Fitch affirms Brookfield Asset IDR

Global rating agency Fitch has affirmed the longterm IDR of Brookfield Asset Management Inc. ( BAM) at ‘ BBB’. The affirmation affects approximately $ 3.5 billion of parent level long term debt issued by BAM. The rating outlook is Stable.

The affirmation reflects BAM’s strong credit profile which is supported by the equity values of BAM’s subsidiaries, the largest of which are publicly traded, as well as substantial dividends or distributions from its subsidiaries and investments which are concentrated in the real estate and power generation sectors. BAM receives approximately $ 600 million annually in dividends from its four largest publicly trad- ed investments, Brookfield Office Properties, Brookfield Infrastructure Partners, General Growth Properties, and Brookfield Renewable Energy. BAM’s equity interests in these same investments has an aggregate market value of approximately $ 18 billion providing substantial interest and asset coverage to BAM’s outstanding debt.

BAM is a holding company that through majorityowned or controlled operating subsidiaries owns a diversified business portfolio, principally commercial real estate and power generation assets, which provide a stable stream of earnings and cash flows. BAM also derives a stable and recurring revenue stream from its asset management business.

BAM is a holding company with a portfolio of investments, rather than an operating company. Therefore Fitch analyzes recurring cash flows that directly accrue to BAM in the form of dividends, distributions, and asset management fees of approximately against parent level debt.

The resulting Adjusted Parent Only Cash Flow (APOCF, a non-GAAP or nonInternational Financial Reporting Standards measure) approximates $1.1 billion and produces a debt service coverage measure of approximately 4.5x in Fitch’s models. APOCF to parent level debt is approximately 24%. As recent investments mature, Fitch expects coverage measures to improve 4.5x to 5.0x through 2015, and leverage to improve slightly to 25% to 27%.