BROOKFIELD ASSET MANAGEMENT LTD (BAM) 2011 Q3 法說會逐字稿

Hello, this is the Chorus Call conference operator. Welcome to the Brookfield Asset Management 2011 Third Quarter Results Conference Call and Webcast. As a reminder, all participants are in 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 Katherine Vyse, Senior Vice President, Investor Relations for Brookfield Asset Management. Please go ahead.

Thank you Lori, and good morning ladies and gentlemen. Thank you for joining us for our Third Quarter Conference Call and Webcast. On the call with me today are Bruce Flatt, our Chief Executive Officer, and Brian Lawson, our Chief Financial Officer.

Brian will start this morning discussing the highlights of our operations and financial results. Bruce will then provide some comments on the current investment environment and our investment initiatives and opportunities. At the end of our formal comments, we'll turn the call over to Lori to open the call up for questions.

In order to accommodate all who want to ask questions, can we please ask that you refrain from asking multiple questions at a time so as to provide an opportunity for others in the queue. We will be very happy to respond to additional questions later in the conference call as time permits, or at the end of the session or afterwards.

I would at this time like to remind you that in responding to questions and in talking about our new initiatives and our financial and operating performance we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. For further information for investors I would encourage you to review our Annual Information Form or our Annual Report, both of which are available on our website.

Thank you, and now I'd like to turn the call over to Brian.

Thanks Katherine, and good morning. Thanks for joining the call.

So this morning we reported aggregate net operating cash flow for the quarter of $465 million, of which $241 million accrues to Brookfield shareholders, with the balance accruing to the co-investors in our consolidated funds and subsidiaries. We achieved improved results in most of our areas, although these were partially offset by some of our more cyclical businesses. Order flows in our power-generating operations returned to normalized levels and we achieved strong leasing in our commercial office and retail businesses.

Net income, which includes fair value changes, increased to $716 million of which our share was $253 million. This compares to $112 million last year.

Our share evaluation gains recorded in income was approximately $200 million and that relates to our US office retail and our timber businesses. But recall that a number of our other assets are not revalued until year-end. And the net income also reflects depreciation.

Taken together, the operating cash flow and fair value changes resulted in the total return to our common equity of $240 million during the quarter, or $1.4 billion for the first three quarters. This is prior to capital distribution such as dividends, and currency fluctuations which I will return to in a moment.

Our intrinsic value at the end of the quarter we calculate to be $37.93 per share, that's at the end of September, in comparison to $39.31 at the end of June and $37.45 at the beginning of the year.

So turning to the operating results, in our asset management and other service activities, base management fees were unchanged overall and continue to track at an annualized rate of approximately $190 million. They are actually up slightly quarter-to-quarter when you factor in a catch-up fee that we had in the previous quarter, and overall fees also included $20 million success fees. Construction contributed $30 million; that's similar to the 2010 quarter.

We continue to expand asset management franchise. We are in the process of establishing a managed listed fund to own our global renewable power operations, expected to have an initial market capitalization of roughly $6 billion. And Bruce will comment further on this initiative later in the call.

We are also in the process of raising capital for eight additional funds, looking for total third-party commitments of roughly $5 billion. And we issued nearly $500 million of additional equity to co-investors from Brookfield Infrastructure Partners in October, increasing our fee-bearing capital under management from our listed entities.

In our power operations, the results for the quarter included $12 million gain on partial monetization of a wind facility. Excluding this gain, cash flows increased to $50 million from $46 million. This reflects increased generation from a return to more normal water flows after unusually low levels in 2010. And it's offset, on the other hand, by the proportion of cash flow that's attributable to noncontrolling interest following the sale of a portion of our interest in our Canadian power operations last year.

Generation increased by 27% compared to 2010, and realized prices declined by 11%. We have 8 projects in advanced stages of development, estimated cost of $1.4 billion. And that will have approximately 500 megawatts of installed capacity which have annual expected generation of one point -- or 1500 gigawatt hours. So that's a good step up in our capacity there.

