Hello, this is the Chorus Call conference operator. Welcome to the Brookfield Asset Management 2012 Year-End Results Conference Call and Webcast. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. (Operator Instructions) At this time, I would like to turn the conference over to Katherine Vyse, Senior Vice President, Investor Relations for Brookfield Asset Management. Please go ahead.

Thank you Saatchi and good morning, ladies and gentlemen. Thank you for joining us for our year-end fourth quarter webcast and conference call. On the call with me today are, Bruce Flatt, our Chief Executive Officer, and Brian Lawson, our Chief Financial Officer. Brian will start this morning discussing the highlights of our financial and operating results. Bruce will then discuss our views on the current investment and market environment as well as a number of our major growth initiatives in the quarter. At the end of our formal comments, we will turn the call back to you Saatchi to open the call for questions. In order to accommodate all who want to ask questions, can we please ask once again that you refrain from asking multiple questions at one time to provide an opportunity for others in the queue. We will be very happy to respond to additional questions later in the call, as time permits, at the end of this session or afterwards, if you prefer. I would at this time remind you that in responding to questions and in talking about our new initiatives and our financial and operating performance, we may make forward-looking statements. These statements are subject to known and unknown risks and future results may differ materially. For further information for investors, I would encourage you to review our Annual Information Form or Annual Report, both of which are available on our website. Thank you. And I would like to turn the call over to you Brian.

Great. Thank you Katherine and good morning to all of you on the call. We reported net income for Brookfield shareholders of $1.4 billion during 2012. This compares to $1.9 billion in 2011. The variance is due to a reduction in the amount of valuation gains which while very favorable were not as large as 2011. Funds from operations which includes disposition gains was $1.4 billion, a 12% increase over the $1.2 billion reported in 2011. Excluding disposition gains, FFO was up between 10% and 11%. The remaining increase was due to improvements in all of our businesses in particular our property group and businesses that are linked to the US home building sector, this was offset partially by the impact of lower water flows on our renewable power business. Total return which includes both FFO and valuation gains totaled $3.4 billion. This represents a 12.4% return on our intrinsic value which ended the year at $44.93. We did make some changes to our presentation this year and we apologize for the inconvenience that may have caused some of you, but we do believe they are better and will be more useful in the future if we can help you in anyway, please let us know. So with that I will turn to each of the major business groups. Asset management and other services increased FFO by 31%, $84 million. Total asset management income, including carried interest was $498 million compared to $226 million in 2011. This reflects the full amount of base management fees earned on our private and listed funds and our public securities portfolios which totaled $352 million during the year. And this really drove the 31% year-over-year increase and it's due to new capital raised and increases in the market values of our listed entities. Annualized…

Thank you, Brian. I hope anyone reading our results have the same view as us that the last 12 months a number of investments have started to payout for the company and the operations have performed well over the last year. This includes many investments we made during the ’08-‘09 period and in particular both of that Babcock & Brown and the General Growth acquisitions that we participated in. In addition, all our operations as Brian noted were active during 2012, with a number of acquisitions and add on investments which included renewable power facilities, toll roads in South America, gas utility in the UK, office properties and a district energy business in Canada. Probably as important is that, as Brian mentioned, the US housing recovery continues and many investments we have in our operating, in our private equity business but also related to some of our other assets have operating leverage to increased housing, and therefore 2012 and beyond looks good. During 2012 the fiscal issues in the United States and Europe dominated much of the financial news. Our view though probably more importantly for our business was that and is that our view is that the recovery did not stop in the underlying business fundamentals of most of our operations, and in fact most businesses out there and we expect this to continue in the current year. We've seen this across most of our businesses, but particular in the United States. We advanced our brand internationally by doing many things during the year and continue to do that by adding new global clients and we appreciate their support. With respect to these global markets, 2012 saw them largely up led by performance of the S&P 500. This in our view was because of a combination of aggressive reflationary…

Thank you. (Operator Instructions) First question comes from Bert Powell of BMO Capital Markets. Please go ahead.

