Morning, ladies and gentlemen. It's now 10:30 and time to begin the annual meeting of shareholders of Brookfield Asset Management. My name is Frank McKenna, Chair of the Board. It's my pleasure to chair today's meeting. On behalf of the Board and management, I'd like to extend a warm welcome to everyone who's here today, including those joining us online through our live video webcast. I'll now call the meeting to order and would ask CST Trust Company by its representatives, Tony Pagano and Kay Harrison, to act as scrutineers. I'll ask our Corporate Secretary, A.J. Silber, to act as secretary of today's meeting. Now my pleasure to introduce members of management on the stage with me. Bruce Flatt, our Chief Executive Officer, Brian Lawson, Chief Financial Officer. As outlined in our Management Information Circular, there are four items of business to be considered today.
First, to receive the consolidated financial statements of the corporation for the fiscal year ended December 31st, 2016. Secondly, to elect directors who will serve until the next annual general meeting of shareholders. Third, to appoint the external auditor and authorize said directors to set their remuneration. Fourthly, to consider an advisory resolution on the corporation's approach to executive compensation. In connection with the business to be dealt with today, unless a shareholder or proxy holder demands a ballot, all voting will be conducted by a show of hands. In order to expedite the formal part of today's meeting, I've asked certain shareholders to move and to second various resolutions. Although this procedure will assist in the handling of formal matters, it's not intended to discourage anyone from speaking in reference to any resolution after it has been proposed and seconded.
I'm advised that the notice calling this meeting and the Management Information Circular were disseminated to voting shareholders in accordance with all applicable laws. I've asked the secretary to keep a copy of the notice and proof of mailing with the minutes of the meeting. The minutes of last year's meeting of shareholders held on June 17th of 2016 are also available should any shareholder wish to review them. Based upon the scrutineer's preliminary report on attendance, the secretary has confirmed that there is a quorum present. I therefore declare the meeting is properly constituted for the transaction of the business for which it has been called. Turning to the first item of formal business, I'll table the corporation's 2016 annual report to shareholders, which includes the corporation's consolidated financial statements for the fiscal year ended December 31st, 2016, together with the external auditor's report.
Copies of our annual report have been mailed to shareholders who have requested the report and are also available here today. The second item of business at our meeting today is to elect directors who will serve until our next annual meeting of shareholders. Before I introduce the nominees, I want to first note that we have two directors who have decided to retire this year, Phil Lind and George Taylor. Phil and George each served for over two decades on our Board and have been an integral part of our growth and success as a company. Members spoke at length about and to these two directors last night, let me just tell you that I can't recall serving with directors of better comportment and of knowledge and of ability and collegiality, all of the attributes of great directors.
We've been privileged to have 2 of the very best, I'd appreciate it if you might give a hand for the work that they've done over 2 decades. I can assure you, shareholders have been well served by the efforts of these directors. It's now my pleasure to introduce the 16 director nominees standing for election this year. To assist you in identifying our directors, their pictures will be shown on the screen as I read the names. The 8 proposed nominees for election by holders of the corporation Class A limited voting shares are Elyse Allan, Angela Braly, Murilo Ferreira, Rafael Miranda, Youssef Nasr, Seek Ngee Huat, Diana Taylor, and myself. The 8 nominees for election by the holders of the corporation's Class B limited voting shares are Jeff Blidner, Jack Cockwell, Marcel Coutu, Bruce Flatt, Robert Harding, Maureen Kempston Darkes, David Kerr, and Lord O'Donnell.
14 of the 16 proposed nominees were elected at last year's annual meeting in June of 2016 and are standing for re-election today. We're also delighted to have Murilo Ferreira and Rafael Miranda standing for election for the first time this year. Murilo and Rafael are both very global businessmen, and of course, we're a very global company right now, but they also have extensive business experience, and they're particularly well respected and knowledgeable in South America and continental Europe, respectively, where we have very significant and growing operations. Information on all 16 director nominees is set out in our Management Information Circular, which was posted on our website for shareholder review and available from the company upon request. The meeting is now open to receive nominations for the election of the proposed directors.
Mr. Chair, I nominate for election as directors the 8 nominees for the Class A limited voting shareholders and the 8 nominees for the Class B limited voting shareholders named in the Management Information Circular dated May 1st, 2017.
