momentum to continue across the franchise as high quality cash flowing businesses with compelling growth profiles are.
Speaker Change: Are proving to be highly attractive to both buyers and to lenders.
Speaker Change: Nick will speak to asset sales that we advanced across the business all of which are expected to generate attractive returns.
Bruce Flatt: At the same time, we committed approximately $20 billion towards new investment. and have a very robust pipeline that we are working on.
Speaker Change: At the same time, we committed approximately $20 billion towards new investments.
Speaker Change: And have a very robust pipeline that we're working on.
Bruce Flatt: So while 2024 has been a good year. 2025 should be back. We continue to focus on building long-term wealth for all stakeholders. And the secret to achieving this is to deliver strong compound return. over a long period of time. Our core principles in this regard are very simple. Invest in good business. Run them well. Allocate excess free cash flow wise. Align everyone with long-term objectives.
Speaker Change: So while 2024 has been a good year.
Speaker Change: 2025 should be better.
Speaker Change: We continue to focus on building long term wealth for all stakeholders.
Speaker Change: And the secret to achieving this is to deliver strong compound returns.
Over a long period of time.
Speaker Change: Our core principles in this regard are very simple.
Speaker Change: Invest in good businesses run them well Alan.
Speaker Change: Allocate excess free cash flow wisely.
Speaker Change: Align everyone with long term objectives.
Bruce Flatt: and evolve with the world around These principles, combined with making sound strategic investment and business decisions, have been the foundation of Brookfield. All of this has enabled us to deliver compound annualized returns of 19% over the past 30 years. and will continue to be extremely important going forward. Our ability to sustain our growth will be driven by our ability to continue to evolve our business with the world around us.
Speaker Change: With the world around us.
Speaker Change: These principles combined with making sound strategic investment and business decisions have been the foundation of Brookfield.
Speaker Change: All of this has enabled us to deliver compound annualized returns of 19% over the past 30 years.
Speaker Change: And what kind of continued to be extremely important going forward.
Our ability to sustain our growth will be delivered driven by our ability to continue to evolve our business with the world around us.
Speaker Change: A few examples.
Bruce Flatt: First, a few years ago, we made the decision to build a wealth solutions business when interest rates were zero. This led us to acquire three insurance companies and reinvest a large portion of our excess cash flow during that period of time into our wealth solutions business. In hindsight, this was well-timed, and today the business is heading towards $2 billion of annualized earnings. and is positioned as a top tier underwriter of annuities in the United States.
Speaker Change: First a few years ago, we made the decision to build a wealth solutions business when interest rates were zero.
Speaker Change: This led us to acquire three insurance companies and reinvest a large portion of our excess cash flow during that period of time into our wealth solutions business.
Speaker Change: In hindsight this was well timed and today the business is heading towards $2 billion of annualized earnings and.
Speaker Change: And it's positioned as a top tier underwriter of annuities in the United States.
Bruce Flatt: Next is expansion outside of North America, with business announcing its first transaction in the UK today. And next step... growth in Asia. Our ability to evolve and adapt with the world around us is critical to our success.
Next is expansion outside of North America with business announcing its first transaction in the U K today and.
Speaker Change: And next steps would be growth in Asia.
Speaker Change: Second our ability to evolve and adapt with the world around us is critical to our success.
Bruce Flatt: Twenty-five years ago, investing in the backbone of the economy meant buying hydro dams. Building Pipelines, Railroads, and Ports. While we still build those assets, and they're still critical today, our investable uniforce has expanded significantly as the trends of decarbonization Digitalization and de-globalization are reshaping the backbone of the global economy. We have evolved our business accordingly. Increasingly raising and deploying significant sums of capital into the energy transition and into infrastructure revolving around AI. On the back of this, we set up our global transition business, which has the potential to be our largest business over time. And we grew our capability around production and relocation of data.
Speaker Change: 25 years ago investing in the backbone of the economy meant buying hydro dams.
Speaker Change: Building pipelines railroads and ports.
Speaker Change: While we still build those assets and they are still critical today, our investable Uniforce has expanded significantly as the trends of decarbonization.
Speaker Change: Digitalization and D. Globalization are reshaping the backbone of the global economy.
Speaker Change: We have evolved our business accordingly.
Speaker Change: Increasingly raising and deploying significant sums of capital into the energy transition.
Speaker Change: And into infrastructure revolving around AI.
On the back of this where we set up our global transition business, which has the potential to be our largest business over time.
Speaker Change: And we grew our capability around production and relocation.
Speaker Change: Of data centers.
Bruce Flatt: When you add in the impact of the AI revolution and the expected incremental demand for data centers, compute capacity, chips, clean power, we find ourselves very well positioned around the most significant investment opportunities of this generation. We will continue to invest in a disciplined manner to create value for our clients, but at the same time, we'll remain focused on adapting with the ever-evolving backbone of the global economy to ensure we are able to participate in the next... Emerging Investment Opportunity.
Speaker Change: When you add in the impact of the AI Revolution, and the expected incremental demand for data centers compute capacity chips clean power, we find ourselves very well positioned around the most significant investment opportunities of this generation.
Speaker Change: We will continue to invest in a disciplined manner to create value for our clients, but at the same time, we remain focused on adapting with the ever evolving backbone of the global economy to ensure we are able to participate in the next <unk>.
Speaker Change: Emerging investment opportunity.
Bruce Flatt: We have widened our service capabilities and product offerings to capture the growing demand for alternatives by high net worth and retail investors via our Wealth Solutions business and our private wealth platform. Looking forward, we are focused on deepening our distribution capability. Spanning into new markets and evolving our product offerings. As we expect to scale our private wealth and retail fundraising to nearly $40 billion a year in the next five years, these inflows will add to our already large pool of discretionary capital at the corporation. And we'll at the same time continue Benefit BAM as it manages most of the capital raised across our franchise.