Bruce, you’ve got a lot of value built up in the woods product business, where do you think we are in terms of seeing disposition gains out of that. Do you think is more to go or you are starting it serious about raising capital from that segment?

So I would make just two comments, the first comment is that we think there is a very long ramp road over the next five years for all housing related investments which I put the ones you just mentioned into that category and because that's really that we don't think there's going to be a snap back from 700,000 houses to 1.5 million built every year. We think it’s a slow and paced recovery in housing in the United States over the next five years and all of those businesses will recover along with it over time. So I guess I'd say underlying fundamentals of all those businesses are good today and they look like they will be good in the foreseeable future based on the facts that we have today in front of us. On the second side, we have many investments which we put substantial amounts of money in at the bottom of the market with significant appreciation from time to time we consider just a reallocation of capital. It has nothing to do with our view of the future of those investments, but often it just gets weighted where we want the capital either on the balance sheet just for new opportunities or for other things or in addition it puts more liquidity into a stock that we have an investment in. So I'd say you may see us overtime taking capital out of some of those businesses, but it probably has nothing to do with our view of the future. We've done well from the bottom of the market and we are just looking for new opportunities.

And then just your comments with respect to the themes that’08, ’09 you put capital to work and now you are in harvest mode, how should we think about squaring that up against being in the market with six new funds and raising capital. Would that infer that those raised initiatives are going to be further out than today given maybe the opportunities that you see I'm just trying to square up that?

No I think a good question because I probably wasn't as clear as I should have been. We continue with all of our businesses to build them and grow them and put capital to work. But when you buy a lot of assets at the bottom of the market what tends to happen is A, you get more of it than you otherwise wanted because it grows in value, relative to other things within your portfolio and secondly overtime as markets recover and values recover what you tend to do or what we tend to do is to trim down to the great things as opposed to the tertiary assets you have in the portfolio. And with the recovering in debt and equity markets what happens is the values of everything goes up including assets which may not necessarily fit with our long term goal for our portfolio or for our company and therefore there's a lot of cash that can be harvested out of assets which wasn’t available to you at the bottom of the market, but now the balance sheet is going to writed or excess cash can be taken out of the business and that's really the comment that I guess I was making.

Next question is from Brendan Maiorana of Wells Fargo. Please go ahead.

So Brian, I would agree with you guys and Bruce too, you know good year cash flows were moving up fundamentals, it seemed like they certainly got better, it was reflective in BAM’s listed share price. But if I look at the total return, as you guys calculated between FFO and the valuation gains and I think Brian as you mentioned it was about 12.5%, and it looks like you guys lowered your interest rates, so it seems appropriate given that rates were down and so valuation gains made up I think 7% or 8% out of that number. And it would strike me that in this year, that number would be the 12% sort of return ought have been the higher given that fundamentals are moving in the right direction and you had interest rates going down. So if we're in a rising rate environment, what's going to keep that number inline with your 12% to 15% target as we go forward?

Sure. That’s a good point there, Brendan. And on the 12%, first of all, 12.4%, just for the benefit of everyone on the call, that is based on our intrinsic value and as opposed to the stock price and the other comment I make on is that these are valuations that are done. They are all generally 10 or 15 or in the case of timber assets, 73 year discount in cash flows and so while they tend to be, it is much that there have been some big moves and valuation gains, they tend to be a little bit more long tail off in nature. They just evolve over a longer period of time. And so having 5% out of cash flow and 8% out of gains this year is I would say, if anything, what we probably saw was cash flow that was still a bit on the light side in terms of the return because as we think you are well aware, we expect to see a lot pickup in cash flow coming from virtually anything tied to the US home building sector and we see that benefiting us for a number of years. So I think we got some tailwinds there. Your comment on interest rates, absolutely. If interest rates rise, all things being equal, your valuations ought to come down. Having said that, all things are really equal and these are mostly real return assets. So rising interest rates should be indicative of the strengthening fundamental market we should be seeing increases in the cash flows within those return assets either because we are getting larger increases in rate based revenues which are driven in large part by regulatory framework that incorporates interest rates or because interest rates are increasing because of inflation and that should be reflected in things like power prices and rents. So what you would see is growth in the cash flow and also the impact of interest rates on our valuations would be mitigated by increases in the cash flows to which they are applied, which is of course one of the fundamental concepts of real return assets. So I hope that’s helpful in giving you some sense of how we would see things rolling here.

