Good day and thank you for standing by.

Welcome to the Brookfield Asset Management 4th Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I'd now like to end the conference over to your speaker today, Jason Fuchs, Managing Director of Investor Relations. Please go ahead.

Thank you for joining us today for Brookfield Asset Management's earnings call for the fourth quarter and full year of 2025. On the call today, we have Bruce Flatt, our Chairman, Connor Teske, our Chief Executive Officer, and Hadley Peer-Marshall, our Chief Financial Officer. Before we begin, I'd like to remind you that in today's comments, including in responding to questions and in discussing new initiatives in our financial and operating performance, we may make forward-looking statements, including forward-looking statements within the meaning of applicable U.S. and Canadian securities law. These statements reflect predictions of future events and trends and do not relate to historic events. They're subject to known and unknown risks, and future events and results may differ materially from such statements. For further information on these risks and their potential impacts on our company, Please see our filings with the securities regulators in the U.S. and Canada, and the information available on our website. Let me quickly run through the agenda for today's call. Bruce will begin with an overview of the quarter and the market environment. Connor will discuss our activity in 2025 and outline the key drivers of our growth for 2026. And finally, Hadley will discuss our financial results, operating results, balance sheet, and dividend increase. After our formal remarks, we'll open the line for questions. To ensure we can hear from as many participants as possible, we're asking for everyone to please limit themselves to just one question. If you have additional questions, please rejoin the queue and we'll be happy to take more questions if time permits. With that, I'll turn the call over to Bruce.

Hi Jason, and welcome everyone. 2025 was another strong year marked by continued growth across the business and consistent execution against our long-term strategy. $112 billion of capital during the year, reflecting strong demand from institutional insurance and individuals for our diverse suite of strategies. We also invested our high-quality assets in businesses that form the backbone of the global economy. We made these investments in areas where we have deep competitive advantages and strong operating capabilities, positioning us to generate very adjusted returns. At the same time, we monetized $50 billion of equity from investments at very good returns, demonstrating that stabilized, high-quality assets and essential service businesses continue to attract. As a result of all of this activity, fee-bearing capital increased 12% over the year to more than $600 billion. Fee-related earnings reached a record 3 billion, up a very strong 22% year-over-year, and continued operating level. Distributable earnings, an increase of 14% from our distributable earnings, fee-based, as you know, in long duration, and our cash flows are further reinforced by the diversification geographies, lack of reliance on any single segment with many growth options and conditions. turning to the broader we enter 2026 economic growth is resilient and transaction activity has increased due to infliquidity in this environment we are seeing renewed growth where we have both well near term conditions are supportive what matters most to our business are the long-term structural forces that shape global capital allocation we are fortunate to remain at the forefront of the largest global investment trends. These trends remain firmly in place and continue to expand the opportunity set also taking place. Individual investors are increasingly gaining access on duration. This represents a significant expansion of the addressable market for individual portfolios are among the largest and fastest growing pools of capital globally, and they are naturally aligned with long duration income generating. Our ability to invest through Partner with Long-Term Investors continues, though, to differentiate our platform. It positions us, supports our long-term objectives in 30, and generating a 15% annual. Now, before I turn the call over, part of our long-term Teske has been appointed CEO of Brookfield Corporation, and president of BAND. Partners and people have all been involved in this. It's a central role in building Brookfield's investment strategy, scaling our renewable business globally, and developing many of the leaders who now run our businesses. He brings deep investment expertise, strong judgment, and a long-term mindset that is fully aligned with Brookfield's culture. He's actually closer to what the next backbone of the global economy is, and we are excited about. I've never been more thrilled to continue supporting Brookfield, focusing my energy where I can be most useful, and will remain fully invested and involved. As far as the CEO of Brookfield Corporation, we have a substantial interest in ensuring Conor and BAM are hugely successful. I'll turn the call over to Conor in more detail and how we are positioned for a strong $2,000.

