Partners Value Investments L.P. Announces 2022 Annual Results

Partners Value Investments L.P. (the “Partnership”, TSX: PVF.UN TSX:PVF.PR.U) announced today its financial results for the year ended December 31, 2022. All amounts are stated in US dollars.

Net income for the year ended December 31, 2022 was $1.1 billion compared to net income of $31 million in the prior year. Net income was higher in the current period primarily due to a special non-cash distribution received from Brookfield Corporation (the “Corporation”, formerly Brookfield Asset Management Inc.). On December 9, 2022, the Corporation completed the distribution of a 25% interest in its asset management business through Brookfield Asset Management Ltd. (the “Manager”), which was incorporated and publicly listed for the purpose of holding an interest in this business. As part of this distribution, the Partnership received one share of the Manager for every four shares held of the Corporation. As a result, the Partnership recognized non-cash dividend income of $1.0 billion from the Corporation in its Consolidated Statements of Operations.

Income of $1.1 billion was attributable to the Equity Limited Partners ($13.78 per Equity LP unit) and income of $6.9 million was attributable to Preferred Limited Partners. Excluding the impact of special distributions received in 2022 and 2021 (December 31, 2021 – $46 million related to the spinoff of Brookfield Reinsurance Ltd.), net income increased by approximately $93 million compared to 2021 due to higher foreign currency gains related to the Partnership’s preferred shares and corporate borrowings and tax recoveries in the current year.

As at December 31, 2022, the market prices of a Corporation (NYSE/TSX: BN) and Manager (NYSE/TSX: BAM) share were $31.46 and $28.67, respectively. As at March 29, 2023, the market prices of a BN and BAM share were $31.19 and $31.39, respectively.

Effective March 31, 2023, Rachel Powell will be replaced by Jason Weckwerth as Chief Financial Officer of the Partnership.

Consolidated Statements of Operations

For the years ended December 31(Thousands, US dollars, except per share amounts)
			2022				2021
Investment income
Dividends		$	1,120,641			$	117,629
Other investment income			6,694				5,361
			1,127,335				122,990
Expenses
Operating expenses			(2,359	)			(3,249	)
Financing costs			(9,789	)			(8,896	)
Retractable preferred share dividends			(39,753	)			(33,628	)
			(51,901	)			(45,773	)
Other items
Investment valuation gains (losses)			10,653				(5,739	)
Amortization of deferred financing costs			(3,363	)			(4,070	)
Current tax (expense) recovery			(19,990	)			7,816
Deferred tax recovery (expense)			21,439				(15,024	)
Foreign currency gains (losses)			37,272				(28,706	)
Net income		$	1,121,445			$	31,494

Change in Net Book Value

The information in the following table shows the changes in net book value:

For the years ended December 31(Thousands, except per unit amounts)	2022								2021
		Total				Per Unit				Total				Per Unit
Net book value, beginning of period1	$	7,482,738			$	92.47			$	4,777,152			$	54.25
Net income2		1,114,558								24,606
Other comprehensive (loss) income2		(3,910,893	)							2,508,092
Adjustment for impact of warrant3		(25,355	)							2,842
Re-organization		—								663,678
Equity LP repurchases		(4,224	)							(493,632	)
Net book value, end of period1,4	$	4,656,824			$	57.60			$	7,482,738			$	92.47

1. Calculated on a fully diluted basis. Net book value is a non-IFRS measure used by management to measure the value of an Equity LP unit on a fully diluted basis. It is equal to total equity less General Partner equity and Preferred Limited Partners’ equity, plus the value of consideration to be received on exercising of warrants, which as at December 31, 2022 was $352 million (December 31, 2021 – $378 million). Opening net book values per unit have been re-casted to conform with the current year per unit presentation.
2. Attributable to Equity Limited Partners.
3. The basic weighted average number of Equity Limited Partnership (“Equity LP”) units outstanding during the year ended December 31, 2022 was 66,169,783 (December 31, 2021 – 72,953,504). The diluted weighted average number of Equity Limited Partnership (“Equity LP”) units available and outstanding during the year ended December 31, 2022 was 80,877,206 (December 31, 2021 – 87,662,153); this includes the 14,707,424 Equity LP units (December 31, 2021 – 14,708,648) issued through the exercise of all outstanding warrants.
4. At the end of the year, the diluted Equity LP units outstanding were 80,844,367 (December 31, 2021 – 82,171,127).