On the office property side the contribution, excluding the dividends from Canary Wharf, were $65 million compared to $57 million in 2010. The increase reflects the impact of properties acquired since the 2010 quarter. It's offset somewhat by the reduced interest in our Australian portfolio and the impact of some lease expiries at the end of 2010. We also received a $16 million dividend from Canary Wharf in the quarter.

Turning back to the leasing, we signed nearly 4 million square feet of new commercial office leases. That brings year-to-date total to more than 8 million square feet, and we have a further 6 million square feet and serious discussion, so we are making tremendous progress on that front this year.

And then on the office development activities we have five projects in the pipeline, roughly 9 million square feet, and a total value once built of $7 billion roughly. This also includes a flagship property in Perth. That's 100% pre-leased and will be completed in early 2012 on budget and ahead of schedule.

On the retail side, our investment in general growth contributed nearly $60 million during the quarter. General growth continues to increase its cash flows through higher lease rates, better occupancy, reduced costs and lower financing charges by actively refinancing debt. These operations are in the process of spinning off a portfolio of 30 noncore retail malls in order to focus on its core fortress mall portfolio. Bruce will have some more comments on this later on.

In infrastructure overall the returns from utilities, transport and energy were steady. That's as expected.

Timber results improved significantly over the 2010 quarter. We continue to have high (inaudible) volumes and good pricing on shipments to Asia.

On the business development side there we reached agreement to acquire two key toll roads in Santiago, Chile. Gross purchase price is $750 million.

We also completed a major long-term contract that will enable us to commence a nearly AUD600 million expansion in our rail lines and the west part of that country, and are pursuing an expansion of our coal terminal in the eastern part of Australia.

In addition, we've commenced construction of a $750 million transmission line in Texas, and have a number of capital projects in our South American transmission and UK connections businesses.

Private equity and residential development activities, they generated lower activities than in 2010. In large part this was due to a number of favorable gains in 2010, particularly from the sale of multi-residential properties. That simply didn't recur in 2011.

The Brazilian residential operations continued to perform very strongly. Contracted sales there during the quarter increased by 61%. North American results declined due to a lower level of closings in the US and some Canadian closing slipping into the fourth quarter.

And we were successful in completing a number of attractive investments both within our private equity and our opportunity real estate operations.

Investment and other income slipped. The more steady contribution from dividends and interest was offset by roughly $50 million of negative market adjustments on financial assets. In the comparable period we benefited from $80 million of positive adjustments. So we didn't get much of a contribution from that area this quarter at all, certainly compared to prior quarters.

Just turning to the total return and changes in intrinsic value, as I mentioned earlier we recognized total return of $240 million. Roughly that's $1.4 billion for the first three quarters. And as I mentioned, that was prior to capital distributions and currency fluctuations.

The quarterly return is due primarily to the cash flow generated in the business, as the fair value changes were pretty much flat overall.

Now the recent market volatility resulted in an approximate 10% decline in the carrying values of our non-US operations due to foreign currency. And that's -- if you keep in mind that roughly 50% of our tangible capital is invested outside of the US, that translates into a roughly $1 billion variance. Now we'd note that just about 50% of that has reversed itself since September 30, and that brings us to being essentially flat on a year-to-date basis and nicely ahead over the longer-term as we continue to benefit from the Australian, Brazilian and Canadian growth economies.

I should emphasize that these fluctuations are the impact of short-term currency fluctuations on long-term capital and not reflective at all of the performance or potential of the underlying operations.

A couple of other notes -- we repurchased 2.4 million shares in the quarter for $67 million. That's an average price of $27.50 and 5.6 million shares year-to-date. We also paid common equity dividends of $0.13 per share in the quarter, and completed $6.1 billion of capital raising initiatives in the third quarter. That brings the total for 2011 to just over $22 billion, and we are continuing to accelerate refinancing initiatives to continue to take advantage of the current low interest rate environment and extend our maturity profile.