I'm honored to be assuming this new role, especially at such an exciting time in BAM's growth story. With Bruce's support and the incremental approach to transition we have been taking for years, we are already fully operating under our new structure. I look forward to continuing to work closely with our team to deliver strong results for our clients and our shareholders and continue to grow our business around the megatrends shaping the backbone of the global economy. With that, now let's turn to our results. 2025 was not simply about raising capital. It was about putting that capital to work at scale and doing so with discipline. On the deployment side, we were active throughout the year across all of our businesses, investing in high-quality assets at attractive values. In renewable power, we invested in Naoen, a leading global developer with long-term contracted clean power assets, and we acquired National Grid's U.S. renewables platform, expanding our footprint in North America. In private equity, we invested in Chemilex, a global industrial technology business with mission-critical products. Our infrastructure business acquired Hotwire Communications, a leading U.S. fiber-to-the-home operator, serving both residential and commercial customers. Colonial Pipeline, the largest refined products pipeline in the United States. and a part of Duke Energy Florida, a vertically integrated electric utility with long duration regulated cash flows, to name only a few. Real estate business recently acquired Generator Hostels, a differentiated hospitality platform benefiting from structural growth in experiential travel. National storage REIT, the largest self-storage company in Australia. Collectively, these investments reflect our focus on essential assets and businesses with durable cash flows, strong downside protection, and meaningful opportunities for operational value creation. 2025 was a record year for investment activity, and it gives us a strong foundation as we look ahead. Turning to fundraising, 2025 was also an excellent year across the platform, continuing our momentum to be market-leading in each of our businesses. We completed final closings for two major flagship funds, the fifth vintage of our real estate flagship, and the second vintage of our global transition flagship. Both were the largest funds we've raised in their respective series and exceeded our targets, with broad and diversified support from existing investors as well as new relationships. These fundraisers are particularly important given where we are in the site. significant dry powder at a point in the cycle where we're seeing attractive entry points, particularly in larger, high-quality assets where there are a limited number of players with scaled, available capital. In transition, demand for power continues to accelerate globally, driven by electrification, AI growth, and energy security. These dynamics create a growing opportunity set for long-term capital, and we are well-positioned to capture it. While our flagship fundraisers were successful the overwhelming majority of our fundraising this year nearly 90 percent came from non-flagship strategies underscoring the growing breadth and durability of our fundraising engine these complementary strategies included continued momentum across our infrastructure and private equity platforms through a range of products as well as further expansion of our private wealth platform we raised capital across a wide range of funds depth of investor demand for our products and our ability to raise capital consistently across market environments and flagship cycles key theme this year has been the continued scaling of our credit platform through a combination of organic growth and strategic acquisitions we have meaningfully expanded our origination capabilities and product breadth when And combined with our long-standing partnership with Oak Tree and the full integration of that business, we are building one of the most comprehensive global credit platforms in the industry, opportunistic credit and insurance-oriented strategies. We are also preparing for a meaningful expansion of our asset management mandate with Brookfield Wealth Solutions upon the closing of their acquisition of Just Group, which we expect in the coming months. initiatives alone, Oaktree managers we acquired in the fourth quarter are expected to generate more than $200 million of incremental annualized fee-related earnings, which positions us with earnings growth in 2026, as that is all before any additional fundraising from our flagships and the approximately 60 strategies we will have in the market or deployment. Looking ahead, 2026 is shaping up to be another record year for fundraising, with strong momentum across the business that we expect will drive meaningful growth, especially within both our infrastructure and private equity platforms. In the private equity, we recently launched the seventh vintage of our flagship fund at a time where clients value our differentiated approach. The private equity business focuses on value creation driven by operational improvement rather than leverage or multiple expansion. It's a strategy for 25 years because it works across the long-term owner and operator of mission-critical, essential assets and businesses. The first fund we launched, more than 25, was the strongest return in the industry. With market conditions aligned with our approach and a deep pipeline of opportunities, we expect this vintage to be our largest private equity fund to date. Alongside our flagship fund, we continue to broaden our private equity platform. We recently launched a new strategy tailored for the private wealth market, which is well aligned with client demand. We also saw strong fundraising across our complementary strategies, including our financial Infrastructure Fund and our Middle East Partner Strategies, both of which we expect to reach final close this year, as well as our venture technology platform, Pine Grove, which recently held a final close on its inaugural fund at $2.2 billion, exceeding its target. We also see a meaningful step change emerging in 2026, driven by the breadth of strategies we now have in the market and the scale of the opportunity in front of us. This year, we will have all of our infrastructure strategies fundraising concurrently, including the launch of our next flagship infrastructure fund, which we expect to be our largest to Alongside the flagship, our infrastructure debt strategy is in the market, and both our open-ended Supercore infrastructure fund and our private wealth infrastructure vehicle continue to scale, with each seeing record inflows in the fourth quarter. Later this year, we expect to launch the second vintage of our infrastructure-structured solution strategy. Together, these strategies position us to raise and deploy capital across the full spectrum of risk and return within the infrastructure asset class, taking advantage of our leading platform and the strong market conditions and growing investment opportunity set. Building on this foundation, last year, we launched a $100 billion global AI infrastructure program, anchored by our inaugural AI infrastructure fund with a $10 billion target. The fund already has strong momentum, with $5 billion of commitments at launch, reflecting the early conviction and the opportunity. Our objective is to deploy more than $100 billion of capital across the full AI infrastructure value chain, from land and power to data centers and compute capacity, leveraging Brookfield's existing scale and digital infrastructure and energy to deliver integrated, long-duration solutions that support the global build-out of AI. We've already announced several transactions for the strategy, including most recently a $20 billion strategic AI joint venture with QAI focusing on developing integrated AI. These initiatives reflect a growing opportunity for long-term private capital to fund infrastructure that has historically sat on corporate and government balance sheets. And Brookfield is uniquely positioned to lead in this space. Taken together, our execution in 2025 and the initiatives already underway position us extremely well as we enter 2026. With strong fundraising momentum, a scaled deployment platform, and clear drivers across private equity, infrastructure, and credit, we feel very good about the growth outlook for the business and expect 2026 to be at or above our long-term targets. We'll turn it over to Hadley to walk through our fourth quarter financial results, and discuss the durability of our earnings in more detail.