Financial Profile

The Partnership’s principal investments are an ownership interest in approximately 132 million Class A Limited Voting Shares of the Corporation and approximately 33 million Class A Voting Shares of the Manager. These holdings represent an 8% interest as at December 31, 2022 in both entities. In addition, the Partnership owns a diversified investment portfolio of marketable securities.

The information in the following table has been extracted from the Partnership’s Consolidated Statements of Financial Position:

Consolidated Statements of Financial Position

As at(Thousands, US dollars)			December 31,2022				December 31,2021
Assets
Cash and cash equivalents		$	185,722			$	80,704
Accounts receivable and other assets			31,270				65,418
Deferred tax asset			1,604				—
Investment in Brookfield Corporation1			4,149,188				7,869,681
Investment in Brookfield Asset Management Ltd.2			934,183				—
Other investments carried at fair value			328,264				344,983
		$	5,630,231			$	8,360,786
Liabilities and equity
Accounts payable and other liabilities		$	36,860			$	7,693
Corporate borrowings			220,711				236,513
Preferred shares3			905,132				835,019
Deferred tax liability			—				23,431
			1,162,703				1,102,656
Equity
Equity Limited Partners			4,304,516				7,105,075
General Partner			1				1
Preferred Limited Partners			153,049				153,054
Non-controlling interests			9,962				—
			4,467,528				7,258,130
		$	5,630,231			$	8,360,786

1. The investment in Brookfield Corporation (formerly known as Brookfield Asset Management Inc.) consists of 132 million Corporation shares with a quoted market value of $31.46 per share as at December 31, 2022.
2. The investment in Brookfield Asset Management Ltd. consists of 33 million Manager shares with a quoted market value of $28.67 per share as at December 31, 2022.
3. Represents $680 million of retractable preferred shares less $13 million of unamortized issue costs as at December 31, 2022 (December 31, 2021 – $611 million less $13 million) and $152 million of three series of preferred shares (December 31, 2021 - $152 million) and $84 million of three series of preferred shares (December 31, 2021 - $84 million) of a subsidiary of the Partnership, issued in December 2021.

For further information, contact Investor Relations at [e-mail] or 416-956-5141.

Note: This news release contains “forward-looking information” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of applicable Canadian securities regulations. The words “potential” and “estimated” and other expressions which are predictions of or indicate future events, trends or prospects and which do not relate to historical matters, identify forward-looking information. Forward-looking information in this news release includes statements with regard to the Partnership’s potential future income taxes.

Although the Partnership believes that its anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond its control, which may cause the actual results, performance or achievements of the Partnership to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.

Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements and information include, but are not limited to: the financial performance of Brookfield Asset Management Inc., the impact or unanticipated impact of general economic, political and market factors; the behavior of financial markets, including fluctuations in interest and foreign exchanges rates; global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; strategic actions including dispositions; changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates); the effect of applying future accounting changes; business competition; operational and reputational risks; technological change; changes in government regulation and legislation; changes in tax laws, catastrophic events, such as earthquakes and hurricanes; the possible impact of international conflicts and other developments including terrorist acts; and other risks and factors detailed from time to time in the Partnership’s documents filed with the securities regulators in Canada.

The Partnership cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on the Partnership’s forward-looking statements and information, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, the Partnership undertakes no obligation to publicly update or revise any forward-looking statements and information, whether written or oral, that may be as a result of new information, future events or otherwise.