So, with that, I will hand the call over to Bruce.

Thanks Brian, and good morning. In general during the quarter I think we made good progress in executing our business plans. And while volatile periods such as these are challenging for everyone, I'd say that we think this type of market favors our style of investing.

As Brian noted, in our operating businesses we continue to generate strong cash flows to reinvest back into the businesses and are fortunate to have many other ways to put it to use, which includes organic expansions within the business and new acquisitions.

We continue to see the US economy emerging slowly from the crisis that has played out over the last five years, and European nations obviously are working through their problems. We expect to find opportunities to acquire international assets from European companies which are endeavoring to deleverage their balance sheets, and we're working with a number of excellent companies to assist them in this regard.

We are experiencing growth across virtually all of our businesses and the outlook in Brazil, Australia and in Canada particularly is very strong.

Turning specifically to the operations, in our renewable power business as Brian said, we are advancing a number of new wind projects -- one in California, one in Ontario and one in New Hampshire, all which will be completed shortly. Even more importantly, we announced a merger of our privately-owned power assets with those of our publicly listed power fund in Canada, and this transaction will be voted on by unitholders later this month, which -- following a favorable vote of bondholders which was held in late October.

We are excited about the opportunity to establish this well-capitalized listed global entity which will provide us with long-term capital to continue to grow the business. It will be one of the largest pure play renewable power businesses in the world that's in a public entity with fully contracted cash flows. It will be virtually a pure play hydro and small amount of wind company. And it will have a very attractive cash flow distribution profile.

With listings on the Toronto and the New York Stock Exchanges, when we accomplish that, this should provide enhanced liquidity to the current entity that we are merging with our private assets and opens up many other forms of access to capital for us, allowing and should allow this entity to compete very effectively for capital to grow its business.

But the creation of this renewable power entity does not diminish -- and it's important to note for our shareholders -- it doesn't diminish our economic interest in the Renewable Power business, nor our alignment with the unitholders of the Renewable Power company as we will own, after the transaction, approximately 70% of this entity. Furthermore, we at Brookfield Asset Management will retain the upside and downside associated with the rising long-term power prices, or with long-term power prices on those assets which are contracted to -- were not contracted to external counterparties, and that were owned at the creation of the entity.

This will position -- this will enable us to position Brookfield Renewable Power with a stable and growing cash flow profile that can pay strong dividends for the foreseeable future, while offering us significant upside based on the belief -- or our belief that power prices will increase over the longer-term.

Turning to infrastructure, our infrastructure business is hitting its stride with excellent results over the last number of quarters, including this one. And as Brian noted, we completed a recent equity issue to ensure that we are in a very liquid position in this business to take advantage of or capitalize on opportunities. And a number of extremely good organic growth projects are in the Company today, and we think there is a number of potential acquisitions which could allow our Infrastructure Group to grow at rates which are well in excess of what we could've imagined five years ago.

The private infrastructure sector specifically is growing in quantum steps, being really the privatization of government infrastructure and the corporations putting more infrastructure assets into the market and to raise capital for their own balance sheets. And we are very well-positioned to assist governments and corporations solve their capital needs, particularly because of our operating presences across many of the markets where this is required. Furthermore, we have very good access to capital assist them with these needs, and therefore we are very positive about our Infrastructure business.

In the commercial property operations, which the predominate assets were in office and retail, our cash flows continued to increase and largely as a result of -- that corporations are still making leasing decisions despite the volatility that's out there in large measure, and this definitely contrasts with that which occurred in 2009. As a result of this, we are experiencing rent step ups in most of our major leases at rollover and uplifts when that occurs in rents. We leased, as Brian said, a significant amount of space in the quarter.

We also acquired a 20% interest in our US office fund which added almost $1 billion of assets to the portfolio. We sold some non-core retail assets. And after quarter end, we both signed up Bank of America to just over 750,000 square feet of space at the World Financial Center and purchased just -- approximately a 50% interest in one of the buildings there.