Hadley?

Thank you, Connor. As mentioned, we've had a great quarter as well as year, and I'll provide an overview of these results and how we're positioned for 2026. In the fourth quarter, we delivered strong performance. Fee-related earnings, or FRE, were up 28% from the prior year period to $867 million, dollars or 53 cents per share in the quarter bringing fre for the year to 3 billion dollars that brings our margins to 61 for the quarter and 58 for the year our business has significant operating leverage so as a growth initiative scale our margins improve that said after buying the remaining stake of oak tree which operates at lower margins it will bring down our consolidated margin, even though the transaction is highly accretive and strategically strengthens our platform. Plus, Oak Tree's margins are near cyclical lows, reflecting the counter-cyclical nature of its business. In that same quarter, we will also enhance disclosure around our partner managers as these businesses have scaled, becoming more meaningful. Instead of reporting only our share of their FRE, given their smaller historical contribution, we will break out our share of partner-manager revenues and expenses, which will not impact FRE or DE, but should provide investors with clear insights as our platform continues to evolve. Distributable earnings, or DE, were $767 million, or $0.47 per share in the quarter, up 18% from the prior year period, bringing distributable earnings over the last 12 months to $2.7 billion. dollars. Growth in DE continues to closely track growth in FRE. This reflects the high-quality, reoccurring, and stable nature of our revenue base and the limited reliance on carry or transaction-driven income. The primary driver of earnings growth in 2025 was our strong fundraising and deployment activities. Over the past year, we raised $75 billion of capital that became fee bearing, and we deployed $16 billion of previously raised capital that also became fee bearing. As a result, fee bearing capital grew by 12% year-over-year, or $64 billion to a total of $603 billion. This growth reflects both strong inflows and disciplined capital deployment across the platform, even as we continue to return capital at an accelerated pace to clients through realizations and distributions. Turning to fundraising, the fourth quarter marked our strongest fundraising quarter ever, with $35 billion of capital raised across more than 50 strategies. This success underscores the breadth, depth, and diversification of our platform that enables us to sustain consistent momentum regardless of individual fund cycles. Within our infrastructure business, we raised $7 billion, including $5 billion, for our AI infrastructure fund. We expect a first close for the strategy in the coming months, with a target size of $10 billion. We also raised $900 million for a super core infrastructure strategy, bringing the fund to $14 billion, dollars and 900 million dollars for infrastructure private wealth strategy our largest quarter yet which puts the strategy at 8 billion dollars within our private equity business we raised 1.6 billion dollars including 900 million dollars for a private equity special situation strategy and we had our final close of prime girls opportunistic strategy at 2.2 billion dollars exceeding our target a very successful outcome for a first-time fund. Within our credit business, we raised $23 billion of capital, which represented a record quarter. Driving our credit fundraising with real asset and asset-backed finance strategies, as well as our insurance channels. This includes nearly $9 billion of capital raised from Brookfield Wealth Solutions. We also raised $5.6 billion from our long-term private fund, $1.4 billion of which was for our fourth vintage of our infrastructure mezzanine credit strategy, $4 billion for our perpetual credit funds, and $3.2 billion for our liquid credit strategies. Over the past decade, we've been intentional in evolving our business to become more diversified across not only client types, but asset classes, strategies, products, and geographies, which has reduced our reliance on any single market, cycle, or source of capital. Along with our long-term disciplined approach, this has allowed us to compound earnings across varying economic environments and strengthen our resiliency. Today, our earnings base is well-balanced across each of our businesses, infrastructure, renewable power and transition, private equity, real estate, and credit, with no single business contributing more than one-third of our fee-related revenues. As an example, the introduction of our transition platform five years ago and the expansion of our credit platform have meaningfully broadened our earnings mix and enhanced durability. In 2026, we will be fundraising across nearly 60 strategies compared to only four in market just 10 years ago, enabling more consistent and diversified fundraising. We now serve more than 2,500 institutional clients globally, alongside a private wealth platform reaching nearly 70,000 clients and an insurance solution business managing over $100 billion of fee-bearing capital on behalf of approximately 800,000 policyholders. Importantly, this breadth allows us to grow through different market environments by shifting capital toward asset classes and regions where opportunity is strongest, while also creating a stable, resilient earning stream that can perform consistently in different market environments and continue to grow across cycles. Looking ahead, a more balanced share of our fundraising will come from individual investors as private wealth, annuities, and more retirement and 401ks will be able to allocate to alternative investments. Turning to our balance sheet, we continue to operate with a strong asset-like financial profile that provides flexibility to support growth. In November, we issued $1 billion of new senior unsecured notes, including $600 million of five-year notes at a coupon of 4.65% and $400 million of 10-year notes at a coupon of 5.3%. We ended the year with $3 billion of corporate liquidity, providing ample flexibility to support ongoing operations, strategic initiatives, and growth across the business. As we look ahead to 2026, we are positioned for another very strong year, and I will emphasize again that the best is yet to come. Our performance as a disciplined investor sets us up to capitalize on the strong momentum across the business with continued capital inflows from institutional insurance and retail channels, and a pipeline of opportunities to deploy capital at attractive returns. Given a strong financial position and significant growth prospects ahead, I'm pleased to confirm that our Board of Directors has increased our Corley dividend by 15% to $0.50.025 per share or $2.01 per share on an annualized basis. The dividend will be payable on March 31, 2026 to shareholders of record as of the close of business on February 27, 2026. That wraps up our remarks for this morning. We'd like to thank you for joining the call, and we'll now open up for questions. Operator?

