BAM Brookfield Asset Management Ltd. 10-Q 2026-09-30 section summaries

Brookfield Asset Management (BAM) — Q3 and nine months ended September 30, 2026

Consolidated results

Investment income included $160M of realized and $604M of unrealized carried-interest allocations in Q3, and $176M and $1.253B, respectively, for 9M; the corresponding prior-year amounts were $0M and $112M in Q3, and $0M and $51M for 9M. The sharp increase in earnings also reflected a $2.0B gain from remeasuring BAM’s previously held Oaktree interest. Carried interest, fair-value movements and the unexplained “other income (expenses), net” line make reported results materially more volatile than recurring segment earnings.

Segment performance

Segment earnings grew modestly in Q3 and 9M, while consolidated pretax income rose to $3.330B from $770M in Q3 and $5.360B from $2.011B for 9M. The reconciliation included carried-interest allocations, net of compensation, of $(677)M versus $(132)M in Q3 and $(1.080)B versus $91M for 9M; other income and expenses, net of other costs and non-asset-management items, were $(1.688)B versus $96M and $(1.667)B versus $217M, respectively. Segment measures were recast to include BAM’s share of partner-manager revenues and related expenses; total Segment Earnings were unchanged.

Cash flow, balance sheet and capital

Capital expenditures were not separately presented. Class A shares outstanding declined from 1,608,492,642 at the start of 2026 to 1,597,837,429 at September 30, including 11,228,830 net treasury-share acquisitions.

The $6.019B of net intangible assets includes acquired Oaktree customer relationships ($1.852B), management contracts ($2.923B) and trade name ($1.055B). Common equity less goodwill and intangible assets implies tangible common equity of approximately $1.539B. Cash and cash equivalents were $657M, plus $31M held by consolidated funds. Corporate debt principal was $3.495B; BAM issued $550M of five-year notes at 4.832% and reopened $450M of 5.298% notes due 2036. Its $1.1B revolver was undrawn, and it was in covenant compliance. A $1.0B commercial-paper program had no balance at quarter-end.

Oaktree acquisition and investment activity

BAM completed the staged acquisition of the remaining approximately 26% of Oaktree on July 31, for approximately $2.9B of total transaction consideration, with approximately $2.2B attributable to BAM. The accounting consideration transferred was $7.509B, including the $5.902B fair value of BAM’s previously held interest; remeasurement of that interest from $3.9B generated the $2.0B gain. Oaktree contributed $308M of revenue and $34M of net income from August 1 through September 30. The acquisition added $1.771B of goodwill, assigned to Credit, and $5.830B of identifiable intangibles; purchase-price allocation remains preliminary. A Q3 $140M goodwill impairment in Public Securities Group reflected organizational changes and lower expected cash flows and fair value.

Reported investments totaled $8.859B, down from $9.795B at year-end. Net carried interest attributable to BAM on new funds increased to $2.2B from $1.1B; mature-fund carried interest is attributable to BN, leaving BAM with no net mature-fund carry. Investment valuations and accrued carry depend on Level III assumptions and can reverse with changes in asset performance and market conditions.

Risks, commitments and subsequent events

BAM had $8.8B of bridge-financing and other equity commitments, up from $6.6B, and $502M of guarantees and indemnities versus $179M. It had $1.3B of unfunded commitments to consolidated funds; consolidated VIE assets are restricted to settling VIE obligations, with no recourse to BAM for their liabilities. The company’s estimates for fair values, carried interest, compensation and deferred taxes involve significant judgment.

After quarter-end, Brookfield and partners completed the approximately $5.2B acquisition of LXP Industrial Trust. BAM also issued $275M of commercial paper at a 4.33% weighted-average rate, maturing in November 2026. On November 5, BAM declared a $0.5025-per-share quarterly dividend payable December 31, 2026.

Business and strategy

Brookfield Asset Management (BAM) is a global alternative asset manager with more than $1 trillion of AUM, over 2,500 institutional clients and approximately 69,000 private-wealth clients. It manages 60 strategies across infrastructure, energy, private equity, real estate and credit, earning management and performance fees and investing Brookfield capital alongside clients. At September 30, 2026, the platforms represented approximately $1.294 trillion of AUM and $681.800 billion of Fee-Bearing Capital (FBC).

BAM completed its Oaktree acquisition on July 31, expanding its credit platform and adding fees, expenses, borrowings and acquired assets. It is also developing AI infrastructure and expanding transition investing, including through its Catalytic Transition Fund. In Q3, BAM revised its FBC presentation to include partner-manager assets subject to servicing fees; prior periods were recast. FBC and BAM’s other reported non-GAAP measures are not substitutes for GAAP results.

Consolidated results

The Oaktree acquisition contributed $227M of Q3 base fees. Fee growth also reflected inflows and NAV increases, higher listed-affiliate prices, and higher incentive distributions; lower catch-up fees partly offset growth. Expenses increased with Oaktree and business growth, including compensation and financing costs. Q3 other income, net, was $1.741B versus other expense of $107M, chiefly because BAM recognized a $2.0B acquisition-date gain when it remeasured its previously held 74% Oaktree interest from $3.9B to $5.9B fair value. A $140M goodwill impairment related to Oaktree integration partly offset the gain.

