Q1 2025 Brookfield Corp Earnings Call
Good day and welcome to the Brookfield Corporation first quarter 2025 conference call and webcast.
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 the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised.
Withdraw your question Press Star one again, please be advised that today's conference is being recorded.
Now I'd like to hand, the conference over to your Speaker Ms. Katie Battalion, VP Investor Relations. Please go ahead.
Katie Battalion: Thank you operator, and good morning, welcome to the Brookfield Corporation's first quarter 2025 conference call.
Speaker Change: On the call today are Bruce Flatt, our Chief Executive Officer, Nick Goodman, President of Brookfield Corporation, and Sachin Shah Chief Executive Officer of Brookfield, well solution.
Speaker Change: Chris will start by giving a business update followed by <unk>, who will discuss our financial and operating results for the quarter and finally, John will provide an update on our wall solution set that.
Speaker Change: After our formal comments, we'll turn the call over to the operator and take analyst questions.
Speaker Change: Order to accommodate all those who want to ask questions. We request that you refrain from asking more than two questions.
Speaker Change: I would like to remind you that in today's comments, including responding to questions and then discussing new initiatives and our financial and operating performance. We may make forward looking statements.
Speaker Change: Forward looking statements within the meaning of applicable Canadian and U S Securities laws.
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 impact on our company. Please see our filings with the securities regulators in Canada, and the U S and the information available on our website.
Speaker Change: In addition, when we speak about our wealth solutions business, what Brookfield, well positioned we are referring to Brookfield investments in this business that supported the acquisition of its underlying subsidiaries.
Bruce Flatt: With that I'll turn the call over to Bruce.
Speaker Change: Okay.
Speaker Change: Thank you and welcome everyone on the call.
Speaker Change: We had a strong start to the year.
Speaker Change: Distributable earnings before realization increased 30% to $1 3 billion that was 82 cents a share for the quarter.
Speaker Change: And $5 2 billion or $3.26 for the last 12 months.
Speaker Change: Each of our businesses performed well our asset management business delivered strong earnings growth backed by continued fundraising momentum.
Speaker Change: Our operating businesses were resilient with stable cash flows.
Speaker Change: Underpinning by largely contracted and inflation protected revenue streams.
Speaker Change: Our wealth solutions business had a strong quarter delivering organic growth scaling earnings and delivering on our goal of 15% Roe.
Speaker Change: In March the business received its regulatory license to launch in the U K.
Speaker Change: Marking the first dedicated PRT license granted there since 2007.
Speaker Change: Sachin Shah CEO of our wealth solutions business is with us today.
Speaker Change: And we'll spend more time on the progress and growth of the business in his remarks.
Bruce Flatt: Focusing Bruce briefly on the macro environment, we started the year with positive economic momentum as all of you know since then trade policy has created volatility in the capital markets.
Bruce Flatt: While our businesses and operations are not immune they are generally insulated from the current environment.
Bruce Flatt: This is because we own and operate businesses would provide essential services and products without significant reliance on cross border movement of goods.
Bruce Flatt: We operate domestic businesses in 30 countries.
Bruce Flatt: We serve local customers in markets, where we invest.
Bruce Flatt: Most of these businesses have highly contracted income streams or regulated meaning we can generally pass through increased costs to the end consumer.
Bruce Flatt: The global franchise.
Bruce Flatt: The operating expertise to successfully navigate change.
Bruce Flatt: As we have experienced in previous periods of stress markets often move for reasons that don't reflect underlying fundamentals.
Bruce Flatt: This creates opportunities for experienced well capitalized investors to invest for value.
Bruce Flatt: Approach has allowed us to deliver stable and growing results for decades.
Bruce Flatt: This period should be no different.
Bruce Flatt: Despite the volatility we have seen the underlying trends of D. Globalization digitalization and de Carbonization continue to drive our investment pipeline.
Bruce Flatt: In this regard we committed $20 billion in the quarter to acquire some excellent businesses at very good value.