Thank you, Claire.
Mr. Chair, I second the motion.
Thank you, Ramy. Are there any further nominations? Are there any further nominations? Are there any further nominations? If not, I declare the nominations closed. As there are 16 directors to be elected and the same number of nominees, I now declare that those nominated have been duly elected as directors of the corporation. Ladies and gentlemen, many of our directors are here today with us and are wearing name tags. I hope you'll take the opportunity presented to meet and talk with them after the meeting over some refreshments. The third item of business today is the appointment of the corporation's external auditor and authorizing the directors to set their remuneration. As stated in the Management Information Circular, the audit committee of our board have recommended to shareholders that Deloitte LLP be reappointed as the corporation's external auditor. It's now in order for someone to move that resolution.
Mr. Chair, I move that Deloitte LLP be appointed the external auditor of the corporation until the next annual meeting, and that the directors be authorized to set their remuneration.
Thank you, Ramy.
Mr. Chair, I second the motion.
Thank you. Thank you, Claire. The resolution has been moved and seconded. The motion is now before the meeting for discussion, if any. Any questions? If not, adoption of this motion requires the favorable vote of a majority of the votes cast at the meeting by the holders of each of the Class A limited voting shares and the Class B limited voting shares voting as separate classes. Management has received proxies representing approximately 68% of the corporation's Class A limited voting shares and 100% of the Class B limited voting shares. These proxies direct me to vote over 99% of the Class A limited voting shares and all of the Class B limited voting shares in favor of the resolution. I will now call for the vote on the motion by a show of hands. All those in favor? Thank you. Against? I declare the motion carried.
The fourth and final item of business is the approval of the advisory resolution on the corporation's approach to executive compensation. It's described in the Management Information Circular. The corporation has put forth an advisory resolution at this meeting as part of its ongoing efforts to both meet its corporate governance objectives and to assure a very high level of shareholder engagement. Because this is an advisory vote only, the results will not be binding upon the board. However, the board and the management resources and compensation committee will most certainly take into account the results of the vote as appropriate when considering future compensation policies and decisions. The board welcomes comments and questions on the corporation's executive compensation practices. It's now in order for someone to move this resolution.
Mr. Chair, I move that the advisory resolution accepting the approach to executive compensation described in the Management Information Circular, dated May 1st, 2017, be approved.
Thank you, Claire.
Mr. Chair, I second the motion.
Thank you, Ramy. The resolution has been moved and seconded, and the motion is now before the meeting for discussion. Adoption of the motion requires the favorable vote of a majority of the Class A limited voting shares. Management has received proxies representing about 64% of the corporation's Class A limited voting shares, which direct me to vote about 97% of the Class A limited voting shares in favor of the resolution. I will now call for the vote on the motion by a show of hands. All those in favor? Thank you. Against? Thank you. I declare the motion carried. Ladies and gentlemen, that completes the formal part of today's meeting, and we'll now move to our management presentation. Bruce Flatt is going to be presenting on behalf of the management team.
At the end of the presentation, he'll be available to respond to any questions or comments that you might have. Please note 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 could differ materially. For further information on known risk factors, I would encourage you to review the Business Environment and Risk section of the MD&A, which is in our annual report. Now, Bruce.
Good morning, everyone. Thank you to everyone for joining today. Thank you everyone that's online. I think this is the first time we've done it online, so welcome to everybody. I'll make a short presentation. Brian and I'd be happy to answer any questions if there are any afterwards, or we would be pleased to answer them in person afterwards. Just looking at the last year in the company, we've done a number of things in the company, and I'd say had a pretty good year in achieving most of the things that we set out to do. Obviously, we never get everything done, but we've had a pretty good year. We've continued to expand the franchise globally of the business. Our total assets under management is just in excess of $250 billion.
Today, we're operating in a significant way in 30 countries, and I really don't think we need to have that many more. Selectively, we do grow that over time. We continue to grow both the people we have in the business to put the money to work, the fee-bearing capital, and the client base that we have. In addition, and just as a snapshot of the business, in addition to the return on capital that we deliver to all the shareholders in our business, and all of our clients, our business really does three things from a perspective of a corporation. Number one is that many of the assets we have are critical to the economies and the communities where we operate. When we deliver clean water, toll roads, pipelines, or critical real estate or infrastructure, that's extremely important to the places that we operate in.