Speaker Change: Third.
Speaker Change: We have widened our service capabilities and product offerings to capture the growing demand for alternatives by high net worth and retail investors via our wealth solutions business and our private wealth platform.
Speaker Change: Looking forward, we are focused on deepening our distribution capabilities.
Expanding into new markets and evolving our product offerings.
Speaker Change: As we expect to scale, our private wealth and retail fundraising to nearly $40 billion a year.
And the next five years these inflows will add to our already large pool of discretionary capital at the Corporation.
Speaker Change: Well at the same time continued benefit Bam as it manages most of the capital raised across our franchise.
Bruce Flatt: All of this should drive significant earnings and cash flow generation for our stakeholders. for years to come.
Speaker Change: All of this should drive significant earnings and cash flow generation for our stakeholders.
Speaker Change: For years to come.
Lastly.
Bruce Flatt: Spunoff for Asset Management Business, which has surfaced significant value for shareholders. Now with a market capitalization of $85 billion plus. Business is currently taking steps to position itself for inclusion in the U.S. industry. should further enhance its shareholder value. We are quite sure that BAM will eventually be included in all major U.S. indexes due to its size and location of business. The only question is when, not if.
Speaker Change: We spun off our asset management business, which is surface significant value for shareholders.
Now with a market capitalization of $85 billion plus.
Speaker Change: The business is currently taking steps to position itself for inclusion in the U S indices.
Speaker Change: Which should further enhance its shareholder value.
Speaker Change: We are quite sure that Bam will eventually be included in all major U S indexes due to its size and location of business.
The only question is when not if.
Speaker Change: Yeah.
Bruce Flatt: Thank you for your continued support and interest in Brookfield.
Speaker Change: Thank you for your continued support and interest in Brookfield.
Nick Goodman: And I will now turn the call over Thank you, Bruce. And good morning, everyone. Our financial results in the third quarter were strong. Distributable earnings, or D.E., before realizations were a record $1.3 billion, or 80 cents per share for the quarter, representing an increase of 19 percent over the prior period. Over the last 12 months, DE before realizations were $4.6 billion or $2.90 per share. Total DE, including realizations, was $1.3 billion or $0.84 per share for the quarter and $6 billion or $3.78 per share over the last 12 months, with total net income of $1.5 billion for the quarter.
Nick Goodman: And I will now turn the call over to Nick.
Nick Goodman: Okay.
Nick Goodman: Thank you Bruce and good morning, everyone.
Speaker Change: Our financial results in the third quarter was strong distributable earnings or de before realizations were a record $1 3 billion or <unk> 80 per share for the quarter, representing an increase of 19% over the prior period.
Speaker Change: Over the last 12 months day before realizations for $4 6 billion or $2 90 per share.
Speaker Change: Total D E, including realizations was $1 $3 billion or <unk> 84 per share for the quarter and $6 billion or $3 78 per share over the last 12 months with total net income of $1 5 billion for the quarter.
Nick Goodman: Starting with our operating performance, our focus on operational excellence continues to drive strong results. Our asset management business generated distributable earnings of $694 million or $0.44 per share in the quarter and $2.6 billion or $1.64 per share over the last 12 months. We continue to see strong fundraising momentum, with total inflows of $21 billion in the quarter and $135 billion for the last 12 months, most notably from our credit franchise and insurance inflows. Beebearing capital at quarter end was $539 billion, 23% higher than 12 months ago. This increase supported the 14% growth in fee-related earnings compared to the prior year quarter.
Speaker Change: Starting with our operating performance our focus on operational excellence continues to drive strong results.
Speaker Change: Our asset management business generated distributable earnings of $694 million or <unk> 44 per share in the quarter and $2 6 billion or $1 64 per share over the last 12 months.
We continued to see strong fund raising momentum with total inflows of $21 billion in the quarter and $135 billion for the last 12 months, most notably from our credit franchise and insurance in force.
Speaker Change: <unk> capital at quarter end was $539 billion.
Speaker Change: 23% higher than 12 months ago.
Speaker Change: This increase supported the 14% growth in fee related earnings compared to the prior year quarter.
Nick Goodman: During the quarter, BAM closed on the previously announced strategic partnership with Castle Lake and completed the acquisition of SVB Capital. With the anticipated closes on our latest flagship funds, we expect strong fundraising through the end of the year and into 2025, driving further earnings growth. Our wealth solutions business is growing fast, with its earnings doubled compared to the prior year quarter. Distributable Operating Earnings were $364 million or $0.23 per share in the quarter and $1.2 billion or $0.75 per share over the last 12 months. The business benefitted from the acquisition of American Equity Life, continued growth in our annuity platform and strong investment performance.
During the quarter <unk> closed on the previously announced strategic partnership with Castle Lake and completed the acquisition of <unk> capital.
With the anticipated closes on our latest flagship funds, we expect strong fundraising through the end of the year and into 2025 driving further earnings growth.
Speaker Change: Our <unk> solutions business is growing fast with its earnings doubled compared to the prior year quarter.
Speaker Change: Distributable operating earnings were $364 million or 23 per share in the quarter and $1 2 billion or <unk> 75 per share over the last 12 months.
Speaker Change: The business benefited from the acquisition of American equity life continued growth in our annuity platform and strong investment performance.
Nick Goodman: During the quarter, we generated approximately $4.5 billion of organic inflows, primarily driven by retail and institutional annuity sales. As a result, our insurance assets increased over $115 billion a quarter end. By leveraging our investment origination capabilities, we generated an average investment portfolio yield of 5.4%, 1.8% higher than our average cost of capital. As we continue to gradually reposition the investment portfolio, we expect to achieve spread earnings of approximately 2%, growing our annualized earnings from $1.5 billion today to $2 billion in the near term. Today, a subsidiary of Brookfield Wealth Solutions announced an agreement to re-insure $1.4 billion of UK pension liabilities.
