Earnings Call: Q4 2015

Feb 12, 2016

Welcome to the Brookfield Asset Management 2015 4th Quarter and Year End Results Conference Call. 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. I would now like to turn the conference over to Mr. Andrew Willis, Senior Vice President of Communications. Please go ahead. Thank you, operator, and good morning. Welcome to Brookfield's Q4 webcast and conference call. On the call 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 financial and operating results in 2015. Bruce will then talk about our market outlook and Brookfield's priorities for the coming year. After our formal comments, we will turn the call over to the operator and take your questions. In order to accommodate all of those who want to ask questions, we ask that you refrain from asking multiple questions at one time in order to provide an opportunity for others in the queue. We will be happy to respond to additional questions later in the call as time permits. At this time, I would remind you that in responding to questions and in talking about 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, I would encourage you to review our annual information form and our annual report, both of which are available on our website. Thank you. And I'll now turn the call over to Brian. Thanks, Andy. Good morning. We had a good year across all our businesses in 2015, and we are off to a strong start this year with major growth initiatives underway across the company. During 2015, we raised $17,000,000,000 of fee bearing capital, bringing our total to the $100,000,000,000 level. We committed over $20,000,000,000 of capital to new investments and we continue to harvest mature investments at attractive valuations allowing us to return capital to clients and reinvest in higher yielding opportunities for the future. Our funds from operations or FFO increased by 18% last year to $2,600,000,000 or $2.49 per share. Breaking this down, FFO included the following: fee related earnings in carry of $551,000,000 that's up 45% over 2014 FFO from invested capital, which stood at $1,200,000,000 similar to the level earned last year, as strong performance in many of our businesses offset headwinds in some of the others and $842,000,000 of realized disposition gains as we took advantage of strong demand for real assets to lock in gains and free up capital for reinvestment. Consolidated net income for the year was $4,700,000,000 or $2.26 per Brookfield share and included a healthy amount of valuation gains on our property portfolio, although not quite to the same extent as we saw in 2014. So turning to our asset management results, fee revenues increased to $943,000,000 that's a 24% increase. That was due in turn to fees on new private fund capital raised during the year as well as expansion in the capital basis of our listed partnerships. Over the past decade, we've built a global asset management business and the strength of this shows in our ability to raise capital from both private and public markets. Our private funds, listed partnerships and public security portfolios had net inflows of $14,000,000,000 so that's $17,000,000,000 gross and $3,000,000,000 of which was returned. And that also included $3,000,000,000 of net inflows in the 4th quarter. Our 3 new flagship funds are each 50% larger than the predecessors. All 3 of our listed partnerships increased their cash distributions to unitholders last year and early this year. The incentive distributions we received for increasing these payouts rose to $72,000,000 up from $48,000,000 in 2014. We added $219,000,000 to unrealized carried interests and crystallized $32,000,000 during the year. Unrealized carry now stands at $658,000,000 The growth in our asset management business is reflected in the increase of the level of annualized fee basis and target carry to $1,600,000,000 and that's up nearly 30% over last year. I'll now move to the results from our operating businesses. Performance was favorable overall despite sales results for our property infrastructure businesses as a result of operational improvements and expansion projects. However, we did face lower water levels in our renewable power business, lower energy prices and lower currency exchange rates. The property business had an excellent year. New leases in major office buildings began to contribute to our results and we also recorded significant FFO from newly acquired assets, such as our increased interest in Canary Wharf and U. S. Multifamily operations. FFO from operations was up 9% to slightly over $600,000,000 And in addition, we had nearly $800,000,000 of disposition gains on the sale of close to 100 properties, including buildings in Melbourne, Toronto, London and New York. And we continue to see very strong demand for high quality properties such as these. During the year, we acquired office properties in Berlin, increasing our presence in Europe and moved forward with premium developments in destination cities such as Dubai, London and New York. Our Renewable Power business generated FFO of $208,000,000 that compares to $313,000,000 the previous year. We did have positive contributions from newly acquired facilities. However, as I mentioned above, we did experience lower water levels And so that and the hydrology was well below historic levels in the Eastern U. S, Canada and Brazil, 9% below long term averages. If we and so if hydrology had turned out roughly in line with historic levels, we estimate that FFO would have been around $70,000,000 higher, all else