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Brookfield Corporation

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Brookfield Asset Management, Inc.
Company typePublic
TSX: BAM.A
NYSE: BAM
Euronext: BAMA
S&P/TSX 60 component
IndustryAsset Management
Founded1899
FounderWilliam Mackenzie,
Frederick Stark Pearson
Headquarters
Brookfield Place
Toronto, Ontario
,
Canada
Area served
Global
Key people
Frank J. McKenna
(Chairman of the Board)
J. Bruce Flatt (CEO)
ServicesFinancial services
RevenueIncrease $18.7 bn (2012)
$1,380.00 mn (2012)
Total assets$181 bn (2012)
Total equity$44.3 bn (2012)
Number of employees
24,000[1]
SubsidiariesBrookfield Renewable Energy Partners
Brookfield Incorporações
Brookfield Office Properties Inc.
Brookfield Residential Properties Inc.
Brookfield Infrastructure Partners LP
Websitewww.brookfield.com

Brookfield Asset Management Inc. is a Canadian asset management company that manages a global portfolio valued at over $180 billion, invested on behalf of clients. The firm's assets are concentrated in property, renewable power generation, infrastructure and private equity.

The company was founded in the 1890s as a builder and operator of electricity and transport infrastructure in Brazil; the company's earlier name of "Brascan" reflected this history ("Brasil" + "Canada"). The company provided electricity and tram services in São Paulo and Rio de Janeiro, and was known as "The Light," short for Brazilian Traction, Light and Power Co. Ltd. Over the next century, the company expanded steadily, and it is now an owner and operator of more than $180 billion of real assets, with 24,000 employees in over 100 offices[when?]. The company's major public subsidiaries include Brookfield Property Partners, Brookfield Office Properties, based in New York, Brookfield Infrastructure Partners, Brookfield Renewable Energy Partners, Brookfield Canada Office Properties, Brookfield Residential Properties and Brookfield Real Estate Services.

Assets

  • Property: $81 billion
  • Power: $18 billion
  • Infrastructure: $20 billion
  • Public Securities: $21 billion
  • Private Equity: $26 billion
  • Development Activities: $7 billion

The company's asset management offerings include alternative-type investments, structured financial products, traditional fixed income and equities and finite-risk reinsurance. Its financial services group, Brookfield Financial, provides advisory services, acquisition financing, bridge loans and project financing. In addition, Brookfield Asset Management owns a significant stake in a real estate services company offering home relocations, property appraisals, move-in services and home transaction closing services, and capital market services, including financial advisory, securities underwriting, and property brokerage. Brookfield Asset Management invests through public, listed companies and through private funds. The company's institutional clients mainly include governments, sovereign wealth funds, pension plans, institutions, corporations and high-net-worth individuals.[2]

The company's corporate headquarters are located in Toronto and New York City.
Brookfield has $23 billion of assets under management in Canada, $90 billion invested in the United States, $16 billion invested in Australia and Asia, $18 billion in South America and $5 billion in Europe and the Middle East.

Its major investments include the World Financial Center in New York, First Canadian Place in Toronto, Brookfield Infrastructure Partners, Transelec and Brookfield Renewable Energy Partners.
Brookfield's infrastructure assets include a major Australian railway and coal terminal, and several European ports. It used to control such major companies as Noranda Inc., Falconbridge Limited, John Labatt, Royal Trust, MacMillan Bloedel and London Life.

CEO

  • Flatt, J. Bruce

Brief Biography: Mr. James Bruce Flatt is Chief Executive Officer, Senior Managing Partner, Director of Brookfield Asset Management Inc. Mr. Flatt is Senior Managing Partner and Chief Executive Officer of the corporation and on behalf of the corporation is the Chairman and a director of General Growth Properties Inc. Mr. Flatt does not sit on any external corporate boards. His 2011 basic compensation was $3,972,040.[3]