Speaker Change: During the quarter, we generated approximately $4 $5 billion of organic inflows, primarily driven by retail and institutional annuity sales.
Speaker Change: As a result, our insurance assets increased over $115 billion at quarter end.
By leveraging our investment origination capabilities, we generated an average investment portfolio yield of five 4%, one 8% higher than our average cost of capital.
As we continue continued to gradually reposition the investment portfolio, we expect to achieve spread earnings of approximately 2% growing our annualized earnings from $1 $5 billion to date to $2 billion in the near term.
Today, a subsidiary of Brookfield, well solutions announced an agreement to reinsure, one $4 billion of UK pension liabilities. This is our first transaction outside of North America as we continue to look to diversify and expand our wealth solutions business we.
Nick Goodman: This is our first transaction outside of North America, as we continue to look to diversify and expand our Wealth Solutions business. We have also been selected to participate in a 1.5 billion Canadian dollar pension risk transfer transaction whereby we will ensure 75% of the liability. This is the second largest pension risk transfer ever in Canada, illustrating our market leading position. Through our combined wealth solutions platforms, we are raising close to $2 billion of retail capital per month, which now includes approximately $450 million a month from our private wealth channel. Our operating businesses were very resilient, generating distributable earnings of $356 million or $0.23 per share in the quarter and $1.5 billion or $0.93 per share over the last 12 months.
We have also been selected to participate in a $1 5 billion Canadian dollar pension risk transfer transaction, whereby we will ensure a 75% of the liabilities.
Speaker Change: This is the second largest pension risk transfer ever in Canada, illustrating our market leading position.
Speaker Change: Through our combined rail solutions platforms, we are raising close to $2 billion of retail capital per month, which now includes approximately $450 million a month from our private wealth channel.
Speaker Change: Our operating businesses were very resilient generating distributable earnings of $356 million or 23 per share in the quarter and $1 5 billion or <unk> 93 per share over the last 12 months.
Nick Goodman: Cash distributions from our renewable power and transition, infrastructure, and private equity businesses are supported by their strong underlying performance. In our real estate business, our core portfolio delivered 4% growth in same store net operating income over the prior year quarter. In the quarter, we signed approximately six million square feet of office and retail leases, including over one million square feet of office leases in India and strong leasing in New York, Toronto and Europe. In our retail portfolio, our occupancy level remains high at 95%. Overall rents on the newly signed leases in our office and retail portfolios were approximately 10% higher compared to those leases expiring.
Cash distributions from our renewable power and transmission infrastructure and private equity businesses are supported by the strong underlying performance.
Speaker Change: In our real estate business, our core portfolio delivered 4% growth in same store net operating income over the prior year quarter.
Speaker Change: In the quarter, we signed approximately 6 million square feet of office and retail leases, including over 1 million square feet of office leases in India and strong leasing in New York Toronto in Europe.
Speaker Change: In our retail portfolio, our occupancy level remains high at 95% overall rents on the newly signed leases in our office and retail portfolios were approximately 10% higher compared to those leases expiring.
Nick Goodman: With interest rates having peaked and capital markets opening up, we expect a strong recovery across real estate markets over the next couple of years. Shifting now to monetizations, we have seen a considerable pickup in transaction activity. We closed or advanced over $17 billion of asset sales across the business in recent months. A few notable examples of asset sales include In our real estate business, we closed on the sale of nine retail parts in the UK. Over the three year hold period, we enhanced cash flows by increasing occupancy rates. The sale of this portfolio generates an approximately 30% IRR and 2.2 times multiple of capital.
With interest rates, having peaked in capital markets opening up we expect a strong recovery across real estate markets over the next couple of years.
Shifting now to monetization, we have seen a considerable considerable pickup in transaction activity.
Speaker Change: <unk> or advanced over $17 billion of asset sales across the business in recent months.
Speaker Change: A few notable examples of asset sales include.
Speaker Change: And our real estate business, we closed on the sale of nine retail parks in the UK over the three year hold period, we enhanced cash flows by increasing occupancy rates. The sale of this portfolio generates an approximately 30% IRR and two two times multiple of capital.
Nick Goodman: We also agreed to sell the PGA National Resort in Palm Beach, Florida, an office asset in Sydney, Australia, and a portfolio of manufactured housing assets in the U.S. Property Transaction Markets Are Recovering. Our renewable power and transition business recently signed four transactions with excellent outcomes. To date this year, this business raised over $2.3 billion of proceeds from asset monetizations, generating an IRR of approximately 25% and a multiple of capital of 2.5 times. Overall, the larger monetizations were related to our second and third vintage funds across real estate and infrastructure. These monetizations advanced the funds further towards the point of realizing carried interest, which we expect to happen in the next six to 18 months and will result in substantial cash flows to the corporation.
Speaker Change: We also agreed to sell the PGA National resort in Palm Beach, Florida, and office asset in Sydney, Australia, and a portfolio of manufactured housing assets in the U S. <unk>.
Speaker Change: Property transaction markets are recovering.
Our renewable power and transition business recently signed four transactions with excellent outcomes to date. This year. This business raised over $2 3 billion of proceeds from asset monetization generating an IRR of approximately 25% and a multiple of capital of two five times.
Speaker Change: Overall, the larger monetization were related to our second and third vintage funds across real estate and infrastructure.
These monetization events advanced the funds further towards the point of realized carried interest, which we expect to happen in the next six months to 18 months and will result in substantial cash flows to the corporation.
