Thank you for standing by, this is the conference operator. Welcome to the Brookfield Asset Management's 2017 Year-end Conference Call and Webcast. As a reminder, all participants in the listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions]. I would now like to turn the conference call over to Suzanne Fleming, Managing Partner, Branding & Communications. Please go ahead, Ms. Fleming.

Thank you, Operator, and good morning. Welcome to Brookfield's 2017 year-end conference call. On the call today are Bruce Flatt, our Chief Executive Officer and Brian Lawson, our Chief Financial Officer. Brian will start off by discussing the highlights of our financial and operating results for the quarter and the year, and Bruce will then give a business update. After our formal comments, we will turn the call over to the operator and take your questions. In order to accommodate all of those who would like 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 will be happy to respond to additional questions later in the call as time permits. I would like to remind you that in responding to questions and in talking about new initiatives in our financial and operating performance, we may make forward-looking statements, including forward-looking statements within the meaning of applicable Canadian and U.S. securities laws. These statements reflect predictions of future events and trends, and do not relate to historic events. They are subject to known and unknown risks, and future events may differ materially from such statements. For further information on these risks and other potential impacts on our Company, please see our filings with the securities regulators in Canada and the U.S., and the information available on our website. Thank you. And I will now turn the call over to Brian.

Thank you, Suzanne and good morning to all of you on the call. Let me start off by saying that we are pleased with the results for 2017. In particular, it highlights a successful year of growth for Asset Management franchise and a further step change increase in our earnings base. Bruce will extend on this in his remarks, but in summary we continue to expand our fee bearing capital, generate carried interest and deploy capital across the multiple asset classes and geographies. Funds From Operations or FFO totaled $3.8 billion for the year that's a record for us. This represents $3.74 per share and an 18% increase over the last year. Net income was $4.6 billion for the year or $1.34 per share attributable to shareholders. Both FFO and net income benefitted from the significant increase in fee related earnings as well as growth in our existing businesses and contributions from new investments. And they also benefitted from an increase in the level of realized disposition gains and fair value gains respectively. I will now cover some of the highlights within FFO. First focusing on our Asset Management results, fee related earnings increased by 26% to $896 million and that's due to growth in fee bearing capital, which now stands at a $126 billion. This growth is driven by both capital committed to new private funds and growth in the capitalization of our listed issuers. We also earned our first performance fees from BDU as a result of the significant growth in its unit price following several notable acquisitions. Moving over to carried interest, which is becoming increasingly relevant to our financial results. As our earlier vintage funds mature, they are staring to generate meaningful levels of unrealized carried interest. As we have noted in the past carry doesn’t…

Thank you all for joining the call. As Brian mentioned, assets under management continue to grow and our investments performed well last year. We continue to find opportunities to invest the capital that we have been raising despite a competitive environment and we put that down to three of our core advantages, which are sized our global presence in our operating platforms. These advantages allow us not only to identify a wide range of investment opportunities globally, but also to acquire assets per value and then use our operating businesses to create upside. With strong markets as Brian mentioned, we sold a number of assets more than usual and we will continue to do so in the 2018. Our strategy has been two-fold, first to sell mature stabilized assets and redeploy the proceeds in the higher yielding assets, or secondly into returning capital to investors particularly when this allows us to substantially complete a defined investment strategy. Fund raising for real assets in both the public and the private markets for the assets that we manage remains strong with institutional funds continue to allocate greater amounts of capital to these sectors. With interest rates expected to remain in a low range compared to the returns that we can generate, I will return to that in a second. This growth should continue for the foreseeable future. Turning to general markets, we see no signs of underlying economic issues despite the U.S. economy being nine years into an expansion. While this economic cycle shows no signs of ending. It is clearly in the mid-to-later stages of elongated expansion. So we are being cautious. Through that end, we continue to focus on our liquidity and our funding profiles to ensure we are in excellent financial shape and position to react to substantial growth…

[Operator Instructions]. Your first question comes from Cherilyn Radbourne with TD Securities. Your line is open.

Thanks very much and good morning. Wanted to start by asking about the private fund client base, which is up nicely to 500 clients. Can you talk about how the high net-worth channel discounted within that number and give us some color on how your private fund capital has continued to evolve by size and type of clients and also the distribution by geography.

