BROOKFIELD ASSET MANAGEMENT LTD (BAM) 2007 Q3 法說會逐字稿

Welcome to the Brookfield Asset Management Inc. conference call and webcast to the present the Company's third-quarter 2007 results to shareholders. As a reminder all participants are in a listen-only mode and the call is being recorded.

Operator?

Yes, sir? Yes, sir, are you able to hear me? As a reminder, all participants are in a listen only mode and the conference is being recorded. After the presentation there will be an opportunity to ask questions. (OPERATOR INSTRUCTIONS) At this time, I would like to turn the conference over to Mr. Robert Harding, Chairman of the Board. Please go ahead, sir. Mr. Harding? Ladies and gentlemen, welcome to the Brookfield Asset Management, Inc., conference call and webcast to present the Company's third quarter 2007 results. At this time I would like to turn the call over to Mr. Robert Harding, Chairman of the Board. Please go ahead.

Thank you very much. Good morning, ladies and gentlemen, and thank you for joining us for our third-quarter 2007 earnings announcement. Joining me today on the call is Brian Lawson, our Chief Financial Officer, who will discuss our financial results and provide an operating overview; following Brian's remarks, Bruce Flatt, our Chief Executive Officer will discuss a number of recently completed transactions and provide an update on some major initiatives currently underway. Following the remarks, of course, we look forward to taking your questions and comments.

At this time I would like to remind you that in responding to questions and in talking about our new initiatives in 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 on known risk factors, I would encourage you to review our annual information form or our annual report, which are available on our website. With that done I'd like to turn the call over to Brian Lawson. Brian?

Thank you, Bob. And good morning. We achieved our targets in most of our operations during the quarter, and exceeded expectations in a few. In particular, we continued to expand our assets under management and recorded increased revenues from these activities. We also realized meaningful gains in our investment activities. At the same time, our -- our results were adversely impacted by lower generation levels within our power generation operations due to below average water condition, continued weakness in the US housing markets, and a strike in the Canadian coastal forest products sector.

Operating cash flow on a year-to-date basis was up substantially. On a comparable basis, which excludes realization and major disposition gains, our third-quarter results were $342 million compared with $289 million last year, this represents an 18% increase. Including all of these items, cash flow from operations for the third quarter was $321 million, compared with $368 million last year which included in particular a large fund formation gain. While we are disappointed with the negative components of our results, we recognize that they are largely as a result of expected cyclicality. The important thing to us is that in almost all areas of our operations, the businesses are performing well and the underlying fundamentals are strong. And looking forward, we continue to be on target to record the highest cash flows in our history.

On a comparable basis, net income prior to realization and disposition gains for the third quarter, was $175 million compared with $202 million last year. The increase in operating cash flows noted above were offset by depreciation on newly acquired assets, which reduced income by $76 million in the quarter. The depreciation is significantly higher than projected annualized sustaining capital expenditures for their assets due to their high quality, long life, and value appreciation potential. And this is why we focus on operating cash flow as a more appropriate measure in managing and measuring our operating performance. Net income for the quarter including all items was $93 million. The decrease over last year represents -- reflects a depreciation noted above, as well as the lower level of realization and major disposition items recorded the year versus last. And in addition, it's worth noting that $66 million of disposition gains that have been recorded in opening retained earnings where as they otherwise would have been reported in the current period of income, and that's due to a prescribed industrywide change in accounting policies.

Turning to the individual areas, our fee revenues increased to $96 million during the quarter from $64 million in the same quarter last year. Due to higher asset management fees as well as an increase in property advisory fees. Base management fees on existing funds now total $90 million on an annualized basis. As we've discussed previously, our accounting policies defer the recognition of performance income. This includes performance fees and carried interest until the end of any claw-back period. We estimate that accumulated performance fees at the end of the quarter that have not been recognized to date, neither are operating cash flow or net income totaled approximately $150 million, of which $80 million accumulated during the quarter. We will continue to update you on these fees on a quarterly basis so you can better assess the value being created through these activities.

We continue to make progress investing funds that we have formed over the past 12 months. Including our second restructuring fund with approximately $1 billion of committed capital, our $800 million Brazil retail fund, $1 billion of follow-on bridge funds, and a $450 million follow-on real estate finance fund. The Brazil retail fund is already half invested and we have a number of promising opportunities. In addition we have also fully invested our real estate opportunity fund. Finally, we are in the final stages of completing the necessary regulatory and organizational steps to form Brookfield Infrastructure Partners. We expect to complete this in early 2008. The process has taken longer than originally anticipated due to our objective of launching Brookfield Infrastructure as a fully invested entity with a select group of operating businesses in the United States, Canada, Brazil, and Chile. This resulted in a more complex formation process but will enable shareholders to participate immediately in returns from these operations and provides greater visibility for the type of business that we are trying to build. In the long term we believe the time spent doing this will be well worth the effort.

Our property operations recorded a slightly higher level of cash flow this quarter than the same quarter of last year. Core properties increased due to the acquisition of a major portfolio around this time last year, and we recorded continued growth from existing properties due to favorable leasing results. Occupancy rates are at high levels across the portfolio, and we continue to lease space at higher rates than the leases being replaced. Our residential businesses in Canada and Brazil recorded strong growth due to the favorable conditions in their respective markets, however the weakened environment in the United States did lead to a negative contribution from these operations following a writedown in the value of some of the land holdings. On the development side, we are continuing to advance a number of important projects in Houston, Toronto, New York, and Washington, as well as in Australia and the UK.

Now turning to our power generation operations, low water flows resulted in generation that was 20% lower than long-term averages. This was offset in part by higher realized prices in the contributions from facilities that we acquired or built during the year. Fortunately, our storage levels for this time of year are consistent with long-term averages, and this should enable us to achieve our generation target for the balance of the year, assuming normal water in-flow conditions prevail. We have continued to expand our portfolio with a number of acquisitions during the year and have several development projects underway to expand our portfolio, particularly in Brazil.

The contribution from our infrastructure operations was lower in the quarter. Transmission results were in line with expectations. You might note that the top-line cash flow results appear to be lower, but that is because we moved from full consolidation of the Chilean operations o an equity-basis of accounting at the end of the last quarter. There has been no impact on the net contribution from these operations. The operating results in this business are typically very stable on a quarter over quarter basis and this quarter was no different. And we are exploring a number of opportunities to invest additional capital at attractive returns so as to expand the scale of our operations in this sector.

Our timber operations experienced lower demand due to the weakness in the US homebuilding market and a strike in the Western Canadian coastal forest industry. The strike was resolved in October, which has allowed us to resume normal operations, however, the weakness in the US homebuilding market is expected to persist well into 2008. We recorded continued growth in our specialty funds with increases in committed capital and invested capital. Operating results improved in all areas with the exception of one investee company in our restructure fund that is facing a difficult operating environment.