Nick Goodman: Over the last 12 months we generated $2.4 billion of unrealized carried interest, increasing our total accumulated unrealized carried interest to $11.5 billion, of which $10.1 billion is directly owned by the corporation. We also recognize $295 million of net realized carried interest into income so far this year and we expect to realize additional carried interest through the end of the year. Outside of our financial results, we continue to strengthen our business by differentiating ourselves with our access to large-scale capital. Our balance sheet and liquidity are robust and the combination of the two positions as well to capitalise on investment opportunities through market cycles and protect us against downside risk.
Speaker Change: Over the last 12 months, we generated $2 $4 billion of unrealized carried interest increasing our total accumulated unrealized carried interest to 11 5 billion.
Speaker Change: Of which $10 1 billion is directly owned by the Corporation.
Speaker Change: We also recognized $295 million of net realized carried interest into income so far this year and we expect to realize additional carried interest through the end of the year.
Speaker Change: Outside of our financial results, we continued to strengthen our business by differentiating ourselves with our access to large scale capital our balance sheet and liquidity are robust and the combination of the two positions us well to capitalize on investment.
Speaker Change: Opportunities through market cycles, and protect us against unsafe risks.
Nick Goodman: With interest rates coming down, liquidity continues to return to the capital markets. In the past few months, we've executed over $30 billion of financings across the business Notable highlights include, in our real estate business, the CMBS markets remain very active. We recently refinanced an $850 million loan on a high quality mall in Las Vegas with a new five year term at a fixed rate, which is substantially more favorable than a year ago. We also financed office properties for approximately £465 million in the UK and over $400 million in India. These financings demonstrate that there is significant liquidity for high quality office properties.
Speaker Change: With interest rates coming down liquidity continues to return to the capital markets in the past few months, we've executed over $30 billion of financings across the business.
Notable highlights include in our real estate business. The <unk> MBS markets remained very active we recently refinanced the $850 million loan on a high quality mall in Las Vegas with a new five year term at a fixed rate, which is substantially more favorable than a year ago.
We also financed office properties for approximately 465 million pounds in the UK and over $400 million in India and.
Speaker Change: These financings demonstrate that there are significant liquidity for high quality office properties.
Nick Goodman: In addition, we executed an over $2.5 billion of financings for two recent acquisitions in our infrastructure and private equity businesses, and we repriced over $5 billion of financings across four portfolio companies, reducing the credit spreads by 45 basis points on average. Turning to capital allocation, we reinvested our excess cash flow back into our business and returned $203 million to shareholders through regular dividends and share buybacks during the quarter. Over the last 12 months, we repurchased approximately $1 billion of shares in the open market, adding approximately $0.80 of value to each remaining share, and we expect to continue to allocate capital to share repurchase.
Speaker Change: In addition, we executed in over $2 $5 billion of financings for two recent acquisitions and our infrastructure and private equity businesses, and we repriced over $5 billion of financings across four portfolio companies, reducing the credit spreads by 45 basis points on average.
Speaker Change: Turning to capital allocation, we reinvested, our excess cash flow back into our business and returned $203 million to shareholders through regular dividends and share buybacks during the quarter over.
Speaker Change: Over the last 12 months, we repurchased approximately $1 billion of shares in the open market, adding approximately 80, a value to each remaining share and we expect to continue to allocate capital to share repurchases.
Nick Goodman: Bringing it all together, our financial performance was strong, and we expect continued growth in our results over the remainder of the year and into 2025. As the economic tailwinds turn in our favor, we are well set up to drive strong earnings and deliver 15% plus total returns on a pair share basis to our shareholders over the long term. With that, I am pleased to confirm that our Board of Directors has declared a quarterly dividend of $0.08 per share, payable on December 31st to shareholders of record at the close of business on December 16th, 2024. Thank you for your time, and I will now hand the call back to the operator for questions.
Speaker Change: Bringing it altogether, our financial performance was strong and we expect continued growth in our results over the remainder of the year and into 2025 as the economic tailwind turn in our favor we are well set up to drive strong earnings and deliver 15% plus tool to returns on a per share basis to our shareholders over the long term.
Speaker Change: With that I am pleased to confirm that our board of directors has declared a quarterly dividend of <unk> <unk> per share payable on December 31 to shareholders of record at the close of business on December 16, 2024, and thank you for your time and I will now hand, the call back to the operator for questions.
Operator: Thank you.
Operator: As a reminder, if you have a question, please press star 11 on your telephone.
Speaker Change: Thank you.
Speaker Change: As a reminder, do you have a question. Please press star one one on your telephone.
Operator: If your question has been answered, or you want to remove yourself from the queue, please press star 119.
Speaker Change: If your question has been answered or you want to remove yourself from the queue. Please press star one again.
Mario Saric: Our first question comes from Mario Saric with Scotiabank. Hi, good morning, and thank you for taking my questions. My first one, just on capital allocation, on page five of the supplemental, I noticed that you've changed the disclosure in terms of capital return to common shareholders, changing it to capital return as opposed to distributions. The stocks moved up nicely this year, part of which perhaps relates to a pretty active NCIB. Should we infer from the disclosure change that you expect share repurchases to be a structurally bigger part of returning capital to shareholders than it has been over the past four to five years outside of this year?
Speaker Change: Our first question comes from Mario <unk> with Scotiabank.
Hey, good morning, and thank you for taking my questions.
Speaker Change: My first one just on capital allocation on page five of the supplemental I noticed that you changed the disclosure.
Speaker Change: In terms of capital return to common shareholders.
Speaker Change: Any other capital alternatives post distributions stock.
The stocks moved up nicely this year part of which perhaps related so pretty active in CIB.
Speaker Change: Should we infer from the disclosure change that you expect share repurchases to be a structurally bigger part of returning capital to shareholders.
Speaker Change: It has been over the past four to five years outside of this year.
Mario Saric: Or am I reading a bit too much into it?
Speaker Change: Or am I reading a bit too much into it.
