Thank you for standing by. This is the Chorus Call conference operator. Welcome to the Brookfield Asset Management 2015 First Quarter Results Conference Call and Webcast. [Operator Instructions] and the conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Andy Willis, Senior Vice President, Communications, for Brookfield Asset Management. Please go ahead.

Thank you, and good afternoon, ladies and gentlemen. Thank you for joining us on our first 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 afternoon, 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 over to the operator to open it up for questions. [Operator Instructions] I would 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 our annual report, both of which are available on our website. Thank you. I'd like to turn the call over to Brian.

Thank you, Andy, and good afternoon. We held our annual meeting today in Toronto, where we discussed the company's activities, so I will be somewhat briefer than usual in my remarks on our quarterly results this afternoon. The majority of our businesses are off to a strong start this year. Funds from operations for the first quarter of 2015 were $557 million, that's up 14% from last year. And the increase reflects growth in our asset management platform and disposition gains, offset by a reduced contribution from our renewable energy business relative to the particularly strong results in that business during the first quarter of last year. We increased our fee-bearing assets to $93 billion, up by $13 billion over the past 12 months due to inflows from clients and strong market performance in our listed partnerships. Fee-related earnings were up 27% from last year to over $100 million, and together, our annualized fee base plus our target carry interest now stand at $1.3 billion. We are currently marketing 3 private funds, with a target of more than $11 billion, and expect to be in a position to launch an additional $10 billion of fundraising later this year. These new funds will add significantly to our fee-bearing assets. FFO from our property group decreased slightly over the year-over-year -- quarter-over-quarter as the positive contribution from new assets and improved leasing was offset by the impact of foreign currency valuations on our non-U.S. operations. We had $162 million of disposition gains through the sale of partial stakes in a shopping mall in Honolulu and office buildings in Seattle and Toronto. We continue to see opportunities to recycle capital by selling mature assets at attractive valuations and reinvesting the proceeds for higher returns. Our renewable energy business generated FFO of $81 million,…

Thank you, Brian, and good afternoon, everyone. Thank you for joining. I will utilize the time allotted for remarks to expand on where we currently see opportunities to invest in this market environment. As value investors, our goal is to acquire high-quality real assets at a discount to their replacement cost. In the current low-interest rate environment, there was strong interest in the property infrastructure assets where we focus our efforts, but this interest has also increased valuations in some reasons -- in some regions, mostly Anglo-Saxon well-developed economies where money is cheap, such as the United States. As a result, we are buying very few assets in these markets and, instead, capitalizing on these environments to realize capital out of mature assets. You saw that during the quarter, we sold a minority interest in one of our shopping malls that valued the mall at a pretty good price. We also recently announced plans to sell a transmission line in New England and are selling a number of interest in office assets across the United States. However, we're also seeing significant opportunities to acquire premium assets evaluations, which are compelling. We've invested $15 billion over the past 12 months and continue to see many opportunities. One reason we see attractive deals is the scale of our business and because we're a global investor, and the good news is, is that there's always some part of the world or business or both that is out of favor. In previous quarters, we talked about how we're finding investments in South America and India, regions where capital has been extremely scarce. That continues to be the case. The other trend I'd highlight is the role that we can play in assisting companies achieve goals when they are under pressure to act fast in…

[Operator Instructions] Our first question today comes from Alex Avery of CIBC.

Bruce, you talked a little bit in the interim about how you rarely issue equity, and the last time you did arguably was influenced by strategic considerations related to general growth. This one seems to be a lot more driven by pure investment opportunity. For your equity, you aim to compound it 12% to 15%. Can you, I guess, just talk about what kind of a premium opportunity you need to see in the market or what kind of returns you need to see to justify issuing additional equity?

Yes. So I -- just broadly, I would say that we're never a big fan of issuing equity into the market, and that's because, generally, the franchise you have you know exactly what it is and it compounds away. And if you continue to keep less shares outstanding, the compounded growth of those shares is usually better if you don't increase the base. There are times when 2 things come about, I guess, which is really the situation today or was the situation as we sit here. And that's that your evaluations in the market are at least reasonable. So you're not starting off at maybe a huge discount compared to what you can buy elsewhere. And secondly, you think you can put the money to work at extremely attractive returns, and I would say this, if we just believe we're going to be buying assets with it, we wouldn't do it. But what this money can be used for is to widen out the franchise that we have and make it more -- build the platforms we have and add some businesses, similar to what we think we did in 2009. If you look -- if you think back to 2009, with the money we raised then, we -- it allowed us to both do Babcock & Brown acquisition to enhance the infrastructure franchise significantly and add a whole new real estate business to our real estate franchise with a general growth purchase and some other things we did there. And those things didn't just come -- they were great deals, and therefore -- and we've compounded a huge amount of return, and we probably equaled what the rest of the business has done by buying -- putting the capital into those things. But in addition to that, we bought businesses that will continue to use capital and generate very high returns for a very long period of time. And we think there are a number of things that we're working on that having some extra capital around could be -- add very attractive to the businesses over the next 10 years, and it's possible that they don't occur, and then we'll just put the money into deals that otherwise would have -- maybe we might not have done, and I think we could probably achieve pretty good returns. But it's possible that we can do some things in this market, which are attractive and very value-enhancing to the franchise.