And our private and public equity portfolios produced strong results in the quarter. We capitalized on rising equity markets to monetize a number of common equity positions, and in the process we realized disposition gains and at the same time established a higher than normal level of cash liquidity with which to fund our acquisition of Multiplex. We also recorded increased cash flows from our private equity portfolio. Carrying charges increased compared to last year, although they were relatively unchanged from the second quarter of 2007. The increase over last year relates to the capitalization of acquisitions in late 2006 and in the second quarter of 2007, which of course in turn contributed to increased net operating cash flows from the acquired assets. Our capitalization overall is relatively unchanged from the end of June. We did take advantage of market volatility during the quarter to repurchase approximately $4 million of our own common shares at an average price of approximately $33.

Our liquidity remained strong. Core liquidity which consists of cash and financial assets and committed credit facilities remained above $2 billion, and included cash of $1.6 billion that we had raised to acquire the remaining shares of Multiplex for an equivalent amount. Our core liquidity is supplemented by and replenished from our secondary sources of liquidity, which include our operating cash flow, which exceeds $1 billion each year, and asset monetizations. And this continues to be strong. Following the Multiplex acquisition, we are in the $1.5 billion range of core liquidity and expect to return to above the $2 billion range very shortly. It is worth noting that this amount of -- that the amount of investable capital at our disposal far outweighs this amount and continues to increase as we raise additional funds with committed capital from our investment partners.

The outlook for the fourth quarter is positive. We continue to experience high levels of occupancy across our office portfolios and strong leasing activity in almost all of our markets. Our Canadian and Brazilian residential businesses continue to experience strong demand, although the slowdown in the US homebuilding markets, as I mentioned before, is expected to persist into next year. Power generation results for the fourth quarter should be in line with our expectations based on the storage levels I referenced earlier in the call and the current pricing environment. And within our infrastructure, transmission operations are expected to produce stable results consistent with recent quarters and as I mentioned the strike had impacted our Western Canadian timber operations has been settled. And as Bruce will describe in a in a moment, we will record two sizable investment gains in the fourth quarter All in all we believe we are well positioned to record favorable operating results.

Finally, the Board of Directors approved the declaration of our dividend, $0.12 per share payable at the end of February 2008 to shareholders of record at the beginning of the month. With that I will now turn the call over to Bruce.

Thank you, Brian. Good morning, everyone. Firstly, as Brian just mentioned, we did close two transactions this week. Which are not, either of them, related specifically to our core operations. In fact, we had very little capital invested, but the results were outstanding for the company. The first one is that we closed the sale of our shares of Stelco to US Steel. And our restructuring fund was integral to that process, and we realized proceeds of approximately eight times the original investment and expect to record a pretax gain in the fourth quarter of around $250 million.

Firstly this will ensure that we record substantial returns in our Tricap one fund, much higher than originally promised. And our carried interest in the future should be larger. The second transaction was a secondary offering of the Brazilian Stock Exchange, the BOVESPA closed this week. The BOVESPA was taken public through an IPO that raised about $3.7 billion. We owned a number of seats, formally through our investment bank on the BOVESPA which were converted to common shares, and we have now monetized them. Proceeds to us were approximately $160 million. Again, in the fourth quarter we expect to record a substantial gain on this sale.

With respect to our operations, we continued to make progress as Brian described during the quarter in expanding the business and accomplished a number of the objectives we set out. And although the third quarter in general in the capital markets was characterized by high volatility, particularly the debt markets, I guess I'd note that our conservative balance sheet, the term financing that we have in place on our type of assets, the very high quality asset base that we have on our balance sheet and in our funds and the associated cash flow that's come with those stood us well, and we are very positive about those assets. The underlying fundamentals in almost virtually all of our operations with the exception of a couple remain favorable, notwithstanding the variability that Brian talked about on some of those during this specific quarter.

On Multiplex, we recently announced our offer to acquire Multiplex was unconditional, and we since secured about 95% of the outstanding shares. We hope to be in a position to acquire the remaining shares by mid November. And this adds about -- as I think it's noted in our materials, about $6.6 billion of office and retail assets under management. It expands our asset management operations. It adds a full scale, fully developed Australian operation to the business. It adds a presence in the Middle East which given what's going on in this region and where oil prices are we believe can be extremely valuable to us in the future. And it adds further scope to our European business.

Most of the initial capital of our investment is in Australia, and the markets of Sydney, Melbourne, Brisbane, and Perth. It also includes about $700 million of assets in Europe, mostly in the UK. In the Middle East, most of the operations are in Dubai. We now own a large-scale construction business there. And we believe we can expand this property construction business into other infrastructure categories and geographically into other markets. Specifically today we're focused on new contracts which we recently secured in India.

Most of these markets that we just invested into are resources driven and therefore like our operations in Canada and in Brazil, are currently being very positively driven by resources, oils, metals, and coal. The Multiplex assets include about $3.5 billion of core office and retail properties within nine funds, actually funds that are managed by us. But there's also about $3 billion of assets which we now own virtually 100% of through the Multiplex property trust that used to be stapled to the entity that we purchased. Essentially we now own 100% of those, and as with all of our initiatives, we're looking at the best utilization of the assets within our capital platform, and our fundraising platform. And during 2008, we will likely establish further funds with these assets. We're in the process of integrating the European operations, the Multiplex with our own, and this should -- and this will enable us to expand our capabilities in that market.

Turning to Latin America, we've continued to grow our operations with a particular focus on Brazil and Chile where we have operations today and we think we have a competitive advantage. This includes the formation of new funds, the expansion of existing operations, and the pursuit of new opportunities to enter new infrastructure areas. Most specifically in the quarter, we added a number of retail malls to our Brazilian retail fund. Today we're about 11 centers encompassing 2.6 million square feet. And with the closing of these purchases and another major acquisition expected shortly, we are one of the largest owners of retail properties in this market, which we think of as 25 years ago in the United States in a rapidly, consolidating market. Shortly this fund will be fully invested and we expect returns to exceed those when launched -- we expected when we launched the fund.

In the Brazilian residential operations we purchased a major piece of land this quarter, which encompasses about 20 million square feet of potential density. It has significant infrastructure in place. And the acquisition will provide us building density for the next 10 to 15 years as we build the business out.

Turning to the commercial property operations, we have recently been asked a number of times about our office building business, which as most of you know is a significant component of the Company. And how it could be affected by market disruptions. And I might just point out five things with respect to the business. First, vacancy rates in virtually all of our markets are extremely low. In our resource-driven countries where we have office properties, I'll say that being Canada and Australia, vacancies are likely, or probably never been lower in history. They are all sub-5% and some effectively are 0% vacancy. In our financial markets, those being New York, Boston, Toronto, London, and Sydney, vacancies are also very low, driven by strong financial services over the past five years.

Second point I'd make is that construction and overbuilding is generally not existent. Since coming out of last cycle, space construction has been relatively constrained with the exception of a few select markets. And as a result, the supply side of the equation is positive in virtually all of our markets.

