Subject: Pershing Sq. Valuation
BN Sum-of-the-Parts Valuation

Presently, Brookfield Corporation has a market capitalization of $80 billion. BN’s ownership in its publicly listed affiliates nearly explains the entire market capitalization of the Corporation – BN’s ownership in BAM, BEP, BIP and BBU collectively sum to $71 billion of market value at BN’s proportionate share. In other words, at the current share price, an investor is paying $9 billion for the combination of Wealth Solutions (poised to generate ~$2 billion of pro forma cash flows for BN), BPG (a $25 billion asset), BN’s carried interest cash flow stream (we estimate a ~$20 billion plus fee stream on a net present value basis) and $11 billion of direct investments BN has in BAM’s private funds. We estimate that BN is trading at a ~38% discount to its sum-of-the-parts value.

Today, BN is trading at 12.5 times our assessment of next 12 months DE, or 10 times adjusted for increased earnings from BWS and our assessment of steady state carried interest. Considering the composition of BN’s future cash flows and using a weighted-average multiple, we anticipate Brookfield should generate 25%-plus compounded returns for shareholders, assuming conservative assumptions on an exit-multiple for the business.

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