Q2 2019 Earnings Call
This time all participants are in listen only mode. Later, we will conduct a question and answer session and instructions will follow.
If anyone should require assistance during the conference. Please press Star then zero on your touched on telephone as a reminder, this conference call is being recorded.
I would now like to introduce your host for today's conference Ms., Suzanne Fleming managing partner Ma'am you may begin.
Thank you operator, and good morning, welcome everyone to Brookfield second quarter 2019 conference call.
On the call today are Bruce <unk>, our Chief Executive Officer, and Brian Lawson, Our Chief Financial Officer, as well as Sachin Shah managing partner and head of our renewables business.
Brian will start off by discussing the highlights of our financial and operating results for the quarter, followed by Bruce who will give an update on our business.
Finally, such we'll give an update on our efforts to grow our solar power business.
[laughter].
After our formal comments, we'll turn the call over to the operator to take analyst questions.
In order to accommodate all those who want to ask questions. We ask that you refrain from asking multiple questions at one time in order to provide an opportunity.
For others in the queue.
We'll be happy to respond to additional questions later in the call.
We'd like to remind you that are responding to questions and in talking about new initiatives and our financial and operating performance. We may make forward looking statements, including forward looking statements within the meaning of applicable Canadian and U.S. lie.
These statements reflect predictions of future events and trends and do not relate to its darkness.
They are subject to known and unknown risks and future events may differ materially from such statements.
For further information on these risks and their potential impact on our company. Please see our filings with the securities regulators in Canada in the U.S. and the information available on our website.
Thank you and I'll now turn the call over to Brian .
Thank you Suzanne and good morning to all of you on the call. So let me start off by saying that we're very pleased with the results for the quarter.
Our asset management business reported, particularly strong results led by fund raising within our private funds and this led to a 33% increase in fee related earnings prior to performance income.
As well as acquisitions and organic growth contributed to strong operating performance within our underlying investments and our listed partnerships.
Together funds from operations or F., FFO totaled $1.1 billion or one dollar nine cents per share and net income was $704 million or 36 cents per share attributable to shareholders.
Cash available for distribution and reinvestment was $599 million for the quarter $2.5 billion over the past 12 months.
So first I will touch on the results of our asset management business. This as you know includes our fee related earnings and carried interest.
So lets fee related earnings were $263 million in the quarter.
Before performance fees as I mentioned, that's a 33% increase over the prior year quarter and that reflects a similar increase in the amount of fee bearing capital.
We did record some significant performance fees last year. So this growth is not evident in the total F. R E. But does represent very strong growth and this is.
Pronounced by the reinforced by the fact that our annualized fees and targeting carry have also increased by 33% from this time last year.
So this positions us very well going forward.
What a what was a big part of driving that was we added $35 billion to fee bearing capital over the past 12 months.
This includes 70 $27 billion of net private fund inflows as we're in the midst of raising our current vintage of flagship funds.
And as well, we continue to build a newer product offerings.
It also reflects the increase in the capitalization and the distributions at our listed partnerships.
Going forward, we expect continued growth in fee related earnings we will benefit from full period contributions from the latest round of flagship fund raising and subsequent closings as well as additional fee revenues from the capital issued last year by BP Y in association with the privatization of its retail business in August of last year. These fees will turn on late in the third quarter, and we will see a full quarter of contribution starting in the fourth quarter.
With respect to carried interest we recorded a $190 million of realized carry in our f. own this quarter.
This is the amount that became no longer subject to claw back during the quarter largely as a result of Aspen asset dispositions in our fourth flagship private equity fund.
As well as our first flagship real estate fund, which locked in these values.
Over the past 12 months, we recognized $536 million of carried interest into income and we expect to recognize additional carry from both these funds in the second half of 2019 in the first half 2020, as we continue to complete asset realizations.
Turning to invested capital, including disposition gains FF, though from this source in the quarter was $405 million.
FFO growth across the listed partnerships with strong we benefited from new investments within the businesses as well as same store growth and development within the existing businesses.