Third, rental rates are still very high. In fact, they're the highest they've been for many, many years in a lot of markets. In general the rents locked into leases in properties and therefore the cash flows of the properties are significant. So even our -- in fact, the rents locked into the leases are lower than the market rents that are out there. So even if rents go down, cash flows likely will stay the same or even keep increasing despite that. To give an example, just referring to mid-town, Manhattan, rents are currently solidly in the $125 to $150 range in most -- in the marketplace for most properties. And the range of values or cash flows locked into properties is generally in the $60-per-foot range, $60 to $70. Today there is significant mark-to-market uplifts occurring in rental properties. And there is a big margin between where those properties are getting rented and cash flows in the buildings.

Fourth, I would just talk about financing of commercial real estate. And while there have been some overleveraged acquisition deals done in the marketplace with terms that were likely, looking in hindsight quite aggressive, by and large the financing of the office building is solid. Office building business is solid, and a few problem loans, whole loans on properties are out there. CMBS underwriting standards were largely good. I would say definitely not all. And value increases in properties over the years have ensured that most underwriting has been corrected through appreciation in growth and cash flows.

Fifth and people should note that of the -- the type of properties that we own and that many others own, lease terms in them are very long. And ours are around 10 years plus on average in the portfolio, as a result cash flows don't change over night. They adjust over the longer term. As a result, even if rents go down in a -- for a short period of time, it takes a very long period of time to materially effect the cash flow streams in those properties. And all in all, I guess those five points, we think that the office building business is in -- still in very good shape looking forward.

Lastly, I'd say we're becoming excited about some of the opportunities presenting themselves in the marketplace. We have become capitalizing on, I'd say smaller incremental transactions in each of our businesses over the past two months to add assets. We think many of these tuck-in acquisitions will be lucrative for us. Most of them have been easier to do in this current environment. We have yet to capitalize on anything substantial in the Company, but we're positioning ourselves to be able to accomplish it in the months and years ahead. Thank you, and I'll now turn it over to the operator and we would be happy to take anybody's questions.

Thank you, sir. (OPERATOR INSTRUCTIONS) Our first question today comes from Chris Haley of Wachovia.

Good morning, guys, it's Brendan Maiorana with Chris. A couple of questions. First in terms of the accrued performance fees, are most of those fees calculated based on a percentage of the increase in value of the underlying assets within the funds?

The way we determine those fees, Brendan, is we look at -- it's obviously dependent on the contractual terms of each particular fund. And we assess where the fund is at that date, at the -- at the date of -- of the reporting date. And assume as though the -- the fees were realized at that time. So it's not necessarily a percentage of the increase. There's often a threshold involved. So it would be a portion of the increase in value above that threshold, or in some cases it may simply be a performance on a cumulative basis of net operating income over again, a specific return threshold.

Okay. So I guess it sounds like it's a mix in between sort of -- a percentage above a threshold of value creation plus some percentage of operating cash flow. But if I think about just the funds that you're -- or the accrued fees that you're getting on the value creation part of it, it would strike me that a lot of the value creation for the underlying assets could happen early on in the life cycle of the asset just by either acquiring the asset at a more attractive purchase price than maybe a market price, or picking off some of the low-hanging fruit. So thinking about that. How do you think the trajectory and the growth of these accrued performance fees is likely to be relative to where it's been over the past couple of years just for the existing funds?

I guess I would respond that by saying in general we try take a pretty conservative approach to how we determine these. And while there are certainly going to be some situations where you might be able to acquire something at a discount, where it is very quickly revalued, what we focus on is how that revaluation is done. And so if it's something that is pretty objective in the market price and that can be pretty clear and easy, on the other hand, if you're looking at discount rates or cap rates and things like that, you're -- we would be less likely to make major adjustments based on movements and those sorts of factors. Absent a objective benchmark that pertains specifically to those types of assets such as the underlying cash flows, for example. So -- for example, we might not change the cap rate on something, but we would certainly apply that same cap rate to an increase in the cash flows, which would give rise to an increase in valuation.

And Brendan, maybe just one additional comment to that. Is when you look at these funds, often the assets that we're buying in them are more opportunistic in nature, and, therefore, in fact it takes until later years to effect the plans that you want to put in place. Sometimes you're buying an asset and it's a redevelopment asset so it takes a number of years to get there. So I think the -- a lot of the value creation comes in the mid-to later stage of the fund than right away.

Okay. Great. That's very helpful. Thank you. And then just Brian, just a quick point of clarification. So are -- is the -- I guess the value assessment, is that being done by you guys, or is that being done by an independent party?

Again, there's a mix. Where the -- a lot of the funds will have valuation stuff, formal valuations done on a periodic basis, obviously those are the ones we would use. Absent those, we will use our own -- our own estimates of value.

Okay. Great. And then in terms of -- so just -- obviously with the Stelco investment, that's an investment that I'm sure you guys are getting a large performance fee on. And just the commentary that most of these would not be recognized for, the accrued performance fees, would not be recognized for six years, with Stelco, is there still a claw-back at the Tricap level rather than at the individual investment levels so that the performance fee for I guess the Stelco individual investment wouldn't be realized until the termination of the Tricap?

Yes, the Tricap one would be, fund would be consistent with most of the other funds meaning that there's not an asset-by-asset specific realization on the performance fee side. So we get pooled and that base would come into our numbers once the fund is largely realized.

Okay. Great. And then last, just in terms of timber and -- and just both for Island and for Longview, how much of your potential sales can you divert to Asia and jurisdictions outside of North America?

Yes. It's -- it would be in the order -- and it varies market by market, and it can fluctuate from quarter to quarter. But it's probably a quarter, let's say, in a given period. Sometimes it will be little less, sometimes we can get -- we can get more of it. But it's certainly in terms of the overall supply/demand balance, that's a pretty significant number for us, being able to manage the -- the sales of the logs.

We also have the ability to shift and you might have noticed, we made some commentary on this, between the various species. For example, if we think that the margins are getting more compressed on Douglas Fir, let's say, which was the case during the last quarter, relative to where we see the launch and value of those trees, we'll simply leave them on the stump and let them grow more. And sell them once values recover. And what we did in the meantime was shift over to a white wood, more white wood species where the margins held up much better. They're lower margins but held up relatively strongly. And so that's the kind of thing you'll see us doing to maximize the value there.

Great. Thank you.

You're welcome.

Our next question comes from Michael Goldberg of Desjardins Securities.

Good morning. Had a few questions. First of all, can you bring us up to date on the lease negotiation with Merrill Lynch.

Michael, Rick Clark dealt with that in the Brookfield Properties call yesterday. And since it's in a subsidiary of ours and separately publicly traded I'd rather that people on the line actually referred to his comments that he made on the call.

Okay. I'll look at--.