Nick Goodman: Hey, Mario, it's Nick. I think you're reading too much into it. There was nothing more substantial than just we thought it was a better illustration of the complete return of capital that we've delivered over recent time. Obviously, with the disconnect between our view of value and where the shares have traded, we've done close to a billion dollars of share repurchases in the last 12 months. And as we said, we continue to see that disconnect and we'll allocate capital to buybacks, but there's nothing more to it than that.
Nick Goodman: Hey, Mario it's Nick I think you're reading too much into it there was nothing.
Speaker Change: More substantial than just we thought it was a better illustration of the complete return of capital that we've delivered over recent time.
Speaker Change: Obviously with the disconnect between our view of value and where the shares have traded we've done close to $1 billion.
Share repurchases in the last 12 months and as we said we continue to see that disconnect and will allocate capital to buybacks, but theres nothing more to it than that.
Mario Saric: Okay, and then my second one just pertaining to the wealth solutions business, the 180 basis points spread to liability cost was up 10 basis points quarter of quarter, but still below your target 200 basis points. I appreciate it takes time to redeploy the AUM into higher yielding private funds. But how would you kind of define your $2 billion annualized DE target? You mentioned it was in the short term, like how would you define short term? And when do you think you can hit your 200 basis point spread? Listen, I think if we're being conservative, I'd say the next 12 months, it just takes time, there's some easy wins.
Speaker Change: Got it Okay and then my second one just pertaining to the wealth solutions business. The 180 basis points spreads liability cost was up 10 basis points quarter over quarter, but still below on your target 200 basis points.
Speaker Change: I appreciate it next time to redeploy into higher yielding private funds, but how would you kind of define your $2 billion annualized target you mentioned it was in the short term like how would you define short term and when do you think you can hit your two.
Speaker Change: 200 basis point spread.
Speaker Change: Listen I think if we're being conservative I would say the next 12 months. It just takes time, there's some easy wins and when you take over the portfolio investing some of the cash and reinvesting shorter dated assets. The rest of it just takes time.
Nick Goodman: And when you take over the portfolio, investing some of the cash, reinvesting shorter dated assets, the rest of it, it just takes time to reallocate into higher yielding opportunities. But I think over the next 12 months, we should get there comfortable. Great, okay, those are my two.
Speaker Change: To reallocate into higher yielding opportunities, but I think over the next 12 months you should get there comfortably.
Speaker Change: Great. Okay. Those are my two thank you.
Operator: Thank you.
Speaker Change: Thank you.
Sohrab Movahedi: Our next question comes from Sohrab Movahedi with BMO.
Speaker Change: Our next question comes from Sohrab, <unk> with BMO capital markets.
Sohrab Movahedi: Okay, thanks.
Sohrab Movahedi: Nick, just looking at the real estate portfolio, I mean, I think Over the past year, maybe the transition and development. Bucket is down about a billion or so, I think. If I've got my numbers right, maybe about 13 properties, number of properties kind of disposed of. Can you remind us what's the eventual plan with that? Lump Sum. And then secondarily, given where the rates have moved, is there any thought as to changing the discount rates you're using to come up with the value of these portfolios?
Nick Goodman: Okay. Thanks, Nick.
Nick Goodman: Nick just looking at the real estate portfolio I mean I think.
Speaker Change: For the past year maybe.
Transition and development.
Speaker Change: Bucket is down about $2 billion or so I think.
Speaker Change: If I've got my numbers right, maybe about 13.
Speaker Change: Properties number of properties kind of disposed of can you remind us what's the eventual plan with that.
Lump sum and.
Speaker Change: And then secondarily, given where the rates have moved is there any thought as to changing the discount rates, you're using to come up with the with the value of these portfolios.
Nick Goodman: Sure. So just tackling the first part, Sohrab, like our plans are consistent and we're executing on what we've been laying out for the last couple of years, which is we're, you know, the T&D portfolio where assets bought with a specific business plan in mind, a value creation strategy. And as we execute on that, we plan to monetize those assets and recycle the capital elsewhere in the business.
Speaker Change: Sure. So just tackling the first parts of Europe like our plans are consistent and we're executing on what we've been laying out for the last couple of years, which is where the.
Speaker Change: The T&D portfolio, where assets bought with a specific bid.
Speaker Change: Business plan in mind, our value creation strategy and as we execute on that we plan to monetize those assets and recycle the capital elsewhere in the business. We've executed those plans for a lot of the assets and now we're just waiting for the right market conditions to monetize and we'll just execute that at the right time.
Nick Goodman: We've executed those plans for a lot of the assets and now we're just waiting for the right market conditions to monetize and we'll just execute that at the right time. Your second question, remind me, sorry. It was just around the discount rates you're using for the various portfolios and whether, then, yeah. Sorry. Yeah, listen, on the discount rates, we made the point when rates went to zero, we didn't take our rates all the way down. And as rates have come back up, we have taken them up slightly. We will assess that over time. But I think we feel where we've had our discount rates has been consistent.
Speaker Change: Your second question remind me sorry.
Speaker Change: It was just around the discount rates you're using.
Speaker Change: Whether it's in.
Speaker Change: Sorry, yes, listen only discount rates, we made the point when rates went to.
Speaker Change: Two zero, we didn't take our rates all the way down and as rates have come back up.
Speaker Change: We have taken them up slightly we will assess that over time, but I think we feel where we've had our discount rates as being consistent again. This is a long term view on what we think is sustainable value of these assets is not fluctuating them based on short term movements in price in the market. So we'll assess that at year end, but I wouldn't.
Nick Goodman: Again, this is a long term view on what we think a sustainable value of these assets is, not fluctuating them based on short term movements and price in the market.
Nick Goodman: So we'll assess it at year end, but I wouldn't expect any significant changes.
Speaker Change: Baked any significant changes.
Operator: Okay, thank you very much.
Speaker Change: Okay. Thank you very much.