As a reminder, if you'd like to ask a question at this time, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. In the interest of time, we do ask that you limit yourself to one question. Please stand by while we compile the Q&A roster.

Our first question comes from Sherrilyn Radborn with TD Cowan.

Thanks very much and good morning. So clearly, manager consolidation is continuing, and the recent emphasis seems to have been on private credit and also secondaries. With regard to secondaries in particular, is that an area that you consider strategically important and a gap that you might look to fill?

Good morning, Sherrilyn. we've made a few complementary acquisitions in recent years focused on areas where we wanted to expand and build out the platform looking ahead we would expect probably to be slightly less active focused primarily on the further acquisition of our existing partner fund managers beyond that will continue to be incredibly selective and opportunistic in terms of secondaries it is a space we track very closely it's growing rapidly it's a segment of the market where our expertise would be very clearly differentiating and it would add an additional service that we could offer to our clients so we do track the space but we will be very opportunistic only looking at opportunities that would be highly additive and complementary but you would be correct that if we were going to do something secondaries is probably near the top of the list and we would focus on a platform that we thought would grow significantly as part of the broader Brookfield ecosystem our next question comes from Alexander

Blostein with Goldman Sachs hey good morning everybody thank you for the question and kind of congrats obviously I think well well deserved on many fronts question for you guys around is the growth for for 2026 so sounds like a lot of momentum in the business on multiple fronts as you highlighted when you refer to at or above long-term targets I just want to dig into that a little bit more I believe your long-term targets you generally talk about FRE I I think at the investor that he talked about that being 17%. So is that what you're referring to when you think about 26th? Does that include Oak Tree and Just? Obviously, those are going to be additive to that FRE growth. So I was hoping to just unpack that a little more and, if possible, get a sense of the sort of organic FRE growth within that statement for the year.