Bruce Flatt: D globalization policies promoting the re shoring of key manufacturing and supply chains are also now presenting opportunity.
Bruce Flatt: Breakthroughs in AI should also lead to further attractive opportunities for disciplined investors like us to continue to provide capital to fund these initiatives.
Bruce Flatt: With strong data center growth.
Bruce Flatt: They need an enormous amount of power.
Bruce Flatt: Renewables continue to offer the most viable solution to meet this growing energy demand.
Bruce Flatt: Our ability to provide scalable solutions across technologies and regions reinforces our position as a partner of choice.
Bruce Flatt: In total with Iraq with a record 165 billion of capital to deploy we are well positioned.
Bruce Flatt: In the current environment to invest for value in all.
Bruce Flatt: All of these areas.
Bruce Flatt: At the same time.
Bruce Flatt: Operating fundamentals for high quality assets remains.
Bruce Flatt: Strong.
Bruce Flatt: For example, our in our real estate business, we continue to benefit from increased demand for premium assets further supported by a muted supply outlook.
Bruce Flatt: This has resulted in strong rental growth and higher occupancy rates across our portfolio.
Bruce Flatt: We are experiencing a significant increase in lease lease.
Lease up activity for our top tier assets in our global markets.
Bruce Flatt: For example, in our largest market being New York office leasing surge to its highest level since 2019.
Bruce Flatt: We completed one 3 million square feet of leasing in the quarter.
Bruce Flatt: Rents in Premier buildings are very high.
Bruce Flatt: And going higher.
Speaker Change: Well it always feels like the first time.
Speaker Change: We have navigated through many periods similar to the one we have in front of us today it.
Speaker Change: It is important to remember at times like these price fluctuations may seem significant in the moment.
Speaker Change: But they are likely to represent just small deviations in the overall trajectory.
Speaker Change: Long term wealth compounding.
Speaker Change: As an example, our shareholders have earned an annualized return of 18%.
Speaker Change: Over the past 30 years by simply staying invested in Brookfield.
Speaker Change: This is not a straight line.
Speaker Change: Nor will it ever be but compound returns other secret to great long term wealth.
Speaker Change: Crucial to our success over the years, it's been effective capital allocation and reinvestment of the corporation's cash flows.
Speaker Change: We have a broad perspective on the relative investment opportunities and capital needs across our entire franchise.
Speaker Change: Our philosophy has therefore always been to largely distribute free cash flow up from our operating companies to the corporation and centralize the cash reinvestment decisions.
Speaker Change: This deliberate approach to capital allocation has been a key contributor to our ability to scale our business.
Speaker Change: And withstand economic cycles across sectors that we invest in.
Speaker Change: This flexibility is one of our greatest strengths and it is something that has been created and methodically.
Speaker Change: And meticulously over the years.
Speaker Change: This approach becomes even more valuable during periods of uncertainty.
Speaker Change: When prices can diverge substantially from value.
Speaker Change: And we are presented with attractive investment opportunities.
Speaker Change: One of the recent examples is repurchasing our own shares in the market and given the trading levels of our shares which grit gapped down during the quarter like all markets, we repurchased $850 million of shares to date this year.
Speaker Change: This was the most shares we've ever purchased in the open market in a single quarter.
Speaker Change: Looking ahead, we will continue to invest in a disciplined manner, while remaining focused on adapting with the ever evolving backbone of the global economy.
Speaker Change: Our business has proven to be a great compound or a capital across economic cycles and by staying the course, we are well positioned to generate strong.
Speaker Change: And sustainable returns for shareholders.
Speaker Change: Thank you as always for the continued support and interest in Brookfield with those comments I'll turn the call over to Nick.
Speaker Change: Yeah.
Nick Goodman: Thank you Bruce and good morning, everyone financial results were strong for the first quarter supported by continued momentum across our core operations.