Number two, we put a lot of money to work for sovereign plans and institutional plans across the world, and that delivers a higher return than they'd otherwise get in this low interest rate environment. Our products are critical to those pension plans. Number three, we operate in 30 countries, as I said, and we employ 70,000 people. That's a large group of people that we provide employment to. Lastly, we try to operate everywhere in the world with the same environmental, social, and government standards and principles within our activities, and we continue to do that. That is just good business to do that. Turning back to the financial numbers, during the year, we completed fundraising for three of our major funds. Usually, it takes from six to 24 months to raise a large fund.
We completed the final fundraising for our infrastructure, which was $14 billion, our real estate fund, which was $9 billion, our private equity fund, which was $4 billion. That was accomplished by both increasing the scale of the funds, the number of institutions we deal with, and the size of commitments in many of the institutions. During the year, our numbers of institutions that we dealt with went from 280 to 455 institutions, and most of these are large sovereign plans or large institutional plans from around the world. That further diversified the investment base.
A large amount of our capital has always come from North America, both the United States and Canada, but we continue to penetrate very significant plans in the Middle East, Asia, and Europe, which is still, I'd say, behind in their allocations to alternatives, but it is growing, and we have a number of plans. Just the scale of dollars that they've invested with us is smaller. Turning to the investment side of the equation, we put over $17 billion of capital to work in various strategies, either from our balance sheet or from those funds, over the last 12 months. It's widely spread throughout the world. A big amount of that money last year went into South America, Colombia, Peru, Chile, and Brazil. As always, a significant amount is invested into North America just because of the size and sheer scale of our franchise.
We achieved favorable results in virtually all of the partnerships that we operate, the listed partnerships we operate, which really means three things. Greater distribution growth, price appreciation, and capitalization growth within the vehicles, just growing those entities. Each one of them is becoming meaningful in their own right to fund their activities. The one achievement we did have last year, which on the listed side, was we spun off Brookfield Business Partners, which, for those of you that are shareholders, received those shares as a special dividend. We're very pleased with, A, the first year of the entity as a listed company, the trading of it, and the transactions that we've been able to do in the company, and I'd say even more importantly, the transactions we think we can do looking forward in that company.
We're quite excited about this entity, which houses most of our private equity activities. That's all led to pretty meaningful growth in our operating results, and I'll mention four things. Fee-bearing capital, which is the money that we manage for outside parties, and that pay us fees, went up by 14%. That led to fee-related earnings, which is what's generated for fees for Brookfield Asset Management, going up by 21%. When you add on top of that the carry that will ultimately be booked within our results, the annualized fees and the target carry went up by 31%, and that led to overall funds from operations of the company going up by 19%. Those are all pretty healthy increases within the company.
I guess this slide, many of you have often seen from us, we execute a very simple and repeatable model in the businesses that we operate, we try to just keep it extremely simple in what we do. Essentially, it's five things. One, we source equity from institutions and others. Two, we use our access to that capital in large scale to invest on behalf of the clients in more unique transactions that give us a competitive advantage. We use our global reach to find those assets, we finance them on a very long-term basis. What we try to do with the 70,000 people within the business is operate them more effectively to squeeze more value out of the assets. Essentially, we just keep repeating that process in each business we have within the company. Looking ahead, I guess that's the past.
If you look ahead and think about where the world is going for investments in alternatives, there's a couple of tailwinds that we have behind us. The first one is that institutional investors continue to allocate significantly greater amounts of their capital that they have to the investment products that we run. Traditionally, they were in fixed income, they then added equities, and now most institutions in the world have real estate in their portfolios. Many have infrastructure, and all these real asset products are becoming a much greater percentage of allocations within their portfolios. We're one of the people that can manage those assets for them. Traditionally, equity and fixed income alternatives were what they held.
