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Partners Value Investments L.P. Announces Q3 2022 Interim Results

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TORONTO, Nov. 22, 2022 (GLOBE NEWSWIRE) — Partners Value Investments L.P. (the “Partnership” TSX: PVF.UN TSX:PVF.PR.U) announced today its financial results for the three months ended September 30, 2022. All amounts are stated in US dollars.

The Partnership recorded net income of $51.0 million for the quarter ended September 30, 2022, compared to net income of $9.7 million in the prior year quarter. The increase in income was primarily driven by higher foreign currency gains related to the Partnership’s preferred shares and corporate borrowings and tax recoveries in the current period. Income of $49.3 million was attributable to the Equity Limited Partners ($0.61 per Equity LP unit) and income of $1.7 million was attributable to Preferred Limited Partners.

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The market price of a Brookfield Asset Management Inc. (“Brookfield”) share was $40.89 per share as at September 30, 2022 (December 31, 2021 – $60.38). The market price of a Brookfield share was $44.07 on November 21, 2022.

Consolidated Statements of Operations

(Unaudited)
For the period ended September 30
(Thousands, US dollars)
Three Months Ended  

Nine Months Ended

  2022       2021       2022       2021  
Investment income                      
Dividends $ 19,800     $ 17,458     $ 58,047     $ 99,350  
Other investment income   2,150       1,116       3,970       4,160  
    21,950       18,574       62,017       103,510  
Expenses                      
Operating expenses   (423 )     (448 )     (2,049 )     (1,983 )
Financing costs   (2,435 )     (2,132 )     (7,449 )     (6,382 )
Retractable preferred share dividends   (10,599 )     (7,207 )     (29,466 )     (26,425 )
    8,493       8,787       23,053       68,720  
Other items                      
Investment valuation gains (losses)   (3,683 )     2,692       9,559       8,685  
Amortization of deferred financing costs   (872 )     (764 )     (2,524 )     (3,301 )
Current taxes (expense) recovery   (73 )     (618 )     (20,248 )     1,627  
Deferred taxes recovery (expense)   7,557       (3,310 )     22,880       (11,481 )
Foreign currency gains (losses)   39,590       2,960       49,279       (27,186 )
Net income $ 51,012     $ 9,747     $ 81,999     $ 37,064  

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Change in Net Book Value

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

For the period ended September 30
(Thousands, except per unit amounts)
Three Months Ended   Nine Months Ended
  Total       Per Unit     Total       Per Unit
Net book value, beginning of period1 $ 5,410,628     $ 66.90   $ 7,482,738     $ 92.47
Net income2   49,290             76,833        
Other comprehensive income2   (470,850 )           (2,560,649 )      
Adjustment for impact of warrants3   (25,628 )           (32,561 )      
Equity LP repurchases   (445 )           (3,366 )      
Net book value, end of period1,4 $ 4,962,995     $ 61.38   $ 4,962,995     $ 61.38
  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, Preferred Limited Partners’ equity and Non-Controlling Interests’ equity plus the value of consideration to be received on exercising of warrants, which as of September 30, 2022, was $345 million (December 31, 2021 – $378 million). Opening net book values per unit have been re-casted to conform to current period’s 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 period ended September 30, 2022 was 66,178,285. The diluted weighted average number of Equity Limited Partnership (“Equity LP”) units available and outstanding for the period ended September 30, 2022, was 80,885,749; this includes the 14,707,464 Equity LP units issued through the exercise of all outstanding warrants.
  4. At the end of the period, the diluted Equity LP units outstanding were 80,861,767.

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Financial Profile

The Partnership’s principal investment is its interest in approximately 130 million Class A Limited Voting Shares (“Brookfield shares”) of Brookfield. This represents approximately an 8% interest as at September 30, 2022. 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 Statement of Financial Position:

As at
(Thousands, US dollars)
  (Unaudited)
September 30,
2022
    December 31,
2021
Assets          
Cash and cash equivalents $ 230,988   $ 80,704
Accounts receivable and other assets   29,975     65,418
Investment in Brookfield Asset Management Inc. 1   5,329,435     7,869,681
Other investments carried at fair value   330,593     344,983
Deferred tax asset2   6,950    
  $ 5,927,941   $ 8,360,786
Liabilities and Equity          
Accounts payable and other liabilities $ 40,196   $ 7,693
Corporate borrowings   216,162     236,513
Preferred shares3   890,673     835,019
Deferred tax liability       23,431
    1,147,031     1,102,656
Equity          
Equity Limited Partners   4,617,893     7,105,075
General Partner   1     1
Preferred Limited Partners   153,054     153,054
Non-controlling interests   9,962    
  $ 5,927,941   $ 8,360,786

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  1. The investment in Brookfield Asset Management Inc. consists of 130 million Brookfield shares with a quoted market value of $40.89 per share as at September 30, 2022 (December 31, 2021 – $60.38).
  2. The deferred tax asset represents the potential tax recovery arising from the excess of the tax value of net assets over the respective carrying values. Changes in the deferred tax asset balance are mainly related to changes in the market value of the Partnership’s investments and foreign currency fluctuations.
  3. Represents $667 million of retractable preferred shares less $13 million of unamortized issue costs as of September 30, 2022 (December 31, 2021 – $612 million less $13 million), $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.

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For further information, contact Investor Relations at 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.

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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.

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