This was partially offset by AFFO reductions from some directly held investments that are more cyclical or variable in nature. So this was not entirely unexpected.
Ah disposition games NFV FFO totaled $303 million in the quarter. This represents our share gains on the sale of several investments across the portfolios.
Dispositions included the sale of our interest in a residential management services company.
Facilities management services business, and our executive relocation services businesses.
Over the past 12 months, we generated over $2.5 billion in cash available for distribution and reinvestment as I mentioned earlier.
This cash flow supplements, our core liquidity at the Bam level.
Overall liquidity stands at nearly $50 billion. This includes $14 billion of core liquidity across Brookfield and the limited partnerships.
And $35 billion of Uncalled private fund commitments.
We continue to look for opportunities to deploy this capital but at the same time, we continue to focus on maintaining elevated liquidity. So that we can continue to invest opportunistically and across any point of a market cycle.
Finally, before closing I was pleased to confirm that our board of directors has declared a 16 cents quarterly dividend per share and that's payable at the end of September and so with that I will hand, the call over to Bruce. Thank you very much.
Thank you, Brian and good morning, everyone.
As Brian noted in his remarks, a fund raising and deployment during the second quarter continued to build on the momentum that we saw at the start of 2019.
And with interest rates globally heading lower over the last six months, we expect that this will continue to accelerate.
This situation comes into our results in two ways.
First with the 10 year in the U.S. now at 1.7%.
And negative out to 30 years in Europe , and Japan, Let's say that one more time negative owed to 30 years in Europe and Japan.
The value of assets should be re rated to higher values in that environment.
Second and and in addition, our clients likely need our services even more.
And if we have seen the high point in rates during this cycle.
This should be very positive for our overall business.
In May we held the first closing of our latest flagship infrastructure fund for $14.5 billion on the first close this fund is now larger than its predecessor.
And we expect to close on additional funds.
It later this month with more closes through the remainder of the year.
We're confident that this will be the largest fund we've completed to date and one of the largest infrastructure funds.
Globally raised.
Our private equity flagship fund also close on new commitments this quarter.
And today stands at over $8 billion twice the size of its predecessor.
Together with our latest flagship real estate fund that closed this past January and co investment capital committed to date. This year, we have raised.
Over $40 billion in this round their flagship fundraising and it will end up being plus minus $50 billion.
By the time those funds are complete.
In our non flagship fund strategies, we're also seeing significant.
Traction last month, we held the first close of our special opportunities program raising a total of $1 billion in capital. This program allows the flexibility to invest across a wide range of opportunities beyond the scope of existing.
Mandates we haven't funds.
We expect the robust fundraising environment to continue to rate remained strong.
As I stated low interest rates in the U.S. and and in other markets continue to make our real asset strategies. One of the few places investors can look to earn a decent yield.
Despite the record level of capital, though flowing into funds of ours and others. We are finding no shortage of opportunities to continue to deploy this capital at attractive returns.
The global business environment continues to be constructive.
Despite many political distractions.
Our businesses are doing well, unlike what one would expect by merely reading the newspaper.
The outlook for our business for the remainder of 2019 is strong.
In fact, we have not seen a bigger disconnect between the organic level of activity going around going on around our businesses and the uncertainty and where wariness that one sees in the media for a long period of time.
[noise] specifically on across the globe. The U.S. economy is slowing but is still good.
Europe is decelerating, but has come far from where it was a few years ago.
In the United Kingdom, we are seeing strong levels of activity around our GDP sensitive businesses.
Brazil has suffered a little bit with pension reform Tailwinds business investment should start to recover.
Asia is being hit with export slowdown, but will grow at a very strong and still grow at very strong rates on a relative basis.
Finally, India's growth is strong. Meanwhile, corporations are severely constrained for capital with what's going on in the lending markets of the country. This is leading to opportunity for us.
