Brookfield Asset Management 12 th Annual Investor Meeting September - - PowerPoint PPT Presentation

Brookfield Asset Management

12th Annual Investor Meeting September 28, 2016

Cautionary Note Regarding Forward-Looking Statements

Forward-Looking Statements and Information This presentation contains “forward-looking information” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding the operations, business, financial condition, expected financial results, performance, prospects,

• pportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of Brookfield Asset Management and its subsidiaries, as well as the outlook for North American

and international economies for the current fiscal year and subsequent periods. In some cases, forward-looking statements can be identified by terms such as “expects,” “anticipates,” “plans,” “believes,” “estimates,” “seeks,” “intends,” “targets,” “projects,” “forecasts” or negative versions thereof and other similar expressions, or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.” Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause the actual results, performance or achievements of Brookfield Asset Management to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information. Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business; the behavior of financial markets, including fluctuations in interest and foreign exchanges rate; global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; strategic actions including dispositions; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates); the effect of applying future accounting changes; business competition; operational and reputational risks; technological change; changes in government regulation and legislation within the countries in which we operate; changes in tax laws, catastrophic events, such as earthquakes and hurricanes; the possible impact of international conflicts and other developments including terrorist acts; and other risks and factors detailed from time to time in our documents filed with the securities regulators in Canada and the United States. We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, Brookfield Asset Management undertakes no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise. Use of Non-IFRS Measures and Other This presentation contains references to financial measures which are not generally accepted accounting measures under IFRS and may differ from similar definitions used by

• ther entities. We believe that these are useful supplemental measures that may assist investors in assessing our financial performance and the cash anticipated to be generated

by our operations. Such measures should not be considered as the sole indicators of our performance and should not be considered in isolation from, or as a substitute for, analysis of our financial statements prepared in accordance with IFRS. Certain values used in this presentation are for illustrative purposes and based on various factors that may or may not materialize, including past performance metrics that may not be indicative of future performance. References to Brookfield, Brookfield Asset Management or BAM are to Brookfield Asset Management Inc. together with its subsidiaries unless the context reflects otherwise. All amounts are in U.S. dollars unless otherwise specified.

2

Agenda

3

Bruce Flatt 4

Chief Executive Officer

Brian Lawson 45

Chief Financial Officer

Agenda

4

Review of the past 12 months The fundraising environment today Our competitive advantages The growth of our Funds Where we are going from here 1 2 3 4 5

In the past 12 months we’ve made considerable progress in building our business into a leading global manager of Real Assets

5

We completed fundraising for our recent series of flagship funds, doubling the size of the predecessor funds

6

$4.4

$9 billion Real Estate

$1.0

$4 billion

$0.8

Private Equity

$7.0

$14 billion Infrastructure

$2.7 $1.0

2014 2016

~150 new institutions invested in our funds, bringing the total to 425 – we believe we will achieve 1,000 in time

7

425 280 +52% +52%

…further diversifying our investor base

8

59% 34% 7%

2016

Europe & Other North America Asia, Middle East, Australia

1) As at June 30, 2016. Private fund capital by geography

We have deployed $16 billion of capital around the world over the past 12 months

9

49% 29% 10% 12% North America South America Asia & Other Europe Peru India Germany

1) LTM as at June 30, 2016

We continue to increase total assets under management

2012 2013 2014 2015 2016

$192 $183 $158 $218 $243

11%

10

TOTAL ASSETS UNDER MANAGEMENT

($billions)

1) As at June 30

We completed the spin-off of Brookfield Business Partners

11

Provides investors with the ability to invest directly in businesses within our private equity group Creates a permanent equity base for these businesses Establishes a currency to transact with

And achieved favourable results for our other listed partnerships

12

Distribution growth Price appreciation Capitalization growth

Which has all led to meaningful growth in operating results

13

Fee bearing capital Fee related earnings Annualized fees and target carry 15% 50% 41%