Nick Goodman: Distributable earnings or de before realizations were $1 $3 billion or <unk> 82 per share for the quarter, representing an increase of 30% per share over the prior year quarter over.
Nick Goodman: Over the last 12 months day before realizations was $5 2 billion or $3.26 per share.
Nick Goodman: Total day, including realizations was $1 $5 billion or 98 per share for the quarter and $6 6 billion or $4 17 per share over the last 12 months with total net income of $1 $5 billion over the same period.
Nick Goodman: Each of our businesses continues to generate stable and growing cash flows our asset management business delivered another quarter of strong results with distributions of $684 million or <unk> 43 per share in the quarter and $2 $7 billion or $1 71 per share over the last 12 months we can.
Nick Goodman: Continued to see strong fundraising momentum across our flagship funds and complementary strategies.
Nick Goodman: Inflows during the quarter were $25 billion contributing to more than $140 billion of capital raised over the past 12 months.
Nick Goodman: Notably we closed on approximately $6 billion of capital for our latest real estate flagship strategy this quarter, bringing total commitments to $16 billion and the final clauses from clients in wealth and regional sleep still ahead. This strategy is set to be our largest pool of capital ever raised for opportunistic real estate.
Nick Goodman: Our fee bearing capital grew to $549 billion at quarter end, representing a 20% increase over the last 12 months.
Nick Goodman: This increase contributed to a 26% growth in fee related earnings reaching a record 698.
Nick Goodman: Yeah.
Nick Goodman: Our wealth solutions business continues to deliver strong financial performance generating stable and growing long dated cash flows distributable operating earnings were $413 million or 27 cents per share in the quarter and $1 5 billion or <unk> 95 per share over the last 12 months.
Nick Goodman: During the quarter, we originated $4 billion of retail and institutional annuities and we continued to maintain a strong financial position in the business with statutory capital increasing to over $16 billion.
Nick Goodman: And then ROE in line with our target of 15% plus and such and we will speak to this business in more detail.
Nick Goodman: Through our combined wealth solutions platforms, we are raising close to $2 billion of retail capital per month, which includes over $650 million a month from our private wealth channel.
Nick Goodman: Yeah.
Nick Goodman: Our operating businesses continued to deliver resilient and stable cash flows generating distributable earnings of $400 $426 million or 27 cents per share in the quarter and $1 7 billion or $1 <unk> per share over the last 12 months.
Nick Goodman: Cash distributions from our renewable power and transmission infrastructure and private equity businesses were supported by the strong operating earnings and underlying fundamentals.
Nick Goodman: As Bruce mentioned, our real estate business continues to benefit from growing demand for the highest quality assets, which contributed to high occupancy and strong rental growth across the portfolio.
Nick Goodman: Specifically in our core portfolio, we delivered 3% growth in same store net operating income over the same period last year and occupancy levels remained high at 95%.
Nick Goodman: During the quarter, we signed close to 9 million square feet of office and retail leases a.
Nick Goodman: A few highlights of our office leasing activity include $1 1 million square feet in India, 787000 square feet in Canada, and two 3 million square feet of office leases across the United States with one 3 million square feet leased in New York.
Nick Goodman: Notably given the supply constraints and strong demand for premium office around the world, We're consistently seeing leases being signed at rents significantly higher than expiring leases, which is a very positive signal for our portfolio.
Nick Goodman: Finally in our North American residential business, we continue to shift the business to a more capital light model and as part of this plan. We sold five master planned communities in the quarter generating approximately $640 million of proceeds.
Nick Goodman: During the quarter, we realized $189 million of carried interest into income and accumulated unrealized carried interest increased to $11 $6 billion.
Nick Goodman: Growth in accumulated unrealized carried reflects the implementation of our value creation strategies across our investments and as we execute our monetization plan and return capital to investors throughout 2025 and beyond we are well positioned to recognize substantial carried interest into earnings over the next few years.
Nick Goodman: While uncertainty in the current environment may impact transaction activity, we do continue to see strong demand for the globally diversified portfolio of high quality cash generating assets and businesses that we own.