Yeah, that’s helpful it sounds like the cash flow growth ought to pick up as we go into ‘13 and beyond. And then just quick sort of follow up or related to that, I know we tried to do this as analyst I am sure the investors all try to do this too, but if we looked at the difference between where you guys have your IFRS values and the public listed entities that are out there, you alluded to this in the letter a little bit, but is that number, would your IFRS move up or would it move down or stay about the same?

So if we adjusted it to reflect stock prices?

Yeah, for the listed entities that are out there if you use their share prices as opposed to the internal estimates that you guys provide?

There are some puts and takes, but on balance it’s probably about flat in terms of the impact of making those kinds of adjustments.

Next question is from Michael Goldberg of Desjardins Securities. Please go ahead.

A couple of questions; so you are not calling the spin off BPY imminent; has anything actually changed, you get approval of the IFRS accounting from the SEC or is there anything that's actually changed?

So Michael, we are continuing to work with the SEC in getting the documents approved. We have addressed a numbers of things. They are having a very comprehensive look at it as I suppose they ought to be, and we think we are making good progress on it, and so we are hopeful of launching it in the near future….

Is that similar to what you would have said a quarter ago, has anything actually changed?

Sure, we had more back and forth with them and we’ve continue to address comments and look, I can't give you affirmed date, affirmed date as to our expectation anything like that or I can tell you we are making progress and we are very hopeful of having it out shortly. It has obviously been a long time, it took us a long time to get Brookfield Infrastructure Partners launched as well and obviously longer than we do originally anticipated but we are making progress.

Okay and Bruce in your letter, you again referred to your plan to assist companies in Europe and recapitalizing, what hurdles have to be cleared before something big might happen?

You know nothing Michael; I guess I would say, we did a lot of things in Europe in 2012. Most of them were assisting corporations in Europe, recapitalize assets or purchase assets from them that were outside of Europe and for us just a lot of singles and doubles, this is good business, and I think more of that will happen in 2013. And in addition, I guess we are getting much more comfortable with the way that we can acquire assets in Europe and probably we'll do some things this year in Europe.

Should we think of Brookfield Property Partners as being a vehicle to factually execute on something that might happen here?

I would say that you should think of Brookfield Infrastructure Partners, Renewable Energy Partners and Property Partners all as entities that could participate in transactions; they have been participating in the transactions and will be.

Okay and you talked about unrealized, unrecognized gains on assets that could potentially be harvested, but is there like a ballpark number you could give us as to what these might amount to in aggregate now and does US residential lands holding assets get included in what you think of as what could potentially be harvested?

Michael, its Brian. You are on three questions but we will just add to this one quickly. The short answer Michael is there are lots of potential candidates I suppose but we really feel it’s not appropriate to give specific guidance as to what might or might not be on the sell. I think for reasons you can understand, but as Bruce mentioned, there are a lot of areas that we could harvest value for good gains.

The next question is from Mario Saric of Scotia Bank. Please go ahead.

Bruce, just with respect to commentary in the shareholder letter with respect to viewing equity that's cheap compared to alternatives particularly fixed income, for the types of assets that Brookfield is looking at and currently owns, how do you look at public market valuation versus private market valuation for those assets today?

