Q3 2025 Brookfield Corp Earnings Call
Speaker #2: Hello, and welcome to the BROOKFIELD Corporation third quarter 2025 conference call and webcast. At this time, all participants are on a listen-only mode. After the speaker presentation, there will be a question and answer session.
Speaker #2: To ask a question during the session, you will need to press star 11 on your telephone. I would now like to hand the conference call over to your first speaker, Ms. Katie Battaglia.
Speaker #2: Vice President, Investor Relations. Please go ahead.
Speaker #3: Thank you, Operator, and good morning. Welcome to BROOKFIELD Corporation's third quarter 2025 conference call. On the call today are Bruce Flatt, our Chief Executive Officer, and Nick Goodman, President of BROOKFIELD Corporation.
Speaker #3: Bruce will start off by giving a business update followed by Nick, who will discuss our financial and operating results for the quarter. As a reminder, we completed a three-for-two stock split on October 9th, 2025.
Speaker #3: Accordingly, all per-share amounts that are discussed during the conference call are on a post-split we'll turn the call over to the operator and take analyst questions.
Speaker #3: In order to accommodate all those who want to ask questions, we request that you refrain from asking more than two questions. 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 performance, we may make forward-looking statements.
Speaker #3: Including forward-looking statements within the meaning of applicable Canadian and US security laws. These statements reflect predictions of future events and trends and do not relate to historic events.
Speaker #3: They are subject to known and unknown risks and future events and results may differ materially from such statements. 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 US and the information available on our website.
Speaker #3: In addition, when we speak about our wealth solutions business or BROOKFIELD Wealth Solutions, we are referring to BROOKFIELD's investments in this business that supported the acquisition of its underlying operating subsidiaries.
Speaker #3: With that, I'll turn the call over to
Speaker #3: Bruce.
Speaker #4: everyone on the call. We delivered another strong quarter of financial results, distributive earnings before realizations were 1.3 billion for the quarter, or 56 cents per share, and 5.4 billion over the last 12 months.
Speaker #4: That was $2.27 per share. That was an 18% increase over the same period last year. Our outlook remains strong, with each of our underlying businesses continuing to execute their strategic plans driving strong organic earnings growth.
Speaker #4: Turning first to markets, economic activity and corporate earnings remain healthy. Capital markets are open and transaction activity is picking up across most asset classes.
Speaker #4: For our business, that backdrop is constructive and highly supportive of real assets. So far this year, we financed 140 billion dollars operations, and closed 75 billion dollars of debt across our of asset sales at attractive values, including over 35 billion in just the past few months.
Speaker #4: At the same time, the direction of monetary policy is turning. After an extended period of elevated interest rates, some softness in the labor markets has started to prompt policy easing from the Federal Reserve to support growth and maintain balance across the economy.
Speaker #4: And while the current environment is influencing policy decisions today, it is important to consider the structural forces that shape where policy goes from here.
Speaker #4: Over the past 15 years, government have relied on fiscal stimulus to offset slowdowns, leading to a buildup of public debt that is difficult to sustain in a higher interest rate are now evaluating the tools environment.
Speaker #4: Policymakers around the world Second, austerity is always possible, but not too many governments have shown the desire to push that. And third, if growth stays modest, policymakers may instead quietly manage rates below inflation to ease debt burdens, lowering short rates and guiding long rates down.
Speaker #4: burdens. The most constructive outcome of that, and the one that we hope for, is faster economic growth that outpaces debt, which can be helped by AI and innovation.
Speaker #4: If this path is pursued, it would likely lead to a period of declining real yields and low nominal rates. This environment will provide the optimal conditions for real assets we invest into.
Speaker #4: Our portfolio is built around inflation-linked durable cash flows backed by hard assets that protect real returns. The benefits of real assets are always evident, but in this evolving environment, they are becoming an essential investment product for every portfolio.
Speaker #4: A suppression of real yields will amplify these benefits and enhance long-term value across the franchise. Turning to the business, we are entering the final quarter of 2025 with strong momentum and a record almost 180 billion of deployable capital positioned in our business to invest for value in the powerful secular trends that define the next chapter of growth in BROOKFIELD, but also the global economy.