being equal. Subsequent to year end, we invested $2,000,000,000 in our hydroelectric portfolio in Colombia and expect this business to make a significant long term contribution to our performance as it has both 3,000 megawatts of existing facilities and 3,800 megawatts of development projects. Our infrastructure business FFO increased by 10% to $245,000,000 We had good performance from newly acquired assets such as the $17,000,000 of FFO from our communications business in Europe also benefited from internally generated growth initiatives, which contributed a 12% increase in FFO on a same store constant currency basis. We continue to move forward with the acquisition of an Australian port and logistics business. In our private equity operations, FFO was $286,000,000 generally in line with our expectations. We had $25,000,000 of disposition gains in the year compared to $239,000,000 of gains in the previous year, which reflected a particularly large disposition. Finally, the Board of Directors declared a quarterly dividend of $0.13 per share. That represents a $0.52 annual payout to be paid at the end of March. That represents an 8% increase over the previous dividend rate. So with that, thank you, and I will now turn the call over to Bruce. Thank you, Brian, and good morning, everyone. Today, I'll cover 4 topics. The first is fundraising second, investment opportunities third, our views on markets and 4th, I'll make some comments on our balance sheets and capital recycling. As always, afterward, we welcome your questions on the phone. Starting with fundraising, our institutional and sovereign fund partners continue to increase their allocation to real assets. We're completing the marketing of 2 of our flagship funds just now, which will close in the Q1 with approximately $12,000,000,000 of commitments. We also expect to complete the first close of one of our other flagship funds at upwards of $10,000,000,000 in the first half of the year. With each of these funds at least 50% larger than their respective predecessor, this sets us up well for continued growth in the business. To answer the question many have asked us, we continue to see very strong allocations from institutional clients for real assets from every market in the world, some with large increases to this sector. Based on our pipeline, we should be able to complete fundraising in 2016 for all of our new flagship funds, raise capital for a number of other investments from our institutional partners and events fundraising for a number of other funds. Our private fundraising capacity continues to strengthen with our institutional relationships deepening. Increasingly, we are offering our largest partners a range of products, which include their participation in our funds, but also, for many, co investments in transactions with us and direct investments alongside our listed partnerships. Examples of recent co investments and direct investments are Esojin in Colombia, our Canary Wharf investment in London, other London and Australian and U. S. Office properties and more recently an office retail complex in Europe. This integrated approach, which often involves large transactions can only be offered by the largest managers with scale and this stands us in good stead with our partners. With respect to investment opportunities, we're seeing significant numbers of investment opportunities that meet our investment criteria across the board. This is the result of the accentuated macro themes over the last few years that we've been focused on, namely, number 1, the lack of capital in the emerging markets, 2, the significant declines in commodity prices virtually across the board, 3, in the currency rate movements against the U. S. Dollar and therefore making it cheaper to buy things in other markets around the world. And 4th, the broad sell off in the U. S. High yield bond market. Specifically to the U. S. High yield market, we have been and are investing significant amounts of dollars into the high yield bond positions today across most of our funds at what we see as exceptional yields to maturity and some which may turn into further opportunities in those funds. With respect to the market environment, our view is that the U. S. Economy continues to improve, making it made 2015 the 1st year of interest rate increases since 'six. We expect more in 20 16, but this will only happen in the event of continued growth in the United States. Jobless claims in the U. S. Recently came in at their lowest numbers in over 40 years and many industries are doing well, including a number of ours, despite what catches the headlines in the news. Given this, our view is that U. S. Interest rates will slowly grind upward over the next number of years. And in this environment, real assets will and are performing extremely well. They should continue to hold their value as cash flows increase and at a minimum offset any interest rate increases exceed them. Should rates not increase, real assets are the place to be. We also continue to see exceptional pricing for mature high quality real assets and therefore we're continuing to sell some of those in order to free up capital for investment elsewhere, lock in returns in some of our funds, return capital to our partners and ensure that our balance sheets are even stronger than they are today. Turning to Europe, it has recovered from a very difficult situation and is ever slowly seeing life. With the euro at closer to par to the U. S. Dollar, many businesses are doing better, manufacturing, tourism, retail. The