We expect 2026 is going to be very strong. we had strong momentum that accelerated throughout the past year and positions us very well going into next year you are absolutely correct in our five-year plan we expect growth rates in call it the the mid to high teens and we absolutely have an outlook today that that exceeds that level maybe just to put some substance around that there are three initiatives the acquisition of the remainder of oak tree the closing of just group and some of the the acquisitions we made in Q4 that will add 200 million to FRE growth that have already been funded beyond that the earnings this year and going forward will benefit from what we expect to be a further step change in our fundraising. And we thought we had a strong year this year. Next year is going to be even better. And this is driven by continued growth in credit and then outside growth in both PE and infrastructure, where in each of those platforms we'll have strategies in the market. This thing just in terms of 2026 outlook, in terms of investment and monetization, obviously this will be market dependent, but based on the very constructive environment we're currently experiencing, the major trends that we continue to be on the forefront of and the large pipeline of deals that we have in the near term, if market conditions hold, we see no reason why 2026 wouldn't also be a market step up from 2025 in terms of deal activity as well.

Excellent. Thank you very much.

Our next question comes from Michael Brown with UBS.

Hi, good morning. So a lot of anxiety surfaced in the market yesterday around AI-driven disruption and including within the alternative space. Based on our analysis, your exposure screens below peers, but could you maybe break down Brookfield's software exposure broadly across private credit and private equity funds. And then additionally for the industry, Connor, I'd love to hear your high-level views on how AI-related disruption could flow through the private asset ecosystem. And if there are major losses, how do you think LP allocations to private assets could react?

So there's really two punchlines from our side. First and foremost, this is a strong net positive for our business. It validates our focus on digital infrastructure and servicing increased power demand to support the growth and increased penetration of AI. These are some of the largest and most active platforms we have at Brookfield. And the announcements, not yesterday, but the increasing tailwinds over the last several months only provide further support for those initiatives. um obviously this question is topical given the significant market move yesterday but given our firm-wide focus on ai this is a trend we've been tracking for a while and as a result the punchline is our exposure across the organization is very minimal as a reminder our portfolio is almost entirely focused on long-term contracted real assets where we don't take any technology risk or build on spec maybe to get into some of the specifics you asked about within our private equity portfolio we have less than 1% exposure to software businesses within our credit business our focus has been on areas of expertise such as infrastructure and real estate credit real asset lending and asset-backed finance where we get benefits from the Brookfield ecosystem and we have no software exposure and then within our corporate credit portfolio we've been actively positioning to where we see the best risk adjusted returns and as such our opportunistic credit strategies have very little software exposure and our performing credit strategies are significantly underweight relative to indices. Taking that all together our firm-wide focus has been being positioned to benefit from increased AI penetration and therefore the headlines yesterday just further reinforce our conviction in that theme and our disciplined approach to building our credit business has once again put us in a favorable position to manage through this volatility and to continue to be a net beneficiary of the impacts from AI.

Next question comes from Bart Zierski with RBC Capital Markets.

Thanks, and good morning. Connor, also echoing the congrats on the CEO appointment. I wanted to ask around liquidity, just given you pay out most of your free cash flow, and so with the $2.5 billion of debt outstanding now, would you consider the business in a place where it's fully funded? And just related to that, could you give us a high-level sense of the duration over which the $130 billion-ish of uncalled commitments could get called? Thanks.

Yeah, sure. So this is Hadley, so I'll take that question. In terms of our balance sheet and liquidity, we're in a really good place. We've got over $3 billion of liquidity. Now, part of that is in anticipation of funding our share of the 26% of oak tree that we currently don't own. And so that's a critical component, so we're well capitalized from that perspective. But then looking forward, we've been instrumental in supporting our business, whether that's through initiatives around our complementary strategies and the growth there, as well as our partner managers and buying additional stakes related to our partner managers. So we're in a really good position. For some time, we've benefited from the cash on hand from the spin-out, but have slowly entered the bond market earlier last year. And anticipate when we look forward in terms of our leverage, obviously the capacity is quite ample and will continue to build as our business grows. but when we look at 2026 we'll be much less active than we were in 2025 given we were obviously in a big growth area and wanting to support that growth when we look at our other area of liquidity that's the uncalled capital at a hundred and thirty ish billion dollars that's a significant amount of capital that can turn into fee-bearing capital, and this is a critical component of our business. We always want to be in a position where we've got liquidity to take advantage of the environment that we're in, so a good example of that is, you know, our Besrep, our flagship for real estate, closed its fundraising earlier in 25, and so in a great position to have ample liquidity to be quite active, and Peekston, the announcement we made yesterday, is a good example of that and so our flagships obviously have built into some of that uncalled capital but separately our credit strategies which are also heavily in market last year and some into this year or have uncalled capital that will get deployed over time and become fee bearing capital so that will take a few years to get called but it puts us in a really good position no matter what environment we have going forward.