Speaker #4: First, AI innovation is fueling unprecedented demand for large-scale infrastructure. Second, aging populations are reshaping global savings, and driving demand for new wealth and retirement products, which is going to last for decades.
Speaker #4: And third, the real estate recovery is well underway. Nick will cover that and gaining momentum. Each of these trends represents a multi-decade opportunity to invest where our scale and expertise give us a major advantage.
Speaker #4: To that end, we advanced a number of strategic transactions during the quarter. In our wealth solutions business, we received shareholder approval for our acquisition of Just Group in the UK, a region where growing retirement market is creating significant opportunities for long-term investment.
Speaker #4: We also
Speaker #1: Insurance market . The first of many expected opportunities in the region . agreed to We acquire the remaining 26% of oak tree that we own don't will already , which bring our to ownership 100% upon completion of the transaction .
Speaker #1: From the outset , our partnership with Oak Tree has been grounded on shared principles a oriented value approach to , including investing with a focus on compounding capital time .
Speaker #1: over Our scale and real asset expertise , combined with oak trees , deep credit experience , has created one of the most comprehensive and diversified credit platforms globally .
Speaker #1: Third , we continue to partner with leading institutions , corporates and around the world , and this is what makes our governments different .
Speaker #1: Combining capital , expertise and our global reach to capture opportunities for all have . We several initiatives underway to deliver the next generation of energy transition and AI infrastructure globally .
Speaker #1: And I'll just mention a few through Westinghouse . During the quarter , we partnered with the US government to deliver $80 billion of nuclear reactors for context , that is the equivalent of eight large scale nuclear plants .
Speaker #1: Enough , for example , power the state entire of Utah to . These projects will help rebuild critical supply chains in the US , revitalize the domestic nuclear industry , and marks an inflection point for the growth of nuclear in North energy America .
Speaker #1: With bloom Energy . We are developing one gigawatt of behind the meter power generation from fuel cells to meet the growing demand from AI data centers and other energy intensive applications .
Speaker #1: And we think this is just the beginning . And through our strategic partnership with figure recently announced a leading developer of humanoid robotics , we are providing access to our portfolio of real assets to the real create world environments needed to develop , train deploy this and safely and effectively us most , positioning importantly , at the forefront of one of the most significant technological advances of the coming decades .
Speaker #1: Looking ahead , despite our size and scale today , our growth potential is greater than it has ever been . Our investment discipline , operating expertise and access to large scale capital positions us to deliver another strong phase of growth for in years to come .
Speaker #1: As shareholders always , thank you for your support . We appreciate your continued interest in Brookfield and over to Nick .
Speaker #2: Thank you , Bruce , and good morning , everyone . We delivered strong results financial quarter , supported by momentum across our core continued businesses .
Speaker #2: Distributable earnings, or D, before realizations, were $1.3 billion for the quarter, or $0.56 per share. Over the last 12 months, they totaled $5.4 billion, or $2.27 per share, representing an 18% increase over the prior year period.
Speaker #2: Total De , including realizations was $1.5 billion , or $0.63 per share , for the quarter , and $6 billion , or $2.54 per share , over the last 12 months , with total net income of $1.7 billion over the same period .
Speaker #2: starting with our operating Now , performance , each of our businesses continues to perform well . Our asset management business generated distributable earnings of $687 million , or $0.29 per share , in the quarter , and $2.7 billion , or $1.14 per share , over the last 12 months .
Speaker #2: Strong fundraising momentum led to $30 billion of inflows during the quarter , and $6 billion from our retail and wealth clients over , fee related earnings increased by 17% to a record $754 million as fee bearing capital grew to $581 billion during the quarter .
Speaker #2: We heard we held the final institutional close of our second vintage flagship global transition with strategy total commitments of $20 billion , exceeding our target and marking the largest private fund globally dedicated to energy transition .
Speaker #2: We also launched our seventh vintage flagship private equity fund focused on essential services and industrial businesses , and are preparing to launch our inaugural AI Infrastructure Fund , which together strong fundraising momentum going into 2026 .
Speaker #2: Finally , jointly with Brookfield Asset Management , we announced the acquisition of the remaining interest in Oak Tree , of which $1.4 billion will be funded by the corporation .