European market will exhibit very slow growth for a long time and real assets may be the only place to find yield in a market where 1,000,000,000,000 of dollars of government bonds have been forced to negative yields by quantitative easing. We have been finding exceptional assets to acquire and we're able to finance them with very long term low rate financing, generating strong cash yields to equity and we hope to continue to do this. In the rest of the world, the U. S. Dollar was strong against almost every other currency in 2015. This was caused in part by the divergence of monetary policy, but also because the emerging markets and commodity currencies were dragged downward with an unrelenting pressure of declining commodity prices. While the lower currency showed our short term results as a result of converting foreign currencies into fewer U. S. Dollars, We had many of our assets hedged and most of the short term negative detraction from results will shortly be over. Lastly, I want to cover funding of our balance sheets and recycling capital. As Brian mentioned, we're in excellent financial shape with very good access to many forms of capital. In this environment, this is clearly a competitive advantage. We primarily invest 2 forms of capital. The first private capital on behalf of largely institutional and sovereign fund partners, which I spoke about earlier. In this category, our access is very robust and in fact has never been better. The second is our listed markets capital on behalf of retail oriented investors. This capital is either deployed in our 3 listed Brookfield partnerships or within our listed markets business. Our private funds have durations usually 10 to 12 years and therefore capital recycling occurs within those funds naturally. As we continue to harvest capital from earlier generation funds, we return capital to clients and our portion of that capital is then available for investment in the new funds or other investments on our own balance sheet. As our private funds have become larger, we've been decreasing our percentage commitments to each fund, even though the quantum is large and still increasing because the funds are getting larger. As a result though, the capital harvested from earlier funds should be sizable enough to fund the commitments we have made to later funds on new funds on a self sustaining basis. With respect to our listed partnerships, we now have achieved critical mass in each of them to the point where they can grow themselves either through internally generated cash or by refinancing or selling assets that have matured on their balance sheets. This means that each of these entities is self sustaining and doesn't need to fund their business model by accessing the capital markets other than for some reason we believe the right strategy is to issue equity. For example, Brookfield Property Partners now has an equity base of $22,000,000,000 Internally, within the company, we sold $2,000,000,000 of equity in assets at excellent prices over the last 12 months and plan to sell about the same in 2016. It has enabled us to repay 100% of the acquisition facility put in place to acquire the other half of the office company 2 years ago, fund our development pipeline and make a number of acquisitions in the company and we will continue to use the resources inside the company to do that. Brookfield Infrastructure has increased its equity base to $8,000,000,000 and has been redeploying capital from more mature assets into ones with what we perceive as greater upside over the longer term. This included selling electricity transmission lines in the U. S, New Zealand and more recently in Canada. And we have a few asset sales targeted for this year. As a result, we do not need to access the public markets to continue to grow our business. The last partnership, Brookfield Renewable, is also self sustaining and has been for over 10 years. To fund further investments over and above our operations developments, we utilized the sizable cash generated in the company and also have been up financing assets as the values increase, as well as selling some mature assets within the company. That concludes my remarks. Operator, I'll turn it back to you and Brian or I would be pleased to take any questions if there are any. Any. The first question is from Bert Powell of BMO Capital Markets. Please go ahead. Thanks. Bruce, with fundraising or what you're in the market today looking like it's going to be completed mid-twenty 16, how soon can you turn around and launch new funds or what are the gating issues around that from a legal perspective and also just maybe around demand to kind of start going again right after you finished? So, hi, Bert, it's Brian. I'll just start off with that and then Bruce will follow-up as necessary. So just in general, the way it works is you raise the money, there's a 3 year investment period that you deploy the capital in and once you get to the 75% or 80% level, then it is permissible to go and begin raising your next fund at that stage. Obviously, you want to be largely and your investors want to see you largely investing that current fund until you move on to the next one. That's the legality or the operational side of it. And I think our real estate fund is probably before usually before full closing of a fund, we're normally 30% to 40% invested within a fund. So, it takes time to close a fund as you've started and you're already investing the capital during that period. So, usually, you start a new fund probably