Just because it's a little bit sensitive obviously. And I'd rather not have two people speaking about it in the marketplace.

Okay. Second, now that Multiplex is almost wholly owned, can you talk about what assets in Multiplex you view as noncore?

Michael, we're in the process of -- there's a -- as when you buy all companies, there's a number of assets in the Company, and the business sorts out really into three groups. The construction business, the funds management business, and then the -- all of the assets are in the Company. And the assets in the Company I guess segment into two groups. There's a full-scale development business like we have here. A little bit of residential development. Not that much. But significant amount of commercial development. And these are the early stages of office buildings and office buildings being completed by us at the time. So all of those projects are in a pipeline that we're building out. For example, we're building American Express, a new building in Sydney, and we're building Macquarie Bank a new office building in Sydney. We're building BHP Billitin, a new headquarters building in Perth. Those are all in a pipeline.

There are some assets in the completed category, which we will sell. A few, not that many, that are just noncore to our long-term strategy. Most of the balance of the assets will find themselves into funds that we will be creating over the next 12 months. And so we're going through that process with the management today to identify the long-term holds that we want to hold with our institutional investors, and a few assets that ultimately will be sold.

Okay. And finally, can you bring us up to date on what funds are pending formation, and what the size of those funds would be.

Yes, Michael, that's one of the areas that we are pretty strictly restricted from commenting on because of the private placement rules in the US. So I'm afraid we really can't give you any specific visibility in that regard.

Okay. But you will be press releasing when -- when they do actually happen?

Absolutely.

Yes, Michael. We'll either -- if it's very large, we'll put a press release out, if not we'll include them in our quarterly materials like we do with other information that isn't maybe as large or as material to the Company.

Okay. Thanks a lot.

You're welcome.

Our next question comes from Cherilyn Radbourne of Scotia Capital.

Thank you very much. I was wondering if you could speak more about the opportunities that you refer to to deploy further capital into your transmission operations both in Canada and Chile. Just to give us a sense of the dollars that you're thinking about timing and what sort of rates of return you would be targeting?

Maybe just on the deployment of capital, I guess we have targeted a number of -- I guess we target all of our areas, to put incremental capital into. And I guess one of the comments that I made in the comments that I had set was that we're seeing a number of other opportunities come to us because of the environments we're in. And I would just say it's easier for us to be able to negotiate and close transactions in this environment than it is in other places. Than it has been over the last 18 months. Specifically, to the utility sector.

We have a number of greenfield or new build operations that are in Chile that we're working on to expand the system. The country of Chile is doing extremely well. The commodity producers are doing -- are booming, and we own the major transmission lines in the country. And these -- the Chilean operations are essentially add-on infrastructure assets to the -- to the system we have, which there's approximately $1 billion of add-ons in the regular course of business that we can add in the system. And then there's one major project in the south of the country that's in the 2 billion to $3 billion range. All of those get added into our rate base, and our returns are, in Chile specifically, in that system, are a 10% real return on a regulated rate base that we get.

With respect to other utility areas, we've been -- we bought some assets in Brazil last year, and we're looking at a number of other assets in Brazil. In addition, we've -- hopefully will be able to find things in North America. And we think there will be some of those that will come along.

Okay. I also wondered if you could talk about the team you're assembling to start investing in real estate in Asia. Just how much capital you would contemplate committing initially, and what your preliminary thoughts are as to how long it might take before you were ready to start raising third-party capital?

When we go into a new market, I guess we're -- we always want to be careful with -- firstly with our own capital, but secondly with anyone else's capital. We're now in the process and we have been for the last year I guess of assessing the markets and what we should do in Asia. We've now hired a team of people, specifically one individual to head the group. On a real estate opportunity fund. We'll commit our capital to it in a -- the way we call it is fund one. And it will be $200 million of our own money. That we'll commit to it. But it will be all our capital. And once we're invested that, we'll work out the issues we have. As you always do, starting up with a new management team and a new market, and then we'll look in fund two to be able to bring in institutional capital. And we hope to probably do that within 12 to 18 months.

Okay. The last question from me, it sounds like in the process of acquiring control of multiplex and just spending more time getting to know that operation that you've become a bit more excited about the footprint that they had in the Middle East. So I wonder if you could just talk more specifically about that footprint and what kind of opportunities you think that gives rise to?

Well, I guess in the most basic sense, oil seems to be heading over $100. And the Middle Eastern countries are booming. There's a lot of capital coming out, and I'd say the -- the interest for us is twofold. The first one is that given our presence there, we have a lot better connections into some of the capital sources because we're actually doing business for them. And working for them and doing things with them, and they actually know us. And we think that will be helpful to our fundraising capabilities in the future.

Secondly, on the opportunity side, today we're solely a construction business in real estate. We think we can take that into other infrastructure-type assets and being able to develop and possibly own, and there's a lot of money there and there's a lot of infrastructure that needs to be built. And secondly, we think we can take the business we have there and expand it into some of the other markets that are close by. And India being a specific one and that we have a -- we believe a competitive advantage of a major work force. A lot of it is Indian, to be able to put back into India to possibly -- to deploy. And we're starting that as we speak.

Okay, thank you very much. That's all from me.

Thank you.

Our next question comes from Peter Sklar of BMO Capital Markets.

Back on the $82 million of carry fees you talked about that were not recorded for GAAP purposes, I just want to understand that $82 million of fees, is that cash fees that you received?

No. That would not necessarily be cash fees. In some cases, it might be, Peter. But typically, that's not cash fees.

So what is it? I don't understand -- some notional amount? I don't understand what it is.

Well, the way we approach it is we look at every given fund at the end of each quarter. And based on the value that's been created in that fund to that date, we look at that in the context of what the management arrangements with that specific fund provide for a payment of whether it's a carried interest or performance fee or what have you. And that is the amount that we would accumulate in those performance fees because the assumption is if that fund was wound up on that date or if you maintained the status quo, let's say, going forward, that's what we should earn over time.

But Peter, it's Bruce, it will be cash amounts.

Yes.

Just to be clear. It's been calculated by us at the quarter end as that if we wound the fund up, it would be owning to us, and it will become cash when it gets paid. But for the time being it's not being recorded in either our cash flow statement or our income statement.

No, but it won't be cash if the value of the -- of the investments or assets decline.

Correct.

That is totally correct. And that's why the conservative way is to not record it in our income or cash flow statement, it's just to show you that at the current time, that's the value of those fees.

Right. And that $82 million calculation, is that gross or is that net after the split that would be taken by the managements of those funds?

That is gross. And what we also referenced in the discussion around the accumulated performance fees is that we would expect out of the $153 million that we've accumulated to date, roughly $25 million of that would go to direct associated expenses which would include those types of arrangements.

Okay. On your disclosure on Multiplex, when you talked about assets under management, the $3.6 billion within the nine funds and the $3 billion held within the trust, you're not -- you're talking about capital deployed. Is that correct?