Really the reason for that is that the interest rates across the world, in particular in Japan, Europe, and the U.K., are virtually negative. That has put significant pressure on interest rates, and that should keep interest rates down for a long time. We think on top of that, global growth is actually pretty good. The United States continues to do very well. Many of the economies of the world actually at a basic economic level are doing very well. Often you don't feel that way because the press focuses entirely on all the political things that are going on in the world. Many places you shake your head at what's going on. The underlying fundamentals of the economies are good, institutional investors are continually searching to put money to work because of these low interest rates.
The shifts in the portfolio allocations are generally being driven by three things, the macroeconomic factors, which is this slower growth and low interest rates, a continued further acceptance of alternatives. They weren't in any pension plans 20 years ago. There were no infrastructure and pension plans 10 years ago, and they continue to expand into these areas. Lastly, just the changes in regulations which allow insurance companies, sovereigns, institutional investors to invest into these products. Country by country, they're observing what's going on in the rest of the world, and they're changing regulations to make these products more available to the sovereign plans. That inures to the benefit of the managers of real assets and alternatives like us. We think these trends will continue for a number of years, irrespective of interest rates.
Obviously, interest rates staying in a relatively low band is helpful to that. Our general view on interest rates is that they're going to move up slowly. Obviously, the U.S. has been raising their short rates, as you may have observed, the 10-year rate has been staying quite low, we're almost heading to a flat yield curve. Despite that, our business model works extremely well in any range of interest rates of where we are. They can go up hundreds of basis points and our business still works extremely well. We've found that despite any of that, the real asset businesses that we operate in tend to perform across cycles.
Lastly, I'd just say that probably the most important thing to think about with interest rates and whether they do go up is interest rates only go up if economies are doing well. If economies are doing well, your revenues are going up as well in these businesses. Because of that, we should have a good environment to invest within. We've tried to position ourself as a partner of choice for our clients, whether they be in the public markets with our listed partnerships or within the private markets. Really, if you take a snapshot of what we've tried to do for our business and tried to capitalize on our advantages is number 1, we've had 115 years in this company of operating these businesses and have a large group of people that run them for us.
We have many funds that we offer to our clients. When they take the time to learn about our business, they take the time to understand what we do, they can allocate money to one product, but once they get really comfortable with us, they can then give us other money and other products. Therefore, it makes their job easier. Number 3, we have decades and decades of experience with very established and very high corporate governance. That gives us a huge advantage with institutional clients. Because of our size, we can do many things that other people can't. Because of our global presence, we can do many things that other people can't. Really, it's one thing to say that India is a great place to invest, let's go and invest.
It's another to have a group of people on the ground and make the opportunities actionable. What we've tried to do is establish our presence in countries so that we can make opportunities actionable. Clearly, the reason why shareholders stay with us and the reason why clients stay with us is we produce results for them. If we don't at the end of the day, nothing else really matters. We spend a lot of time making sure that we deliver the results that we promise to the people we manage money for. The three offerings we have are quite distinct, but obviously, the underlying strategies are all the same. We have our listed partnerships, which are just over $50 billion.
All of our private funds, which are another $50 billion deployed, and our listed public securities business, which manages the same thing, real estate and infrastructure, which is about $113 billion of fee-bearing capital that we manage for others. Which really allows us to access a multitude of sources of capital, which run from our private funds to listed partnerships. We co-invest with many of our clients. We have our own balance sheet to put money beside our clients and do things which they otherwise can't do. We have many joint venture partners. We have a whole array of funding sources and have tried to continue to enhance that over the years. This industry that we're in, the alternatives and real asset industry, we believe is headed towards a $70 trillion industry. What we've done is established ourselves as one of the managers in that industry.
The industry is growing just because more money flows into it, but also just because of the sheer fact of compounding. These funds, many of these sovereign plans are in the hundreds or 500s of billions of dollars. If you just earn 6% or 8% on that over time in 10 years, the numbers become enormous, which means they have to put more and more money to work within strategies. Our large-scale capital clearly gives us a distinct advantage. Real asset transactions often take very large commitments. Our money we manage for outside parties is significant. About $20 billion of that is dry powder to be invested in new things that we're doing every day. Our listed partnerships are perpetual, and they all have access to the capital markets when we choose to access it.