a year after the closing of a prior fund because you've already had a year of investing usually in that. And Bruce, what about other strategies? I think you've seeded on the hedge fund side, and I guess private equity, are you free to start looking at fundraising on for those kinds of strategies? Yes. So, our we continue to create products where we see we have a competitive advantage and we can bring our clients into them. So, we've created a number of debt products and we'll create more within either our real estate infrastructure business. We have a hedge fund for we've been buying distressed and high yield bonds and we'll continue to increase the size of that. And where we see opportunities, we'll continue to create funds for strategies. In addition to that, we're as you know, we have a lot of core product that is on our balance sheets and we continue to bring our investment clients into core properties and other infrastructure assets with us. You're welcome. The next question is from Brendan Mayerana of Wells Fargo. Please go ahead. Thanks. Good morning. So Bruce, I understand it makes perfect sense about kind of the asset recycling given where equity prices are now, it would be challenging for the listed subsidiaries to raise capital. But it seems like given how much success there's been in terms of the capital raising from your institutional partners that there's a lot of investment the institutional partners are likely to do that you're going to do on their behalf? And do you have enough scale in the listed partnerships to be able to monetize assets, to be able to invest alongside those those institutional partners? Or is this something where maybe really the size of investments, the percentage that Brookfield has had alongside its institutional partners is going to drop really meaningfully over the next few years? Yes. Hi, Brandon. It's Brian. So, when we set up each fund, we have the point you're making very much in mind that we get the right kind of it's really trying to balance out the investment opportunity set, the availability of and demand from institutional clients as well as what is the right amount of investment to be made over the next few years from the listed partnership. And I think one of the things you're seeing, and Bruce alluded to this in his comments, stated this in his comments, is having that flexibility to, when it's appropriate and you can do it on an accretive basis, go raise the listed capital from the public markets for the listed partnerships. But what you've also seen us do over the past number of years, and we see excellent opportunity to continue to be doing this, is harvest and monetize assets directly off of the listed partnership balance sheets as well. And so that gives us the ability, the flexibility to find the right and really, I'll say almost are between public and private opportunities to raise capital. And then finally, what we are seeing is the funds mature and we begin to approach the monetization periods, harvesting periods for each of the funds is significant capital flows coming back to us from those funds. So there are a number of different avenues to source that capital so that the listed partnerships can be continuously redeploying and recycling capital to up the returns. In addition, Brandon, I was just going to add, I'd maybe just add to it. There's no doubt that and I may not have been clear in the comments I made, but what we've been doing is decreasing the percentage of the funds that we have as they get larger. So, our quantum of dollars is still quite significant, but the number, just because the size of the funds are getting to $8,000,000,000 $10,000,000,000 $15,000,000,000 the percentage is coming down. And therefore, there's less pressure on those companies if you're making very large commitments. In addition to that, and I guess it's just important to note that we have a we keep a liquid balance sheet up top in Brookfield Asset Management and such that if we ever needed to fund commitments like that, we could always take part of the commitment in BAM and then either keep it or feed it off to institutional clients, other institutional clients over time. So, there's lots of flexibility on our balance sheets. That's why we keep them pretty flexible. Yes. And maybe just as a follow-up, I mean, is the percentage decrease, I think a lot of the pitch that you guys made and were successful and have been successful at was your capital is going to be invested alongside these institutional partners. And I think typically you guys had been the biggest investor in a given fund or strategy. Is the decrease in percentage terms, I mean, is that is this something like 25% down to 10 percent? Or is it you're still probably the biggest individual investor in kind of each of the strategies as you're laying it out? So, in our flagship funds, we used to be as you know, when we had the earlier series, we were 100% of the money. We were then 50% 75%, then we were 50%. There's no fund where we're under 20 5% of the money, but the quantums of dollars are becoming very significant. So, when you have a $15,000,000,000 fund and you're 25 percent of it, it's $3,250,000,000 And that's a lot of money and we don't have a client that has that much money in a fund, in one specific fund and I don't think you'll probably ever see a client with that much money in one single fund. So, I think our story holds very true and we've not had any issues with our clients. It's just because the quantums get so large. Yes, understood. Okay. Thanks, guys. Welcome. The