So both in terms of the return on capital and also the strategic elements.

Yes. Yes. We wouldn't have done it if it was just a return on capital gain because probably what we have is just as good as what we're going to buy. But strategically, this money can possibly do some things, which are even bigger for the franchise than what we could have otherwise done.

Okay. And then just looking over the last 12 months in terms of your capital deployments. You've talked a fair bit about the idea that the opportunities that you see are outside of the United States. Over the last 12 months, about 65% of your investments have been in the United States. Inherently, there has to be some, I guess, currency perspective on that. Is there something you can provide in terms of how you think about the U.S. dollar?

Yes. I would just -- and maybe I'd start and then Brian can add if there's anything he thinks of. But I would say that our -- we have an enormous franchise in the United States, and because of the big businesses we have in North America and particularly in the United States, there will always be opportunities that come along for us to put money to work just because we're enhancing the franchise and things come about because of our reputation and our businesses here. So I suspect even though we say to you a very significant amount of our capital is going outside of the United States, what that does mean is that there still will be probably 25%, 35%, 40% of our money going into the United States merely because, on an incremental basis, it's a lot of money on what we're putting out, but it's small compared to the franchise that we have. We have $100 billion of assets in the United States. The money we put out over a year, even if it was 40% of our total funds, it's small compared to that $100 billion. On the -- when you look at the United States, the amount of money that we have invested is a lot less, and therefore, those markets, it's bigger relative to what we have invested there. So that's the first comment. Related to and part of, I think, your question was related to just our views on currency. And I guess we've been a -- we're a U.S. dollar security. That's benefited all the shareholders of the company over the last while. And because the U.S. dollar obviously has been going up against all currencies in the world, what it does do is it puts a noise into our results because as you convert back foreign currencies into U.S. dollars, it puts a little bit of noise into the numbers. I'd say we're -- we've been negative on foreign currencies against the U.S. dollar over the last 2 to 2.5 years, and therefore, we have a number of our operations hedged. We're turning -- I'd say the foreign currencies are more fairly valued today than they were a long time ago or the last -- over the last 2 or 3 years, and therefore, it's possible you'll see us do less hedging in the future from now.

Our next question comes from Blaine Heck of Wells Fargo Securities.

So you guys obviously just made a pretty sizable investment in U.S. multifamily with the acquisition of associated estates, and you have your investments in Fairfield Residential. So I'm just wondering if the AEC acquisition, at all, changes your strategy in multifamily going forward and if you have additional appetite for U.S. multifamily space.

So I don't know what Rick Clark said recently. In fact, the -- when he was talking about multifamily on the Brookfield Properties call, but I'll say the following: we've always had a very large residential business in the United States; in the single-family business, we do have lot of houses; in the multifamily business, we've been doing a lot more over the past 7, 6 -- 5 to 10 years. We have a big business in Fairfield. We've been building multifamily. We're now building multifamily in New York. We're building multifamily in London. So we continue to increase the business, and I'd say we're an opportunistic investor in all asset classes of real estate. And to the extent we can find transactions that makes sense for us, we'll do them. And to the extent there aren't any available, we won't. So it doesn't really change anything, we just -- we continue to be a value investor in real estate.

Okay. That's helpful. And recently, Tesla announced their new energy storage product for both residential and commercial use, which power is stored on-site and used during peak pricing hours. I'm wondering what you all think the implications of this product and maybe the expansion of this technology will be for your power business and the long-term effect on pricing dynamics.