I think I understand your question but if I answer it incorrectly please you can clarify or I will try to clarify for you, but I guess our business is about buying assets that are more time consuming to underwrite and more fluid to underwrite at times when owners have either too much debt on them or they want to achieve a goal that we can be helpful with because of our operating assistance or capital availability. It’s not really buying assets in the market at the trading price. So I guess our view is that we can continue to buy in this environment assets on a leverage basis to make us 12% to 15% returns on the asset and we will continue to do that. On the other hand, there are many assets in the market trading at higher valuations than what I just described and but I'd also say that those valuations are extremely good relative to what you could earn in a fixed income instrument and the risk you take with a long-term fixed income instrument. So I think people have been trending towards and putting more money towards real assets Property, Power, Infrastructure and other types of assets like we buy, merely because they can earn decent cash returns and they are not taking significant tail risk because ultimately rail return assets will earn back the return, and I think that’s you are seeing and you will continue to see more money going into them both in the private and public markets overtime.

And then maybe switching gears to IFRS, maybe Brian. I think you indicated that about a third of appraisals or about a third of the assets was extremely appraised actually more than as you include refinancing during the year. Just wondering how would those appraisal valuations compared to internally generated valuations?

You know, it varies a bit. I would say generally they are pretty much in line. We believe we're pretty good at underwriting and valuing these assets and it's certainly in some asset class, it's a relatively standard way of approaching it. For example, office properties, CBRE or something like that is generally going to take a pretty similar approach to us. We might have a bit more specific view as because you will know what the actual lease stock is we're building but they are laying their views on market trends and things like that. So sometimes they are a little higher and a little lower and we take that into consideration. And if it's financing appraisals, they often done a bit more conservative basis for obvious reasons. So there is certainly a good indicator and there is something that we definitely factor in, in terms of coming up with the valuations.

One last question just with respect to, a very quick one. With respect to harvesting some of the non-core assets, would these be assets generally that were acquired in the stress situations in the last four or five years or are we also looking at assets that have been held for much longer period of time?

It could include all of the above.

Next question is from Andrew Kuske of Credit Suisse. Please go ahead.

I guess the question is for Bruce and you spent a lot of time in last few years developing these public market vehicles, the LPE vehicles that really are a form of permanent capital, do you feel you are missing any platforms at this point in time just really when you look at a competitive dynamic versus the other managers around the globe, do you think you are missing anything?

We would always like to do better in everything we do, but I would say our property business is large and extensive and we intend to grow it and build it and earn great returns overtime. Our infrastructure business is a leader in global infrastructure management. Renewable Energy is one of the largest portfolios in the world. Our private equity business, there is while it’s where we started and it relates to a lot of the things that we do. It’s smaller and I think can grow extensively because it is one of the largest businesses for institutional clients in the world. So I think we can grow that businesses and I think our but not in a public market that will be build privately and may be the only business that we don’t have a flagship entity in is in the timber business and we may consider it overtime.

Okay that’s helpful. And then just related to that, could you give a bit more color and commentary around the number of clients sort of client penetration across multiple strategies?

So I don’t have the exact numbers with me. But what I can tell you is our business is about high-end client management of a group of institutions which we take a lot of time with and we get a lot of repeat performance. So if you look at our client list its less then most large organizations with the scale of capital that we have and many of them are larger institutions and many have multiple investments with us. So we pride ourselves on that and we try to do it and I think overtime it will continue to grow.

Next question is from Cherilyn Radbourne of TD Securities. Please go ahead.

I wanted to start by asking a question related to the new disclosure you provided in your asset management segment and specifically you reported the 40% gross margin on days [fees] for the year and which compares with this 50% that is state target that you articulated to investor day. So I wonder if you could just give us a bit of a feel for the mix between fixed and variable cost within the $250 million of direct cost going against that business?

So I see a fair amount of that is fixed, there is some transactional stuff in that, but a fair amount is fixed because large a lot of it that has to do with people and everything you do to support the people. What I would say though is, and you would have seen this evidenced in the fact that the cost did increase year-over-year. We put more money into building out our client management groups, there was the growth in the infrastructure side. We’ve obviously got more people working there, because there has been fantastic growth and then there has been a couple of other parts of the business more niche services that we provide where we have expanded either in the new regions. And what I would say to those is so the mix of some of the cost in there is in anticipation of future revenues, and in respect of growth that not only is directly tied to existing expansion of business that will yield future growth in fees and revenues down the road, but also we should be able to leverage those resources and hence expand the margins. So we are actually quite encouraged with how the margins are developing but 50% is still the long term target. Again I would say one other thing in that regard is, our business is a little different in some sense because we do have large listed entities and so the cost profile with us is perhaps a little different than some other managers and we mingle those together between the listed and the private fund side.