We also sold a large property just across the river from Lower Manhattan in New Jersey for just under $400 million, after reworking it and re-leasing it over the past six years. And we refinanced approximately $3 billion of mortgages within our different commercial property businesses. In our opportunistic funds, we continued to buy multifamily properties in the US, believing that there is cap rate compression and rent growth continuing into the future. And just for reference, we've purchased a number of our funds with clients approximately 12,000 units over the past two years.

In GGP, leasing done -- the good news is leasing done during the bankruptcy is finally behind the company and results are turning. As reported by GGP this week, cash lease spreads and uplifts on rent rollovers are highly positive now versus those leases that are rolling off and should be for another 2 to 4 years, leading to excess cash flow growth and more cash flow growth than you would expect during -- in a portfolio such as this one.

And the portfolio occupancy increases that are either locked in or should be coming based on new leasing, and select redevelopments in some of the great malls that we have should also contribute very positively over the period I just mentioned. Full year results for 2011 were announced yesterday by GGP, which should beat expectations of most people. And we're very pleased with what management has achieved on both the financial front and on the reorganization in -- of the company in the last year since they have been working at it.

More importantly, then, the short-term result is that all of the things I said a minute ago should bode very well for the 2012 to 2015 period. And it looks like they are -- the results are on an excellent trajectory, well better than what we underwrote when we made our investment a couple of years ago.

So with that, operator, I'd like to turn the call back to you and Brian, or I would take -- will take any questions that anyone has.

(Operator Instructions). Brendan Maiorana, Wells Fargo.

Thanks, good morning. Bruce, had I guess a two-part question as it relates to the opportunity set that you mentioned that was out there. And I think you said that we are working with a number of European companies to look at and to help them solve some financing issues with the assets that they have.

I guess you mentioned assets, but I don't think you mentioned the geographic regions. Is this to assume that most of the -- would you still be comfortable investing in Europe, given everything that's happened from -- on the political side over the past couple of months? Or are most of these assets that you're looking at held by European companies but in other geographic regions?

And then, the second part is it sounded like you mentioned there was a lot of opportunity set on the Infrastructure side. So is the disproportionate amount of the opportunities that you're looking at on the Infrastructure side similar to the Chilean toll road that was done -- I guess that was couple months ago?

Okay, I'll try to answer some of those questions for you. I think there was more than two. But I'll try to lump them together and hopefully I can give you the flavor of it.

I guess the points I would make are as follows. Maybe I'll go from back to front. We are seeing both real estate and infrastructure opportunities in -- from European entities. In fact, I would say from more entities around the globe today than we've seen since we saw in late 2008 or early 2009, and just because of the volatility that's out there.

And there's probably more in Infrastructure than specifically in real estate, but there are a lot of real estate opportunities as well. And those break down into really two categories. They're large international corporations which are shedding assets in other places. And those assets, some of them are in our businesses that would be assets we would be buying in North America, some that are in South America, some that are in Australia.

So there's a number of things we are buying from international corporations in each of those -- would be in each of those jurisdictions. In addition there a number of things we're looking at, Europe, with corporations in Europe or others that bought assets in Europe. And we are a micro underwriter of assets.

And there are not that many things we do that rely solely or are on sovereign credit, and the bottom line is we think there will be -- thoughtfully done, we think there are going to be some great opportunities to buy assets in Europe in many of the countries which are undergoing distress, and some of the turmoil they're undergoing today. And obviously they have to be well thought through and the risks taken on are -- we're going to have to get paid for them. But we think there are some opportunities to come and are working on a number of things.

Great, thank you.

Michael Goldberg, Desjardins Securities.

Thanks, good morning. If I assume that BAM fully underwrites the planned (inaudible) rights issue, what percent ownership would you increase to, and do you expect other GGP consortium members to participate?

So the rights offerings hasn't been mailed, so none of our -- so our consortium members don't have to participate would be the first answer. I don't have an answer for you as to whether they will or won't. We'll discuss that over the next while as we go into a rights offering process.