Nick Goodman: In the quarter, we closed approximately $22 billion of asset sales across the business.
Nick Goodman: With substantially wholesales completed at prices in line or above our carrying values.
Nick Goodman: And our real estate business, we closed the previously announced sale of our hospitality asset in Florida for over $400 million of gross proceeds and our infrastructure business, we completed the sale of <unk>.
Nick Goodman: Minority stake in a portfolio of fully contracted containers within our global intermodal logistics operation and we remain on track to close on the remaining 25% interest in N. G. P. L. U S gas pipeline, representing an extremely successful exit from the business generating total gross proceeds of over $1 7 billion.
Nick Goodman: Crystallizing, an 18% IRR and three times multiple of capital.
Nick Goodman: Looking ahead, we have a number of sales processes underway diversified across strategies sectors and geographies, we employ a disciplined yet flexible approach to executing exit strategies with the objective of optimizing investment value and we look forward to providing you with updates as they progress.
Nick Goodman: Moving to capital allocation, we continued to reinvest our free cash flow back into the business to drive growth and further enhance value.
Nick Goodman: We reinvested $3 billion back into our operations during the quarter. This included $1 $4 billion towards our operating businesses, primarily to opportunistically repay debt within our real estate business and approximately $465 million to support commitments and our real estate and credit private fund strategies within our asset management.
Nick Goodman: Business.
Nick Goodman: Additionally, we continue to allocate capital to support the growth of our wealth solutions business with a further $413 million being allocated this quarter.
Nick Goodman: In addition, we returned over $700 million to our shareholders through regular dividends and share repurchases during the quarter and so far this year, we have repurchased $850 million of shares in the open market, adding more than 40 <unk> per share of value to each remaining share as Bruce highlighted in his remarks, we will continued to.
Nick Goodman: Opportunistic we'll repurchase shares when they are undervalued carefully weighing this use of capital against other opportunities.
Nick Goodman: Moving onto our balance sheet and liquidity, we continue to maintain a conservatively capitalized balance sheet and high levels of liquidity with record deployable capital of $165 billion we.
Nick Goodman: We were active in the capital markets and executed over $30 billion of financings during the quarter, including at the Corporation, where we issued $500 million of senior.
Nick Goodman: Unsecured 30 year notes, achieving our tightest 30 year spread to date.
Nick Goodman: Other notable financings and could the 5 billion recapitalization of <unk> $10 billion of real estate financings, which included successful term financings within our office and retail portfolios and several other successful issuances within our infrastructure and you're neutral power businesses.
Nick Goodman: Bringing it altogether, our financial results signify a strong start to the year and we expect to continue on this positive momentum as we execute on our strategic plan to enhance shareholder value.
Nick Goodman: With that I am pleased to confirm that our board of directors has declared a quarterly dividend of <unk> per share payable at the end of June to shareholders of record at the close of business on June 13th 2025. Thank you for your time and I will now pass the call over to Sachin.
Sachin Shah: Thank you Nick.
Sachin Shah: And good morning, everyone.
Sachin Shah: It's been a year since I last joined this call and with the significant growth in Brookfield wealth solutions since that time I am pleased to provide you with an update.
Sachin Shah: As many of you know we set out in late 2020 to focus on building. The next scale business for Brookfield. Our thesis at that time was that certain retirement wealth and protection products within the insurance industry could benefit from our scale capital investment discipline strong operating culture.
Sachin Shah: And perpetual time horizon combined.
Sachin Shah: Combining all of these attributes with the tailwind of an aging population.
Sachin Shah: Driving demand could set the stage for this business.
Sachin Shah: Equally important but maybe not as appreciated is that this business could be highly synergistic with all of the parts of Brookfield, while scaling and delivering in excess of 15% returns on invested capital over a long period of time.