next question is from Alex Sabry of CIBC. Please go ahead. Thank you. Just reflecting on all of the volatility that we're seeing in a lot of different markets around the world, I know you guys have a very long term view. But can you talk about how any, I guess, different investments types or geographies have been changing in relative appeal in the last, say, 6 months? Yes. So, I would just say that the same themes exist today as they had over the past few years, except they're much more accentuated today. And probably the biggest one that has changed is the oil and gas markets, as you know, everyone knows it, have deteriorated very significantly in the last 6 months and that's caused a lot of stress in a number of areas and commodity prices have changed a lot. And those two areas are increasingly generating opportunities in around the pipeline area, in the infrastructure area and other different things. So I'd say that's probably the largest one. And secondly, I'd say there's because of the sell off in the stock markets, there's a lot more opportunities we're seeing in sell off in stock markets and bond markets. There's a lot more opportunities we're seeing in the listed markets than what we would have seen, 18 months ago. And those are probably the 2 biggest changes. Okay. And then, you've talked a lot over the past few years about investing in infrastructure around commodities. Given the, I guess, the severity of the commodity price weakness and the fairly extended period over which we've seen very depressed pricing. Can you just talk about counterparty risk exposure and how you manage that? Yes. I would just say, we're in the the infrastructure business and the real estate business are really just, you own tangible real assets and you rent them to people and credit party consideration is really what we do for a living. So we spend a lot of time thinking about who our tenants are in a retail mall, an office building, a pipeline, a railroad or any other thing that we rent to people. And we don't think we have significant exposure to anything that's going to bother us around the edges. Obviously, we do. But as you're around these type of things, but not very much. And so we don't foresee a lot of issues. The next question is from Andrew Kuske of Credit Suisse. Please go ahead. Thank you. Good morning. I think, Bruce, you made a comment about a lot of focus on the U. S. High yield market and obviously this piggybacks on some of the earlier questions that one of the biggest issuer groups in that is energy. And so when you look at that vertical, is it the combination of a lot of high yield access in the past, capital models that are business models that generally require a lot of capital market access and then just the way spreads have blown out really combining to a good perspective environment for you, both on owning the paper and then possibly distressed situations? Yes. I would just say that the high yield markets, a number of them are in energy, but all the other high yield markets are pretty significant. And everything in the high yield market has gapped out, as you likely know. And a lot of the things that we're looking at aren't energy related. There's no doubt some of them are around the edge around the energy area, but not specifically oil and gas opportunities. But there's I think those will come as well over time, but it may still be a little early. And then just furthering that discussion, are there is it just easier for you to have a good view on potential distressed situations or high yield within the U. S. Market given the fact that it's largely a public traded market? And then how do you compare that to what's happening in Europe where it's still largely a bank driven lending market? Yes. Thing I would say is there are opportunities around the world. They come in different forms and different places and different types. What the U. S. Capital market has versus every wealth is the widest and deepest market. And secondly, most of its credit is listed in trades with CUSIP number. And therefore, you can buy it in the secondhand market easily as opposed to as you mentioned in Europe, it's mostly in a bank market. So they're just much more accessible opportunities in the short term versus opportunities you might otherwise find from a bank or something else in Europe. They're just more difficult to access. Okay. Thank you. The next question is from Cherilyn Radbourne from TD Securities. Please go ahead. Thanks very much and good morning. So the disconnect between public market values and private market values has been a theme on the conference calls for all of your listed issuers. And I noticed that you have been buying back stock. So I did want to ask the question as to how you evaluate the attractiveness of buying back your own stock versus pursuing new investment opportunities here? So, Sean, I'd just say that we're in the business of capital allocation and we constantly look at stock prices versus opportunities to buy or to invest capital into other things. And bottom line, if you can find an additive opportunity in a business, which is beside a business that you have or combine something into a business you have, usually that's better than putting money into buying your own stock back. You get a one time change when you buy stock back, but you can multiply it if you can have it highly additive to an operating business that you run. So, first place to look is trying to add to the businesses. But when we see opportunities to buy capital