Cherilyn Radbourne: Our next question comes from Cherilyn Radbourne with.
Speaker Change: Okay.
Our next question comes from Cherilyn Radbourne with TD Cowen.
Cherilyn Radbourne: Thank you very much and good morning. First, in terms of the structural changes that are being made to improve BAM's eligibility for U.S.
Speaker Change: Thank you very much and good morning.
Speaker Change: First in terms of the structural changes that are being made to improve Dan eligibility for U S index inclusion a related question that I get a lot is how.
Cherilyn Radbourne: index inclusion, a related question that I get a lot is how you can improve the liquidity of the public flows of BAM, and related to that, what is BM's desired stake in BAM longer term?
Speaker Change: How you can improve the liquidity of the pub.
Speaker Change: Click float of Bam.
Speaker Change: And related to that what is is.
Speaker Change: Is that it's taken them longer term.
Nick Goodman: Yeah, hi, Cheryl. And listen, I think the first thing is, you know, we're doing for BAM is and what we're very focused on right now is positioning it for broad index inclusion in the US. And we think that will be highly beneficial to the stock and therefore to our shareholders. As it relates to our ownership and the liquidity, you know, we're down to 73%, we used a small amount of our ownership as consideration for the AEL transaction.
Speaker Change: Yeah, Hi, Shirley listen I think the first thing is you know what we're doing for Bob.
And what we're very focused on right now is positioning it for broad index inclusion in the U S and we think that will be.
Speaker Change: Highly beneficial to the stock and therefore to our shareholders.
Speaker Change: As it relates to our ownership.
Speaker Change: The liquidity, we're down to 73% we used a small amount of our ownership.
Nick Goodman: I wouldn't say we have a specific target in mind, but it's obviously a business with a very strong growth profile ahead of it and one that we have a lot of conviction in. And we will be a significant owner of that business for the long term. We have some flexibility around the ownership, nothing imminent planned. But obviously, we were made very supportive of the business and we'll see how things evolve over time.
Speaker Change: As consideration for the AGL transaction.
Speaker Change: I wouldn't say, we have a specific target in mind, but it's obviously a business with a very strong growth profile ahead of it and one that we have a lot of conviction.
Speaker Change: We will be a significant owner of that business for the long term, we have some flexibility around the ownership nothing eminent planned.
But obviously we.
Speaker Change: We're very supportive of the business and.
Speaker Change: And we'll see how things evolve over time.
Cherilyn Radbourne: Okay, and then on the insurance side, I was hoping you could go into a bit more detail on the international expansion, including today's announcement and just how competitive you see the UK and I believe it's Japan that you're targeting in Asia. How competitive are those markets relative to North America? Yes, so Cherilyn, the first comment I'd make on that is that we want to set this business up like we've set up our other businesses, which is we don't want to be beholden to any one market as it relates to capital deployment. And having a global footprint will allow us to allocate our capital where we see the best investment opportunities at any point in time.
Okay, and then on the insurance side I was hoping you could go into a bit more detail on the international expansion, including today's announcement and how competitive you see the U K and I believe it's Japan that youre targeting in Asia.
Speaker Change: But it never though markets relative to North America.
Yes, so chairman.
Speaker Change: First comment I'd make on that is that we want to set this business up like we set up our other businesses, which is we don't want to be beholden to any one market as it relates to capital deployment and having a global footprint will allow us to allocate our capital where we see the best investment opportunities at any point in time.
Nick Goodman: So we've obviously built a scale platform in the US, we see a lot of growth potential here, but we want the flexibility to move globally. And so having a presence in the UK, and Asia will allow us to do that. And obviously, markets have, they're competitive in the UK. They're competitive everywhere, but we think we can find areas in which we can participate where we can drive strong returns. And this transaction in the UK is just a very good example of that.
Speaker Change: We've obviously built a scaled platform in the U S. We see a lot of growth potential here, but we wanted the flexibility to move globally and so having a presence in the UK and Asia will allow us to do that and obviously markets have they are competitive in the U K.
Speaker Change: <unk> everywhere, but we think we can find areas in which we can participate where we can drive strong returns in this transaction in the UK is just a very good example of that.
Cherilyn Radbourne: for me. Thank you.
Speaker Change: That's all for me thank you.
Speaker Change: Are you.
Robert Kwan: Our next question comes from Robert Kwan with RBC Capital Markets. Great, thank you. Good morning. I just wanted to ask a little bit more around the asset transaction environment. And from the BAM call, there was the statement that it's a good environment to be a buyer and a seller. And we've heard that with a bunch of the affiliates too.
Speaker Change: Our next question comes from Robert Kwan with RBC capital markets.
Great. Thank you good morning.
Speaker Change: Wanted to ask a little bit more around the asset transaction environments.
Speaker Change: The band call. There was the statement that it's a good environment to be a buyer and a salad and we've heard that with a bunch of the affiliates too, but just from the top of the house what business segments. Do you think offer the best opportunities for asset monetization activity and similarly, where are you seeing the best value for acquisitions.
Robert Kwan: But just from the top of the house, what business segments do you think offer the best opportunities for asset monetization activity? And similarly, where are you seeing the best value for acquisition?
Nick Goodman: Yeah, thanks, Robert. Listen, I would say that it's almost within each of our business groups, there's different areas within those where there's good opportunities to buy and sell. And they all have their own specific themes and trends right now. But we're looking for opportunities to buy assets where maybe there's capital structures out of the last few years that have become broken, but they're underlying them as highly high quality assets or operations where we believe we can generate attractive returns markets that have fallen out of favor, assets have fallen out of favor with the public markets.
Speaker Change: Yes, Thanks Robert.
Speaker Change: Listen I would say that it's almost within each of our business groups, there's different areas within those where there is good opportunities to buy and sell.