Very helpful. Thanks, Hadley.

Our next question comes from Craig Siegenthaler with Bank of America.

Thanks. Good morning, everyone. And, Connor, first, just big congrats on your promotion to CEO of Brookfield. And I think you're probably the youngest CEO in asset management, too. Thanks, Craig. So my question is on artificial intelligence. So Brookfield has really built a leading business servicing the AI industry. So, So, you know, like your peers, it's a lot of picks and shovels, not actually the AI models. So data center and power. Can you talk about the mix of capital being deployed today between equity and also debt? And on the equity side in data centers, is it mostly investment grade tenants like the hyperscalers? And I'm sorry, but one more I'm going to squeeze in if you can address this one, too. And on the leases, I think almost all 15-year-plus leases, are there scenarios where they can be broken early or no because there's a financial benefit to the data center provider when it's broken? Sorry about the three, but they're all kind of related.

So, in terms of themes across Brookfield, AI, continuous AI and AI infrastructure and the value chain that supports the increased penetration of AI remains at the top of the And this is not only the digital infrastructure, but also the energy generation that is required to support these data centers. Just as a general comment as to why the market opportunity is so robust today, you've got three dynamics that are all compounding on themselves. One, more data centers are being built. Two, the data centers that are being built are now larger. And then the third one is historically the financial investor in a data center typically funded the rack and the shell. Increasingly, there is an opportunity for those that have the scale and the operating capabilities to not just fund the rack and the shell, but to fund the rack, the shells, the chips, the servers, the power supply, the grid redundancy, the substation, the interconnect, the whole system, if you will. And that's creating a very large and attractive investment opportunity on both the credit side and the equity side because while that wallet is getting bigger, it's still backstopped by that same long-term take-or-pay-off take with one of the greatest either hyperscaler or sovereign credits in the world. In terms of our pipeline today, it's as large as it's ever been, and we expect it to only continue going forward. There's two things that perhaps we would highlight that are of interest. Component of growth for AI demand is the hyperscalers, and we are absolutely leading in supporting and investing the infrastructure to support their AI initiatives. But there's also a growing opportunity to support sovereign AI. This is the AI offtakes from countries to support the national interests of those regions. Again, very high-quality credit offtakes, large-scale investment opportunities where our skills can be brought to bear. And this is an area where we do think we're market-leading, given our announcements with Sweden, France, Qatar. Last point I'd simply make here is, this is not just an investment opportunity, we are seeing incredible demand from our clients to get exposure to this investment theme. Structure fund with a target of $10 billion, we've already secured five, we expect we'll hit our targets and expect the broader program to be well north of $20 billion when we include the co-invest given the size of some of these investment opportunities. I'm just seeing here, the second part of your question, these are very strong long-term off-takes, very similar to what we would expect in other infrastructure asset classes. These are taker pay, where if we continue to provide the asset, the off-taker is locked And similar to what we do on the power side, the real estate side, the infrastructure side, AI infrastructure is no different. We spend a lot of time ensuring it's a great revenue construct backed by a great, high-quality credit counterparty.

Our next question comes from Michael Cypress with Morgan Stanley.

Hey, good morning. Thanks for taking the question. Maybe just sticking with AI and data centers, understand the U.S. administration wants to see new data centers stand up their own power generation. I'm curious, how do you see that impacting bottlenecks? And as you invest in data centers, talk about how you're bringing together your greenfield power capabilities, which is a major differentiator for you, and how you're expanding your capacity there given bottlenecks.

There is no question. The bottleneck to AI growth today is not capital. It is not demand. It is electricity supply. And unlocking that electricity supply and, you know, the slogan bringing your own power is a key differentiator. And while electricity grids around the world are doing everything they can to increase their capacity as much as possible, they very simply cannot keep up with the increased level of demand that we've been seeing in recent years. It's only going to accelerate going forward. And therefore, our ability to bring unique solutions beyond just simply flowing power through the grid is a key differentiator. Our ability to bring quick-to-deliver power through our investment in Bloom Energy, longer-term, our ability to use nuclear solutions through Westinghouse, and then behind-the-meter energy storage and renewable solutions that can be hooked up directly to these data center complexes. All of these are different ways that we can look to capture this significant demand and essentially not be affected by the growth of the grid that is not going to keep up with the opportunities that we see in front of us.