back, we tend to do it. And it's easy money in doing that and it's simple. And when it gets when it gaps out to a level where it's much more significant than just smaller amounts, we generally do it. Okay. And then if I look back over the last 12 months, one of the larger drags that you've had to overcome has been poor hydrology in the power business. So I wonder if you could just comment on how confident you are that that business is positioned for a better 2016 from a hydrology standpoint? Yes. There's a lot of things that Brian and I can promise you. We can't promise you that there's going to be rain. But it appears that hydrology levels in Brazil, we have 3 main hydro businesses, 1 in Canada, 1 in the U. S. And 1 in Brazil. It appears that hydrology levels, water levels in Brazil are getting much, much better. There was a drought for 2 years straight in Brazil. Reservoir levels have been coming up very significantly. They doubled in the last increase and it's raining in Brazil and that's a very good thing for the country in general and for our water business there. So I'd say that the Brazil component of the business looks much, much better. In North America, it has been had low water levels and we are back at average today and maybe a little bit better than that, although we won't count that yet. And I would just say that we think based on all knowledge we have today about water levels and where we sit for the year that we that 2016 should be a pretty good year. Great. That's my 2. Thank you. You're welcome. The next question is from Mario Saric of Scotiabank. Please go ahead. Hi, good morning. I want to come back to the kind of shifting co investment philosophy as the private funds get bigger in size. Historically, Brookfield's kind of stood out in terms of the co investment percentage, whether it's 25% to 40%, much larger than some of your peers. Clearly, you have strong operational expertise in the various funds and the returns have also been good. Going back from an LP perspective in the private funds, how much of a competitive advantage was it to see Brookfield at 40% versus their peers at 10% when they're deciding to give you money as opposed to someone else? So I think our I think there's sort of 2 questions there and I'll try to answer both of them. I think our commitment to the funds is a very important factor when we sit with investment committees. And I'd say more important from the corporate perspective of Brookfield Asset Management, the culture of our organization has been built on that and I think it's a very important factor in it and that, pervades all the dealings we have with our clients. So I think it's important and the size whether it's 25% or 40, the numbers are large. I don't think it changes anything. From a co investment and direct investments we do with clients, I'll break our clients out into 2 general groups and there's smaller institutions who look for us to invest their money in funds because they don't have large scale organizations that do what we do. And as a result of that, we take their money, put it in our funds, we put it to work and we try to earn them as high return as possible given the strategy. The second group are large midsize to larger funds that actually have more people and they've built organizations and sometimes they do things on their own, but often they look to people like us to put their money to work. And what's important for them is that they come into our funds, but we also can offer them other investments. And sometimes, for the larger ones, those are co investments beside us in deals. So it's too big for a fund. We take some maybe in our listed partnership or on BAM's balance sheet, but we also offer some to them as co investors into a specific opportunity. And secondly, and maybe more uniquely to us, often people do that. But secondly and more uniquely to us is we do many things on our own balance sheet that don't fit the mandates of the funds. And increasingly, we do every one of those opportunities with our institutional clients as partners. So they're getting the opportunity to directly invest into opportunities with us on a percentage basis and that's very important to some of them. And those three things together just give us a greater ability to interact with the institutional clients and to assist them achieve their goals. And every time we can do that, they come back another time. And that accrues to the good of our franchise. Okay. I can appreciate that. I guess, is it reasonable to say that, I guess, in the near term, Cherilyn talked about the disconnect between public and private market valuations and it's pretty pervasive across most real asset classes today. Clearly, it's not impacting your near term fundraising capabilities with the discussion of a $10,000,000,000 plus infrastructure fund going forward. But over the longer term, the maintenance of those types of discounts to NAV underlying sub level, does that impair fundraising ability over the long term when after you've sold a bunch of mature assets and underlying funds in one time? Yes, I would say I would respond the following. I don't think it does. And I think we're there is an enormous change going on in the institutional client world driven by the fact that interest rates have come down dramatically over the last number of years and they need to earn yield within their funds. And the percentage allocations to real assets hasn't even started to go to the percentages which most of them want. And as a result of that, the probably the