Carried interest added substantial valuation-driven volatility: Q3 unrealized allocations were $604M versus $112M, of which $494M was attributable to BAM versus $241M. Net new-fund carried interest was $633M versus $352M; accrued new-fund carried interest reached $3.347B at September 30, including $312M from Oaktree. Accruals reflect period-end fair values and may reverse; carried interest and some incentive fees may also be subject to hurdles or clawbacks.

Q3 segment performance

Credit fee growth reflected insurance capital, private-credit deployment, partner-manager contributions and higher liquid-strategy FBC. Energy fees declined as lower catch-up and earlier-vintage fees outweighed growth in BEP and co-investment fees. Private-equity growth was supported by fundraising for its seventh flagship fund. Real-estate fee revenue was modestly higher in Q3, but lower catch-up fees drove a 6% decline for 9M to $786M from $835M. Rising compensation and operating costs constrained earnings in several strategies; credit earnings benefited from partner-manager and complementary-strategy growth.

Fee-bearing capital and earnings measures

FBC increased 9% over the first nine months, mainly on $104.720B of inflows, partly offset by outflows, distributions and other changes. Credit generated $74.961B of inflows, principally from BWS insurance capital and fundraising/deployments. In Q3, total FBC fell 2% as inflows were outweighed by outflows, distributions, lower market valuations and the partner-manager presentation change. Declining listed-affiliate share prices notably weighed on energy and private-equity capital.

BAM targets distributing approximately 90% or more of Distributable Earnings to shareholders quarterly. Approximately $68B of uncalled fund commitments was not yet fee-bearing; BAM estimates investment of this capital could generate approximately $680M of additional Fee Revenues.

Balance sheet, liquidity and cash flows

The acquisition added $5.8B of intangibles—customer relationships, fund-management contracts and the Oaktree trade name—and $1.8B of goodwill, partly offset by the impairment. Implied tangible common equity, calculated as total equity less goodwill and intangible assets, was $3.923B. Corporate borrowings include the effect of a $1.0B debt offering; Oaktree also added $845M of subsidiary borrowings, non-recourse to BAM. Consolidated-fund borrowings were $1.676B.

Nine-month financing outflows included $2.4B of distributions and $586M of share repurchases. Corporate deployable capital was $2.124B, down from $2.961B at year-end, comprising $774M of cash and financial assets and $1.350B of undrawn facilities. Total uncalled commitments were $114.260B; $102.952B was scheduled for 2030 and thereafter. Oaktree debt repayments and refinancing after the acquisition included $321.5M repaid on October 5 and refinancing of $128.5M of December 2032 notes at 6.230%, with maturity unchanged.

Principal risks and considerations

Reported earnings are sensitive to fund valuations and carried-interest reversals, while fee growth depends on fundraising, insurance flows, listed-affiliate market prices and assets remaining invested; redemptions, distributions, realizations, foreign exchange and changing fee bases can reduce fee-bearing capital or fees. Higher operating and interest costs also pressure earnings. BAM’s valuations—particularly for investments without observable market prices—and acquisition accounting rely on significant assumptions and judgment, so changes in estimates may materially affect results. Q3 market conditions included persistent inflation, geopolitical and energy-supply pressures, and widening U.S. corporate-credit spreads.

Market and Financial Risks

• Market capitalization: BAM’s primary market exposure is the sensitivity of base management fees from its publicly listed permanent-capital affiliates BEP, BIP and BBUC to their market capitalizations. A 10% adverse market-capitalization move as of September 30, 2026 could reduce base management fees earned by up to $17 million; the filing does not specify the period basis for this amount.
• Foreign currency: Exposure is described as very limited. Most private funds and fee revenues are denominated or paid in U.S. dollars, and most revenue is earned in the U.S. BAM may use hedges, including forward contracts, when meaningful capital is invested in foreign currencies.
• Interest rates and debt: BAM had $3.5 billion of outstanding senior unsecured notes, all fixed-rate. Following the Oaktree Acquisition, BAM also consolidated $900 million of principal in Oaktree subsidiary senior unsecured notes as of September 30, 2026. Those notes are fixed-rate and non-recourse to BAM. Market-rate changes do not affect interest expense on these notes, but may affect their fair value. Other interest-rate exposure primarily comes from variable-rate balances with affiliates and external parties, revolving credit facilities and commercial paper. BAM had no outstanding revolving-facility or commercial-paper borrowings at September 30, 2026.
• Credit risk: Private-fund investors meet capital commitments through contributions when funds make investments. Investor defaults could harm earnings or require BAM to provide capital, with greater potential impact if an investor defaults across multiple funds. BAM describes its investor base as diverse and creditworthy, comprising more than 2,500 clients, including large institutional investors, sovereign wealth funds and pension plans, and assesses that its asset-management business has no material credit risk.

Disclosure Controls and Internal Control

Management assessed the company’s disclosure controls and procedures as effective at the reasonable-assurance level as of period-end. During the most recent quarter, no changes to internal control over financial reporting materially affected, or were reasonably likely to materially affect, those controls.

The company reported no material changes to the risk factors described in its Annual Report, except for matters discussed in the “Business Environment” section of this report’s MD&A. Investors should refer to the Annual Report and that MD&A section for the underlying risks and developments.