During the quarter, we were active in deploying capital across a number of geographies our private equity business closed on the acquisition of Healthscope one of the largest hospital groups in Australia, our infrastructure business announced the acquisition of one of the two mobile phone and Internet providers in New Zealand as well as the acquisition of a portfolio of 120 short line railroad predominantly in North America.
In our power business, we announced the acquisition of a 50% interest in the solar development business in Spain.
Despite good levels of investment, we still have nearly $50 billion of liquidity across the business available to deploy globally.
We intend to maintain these levels of capital, while continuing to judiciously invest capital as we find opportunity.
It is important to note that over and above the capital raised in funds. We also generate significant internal liquidity on our balance sheets.
Over the last 12 months.
As Bryan stated, we generated over $2.5 billion of free cash flow at them that it's more than double what it was five years ago and it should double again over the next five years.
Overall combined with our partnerships free cash flow, we generate approximately $6 billion.
Cash flow annually from internal sources to be distributed or used in the operations and this number continues to grow.
You have heard increasingly from us on the growing free cash flow at Brookfield asset management. This is a key measure in our business and have important focus to us.
As it is the cash that we can utilize for new investments or distribute back to shareholders in the form of dividends or share buybacks.
If we execute on our business plan as laid out at last years Investor day, and in our recently filed prospective prospectus.
Our free cash flow should double again by five years from now to more than $5 billion on an annual basis.
If you look at where our market capitalization today is that implies about 11% free cash yield.
Lastly in before turning it over to the.
Sachin on the topic of Oak tree as you may have seen from various public filings. The deal continues to progress as expected.
We continue to target a closing in the third quarter of 2019, which I would add is very soon for now and we look forward to providing you a further up tree on oak tree and our plans for that business at our upcoming Investor Day in New York on September 26.
With that I'll pass the call to Sachin, who will speak more about our.
Solar power business.
Thank you Bruce and good morning, everyone today I'd like to speak to you about the growth of our solar business, which started two years ago with the acquisition of the reform company and today represents approximately 9000 megawatts of operating and development assets and over $5 billion of invested capital globally.
Solar has undergone a significant transformation a decade ago, we were at the start of the de carbonization of global power grids.
We're environmental regulation was pushing out of traditional forms of generation like call in favor of new renewable technologies.
However, during this time solar and wind remained highly reliant on government subsidies to be economically viable.
In turn the subsidies drove an inflow of capital into the sector from financial investors, who pushed valuations and corresponding leverage to excessive levels as the asset class was viewed as a proxy to government bonds.
During this period, we remain patient and looked for an entry point into the sector that could leverage our operating capabilities and global presence rather than competing for low returns.
In 2017, the bankruptcy of Sun Edison at the time, the largest developer of solar globally presented such an opportunity.
By taking an active role in the restructuring of Sun Edison, we were able to acquire for value two portfolios.
That included 1500 megawatts of recently constructed contracted solar assets.
As part of the restructuring, we prioritize the emerging markets portfolio, while keeping terraform power publicly traded.
At Terraform power, we have taken a number of steps to drive value from the existing portfolio.
We stabilized the business by inserting our own operational teams improved asset reliability.
And have driven over 30 million in annualized cost savings.
We've also been working to fix the balance sheet by reducing leverage improving covenants and increasing liquidity.
As a result, since our acquisition Terraform credit rating has been upgraded by three notches.
We have reduced corporate leverage by nearly $400 million.
Increased debt term over by over two years and combined with growth we have delivered a 34% annualized return to shareholders.
Recently, we announced two initiatives that demonstrate the next avenues of growth for our business.
In July we formed a joint venture to own one of the largest solar developers globally with an operating and development pipeline of over 6500 megawatts of utility scale solar.
We believe development has hit an inflection point, where declines and build costs have allowed subsidies to be almost entirely phased out.
This environment should favor investors like ourselves, who can surface value through efficient operations scale procurement and capital efficiency.
We also announced the acquisition of a 320 megawatt distributed generation effectively rooftop solar business in the United States.
