Hello, and welcome to the Brookfield Corporation First Quarter 2024 Conference Call and Webcast [Operator Instructions]. I would now like to hand the conference call over to our first speaker, Ms. Angela Yulo, Vice President. Please go ahead.

Thank you, operator. And good morning. Welcome to Brookfield Corporation's first quarter 2024 conference call. On the call today are Bruce Flatt, our Chief Executive Officer; Nick Goodman, President of Brookfield Corporation; and Sachin Shah, Chief Executive Officer of our Wealth Solutions business. Bruce will start off by giving a business update, followed by Nick, who will discuss our financial and operating results for the quarter. And finally, Sachin will provide an update and the outlook for our Wealth Solutions business. After our formal comments, we'll turn the call over to the operator and take analyst questions. In order to accommodate all those who want to ask questions, we ask that you refrain from asking more than two questions. I'd like to remind you that in today's comments, including in responding to questions and in discussing 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 US securities law. 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 and results may differ materially from such statements. For further information on these risks and their potential impacts on our company, please see our filings with the securities regulators in Canada and the US, and the information available on our Web site. And with that, I'll turn the call over to Bruce.

Thank you, Angela. And welcome to everyone on the call. We generated strong financial results in the first quarter with distributable earnings before realizations of $1 billion for the quarter, and $4.3 billion for the last 12 months. This represented an increase compared to last year of 10%. The outlook remains strong with each of our underlying businesses continuing to execute their respective business plans, driving organic earnings growth, supplemented by strategic acquisitions. Of note, our Wealth Solutions business reached a significant milestone through its recent acquisition of American Equity Life or AEL. Our Asset Management business announced an important investment in Castlelake further enhancing our asset backed lending capabilities. And our operating businesses continued to deliver resilient earnings backed by strong demand for their high quality assets. Sachin Shah, the CEO of our Wealth Solutions business, is with us today and will spend more time on the AEL transaction in his remarks. Since the start of the year, we repurchased over $700 million of our shares at excellent prices. And we continue to allocate capital to share repurchases, enhancing the value of each of your remaining shares. Shifting briefly to the markets. The macro environment continues to normalize. With interest rates expected to have peaked and inflation beginning to cool liquidity has returned to capital markets. Most major economies in the world are performing better than anticipated and risk appetite has come back to most markets. With conditions less restrictive, it appears that we are in a more stable and constructive market than in the past couple of years. With this backdrop, transaction volume is picking up, in particular, for high quality businesses and assets of the type that we own. This enabled us to advance a number of monetization initiatives, which Nick will touch on in his remarks.…

Thank you, Bruce. And good morning, everyone. Results for the first quarter were strong as our businesses continued to generate stable and growing cash flows. Distributable earnings or DE before realizations were $1 billion or $0.63 per share for the quarter and $4.3 billion or $2.70 per share over the last 12 months. And this represents an increase of 10% per share over the prior year after adjusting for the distribution of 25% of our manager in December 2022. Total DE was $1.2 billion or $0.77 per share for the quarter and $4.9 billion or $3.07 per share over the last 12 months with net income of $5.2 billion over the same period. And starting with our operating performance, our Asset Management business generated distributable earnings of $621 million or $0.39 per share in the quarter and $2.5 billion or $1.58 per share over the last 12 months. We continue to see strong demand for our private fund strategies with total inflows of $20 billion in the first quarter. Fee bearing capital was [$459 billion] as of March 31st, 6% higher than 12 months ago with fee related earnings in line with the prior year quarter. We recently announced the acquisition of a majority stake in Castlelake, a premier asset backed lender focused on aviation, specialty and real estate finance, broadening our presence in asset backed lending. We expect fundraising to build throughout the year, leading to strong growth in earnings. Our Wealth Solutions business had a strong quarter, continuing to generate stable and growing long dated annuity like cash flows. Distributable operating earnings were $273 million or $0.17 per share in the quarter and $868 million or $0.55 per share over the last 12 months. And the average cash yield on our capital today is 18%. As at the…