1) One year return as at June 30, 2016

We have achieved this by executing our simple and repeatable business model

14

Source equity from clients seeking exposure to property and infrastructure returns Use our access to large scale capital to invest on behalf of clients Utilize our global reach to identify and acquire high-quality Real Assets Finance assets on a long-term, low-risk basis Enhance the cash flows and value of assets by leveraging our leading

• perating businesses

1 2 3 4 5

Institutions continue to allocate increasing amounts of capital to Real Asset strategies

15

Traditional equity and fixed income investments no longer provide sufficient total returns

16

Negative interest rates in Japan and Europe continue to put downward pressure on the long U.S. rate Global growth is slow so it looks like we will continue in a low interest rate environment for a while

Institutional investors are in search of alternatives

We anticipate allocations of capital to Real Assets to grow substantially

17

Equity/Fixed Income Real Assets

90 10 85 15

2000 2016 2030

60 40

Shifts in portfolio allocations are being largely driven by…

18

• Macroeconomic factors

– continued slow growth and low interest rate environment

• Continued acceptance of Real Assets as an asset class

– with infrastructure investment growing at accelerated rates

• Changes in regulation

– increasing allocations to alternatives and foreign investments by Asian insurance companies and institutions

Allocation trends should continue, irrespective of interest rates

19

• Interest rates should slowly move up in the U.S.
• Our business model works very well even if rates trend higher
• We have found that Real Assets retain their value across the cycle
• Interest rates should rise only if the economy is improving… leading to

growth in cash flow returns

Returns on Real Assets remain extremely attractive in this environment

Sovereign investors are leading the way

20

• Ability to commit large amounts of capital
• Long-term, global mandates
• Sophisticated and diverse strategies
• Looking for partners to extend their reach

And Real Assets have become well established as an asset class across most other institutions as well

We are well positioned as a partner of choice for Real Asset strategies

21

We have a number of competitive strengths…

22

• 115 years of operating experience – 55,000 employees
• Multiple fund offerings – three ways to invest
• Established governance and client service capabilities
• Large scale capital – ~$250 billion of assets under management
• Global presence – 30+ countries
• Strong track record – proven investment results

One big advantage we have is that investing in Real Assets requires hard work

23

We have more than 55,000 employees and decades of experience

We provide three distinct offerings, which appeal to a broad range of investors

24

Listed Partnerships $49 billion $47 billion $12 billion Private Funds Public Securities

$108 Billion Fee Bearing Capital

Plus numerous co-investment and joint venture opportunities

1) As at June 30, 2016

…which allows us to use multiple channels to source capital to fund transactions… quickly

25

Transactions

Private Funds Listed Partnerships Co-investors BAM Joint Venture Partners

In an industry headed towards +$70 trillion of flows by 2020s, we have already established the backbone to manage this growth

26

Investors and regulators expect best-in-class governance and compliance We have invested in our client service capabilities

Our large scale capital is a distinct advantage

27

• Real Asset transactions can require extremely large capital commitments
• $108 billion of committed capital within funds

– $18 billion of dry powder in private funds – Listed partnership liquidity and perpetual equity

• Relationships with global institutions provide substantial co-invest

and joint venture capital

• Our corporate balance sheet provides additional liquidity and flexibility

Our private funds provide investors access to premium returns across the Real Asset investible universe

28

Notes/Assumptions: 1) As at June 30, 2016. Excludes funds in market and funds closed within twelve months of the performance calculation date. Past performance is not indicative of future performance. Gross Internal Rate of Return (“Gross IRR”) reflects the annualized performance before fund expenses, management fees and carried interest

Vintage Gross IRR1 Opportunistic Real Estate 2006 – 2015 23% Private Equity 2001 – 2015 23% Core and Value-add Real Estate 2004 – 2013 14% Infrastructure 2006 – 2016 15%

1 2

Our investment approach focuses on two things

29

Making Repeatable Investments

• Where we already have

scale and knowledge

• Assets where we can drive

more value

Purchasing for Value

• Acquiring when capital is

scarce

• Value the business as if we

will hold forever

…Our goal is to achieve both with each investment

Colombian hydroelectric portfolio

30 Sogamoso Hydro, Colombia Calderas, Colombia

Purchasing for Value Repeatable Investment

We recently acquired a self-storage business and have continued to expand its operations through development and acquisitions