We continue to believe that localized forms of generation such as rooftop solar and Microgrid will offer customers meaningful optionality to service their electricity requirements in the future.
We have now assembled one of the largest distributed businesses in the U.S. with over 250 credit worthy customers and 15 years of long term power purchase agreements.
The opportunities for us to use our scale and provide additional energy related services to our clients should provide added growth as this sector evolves.
Finally, as part of our global growth efforts, we have expanded the business into India, and China and are actively building wind solar distributed generation and development capabilities. In these markets as strong GDP growth is driving increased power demand and the need for new renewable supply.
We have an active utility scale business in India with over 600 megawatts of wind and solar and believe that the significant support for renewables from the federal government and state utilities combined with distress in the banking sector will allow us to invest in that market on a value basis.
In China, the country continues to industrialize, while transitioning away from call. Accordingly, we have over 400 megawatts of operating wind and solar and are advancing the build out of an additional 300 megawatts of distributed rooftop solar over the next three years.
Over the last decade de Carbonization has emerged as a global theme and has resulted in significant disruption and opportunity in the power sector. We have used this period to build one of the largest renewable businesses in the world with investing in operating capabilities across multiple continents and technologies.
Looking ahead the transformation of global power grids is still in its early stages and will require an enormous amount of capital over multiple decades.
Solar will play an important role in this transformation and we are positioning ourselves to be able to meaningfully participate in that growth on a global basis and with that I will turn the call back to Bruce.
So operator, I think we will take questions now if you could.
Do that.
Ladies and gentlemen, if you have a question at this time. Please press the Star Bar number one key on your Touchtone telephone. If your question has been answered or you wish remove yourself from the queue. Please press the pound key again, that's star then one to ask a question.
To prevent any background noise, we ask that you. Please place your line on mute. Once your question has been stated.
Our first question comes from Cherilyn Radbourne with TD Securities. Your line is now open.
Thank you very much and good morning.
So obviously the flagship fund raising has been very strong over the last 12 months, but you've also raised I believe $3 billion for perpetual or long life strategies. So I was wondering if you could comment on how much perpetual capital. The company is currently managing and if you look out how big do you think those long life strategies can become relative to the flagship strategies.
Yeah, it's it's about $5 billion I'm sitting here today Cherilyn.
[laughter] and sure I I would add just on the future that these are our ideal strategies for owning long term assets, which may not otherwise.
Have the upside to earn 15 or 20% returns, but can earn a solid.
[noise] 789, 10, 11% return.
Over very long durations and not have a lot of risk with them. So I. I think these are we think these are ideal assets for institutional investors and therefore, the long dated product is going to continue and continue to grow significantly in it.
You know I think we stated before that it could be $50 billion in each of our businesses and I think that's probably an understatement in the longer term.
If a if we do our job right because they are.
These are some of these are great assets, which you should hold for long periods of time.
And maybe just as a quick follow up would you expect client appetite for those strategies to be particularly sensitive to the latest move in global interest rates.
Look I think we've always stated that the strategies that we deploy our fine the way we're running them today as long as global interest rates are not the 10 year treasury isn't at five or 6% when if the global Treasury U.S. treasuries at five or 6% people may look to differentiate and invest just into treasuries as opposed to some of the things they are doing with people like ourselves.
I don't think people expect that interest rates were going to trend upwards from 2% and now that they've trended downwards and it looks like globally.
That's going to be going on for a while I'm not sure that that's been factored into the marketplace yet.
But I think it will come.
When when if that if this phenomena is for real.
And then last one for me just wonder if you could give us a bit more color on the news special opportunities fund and where that sits on the risk return spectrum and how its investment mandate compares to though is that the flagships.
So just for everyone's benefit we created a program called special opportunities and it it captures a investments that lie outside the areas from which our funds invest into so it.
Most of our strategies are for example control investing.
So there may be situations, where it's not control, but we think it's an interesting opportunity and someone brought us in.
And therefore.
If we may invest out of that is that the funds could be deployed across the.
Risk reward spectrum, so some returns could be in the low.