Thank you, Nick. And good morning, everyone. With the recent close of the acquisition of AEL, we thought it was worthwhile to provide an update on our Wealth Solutions business and its outlook going forward. As many of you know, we launched Brookfield Reinsurance in late 2020 to focus on annuities and retirement income at a moment in time when historically low rates presented a unique opportunity to learn the business and potentially meaningfully benefit if rates gradually normalize to higher levels. Our strong capital position, decades of investment experience and deep operating capabilities positioned us well to build a scaled business as demand for retirement income was on the rise. As we set out to build the business, our focus, as always, was on compounding capital at 15% to 20% returns on equity over the long term while managing downside risk. Today, in the United States, there is a significant shortfall in retirement funding for aging populations to the tune of a $7 trillion deficit. There are approximately 60 million people in the US who are 65 years or older, representing one out of every six people. 100 years ago, that number was one out of every 20 people. And over the next two decades, the US will add another 25 million people to that aging cohort. Accordingly, as the population gets older in the Western world, the retirement deficit that exists today will only compound. Furthermore, less than 50% of US workers qualify for retirement benefits through their employer, putting significant pressure on government entitlements. As a result, the demand for private sector solutions that provides stable annuity like income for an aging population are not only large today but will grow well into the future. Accordingly, in 2023, record annuity sales surpassed $385 billion in the United…

[Operator Instructions] Our first question comes from the line of Mario Saric with Scotiabank.

The first one is maybe for Nick, just on carried interest and utilization. Nick, on the last call, you talked about realized carry maybe being in the $400 million to $500 million range for '24, fairly consistent with '23. Q1 was off to a surprisingly solid start, just shy of $200 million with the language suggesting transaction markets should continue to improve. So I guess the question isthis $400 million to $500 million still a reasonable range or can we see being exceed that level?

Yes, I think it's still a reasonable range. We expected it to be a little bit front loaded this year just given monetizations and where they're coming from and in which funds. So I would still work off that previous level we gave you.

And then my second question, just on real estate debt. I think you mentioned $15 billion of refinancing was highlighted. Can you talk about what you've seen in terms of spreads on both the unsecured and secured market quarter-over-quarter for the types of assets that you're looking to refinance as well as kind of lender appetite in terms of where LTVs are going?

I would say, as a general comment, liquidity in the capital markets has been very strong to start the year. We highlighted a number of financings that we are continuing to execute very strong financings across the business every day. And I think when you're bringing high quality assets to the market, the bid is very strong and especially when people are looking for duration -- backed by long duration cash flows. In real estate specifically, it's been a really strong start to the year, I think, in the market in the US. There's more CMBS issued already this year than in totality in last year. We've seen demand strong across the spectrum, retail very strong, multifamily, logistics and all those kind of assets industrial, and we're starting to see the bid improve for office as well. We see some office assets start to come into conduit. CMBS for the highest quality real estate, so we're starting to see the liquidity and appreciation of the bifurcation of office and the demand for debt on high quality real estate improve. So spreads have tightened I see across the board. I'm not sure LTV are drifting that much higher, but demand is definitely stronger across the capital stack, but the flow of demand for the AAA is driving down the spreads, and that helps the overall cost. So I would say, generally, we see spreads continue to tighten. But more importantly, we're seeing the demand debt being there, which is supporting refinancings and will start to support transaction volume in the US. Outside of the US, the markets are very strong. We did $2 billion financing in Korea, which is predominantly office, the $600 million office financing in Perth, Australia. So I would say that demand and depth of appetite for real estate across the spectrum, including office, continues to be very robust globally.

Our next question comes from the line of Ken Worthington with JPMorgan.

Part of the Brookfield game plan has been to monetize the noncore part of the real estate holdings, and the thought was this could be done over, say, like a five to seven year period. Nick, you and Bruce called out this morning the improving conditions. You called it the monetizations that you're executing on. How do you see the monetization picture developing for what you'd previously called out as those noncore balance sheet investments versus how you're seeing the Brookfield funds monetize given the difference in the investment mix? And I guess the follow up would be, is AEL going to be a factor in terms of the monetization picture going forward?