Speaker #2: The transaction expands our ownership in oak trees , carried interest fee related earnings sheet and balance investments and further strengthens our global credit .
Speaker #2: Transaction platform is expected to close in the first half of 2026 , subject to closing customary conditions and regulatory approvals . Turning to wealth Solutions our business , we delivered another quarter of strong growth with distributable earnings of $420 million , or $0.18 per share , in the quarter , and $1.7 billion , $0.70 per share , or over the last 12 months .
Speaker #2: This represents organic growth of over 15% year over year , supported by investment strong performance , robust underwriting across property and casualty lines , and disciplined capital deployment .
Speaker #2: During the quarter , we originated $5 billion of retail and institutional annuities , bringing our total insurance , insurance assets to $139 billion .
Speaker #2: Importantly , we continue to focus on raising long duration liabilities with approximately 80% of new retail annuities written during the quarter . Having of five years durations or longer .
Speaker #2: Our investment portfolio generated an average yield of 5.7% , contributing to related spread earnings that were 1.7% above our average cost of funds .
Speaker #2: As we continue to reposition the portfolio into higher yielding real asset investments sourced within Brookfield . We are well positioned to sustain spread strong related earnings during the quarter , we deployed $4 billion into Brookfield , Managed Strategies at an average net yield of which 9% , helped support a 15% return on equity .
Speaker #2: Consistent with our long term target . We also made meaningful progress internationally , expanding across the fast growing retirement markets in the UK and Japan .
Speaker #2: In the U.K. , we received shareholder approval for the acquisition of just Group , which remains on track to close in the first half of 2026 , subject to customary closing conditions and regulatory approvals .
Speaker #2: Upon closing our insurance assets are expected to grow by approximately $40 billion to $180 billion . In Japan , we announced our first reinsurance agreement in the region with a leading Japanese insurance company to reinsure annuity policies on a flow basis .
Speaker #2: These initiatives strengthen our position in key international markets and position us to capture the global growing demand for retirement solutions . Our operating businesses continue to deliver growing and resilient cash flows , generating distributable earnings of $336 million , or $0.15 per share , in the quarter and $1.7 billion , or $0.72 per share , over the last 12 months .
Speaker #2: These results underscore the strength of our operating performance and the continued momentum across each of the businesses. Our infrastructure and renewable power and transmission businesses remain at the secular forefront of trends reshaping global investment opportunities.
Speaker #2: Recently , we announced new initiatives to advance next generation power and AI infrastructure , including our partnership with the US government through Westinghouse to deliver $80 billion of new nuclear plants in the United States and our publicly listed private equity business .
Speaker #2: We announced plans to simplify its structure into a single listed corporate entity aimed at broadening the investor base and improving trading liquidity . Our real estate business continues to perform well , supported by improving market conditions and strong fundamentals .
Speaker #2: Leasing activity remains concentrated in high quality , well assets , driving strong operating performance across the portfolio . Our super core portfolio continues to outperform with 96% occupancy at the end of the quarter , and our core plus portfolio , which shares similar high quality characteristics , ended the quarter with 95% occupancy .
Speaker #2: During the quarter , we signed 3,000,000ft² of office leases with rents on newly signed leases averaging 15% above those expiring , notably at Canoe Wharf .
Speaker #2: Leasing activity remains very strong , with over 450,000ft² leased year to date , putting 2025 on track to be its best leasing year in the past decade .
Speaker #2: The leasing pipeline is also the been in strongest it has years , underscoring the depth of demand for high quality space and Canary Wharf position .
Speaker #2: As one of the world's leading business destinations . Turning to Monetizations . Market conditions remain highly favorable for high quality assets and businesses like the ones we own to date this year , we advanced $75 billion of Monetizations across our franchise , including $22 billion of real estate assets , $14 billion of infrastructure assets , nearly $11 billion of renewable assets , $7 billion from private equity and $21 billion from credit and other diversified assets .
Speaker #2: Two recent highlights to note are as follows . In our infrastructure business , we completed the IPO of Gas Storage , Rockpoint one of the largest independent natural gas storage operators in North America .
Speaker #2: The offering was well received and oversubscribed , raising 810 million CAD . The largest IPO on the Toronto Stock Exchange since May 2022 .