Our relationships get better every year because we keep working at it and keep building our track record with institutions, every year that inures to the benefit of the whole franchise. Our balance sheet is very liquid and quite flexible, and we can use that for many different activities. I guess I mentioned returns, this slide just shows a snapshot of the strategies we've had. This includes the financial crisis of returns. These are all of our funds over the past 15 years that we've had list private funds, and the returns are exceptional. That's really why people come to us because we've generated decent returns for the risk that we take within the strategies.
We continue to identify many attractive opportunities, we think despite a world of significant money out there and significant money chasing the things that we do, we can still find opportunities, we try to use the competitive advantages that we have to continue to find those. Just a few of those as a snapshot over the past 12 months. We bought a natural gas pipeline in southeast Brazil. We paid $5.2 billion for it. It's almost 100% equity financed just because of interest rates in Brazil today.
We brought in our full operating pipeline groups to be able to assist diligence this, and there were very few people that could, A, had $5.2 billion, B, had a major platform in Brazil, and C, could understand what a pipeline is, and lastly, that the government of Brazil would allow somebody to own a critical piece of infrastructure in the country. This, I think will be a great transaction in hindsight, looking at this transaction. We also invested $600 million, or we're shortly to invest $600 million in a telecom tower portfolio. We don't actually operate the telephones or the mobile phones. What we operate is the towers that we just rent the space on the towers to phone companies. It's a very broad portfolio of 40,000 towers in India, we think there's a number of other opportunities to continue to grow that business.
In Brazil, we also invested just over $1 billion in a water distribution collection and treatment business in Brazil. Said very simply, we deliver clean water to 21 million people in Brazil, and we take sewage away from their houses. This is an amazing thing in emerging market, and we think this business can expand and grow just given the dynamics of the country. In Colombia, we bought a 3,000-megawatt portfolio of hydro plants, which is 7 very major critical hydro facilities in Brazil. It used to be owned by the government. They used our $5 billion. This is what's going on in the infrastructure business in the world. They're going to use our $5 billion to fund new greenfield infrastructure in Colombia and launch new programs of toll roads and distribution and different things in the country.
They sold us this asset, which was fully completed operating and cash flowing when we bought it. In Asia, we bought a large landmark mixed-use complex. We paid $2.3 billion in Seoul for a complex that has a very large Conrad hotel, three office buildings, and a retail mall that's underneath it. We think there's a number of things we can do with the complex like we've done in much of the other real estate that we own around the world. All of those transactions, just a snapshot of many of the things that we did, but all of those transactions have enabled those funds, which I said were closed for investing in last year to become significantly invested. Our real estate fund is over 80% invested. Our infrastructure fund is 45%, and our private equity fund is 55% invested.
Which what that means is we're shortly starting to raise another real estate fund and then successively with the others. We continuously raise these types of funds. Looking ahead, I just summarize with five things within the business that we're really focused on. One, every business we have and every asset we have, we have spent every day with our people to try to enhance the values we have in the business because that's how we get extra returns for the shareholders. Number two, we have a lot of extremely valuable relationships with clients, and as everyone knows, client relationships are everything within a business. We have to take care of them, and we continue to expand those relationships selectively. We spend a lot of time taking care of them. We have $20 billion of untapped money to invest.
We have our balance sheet, we will be out raising new funds. We have to always look for opportunities and make sure we can source opportunities. Fourth, we're out raising our next set of funds. Lastly, our listed partnerships, enhancing the values of those companies is critical to the franchise that we have because the better that they do and the greater access they have to capital, the more successful our overall business can be. We spend every day trying to work with those entities to make sure that they grow and enhance their business. I would just end by saying again, A, thank you for coming. Secondly, just that we really appreciate all the support of everyone from analysts to bankers to stock investors to everybody that helps our franchise.
We, on behalf of the whole management team, thank you for everything that people do for us. Thank you for coming. If there are any questions, I will take them.
Hi. Dan Kurkoff. I'm a shareholder. Can you talk about the latest, the spinoff, the Trisura, the insurance company?
Why doesn't Brian just maybe explain what is happening? He probably remembers it better than I'll make a couple comments just on the business.