So let me address the different parts of that, ken, and maybe I'll start with insurance first. I think we've identified that the core real estate that we own, the top 35 office and retail assets that we want to own all of a portion of a very long time, which are truly some of the best real estate in the world with long-duration cash flows, high quality assets. Those are perfect assets for insurance companies to look to own. So as we think about the long term ownership of the core, I wouldn't just say AEL, but the broad wealth solutions and insurance platform will play a part in that, and we expect to make progress on that in the next 12 months. As it speaks to monetizations, yes, liquidity and transactions has started to pick up. We sold an office building in Brazil. So it's not specifically assets outside of office but we're seeing capital markets improve, liquidity improves and that supports transactions. So our plan on T&D hasn't changed. Office in the US maybe has a little bit more time to go before transaction activity really picks up, and that will be supported by the improved liquidity in the capital markets, but our outlook for that hasn't changed and our strategy is the same.

Our next question comes from the line of Cherilyn Radbourne with TD Cowen.

I wanted to start with a question on Wealth Solutions, so probably for you, Sachin. In the letter, you mentioned further growth through pension risk transfer and international expansion. So I was hoping you could touch on the current environment for pension risk transfer deals and comment on some of the complexities and opportunities associated with international expansion?

So the pension markets both in the US and the UK are very strong. The UK has been at it now probably for about six or seven years where every year, you get a very large set of pensions coming off corporation balance sheets into private hands. And as a result, we've seen very meaningful growth in some of the pension aggregators in the UK. But there's still probably 20 years and close to $1 trillion of pensions that have to come off corporation balance sheets in the UK alone over the next two decade period. So we see tremendous growth there and it's a market where we think, given our asset origination and what's called matching adjustment in the UK, we could be highly successful. The US is much earlier in their transition from pension sitting on corporate balance sheets. And so I think we have not only a longer runway, but given the scale of US companies, even a larger volume of pensions that will come off. All that being said, we started building out our US pension business last year. We, in the last 12 months, have done $3 billion of US pensions in terms of transactions that we've won. And we're still just in the very early days. I think that's a business that can comfortably scale to $7 billion to $10 billion a year in the US for us. And in the UK, we're in the process of getting licensed. We should be in a position by the end of the year where we're actually bidding on transactions. And similar to our US strategy, we'll start small and eventually migrate into the larger transactions.

And then just in terms of capital allocation during the quarter, we noticed that there was just over $450 million that was reinvested back into the operating businesses. Can you give us some color as to what that went towards?

So that was, as you said, capital allocation, so taking the consolidated cash flow that we have, we used that to retire corporate bonds within BPY, which I think we've talked about in the past, deleveraging that corporate balance sheet as a capital allocation decision when we weigh up that against other things we can do. So that's where the cash went in the quarter.

Our next question comes from the line of Geoffrey Kwan with RBC Capital Markets.

Discount to NAV remains wide but it has narrowed meaningfully in the past couple of quarters. And just given your outlook for capital deployment, how has that changed your appetite for share buybacks given where the discount is today?

Geoff, I think it remains the same. We have complete conviction not only in the intrinsic value of the business. But if you listen to all the remarks today, the growth potential and the tailwinds that we have across the franchise, we still see tremendous growth from here to date. So we still see buybacks being a very attractive use of our capital, we weigh that up against other opportunities that we have, and we have lots of strategic initiatives going on in the organization, a couple executed recently, which are all highly additive to the franchise, but they're just as attractive now as they've been over the last few months.

And just my second question, maybe expanding on Ken's question on the T&D monetization. I mean, if we're looking at over the next five years, if we've seen the monetization market, call it, opens up at some point this year. Do you see that monetization of the T&D portfolio as you've got a, I don't know, call it, a material amount of the portfolio that could get monetized kind of call it out of the gate or is it something that may be a little bit more back end loaded thinking about that profile?

Listen, Geoff, I think we'll just take it as the market comes, like to be clear, T&D still is good real estate. These are good assets. We're comfortable running them. And when the transaction market improves, if transactions are at levels that are attractive, we'll look to monetize. We think over the next five years that market will be there, but we're under no pressure to do this. And when you think about it in the context of the overall business of Brookfield, this is not a material driver to us achieving our strategic objectives. This is about rightsizing the business over time and we'll do it when it makes sense. So that's how I’d summarize the approach.

Thank you. I would now like to turn the call back over to Ms. Angela Yulo for closing remarks.

Thank you, everybody, for joining us today. And with that, we'll end the call.

This concludes today's conference call. Thank you for participating, and you may now disconnect.