31

We plan to build it into one of the largest self-storage companies in North America

Repeatable Investment

We acquired a district energy business and have continued to grow the operations city by city

32

Repeatable Investment

Our goal is to be one of the largest district energy companies in North America

1

We have three main competitive advantages

33

Large Scale Capital

2 3

Global Reach Operating Capabilities

Natural gas pipeline in southeast Brazil

34

$5 billion

LARGE SCALE CAPITAL

Brazil

GLOBAL REACH

Pipeline Team

OPERATING CAPABILITIES

Landmark mixed-use office complex in Berlin

35 Potsdamer, Berlin

€1.3 billion

LARGE SCALE CAPITAL

Germany

GLOBAL REACH

Office/Retail/Hotel Teams

OPERATING CAPABILITIES

Hydroelectric facilities in northern U.S.

36 Holtwood Hydro, Pennsylvania

$1.5 billion

LARGE SCALE CAPITAL

U.S.

GLOBAL REACH

Renewable Team

OPERATING CAPABILITIES

All of which has enabled us to invest our flagship private funds capital...

37

BCP IV

>33%

INVESTED1

BIF III

>30%

INVESTED1

BSREP II

>65%

INVESTED1

…and be in a position to begin fundraising for our next series in 2017

1) As at September 23, 2016 – invested or committed

What does all this mean for Brookfield?

38

We have achieved the scale to compete at all levels on a global basis

39

~$250B

assets under management

$108B

fee bearing capital

30+

countries

700

investment professionals

55,000

• perating employees

$30B

invested capital

1) As at June 30, 2016

We have the capacity to continue to grow at an enhanced rate

40

Our pipeline for Real Asset investment opportunities is strong

41

Our competitive advantages offer us opportunities in all environments Interest rates look like they will be relatively low for a long time Commodities and emerging markets are slowly recovering We believe that Brazil bottomed in January 2016

Market volatility creates opportunities

We are launching new products

42

Private Funds

• Expanded Real Estate and Infrastructure Finance Funds
• Core Plus Private Property Funds
• Geographic focused funds and sleeves of funds
• Distress Hedge Fund added in 2015
• Additional long/short and long-only Infrastructure Funds
• Additional Real Asset Funds

Private Funds Public Securities

Looking ahead, we are focused on five things…

43

Enhancing returns and asset values Maintain excellent client service and expanding our investor base Sourcing deals and investing $18 billion of dry powder at or above target returns Preparing for next series of flagship funds and launching new products Optimizing value of listed issuers 1 2 3 4 5

Bringing it all together…

44

• The environment is favourable

– Strong demand for Real Asset strategies – Attractive investment opportunities – Favourable financing conditions

• We are well positioned

– Large scale capital and established execution capabilities – Strong client base with room to grow

• Execution of our strategy will continue to generate value over the

next 10 years – Asset management cash flows should be ±$4 billion annualized – At normal valuations, a share should have an intrinsic value of ±$160 in 2026

Financial Review – Brian Lawson

45

Themes

46

Progress since last year Balance sheet and liquidity Growth potential

We achieved substantial growth

• ver the past year…

47

48

We raised a record amount of private fund capital…

2016 Base fees – private funds $ 160 M Target carry 355 M Annualized fees & carry $ 515 M

IMPACT

(Annualized)

$16 B increase in Private Fund FBC

Notes/Assumptions: 1) Impact reflects annualized base fees and target carry, year-over-year change as at June 30 2) LTM net flows to private fund fee bearing capital

49

and expanded our listed partnership capitalization…

$ 60 M Base fees 32 M IDR’s $ 92 M Annualized fee revenues Price Appreciation & Capital Generation Launch

• f

BBU

IMPACT

(Annualized)

Notes/Assumptions: 1) Impact reflects annualized base fees and incentive distributions, year-over-year change as at June 30

resulting in a 50% increase in fee related earnings…

50

Q2 2015 Base Fees & IDRs Transaction & Other Fees Direct Costs Q2 2016

+50%

$440 $660 $49 $31

FEE RELATED EARNINGS (LTM)

