TORONTO (Reuters) - While the current low interest-rate environment has been toxic for many investors, Brookfield Asset Management (BAMa.TO) is banking on its continuation to draw capital to its power, infrastructure and property assets, Chief Executive Bruce Flatt said on Thursday.
“We expect the current slow growth, low rate, interest rate environment to persist,” which should stoke demand for income-producing assets, he said on a conference call with analysts, investors and media.
“As a result, real assets should continue to emerge as an even more compelling investment alternative.”
The Toronto-based investment company, which reported a 34 percent rise in funds from operations in the first quarter, has about $185 billion in assets, largely weighted to the United States.
Benchmark 10-year U.S. bonds currently yield just over 1.8 percent, which is up from a low of around 1.4 percent last July, but are well below the 3 to 5 percent levels of the last decade.
Brookfield invested heavily in U.S. real estate during the downturn, and is now starting to see the benefit as that sector recovers.
“We expect the housing rebound will have strong spillover effects both for the consumer spending and business confidence, good for all businesses, but specifically related to all the housing-related investments that we made,” said Flatt.
Brookfield’s funds from operations rose to $689 million, or $1.03 per share, from $515 million, or 77 cents per share, a year earlier.
Revenue rose 23 percent to $4.95 billion, while direct costs climbed 19 percent to $3.42 billion.
Net income fell 4 percent to $697 million, or 51 cents per share, reflecting lower level of fair value gains.
The company’s shares fell 1.8 percent to C$38.48 on the Toronto Stock Exchange.
In April, Brookfield Asset spun off subsidiary Brookfield Property Partners BPY.N, which holds substantially all of the commercial property assets previously held directly by Brookfield Asset. Brookfield Asset holds 92 percent of Brookfield Property.
With additional reporting by Ankur Banerjee in Bangalore