Speaker #2: Following the IPO , we have now realized a multiple of capital over three times while retaining significant ownership interest in the business . In the business and in a real estate business , we advanced the sale of the remaining assets in our US manufactured housing portfolio for $2.5 billion , resulting in a total investment IRR of 25% and a 3.5 multiple on invested capital .
Speaker #2: sales Substantially all completed year this were at or above carrying values , and have crystallized significant value for our clients at attractive returns through these monetizations , we realized $154 million of carried interest into income during this quarter .
Speaker #2: Importantly , because our earnings recognition follows a European waterfall model were carried , interest is recognized only after we have returned to funds invested .
Speaker #2: The capital and achieved a preferred return . A number of the realizations have advanced our mature funds closer to that carried interest , realization .
Speaker #2: Shifting to capital allocation during the quarter , we reinvested excess cash flow back into the business and returned to $180 million to shareholders through regular dividends and share buybacks .
Speaker #2: To date , this year , we have repurchased over $950 million of shares in the open market at a roughly 50% discount . To our view of intrinsic value .
Speaker #2: Moving on to our balance sheet and liquidity , we continue to maintain a conservatively capitalized balance sheet and high levels of liquidity with record deployable capital of $178 billion at the end of the quarter .
Speaker #2: We also maintained strong access to the capital markets , executing $140 billion of financing so far this year , including the issuance of $650 million of ten year senior notes at the corporation during the quarter .
Speaker #2: Other notable financings include the successful refinancing of a $1.9 billion , five year loan at a luxury resort in the Bahamas , five year and two CMBS issuances at New York office Trophy buildings , each over $1.25 billion , reinforcing that capital continues to flow to high quality assets at attractive returns .
Speaker #2: Bringing it all together, our financial results continue to be very strong, and we expect continued growth in our results over the remainder of the year and into 2026.
Speaker #2: I am pleased to our Board confirm that of Directors has declared a quarterly dividend of $0.06 per share , payable at the end of December , to shareholders of record at the close of business on December 16th , 2025 , on a post-split basis , the quarterly dividend is consistent with the previous quarter's dividend .
Speaker #2: Thank you for your time, and I will now hand the call back to the operator for questions. Operator?
Speaker #3: Thank you . As a reminder to ask a please question , press star one one on your telephone and wait name to be for your announced .
Speaker #3: To withdraw your question , press star one . One again , due to time restraints , we ask that you please limit yourself to one question and one follow up question .
Speaker #3: Please stand by while we compile the Q&A roster . And our first question will come from the of line Michael Cyprus with Morgan Stanley .
Speaker #3: Your line is open .
Speaker #4: Great . Thank you . Good morning . If we think about the pillars of your success over the years , I think it's been your ability to adapt the business and innovate in recent years , you've added wealth solutions .
Speaker #4: You continue to grow that . But recently you've made some partnerships around AI , humanoids , partnership with figure as one example . So I was hoping you could talk about how you see humanoids and AI broadly , potentially creating another leg of the stool for Brookfield .
Speaker #4: Over time, I remember at your Investor Day, I think embedded in your 2030 guide was about $2.6 billion of D from capital allocation.
Speaker #4: Maybe you can help unpack the components there and how you think about other different contributors over time . Thank you .
Speaker #2: Good morning Mike , and thanks for the question . I would break the answer into two parts . I'd say most of the capital deployment and the focus that we have today is around building the backbone infrastructure to support the build out of AI .
Speaker #2: The growing demands of secular trend of the growth of AI , the need for compute capacity , and also the need for the power to drive that and be able to supply the electricity for the the compute is where we are most of our time in our dollars right now , and we have a very unique position around that given our capability and our global reach and our operating expertise around renewable energy and nuclear and other energy sources .
Speaker #2: And then our data center and that we're launching AI fund soon . So I'd say that that offers great growth potential for the franchise .
Speaker #2: And we're very well positioned to participate in that . And our investing in a disciplined way to drive really , impressive really results so far , I'd say the second component and the figure transaction that you talked , you about Brookfield know , Corporation , what we're doing looking to is stay ahead of the curve and deploy capital for the benefit of the rest of the organization and for the benefit of our operations .