($millions)

$238

Notes/Assumptions: 1) LTM fee related earnings as at June 30. Excludes net carried interest

FEE RELATED EARNINGS

($millions)

$440 $700 $960 $1,220 $1,480 2015 2016 2017 2018 2019 2020 2021

…outperforming our previous projections

51

Notes/Assumptions: 1) Excludes net carried interest 2) 2016 interpolated value from our 2015 Investor Day financial plan

2015 Investor Day 2016 Investor Day

$1,455 $660 $1,140

We have increased annualized target carried interest to $830 million

52

Carry Eligible Capital Annualized Target Carry

($billions) ($millions)

Core & Value Add $ 22 $ 350 Opportunistic 17 480 $ 39 830 Direct costs (35%) (290) $ 540

… increasing the value of our asset management business well ahead of our expected pace

53

($millions)

2015 Investor Day 2016 2015A 2016P Actual 20x Fee related earnings $ 8,800 $ 10,650 $ 13,200 10x Target carried interest, net 3,090 3,490 5,400 $ 11,890 $ 14,140 $ 18,600

+56%

Notes/Assumptions: 1) 2016P interpolated from our 2015 Investor Day; target growth of 21% FRE and13% target carried interest 2) Multiple of 20x LTM fee related earnings, as at June 30 3) Multiple of 10x target carried interest as at June 30, net of direct costs; assumes 65% gross margin

+19%

In addition…

54

Brookfield Business Partners spin-off – $0.50 special distribution to shareholders – ~85% of our balance sheet is now invested in listed securities Deployed or committed to invest $16 billion of capital (LTM) 11% total return on IFRS portfolio values 8% dividend growth on BAM shares Strengthened our capitalization and liquidity profile

Notes/Assumptions: 1) One year total return as at June 30, 2016, based on increase in IFRS values and FFO

55

Our balance sheet contributes meaningfully to our growth…

1

…and provides us with several competitive advantages

56

Strength and liquidity

2 3

Facilitates execution Value creation

• pportunities

~85% of our balance sheet is held through listed securities, the majority invested in our four listed partnerships

57

BPY BEP BIP BBU Unlisted Other Listed

Provides liquidity and increases transparency

INVESTED CAPITAL – $30 BILLION

1

Notes/Assumptions: 1) As at June 30, 2016

Which is conservatively financed and provides important liquidity

58

1

Capitalization Average Maturity Total

($billions)

Corporate borrowings 8 years $ 4 Preferred shares Perp. 4 Common shares + 35 $ 43 Total Liquidity Total Core Liquidity $ 6 Uncalled fund commitments 18 $ 24

Notes/Assumptions: 1) Common shares based on recent market pricing

Our balance sheet benefits our asset management operations

59

2

And provides alignment of interest with our fund investors

Co-invest Seed new products Expedite transaction execution

Build intrinsic value and narrow discounts Redeploy / reallocate existing capital Share buy-backs for value We have multiple opportunities to enhance the balance sheet values

60

3

61

Invested capital will continue to increase, benefitting from capital appreciation and retained cash flow

INVESTED CAPITAL

($billions)

2016 $ 30 CAGR Capital appreciation Distribution increases (mid-point) 12 7.0% Eliminate BPY discount 5 2.7% 17 9.7% Retained free cash flow Invested capital 8 3.7% Capitalization (5) Fee related earnings 5 8 2021 $ 55 13.5%

Notes/Assumptions: 1) Totals may not add due to rounding. As at June 30. Projected 2021 results 2) Retained free cash flow includes fee related earnings and invested capital cash flow. Assumes mid-point distribution growth for BPY, BIP and BEP and a 7% increase per annum in BAM’s common dividend. Capitalization & costs includes common share distributions. Accumulated balances are reinvested at 8% 3) 13.4% shown reflects a total return

+13.4%

INCREASE

Eliminating BPY’s discount significantly increases quoted value of our invested capital