Sachin Shah: Fast forward to today and through a series of acquisitions and organic growth our business has over $140 billion of assets $1 7 billion of annualized earnings and statutory capital in excess of $16 billion.
Sachin Shah: The business is also highly complementary to what we do across the group.
Sachin Shah: We benefit from access to Brookfield fund products credit and equity capabilities and.
Sachin Shah: World class expertise in infrastructure real estate and renewable power, which have decades long track records.
Sachin Shah: This has allowed us to upgrade assets inherited when we acquired American National and American equity in.
Sachin Shah: In particular in real estate, where we have access to the highest quality and irreplaceable commercial real estate globally.
Sachin Shah: This allows us to grow our annuity franchise with the confidence that our investment teams will constantly source, new and accretive assets.
Sachin Shah: More important than even our investment capabilities is our capital base.
Sachin Shah: We've invested permanent capital from Brookfield balance sheet to build this business we.
Sachin Shah: We do not have any client money or private equity money in any of our insurance businesses.
Sachin Shah: Means our capital as perpetual and 100% aligned with our policyholders.
Sachin Shah: It allows us to make decisions with a very long term time, horizon, which prioritizes simple and predictable liabilities.
Sachin Shah: Low volatility and a singular focus on capital compounding.
Sachin Shah: We will grow this business as long as our returns on capital remain above our targets and as long as the risk profile of liabilities remains low and predictable over the long term.
Sachin Shah: With that in mind, we continue to scale, our core U S annuity business, where.
Sachin Shah: We're primarily focused on expanding the reach of our product offerings through both new product development and new distribution channels, including the larger bank channels.
Sachin Shah: For context banks and broker dealers accounted for 60% of total U S retail annuity sales each year, but only 30% of our retail annuity sales last year were through this channel.
Sachin Shah: Leveraging Brookfield strong relationships, we expect to be on several of the larger bank channels over the next 12 to 18 months, which will support further growth in our business we.
Sachin Shah: We are also in the beginning stages of our international expansion.
Sachin Shah: We were recently granted a pension risk transfer license in the U K the first such license to be granted since 2007.
Sachin Shah: And plan to bring our strong track record of servicing policyholders to the region.
Sachin Shah: The UK represents the largest pension market in the world with over 500 billion expected to come to market in the next decade.
Sachin Shah: Our U S pension risk transfer business is just in its third full year, where our focus has been on small and mid sized plans with a thoughtful progression towards larger plan deals.
Sachin Shah: The U S pension market is expected to represent another $350 to $500 billion over the next decade, setting up setting us up for meaningful growth.
Sachin Shah: In the coming years.
Sachin Shah: As you can see we have built and are continuing to build a platform with diversified products and sales channels in various markets around the world last year, we were up $19 billion of annuities and pension deals across our business.
Sachin Shah: These numbers demonstrate the strength of our operating capabilities and significant growth in a few short years, we're still in the early days of our evolution.
Sachin Shah: Based on the current rate environment and projected demand, we expect to write 25 billion of combined retail and institutional annuities.
Sachin Shah: For the calendar year 2025.
Sachin Shah: Turning to investment returns one of our great advantages is our ability to leverage the Brookfield ecosystem.
Sachin Shah: This includes a vast network investment professionals across multiple asset classes and geographies.
Sachin Shah: Our capabilities in real estate, Inc.
Sachin Shah: Our capabilities in real assets, including real estate and infrastructure provide very attractive risk adjusted returns through economic cycles, which is a tremendous benefit to both policyholders and the growth of our capital base.
Sachin Shah: We are also highly opportunistic in particular during periods of volatility.
Sachin Shah: In that regard, we continue to maintain over $15 billion of cash on hand, and over $40 billion of liquidity, which can be used for accretive transactions.
Sachin Shah: Taken altogether, our business is uniquely positioned to serve our policyholders and drive significant value and we remain on track with the goals set out during our Investor day in September of last year.
Sachin Shah: Although our business is much larger than it was just a few short years ago, our fundamentals remain unchanged and our focus continues to be on compounding capital in excess of 15% returns on our equity.