Speaker #2: we see with the developments And what in AI and humanoid robotics , we believe that over time , they will have a material impact on the way that businesses are run .
Speaker #2: And even broader society . And so I think this is about investing as a defensive investment and an opportunity to make money . But to really learn and be at the forefront for the benefit of broader the organization .
Speaker #2: And we would look to do that . I'd say over time we'd that look to do selectively as we see good opportunities to do so .
Speaker #2: So I don't this as think of next necessarily the leg . I think it's a and a trend force that's driving broad growth across the organization .
Speaker #2: And we're well positioned to participate in it .
Speaker #4: Okay . Thanks . And then just up question on wealth solutions . So you signed the first reinsurance agreement in Japan , expanding your global footprint .
Speaker #4: I was hoping you could talk about that arrangement . How you see that contributing . What's the scope for others in Japan as well as elsewhere around the world ?
Speaker #4: Maybe you could just update us on your global ambitions . Clearly you have the transaction underway in the UK .
Speaker #2: Yes . Thanks , Mike . Yes . As you mentioned , we we've made the transaction . Well , we've we've agreed to transaction in the UK and we're working towards closing that transaction in the early next part of That's a year .
Speaker #2: significant step for us . Scaling PRT and giving us access to a long duration low pool of low risk liability . Sorry , long duration , pool of low risk liabilities .
Speaker #2: And so we're excited to close that . That really sets us up well in the UK market . And we identified Asia and Japan as the next market that we look to to grow into .
Speaker #2: And doing that in partnership with local players . The reinsurance , it's a flow agreement . So it's really a transaction that will build over time , month to month , quarter to quarter .
Speaker #2: As we participate in the business that they're writing . So it has the potential to scale . And then it has we also have the also potential to partner with other local players .
Speaker #2: So very much about continued growth in both markets . And those are the two markets we're predominantly focused on outside of North America today .
Speaker #4: Great . Thank you .
Speaker #3: Thank you . our next question . And that will line come from the of Mario Saric with Scotiabank . Your line is open .
Speaker #5: Hi . Good morning and thank taking the you for questions . Coming back to the Wealth Solutions business Nick I was wondering how long do you think it may take to get to your approximate 200 basis point target ?
Speaker #5: Net investment yield , spread . And then secondly , how should we think about the evolution of growth versus net insurance flows ? I think in this quarter was the net was about So 40% of gross .
Speaker #5: just curious on what your thoughts are on those two items .
Speaker #2: Yeah , I mean , listen , the 200 basis points is a long a long term , medium to long term target . So it will take time to grow into it .
Speaker #2: And as you know , as cash comes in , we're very disciplined on the deployment . And we're looking at a sort of barbell approach on deployment .
Speaker #2: Sitting in significant short term liquidity and balancing that with investment into real assets around credit and equity . So it just takes time for the deployment .
Speaker #2: But as we work through the plan, we do expect that spread to start to broaden out and work towards it. Importantly, we think about ROE, Mario, as opposed to just spread and the return on equity that we're generating.
Speaker #2: And the capital is compounding a 15% plus . And that is in line with our long term targets . We're very happy with the performance there .
Speaker #2: On the gross to net flows . It should stabilize out to about a third outflows versus inflows in a quarter . As we move forward .
Speaker #5: Got it okay . And then my follow up , just with respect to the recently announced oak tree acquisition , has the composition of the $3 billion purchase price between Bam shares and cash .
Speaker #5: Has settled that been you see the ? And how do transaction impacting the velocity of . Ben ? Share repurchases going forward , if at all ?
Speaker #2: So yeah, we do have the finalized results, and the election's end result would, I'd say, roughly be $250 million of shares elected.
Speaker #2: The balance will be in cash, and almost 100% of the BAM consideration will be in cash. It will have zero impact on our buyback.
Speaker #2: We will buy back the $250 million of shares that we issue, but it will not have an impact on our broader buyback strategy.
Speaker #5: Okay . Those are my two . Thank you .
Speaker #3: you . Thank One moment for our next question . And that will come from the line of Alex Blostein with Sachs . Goldman is open .
Speaker #6: Hey , hey Nick . Good morning everybody . Just maybe zoning back to trajectory of the insurance business . So really good growth .