Speaker Change: They all have their own specific themes and trends right now, but we're looking for opportunities to buy assets, where maybe there is capital structure over the last few years that have become broken but their underlying them as highly high quality assets or operations, where we believe we can generate attractive returns markets that fallen out of favor assets opponent.
Speaker Change: Safer with the public markets and I stated, we see those opportunities across the different businesses that we have in specific areas or markets. So it's hard to be specific to any one asset class.
Nick Goodman: And I say we see those opportunities across the different businesses that we have in specific areas or markets.
Nick Goodman: So it's hard to be specific to any one asset class. But we're definitely seeing a number of attractive investment opportunities now coming to us where having capital and operating expertise is putting us in a unique position to be able to find those opportunities where we can drive value creation. Whereas at the same time, there is a once those assets are stabilized, and they've turned into we de-risk the operations, there are buyers for those assets on the other side. So that's how we're seeing the good opportunity on both sides. And I'd say it's prevalent across all of our businesses right now.
Speaker Change: But we're definitely seeing a number of attractive investment opportunities now coming to us, we're having capital and operating expertise is putting us in a unique position to be able to find those opportunities where we can drive value creation, whereas at the same time. There is once those assets are stabilized and if turned into we derisked or the.
Speaker Change: Operations, there are buyers for those assets on the other side. So that's how we're seeing the good opportunity on both sites and I'd say, it's prevalent across all of our businesses right now.
Nick Goodman: Thanks, Nick. And just as the second question related to that, just with your expectation of increased monetization activity, what are you thinking about with respect to the realized carried interest say over the next 12 months?
Speaker Change: Okay, great. Thanks, and just as a second question related to that just with your expectation of increased monetization activity. What are you thinking about with respect to the.
Speaker Change: The realized carried interest say over the next 12 months.
Nick Goodman: Yeah, the one thing I like to remind you and everyone I know, I know most people know this, but the way the carried interest works for our funds is, as we monetize assets, and we return capital to our shareholders, carry is collected on the fund in its entirety, not on individual investments. That's the way that we operate. So we have to return all the capital to shareholders in the fund, we have to work through the preferred return.
Speaker Change: Yes, the one thing.
Speaker Change: To remind you and everyone I know most people know this but the way the carried interest works for our funds is as we monetize assets and we return capital to our shareholders carry is collected and on the fund in its entirety not not individual investments that's the way that we operate so we have to return.
Speaker Change: All the capital to shareholders in the funds we have to work through the preferred return and then we start to realized carried interest and we recognize that into our statements. When we're past that period, where we believe there is minimal risk of clawback. So as we monetize our assets right. Now we are returning that initial capital to shareholders. In this next vintage of funds at excellent returns.
Nick Goodman: And then we start to realize carried interest and we recognize it into our statements, when we're past that period where we believe there's minimal risk of clawback. So as we monetize our assets right now, we are returning that initial capital to shareholders in this next vintage of funds at excellent returns. And as we work our way through that, you'll start to see the carried interest being realized. And that just takes time. So we will, you know, you're starting to see progression this year, you see a small step up next year, and then 26 and beyond, you'll see a significant step up as we work our way through the various stages of that.
Speaker Change: And as we work our way through that Youll start to see the carried interest being realized and that just takes time. So we will start to see progression. This year, we see a small step up next year, and then 26 and beyond Youll see a significant step up as we work our way through the various stages of that.
Operator: That's great.
Operator: Thank you very much.
Speaker Change: Okay. That's great. Thank you very much.
Dean Wilkinson: Our next question comes from Dean Wilkinson with CID. Thanks, morning. This first question is on the discount to plan value. I think historically the market investors may have erroneously described the discount as purely real estate. But when I look at it… Brookfield Property Group. Wealth Solutions, and the Target Carry are almost equal components of planned value.
Our next question comes from Dean Wilkinson with CIBC.
Dean Wilkinson: Thanks, Good morning.
Speaker Change: Just first question is on the onset of the discount to plan value I think historically the market or investors may have erroneously described the discount is purely real estate, but when I look at it.
Speaker Change: Brookfield property group.
Speaker Change: Wealth solutions and the target carry are almost equal components of planned value.
Dean Wilkinson: Which one of those buckets do you think that the market most misunderstands and how do we close that gap?
Speaker Change: Which one of those buckets do you think that the market most misunderstand and how do we close that gap.
Nick Goodman: Hi, Dean. Listen, it's very hard for me to assume what other people are thinking when they value our business. We believe all of them are highly valuable. And different of them have different discussions and focus around them, the carried interest, as I said, we just need to execute and deliver the returns. And it's going to realize and crystallize a significant amount of cash for us over time, we just have to execute.
Speaker Change: Listen, it's very hard for me to.
Speaker Change: Assume what other people are thinking when they value our business. We believe all of them are highly valuable.
Speaker Change: And defer them have different.
Speaker Change: Discussions and focus around them to carried interest as I said, we just need to execute and deliver the returns and its going to realize and crystallized a significant amount of cash flows over time, we just have to execute on the insurance business. We are building and scaling a business. So maybe we just have to prove it out to track record and the proof of execution will lead to.
Nick Goodman: On the insurance business, we are building and scaling a business. So maybe we just have to prove it out the track record and the proof of execution will lead to that and higher multiple earnings coming through in the valuation and obviously real estate, we execute and we monetize. So we believe all of this will come to fruition and all of it will present itself in plan in value over time and price. We just have to execute how the market allocates each value to each of those we can't really No, fair enough.
Speaker Change: And higher multiple of earnings coming through an evaluation and obviously real estate, we execute and be monetized. So we believe all of this will come to fruition and all of it will present itself in.
Speaker Change: In client and value overtime on price, we just have to execute out of the market allocates each value to each of those we can't really influence.