62

($millions, except per share amounts)

Quoted1 IFRS1 Discount BPY NAV per share $ 23 $ 31 $ 8 Units held by BAM 485 485 485 Invested Capital $ 10,890 $ 14,780 $ 3,890

+36%

Notes/Assumptions: 1) As at June 30, 2016

…which compounds to $5 billion of intrinsic value by 2021

63

2016 2016

($millions)

LTM FFO Free Cash Flow Asset Manager Fee related earnings $ 660 $ 660 Carried interest, net 15 – 675 660 Invested Capital Invested capital 1,659 1,251 Disposition gains 844 – Financing and corporate costs (356) (489) 2,147 762 Total $ 2,822 $ 1,422

Which is available to expand our operations and distribute to shareholders Our operations currently generate $1.4 billion of free cash flow, excluding carried interest and recurring investment gains

Notes/Assumptions: 1) As at June 30. Please refer to endnotes for detailed definitions of Funds from Operations (“FFO”) and Free Cash Flow (“FCF”). FCF from financing and corporate costs includes preferred share distributions which are excluded in FFO

Our free cash flow should increase strongly… even before carried interest

64

FREE CASH FLOW

($millions)

2016 2021 Fee related earnings $ 660 $ 1,455 Invested capital 1,251 2,150 Financing and corporate costs (489) (500) Total $ 1,422 $ 3,105

17%

Notes/Assumptions: 1) As at June 30. 2016 LTM and 2021 projected annualized results. 2) Retained free cash flow includes fee related earnings and invested capital cash flow. Assumes mid-point distribution growth for BPY, BIP and BEP and a 7% increase per annum in BAM’s common

• dividend. Accumulated balances are reinvested at 8%.

3) Please refer to endnotes for a detailed definition of Free Cash Flow (“FCF”)

We continue to consistently increase our dividend

65

7% average annual increase over past five years Strong coverage with current and projected free cash flow Expect no policy change in the short term but will reassess on an ongoing basis

Plus, periodically, we give you a special distribution!!

Looking ahead…

66

67

Rapid expansion over the past year has accelerated our five year growth plans

1

Overall there are three key drivers to our growth

68

Raising Capital

2 3

Fund Performance Distribution Increases

These also enhance our invested capital

Establishes fee base Carried interests IDR’s grow

Our private funds business cycle…

69

7-12 YEARS

70

…has multiple points of value creation

RAISE DEPLOY

(YEARS 1-4)

ENHANCE VALUE

(YEARS 4-12)

HARVEST

(YEARS 7-12)

Establish base fee Lock in capital/fees for remainder of fund term Generate IRR/MoC and carry Return capital to clients and realize carry

71

2016 MATURITY 2021

Our private capital is long term in nature; 87% extends beyond 2021

$47B $91B

PRIVATE FUND FEE BEARING CAPITAL CURRENT NEW FLAGSHIP FUNDS NEW CORE+ FUNDS NEW NICHE FUNDS

87%

We have shortened our cycle to launch and deploy new funds…

72

$4.4B

23 mths / 22 mths

$9B

19 mths / >65% in 18 mths

Real Estate

$1B

24 mths / 35 mths

$4B

20 mths / >33% in 15 mths

Private Equity

$7B

11 mths / 28 mths

$14B

10 mths / >30% in 5 mths

Infrastructure

PREVIOUS SERIES

Raise / Deploy

CURRENT SERIES

Raise / Deploy

Notes/Assumptions: 1) Flagship funds 2) Raise reflects the number of months from marketing launch to final close. Deploy reflects the number of months from when the fund has substantially invested aggregate commitments (typically 75%) allowing for the next fund to be raised, except for current funds, which reflects the number of months from first close to September 2016

…which gives us confidence that we should be able to raise two additional series of funds over the next five years

73

PRIVATE FUNDS & PUBLIC SECURITIES

($millions)

