Brookfield Asset Management Inc. sees investment opportunities growing in the coming months as the economy bounces back somewhat less than many expect.
A slower recovery will mean more companies need capital and investment from firms like Brookfield that have been preparing for an economic shift, Brookfield chief executive Bruce Flatt told a conference call Thursday to discuss the company’s latest results.
“There’ll be more opportunities in three months from now, and there’ll be a greater number in six months from now. And that’s merely because our expectation is that the economic recovery will be slightly less than everyone hopes,” Flatt said.
He said the company has US$60 billion in available liquidity ready to deploy as opportunities arise.
The Covid-19 pandemic helped push the company into a first-quarter loss of US$157 million compared with a profit of nearly US$1.26 billion in the same quarter last year.
The company, which keeps its books in U.S. dollars, says the loss amounted to 20 cents per share for the quarter ended March 31 compared with a profit of 39 cents per share a year ago.
The loss came as Brookfield was hit by non-cash, unrealized adjustments during the last month of the quarter, which included the plunge on the stock markets. However, the alternative asset manager said that it expects many of these changes to reverse as markets recover.
Toronto-based Brookfield announced last week a US$5-billion program to invest in cash-strapped retail business and operations, focused on companies that have US$250 million or more in revenues.
The company has a direct interest in the success of the retail sector because it is heavily invested in malls and other retail properties, which make up about a third of its real estate assets under management, concentrated in the United States.
The Covid-19 pandemic has forced the closure of many of the company’s retail properties and reduced earnings from the sector. Brookfield’s property division reported last week that only about 20% of its retail tenants paid rent in April.
Brian Kingston, chief executive of Brookfield’s property divisions, said that while the sector is taking a short-term hit, the company’s focus on densely populated high-growth markets is still sound.
He said more online businesses are looking for physical stores in these areas, while weaker stores with older business models are bowing out and Brookfield is converting some of that freed-up space into residential and entertainment uses to create a more urban environment.
“We had initially expected this process to play out over an extended number of years. However, the sudden impact of the Covid-19 crisis has accelerated the demise of the weaker balance sheets and poor business models.”