Sure. So I will start off on the private client side it's Brian, Cherilyn thanks for that. So much of that happens into what I would recall on an aggregated basis. So we would not include if there is I will say one channel that we go through that represents 51. So that does so that's how that plays it. So a lot of the increase in the number of clients which I think you remember about 40 new clients that we introduced across the funds over the past year, which was in a wide variety of geography I would say very well diversified. A very minimum amount of that was actually from a numbers perspective private clients.

And so just in terms of some of the areas that you have been focused on. Can you just comment on progress relative to small and mid-sized institutions in the U.S. and then also Europe where you have seen a little bit underrepresented arguably.

Sure, Cheril I might just comment that I would say across the board they are known. And we keep growing in all areas. So I would say we are pushing we are adding more U.S. small clients, we are adding a number of European clients to our list when we continue to add clients really across the board in all jurisdictions.

Great. My second question relates to something you have referred to in the letter, which is the idea that as a value investor you have to be increasingly aware of the potential impact of the technological change, but I wondered if you could just talk about how you have adapted your underwriting processor or your regular business reviews to incorporate considerations of that type of risk?

Hey look I would say that there is nothing that scientific about it. other than we are extremely aware in some businesses. In fact in all businesses, technology is effecting them some more than others and the business is where there is direct effects we need to understand and try to better incorporate it into our underwriting. So although what I would say is generally it’s more technological change usually people over estimate what it's going to do to most businesses, and very sell them as it is dramatically as quick as what most people expect. So often getting people getting over exuberant about it means that there is opportunities for us to invest in the interim stages where people are just wrong on predicting the time or the impact on businesses. So that's probably the biggest focus for us is that more from a value perspective versus looking at it from where we can grow businesses from scratch, which most of the investors would be focused on.

Thank you. That’s my two.

Your next question comes from Ann Dai with KBW. Your line is open.

Hi good morning, thanks for taking my question. So first one is one Tax Reform, I guess I was just wondering if you guys can talk about the impact of Tax Reform on some of your underlying businesses and investments. Just given the size of the investments you have in U.S. in the nature of real asset investing so maybe what are some areas where you might see investments start to look fundamentally less attractive due to limitations on deductibility and then conversely other areas where changes to rules around capital investment and deductibility around that might make other opportunities look more attractive in the near-term?

Sure, thanks Ann, its Brian. So in general our take of this is that it is overall positive for us and some of that's going to play at overtime. You mentioned that couple of things in there and yes there will absolutely be some benefits from accelerated write off or deductibility of capital expenditures in a number of our businesses that will be helpful. Interest expense is probably overall not a big issue for us in part because we run an investment grade model above fundamentally and so we keep our leverage and the interest accordingly the interest cost is on the lower side in that regard. Also I would observe that several of the industries that we operate in our exempt from a number of these changes whether it's utilities or certain real-estate, so those would be some of the of ongoing impact and then off course having the tax rate to go from 35 down to 21 is obviously a benefit. So overall, I would say it's generally a positive for us and then of course a lot of that is just how does that kick into the economic environment overall, which it has a positive impact on that is good for us.

Thanks Brian. Bruce, I also wanted to address some things from the shareholder letter, so there is a line in there talking about you guys thinking about the next stage of Brookfield's post 2025, so I understand that’s long time away and maybe not a conversation today, but I guess I'm just kind of curious with some of those growth considerations are and at that point what might some of the concerns be that you would want to talk through and then what is the motivation for taking those discussions off today?

Yes. I would say the line in the letter is really - it was meant to indicate two things to shareholders. The first one is, the next seven to eight years by virtue of the business we have and the maturing of the business we have and the continued growth we think that can happen just with the business we have. For six, seven, eight years, this business grows at a very fast cliff. And we don’t have to do anything else, and we will do. We think the returns that we have set out for the company. Once the business matures, if we haven’t done anything else. 10 years from now, the growth rate will slow. Of course, we are going to do other things and what we need to do is between now and 10 years from now is to figure out how do we widen out the franchise and use what we have for the brand, and our fund raising capabilities and our investment capabilities to add other products for our clients. And we don’t think that will be an issue. So the reason for the comment was really two-fold. One to say, that the growth rate is, we don’t have to do anything for the next seven to eight years. Post that, we need to figure out, but we have a long time to figure that out. Most companies can’t give you that predictability on the growth of the business from that perspective.

Okay. Thanks for the insight.

You’re welcome.

Your next question comes from the Mario Saric with Scotiabank. Your line is open.