FBC Base Fees 2016 $ 59,545 $ 560 Less: Fund maturities (6,000) Add: Flagship funds 2017/2019 20,000 2020/2021 20,000 Core+ funds 5,000 Niche funds 5,000 Public securities 7,000 Increase 51,000 600 2021 $ 110,545 $ 1,160

While launching new products

Notes/Assumptions: 1) As at June 30 2) Projected annualized results

Our listed partnerships’ fee bearing capital should continue to grow and in five years could look like this…

74

LISTED PARTNERSHIPS

($millions)

FBC Base Fees 2016 $ 48,767 $ 425 Market appreciation Shrink valuation gaps 5,500 Distribution growth 16,500 Issuances 10,000 Increase 32,000 400 2021 $ 80,767 $ 825

As we work to shrink the gaps between intrinsic value and traded values for our partnerships

Notes/Assumptions: 1) Projected annualized results 2) Market appreciation; eliminate the market price to IFRS discount for BPY and listed partnership dividend growth at mid-point of target distribution growth rates 3) Issuances; preferred units or debt issuances. Assumes no change in units outstanding 4) Listed partnership base fees of 125bps on increase in capitalization

... and incentive distributions will grow as increased distributions are paid to unitholders in our listed partnerships

75

Notes/Assumptions: 1) Assumes no change in units outstanding

• 50

100 150 200 250 300 350 400 450 2016 2017 2018 2019 2020 2021 High end of target distribution growth range Average of target distribution growth range Low end of target distribution growth range

High ($400 mm) Base Case ($340 mm) Low ($270 mm)

($ millions)

INCENTIVE DISTRIBUTIONS

…leading to strong growth in fee related earnings; increasing intrinsic value

76

($millions)

2016 Increase 2021 Base fees $ 912 $ 1,063 $ 1,985 IDR’s 86 254 340 Other fees 107 (7) 100 Fee revenues 1,105 1,310 2,425 Direct costs (445) (520) (970) Fee related earnings $ 660 $ 790 $ 1,455 20 x Fee related earnings $ 13,200 $ 15,800 $ 29,100

+17%

CAGR

Notes/Assumptions: 1) 2016 LTM fee related earnings as at June 30 2) 2021 hypothetical fee revenue. See slides 78-80 for details; assumes a 60% gross margin

77

In addition, we expect to generate substantial carried interest

How we measure carried interest…

The carry we would generate on third-party capital, assuming the fund achieves the target return, annualized on a straight line basis

1

Target Carried Interest

Carry generated and based on fund performance to date

2

Unrealized Carried Interest

Carry earned, excluding amounts subject to clawback. Basis for financial statement and FFO recognition

3

Realized Carry

78

Accumulated carried interest is almost $1 billion, which will be realized as we wind up our funds

79

~60%

($millions)

Accumulated Unrealized Carry Vintage Maturity1 BCP II $ 115 2006 2016 BIF I 150 2009 2022 BSREP I 275 2012 2023 Other funds 385 Various Various $ 925

Notes/Assumptions: 1) Maturity excludes optional extension periods

Looking forward, growth in private fund capital will increase Carry Eligible Capital and Target Carried Interest…

80

2016 2021 2016 2021

CARRY ELIGIBLE CAPITAL

($billions)

TARGET CARRIED INTEREST

($millions)

$39 $83 $1,790 $830

+17% +17%

Notes/Assumptions: 1) 2021 projected annualized results. As at June 30 2) Target carried interest excludes direct costs

• 200

400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Existing Funds Target Funds

Which we expect to realize as existing funds mature and we harvest investments

81

($millions)

REALIZED CARRIED INTEREST

$8B

CUMULATIVE

Notes/Assumptions: 1) 2017-2026 estimated results based on existing and target funds. Realized carried interest determined by accumulated target carried interest over the life of a fund 2) Wind-up of existing fund capital distributed over the last three years of a 10-year fund

82

Pulling it together… we have multiple opportunities to increase share value

Our base case leads to a $92 per share intrinsic value

• ver the next 5 years

83

2021 Multiple 2021 Base Value

($millions) ($billions, except per share amounts)