Sure. Trisura, it's a property and casualty and reinsurance business within Brookfield. What we've done, in some ways not dissimilar, is we've established it as a corporate entity, we're spinning out the shares in that entity to Brookfield shareholders as a dividend in kind. I guess one of the differences is that it'll be a self-standing entity. It will not be managed by Brookfield. We're spinning out 100% of it. You will all receive, in proportion to your own shareholdings, a shareholding in Trisura. It will have a value we expect around $0.10 or $0.11 per Brookfield share. It will start trading in the market. We would value it around $25, but the market will value it however it sees fit. The record date, just for some of the formalities of it, June 1st. The payment date will be June 22nd.
If you can do the math, you're going to get one Trisura share for every 170 Brookfield shares. I'll leave the rest of the math up to you on that front. That's really the starting point of it. We'd be happy to take any questions.
I would just add to Brian's comments. I'd just say that we always think about how do we maximize value for the shareholders of Brookfield. On this one, it didn't really fit with what the company is today, we owned it 100%. It's a people business, it's tough to sell. If you sold it, we would get X value, but we thought it was worth a lot more than what we would sell it for. The bottom line, we decided for the management team and for the shareholders, the best thing to do was just give it to our shareholders. Everyone can decide what to do with it. You can either sell your shares and buy yourself an extra coffee, lunch, dinner, or a new car, depending on how many shares you own. People can hold it and ride along with it.
I think it's a great little company, we just thought it was the best thing for all shareholders.
Okay. I understand it's an insurance company, but how do you value it? Do you value it like a regular insurance company, or it's very specialized insurance from what I read.
Yeah. Brian and I, we're spinning it off because we really don't understand the business.
Thank you.
No, here's what I'd say. They write specialty insurance. If you have a special type of car insurance and other people don't write it, they'll take the policy. They've been highly profitable over the years, and it's like an insurance company, but it's a specialized one. Their record is good. Eventually, it will just be looked at on an earnings multiple of like insurance companies would normally be.
A multiple of book basis. People will take different views of it, but those would be the two most common approaches we would think.
I think there's someone over here.
Go ahead, sir.
Hi, my name is Phil. I'm on behalf of Mike Wazowski. He wants to know when you guys are going to increase the dividend. Another question is very simple. I know you guys invest in value company. Would you be interested to acquire Home Capital? Thank you.
Brian? You want the first one? I'll do the first one, you do the second one. Okay. The first one, we did actually increase the dividend at the beginning of the year. We've tended to increase it. The average rate has been around six or seven, around 7% of an annual increase over the past number of years. I think it's reasonable to suggest that's something along the lines of what we would expect in the future. Obviously, those are increases each year subject to the board of directors. That's the pattern of dividend increases. We do think it's a good thing to do.
On the second question on Home Capital, it's obviously we have a big Canadian business and a lot of people here. Everything that's in the market we look at, and if there is a transaction that made sense on a risk-weighted basis that we get involved in, we'd be pleased to be involved. Whether that happens or not, we'll see. There's many things we look at. Lots of them don't happen.
Good morning. My name's Nick Cyrus, and I'm a shareholder. I'm looking to get a little bit more clarity on the process by which board members are nominated. As I look through it looks as if we have 50% of the board members don't have serious money invested in the company. I'm all for sweat equity, but when half of the board members don't have much of their own money invested in the company, I'm wondering if we're not depending a little bit too much on sweat equity. Would you like me to go through the names of the individuals?
No, I think I get the question. I would just say, if you look in general at our company and our board and our management team, I think, in general, if you look at the amount of money we all have invested in the company, it probably is greater than virtually every other company that's around, certainly in Canada, and would be up there with the best in the world. I don't think that has actually never been an issue that we've ever thought about. Secondly, many of the board members that we've brought on the board over the past five years have been very international board members, and we bring them on because we want the experience of theirs around the world. I think we have an unbelievably talented board to be able to help the company.
I can tell you that Brian, myself, and the management team are extremely benefited by having all of them, and I would be happy to sit with you in person and talk about any one of them if you wanted to do that. What I might add to that is that there are director ownership expectations, and particularly given that a number of the directors have joined the board more recently, there's a period of time over which those positions can be accumulated. We don't expect it to happen right off the bat. In many cases, that will accumulate over time.
I guess there's a period during which somebody is being approached to join the board. They have plenty of time to buy some stock to demonstrate their commitment to the shareholders. It's a little bit frightening when you see new members coming with 0 cash invested, but that's simply an observation.