Speaker #6: So the sales are coming through nicely on the spread though . And I hear your around the comment ROE , but the spread , I think in annuities was 165 basis points this quarter .
Speaker #6: So maybe help us think through kind of the near term dynamics over the last maybe 12 to 24 months on the trajectory of that spread , as you kind of start to earn your way back towards the targets .
Speaker #2: Yeah . So first , Alex , welcome to the call . I know it's your first one . It's great to have you .
Speaker #2: I'll just say that the the spread is you're right . 165 and it's really because we're being disciplined in deployment and way we think about , you know , the the business , we run it for the long term .
Speaker #2: And so we're being patient in the deployment . We are sourcing very attractive , real asset investment opportunities in the credit and equity side .
Speaker #2: As I just said . And so as we look forward , we do expect it to work its way back up . But we're not running as you business know , the quarter to quarter .
Speaker #2: We're it long term . So we're going to be patient and wait for the right investment opportunities . And as they come in , you'll start to see that spread widen out .
Speaker #2: But again , what it all comes back to is the ROE . And so we're happy with the performance .
Speaker #6: Gotcha . Thanks for that . And then for my follow up we'll just maybe stay with insurance . Can you spend a couple of minutes maybe on how you're progressing towards closing the just acquisition ?
Speaker #6: I know there's probably a lot of limitations to what you could say publicly , but as you were to sort of frame the spread related earnings contribution and then strategically , how you think this could accelerate growth of your presence outside the US and PRT markets in UK and Europe broadly would just be helpful to understand what this deal could mean financially for the business over medium kind of term
Speaker #2: do because we apologize are in what limited
Speaker #2: we can say , and . So I we haven't really talked to date about the what the proforma looks like as we work our way through the regulatory approvals .
Speaker #2: I would just tell you that we're working through it . We have the shareholder vote , we're working with the regulator , as you know , we previously were licensed under Bluemont in the UK .
Speaker #2: So we have a good relationship with the PRI . But we're working through that process . I'd say that just has got a good track record of issuing PRT on a consistent basis in the UK .
Speaker #2: I think in the year before we acquired them , about 5 billion sterling of origination . So we would expect to hopefully be able to continue that and scale up with our capital .
Speaker #2: But as for performers , it will have to wait until we're further along in the process .
Speaker #6: Okay . Fair enough . Thanks .
Speaker #2: Thank you .
Speaker #3: Thank you one moment for our next question . And that will come from the line of Sherilyn Radbourne with TD Cowan . Your line is open .
Speaker #7: Thanks very much and good morning . Ever since framework the agreement to build new nuclear capacity in the US was announced , the biggest question we've been getting from clients is to the extent that Brookfield , alongside LPs , will invest capital capital in nuclear project development , what kind of downside protections would you be seeking ?
Speaker #7: And is that investment likely to occur in a discrete nuclear strategy in the or BGT strategy ?
Speaker #2: Hi Sherilyn , and thanks for the question . So I'd say , first of all , I'd say that it's being bought . It's being bought within Westinghouse .
Speaker #2: So the transaction that is being done is being done between Westinghouse and the US government and the US government is buying as the equity investor , $80 billion of nuclear facilities .
Speaker #2: Our role within that is to help deliver the facilities . And then provide , as you know , the services that we provide , which is the fuel rods , the fuel , and then the servicing of the facilities going forward .
Speaker #2: So the end result will look very much like the Westinghouse business that we have today , to service and provide the fuel to nuclear reactors .
Speaker #2: And it's really scaling Westinghouse as a global nuclear champion. But it will be done through Westinghouse, which is owned by BG one.
Speaker #7: And maybe just extending that to the plans that are being evaluated in South Carolina . Maybe you can elaborate on how that might be structured .
Speaker #2: Yeah . So again , we're in a process there . And it's very early days . But what I can tell you is as we as we think about the growth in the space , we are focused on downside protection .
Speaker #2: So anything that we would do in the space where we're looking to get involved in either bringing Westinghouse services or Brookfield Capital would be structured in a way to provide strong downside protection.
Speaker #7: That's all for me . Thank you .
Speaker #8: you Thank .
Speaker #3: One moment for our next question . And that will the line of Kenneth Worthington with JP Morgan . Your line is open .