History

  • 1899: The São Paulo Railway, Light and Power Company was founded by William Mackenzie, Frederick Stark Pearson and others (the word "Railway" would later be changed to "Tramway")
  • 1904: The Rio de Janeiro Tramway, Light and Power Company was founded by Mackenzie's group
  • 1912: Brazilian Traction, Light and Power Company Limited is incorporated in Toronto as a public company to develop hydro-electric power operations and other utility services in Brazil, becoming a holding company for the two previous companies
  • 1916: Great Lakes Power Company Limited is incorporated to provide hydro-electric power in Sault Ste. Marie and the Algoma District in Ontario
  • 1966: Brazilian Traction, Light and Power Company Limited changes its name to Brazilian Light and Power Company Limited
  • 1969: Brazilian Light and Power Company Limited changes its name to Brascan Limited (BL)
  • 1979: the company's Brazilian assets are transferred to Brazilian ownership (e.g., Eletropaulo and Light S.A.), the company meanwhile having diversified to other areas

Recent history

In 2005, the company changed its name to Brookfield Asset Management (BAM). As part of a number of purchases in 2007 Brookfield acquired Multiplex Group construction company for $6.1 billion and renamed it Brookfield Multiplex. It also acquired Longview Fibre Company, expanding its timberlands platform to 2.5 million acres (10,000 km²). In 2008, Brookfield Infrastructure Partners was spun out of the holding company, and subsequently merged with Australia's Prime Infrastructure in a $1 billion transaction. In 2010, Brookfield Renewable Enegy Partners was launched as an exchange-listed global renewable power company, with a portfolio of hydroelectric and wind power plants in Canada, the United States and Brazil. Brookfield led a successful restructuring of General Growth Properties, the second largest owner of U.S. shopping malls, in 2010. In 2011, the company increased its share of General Growth Properties to 38%.[4] By 2012, Brookfield's stake in GGP grew to 42% which prompted investor activist William Ackman to request that GGP create a special committee unaffiliated with Brookfield to consider a sale to Simon.[5] On Dec. 31, 2012, Pershing Square agreed to sell a portfio of its stake in GGP to Brookfield and struck a four-year agreement to be a passive investor in the shopping mall company.[6]

In 2012, the company announced plans to spin off its global property holdings to shareholders in Brookfield Asset Management by distributing units in a new entity, Brookfield Property Partners.[7] In June 2012, Brookfield Office Properties announced plans to acquire a portfolio of three office buildings and a development site in the City of London for $829 million from Hammerson Inc., a British real estate company focused on retail developments. In July 2012, Brookfield and Spanish toll road operator Abertis announced plans to acquire a toll road network in Brazil. At the same time, Brookfield acquired full control of toll road assets in Chile. In December, 2012, Brookfield Renewable Energy Partners agreed to acquire a portfolio of 19 hydroelectric power stations in Maine from Nextera Energy Resources LLC for $760 million.[8] In April 2013, Brookfield spun out its commercial property operations as Brookfield Property Partners, listing the new entity on the New York and Toronto stock exchanges.[9] On April 26, 2013, Brookfield Office Properties made an offer for MPG Office Trust Inc. and announced plans to create a new $1.15 billion fund that would hold seven MPG and Brookfield office buildings in Los Angeles.[10] In June 2013, a Brookfield private equity fund acquired two Canadian refrigeration facilities, in Toronto and Calgary, from Millard Refrigerated Services, launching a new national company, Brookfield Cold Storage.[11] In June, 2013, Brookfield also announced two separate transactions totalling $3.65 billion that saw the sale of its Longview Timber unit to Weyerhauser for $2.65 billion, and the sale of Longview Fibre Paper and Packaging to Kapstone Paper and packagin for $1 billion. Brookfield purchased the companies in 2007 with $1 billion of equity. [12] In commenting on the transaction, Kapstone chairman and CEO Roger Stone said: ""The Longview team orchestrated a transformation that is truly, in my experience, the most amazing that I've actually ever seen in my 55 years in the industry." [13] In July, 2013, the New York Times ran an article by short seller Carson Block of Muddy Waters LCC that cited Brookfield as one of a number of companies that had miscalculated badly in foreign investments.[14]

In August, 2013, Brookfield Property Partners, acquired Industrial Developments International, an Atlanta-based owner of distribution facilities, from Japanese construction company Kajima Corp. in a $1.1 billion transaction.[15]