Thank you.
Hi, I'm Robert Batha, a stockholder for a number of years. I always enjoy coming to these meetings just from your comments on the global situation. Last year, we were talking about the possibility of Brexit, and of course, we thought at that time that it wasn't going to be voted in. It was. Now with the turmoil in Britain, I've really got a two-part question. My first part of the question is, and I realize you've alluded to the political turmoil in the U.K. and Europe, do you see this as an opportunity, A, to get into further stuff because it might be undervalued because of these concerns? Secondly, are you concerned about our exposure, particularly to London, where it seems we could be facing a situation where finance houses move elsewhere in Europe? Actually, it's a three-part question.
The third part is, it was funny actually, because sometimes I ask these questions separately and somebody says, "Oh, not you again." This time I'm putting them all together. The third part of my question is, in South America, we've tended to stay away from Argentina, and I think I understand why. Bank of Nova Scotia's experience there demonstrates the political risk. Having said that, the political situation is changing somewhat, and do you see that as a potential area of operation in the future, infrastructure-wise and otherwise?
Thank you for the 12 questions. Let me try to take them in reverse order.
Sure
I remember them that way. First, on.
On countries, I'll make it more broad than just.
Sure
talking about Argentina. We spend a long time thinking about countries to go into, and we have very large amounts of money that we need to put to work. We earn reasonable returns on capital on an annual basis. At the end, what's really important is that you get your money back because we need to either sell the asset or monetize it, and the back end is important. What's really important to us is rule of law, judiciary that's separate from political interference, and most importantly, a culture of respect of capital. Therefore, when we look at countries, they have to be large enough that we can put meaningful amounts of money to work. They have to be able where we can hire people and put them there and have a presence on the ground, and they have to have all of those characteristics.
Until a country has those, we're not really interested. There's hundreds of countries to invest into the world. We're a big investor, but you know what? We're very small on a global basis, therefore, we can pick and choose. We don't want to take any risks when we go in. If we go to a country, we want to be there for a long period of time. We're not interested in really while something's changing. If it's changed and it's good, we will be there. We're not interested in making speculative investments based on whether they will or won't change. There's many countries like that, and we just usually take the easy route or the less risky route in it. That's the last question.
With respect to Europe and London specifically and Brexit, firstly, I can't remember what I said to the Annual Meeting last year about Brexit.
I can. You said basically this.
I knew
we assure it won't be voted in. Even if it was, no need to worry.
So-
That's a crazy.
I guess we were wrong. We're sometimes wrong. That happens. We all make mistakes. Here's what I would just say is that the situation in Europe today on the underlying fundamentals of virtually all of the businesses that we have, one year later from Brexit happening or close to it, is that all of the businesses we have are doing really well. There's really been no impact on the fundamentals of the businesses. Housing prices are strong. Our connections business is strong. Our office business is strong. Most of the businesses we have there are very positive. Second, what we thought would happen actually did happen, which is that gilt rates, the long rate in the U.K., went from 2.5 to one.
Because of that and because of international flows of money, real estate prices on average have gone up by 25%-50% since Brexit. I'm going to say that again. On average, prices have gone up 25%-50% since Brexit on many great office in the city. On average, they were selling at GBP 1,200 a foot. On average, they're selling at GBP 1,700 or GBP 1,800 a square foot today in the city of London. You've seen an enormous increase in value. Part of that's currency. Currencies went down. I'd say so far, we haven't seen any issues. As to the future, there's no doubt, third question you had, which is what about financial services and your exposure to that?
Look, we have very long-term leases, but around the edges, there are some financial service jobs that are clearly going to move out of the U.K. if they separate from the EU. That's given. We think it's probably 10%. What I can tell you is our observation is that the growth in white-collar employment in great urban centers like downtown Toronto, like New York, like London, like Sydney, like Shanghai, is not from financial services on the margin. It's from technology companies. The number of technology companies, for example, in the city of London, we open next week a new Amazon European headquarters, which is 700,000 square feet that they use entirely for themselves. The number of technology businesses growing in these centers because they can get people is very significant. I think the counterbalance is that. I just think the last question was just opportunities.
Yeah.
