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TORONTO - The next two years offer an "exceptional" opportunity for those with both the capital and the expertise to invest in global infrastructure projects, the chief executive of Brookfield Asset Management Inc. (TSX:BAM.A) said Friday.
"Thankfully, it now appears we're in the bottom portion of the recovery phase of this market cycle and that bodes well for everyone, including us," said Bruce Flatt, whose Toronto-based company holds a large and growing global portfolio of infrastructure assets.
Flatt told a third-quarter conference call with analysts that infrastructure as an asset class had become "bruised" in the eyes of many investors in recent years because of problems some companies have experienced.
"But we believe this is unwarranted . . . and think that with proper capital allocation and underwriting assumptions these assets are one of the most compelling real return assets for institutional investors."
He cited a number of mistakes by investors over the last four years, including paying too much, too-high assumptions for cash-flow growth and "probably the most fatal one, as usual, is that excessive leverage was employed within strategies."
Many of these troubled companies are now the focus of Brookfield's attention, Flatt said. "Our goal is to assist financial institutions and owners of assets by providing solutions for unravelling some of these situations."
Brookfield has raised almost $12 billion in investment capital and is continuing efforts to raise capital both privately and publicly, "which should enable us to continue to acquire assets in the bottom portion of this market cycle."
Brookfield believes this environment "probably exists for another 18 to 24 months, similar to what we believe exists for real estate," Flatt said.
Beyond opportunities in the private sector, he believes governments are going to have to sell assets to pay down debt.
Earlier Friday, Brookfield released results showing profit and revenue fell in the third quarter, although the company managed to meet or beat analyst expectations.
The diversified Toronto-based investment company, which is active in real-estate, forestry and power generation as well as increasingly in infrastructure, said its net income fell to US$112 million or 17 cents per diluted share in the quarter
That was down from US$171 million or 27 cents per share in the third quarter of 2008.
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