Not on the 3.6. We have basically nothing -- none of our own capital or none of Multiplex's existing capital is invested in the 3.6.

What -- I didn't mean your -- I'm really trying to drive at how much third-party capital--?

Right. The $3.6 billion there is all third-party capital. The $3 billion that we referred to, that Bruce referred to in his comments, that is the Multiplex Property Trust, which was units of that were stapled to the units of Multiplex Group. And so when we acquired Multiplex, we ended up acquiring 100% of that trust. So that -- the way to differentiate is t is the $3.6 billion is all third-party money. The $3 billion for the Multiplex Trust is all -- as it stands today, our money.

I just want to make sure I wanted. We're talking about equity, not assets?

Those are -- the 3.6 -- yes. That's right.

Okay. And lastly, on the -- the sale you talked about of your seats on the Brazilian Stock Exchange that were converted into equity, I noticed that you -- you're reluctant to give an estimate -- like you talked about the proceeds, but you're reluctant to give an estimate of the gain. I'm wondering if you could give us your viewpoint on what the gain is going to be?

I can't really give that to you right now, Peter. Frankly, we're just working our way through that one, and it's a little bit more complicated because we -- we've just recently acquired half of that business from Mellon Bank, and so we need to factor through purchase equations and things like that.

Sorry, one last question. I think I calculated this right, but when I looked in your supplemental information package and looked at the amount of third-party capital that you have under management. It was unchanged relative to the second quarter. I thought it might have grown because you're launching funds -- is it possible that capital was repatriated as investments were monetized?

There is a little bit of that, Peter. And then some of the newer funds were raised more toward the beginning of the year, the first six months of the year.

Right. Okay. Thank you.

You're welcome.

Our next question comes from Andrew Kuske of Credit Suisse .

Thank you. Good morning. Given some of the gyrations we've seen in credit markets, how have you seen competition for certain infrastructure assets really around the globe? And I ask the question in part -- one of the most recent Toll Road options we saw in Brazil, the rumored number of bidders was around 30. And the pricing was actually paid at the end looked fairly hefty. So I'm just curious as to what your thoughts are on competition and how that's been in the last few months compared to, say, six months ago?

Yes, I -- it's Bruce. Andrew, I would make two comments. The first one is -- there is a flight to quality in the world and the type of assets that we generally own are high-quality streams of cash and high-quality assets that appreciate in value over time. And given a flight to quality, those are the type of assets people are still comfortable with funding and comfortable with putting equity into. So if there are going to be transactions on assets, it's these type of assets that people have capital availability to buy.

Secondly, I'd say on the margin, there are less buyers today than there were before. Because the high leverage buyers and those -- the type of buyers that were on the margins that sometimes force the price up a lot are nonexistent today or don't have the capital availability.

Third comment is, and you specifically referred to Brazil, there are other parts of the world that are not as affected by the US banking and subprime issues. And as a result of it and Brazil being one of them, Brazil is still booming. The banks have capital availability. In fact, the availability of capital in Brazil is probably higher today than it's ever been in history. And the banks are extremely positively disposed to lending that capital in the marketplace for appropriate returns. So I'd say that it -- it depends on the market you're in as to what's going on.

I guess just following up on that, when you look at your cost of capital in Brazil and Latin America broadly, how much of a compression would you estimate you've seen on your cost of capital, in Brazil? Really in part because the economic turnaround there, and then really what we see on a go forward basis, a fairly booming economy.

Why don't I -- I'll try to answer it and if I don't specifically answer your question, you can try again. But I guess I'd say this, is that short-term interest rates were 18 months ago in the close to 20%. Six months ago they were 14, and today they're 11 to 12%. That's a nominal rate. Take off 3 percentage points for inflation and get you to a 9% real rate. Which is still high. But it's come down dramatically from where it was before. In essence, what that forced anyone that bought an asset in the country to do was to buy it with no leverage. And no one used any leverage in an acquisition in the country including ourselves.

What you're seeing now is that the -- with interest rates coming down and the expectation that it -- short interest rates will come down more, long interest rates are actually much lower than short rates in Brazil. And as a result of that expectation, the capital markets are developing, and people are starting to use leverage. And we believe that as Brazil, which it's largely expected to do in the next short while, become investment grade, that will continue to happen. And that rates will continue to come down and the cost of capital will be lowered. So it just means higher equity returns, even though asset values have been going up.

So in effect your existing asset base there has already appreciated given the compression on your cost of capital?

Well, in fact, the -- it's -- the increases in values of the assets we have there on an NAV basis is twofold. It's one that, but secondly the appreciation of the real has been by far, I think, the strongest currency appreciation against the US dollar almost without exception in the world. And that says a lot today actually. There's been some very significant increases in the last 24 months.

And then if I may just one final question -- if you look at yourselves and where you're allocating your capital, what's your longer term view on really the US dollar? You mentioned really focusing on countries that have resource-driven economies, and that's where you see a considerable amount of opportunity. How do you look at that in the context of the US dollar?

Well, firstly I'd say we're definitely not currency experts. We try to invest on a NAV basis and make money over the longer term and asset values. Sometimes we take a little bit into account where we're putting capital. We just happen to be lucky and have a lot of assets in three countries which have exceptional resource-driven economies.

Just to give everyone on the phone a basis, we essentially act as a US company. 60% of the assets, though, are outside the United States. So we're like a -- we're like an international -- US international company. And the values of the assets as they appreciate in those markets, obviously the values of the Company continue to go up inside. When some people see the Canadian stock price and they convert it into US dollars at the higher exchange rate, it goes down because we trade on both exchanges. But what doesn't get factored in sometimes until later stages is that the value of the assets in the Company went up. And I guess, we believe that we are benefiting from some of those things, although we generally don't invest off of that and try to take views on currencies.

That's great. Thank you, Bruce.

Our next question comes from Rossa O'Reilly.

Thanks very much. At the end of September the common shares held by Multiplex are held in under cash and financial assets at $558 million. That seemed like a rather low number to me. Was that -- is that because of some off balance sheet financing, or had you actually only paid for and closed a relatively small number at that time?

Is t's the latter. That's how many we had acquired to date. As with any takeover bid, Rossa, as you might imagine, most of the shares come in right at the end of the day. We did not declare our bid unconditional until mid-to late October. And so what you saw was most of the shares that we now through 95%, and that really came in over the last week or so.

The 558, do you happen to -- to know what percentage of the shares that represented.

Oh, gosh. That--.

That was most of our original shares.

And -- and some of the shares that we'd acquired from--.

From the Roberts family.

We can get you that number, Rossa. But we're not -- I'm not exactly sure.

And I note that -- as you frequently do, you've updated the value of your investment in Canary Wharf, which is on your books at $182 million for the appraisals that were done for that company in the UK. It now indicates that investment is worth close to $1 billion. And as you go increasingly global, with real estate investments of which I guess Canary Wharf was the first step outside North America, are you contemplating at all the adoption of international accounting standards with respect to the real estate operations which of course include regular updates on appraised values?