Speaker #9: Hi . Good morning , and thanks for taking the question . You've talked in the past about transition 2025 being a year for Kerry .
Speaker #9: You've talked about the improved outlook going through 2030 , given what continues to be continues to look like a better M&A environment and a better realization environment with better valuations .
Speaker #9: Can you talk about how how Kerry generation is shaping up for 2026 and then maybe wrapping the follow up in the same question as we think about realizations , how are how is the outlook developing for realizations on balance sheet versus realization in the Brookfield funds , as you think about the intermediate term outlook , I guess I'll be vague like that .
Speaker #2: Thanks , Ken . So I just see that the the the outlook for Kerry hasn't changed . So this year , as we said , would be a bit of a bridge year .
Speaker #2: And it's played out in that direction , largely consistent with last year and with the monetizations that we have in the pipeline . Either those that are progressed or that we plan on launching .
Speaker #2: end of And through the this year or into the early part of next year , therefore , which should close in 2026 . We do still see the potential for a a step up in carried interest in 2026 .
Speaker #2: So that is still continuing a step up in 2026 and then again into 27 . And a strong year in 28 . the So that's outlook .
Speaker #2: The expectation of what we can achieve in the next three years really hasn't changed from what we presented at Investor Day. We're still optimistic and we still believe that it is a very healthy transaction market.
Speaker #2: And the strong capital is supporting that markets activity as it relates to the split between the balance sheet and what's being done in the funds .
Speaker #2: As you know , the operate completely independently of each other . So we continue to advance the in the fund . It's globally diversified portfolio of many assets and many geographies .
Speaker #2: So has the ability to be a bit nimble where around assets are ready to trade and where the capital is there . And the appetite is strong on the balance sheet .
Speaker #2: We're talking about the office and retail assets in the US , and I can tell you that the capital markets are stronger now than when we had our last call .
Speaker #2: When we talked about the strength of the markets, we had very successful financings in the quarter at the spreads and all-in rates.
Speaker #2: We couldn't have achieved even a month ago . And that all lends itself very favorably towards increasing transaction activity . We've been able to dispose of a few smaller assets , which make a dent in the numbers , don't but they that for appetite acquisition activity is as that returning .
Speaker #2: picks So up , we we expect to see continued activity into next year .
Speaker #9: Okay , great . Thank you .
Speaker #2: Thanks , Ken .
Speaker #3: One moment for our next question . And that will come from the line of Bart with RBC Capital Markets . Your line is open .
Speaker #10: Great . and Thanks good morning . Just ask on wanted to on real estate . So within the LP , the NOI really , really ticked up this quarter .
Speaker #10: So 465 million versus I think last year was about 80 million . So apologies if I missed this in the prepared remarks . But call out there in terms drivers of that step up .
Speaker #2: Yeah . So listen the the performance of the LP portfolio is the running returns that we earn . it's the Plus disposition gains that So during the , we we earn .
Speaker #2: The quarter benefited from disposition gains from monetizations, and that's what's driving the increasing FFO during the quarter.
Speaker #10: Okay . Got it . And then just a follow up on carry regards to with carry target framework that you have , could you help us kind of understand if there's a that pickup will the like will target carry increase once your oak tree pickup deal closes ?
Speaker #10: And if so, roughly maybe how much that could increase.
Speaker #2: So we will own more tree of oak carries . You know kind target , represents the of the for us compounding on the carry carry that's eligible capital that we manage .
Speaker #2: So yes, when we do acquire Oak Tree and we have more eligible carry capital, it will pick up. But it won't be material.
Speaker #2: It won't be . It won't be a significant adjustment numbers that we have today to the .
Speaker #10: Okay . Thanks , Nick . That's it for me .
Speaker #8: .
Speaker #3: our next question . And that will Thanks , come from the line of Saurabh One moment for Movahedi with BMO . Your line is open .
Speaker #11: Okay. Thank you. I just wanted to go back to the earlier remarks about, broadly speaking, the three types of economic environments that could play out.
Speaker #11: I think Bruce was that talking to that , and I understand the implications of those from an investing perspective . Is any one environment of those three better than the others from a fundraising perspective ?