Asset Manager Fee related earnings $ 1,455 20x $ 29.1 Target carried interest, net 1,165 10x 11.7 Accumulated carried interest, net 5.0 45.8 Invested Capital Invested capital 13.5% growth 55.0 Leverage (8.4) 46.6 Total $ 92.4 Per Share $ 92

+22%

Notes/Assumptions: 1) Values are for illustrative purposes and based on various factors that may or may not materialize, including past performance metrics that may not be indicative of future performance 2) Estimated total return including dividends compared to public pricing per share on September 23, 2016 3) Projected annualized target carried interest, net assumes gross margin of 65%

Total Return

84

We have the potential to

• utperform our base case

Additional capital raised and distribution growth expands fee related earnings and target carry

85

($millions)

Fee Bearing Capital FRE Target Carry Add: Enhanced values Larger flagship funds 2017/2019 $ 5,000 $ 60 $ 105 2020/2021 10,000 130 215 Listed Partnership Equity issuances 10,000 230 – Distribution growth 5,000 150 – Performance income – 125 – Direct costs (280) (110) Net increase $ 30,000 $ 415 $ 210 Multiple 20x 10x Increase in valuation $ 8,300 $ 2,100

Notes/Assumptions: 1) Values are for illustrative purposes and based on various factors that may or may not materialize, including past performance metrics that may not be indicative of future performance 2) Listed partnership equity issuance of $600 million per annum, except for BBU of $200 million per annum for the next five years 3) Assumes listed partnerships distributions grow at the high end of the target range; BPY 8%, BIP 9%, BEP 9% 4) Direct costs assume a gross margin of 60% for fee revenues and 65% for target carried interest

Our upside scenarios increase share value further

86

($billions, except per share amounts)

Increase 2021 Enhanced Values Asset Manager Fee related earnings $ 8.3 $ 37.4 Target carried interest, net 2.1 13.8 Accumulated carried interest 5.5 56.7 Invested Capital Invested capital (16.5% growth) 10.0 65.0 Leverage (8.4) 56.6 Total intrinsic value $ 113.3 Per Share $ 113

+27%

Notes/Assumptions: 1) Values are for illustrative purposes and based on various factors that may or may not materialize, including past performance metrics that may not be indicative of future performance 2) Estimated total return including dividends compared to public pricing per share on September 23, 2016

TOTAL RETURN

87

Our earnings and cash flows have favourable characteristics

Fee related earnings are stable and highly visible

88

Base fees are fixed rate contractual arrangements Capital is “sticky” – Private fund life of ~10 years – Listed partnership equity is perpetual IDR’s determined by visible distribution policies Costs are largely controllable

Carried interest will become a source of recurring cash flow and earnings

89

Based on relatively lower volatility asset classes Supported by growth in tangible asset values Realization less dependent on IPO market value

Invested capital produces relatively low volatility returns

90

Underpinned largely by high-quality core/core+ type assets Cash flows consist mostly of visible and predictable distributions from listed partnerships

In closing… Across Brookfield we are focused on three priorities throughout our business

91

Best-in-class investment performance Designing innovative funds for our clients Service excellence

These are the key determinants of our long-term success

Q&A

92

93

This Investor Meeting material contains key operating and performance measures that we employ in analyzing and discussing our results. These measures include non-IFRS measures. We describe our key financial measures below and include a complete list of our operating and performance measures on pages 36 through 38 of our December 31, 2015 annual report.

• Funds from Operations (“FFO”) is our key measure of financial performance. FFO is defined as net income attributable to shareholders prior to fair value changes, depreciation and

amortization, and deferred income taxes, and includes disposition gains that are not recorded in net income as determined under IFRS. FFO also includes the company’s share of equity accounted investments’ funds from operations on a fully diluted basis.

• Free Cash Flow (“FCF”) is comprised of fee related earnings, distributed cash flow from listed investments based on current distribution policies, financing and corporate costs and

preferred share distributions.

• Fee Bearing Capital (“FBC”) represents the capital committed, pledged or invested in our listed partnerships, private funds, and public markets that we manage which entitle us to earn fee

revenues and/or carried interests. Fee bearing capital includes both called (“invested”) and uncalled (“pledged” or “committed”) amounts.