Controversies

Birch Mountain class action

The Birch Mountain class action lawsuit arose out of allegations that a Brookfield affiliate used its $31.5 million convertible debenture position to transfer assets from Birch Mountain Resources.[16] In a process supervised by the Alberta courts, PricewaterhouseCoopers (PwC) was appointed receiver of Birch Mountain Resources in November 2008 at the request of Tricap Partners Ltd., after Birch Mountain had defaulted on its debts. The assets included nearly 1 billion tonnes of limestone reserves, along with permits and leases for limestone and other minerals covering over 700,000 additional acres. The assets were transferred to Tricap Partners Ltd, now operating under the Hammerstone Corporation, a subsidiary of Brookfield Special Situations Group, for approximately $50 million.[17] The assets from the Hammerstone Project were valued at over $1.6 billion in an independent NI 43-101 Technical Report conducted by AMEC in 2006.[18] A group called Birch Mountain Shareholders for Justice filed a lawsuit against Brookfield Asset Management on September 22, 2010 with the Superior Court of Justice in Ontario, Canada. The lawsuit challenges the acquisition and transfer of assets from a public company, Birch Mountain Resources, to the Hammerstone Corporation.[19]

Brookfield and the Birch Mountain group went to court in 2011 to determine if the case should be heard in Alberta or Ontario. The defendant, Brookfield, filed a motion that the plaintiff lacked jurisdiction in Ontario with the Superior Court of Justice. the court agreed with Brookfield.[20] In November, 2012, the Supreme Court of Canada declined to hear an appeal of the jursidictional issue, and awarded costs to Brookfield. Based on this decision, the Birch Mountain group amended their Statement of Claim and served/filed Brookfield/Tricap in the Court of the Queen's Bench of Alberta on July 25th, 2013 in Calgary.

The Hammerstone Corporation is operating the quarry which announced a new business contract in May 2012.[21]

Kerzner lawsuit

In January 2012, two investors in a loan with Brookfield filed a lawsuit in Delaware asking that the court restrain a Brookfield - Kerzner International deal from being closed.[22] In the lawsuit, the investors allege that Brookfield engaged in "brazen self-dealing" and collusion with junior lender PCCP and servicer Wells Fargo to complete the deal in violation of the loan agreement.[23] The court granted a temporary injunction pending a hearing, and according to Brookfield senior vice president of communications and media, Andrew Willis, the firm cancelled its offer to acquire the property.[24] According to Willis, Brookfield decided to walk away after a Delaware judge issued the injunction.[23] The lawsuit was a negotiating tactic on the part of the two investors, and they subsequently agreed to a restructuring that allowed Brookfield to acquire the property.[25]

São Paulo, Brazil

In 2012, Brazilian authorities announced that they were investigating allegations that a managing partner at Brookfield bribed São Paulo building officials. The bribes reportedly totaled $789,851. Silvio Antonio Marques, a São Paulo state prosecutor confirmed the civil and criminal investigations to the Wall Street Journal and added that the reporting individual also provided documentation of the misconduct by Brookfield employees. A former Brookfield employee, who is being sued by Brookfield for embezzlement and is being investigated by Brazilian authorities, reported the alleged bribes to both the authorities in Brazil and to the U.S. Securities and Exchange Commission.[26]

General Growth Properties

In 2010, Brookfield led a recapitalization of U.S. shopping mall operator General Growth Properties (GGP), with the support of several institutional investors, including Pershing Square. In 2012, Pershing Square founder and chief executive William Ackman pressed for the sale of GGP to Simon Property Group, which had previously bid for GGP.(click on link to view presentation)[27] On December 31, 2012, Pershing Square agreed to sell a portion of its stake in GGP to Brookfield for $270 million and signed a four year agreement to be a passive investor in the company, while Brookfield agreed to a 45% cap on its stake in GGP.[6]

Plymouth County Retirement Association

In December 2010, Plymouth County Retirement Association filed suit against Brookfield Asset Management (BAM) as a minority stockholder of Brookfield Homes Corporation. BAM held 51% of Brookfield Properties Corporation, which was divided into two divisions, residential and commercial properties. A merger between Brookfield Homes and the residential assets in Brookfield Properties formed a new company called Brookfield Residential Properties Inc.[28] The lawsuit alleges the transaction is not fair to Brookfield Homes minority stockholders and serves to benefit BAM, which stands on both sides of the transaction, at the expense of the minority stockholders.[29] Since the company was created 2010, shares in Brookfield Residential Properties have more than doubled in value.