Teens in summer opportunistic returns they just don't fit the mandates of our.
Our flagship strategies.
Thank you that's all for me.
Thank you and our next question comes from Bill Katz with Citigroup. Your line is now open.
Okay. Thank you very much for taking the questions. This morning, as well or maybe a Brian start one with you as you think about the that base fee rate.
I was wondering how that might look as you go out over the next three to 12 months.
Maybe you could break down your comments between the asset management business and are listed partnerships.
Sure so.
Yeah, I think a big part of it will depend on the mix of where the growth comes from and as you know each of the different strategies.
Has a.
A different.
Fee rate associated with it.
In general there is not a huge difference between overall the fee rates that we earn on the private funds and the and the fees that we earn on the listed issuers.
But the fees that we would earn for certain corden credit products will be a little bit less than that and so really it's going to.
Evolve the mix of it and the overall weighted.
We'll we'll.
It will depend on that having said that I'd say that for the foreseeable future.
The growth is going to be skewed.
More toward the bird.
The private fund like the flagship funds.
And the listed issuers.
It because the as you know we're building from a slightly smaller based on those core funds, we still see that Bruce mentioned a lot of growth in that over time.
But.
But do you have the larger piece of it right now still is the the listed issuers and the private funds. So it'll be very much mix mix focused so hopefully that's somewhat helpful to you.
Okay. Thank you and just as a follow up I think you'd mentioned in prior calls that you're on pace for this year for about $1 billion worth of a gross realizations I was just sort of wondering if you could give us an update you'd mentioned in your prepared comments and you sort of expect continue to see that in the second half of the year, but is it still expected to be about a billion or so this year and then appreciate you gave a little disclosure in terms of the array of timeline. So as you look over the next five years, but how do we think about the outlook for 2020 or even 2021 in terms of pace of realizations.
Yeah, So I'm not sure we've really said that much publicly about 20 and 21, although I think you can glean.
From our supplemental.
Where we do break out in terms of the carry that we've got a crude up to date.
And when do you the lifespan of those funds take place and Anders.
Of the 2.5 years a billion or so that's over the next three years and then a $1 billion in years four to seven.
So in terms of going back to the opening of your question in terms of the what we've.
Originally mentioned earlier in the year, which was up to.
$1 billion.
This year, we've achieved a fair bit of that and we still expect to see more carry coming in over the balance of the year.
Yes, again, we're going to be disciplined and opportunistic in terms of of the yield because it's driven by monetization events and ideally we'll get it done before the before the end of the year if circumstances demand it will.
Shifted into the first quarter, if we think that we'll get to a better outcome overall.
Thank you.
Thank you. Our next question comes from Robert Lee with KBW.
Your line is now open.
Hi, good morning, Thanks for taking my questions.
Maybe just following up on bills with the.
Thinking about incentives and.
[noise] carry realization minute when you look at the accrued carry balance I mean, obviously, you've had a bunch of realizations so that.
You know it pulls out but it feels like its been kind of locally.
Flat for last year or so.
Even though you know senses underlying performance has been pretty good. So is it really just the phenomena that.
Of.
The realizations us more or less offsetting kind of what's flowing in from performance or is there.
Yes, anything else, we should be thinking about because the balance has been pretty flat considering all the.
Capital you have at work and the underlying performance.
Yeah, So I'll I'll make a couple of comments on that.
Robert the.
So and just in terms of your comment that it was sort of flat I mean rough numbers.
We're standing about two and half billion, we took $500 million out so in the end. It stayed relatively the same so that's about 20% growth. If you factor in the drawdown there the last quarter in terms of the actual not generated was was pretty flat as we mentioned.
How we lay out.
Kerry evolving over the next eight or 10 years, both in terms of how it's generated and how its realized.
Is as you know there is a bit of a month, it's the J curve for lack of a better word.
And given that a lot of the capital was raised quite recently it does take time to put it to work.