Our next question comes from Dean Wilkinson with CIBC.

Thanks. Good morning and congrats, Connor and Bruce. Just want to circle back on credit overall.

I mean there's been concerns around private credit I guess going back to September of last year can you comment just on what you're seeing in credit within the portfolio a general view and maybe a comment on some of the redemptions that you're seeing in the industry in the private wealth strategies thanks so the market demand for credit continues to be very robust and it's driven by the same drivers we're seeing across our equity business, huge capital requirements to build out assets around key themes of energy and digitalization and de-globalization. Maybe to dive into what we're seeing, we continue to see very strong demand and attractive of spreads in real asset and asset-backed lending where, quite frankly, demand continues to outweigh supply, and we expect that dynamic to continue going forward. We are seeing incredibly tight spreads in select pockets of more commoditized segments of the market, and while that's subset-specific, some uncertainty in this space is significantly increasing the pipeline for our opportunistic credit business, which we have seen increase its activity over the last couple months. In terms of credit flows, you're absolutely right. Across the market, there were modest increases, sell redemptions or wealth redemptions late last year. For us, these were very modest and very manageable. But what they shouldn't overshadow is on the institutional side, we're still seeing very robust inflows into credit, especially those products that are well positioned to outperform in this market.

That's great. Thanks.

Our next question comes from Dan Fannin with Jeffries.

Thanks. Just wanted to follow up on just the outlook for wealth flows. You've obviously had very good momentum exiting 2025. Can you talk about your product roadmap as you look into 2026 and beyond, as well as just the continued momentum?

So 2025, our growth in the wealth channel was a little bit north of 40%, 4-0%. We expect that to continue in 2026, particularly on the back of a number of new products we launched in the space at the end of the last year, notably in the credit and private equity segments. And those are seeing great early receptions. In terms of our outlook for the business, we're going to continue to build incrementally. This is an amazing opportunity in terms of the scale, the potential scale for our business. And we absolutely intend to capture it, but we want to go about doing it the right way. We're focusing first and foremost on getting the right products on the right platforms. Here we're having an incredible amount of success. Secondly, very focused on raising prudent amounts of capital to ensure that through these wealth products, we deliver the same strong and consistent returns that have defined our business for years. We feel that is the right way to build this business over time so we can lead in this space the same way we lead in the institutional space. And it's clearly not restricting our growth taking this approach, given our 40% plus CAGRs. And then maybe lastly, the one thing we are doing is taking some incremental steps in 2026, really around brand awareness for Brookfield and also filling out our product offering, most notably on the credit side.

Our next question comes from Crispin Love with Piper Sandler.

Thank you. First, congratulations, Connor. And then just on my question, FRA margins have expanded nicely in recent quarters to 60% plus. Can you share your views on the margins trajectory from here? How do you feel about sustainability of current margins, potential for further expansion, just given some of the tailwinds you've discussed for the business broadly? Just any puts and takes there would be great.

So I can describe that. I mean, you're absolutely right about the margins and the operating leverage that we've seen play out. As a reminder, when we close the 20%, 26% of Oaktree, that will have a shift in our margins just because of where they operate and the cyclicality of their business. But the other thing that we mentioned that we're going to do, which is really just a one-time presentation change, is take our partner managers, which have continued to grow as a business, and our share has grown, which is reflecting more into our numbers. we're going to actually bifurcate their revenues and expenses, the portion that we own, whereas today we include only their FRE. So this change won't impact FRE or DE, but it will increase the reported revenues and costs so as a result impact the margins. Now, the reason why we've always just shown their FRE is because they were a small part of the business. But, as mentioned, they continue to grow, and we're quite excited about that. So we want to provide more transparency around that. And this should also help investors better understand the components of our credit business specifically, as well as the underlying fee rates for our credit strategies. But importantly, to get to really the crux of your question, the margins for our business will continue to improve because of that operating leverage that's built in. across all of our platforms and in fact when we look forward every especially for 2026 every business should have stronger margins except maybe real estate only because they don't have the catch-up fees so we're quite excited about the business in general for 2026 and onwards and that will be reflected in the margins I think you have our next question comes from Mario Sarek with

Scotiabank.

Good morning. I just had a quick follow-on question with respect to the emerging pursuit of the individual investor and wealth channel. I think, Connor, you highlighted three initiatives for 26 on that front, including brand awareness. I'm just thinking from a cultural perspective, you know, Bookfield's culture has been very consistent, very strong, excellent institutional culture, it's made Brookfield what it is today. How do you balance the drive for brand awareness on the private kind of individual wealth side with maintaining kind of that institutional culture that you've had historically?