Sachin Shah: With that I'll turn I'll turn it over to the operator for questions.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question Press Star One again, one moment, while we compile the Q&A roster.
Speaker Change: And our first question will come from the line of Cherilyn Radbourne with TD Cowen Your line is open.
Speaker Change: Yes.
Cherilyn Radbourne: Thanks, very much and good morning.
Speaker Change: First question is apart from semi conductors and pharmaceuticals, I find that investors I speak with are somewhat skeptical about the concept of rod reindustrialization in the U S could you elaborate a little bit more on Brookfield perspective on that and the opera.
Speaker Change: <unk> is the Intel deal as a template to facilitate the related funding needs.
Yes, sure Cheryl Lynn like I.
Speaker Change: Thank the <unk> team has been playing for a while and our expectation is we are seeing supply chains reorient around the world and we don't see that slowing down and I understand it's a topical issue in the U S and we will see how much and it plays out.
Speaker Change: And what the infrastructure they have to support it but absolutely we see it reorienting and we have a number of discussions underway now.
Speaker Change: And we think it will present attractive investment opportunities for the business and we have a unique proposition we have the capital we have the scale and we have the operating expertise to deliver these solutions that maybe.
Speaker Change: Others have so I think we are in a unique position to be able to have these conversations and we do seeing it being a driver of capital flows over the coming years.
Speaker Change: Thank you.
Speaker Change: Secondly, we appreciate the enhanced disclosure on Brookfield, well solution and one question that I have in that regard is with respect to funding agreements as a source of funds.
Speaker Change: Can you explain how the characteristics of that liability differ versus straight up annuities pension risk transfer deals and who is the typical counter party there.
Speaker Change: Okay.
Speaker Change: Hi, Cherilyn, it's Sachin I'm happy to.
Speaker Change: I'll take a shot at that.
Speaker Change: So the characteristics I would say almost a bit of a hybrid between an annuity and pension deal.
Speaker Change: Were there like an annuity as they tend to have.
Speaker Change: Finite terms are 10 years is that.
Speaker Change: That.
Speaker Change: The standard products between five seven and 10 years.
Speaker Change: And they have a fixed rate.
Speaker Change: For all intents and purposes look similar to a bond issue.
Speaker Change: But they do.
Speaker Change: They do form part of your insurance capital base, So theyre not theyre not issued out of the Holdco debt issued out of the insurance subsidiary, where they look like a pension is that the holders typically fixed income buyers cannot ask for their money back early theres no lapse risk and.
Speaker Change: And therefore, you don't have to build in surrender charges or anything of that nature.
Speaker Change: So they kind of benefit from the best of both worlds there are fixed annuity.
Speaker Change: With a set term and there is no right to ask for the money back early.
Speaker Change: So we think it's a pretty attractive market, we did $500 million in the first quarter, which was our inaugural issue.
Speaker Change: I would say, we probably could do a 1 billion and a half of this year. If the markets are constructive and we liked the rate.
Speaker Change: And then you should see this part of our annuity offering grow overtime as an alternative to either annuities or pensions.
Speaker Change: That's really helpful. Thank you.
Speaker Change: Thank you one moment our next question.
Speaker Change: And that will come from the line of Michael Cyprus with Morgan Stanley. Your line is open.
Speaker Change: Oh, Hey, good morning, Thanks for taking the questions, maybe just starting off on wealth solutions and greatly appreciate the enhanced disclosure there. So a big thank you.
Speaker Change: Just around the $25 billion of business you expect to do in calendar 'twenty five I think you did maybe around $4 billion. This quarter. So that would suggest a meaningful ramp over the next couple of quarters. So I was hoping you could elaborate a bit on where you see that coming from what you see contributing there to drive the ramp and then related to that you spoke about building out the distribution and product side is.