Sure. We are -- we certainly -- and as you alluded to the whole Canadian gap is being replaced with international GAAP and there's developments in that regard in the US with respect to the multinationals and others adopting international standards close to US GAAP. So we are looking at that definitely. And I would just say, to the extent that where there are publicly available valuation metrics, we will do our best to share those with you. I'll just come back to your earlier question about the Multiplex. The investment on our books would have represented around 13%.

13 -- thanks. Thanks very much. And then -- but I guess it will be too early to expect that at the end of this year you would switch to any kind of international accounting standards or include a current value component to disclosure?

That's correct.

But next year could that be in place?

Rossa, I think the timeframe in Canada is closer to 2009, 2010. So you're really not going to see it there until -- that's when we would be doing it within that framework.

And then -- looking to the Brazilian operations, the -- are there any currency reserves that relate to that, or I'm just wondering if we should view any changes in the Brazilian assets and liabilities as being reflected generally in the consolidated financial statements at their current exchange rates?

Yes. Some of them we do. Some of the assets do end up getting carried at current value, although you don't see that coming through our P&L, you see that going through what we call cumulative and other comprehensive income, which is the same as the old commutative translation adjustment in Canada. You would see perhaps a fluctuation in our equity. But there's no current earnings impact.

And then a final accounting thing if I may. When -- when you have a number -- full control of Multiplex, will it then come in as a segment under your property income in the same way as you have Canadian, US, and UK investments there?

Yes, it would come in -- and I think Bruce mentioned the various segments that -- within Multiplex which frankly, line up very well within our existing segments for disclosure. So the core office properties would be included in our core office segment. Same thing for the residential, same thing for the development. And then the construction would be a new area.

But you have 90% plus of the shares. How quickly do you expect that it will be 100%?

I think we're in the steps of proceeding towards compulsory acquisition, and so it should be within I'm hopeful within the next four to five weeks. Frankly, I don't know the strict legal timing--.

Definitely before year end, Rossa. We should have 100%.

Thanks very much.

Our next question comes from [Ronald Redfield] of [Redfield Blonski].

Good morning. I have a question on total assets managed. In the past I believe you included invested capital and committed capital. And you broke that down previously under totally -- for the total Company, but you never listed the Brookfield committed capital. Can you tell me if -- what is the Brookfield capital committed versus funded currently? And if it's unfunded, when is the capital due?

There's no specific timeline for when the capital is due. That would come in as we -- as we make investments. The total amount, I think if you looked at our disclosure and what we show as the committed capital by co-investors versus the total, I would estimate it at -- versus invested is probably around $1.2 billion in the one segment, so it's probably around $3 billion in aggregate of commitment. But a big chunk of that is already invested.

So $3 billion committed total--?

Right. Of which there is probably about 1 billion of committed capital that has not been invested.

And of that, how much would Brookfield's share be?

That would be our share of it.

Okay. My other question would be on Liberty Plaza, One Liberty Plaza, can you give any grade of returns on that? Was it principle and interest, interest only --

Again, that's a Brookfield Properties financing. So it's probably something that should get disclosed more by them. I think we've disclosed what the general term and the financing rate is. There is an IO component to that for a period of time. But I think you're probably best following up with the folks at Brookfield Properties or we can get back to you on their behalf.

But in general and what is disclosed is that it was a 10-year fixed rate 6.1% coupon. Traditional commercial mortgage financing.

Okay. And then my last question would be for Brookfield Power operations, which is primarily Brookfield Power, Inc., but not solely, can you please give us a three months net income for that, where it came in?

For that particular -- I can't give you that offhand. I'm not--.

Okay. And it's -- currently that's rated -- if I'm not mistaken, Brookfield Power, Inc., or Brookfield Power, Corp, it's, the bond issuance is rated BBB minus, which is the lowest grade of investment grade or one step above junk. Are you doing anything to hopefully change that and have that upgraded, or can you discuss how you feel about the BBB minus rating?

It's actually the corporate unsecured notes are rated BBB by S&P and BBB high by DBRS, and BBB by Fitch. I think they're a little higher than what you are listing--.

Are you saying there's no Brookfield Power notes rated BBB minus by Fitch?

The corporate unsecured notes are BBB. Now what I don't know is whether there's a single issuance out of there on a specific project that might be BBB minus. I'm frankly not aware of one.

In February they gave you a rating of BBB minus. But if you're not familiar with that, then I guess you can't discuss it.

Yes.

Well, it may be on -- they may rate one of the securities that's issued by one of the power plants. And one of them may have a rating as that. But if you wanted, Brian, you could send the materials to Brian and he could certainly clarify it for you, sir.

Sure. I've spoken to them, and I guess I confirmed it. I guess you're just not -- that's fine. Thank you.

Our next question comes from Louis Sapir of Oppenheimer and Company.

Thank you very much. Would you kindly give me an idea of the adjusted book value of Brookfield Properties in total, and the amount of the value that you're spinning off to Brookfield Infrastructure Partners?

Okay. Starting with the latter question, we have given an approximate range of value for the equity of Brookfield Infrastructure Partners of $1 billion.

What will that be per share?

So that would translate into -- we're spinning off 60% of it. So that's around $600 million. And that's about $1 per share.

And how about Brookfield itself?

Brookfield, Brookfield Properties? Is that what you were asking about?

Yes, sir.

That I couldn't give you that one offhand. But if you'd like we can follow-up with you on that point.

I would appreciate it, thank you.

You're welcome.

Our next question comes from Neil Downey of RBC Capital Markets.

Good afternoon, everyone. Two quick questions. Periodically in the past, you have received some special dividends or special distributions of the Canary Wharf. Any visibility for that to occur in the near term again?

I think as most people know, we own about 16% of Canary Wharf. So we don't control it. And the dividends come as they come. There is a significant amount of cash that's been monetized on the balance sheet. So it is possible that they could pay a dividend, but we don't have any visibility as to when that will be, Neil.

Okay. And in light of the comment on the appraised value, of $1 billion versus the carrying value of sub-$200 million. It's also kind of interesting, I think that some of these big UK property stocks seem to be trading substantially below their recently published NAVs. I've seen comments about the west end prime property yields moving from 3.5 to 3.75% yield up to 4% and maybe the expectation is that actually continues to revert in the near term? Any comments on that phenomenon, and can you tie that into maybe your thinking with respect to Asian property stocks, as well, Bruce, which I know you had some comments on on your last call?

I guess I would generally say that we're quite positive longer term about the office billing business and the fundamentals are good. In fact, London itself while you may have seen or people may think that cap rates moved by 50 or 75 basis points, to the longer valuations of this business, it's sort of irrelevant. That's actually very possible that that has happened. And so I'd say in general, cap rates have moved up a little bit. Some of that's dependent on the fact that debt costs that people can put in place are little more costly and a little lower loan to value. So your equity returns are less and therefore you need a little higher cap rate to get your returns. But I'd say those are all short-term phenomenas.