It is one of our biggest and most valuable assets and it is not going to change going forward. It guides how we operate, how we partner with our clients, how we're disciplined and take a long-term view to investing. When we speak about increasing brand awareness, one of the important things is that it's about increasing the awareness of the Brookfield brand, which, to your point, is very distinct. It speaks to stability. It speaks to discipline. It speaks to long-term focus. And that's all we will be reinforcing. One thing we're incredibly proud of at Brookfield is everybody represents the brand, and that's really what we're going to look to reinforce. As we do increase the brand awareness, it's just ensuring that people know who Brookfield is and what we stand for.

Thank you.

Our next question comes from Jamie Klein with National Bank.

Yeah, thanks. Good morning, and congrats as well, Connor. On the private wealth and market as that continues to evolve and access for private markets in 401ks expands, how should we be thinking about the potential impact on BAM's Seabury Capital and FRE? And what do you need to have happen for that to become a material?

We think about the large opportunity in the future for the individual investor. We think about that in three parts, the retail and high net worth channel, the insurance policy and annuity holder, and the 401k and retiree benefit market. In that third bucket, we do expect the opportunity set to be very, very large, but we expect it to grow incrementally over time. In terms of what's happening in the near term, we do expect guidance to come later this week, which we expect will be highly supportive of alternatives in 401Ks, and will include, we expect, initiatives that will create catalysts for increased reviews of alternatives within these portfolios. And we are very well positioned to capture these opportunities in the DC Channel. We are already working with leading target date fund managers to provide the best of Brookfield's strategies to improve participant plan outcomes. We've been focusing on professionally managed portfolios and target date funds where we can co-develop sleeves and solutions with the existing providers of those products. And in that regard, we're very confident that we can demonstrate value for cost while meeting the regulatory requirements. And that really goes to the strength, track record, and durability of our private investment strategies. Maybe the last point just on this market, because we're very excited about it. from all stakeholders, we continue to receive very positive feedback that our focus on high-quality, downside-protected real assets that provide cash yield and inflation protection is uniquely suited to the objectives of these plan participants. And that's what we'll be looking to offer on an increasing basis going forward.

Next question comes from Kenneth Worthington with JP Morgan.

Hi, good morning. Connor, congratulations. My question is for Hadley. There was a more meaningful increase in the long-term fund and co-investment revenue in both transition and private equity businesses this quarter. For transition, it went from like $5 to $28 million sequentially. In private equity, the revenue went from $44 to $62 million sequentially. What drove the jumps here, and to what extent is this sequential jump in revenue this quarter sustainable at these levels, or were there one-offs that we should be accounting for?

So one thing to keep in mind, and we've mentioned this for PE, is Pine Grove, and they had a great first fund with a final close of $2.2 billion, and that had catch-up fees. So that's what you're seeing there. So there's some catch-up fees there, but that is capital that's now going to be earning FRE going forward. So very exciting outcome there. On the transition side, what you're seeing there is one of our partners that we have in terms of some revenues that they generated from there. That is probably a little bit more one-off generated that the overall business is performing quite well, but they did have a solid wind, and so that's something that you're seeing flow through there.

Okay, great. Thank you very much. Yep, that's exactly it. Thank you.

Our next question comes from Sourab Mobahedi with BMO Capital Markets.

Okay, thank you for squeezing me. congrats to Connor as well. Hadley can you just give us a sense of how you arrived at the 15% DV bump and whether or not you expect to be below 100% payout ratio next year?

Yeah so look we do a lot of forecasting and analysis around our business by each business tops down and bottoms up so this is a thorough analysis that we conduct, it does make it a little bit easier when we've got 200 million of FRE coming in for 2026 that we can forecast with incredible certainty around Oak Tree and Just Group. So that's quite supportive. And when we think about our payout ratio over time, as you know, we target around a 95 percent. And so that is the goal that we're going to be leading into, especially as we get in Cary, which is the second leg of our growth. So what gives us that confidence around 15% is the analysis that we performed and then the overall long-term goal from that perspective.

That concludes today's question and answer session.

I'd like to turn the call back to Jason Fuchs for closing remarks.

Okay, great. If anyone should have any additional questions on today's release, please feel free to contact me directly. And thank you, everyone, for joining us.

This concludes today's conference call. Thank you for participating. You may now disconnect.