Speaker Change: Well, maybe you could just speak to how you anticipate that playing out just around the distribution channels, maybe remind us where you are today and how you expect the product set to evolve from here. Thank you.
Sachin Shah: Sure It's Sachin again.
Sachin Shah: First on the remainder of the year Q1 is typically a little slower.
Sachin Shah: In terms of both annuities and pensions when they come to market.
Sachin Shah: So we were not surprised by that.
Sachin Shah: And.
Sachin Shah: The reason our expectations haven't changed for the year is largely because of that sort of profile of the first quarter.
Sachin Shah: In terms of the makeup of I would say we should see.
Sachin Shah: Regression in the U K, we think we can do several billion dollars of pension deals in the U K focused on smaller plans.
Sachin Shah: But the U K market.
Sachin Shah: Does it have any participants and deeply needs competition and we represent a really interesting new entrant.
Sachin Shah: Because we have a track record both in the U S and Canada, So although were new.
Sachin Shah: We have a track record to point to we have great relationships with trustees.
Sachin Shah: Who often act on a global basis for corporate Counterparties.
Sachin Shah: And therefore, we think we can hit the ground running.
Sachin Shah: Our U S business on the pension side continues to scale as does our Canada business. So so the overall pension outlook is very strong.
Sachin Shah: And then in terms of the retail annuity market and the institutional annuity market.
Sachin Shah: Really on the retail side.
Sachin Shah: We are building out relationships with broker dealers and the bank channel as I as I described.
Sachin Shah: Our relationships at the independent marketing organizations and at the agent level are outstanding we have a very strong following with both American National American equity.
Sachin Shah: Seeing as one of the leading firms when it comes to our technology backbone and customer service.
Sachin Shah: And we have a strong following from from agents, because we we service policyholders well.
Speaker Change: So I think Youll see R. R <unk>.
Speaker Change: Product offering grow through those channels the banks will be new.
Speaker Change: The large banks in the U S. We're working actively to get on several bank channels.
Speaker Change: And then lastly, I'd say, the institutional annuity market, which the earlier question was about <unk>. We did our inaugural issue in the first quarter at $500 million and it was three times oversubscribed. So we know there's healthy appetite for that product coming from us and.
Speaker Change: And we can tap that market.
Speaker Change: Periodically throughout the throughout the year.
Speaker Change: Great. Thank you and then just a follow up question on real estate, maybe you could talk for a moment and just how you are approaching and thinking about the opportunity set in this more volatile backdrop to monetize the real estate portfolio. How you expect that to the cadence of that to play out over the next 12 months versus the next five years. Thank you.
Speaker Change: Yeah, Hi, Mike, It's Nick I mean listen time will tell what we know for sure is that the operating fundamentals of the portfolio are getting better and better by the day.
Speaker Change: We are seeing as we expected we're seeing tightness in the market with limited supply and demand from tenants is really not growing down we talked about in New York in our comments, but we are seeing this globally, where there was a lack of new quality supply demand tenants are actively looking for new space. We have a number of conversations with tenants around the world. So the underlying <unk>.
Speaker Change: Fundamentals are strong and that's a positive indicator for a potential investors into the space and the capital markets are constructive to capital market started the year very strongly for office on retail we executed a number of financings. The market took a pause for a couple of weeks two three weeks, but they now seem to be coming back with the liquidity there and we are advancing a number.
Speaker Change: <unk> our financing so all the as we said before all the building blocks are there for transaction activity and we have actually started to move on assets within the T&D portfolio, they're not meaningful contributors to equity, but we are starting to transact and we are starting.
Speaker Change: To sell assets next to our plant and so I think over the next 12 months, we will see how it develops but all the building blocks are there for transaction activity to pick up so we're highly optimistic but in the meantime, the fundamentals are very strong.
Speaker Change: Great. Thank you.
Speaker Change: Thank you one moment for our next question.
Speaker Change: And that will come from the line of Kenneth Worthington with Jpmorgan. Your line is open.