References

  1. ^ "2012 Annual Report" (PDF). Brookfield Annual Report.[self-published source]
  2. ^ Pachner, Joanna."Brookfield Asset Management: A perfect predator",Canadian Business, Canada, 16August2010 Retrieved 23September2012
  3. ^ [1],Reuters
  4. ^ "Brookfield to buy Fairholme's General Growth stake". Reuters. 18 January 2011. Retrieved 7 March 2012.
  5. ^ Gallun, Alby. "Ackman presses General Growth to consider acquisition by Simon","[chicagorealestatedaily.com]", U.S. 27August2012 Retrieved 24September2012
  6. ^ a b http://www.theglobeandmail.com/globe-investor/ackman-brookfield-reach-truce-on-us-mall-spat/article6890999/
  7. ^ Brookfield Property Partners[self-published source]
  8. ^ http://www.theglobeandmail.com/globe-investor/news-sources/?date=20121221&archive=ccnm&slug=201212220843595001
  9. ^ http://www.brookfieldpropertypartners.com/[self-published source]
  10. ^ http://www.brookfieldofficeproperties.com/content/2013_press_releases/brookfield_office_properties_to_acquire_mpg_office-37090.html[self-published source]
  11. ^ http://www.brookfield.com/content/2013_press_releases/brookfields_private_equity_group_acquires_canadia-37299.html[self-published source]
  12. ^ http://www.brookfield.com/content/2013_press_releases/brookfield_sells_longview_timber_and_longview_fibr-37384.html[self-published source]
  13. ^ http://ir.kapstonepaper.com/phoenix.zhtml?c=190219&p=irol-newsArticle&ID=1839049&highlight=[self-published source]
  14. ^ Block, Carson C. (10 July 2013). "Adventures Abroad Could Hurt U.S. Companies". New York Times. Retrieved 18 July 2013.
  15. ^ http://brookfieldpropertypartners.com/content/2013_press_releases/brookfield_to_acquire_leading_industrial_and_logis-37836.html[self-published source]
  16. ^ Mazurkewich, Karen. "Piling up the profits as the markets go down",National Post, U.S. 2December2008 Retrieved 23September2012
  17. ^ "Birch Mountain names receiver",’’Calgary Herald’’, Canada, 7November2008 Retrieved 22July2012
  18. ^ Whiteley, Don. "Oilsands with a Twist of Limestone",’’Stockhouse.com’’, Canada, 30June2006 Retrieved 22July2012
  19. ^ Gray, Jeff. "Squeezed-out Birch Mountain shareholders take on Brookfield",’’The Globe and Mail’’, Canada, 15November2011 Retrieved22July2012
  20. ^ Todd, Jeffrey. "Brookfield fights legal battle in Canada over asset transfer",’’The Nassau Guardian’’, Bahamas, 26January2012 Retrieved 22July2012
  21. ^ "Trimac Transportation gets $36M limestone hauling contract from Hammerstone",’’The Canadian Press’’, Canada, 31May2012 Retrieved 22July2012
  22. ^ Dames, Candia (13 January 2012). "Legal Battle for Atlantis". Nassau Guardian. Retrieved 24 September 2012.
  23. ^ a b Todd, Jeffery (18 January 2012). "Brookfield: Everything is still on the table". Nassau Guardian. Retrieved 24 September 2012.
  24. ^ Brandt, Nadja (17 January 2012). "Brookfield Cancels Agreement for Kerzner's Atlantis Resort". Bloomberg Businessweek. Retrieved 24 September 2012. {{cite web}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  25. ^ Jinks, Beth (27 April 2012). "Kerzner Hands Atlantis Bahamas to Brookfield, Palm to Dubai". Bloomberg Businessweek. Retrieved 24 September 2012.
  26. ^ Karmin, Craig; Trevisani, Paulo (19 September 2012). "Brookfield Faces Brazil Accusations". Wall Street Journal. p. C12. {{cite news}}: |access-date= requires |url= (help)
  27. ^ LaRoche, Julia. "Here's The Massive Presentation On REITs That Bill Ackman Delivered At The Value Investing Congress",’’Businessinsider’’, US, 2October2012 Retrieved 21Oct2012
  28. ^ http://brookfieldrp.com/[self-published source]
  29. ^ "Court of Chancery State of Delaware" 13Dec2010 Retrieved 30Oct2012
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