Look, we're always looking for opportunities. If there's more stress than what I just stated, there will be opportunities. Today, there isn't. There's always things we find to do, but there isn't any major opportunity that comes out from Brexit so far.
Great. Thanks for answering my multitude of questions, Bruce. I'm going to go away and start working on next year's questions. In the meantime, I mean, seriously, it would be remiss if I didn't say, I know on behalf of other shareholders that I've spoken to, thanks again for another great year.
Thank you. With that comment, you can come with 13 questions next year.
Elizabeth Ecker, shareholder. Something just occurred to me. How do you make money on a dam? That would be a liability to keep it up, but what do you sell? The water?
Yeah. The question is how do you make money on a dam? It's actually really simple. It sounds complicated. It's really quite simple. There's a river.
Yeah.
It has a dam on it. It holds the water back. Often it actually is contributing to the area because it creates a area where people can boat behind it. What happens is the water goes into tubes on the sides, and it's usually where there's an incline, and it goes into tubes, and the water runs through the tubes, and at the bottom of the tube, there's just a simple flywheel, and it turns a turbine-
Okay
It generates electricity.
Okay.
It's actually really, really simple. That's why these dams, they last for hundreds of years because the technology is extremely simple, and all you just need is water, and they run through the tube. It turns this turbine and creates electricity. It's a very simple technology.
You're basically just generating electricity.
Correct.
Thank you.
Good morning, guys. Anthony Vanelli, I'm a shareholder. I have a couple questions, one specifically about Brazil, seeing as you have larger and larger amounts of capital there now, and the ever-going government scandals that keep on embroiling the government there, if that's actually having any effect on the ground with the economy. That's my first question. My second question is with regards to property. BPY seems to be buying in a fair amount of their float on a yearly basis now. With where U.S. real estate companies are trading publicly, traded real estate, far away from their NAVs these days. Are there more opportunities in the marketplace or in buying back that stock in BPY consistently?
Okay. On Brazil, I'd just make the comment that it went through an extremely tough recession over the past four years. It was a tough recession caused by commodity prices coming down, oil and other commodities. That was exacerbated by a government that has spent a lot of money and ran up a pretty big deficit. Then what happened is all these political scandals came on top of that. It virtually paralyzed the country. That was very damaging to the country. Based on what we see within all of our businesses on the ground, whether it's rail traffic on our rail business, whether it's toll road traffic, whether it's sales of condominiums, whether it's retail sales in our malls, whether it's electricity usage, all of those things, we're seeing it start to recover. It's been recovering for 12 months.
It's not fast, and it's probably not going to be fast. The political scandals that can keep happening aren't helpful. Ultimately, this is all going to get sorted out, and they're going to have an election next year. Probably the most positive thing I can say about all this is our belief always was that there was a rule of law in Brazil, that there's a judiciary separate from the political system, and that they had a culture of respect to capital. Despite all of the issues that happened over the past five years in Brazil, every one of those things proved out. We've been comfortable over the last 18 months putting much more large amounts of significant capital into the country in transactions purely because those things proved out. If they hadn't have, we would not have more money in the country.
I'd say Brazil was what proved that the three things that are fundamental to foreign investors in any country. On BPY, private values of real estate in virtually every place in the world for good real estate are trading at far higher values, lower cap rates, higher values than what they trade at in the public market. I think that's just perception of market investors versus private investors. Our goal is always to arbitrage the opportunities if they're out there. Clearly, and you've observed it, we've been selling private assets at high prices and buying stock in BPY, and we will keep doing that if that mismatch stays. Ultimately, the price of BPY should trade at its NAV. If it doesn't, we'll keep doing it. That will happen over time.
Thank you.
You're welcome. Seeing no other questions, Mr. Chairman, shall I turn it over to you?
Yes, please. Thank you, Bruce. Thank you, ladies and gentlemen. Ladies and gentlemen, if there are no further questions or comments, I want to thank you all for coming and joining us today in person and online through our webcast. We appreciate your participation. We don't take it for granted. We like it, and I hope you have found the meeting informative. That brings us to the end of today's meeting, unless there are any other business. As we indicated at the outset, directors, executives will be around so that you can address them in person if you have any other questions. Since there's no other business, I declare this meeting to be terminated.