Hi, good morning and thank you. I just wanted to tell you back off of a last question with respect to this post 2025. One thing that you have talked about in the past is just trying to identify perhaps what the optimal balance sheet for Brookfield Asset Management looks like over time. And I was just wondering how that may play into any potential restructuring if you will as you kind of go through that next phase of revolution.

Yes, thanks for the question. I would just say that we are always open to doing things with the companies that maximize the value for all the shareholders in the business in the longer-term. So if that means 10 years from now that we should distribute out to shareholders and of course, we will do that. And at some point that might make sense. I think if you would have looked back 20 years ago or even in 10 years ago, and looked at where we are with business today, we might have said we were overcapitalized and we should distribute capital out. The thing that’s differentiating is this business keeps getting bigger and we can use the capital we have to keep building a bigger franchise. And we think that will continue for a while. At the point when the franchise doesn’t get built, we can’t put the money productively to work. Then, we will look at what we do with that capital whether we increase dividends and get back to shareholders or buyback shares or distribute it out in some other forms. So we are open to all suggestions and we look at it all the time. Right now, I would say, we think that is an enormous competitive advantage to have the capital we have. And that gives us a lot of ways to grow the business that others don’t have.

Okay, thank you for that. And then my second question just again referencing to the Letter to Shareholders and specifically, the market environment. You have been noting more of a cautious stand in the last several quarters. Just kind of referencing the elongated expansion and then I guess in this letter also referencing a couple of specific items that may raise a question mark with respect to valuation in the broader market, making a bit more cautious, outside of pace of capital deployment, how does that shift the deployment mix in terms of capital allocation for you? And has the cycle changed in the last three to six months for the shift that makes from the high deployed capital changing?

I would just say that we always are investing and we are always putting money to work. We try to move our capital to where value is, so where our remark everywhere in the world today there is not overvalued, never the industry is overvalue. There are a many businesses I referenced to investing how is that these are two bankruptcies that happen in the United States, so this is the most liquid highly valued market in the world over the past 12 months and those are over 10 billion of assets we have purchased, because of two specific situations. So, we are always putting money to work. I would just say on balance though, we try to have themes of should we be more cautious or more aggressive, and in 2009, while we were worried like everybody else, we viewed that the best thing we could possibly do was as much as prudently possible, we were trying to put money to work at that point in time, that wouldn’t be what we are added to today. As we should be cautious, we should keep investing, because we have strategies to invest and we see we have to keep growing our businesses, but on balance with excess capital, we have our own balance sheet and with funds we are just a little more cautious today in some of the more highly valued markets, but that doesn’t mean there aren’t other places and that’s really the value we have in the breadth of the franchise, because there are places still in the world that are undervalued today.

I agree. Thanks Bruce.

[Operator Instructions]. Your next question comes from Andrew Kuske with Credit Suisse. Your line is open.

Of course, it’s probably for Brain and it just relates to the ENI comparative and I appreciate that being on the results this time around, but maybe beyond the really obvious, but you might want to also address the really obvious as why did you include the ENI in your supplemental today?

We are really trying to do is get as some comparable metrics relative to the other alternative asset managers and trying to facilitate that, and if you do think about and as you know, how we think about the business that really are the easiest way to think about is with the two components, one is the economics of the asset management business itself and then the other is the tangible value of our balance sheet and so by putting out the easy ENI, it gives folks inside into the fee-related earnings as well as the carry that we look. But more as importantly or more importantly, the amount of carry that is generating and building up in the system, and we think now the business has evolved to the stage where that has more representatives. There’s still a lag, but it's more representative of what is actually going on or as five years ago, I’m not sure it would have been as good metric for valuation purposes.

And then maybe just a follow-up on that when you think about your ENI calculation and how it compares to some of the US holds. How do you think about the quality of your ENI number versus the US holds tend to be very reliant upon IPO markets for cycling assets?

Yes. So, I think really what that's giving at is on the carry side. And so we would maintain that, the IPO markets obviously are relevant as an exit for certain types of investments. We feel fortunate in that because of the breadth of the business that we are in. And in particular the nature of some of that business is that there in that they lend to a much wider variety of exit opportunities. So we think that our ability to crystallize carry should more which should be more robust as a result, because we have more options on how we can monetize an investment.

Okay, that's great. Thank you.

There are no further questions queued up at this time. I will turn the call back over to Fleming for closing remarks.

Thank you, operator. And with that, we will end today's call. Thank you everybody for participating.

This concludes today's conference. Thank you for participating and have a good day.