Dean Wilkinson: And then just a question on I'll call it the sort of reallocation of how you will hold the BAM shares. Is there any thing that comes out of that vis-a-vis taxes or a, you know, a realized disposition gain? Or is that, you know, accounting stuff behind the scenes? Yeah, there's there's no impact to us whatsoever. The only differences at the end of this will own liquid Class A shares as opposed to the privately held shares we have today. Right, so it's just the IFRS book value. No, I don't think there's any change to that. There's no change at all.
Speaker Change: No fair enough.
Speaker Change: And then just a question on I'll call. It their sort of reallocation of how you will hold the Bam shares is there any thing that comes out of that vis vis taxes or aura.
Speaker Change: Our realized disposition gain or is that.
Speaker Change: Accounting stuff behind the scenes.
Speaker Change: Yes, there is no impact to us whatsoever. The only differences at the end of this real on liquids class a shares as opposed to the privately held shares we have today alright.
Speaker Change: Alright, so its just the IRS book value of the changes.
Speaker Change:
Speaker Change: No I don't think there's any change to that there is no change at all.
Dean Wilkinson: Oh, okay. Perfect. All right.
Operator: Thanks. Appreciate it.
Speaker Change: Okay perfect alright, thanks, I appreciate it.
Speaker Change: Yes.
Kenneth Worthington: Our next question comes from Kenneth Worthington with JPMorgan. Hi, this is Alex Bernstein on for Ken. Thanks so much for taking our questions.
Speaker Change: Our next question comes from Kenneth Worthington with JP Morgan.
Speaker Change: Hi, This is Alex Bernstein on for Ken. Thanks, So much for taking my questions. We first wanted to touch on insurance. We appreciate you've narrowed your focus to the new.
Kenneth Worthington: We first want to touch on insurance. We appreciate you've narrowed your focus to the annuities business with annuities now accounting for 91% of total insurance liabilities up from 88% the quarter prior. But we wanted to touch on the P&C business as well and check if there were any negative impacts on results from hurricane or other weather related events in Q3, just given some of the prominent headlines there. And if so, if there are any expectations on what that hurricane activity may look like for Q4 as well. Thanks.
Speaker Change: The annuities business with annuities now accounting for 91% of total insurance liabilities up from 88% quarter prior but we wanted to touch on the P&C business as well in check if there were any negative impacts on results from hurricane or other weather related events in Q3, just given some of the prominent <unk>.
Speaker Change: Lines, there and if so if there are any expectations on what that hurricane activity may look like for Q4 as well. Thanks.
Nick Goodman: Yeah, hi there. So there was a small impact, but not material in the third quarter. And in the fourth quarter, and currently, we don't expect anything significant, because we've actually taken steps in Argo to de-risk some of our exposure to the market and in Florida, where we have reinsured a lot of our exposure in that market. So we're not currently expecting anything material in the fourth quarter. Great, that's great to hear.
Speaker Change: Yes, hi, there. So there was a small impact but not material in the third quarter and in the fourth quarter.
Speaker Change: Currently we don't expect anything significant because we've actually taken steps in our go to.
Speaker Change: To derisk some of our exposure to the market unemployed out where we have reinsured a lot of our exposure in that market. So we're not currently expecting anything material in the fourth quarter.
Speaker Change: Great that's great to hear and maybe maybe one more broader question just thinking about the U S election, the Trump victory and we're increasingly looks like a red wave. That's happening here you mentioned earlier on the call today that the energy transition business could become one of your largest overtime.
Kenneth Worthington: And maybe one more broader question, just thinking about the US election, the Trump victory, and what increasingly looks like a red wave that's happening here. You mentioned earlier on the call today that the energy transition business could become one of your largest over time. I appreciate that it's a global mandate, and Brookfield in particular is a global investor.
Speaker Change: I appreciate that it's a global mandate and Brookfield in particular is a global investors. So I presume you are to some degree insulated from what happens just in the U S. Specifically, but wanted to check if you anticipate any regulatory changes or in general any changes as it relating to the opportunity here and energy. Thank you.
Nick Goodman: So I presume you're, to some degree, insulated from what happens just in the US specifically, but wanted to check if you anticipate any regulatory changes or, in general, any changes as relating to the opportunity here in energy. Thank Yeah, listen, I would reiterate the comments that Connor has made about the business, which is we invest based on underlying demand and fundamentals. And in the markets we operate in, renewable energy, solar and wind is the lowest cost producer of power. and the underlying demand for clean and green power specifically from technology companies but corporates is significant and we think that that is a long-term trend that is not necessarily going to change and it's going to support our business renewables both in the U.S.
Speaker Change: Yes, listen I would reiterate the comments that corner has made about the business, which is we invest based on underlying demand and fundamentals.
Speaker Change: And in the markets, we operate in renewable energy solar and wind as the lowest cost producer of power.
And the underlying demand for clean and Green power specifically.
Speaker Change: Technology companies, but carpets.
Speaker Change: Is significant and we think that that is a long term trend that is not necessarily going to change and it's going to support our business renewables both in the U S and internationally. So I think we're still as optimistic about that business as we've ever been.
Nick Goodman: and internationally. So I think we're still as optimistic about that business as we've ever been.
Kenneth Worthington: Understood. Appreciate the responses. Thanks again.
Speaker Change: Understood I appreciate the response, thanks again.
Operator: Thank you.
Speaker Change: Thank you.
Angela Yulo: As there are no more questions, I will now turn it back to Ms. Angela Yulo for closing remarks. Thank you everybody for joining us today and with that we'll end the call. This concludes today's conference call. Thank you for participating.
Speaker Change: As there are no more questions I will now turn it back to MS. Angela Hello for closing remarks.
Angela Hello: Thank you everybody for joining us today and with that we'll end the call.
Angela Hello: This concludes today's conference call. Thank you for participating you may now disconnect.
Operator: You may now disconnect.
Angela Hello: Okay.
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