The business is made by 5 points, in extremely good shape in n London. Barring actual at the has a few developments going on compared to New York which has very few. It's in great shape. So we're positive to it. As to the NAVs of the UK companies and the trading values, clearly a number of the trading values have gone down a lot and they're trading below their net asset values. What the expectation is that some of the net asset values will be lowered. But I don't think to the extremes that the market has done, and I think what's happened or our expectation -- our view is what's happened is that the financials and the real estate have all got caught up in the same trend that's in the marketplace. And that just takes time to work itself out.

I guess your last question was on Asian securities and real estate. And I'd say 12 months ago, the valuations on Asian securities were probably the only place in the world you could find discounts NAV. That's not the only place in the world today. And, therefore, there are other places that are probably equal -- equal discounts to NAV's, and in fact may be easier to buy or easier to access in the marketplace than some of the Asian securities. I would say they're not as solid candidates on a relative basis to other places today.

Would you say some other areas are also easier to value?

Yes.

Yes. Okay. Thank you.

Our next question comes from Chris Haley of Wachovia.

Yes. As a follow-up, Brian, could you give us a sense as to how much the power business fell below your expectations or what type of impact on either an operating cash flow number or a revenue number that the third quarter was impacted relative to your expectations.

Well, I think maybe the easiest way to think about that is we are roughly 20% below where we were -- below long-term average on a hydrology basis. So if we had picked that up we should have had around another 600 gigawatt hours. And so if our contribution there was around -- let's see, it would have been around -- I'm just trying to work that one out.

Are you using your average price then?

Yes. It's probably around $24 million, $24 million more based on what our average realized price was during the period.

And that would basically flow all the way through, correct?

Yes. And what I've done is to simply -- what we're giving you there is the $42 per megawatt that was our average realization for a gigawatt hour during the quarter and multiplied that by the 600-megawatt shortfall based on hydrology.

How much at that business would you characterize as, obviously weather plays a part, obviously. But seasonalities of the business, the wattage, just a simple question about seasonality. Secondly, how do you think that might play into the eventual monetization of the business? How do you think investors are thinking about these type of risks?

Sure, well, there's a definite seasonality to the business. And we do actually try and give some reference to that. The long-term averages that we do provide are adjusted for the seasonal trends. But I think what's important is that we're working off of a very long, very substantial data in terms of coming up with those long-term averages. And as much as you might be plus or minus a certain percentage point in any given quarter, that over the long term the cash flows are quite consistent and predictable. And as we continue to broaden the portfolio the actual overall volatility is reduced.

And Chris, I might go to your second comment which is just on the asset values and whether it changes our minds as to monetization and what people are thinking about. I would say that we've been in this business a long time, water comes and goes. But the durability of the cash flows is very strong. And on long-term averages which have proven themselves out over the years, you can highly predict cash flows. You have a few ups and downs once in a while in the quarter over quarter, but the -- we still think these are one of the great, great groups of assets that are out there. And we'll continue to buy them, and continue to believe that these assets are great, and ultimately we know that there are a lot of investors that if we want to put them into a fund would be highly attracted to them.

I would agree with that, Bruce. And I would -- I would then follow that question up with how much of the value of the business, well, I guess you can't say the value of the business, but how much do you think the upside or the sustainability of the business is driven by the increased diversity and scale of the portfolio versus an individual market or an individual group of assets of hydroplants and how that might play into the eventual monetization of these assets? My suspicion is just thinking this through, it might make more sense -- obviously there would be more interest for a larger portfolio versus one off sale or one off contributions or smaller market contributions as those investors might want the access -- they want the whole operation involved rather than a country or a continent.

Yes. I think you're right to a large degree because the -- and I would make a differentiation. With an office building or a country where there are office buildings in it, people generally like to invest place by place and they have a view, because the markets all are different, with the hydro business it's one business. And what the diversity of operations allows you to do is smooth cash flows out because precipitation which is a big -- which is the real variable factor is smoothed by having operations in many different places. And as a result of that clearly the business, if you worry about variability in it, is smoothed by having a larger portfolio. And therefore, if that -- if people think of that as an important component of their view of the business, that's an important factor.

Interesting to think of that in the context of, say, some commercial assets might be more valuable on a one-off basis versus the inverse with this power portfolio.

That's very possible.

Thank you for that. Brian, when you do you expect to have some disclosures, balance sheet disclosures, cash flow disclosures on Multiplex?

I would expect that would be forthcoming with our 2007 annual report.

Okay. And then last is the promotes or the performance fees that you're disclosing. Our perspective is that there's very little doubt that you have an excellent track record in creating value. So I'm trying to understand why you would disclose the potential earnings upside which is in the magnitude of let's just call it 50 million to $150 million. Hopefully that will continue to recur. What is the rationale behind disclosing these promotes given the variability of those promotes which is somewhat inconsistent with the long-term consistent business model that you've espoused over the last several years?

Well, that's a -- that's certainly a fair observation, Chris. And we -- we thought long and hard about the merits and some of the considerations with disclosing those figures. I think bottom line, that's information that a lot of people are interested in in assessing how we build out the asset management side of how we conduct our operations and the value that we create there. Frankly, we have some of our -- of our peers that disclose that kind of information in their results. Some who actually book it right through their financial statements, and others who record it more through their MD&A. And I'm specifically referring to Fortress and Blackstone. And it's an important benchmark for us, as well. So we felt it was appropriate to share that with people, I think it's -- it obviously is a number that may have some degree of variability quarter over quarter. I think we will be continuing to take a pretty conservative approach to how we put those numbers forward. And I think hopefully what you'll see is over time that part of the value creation in our business increase substantially.

I appreciate the color. I mean, those figures -- the numbers that you're providing on a net basis are roughly consistent what we've calculated. So prior to your disclosures, if someone wants to do the work, they can get to a close number. But that does take away some of the -- in our mind, it takes away or introduces a -- a level of volatility in terms of earnings stream and a check on value creation that might or might not happen that we view as unnecessary in terms of the long-term communication of your story.

Obviously I respect that. The one observation that we would make as much as if you think about our fees, the base management fee which we have been providing how we are building that business out on an annualized basis quarter by quarter, that's obviously a very consistent and stable fee. The performance fees and the carried interest, obviously there's a little bit more potential volatility there as value is being created, having said that, we wouldn't expect to see as much volatility in that figure as compared to let's say a pure private equity manager because of the nature of the assets and the creation of value within those assets that give rise to those carried interest and performance fees. So we think that over time as we build out the portfolio and the -- and the assets that are underpinning those fees that in fact there should be a reasonable degree of stability relatively speaking to -- to the generation of those fees, as well, or those interests, as well.