most important thing is that they still most institutions are still far underweighted to their percentages of real assets, real estate infrastructure and other real assets. And therefore, even if the funds come down in total size because equities went down, even if some of the funds take money out of their pools or they get smaller, they're still going to be allocating percentages to real assets. And we've seen very little change over the last where we think the allocation percentages are only starting. And Asia would be one of those. They're very under allocated to these type of products. And as the insurance business in China, for example, grows over next 25 years, there will be very significant percentages allocated to these type of assets and some of it will be global, not just in the local markets. So, I think it's going to continue despite what the comments that you the environment that you suggested. And I guess given those rising allocations to assets across many geographies, are you seeing any shift at all with respect to your discussions with sovereigns or other institutions in terms of potentially investing directly in publicly traded securities as opposed to providing capital for your private funds. So for example, BPY today is trading at a very substantial discount to your IFRS NAV. Sovereigns or institutions come in and get units at a 30% to 35% discount NAV as opposed to providing capital for private funds going forward arguably at NAV initially, particularly given BPY co invests in those future private funds, you're getting exposure on both sides, which are arguably getting a much cheaper valuation going in. So are you seeing any trends on that front? We haven't seen anything of note today. It's Brian, Mario. I mean, obviously, that's going to happen in the secondary market. It would be fairly unique circumstances if we're and something will be clearly accretive for us to do that through treasury. Okay. That's great. So, Rick, we've not seen any sort of major softwares take a conscious and noted acquisition program of stakes, large stakes in our listed issuers. The next question is from Neil Downey of RBC Capital Markets. Please go ahead. Hi. Good morning. Maybe a question directed to Brian. Your disclosures show $39,000,000,000 of private funds and co investment capital. If you were to slice that number up, say in percentages, is it possible to give us a high level view as to the geographic sourcing, let's say from Asia versus the Middle East versus the Americas and any other relevant region? And I suppose the reason I ask is that oil is $30 a barrel and it used to be $100 and this capital that you have today is obviously very sticky. But how should we think about the opportunity in terms of growth in AUM for the private funds and where the capital may come from in a world of $30 oil? Sure. So, Neil, I'll pick up on a comment that Bruce made earlier. But in essence, in terms of the geographic allocation of our private fund commitment, are still pretty heavily weighted towards North America, U. S. And Canada. And so while there is some Middle East component to that, it's probably more in the 10% to 15% range overall. And frankly, it's continued to be a good source of funding and we're not really seeing any abatement in that. Obviously, these things can play out over time. But the other point is, is there are a number of areas that we see large potential increases in the funds flow and our ability to access those. I'd say we're pretty heavily underrepresented in Europe at the stage of the game, but in particular going to Bruce's comment on Asia, where we've made some great progress, but there are tremendously large pools of capital and increasing for regulatory and other reasons, we're seeing much more of that capital flow into funds like ours. Okay. And one follow-up question, you made comments earlier about how the strength in the U. S. Dollar has really been a headwind to the growth in the company's U. S. Dollar centric net asset value or intrinsic value. Do you have a view as to whether that big shift is largely now done? And are you doing anything proactively in that to support you either way with respect to your hedging or other policies? Yes. Our view is that we're almost through the U. S. Dollar being strong. It may not change a lot for the while, but you're not going to see substantial movements in the currencies, in particular, that we operate in other than the US dollar. Therefore, you're going to see the detracting from results will be over and there and you'll not see any negative amounts going forward after maybe the 1st or second quarter this year, just because a lot of it happened in the last half of last year. As a result of that view, we have been scaling out of hedges we had in many of the other currencies that we had hedged and, therefore, you'll see much more local currency exposure going forward. And in essence, what we're doing is we're buying those assets at this point in time in the local dollars at this currency price. And because we just think it's the right there's no reason to have hedges if we view that the cycle is played out, and we don't need the protection anymore. But it may be a while turn the turn the conference back over to Mr. Andrew Willis for closing remarks. Please go ahead. Thank you, operator, and thank you everybody for listening. Please feel free to reach out to us if you have any further questions. We look forward to updating you after the Q1 of 2016. This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.