Brookfield Asset Management, Inc. operates as a global asset management company, with a primary focus on property, power and infrastructure assets.
Business areas
The company operates and manages assets in the following areas: its property operations include core office properties in North America, the U.K. and Brazil, residential home building in North America and Brazil, as well as associated development activities and property services.
The company’s power generation business is concentrat...
Brookfield Asset Management, Inc. operates as a global asset management company, with a primary focus on property, power and infrastructure assets.
Business areas
The company operates and manages assets in the following areas: its property operations include core office properties in North America, the U.K. and Brazil, residential home building in North America and Brazil, as well as associated development activities and property services.
The company’s power generation business is concentrated on hydroelectric power generation in North America and Brazil, with co-generation and wind energy facilities.
The company’s timberland operations own and manage two million acres of private timberlands in North America and Brazil.
The company’s transmission infrastructure business includes electricity transmission systems in Canada and Chile.
The company’s specialty funds business develops, invests and manages funds and investments on behalf of institutional and related investors that co-invest in the same types of assets which the company owns, including bridge lending, restructuring, real estate finance and fixed income and real estate securities.
The company also owns direct interests in various investments, collectively referred to as Private Equity Investments.
PROPERTY OPERATIONS
The company conducts a range of property operations in North America as well as in Europe and South America.
Core Office Properties
The company owns and manages a core office portfolio and focuses on major financial, energy and government centre cities in North America and Europe. The company owns interests in 133 commercial properties totalling approximately 85 million square feet of rentable area, as well as 18 development sites with 22.6 million square feet of potential developable area.
The company’s North American operations are conducted through a 50%-owned subsidiary, Brookfield Properties, and its primary markets are New York, Boston, Houston, Los Angeles, Washington D.C., Toronto, Calgary and Ottawa. These operations include directly owned properties as well as those contained within its U.S. and Canadian core office funds.
The company’s European operations are principally located in London, U.K. where it owns an interest in 17 commercial properties comprising 8.5 million square feet of rentable area and a further 5.4 million square feet of development density. The properties are located in the Canary Wharf Estate. The company holds a direct 80% ownership interest in the 550,000 square foot 20 Canada Square property and an indirect interest in the balance of the portfolio through its 15% ownership interest in privately-owned Canary Wharf Group.
Residential Properties
The company conducts residential property operations in the United States, Canada and Brazil through subsidiaries in which the company holds the following interests: United States – 53%; Canada – 50%; Brazil – 60%.
The United States: The company’s U.S. residential operations are conducted through its 53%-owned subsidiary, Brookfield Homes. These operations are concentrated in four major supply constrained markets: San Francisco, Los Angeles and San Diego in California, and the Washington, D.C. area. In these operations, the company owns or controls 28,000 lots through direct ownership, options and joint ventures. The company focuses on the mid-to upper-end of the home building market.
Canada: These operations are conducted as a business unit within Brookfield Properties. The company’s Canadian operations are concentrated in Calgary, Edmonton and Toronto. Operations in the U.S. markets of Denver, Colorado and Texas are managed and reported within this unit. The company owns approximately 61,400 lots in these operations of which approximately 5,800 were under development as of December 31, 2006 and 55,600 are included under development assets. The company’s primary activity in this business is to acquire and develop lots for sale to other homebuilders.
Brazil: The company’s Brazilian operations are owned through its 60% subsidiary, Brascan Residential Properties, S.A. This operation is focused on building residential condominiums and also deploys capital to secure sites.
Retail Properties
In addition to significant retail space which the company operates in conjunction with its office properties, the company has owned and operated retail properties in Brazil. During 2006, the company formed a fund to invest in Brazilian retail properties. The fund purchased three shopping centres previously owned by the company. The fund’s initial portfolio consists of three shopping centres and associated office space totalling 1.1 million square feet of net leasable area, located in Rio de Janeiro and São Paulo, and includes its 54% interest in the one million square foot Rio Sul Centre, which is a Brazil’s shopping centre.
Infrastructure Development
The company entitles, seeks approval for, builds, manages and develops various types of critical backbone infrastructure in business segments where the company owns assets. It typically acquires land or long-term rights on land, seek entitlements to construct, and then either sell the project improved by the infrastructure entitlements or build the project ourselves.
Core Office Properties: The company maintains a development capability to undertake development projects when the risk-adjusted returns are adequate and significant pre-leasing has been achieved. As of December 31, 2006, the company held projects with 29.9 million square feet of commercial density rights. During 2006, the company acquired the 1.3 million square foot Four Allen Center in Houston with a joint-venture partner and signed a long-term lease with Chevron for the entire property that would commence in 2007. Development projects also include its Penn Station development in midtown New York.
The Bay-Adelaide Centre development property, 100%-owned, is located in Toronto’s downtown financial district and zoned for up to 2.6 million square feet of office and residential use. The company is under construction on a 1.1 million square foot premier office property. The company also owns expansion rights for a third office tower at BCE Place, its Toronto office complex, which would add approximately 800,000 square feet of density, and similarly the company has rights to develop approximately 500,000 square feet of office space at Bankers Court in Calgary, where the company also has a 265,000 square foot office property under construction. At Canary Wharf in London, the company owns its proportionate share of development density which totals approximately 5.4 million square feet of commercial space.