And to get yourself into the into the upward slope of the J curve, where it really starts to build in a meaningful way and that does tend to be back ended even on the generation side, let alone on the realization side. So again, we still see everything tracking really nicely.
And I'd say.
What you pointed out is not to be unexpected given the growth cycle in the stacking of funds with the more recent raises.
Okay, Great and then.
Maybe going back to fund raising question me now.
And I apologize if you could maybe touched on this earlier, but the.
As you come towards the end of this robust fundraising cycle infrastructure nearing its end PE pretty much at it then.
How do you think of.
The fund raising capacity of the business when you're not outpacing flagship funds I mean, do you think of it.
And we are set up to snuff currently current generation funds raised 10 billion annually 15, how do you think of kind of the.
The ongoing fund raising capacity outside of fun flagship products.
So.
It's Bruce and I would just make two comments and Brian may add something but the first one is that.
Our real estate fund is 50% invested in our infrastructure fund well, we're just closing it is coming on 50% invested so.
It's.
By the time, you and you're a large way through so firstly the follow on funds come relatively quickly afterwards.
That's the first comment I would make the second one is we have a lot of other products, which we offer our clients and the and the perpetual products, which.
Our ideal in this rate environment.
Continue to be raised all the time, so we're always out talking to our clients with some form of product.
To be able to offer them, but but theres no doubt during some years when a few of these funds all hit at once and fund raising is greater.
In greater amounts in other years.
Okay, Great and then if I could just one last quick questions really probably more of a reporting question. When you started to pick up.
More focus on cash available for distribution.
Why not.
If I look at many of US peers, who have all moved to the number.
Districts.
Really essentially cash available for distribution why not.
What why not make that kind of more of the central focus for Bam.
And then kind of align you at least with some of the public.
Alternative manager peers are doing.
Yes, Thats a great question Robin it's something we're spending a whole lot of time thinking about given the shifts in how a number of the.
Of our peers have moved their disclosure.
Wave from the NIH and more towards the D.
We started to talk about the.
Cash kept our cash available for distribution a while back.
At our last Investor day in a bit before and a lot of that goes to what Bruce was talking about because what that means for us.
The amount of cash that's building up in bandwidth getting generated each year at the Bam level, that's available for reinvestment or for distribution as as the determent.
Suggest so it's a really key metric for us.
Having said that we do also want to make sure that we're positioning positioning ourselves.
Well, so that people can assess our performance in the broader context of our of our peers, but also make sure that it is the right metric that reflects.
Our.
Business as well and we are a little bit different with the.
The size of our balance sheet, and so we want to be mindful of that image to wrap that up sorry for that long winded there, but the it's something we're spending a lot of time on and will be.
Thinking about our reporting metrics going going forward probably after.
Thinking about that more into Q4 and maybe into the new year.
Great I appreciate you taking my questions. Thank you.
Thanks.
Thank you and our next question comes from Mario Saric with Scotiabank. Your line is now open.
Hi, good morning.
I just.
Sorry, just dovetailing on I guess versus your.
Your comment on.
To the flagship funds being 50% deployed already.
One in particular, but.
Before.
Sort of fund raising in October of last year. So it's been a very very quick.
Pick up how would the pace of deployment in those two funds compared to expectations.
Going into the fund raising and would anything out there change the historical.
Target of commencing another fund when the previous one is called 70, 580% committed.
Yes.
Answering that question first I'd say that.
The document or documents like most funds allow for us to start fundraising when you're 75% invested and we would have all.
We would expect to do that.
I guess, our pace of how we invest sometimes is just because we find opportunities that come along to meet our thresholds and partly.
We're watching what the environment is and.
I'd say the last.
Six and 12 months.
Even despite the environment that's been out there were a lot of people.
I would say and it probably is true is that there is a lot that valuations are high in many places there seem to be.
Miss valuation in other places if you have the right.
Capabilities and so weve.
Been able to find a number of opportunities to put money to work.
Okay.
And my second question is somewhat related.
It's a bigger.
Bigger picture, one we've talked about.