So I will try to answer you in a minute, which we have for this call, but it's probably a 5-day answer that would take to do a proper analysis of this. And I guess what I -- I'd just make a couple of comments. Firstly, I won't make any specific comments on Tesla or its technology or what they're doing, but what I will say is that solar and battery technologies are getting better every year, and they have for the past 15 years. They're getting cheaper, but they're nowhere near what is economic to justify them without subsidies. On top of that, our water -- hydro technology is the best storage there is on the planet, bar none, and will probably never be supplanted in the cost of storing energy. And therefore, we believe that our hydro systems, but in particular our hydro systems that have reservoirs, will be the lowest-cost energy storage ever. And almost in any environment of electricity, they will be extremely valuable. And in fact, they may be enhanced because of what's going on with electricity today. Despite that, we're very cognizant of what's going on in the technology advances being made, and we're paying a lot of attention to them and we continue to watch them. Most of the disruption, so far, has been in the distribution businesses in the United States, which we're not significantly involved in, and that's the most disruptive part of everything that's going on. But of course, we're very -- we pay a lot of attention to it, and it's probably the one area where we do have some technology risk. Most of our other things don't have much.

The next question is from Andrew Kuske of Crédit Suisse.

I guess the question is just for Bruce, and it really relates to, given the deal origination seems to be accelerating and the opportunities you're seeing around the world, how have your investment committees internally changed and evolved just to reflect the deal size since you're working at the diversity of them?

Yes. So I would say our -- they -- our investment committees and our -- and in fact, even our Board of Directors, starting right from the top, have changed over the last 20 years to reflect the fact that we're a much more global, much more diverse organization. And because of that, we have to have other skills, and I can tell you we've had a concerted effort over the last 10 years to broaden our boards to include people from around the world that give -- bring us a broader knowledge in markets, and that's been extremely helpful to our decision-making. Having local teams of people in all the markets where we invest is an extremely valuable thing, and I guess having to -- we can do that because having the shareholder base and the platform we have in Brookfield allows us to bear the cost of having offices around the world to be able to contribute to the decisions we make in investments, and that's an extremely valuable thing that we wouldn't put money to work in a place if we didn't have it.

All right. That's helpful. Maybe a bit more of a specific example. When you look at the Australian natural gas assets that you just purchased, if memory serves me correctly, even if I go back to the Canadian Hunter days, you never had offshore exposure, and these are predominantly offshore assets. So how did you really get comfortable with really a step out from what you've had before and what you have under existing balance sheet from natural gas exposure?

Yes. So as you know because you mentioned one of them, we've been in the oil and gas business many times over many years. In addition to that, we have teams in Calgary, and we have teams in Houston and teams in Australia. So the combination of those 3 teams did all the work. What was extremely important to us in that acquisition is that we were buying the whole franchise and the management team that came along with it. And therefore, we spent a lot of time with them in an exclusive transaction to be able to educate us on the issues that we needed to be attuned to. And it was really important to us to have the management team. And more and more, that's what we can -- we bring to the table, is the ability to fold in management groups that are best-in-class. And I would say we're stepping sideways not stepping out by doing that, but there's no doubt there is more risk in what we did versus some of the conventional oil and gas we've been in the past.

The next question comes from Cherilyn Radbourne of TD Securities.

So the breakdown you provided on your capital deployment on Slide 4 was very helpful. And I guess in looking at it, 2 things struck me. The first was how much of this $15 billion went to North America, notwithstanding the fact that, that seems to be a market where you've had trouble finding value recently? And second, how much of the $15 billion went to private equity, just given the existing size of that platform? So just wondering if you could give some commentary on those 2 observations.

I'll start off, Cherilyn. This is Brian. So I guess a couple of things. First of all, just to echo Bruce's comment earlier, we -- a lot of our business is in North America, to start with, and so it is always going to be very easy and likely that we're going to find good things to do in the context of the scale of that existing business. And so that's the one observation, I'd just echo that. In terms of the specific comment about private equity, we also include our residential business, for example, in there. So for example, that would include us taking private Brookfield Residential, but there've been a number of other large initiatives in there as well. And obviously, we've been involved with the TXU initiative. There've been a number of other energy-related things that we've done within the private equity business. We bought out the Johnson Controls business. So there are a number of things that are in there that are, I'll say, broader than the private equity funds per se.

Yes. And I would add, Cherilyn, maybe just to that is that we have had a concerted effort, and I think most of you on the call probably knew this, over the past 2 years, to broaden and deepen and size up our private equity business. We seem to go in phases. We were focused on real estate and then we were focused on power and then we were focused on building our infrastructure business. And our latest 2 years have been focused on scaling up our private equity business. And therefore, we've been devoting much more significant amounts of capital from balance sheet of Brookfield and resources and people and fundraising capabilities to be able to size up their business because we think it's important to have that offering, which is equal in size to the other offerings we have to our clients. And when people come to us that they have a one-stop shop that they can come for all real asset products. And what we had was a fund which was great. It has unbelievable returns, but it wasn't the scale and size, therefore, some of our clients couldn't invest in it because it was too small for them and it wasn't global. And so we've been spending a lot of time knitting together all the things we had in private equity and make one concerted offering for our clients as we go forward.