Residential Development Properties: Residential development properties include land, both owned and optioned, which is in the process of being converted to residential lots. The company holds options on approximately 14,900 lots in predominantly California and Virginia in return for providing planning and development capabilities to obtain the required entitlements. In Brazil, the company owns rights to build residential and office condominium space of a further 8.0 million square feet and a further 9.1 million square feet of condominium density in Rio de Janeiro.
Rural Development Properties: The company acquired 74,000 acres of additional rural land in Mato Grosso State in Brazil and owns approximately 260,000 acres of prime rural development land in the States of São Paulo, Minas Gerais and Mato Grosso. These properties are being used for agricultural purposes, including the harvest of sugar cane for its use in the production of ethanol as a gasoline substitute.
The company holds 30,000 acres land adjacent to its western North American timberlands acquired during 2005, which it intends to convert into residential and other purpose land and are included within its timberland operations. In addition, the company has been developing various hydroelectric power facilities in Brazil and North America as well as wind generation facilities in Canada.
POWER GENERATING OPERATIONS
The company’s power generating operations are predominantly hydroelectric facilities located on river systems in North America, as well as various locations in southern Brazil. As of December 31, 2006, the company owned and managed approximately 140 power generating stations with a combined generating capacity of approximately 3,800 megawatts. The company’s facilities produced approximately 13,000 gigawatt hours of electricity in 2006. Four of its existing stations are hydroelectric facilities located on river systems in seven geographic regions, specifically: Ontario, Quebec, British Columbia, New York, New England, Louisiana and southern Brazil. The company also owns and operates two natural gas-fired plants, a pumped storage facility and a 189-megawatt wind energy project that it operates under a 20-year fixed price power sales agreement.
TIMBERLANDS
The company owns and manages timber assets which have investment characteristics that are similar to its property and power operations.
Western North America: The company established the Island Timberlands fund in 2005 with the purchase of 633,000 acres of private timberlands on the west coast of Canada. The company owns 50% of the fund and the balance is owned by institutional investors.
Eastern North America: In 2006, the company established the Acadian Timber Income Fund, a publicly listed income fund that acquired the 311,000 acres of private timberlands previously owned by the company as well as a further 765,000 acres held by Fraser Papers. Acadian, in which the company holds an approximate 30% interest, is managed by its timber management group.
Brazil: The company holds 140,000 acres of timberlands located in the State of Paraná in Brazil and are actively pursuing acquisition opportunities to expand its timberland operations in this country.
TRANSMISSION INFRASTRUCTURE
The company owns and manages transmission systems in northern Ontario and acquired an electricity transmission company in Chile at the end of June 2006. The company also made a non-controlling investment in a Brazilian transmission company during 2006.
North America: The company owns and operates an electrical transmission system in northern Ontario.
Chile: During 2006, the company acquired the HQI Transelec Chile S.A. (Transelec) electricity transmission system in Chile. It owns 28% of the business and the balance is held by its institutional investment partners. Transelec’s assets serve as the backbone of the Chilean electrical distribution sector, with approximately 8,000 kilometres of transmission lines and 51 substations that deliver electricity to approximately 99 percent of the Chilean population through various local distribution companies.
Brazil: In 2006, the company acquired a 20% interest in a Brazilian transmission company.
SPECIALTY INVESTMENT FUNDS
The company conducts bridge financing, real estate finance and restructuring activities through specialty investment funds. Its public securities operations manage funds with specific mandates to invest in public and private securities on behalf of institutional and retail investors.
Bridge Lending: The company provides bridge loans to entities operating in industries offering tailored lending solutions to companies in need of short-term financing.
Real Estate Finance: The company’s real estate finance operations provide financing for the ownership of real estate properties on a primary or secondary basis in a form which is senior to traditional equity, but subordinate to traditional first mortgages or investment grade debt. The company maintains credit facilities that provide financing for these investments on a non-recourse basis, and it has also established two collateralized debt obligation vehicles. During 2006, the company completed the initial public offering of a mortgage REIT in the United States.
Restructuring: The company’s restructuring group, which operates under the name ‘Tricap’, invests long-term capital in companies facing financial or operational difficulties which have tangible assets and cash flows, and in particular industries. The company completed the investment phase of its first fund and formed its second restructuring fund, Tricap II. Tricap completed the financial restructuring of Stelco, Inc., a major Canadian integrated steel company during 2006, which resulted in Tricap owning a 37% equity interest. Tricap also increased its equity interest of Western to 70% through a rights offering during the second quarter of 2006.
Fixed Income and Real Estate Securities: The company manages fixed income and real estate securities on behalf of its clients. It specializes in equities and fixed income securities, including government, municipal and corporate bonds, and structured investments, such as asset-backed, mortgage-backed and commercial mortgage-backed securities. The company’s clients include pension funds, insurance companies, foundations, mutual and other closed-end funds, and structured funds. For its insurance clients, the company also provides ancillary services, including asset allocation and asset/liability management.