I wanted to ask a bigger picture question, just in your letter you talk about interest rates not likely to go much lower, but its difficult to predict the timing of when they eventually rise and I don't want to ask you to play economist. But we are just hoping you could give us a bit more insight into your view of interest rates and how much is less in terms of your ability to continue the lock in long term financing at attractive rates.

Brian will take the second one, I'll answer the first one and I'd just say that our general view based on what we know from our businesses and just observations in the capital market is that interest rates aren't going up in the next short while. But eventually they are going up, and I think more importantly to this business and maybe to the point of also to the question earlier of appraisals and valuations is that appraisals and what's important with appraisals under IFRS and things like that is that these are done on long term discounted cash flow analysis and they are not spot valuations based on a cash flow tomorrow morning. And if you did that you might benchmark it to current interest rates, as opposed to looking over a long period of time. So when people are looking at it, I'd encourage you to think that 200 to 300 basis points of interest rates going up really doesn't bother the business of Brookfield Asset Management and all the things it does within the franchise. What we’ve said before and I stated again, if you believe that interest rates on the long end of the treasury are going to 10% in the foreseeable future, then there's no doubt that for a period of time our business will have headwinds against us. Eventually after those headwinds we have the greatest assets anyone can own in a highly inflationary environment, but there will be headwinds for a short term period of time. I guess we don't think either of those are going to happen in the short term, but certainly the first one which is a slow and gradual increase of interest rates over time we think will come.

Yeah Cherilyn on the second part of your question, I'd say we are still following very much the same approach as we follow for the last couple of years. In terms of thinking about how we might position ourselves with respect to the expected increase in interest rates, we are going at that by aggressively refinancing things as soon as we can and ideally prefinancing if the terms of the debt makes it economical. But we've also been making use of interest rate contracts usually treasury locks or forward starting swaps, and generally we've been locking in around half of the expected North American refinancing proceeds over the next three to four years. That’s generally household rolled out, and there is probably the 4 billion of that, and we've hedged about half of that. So that can give you some idea of where we see. Australia is another area we look at. It's bit more of a floating rig [short] dated market. But we're doing things on that in that market as well to try and lock some of that in.

Okay, and I think you had about 3.6 billion of those contracts at the end of last quarter. So it sounds like they are stable to us in terms of

Yeah, I may have gotten (inaudible) given your proportionate versus the gross and things like that. But it's around 50% is the main thing.

The next question is from Michael Smith of Macquarie Securities. Please go ahead.

Just wanted to talk about the share buyback; what are the intrinsic value of the company close to $45 and the outlook is looking pretty good and the stock trading at 38 or slightly below 38. Is it fair for me to assume that like at these levels are noticeable amount of share buybacks would be on the table.

I guess, Michael, these are all capital allocation decisions and to answer this question, and one that was asked earlier, our business is about capital allocation at the most senior corporate level and all we do is decide whether we should take money at a one thing and pulled in one another. There is no doubt our shares we believe are good investments compared to other things. Some other things today and as we harvest cash, one of the places we look to is pull in stock. I don't think we should specifically say whether we're going to be in the market buying at these levels or not, but it's very possible over the next year that as I said in my notes that we will use a portion or a significant portion of the allotments.

There are no more questions at this time. I will now turn the call back over to Mr. Flatt for closing comments.

Thank you to everyone for listening in on our conference call this quarter. We appreciate all your support, and if you have any questions please feel free to contact any of us. Thank you very much.

Ladies and gentlemen this concludes today’s conference call. You may disconnect your lines thank you participating and have a pleasant day.