As to our underwriting commitment, it will be for the $200 million. And we are backstopping it because we think this is a very important thing for GGP, and we think it's going to be a great little company that's trading -- trade in the market. And we think the Rouse Company is -- in the B mall sector can be a -- I'll call it an industry consolidator in that space, and it can do a very good job reworking the assets that GGP is spinning off. So we are doing it for those really two reasons.

And I think, to answer your other question, I think if we ended up with a full $200 million we would be approximately 50% of GGP along with our consortium members.

That would be up from 38%.

Correct.

Okay. Can I ask another, or should I re-queue?

We'll give you one more.

You've done a lot to make progress along the asset management theme. Nevertheless, many of the investors that focus on Brookfield continue to be specialists in real estate or utilities or infrastructure or whatever, and not asset management or financial services. What are you doing in order to change the -- call it the audience of the investors that you address to better focus on the asset management or financial services audience?

It's Brian. I'll take that one. We are doing a number of things. First of all, this is an evolutionary thing -- process. And if you look at where a lot of the cash flows and the value is of the Company, there still is a lot of it that would lend itself to a more fundamental view as to value and performance for those various constituencies that you referenced.

Having said that, increasingly -- I'll say the strategic approach to the business is entirely on asset management basis. And increasingly more and more of our cash flow and value is attributed to that -- to that type of -- to that business or that part of the strategy, which really encompasses everything that we do now.

So, specifically, we've been trying to reshape some of our disclosures to emphasize those elements of the performance. And we've been doing things such as seeing more conferences, for example, that are focused on asset management and financials. And I think we're seeing some of our investor base increasingly shift that way as well in terms of contact and interest.

So it will take time. We are extremely appreciative and thankful for all the support that we have got from the folks that are -- I'll say more focused on the real estate property and power side of the business. And we welcome as well those investors and analysts and folks that are viewing us through the asset management lens as well. I think we're fortunate we can really play to all those constituencies and provide value to all of them.

Thank you.

Mario Saric, Scotia Capital.

Good morning. Just sticking to the asset management side, there was a recent article in the Wall Street Journal with respect to one of your competitors in a real estate offering out in the market, and potentially adjusting some base asset management fees on that fund. Specifically pertaining to some of the funds that you wrote in market with, can you talk about discussions that you're having with potential investors as far as the structure of the fees going forward?

Sure. I'll start off with that, and we noticed the same thing as well. I think that depends to a certain degree on the time cycle. We are finding that we are not under undue pressure with respect to fees.

This is a market business, so it does tend to fluctuate up and down. We've seen that in the past. And -- but we are certainly working towards and able to achieve the type of fee economics that we think makes sense for our business.

I would only just add to that in saying that I don't -- I think our franchise is stronger today than it's ever been. And each of the funds that we have in the market we think will achieve the exact economics that we went out with or we expected to end with. And we don't see any shift on that, and I think there is a divergence in capital, capital users in the world that are taking money from pension funds and sovereign funds, and they are the ones that have availability and unfortunately there's others that may not.

But I don't -- it's not -- in that circumstance it's not really about the fees. It's about whether people are going to [commit] a fund or not. So we haven't had any real issues with that, with respect to that.

Great. Appreciate the color, maybe one other question with respect to the Dubai property fund, a very exciting announcement. Can you maybe talk about how long that fund took to put together, the process behind it, and looking out, what targets or goals there are internally with respect to growing the business in the Middle East?

Just for background, we have been in Qatar, Abu Dhabi and Dubai in the construction business for seven, six years I guess. And we've had a large operation there. We've built many buildings in the market and have a marquee brand for construction and other services in the market.

We have 2000 people in Dubai today that work for Brookfield. And so we have a very substantial interest there already, not from a capital investment perspective, but from a service perspective. So we knew the market, we all have spent a lot of time there. We've never invested any money in the country, in fact in any of the countries.