Thank you for that, Brian. I appreciate it. And I don't know if the goal is to try to attract a different type of investor. I think your goal is obviously more toward disclosure, which you've been very good at over the years. I would recommend not disclosing this. I don't necessarily think it's important to try to compare yourself to two other private equity firms which have completely different business models than Brookfield Asset Management.

Thanks, we appreciate that.

You're welcome.

Our next question comes from [George Denninghaff] of Vista Resource Management.

Hi, guys. I just have a couple of quick questions for you. One in regards to how you see the marketplace with regards to the sovereign wealth funds affecting your potential acquisitions abroad as well as here. If you could talk a little bit about that. And my second question is on the carried interest tax bill and the ramifications that that will will have on your long-term growth prospects?

Maybe I'll deal with the first one. Brian can I think quickly deal with the second. On the sovereign wealth funds, clearly and just for everyone's reference, that refers to the capital that's pouring into a number of these country funds which have been set up to accumulate wealth for a number of different countries. Some in the Middle East, but also other countries such as China, Norway, in fact Alberta, and Canada. A number of other places. I guess I'd make two comments. On the supply side, we believe they -- they are and they will be an increasing component of the supply side equation to investing into funds and providing capital to managers like ourselves to deploy in transactions. So we intend -- we have some of them today invested with us, and we intend to coerce a number of those to invest into our funds. And we think a substantial amount of capital will be employed by them both directly but indirectly through fund managers like ourselves. So that's the first component.

On the demand side, clearly when they do direct investments, they will be a competitor to us for assets. And some of them will choose to do it themselves, and we'll have to compete with them just like everyone else. But we think by -- by and large, the skills that some managers like ourselves have will be attractive to them in some places in the world. And we think that -- that I say the supply far outweighs the demand. And on the second point, on the taxation of carried interest, we operate our funds in a number of different jurisdictions around the world. Most of which will be not impacted at all by that. We're certainly monitoring it, and I suppose there's a possibility that there could be some impact from us, but we expect it will be relatively contained.

Great. Those are the questions that I had. Thank you.

Thank you very much.

Our next question comes from David Henley of DLH Capital Management.

Good afternoon, guys. I was wondering if you could talk a little bit about the distribution side of the business? Those people that are out there to really help grow your asset management product. I wondered if you could talk about how big that group is now? Is most of their activity kind of episodically around when you do particular private equity-oriented funds? And maybe as a follow-up to that, if you could give us some kind of guidance on on fee-bearing assets of $44 billion. X market appreciation, how do you expect the new moneys to grow on top of that base over the course of the next 12 to 24 months?

Maybe I'll deal with the first part and then Brian will come to the second part of your question. And just to deal with the first one, on who's marketing our funds. I guess we -- firstly, we split funds into private funds, where we market to institutional investors or high net worth investors, call it. And those are generally funds done with a group of institutional investors. And secondly, we have funds like Brookfield Infrastructure that are being created in the capital markets to appeal to I'll call it a retail/institutional public securities owner. Largely, they own the same things, but there's just a different group of investors. So on the public side, dealing with Alan specifically, we have investor relations people and the management of each of the entities that go out and talk to institutional and retail and investors and market those stories. So we have a highly attuned shop of investor relations people that market those stories and have been doing it for many years with all of the public companies that we've been involved with.

On the private side for private funds, we've been building up our marketing operations. Those people are largely headquartered either in Toronto or New York today. It's run out of our New York office. And we're adding people to our Sydney office in London and in the Middle East. And I guess those will be where we'll have people situated to market these funds. They're generally done where we create a fund. We come up with a strategy to invest and then we work with marketing people to identify which institutional investors on the private side would be appropriate for it. And that's how we market the funds. So it's generally done in that fashion.

So just on your -- I think I would interpret your second part of your question as starting with the $44 billion of fee-bearing assets under management, where do we see that evolving over the next period of time? And we spoke to this a fair bit at our investor day a month or so ago. And what we're actually focusing on perhaps a bit more is the actual amount of net invested or committed capital. So the $44 billion, that would translate down to around $31 billion, $30 billion of net invested or committed capital of which roughly $26 billion of that, $27 billion of that is third party.

In other words fee-bearing from -- other than from ours. And what we laid out there was a scenario whereby we would love to take those -- that committed capital up substantially over the next period of time, by the tune of, let's say $50 billion, $60 billion, $80 billion. And that is going to come from a number of different asset classes. Obviously we have a very substantial footprint in the property sector, particularly on the core office side. So it's logical to see that that's a very strong base to grow from. Very well established on the power side, as well. Although perhaps the hydroelectric sector there is not as large in asset class overall. But in particular what we're focused on is on the infrastructure side.

So if you take the infrastructure and the property side of the business, those are two of the largest asset classes globally, and so, hence, a -- a significant opportunity to establish a higher level of invested capital there, and also to attract capital from institutions because we see strong interest in institutions continuing to increase their allocations there. And lastly with the establishment of additional public specialty issuers like a Brookfield Infrastructure partner, that's out of the business that Bruce referred to. We'd like to see that part of the capital significantly increasing, as well.

One of the things that would be helpful to all of us, you don't have to do this, but it would be extremely helpful if you could start reporting what your net new moneys are in a given quarter because to me, one of the great value creation sides of your story is just the distribution network you're going to build as an asset manager. Based on the wonderful performance that you have. But the best way to be able to provide a metric on that or get a benchmark on it is to see how many net new assets you're bringing in in any quarter or any half year, or whatever. Because obviously you have a lot of funds that are harvesting themselves constantly and assets are rolling off. It would just be an easy way for us to see how powerful and quickly your distribution network is building.

That makes a lot of sense.

Yes, I think that's a great idea. And we'll endeavor to do that. And we thank you for the suggestion. Because we can provide lots of information. We always parse through what we should and should not be providing. But I think that's a good idea. Thank you.

(OPERATOR INSTRUCTIONS) Our next question today comes from Michael Goldberg of Desjardins Securities.

Thank. What are you doing to get your stock properly included by the TSX in a subindex that better reflects the nature of your asset management business instead of the real estate index?

Well, Michael, we used to be in the mining index, so we've I'd say made some progress by getting ourselves into the real estate side, which is obviously a better reflection of our -- of a significant opponent of our -- component of our underlying asset base. And that's going to happen over time. And I think as you would be well aware from the composition of our balance sheet and the earnings, that the asset management side is -- the contribution there from the earnings side is relatively small compared to the other contributors. And we're hopeful that that will change over time.

So what -- what's the actual process for this happening or what are the impediments to it happening?

With the TSX?

Yes.

That's a committee decision based -- that TSX makes.

So it's the index committee?

Yes.

Okay. Thank you.

Thank you.

Gentlemen, there are no further questions at this time.

Thank you very much, everyone, for joining us and for your questions and comments. We as always appreciate it. We look forward to speaking to you in the new year when we announce our year-end results. Bye for now.

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