Speaker #2: I Hey , listen , think , Sohrab , we've been through a pretty severe cycle in just the last five we've years , and experienced a few environments in a very short period of time .
Speaker #2: And I think through all of demand for that or to alternatives has stayed strong . And I mean . Specifically real asset alternatives and essential service investing .
Speaker #2: So I think as it plays out , the ones we've framed that you should attract strong demand from still the into the clients assets that we have .
Speaker #2: They've proven their durability . They've found their place in investment portfolios and investors . Now appreciate and like the characteristics of the income and the returns that they generate .
Speaker #2: I think that And so irrespective of where we end up demand for for real assets , will will stay strong .
Speaker #11: Okay . I appreciate that , Nick . I just wanted to see a if there's likelihood in a scenario , some of the targets that would have been discussed , let's say at the Investor Day , could actually get upgraded .
Speaker #11: but But
Speaker #2: Mean .
Speaker #11: Listen .
Speaker #11: Listen . but . Sure , sure .
Speaker #2: I mean , listen , if you go I . into if you go into the environment of sort lower of yields , nominal then I do think real the assets have potential maybe to become even more attractive in scenario .
Speaker #2: So maybe it could be an upside, but not to the extent that we've changed our plans today. We continue to do business and think that the growth outlook is incredibly strong already.
Speaker #11: Thank you very much for taking the
Speaker #11: question . Okay . .
Speaker #2: Thank you .
Speaker #3: one moment for our And next question . That will the line come from of Dean Wilkinson with CIBC World Markets . Your line is open .
Speaker #12: Thanks . Morning , guys . Nick , I guess you know , when you look growth at of the business over time a , do you hit point where you start to worry about large numbers ?
Speaker #12: I mean , the ability for you to put out has seeming capital to exceed the rapid rate that you're growing . You know , Bam and everything Ben and together .
Speaker #12: Is there a point where things flatten out? I sort of think that those opportunity sets are going to grow, and that you can actually grow the underlying business quicker.
Speaker #12: Is where that there a point flattens out , sort of think that those opportunity sets continue to are going to grow than than you can quicker actually grow the underlying business ?
Speaker #2: it's exactly I that when we look think today at the at the going on in the market and the amount of capital that is needed to deliver in the areas of AI , infrastructure , renewable power , we see that being a significant I think growth .
Speaker #2: today the And the scale of say the significant . I quality of the opportunities are probably the best we've ever And so seen .
Speaker #2: the ability to earn returns while deploying large amounts of capital is a I don't great place to be . And in the foresee short term any shortage of opportunities deploy to .
Speaker #12: Thanks .
Speaker #8: .
Speaker #3: question Christine next . from the And that will come line of Jamie Gloyn National Bank . Your line is with open .
Speaker #10: Yeah .
Speaker #13: Thanks . And sorry I jumped on late . So apologize if this was addressed , but in the Wealth Solutions business , just looking at the the annuities , distributable earnings from annuities little stepped down a quarter bit over quarter year over year .
Speaker #13: Can I kind of talk you through a little? Hoping you are moving there. Parts, and as well as the looks like a ten basis point step down in the yield on investments in that portfolio.
Speaker #2: Yeah .
Speaker #2: There's I would
Speaker #2: significant . over year say . to continue drive strong earnings . The year one off small movements in the portfolio nothing earnings , but significant .
Speaker #2: portfolio continues to perform incredibly well . The drop down The in the in the spread , which we touched on briefly earlier , is really just a product of capital coming in , inflows coming , really being parked in cash until we invest them .
Speaker #2: And the point I made earlier was that we're being very patient and waiting for the right real asset investment opportunities and getting the right time to put the capital to work .
Speaker #2: And it will come . And as we put that capital to work , you'll start to see the spread increase again back towards long term targets .
Speaker #13: Thank you
Speaker #13: . Oh , and the yield . Okay . Sorry . Just cash as well .
Speaker #8: Yeah, that's right. Yeah, okay.
Speaker #13: Got it. Thank you.
Speaker #3: Thank you . is all That the time we have for question and answers would now today . I turn the call over to Miss Katie Battaglia for closing remarks .
Speaker #14: everybody Thank you , , for joining us today . And with that , we'll end the call .