So a number of years ago when the -- specific Dubai was going through its issues, we spent a lot of time talking to them for the past three or four years on various matters. And six or nine months ago we thought that a great way to take the business to the next level was to put together a fund, and we sought out the partnership with the holding company of the government. And so we are in the midst of that today.

And we've put that together and we're going to be acquiring real estate in the market, and we'll see where we go over the next 12 months with that. So we are actually very positive about it. And we'll see from here.

It's not a massive or major commitment from Brookfield, but we are quite excited about what it could turn into in the future.

Bert Powell, BMO.

Brian, it seems like there's a little bit of new disclosure in the press release talking about average term during which uncalled capital can be called for 18 months. Is that 18 months for you to call it to deploy it, or 18 months after which those that have subscribed can call it?

No, it's that that would be generally the call and the investment occurs coterminously.

So help me understand that, just in terms of the 18 months, what does that signal?

Well, typically there is a three-month investment period -- or sorry, three-year investment period for a fund, when it's formed. And from the date of first closing or second closing there is -- you have three years to invest the capital.

And then at that stage you go and that's when you're launching your next fund. You try and time your fundraising and closing of your next fund so that when the investment period of one fund closes, you're there with your successor fund and ideally you have it fully invested, but not necessarily.

Maybe I'll circle back on that. One other question, just in terms of -- FX had a big impact on the intrinsic value in the quarter, and you did have $325 million of mitigation. And given that your functional currency, the country -- the US seems to be doing relatively better, I'm just wondering if you guys have a different view today than maybe in the past in terms of hedging to mitigate the impact on some of your net investments.

That's definitely worth chatting about in today's context. So we have roughly 45% of our equities in the US dollar. The balance, most of it, is spread -- Australia, Brazil, Canada.

So we will hedge those currencies, but typically only when we consider them to be at a pretty full or pretty full value relative to the US dollar. We do not attempt to hedge on a static basis or certainly don't try and hedge the entire amount. That in fact would be extremely risky (inaudible) liquidity position and would be detrimental to returns as well. So that's really the approach that we follow.

So with the $325 million this quarter, would that just signal that tactically you had your timing right on the view?

Yes.

Perfect, thanks.

George Smith, Davenport Asset Management.

Thanks. Bruce, a lot of your investments on the margin have been in emerging markets or markets like Australia that are heavily dependent on areas like China. When you hear the argument that some of those places may cool a bit, is the counter that you'd be relatively immune just because of the contractual nature of your investments and cash flows? Or how should we be thinking about that risk?

Well, it actually is a very good question. And I guess I would say the following. We never -- we generally have tried to benefit in the emerging markets, but do it in an indirect way so that our risk/reward was probably not as good as if we had invested in many of the emerging market countries, and in the types of assets you might've made extremely high returns.

But what we have done is gone to more contracted long-term streams of cash. So, for example, instead of building an iron ore mine in Western Australia, we own the railway there and we are writing triple net take-or-pay contracts to good credit companies that will put their ore on our tracks. So we do get a muted return on the upside, but our risk is far, far less if something does occur.

So the first thing I would say is I think your comment is right, is that our exposure to those countries and the benefit we get from it is dependent on some of those issues you mentioned. But it's much less at risk because it's been muted and because of long-term nature and contractual nature of the cash flows we have.

Despite that, it could be affected if a very significant issue comes about. In the short-term it's not really a problem because most of the things we have don't get affected in the short-term. But the real question is whether these countries are going to be -- do well in the longer term.

And I guess our belief is that most of the countries will sort their issues out, just like we think the United States will and Europe eventually will I guess, and they will sort their issues out. And therefore, the longer-term piece is still in place. So, as a result of that, we are quite positive to those markets still.

And I guess I would just -- maybe the last comment I would make is just on Australia, because it is quite dependent on China. But today, and a lot of it is investment in infrastructure that's getting built. And there's an enormous amount of money that's getting put into these projects. It's hundreds of billions of dollars.