I'd say, it's safe to say for the past couple of years Brookfields talked about why rising interest rates are good for business, which ive interpreted to mean that.
Good economy is good for your underlying portfolio or cash flow.
In the business that you operate with the tenure down almost 200 basis points year to date.
Potentially embarking on an easing cycle for the first time in a very long time.
How does that shift in monetary policy if at all.
Impact your near to medium term capital deployment and operational kind of focus strategies within the organization.
Look I would just say the following interest rates.
Being low are very good for long terms change streams of cash flow, especially ones that continued to adjust going forward.
With some form of GDP sensitivity or some rate increase overtime and generally thats, what we own.
The only caveat to that is if it is if a recession comes along because of that and that's why interest rates are going down and if that changes the cash flow significantly than you have capital destruction.
Along with lower interest rates and.
I would say we've always.
Focused on high quality assets with long term streams of cash and therefore, I would say we should outpace.
That environment.
Going forward and have higher quality streams.
Of cash flow, but your point is.
Very valid.
In this situation.
Okay. Thank you.
Thank you as a reminder, ladies and gentlemen that Star then one to ask a question.
Our next question comes from Andrew Coskey with Credit Suisse. Your line is now open.
Thank you good morning.
I think in the supplemental disclosures you highlighted your client base is 700 institutional investors and I think that's up from 630 and the prior quarter.
How do you think about your client penetration right now and then when you think about closing off oak tree very shortly.
How much overlap you have with their client base and versus how much is unique and distinct.
So.
I guess first thing I'd say is given the competition issues.
That were under with the Oaktree transaction, we don't have access to their client relationships. So I won't make any specific reference to their actual relationships that they have.
What I would say broadly is of course, because there are large global manager and we're a large global manager I'm sure. There are many relationships that are similar.
I would I would note, though our.
Middle Eastern Asian franchise has always been very large weve off weve for long time been quite global and there.
They have had a much I believe a much broader us business I think the real benefit of.
That we should see out of the.
Being together is that we can offer multiple products.
To our clients and have one tailored opportunity and there's very little overlap between the products. So that's really the benefit out of it and.
And even if they are some institutions that we both deal with.
Okay. That's helpful. And then just as a follow up but could you provide any.
Incremental color on just or high net worth channels.
One of the last comments. It was made public is probably around 2 billion.
Or so of am I mean, where are you now.
And how has that grown over the last few years.
Yes, so it's.
So we're still continuing if the target was to have a bad.
10% of the of the funds.
Flows coming out of those channels, we are still tracking along that.
Gosh I'm.
I'm trying to recall, what the exact or roughly what the number would be in terms of the total that were at now.
I think it's probably around 3 billion.
And again remember this is through a couple of different channels. Some of it is is where we would.
Place I'll say a block with a.
With a with a large.
Institution that would then.
Distribute that within their high net worth channels, and that's probably where we're more advanced and then the other side is working more through.
Individual raise intend and thats, a little bit of a slower build because it takes time to get.
Those channels up and fully operating and there's a bit of technology involved there as well, but its still progressing quite nicely overall.
Okay. Thank you one final question, if I may and Brian maybe for you just on on the carried interest and this is page 21 of the supplemental.
Theres a comment about revised valuation assumption on the second real estate flagship fund is there any color you can provide on that what was the revised valuation assumptions.
Yes, I wouldn't say, there's not really a whole lot to.
Read into that as you know we did.
There was a bit of a step back and some of the retail.
Valuations really across the.
The board I'll say in some of that would sit within the within the fund it's nothing that we think.
Should impede the overall performance of the funds.
Or the business for that matter.
Okay. That's great. Thank you.
Thank you and I'm not showing any further questions at this time.
I would now like to turn the call back over to Suzanne Fleming for any closing remarks.
Thank you operator, and with that we will end the call. Thank you all for participating.
Ladies and gentlemen.
Thank you for participating in today's conference. This concludes today's program and you may all disconnect everyone have a wonderful day.