Kenneth Worthington: Hi, good morning, Thanks for taking the questions.
Speaker Change: Along those same lines NICU and Bruce Bruce growth highlighted that carry generation sort of at the highest level in two years. The pace of monetization is 22 billion with strong and maybe a somewhat uneven environment.
Speaker Change: What does the monetization pipeline look like as we think about the second half of the year and maybe compare.
Speaker Change: The outlook for monetization and the funds versus what you see potentially.
Speaker Change: Potentially off the balance sheet.
Ken: Yes, Hi, Ken.
Ken: Listen the monetization pipeline is active as you know we have a global business and so we're always in the market with assets in different sectors in different geographies through the cycle and we have assets currently in the market in 19, Australia Korea, Brazil, Europe, and we're executing and we've actually seen demand for some of those asset.
Ken: Hold up pretty strongly through this period of volatility.
Ken: Listen I think if you if you talk about one area of the business, where the uncertainty impacted over the timing certainty of those monetization, but so far we haven't seen that impact materially and we're continuing to progress now the bulk of those monetization today would be fund assets.
Ken: And they would be out of our earlier vintage real estate infrastructure private equity funds and as we work our way through those monetization will get ourselves into carry and we've talked about this being a bridge year for carried interest in a meaningful step up next year, that's still the expectation.
Ken: So we do have assets that we plan to bring to market on the balance sheet, but the bulk of the sales that we have in our plan would be from the fund and that makes sense, because it's just where the larger pool of assets, which sit.
Ken: Okay great.
Speaker Change: And then maybe secondly, the U S financial media.
Ken: Adjusting another larger annuity companies in play for tick up by private equity.
Ken: So just.
Ken: Just sort of gets to the question how beneficial is additional size and scale completely irrelevant to this to this company.
Speaker Change: Company, but how much how beneficial additional size and scale to Brookfield given your current position is it nice to have at the right price is it a must have given the market places consolidating or is it really sort of irrelevant given what you've already built.
Okay.
Speaker Change: Look we've approached growing this whole business from a value perspective, we acquired American National and American equity.
Speaker Change: <unk>.
Speaker Change: Meaningful discount to book equity.
Speaker Change: We're in the range of seven to eight book.
Speaker Change: And and we were fortunate to have done that when rates were very low. So we not only acquired for a discount but we inherited liabilities at very low rates I think the two things that have changed dramatically, which would maybe give us pause.
Speaker Change: Today the rate environment is much more normalized.
Speaker Change: And number two.
Insurance platforms are now trading at close to two times book.
Speaker Change: You would've seen the.
Speaker Change: The some recent transactions I won't call them out by name, but some recent transactions of scale platforms that have traded much closer to two times book.
Speaker Change: Which just signifies how valuable these are the demand that is out there for for this permanent capital base I don't think we would be a buyer in that zone. In fact, I know we wouldn't.
Speaker Change: And then setting that aside what we have today is outstanding we have licenses across the U S. We have distribution capabilities in every major channel in the U S.
Speaker Change: We have our pensions business, our retail annuity business and institutional annuity business and we have international expansion. So we're in a fortunate position, where we can lean on organic growth when valuations are high and if that changes.
Speaker Change: The ability to pursue M&A on an opportunistic basis.
Speaker Change: Great. Thank you. Thank you.
Speaker Change: Thank you one moment for our next question.
Operator: And that will come from the line of Robert Kwan with RBC capital markets. Your line is open.
Speaker Change: Mr. Kwan of your line is muted please on mute.
Speaker Change: Again, Mr. Qantas. Your line is on mute please UN mute that.
Speaker Change: Alrighty speakers I'm showing no further questions in the queue. At this time I would now like to turn the call back over to Katie Vitale for any closing remarks.
Katie Vitale: Thank you everybody for joining us today and with that we'll end the call.
Speaker Change: This concludes today's program.
Speaker Change: You all for participating you may now disconnect.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: <unk>.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: And.
Speaker Change: [music].