It's being spent today. It's by some of the giants of industry. Today these are between $10 billion, $20 billion and $250 billion companies. And the money is pouring into the country building these LNG, bauxite, iron ore and coal projects.

And some of that might slow down, but they are extremely good projects and by very high quality companies. So I think there is some downside protection to that, but we always do try to do it in that type of fashion.

One other if I may; have you explored and any ways via which you could invest on a bigger scale in the US in residential real estate or housing?

So we have been [playing] multifamily apartments, and in the short-term we do think rents will continue increase, and therefore we probably will continue to buy more multifamily. In the single-family business, I think it will be just continued organic growth of the business that we have. There are not really any big targets out there that you could acquire into our residential businesses.

But what we have is very substantial. And when the markets turn, I guess we think it's going to be quite valuable in itself and adding around the edges can even make it better.

Thanks very much.

Michael Goldberg, Desjardins Securities.

I wonder if you could give us any more color on the $50 million below normal in financial markets this quarter.

It's Brian. I can give you a bit. As you know, we have -- that generally arises from the cash and financial assets. We have around $1.7 billion invested, most of which is in things like corporate and government bonds. But we do have a smaller amount of portfolio that's invested in common equities and high yield bonds.

And on that specifically with the $50 million this quarter, that comes from a variety of smaller common equity positions that we, along with the rest of the market, suffered with some downturns. We believe -- we think we made investments for the right reasons and we think just as much as we had $80 million of positive mark to markets in the preceding quarter, that we will benefit from these going down the road.

Okay. So this is -- call it direct securities related as opposed to derivatives?

Correct.

Thank you.

Michael Smith, Macquarie.

Thank you. Why was the Canary Wharf dividend down this year versus last year?

The amount of monies that are paid out of Canary Wharf Group are not a set amount. Each year they -- their -- an amount is declared and it varies. It has varied in significant proportion over the years.

So there is no specific amount that gets paid out based on any -- like we pay $0.13 out every quarter and we consider whether it gets increased. There is just amounts that are paid out when there is excess cash in the Company. So it's just that was what was paid out this year.

But it's nothing to do with the underlying performance of the assets?

No, not all. In fact there is significant cash in the Company and underlying company is doing better today than it ever has.

And the second question, what -- you have positive views on the multifamily market in residential market in the US. What are your views on it in Canada?

I don't really have a view. We are not spending a lot of time in Canada looking at any, and there's many that do it. And in fact housing, as you know, Michael, in Canada has not been hit like the United States.

So I would say we think there's greater value in the United States to buy it. And we have not had any focus on it. So I couldn't really give you a view.

Thanks.

Brendan Maiorana, Wells Fargo.

Thanks, I just had a quick one for Brian. The accrued performance fees dropped fairly significantly in the quarter, so I think you were at -- the unrecognized number was $400 million, went down to around $225 million. What drove the drop in Q3?

Really just a decrease in what we would expect the values to be if we liquidated all the funds at the end of the quarter. That's the policy that we follow for determining that amount.

And what you might expect is that there's a certain amount of it that gets tied in with Capital Markets, but there's also a lot of it that just reflects the power of compounding and IRR because you're dealing with longer-term cash flows there.

But I mean, if your cash flows in the business held up reasonably well, and I don't think you guys typically adjust cap rates, or I would assume you probably didn't adjust cap rates from Q3 to -- is it like -- is FX-related? Or is there something -- or is it just securities that have gone down in value that you're holding that drove that number down?

As -- so the liquidation is not based off, for example, our fundamental values or IFRS. It would be based off a point in time calculation, so definitely capital markets valuations would have an impact on that.

Okay. Thank you.

This concludes the time allotted for questions today. I will now turn the conference back over to Mr. Flatt for concluding remarks.

Thank you everyone for joining the call. We appreciate your time and your interest in Brookfield. If there's anything that we didn't answer for you today, please feel free to call Brian, myself, Katherine or others. And if not, we look forward to speaking to you next quarter. Thank you very much and have a great day.

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