Okay. That's helpful. Second question, BPY, in their letter to unitholders, indicated that the real estate opportunity fund is now fully invested and the focus has shifted to maximizing the value of the portfolio. Could you just give us some color on the time line we should be thinking about over which that will happen and when it might translate into carry at the BAM level?

So I think what they said specifically was that they focus on that fund not to focus on the whole business was going to move towards -- because it was all invested, it was moving towards operationally building out the assets and then realizing on it in the future. And I would -- I don't have any specific numbers and they probably didn't say them and probably because we don't really have it. But I might guess that, generally, it's things that they fit into when you're buying opportunistic real estate 1/3, 1/3, 1/3: 1/3 are shorter-term IRR place, high IRR short-term invested period; 1/3 are medium-term with a little bit lower IRRs, but pretty good multiples; and 1/3 are very long-term investments, which are great assets, which keep compounding away, but that earn lower IRRs then all averages out to a -- to the IRR you want and the multiple you want or something in that range. So I'd say it's 1/3, 1/3, 1/3, and it will start to come in over time. And some assets have already been realized in that fund that were bought in the fund.

[Operator Instructions] Our next question is from Mario Saric of Scotia Bank.

Just coming back to the discussion on the private equity business and the strategic nature of the equity issuance, that's the part of the business that BAM seeds with its own money. And given some of the disclosure with respect to kind of fundraising going forward, you're looking to do much bigger funds in that business relative to what you have. So in terms of the equity issuance, can we think about it as somewhat of a kind of a pre-funding of expected significant growth in private equity funds in a platform over the next couple of years?

The answer is yes. You could probably think of it that way, but our infrastructure business we just invest into a big issue that they did to scale up their business. We've done a number -- a couple of issues out of Brookfield Property Partners over the last number of years. We've been doing a lot of private equity deals. So it all depends. And how you -- capital is fungible, but certainly, that's one source or that's one use of capital that's been much heavier on our balance sheet as we scale up this business.

And as it sits today, it's roughly about 17% of your net invested capital for you if we define that investment capital based off of IFRS. Is the goal to get that up to 25%, 30% so that's consistent with the size of the other platforms? Or is it more opportunistic in nature?

I'd just say it's opportunistic, and I'll say it this way. You will recall that in prior times, our real estate business, our infrastructure business and our renewable power business were all private equity transactions. So we got into the businesses because they were private equity deals that we happen to like and then we bought a lot of things. And out of this private equity business are maybe one area, which we find which will spawn another business in real assets. But -- so we continue to put money to work and we -- and truly, while we have a goal to scale up this business, we're opportunistic investors putting the money to work, trying to earn risk-adjusted returns, which are reasonable for shareholders. And we don't really set any goals on where our money will go or in businesses and percentages for that matter.

Okay. And my second question will just be on the structure of growth going forward. You did a great job of simplifying the balance sheet in the last couple of years where your investment infrastructure or[ph] your shares or units that you own in BIP. Similarly, on the property side, your units that you own in BPY. It sounds like the opportunity that you're seeing today are very sizable in terms of acquisitions. So how should we think about kind of support for the underlying subs in those scenarios where there's very large acquisitions can we expect or is there a possibility that we may see BAM come back to direct investing in some of those underlying asset classes because simply the transactions are too big for the underlying subs? So just curious as to how you think about balance sheet simplicity versus kind of supporting the subs on potentially bigger deals.

Yes, I would answer that by saying that our goal is not to have direct investments on the balance sheet competing with the entities down below, if you want to call it that. On the rare occasion where we needed to do a transaction, we needed to use our balance sheet, our first inclination will be to support the subsidiaries by buying our pro rata piece of an offering, if they're going to do one; second, we may buy more if we need to of an offering; third, we may provide lending to an entity -- to one of our entities to provide them capital in the shortened period of time or other forms of capital we could provide them; and probably only lastly, would we ever buy pieces of deals on our own balance sheet. It's more important for us to refine the structures and make these entities into great companies trading in the market with a franchise in each of the areas that they're in, and that's really our main -- our objective for those 3 companies.

There are no further questions at this time. I'll now hand the call back over for closing comments.

Thank you very much, everybody. Please feel free to the reach out to any of us directly, and we look forward to updating you in our next quarter.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.