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Brookfield eyes breaking off asset management business

CEO Bruce Flatt touts appeal of “asset-light models”

Brookfield CEO Bruce Flatt (Brookfield, , Illustration by Kevin Cifuentes for The Real Deal)
Brookfield CEO Bruce Flatt (Brookfield, , Illustration by Kevin Cifuentes for The Real Deal)

Can you truly take the “asset management” out of “Brookfield Asset Management”? The investment group may try.

Brookfield is considering spinning off its asset management business into a separate public company, the Financial Times reported. One analyst told the publication the separated company could be valued at more than $75 billion.

For CEO Bruce Flatt, the decision would come as part of a larger effort to lighten the asset load for Brookfield. The potential move was revealed in a shareholder letter released on Thursday.

“The financial markets have evolved. What people like are asset-light models,” Flatt told the Financial Times. “It appears that there is an enormous amount of shareholder value to be unlocked.”

Flatt also claimed the firm’s asset management business is self-sustaining and no longer requires the capital it once did. Flatt did, however, admit the spin-off may not happen and it does not appear to be imminent.

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In 2021, the asset management business generated $1.9 billion in fee-related earnings and $6.3 billion in distributable earnings. In the fourth quarter, the whole firm reported $1.1 billion in net profits, a 74 percent increase year-over-year, and a 14-cent quarterly dividend.

Brookfield bolstered its property portfolio in July 2021, when it privatized its real estate arm, Brookfield Property Partners.

Brookfield’s real estate portfolio includes several of the largest office developments in the United States, as well as more than 100 American malls. The Toronto-based company manages more than $690 billion in assets, including real estate.

The business last month agreed to sell 111 WoodSpring Suites properties to Blackstone and Starwood Capital Group for about $1.5 billion, retreating from the extended-stay hotel hype.

Meanwhile, Bloomberg reported in December that Brookfield was soliciting interest in a potential sale of a stake in One Manhattan West in Hudson Yards. The sale of the share the firm is looking to ditch would reportedly value the building at almost $2.8 billion. Blackstone was reportedly in advanced discussions for that stake as of mid-December.

[FT] — Holden Walter-Warner

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