PRIVATE EQUITY INVESTMENTS
The company owns direct interests in various investments which would be sold once value has been maximized, integrated into its core operations or used to seed new funds.
Forest Products
Norbord, Inc.: The company controls 38% and owns a net beneficial interest in approximately 24% of Norbord, Inc. (Norbord). Norbord is an international producer of wood panels with operations in the United States, Canada and Europe. The company’s principal product is oriented strandboard.
Fraser Papers, Inc.: The company owns approximately 49% equity interest in Fraser Papers. Fraser Papers produces a range of specialty paper products from its operations which are located principally in Maine and New Brunswick.
Privately Held: The company acquired Katahdin Paper in connection with the purchase of power generation operations. Katahdin owns a 250,000 ton-per-year directory paper mill and a 180,000 ton-per-year super-calendered fine paper mill. These operations are located in Maine. The company merged Cascadia with Western, which is owned within its restructuring fund, during 2006.
Mining
Coal Lands: The company owns the coal rights under approximately 475,000 acres of freehold lands in central Alberta. These lands produce approximately 13 million tonnes of coal annually. In addition, the company owns a 3.5% net profit interest in 75 million tonnes of proven reserves, and 35 million tonnes of potential reserves of metallurgical coal in British Columbia.
Business Services and Other
Insurance Operations: The company’s insurance operations are conducted through 80%-owned Imagine Insurance, a specialty reinsurance business which operates internationally; Hermitage Insurance, a property and casualty insurer which operates principally in the northeast United States; and Trisura, a surety company based in Toronto.
Banco Brascan, S.A.: The company owns a 40% interest in Banco Brascan, which is a Brazilian investment bank based in Rio de Janeiro and São Paulo. The balance of the company is owned 40% by Mellon Financial Group and 20% by management. Banco Brascan advises, lends to and provides asset management services to domestic and foreign companies in Brazil.
Other Privately Held: During 2006, the company agreed to sell to the Accor Group of France its interest in a joint venture with them that owns and manages the Accor Group hotel brands in Brazil, as well as a voucher services business. The transaction completed in 2007. Other privately held investments include its investment in NBS Technologies Inc., which the company privatized during 2006. NBS provides identification solutions, financial transaction services and operates a commerce gateway that facilitates electronic payment processing. In 2005, the company sold a tin mining operation in Brazil.
Other Publicly Listed: Publicly listed business service investments include a controlling interest in MediSolution, Ltd. MediSolution develops and manages medical human resources management software and systems for the health industry, primarily in Canada.
Privately Held Properties: The company holds various properties that do not form part of its other designated portfolios.
Significant Events
Property Operations – Core Office Properties
In June 2006, the company announced that it signed a definitive agreement to acquire through a joint-venture with The Blackstone Group, all of the shares of Trizec Properties, Inc. (Trizec Properties), a publicly-traded U.S. core office REIT, and Trizec Canada Inc. (Trizec Canada), a Canadian company that holds an approximate 38% stake in Trizec Properties. The Trizec portfolio consists of 58 office properties totalling 29 million square feet in nine U.S. markets including New York City, Washington D.C. and Los Angeles. The transaction closed on October 5, 2006.
In January 2006, the company acquired One Bethesda Center, a 168,000 square foot office building located in Bethesda, Maryland. This acquisition increased its core office portfolio in the Washington D.C. market area to two million square feet.
In January 2006, the company sold the World Trade Center Denver, which followed the sale of its 50% interest in the Colorado State Bank building in December 2005.
Property Operations – Residential Properties
In November 2006, the company completed an initial public offering of common shares of its Brazilian subsidiary, Brascan Residential Properties S.A. (BRP), which is a developer of upper-end luxury residential properties in Rio de Janeiro and São Paulo.
Property Operations – Other Activities
In October 2006, the company’s Real Estate Opportunity Fund acquired from affiliates of J.P. Morgan and Chase Co. a 5.3 million square foot portfolio of 33 commercial properties. This portfolio includes properties located in Chicago, Phoenix and Milwaukee.
In September 2006, the company announced the formation of a real estate opportunity fund. The fund would invest in under performing real estate in North America and has completed 12 investments in the United States and Canada, totalling 7.6 million square feet of property.
Power Operations
In November 2006, Brookfield Power, Inc. announced that the company had completed both phases of the Prince Wind Energy Project, located northwest of Sault Ste. Marie, Ontario. The Prince Wind Energy Project comprises 126 wind turbines extending approximately 20,000 acres. With a total installed capacity of 189 megawatts (MW), Prince is major wind farm in Canada.
In August 2006, the company entered into agreements to acquire two hydroelectric generating plants in West Virginia, which have a combined capacity of 107 MW and generate on average 526 gigawatt hours of electricity annually. These stations are being acquired from Alloy Power LLC and West Virginia Alloy LLC (WVA) and would sell power to WVA under a 15-year contract.
In January 2006, Brookfield Power announced the acquisition of four hydroelectric generating stations in northern Ontario with a total generating capacity of 50 MW and two hydroelectric generating stations in Maine with a generating capacity of 40 MW.
History
Brookfield Asset Management, Inc. was founded in 1997.