• Fee revenues include base management fees, incentive distributions, performance fees and transaction and advisory fees presented within our asset management segment. Fee revenues

exclude carried interest.

• Fee Related Earnings (“FRE”) is comprised of fee revenues less direct costs (other than costs related to carried interests). FRE gross margin is equal to FRE as a percentage of fee

revenues.

• Base management fees are determined by contractual arrangements, are typically equal to a percentage of fee bearing capital, are accrued quarterly, include base fees earned on fee

bearing capital from both clients and ourselves and are typically earned on both called and uncalled amounts.

• Incentive distributions (IDRs) are determined by contractual arrangements and are paid to us by our three primary listed partnerships and represent a portion of distributions paid by a

listed partnership above a pre-determined threshold.

• Performance fees are paid to us when we exceed pre-determined investment returns in certain portfolios managed within public securities and in our private equity listed partnership.

Performance fees are not subject to “clawback” in future years.

• Carried Interests are contractual arrangements whereby we receive a fixed percentage of investment gains generated within a private fund provided that the investors receive a pre-

determined minimum return. Carried interests are typically paid towards the end of the life of a fund after the capital has been returned to investors and may be subject to “clawback” until all investments have been monetized and minimum investment returns are sufficiently assured. This is referred to as realized carried interest. We defer recognition of carried interests in our financial statements until they are no longer subject to adjustment based on future events. Unlike fees and incentive distributions, we only include carried interests earned in respect of third- party capital when determining our segment results.

• Unrealized carried interest is based on carried interest that would be receivable under the contractual formula at the period end date as if the fund was liquidated and all investments had

been monetized at the values recorded on that date. Carry generated refers to the change in unrealized carry during a specified period, adjusted for realized carry.

• Target carried interest is a mechanical calculation that is intended to represent the annualized carried interest we would earn on third-party private fund capital subject to carried interest on

the assumption that we achieve the targeted returns on the private funds. It is determined by multiplying the target gross return of a fund, by the percentage carried interest, by the amount

• f third-party capital, and discounted by a utilization factor representing the average invested capital over the fund life.
• Annualized fees include annualized base management fees which are determined by the contractual fee rate multiplied by the current level of fee bearing capital, annualized incentive

distributions based on our listed partnerships current annual distribution policies, annualized transaction and performance fees equal a simple average of the last two years’ revenues.

• LTM represents last twelve months of financial data.

NOTES, DEFINITIONS AND ASSUMPTIONS

Base Case

• No. of Units

Quoted1 IFRS Listed investments Brookfield Property Partners 485 10,890 $ 14,780 $ Brookfield Renewable Partners 183 5,463 3,915 Brookfield Infrastructure Partners 102 3,081 1,638 Brookfield Business Partners 73 1,392 1,667 BPY Preferred Shares n/a 1,275 1,275 Norbord 35 688 237 Acadian Timber 8 96 81 Other listed Various 434 434 Financial assets Various 1,070 1,070 24,389 25,097 Unlisted investments2 Residential development 2,578 2,578 Energy marketing 1,076 1,076 Other 968 968 4,622 4,622 29,011 $ 29,719 $

AS AT JUN. 30, 2016 (MILLIONS)

94

• Base Case Value or Invested Capital refers to the value ascribed to our company’s investments on a deconsolidated basis utilizing the following valuation methodologies, which primarily

utilize public pricing or reading available external valuation inputs: − For listed investments where a publically quoted price is available, base case value is determined by the quoted market price multiplied by our holdings. − Unlisted or privately held investments are based on IFRS values − Our asset management franchise value is a mechanical calculation using multiples based on comparable companies trading values in the asset management industry and/or multiples utilized in analysts reports for comparable companies Base Case comparison to IFRS equity value 1) Quoted value based on June 30, 2015 public pricing 2) Quoted value utilizes IFRS value for unlisted assets

NOTES, DEFINITIONS AND ASSUMPTIONS (CONT’D)